Investments In Clean Energy Soar

Governments, banks, and private investors around the world are furiously pumping capital into renewable energy, research and development, and clean energy manufacturing.

Roughly $100 billion was invested globally in clean energy in 2007, continuing a steady trend of annual growth since 2001 ranging from 20 to 40 percent. Thanks to the rapid development of American clean energy technology and some progress in state and federal policies, about a third is being invested in American-made renewable energy tools, equipment, and practices.

Big Picture
More than $13 billion in public and private investment capital was pumped into U.S. clean energy industries in 2007, according to the U.S. Department of Energy. Most of the investment — nearly $9 billion in 2007, a 32-fold increase from 2001 - was made in the wind energy sector.

In 2007, $2.7 billion of venture capital funds were invested in renewable energy technologies, representing nearly 10 percent of total venture capital activity in the U.S. This is more than four times the amount invested in 2000, when renewable energy  investments made up less than one percent of overall venture capital investments.

Venture capitalists favored solar energy development, spending $1 billion last year, a 200-fold increase from 2001. That trend continued in 2008. The top three venture capital deals in the second quarter this year were in solar technology companies.

A recent Packaged Facts report projects that investment in RE could reach nearly $50 billion by 2011.

Source: DOE EERE, http://venturebeat.com/2008/07/19/slowdown-venture-capital-investments-drop-12-percent-from-last-year-fewest-deals-since-2005/

Source: http://www.azcentral.com/arizonarepublic/business/articles/2008/09/09/20080909biz-mktsector0909.html, New Energy Finance

Even big oil is investing in renewable technologies and projects. Chevron started Chevron Technology Ventures in 1999, and has increased the share of its venture funds going into renewable energy to 33 percent from 18 percent. In 2006, Shell purchased $33 million in Codexis preferred stock, in addition to its $20 million initial investment in the firm, which researches renewable fuels.

Source: http://online.wsj.com/article/SB122123947896128695.html

Government Role
A 2007 survey by Cleantech Venture Network and Environmental Entrepreneurs, which surveyed 41 prominent cleantech investors who collectively control approximately $3 billion in capital, found the following:

• 72 percent report that current federal policies regarding cleantech affect their likelihood of investing in U.S. companies in some way.
• 65 percent feel state renewable portfolio standards had been important or critical to their investment decisions.
• 52 percent said the same of the federal Renewable Fuels Standard.

Source:
Stack, James. Cleantech Venture Capital: How Public Policy Has Stimulated Private Investment. May 2007.

According to a new study by Navigant Consulting, the extension of the federal production and investment tax credits (PTC and ITC), recently approved by both the House and Senate in two separate bills, could save the wind and solar industries from lost investments of around $19 billion. Extending the ITC for eight years would support $232 billion in investment in U.S. solar companies by 2016.

Source: http://www.seia.org/cs/news_detail?pressrelease.id=162

The U.S. Department of Energy plans to invest $35 million over the next 4 years in 15 concentrating solar power projects, which will total up to a $67.6 million investment when combined with the project cost-sharing from the project participants.

Source: http://apps1.eere.energy.gov/news/news_detail.cfm/news_id=11987

The Deal
Spanish energy conglomerate Iberdrola - builder of a controversial large hydro project in southern Chile - has proposed to buy Energy East, a utility operating in five northeastern states, and invest at least $2 billion in new wind farms in upstate New York.

Source: http://www.nytimes.com/2008/09/04/nyregion/04power.html?_r=1&scp=3&sq=iberdrola&st=cse&oref=slogin

In 2007, GE Energy Financial Services announced it would more than double its renewable energy investments to $6 billion by 2010. In September of this year, the company announced that it is investing $141 million in the $381 million Tatanka Wind Farm, built by Spanish firm Acciona, which began producing electricity in late July. GE Energy has equity in 38 U.S. wind farms and projects that RE will make up almost a quarter of its total energy investments in 2010, up from 10% in 2006.

Source: http://www.businessweek.com/ap/financialnews/D92ULKA00.htm, Renewable Energy World

Google recently agreed to commit an additional $5 million, on top of its initial $10 investment in 2006, to Bay Area-based wind power company Makani. This comes directly on the heels of another Google investment of $10 million towards the development of geothermal technology.

Source: http://www.goodcleantech.com/2008/08/google_invests_in_cali_wind_st.php

In June, Duke Energy Carolinas announced its intention to invest $100 million in up to 850 distributed-generation, rooftop solar arrays for homes, schools, stores and factories in the Carolinas and the Midwest. Doing so would help it meet North Carolina’s rule that .02 percent of the company’s energy must come from solar energy by 2010, growing to .2 percent by 2018 and 12.5 percent by 2021.

http://www.greenerbuildings.com/news/2008/06/10/duke-plans-100m-investment-solar-energy

In 2005, $850 million was invested in biofuel technology, nearly half of which poured into California-based companies. In July, the DOE and U.S. Department of Agriculture announced plans to award more than $10 million in grants to accelerate fundamental research in the development of cellulosic biofuels.

Source: DOE EERE; Stack, James. Cleantech Venture Capital: How Public Policy Has Stimulated Private Investment. May 2007.

Grow The Grid
The wind energy transmission system is not large enough, nor does it reach into the right places to adequately scale up wind technology. Fortunately, after many years of faltering wind transmission investment, capital has begun to climb again, from $3 billion in 2000 to a projected $8.4 billion in 2009.

Source: DOE, 20% Wind Energy by 2030.

Updating the electrical grid is an important piece of Texas oilman T. Boone Pickens’ plan to invest $10 billion to build the world’s largest wind farm in the Texas Panhandle. He estimates his plan will spur $1 trillion in private investment and require another $200 billion in updates to the electrical grid.

Source: http://www.usatoday.com/money/industries/energy/2008-07-08-t-boone-pickens-plan-wind-energy_N.htm

Where Are We Headed?
A recent report by a veteran market research firm predicts that the domestic U.S. market  for wind turbine components and systems will reach $60.9 billion in 2013, representing a compound annual growth rate of 40 percent between now and then. Currently, the biggest state spenders on wind turbine technology are Texas, Iowa, Kansas, and New York.

Texas, the largest wind energy investor with an estimated $3 billion going into wind development in 2008, is expected to reach $15.2 billion by 2013.

California, thanks to its well-established status as a testing ground for new technologies and state law, will grow its investments in the wind energy sector to $17.1 billion by 2013, from $676 million today.

These investments and others are carrying the country toward the Apollo Alliance’s forecast that nationwide wind energy investment will reach $75 billion by 2015.

Source: http://www.marketwatch.com/news/story/hillpoint-energy-estimates-us-wind/story.aspx?guid={7BBC1816-9D73-4410-A343-FF96836A8AC9}&dist=hppr, The New Apollo Program.

Seph Petta is a researcher with the Apollo Alliance. Reach him at petta@apolloalliance.org. Amelia Klawon, an Apollo Alliance intern in our San Francisco office, contributed reporting for this article.