Data Points: 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.

“Building a new energy economy requires a new way of doing business in America, one that takes the cost of global warming into account, ”The New Apollo Program says. “It also requires visionary new investments in our industries, our communities, and our workers.”

10 Years, $500 Billion, 5 Million Jobs
The program would generate and invest $500 billion over 10 years. An annual investment of about $50 billion a year, the Alliance notes, is a smaller share of the gross domestic product than what was spent on the Apollo space program, about one-third of current spending in Iraq, and roughly half of what was just lent by the federal government to insurance giant AIG.

Citing sky-high oil prices and the potential loss of one million jobs by year’s end, Angelides said, “We can and must embark on a new course that will create good jobs and broadly shared prosperity in order to overcome the daunting problems facing the nation.”

A primary facet of the program would make buildings more energy efficient. Homes, commercial buildings and factories account for almost 70 percent of U.S. energy consumption. Three-quarters of U.S. buildings will be new or substantially renovated by 2035. Using an Energy Smart Fund, the plan would funnel money to state and local programs focused on making these buildings more efficient, prioritizing those programs that create high-quality, local jobs in the construction industry. Every $10 billion invested in efficiency upgrades would create 100,000 on-site jobs and hundreds of thousands more jobs throughout the economy.

The New Apollo Program     1 Rebuild America Clean and Green   Establish a national energy efficiency commitment to reduce energy use in new and existing buildings at least 30 percent by 2025. Provide the support necessary to produce 25 percent of the nation’s power from renewable and recycled energy resources by 2025. Bring the power grid into the 21st century. Improve efficiency by 20 percent in existing power plants and industries by 2025. Connect America’s 21st century neighborhoods and cities with world-class transit systems. Strengthen and improve America’s transportation infrastructure by “fixing it first.” 2 Make It in America   Rebuild the U.S. auto industry by investing in high-efficiency vehicles. Invest in a national low-carbon fuel infrastructure and next generation alternative fuels. Restore America’s manufacturing leadership to meet the demands of the clean energy future. 3 Restore America’s Technological Leadership   Double national investment in clean energy research and  development. Establish a National Energy Innovation Fund to invest in the most promising new clean energy technologies emerging from our nation’s laboratories. 4 Tap the Productivity of the American People   Train America’s workers for the new clean energy economy. Ensure the transition to America’s clean energy economy  creates widely shared economic opportunities. 5 Reinvest in America   Establish a federal “cap and invest” program to generate and strategically reinvest the resources necessary to build the new clean energy economy.

Expanding the use of renewable energy will require a new and improved manufacturing sector to make and assemble the necessary parts and infrastructure, such as wind towers and turbines, solar panels, a modern power grid, and next-generation cars. The blueprint calls for grants to retool and expand factories that use American-made components and that will create good, middle-class jobs here at home. The U.S. has lost 7.2 million manufacturing jobs over the past decade, and this action will help restore a vital sector that provides family-supporting jobs with benefits to millions of Americans.

Nearly 30 percent of greenhouse gas emissions come from the transportation sector, and transportation costs are eating up an increasing share of household incomes. Consequently, the plan calls for major new investments in public transit systems. It also envisions a “fix-it-first” policy that gives priority to upgrading and maintaining existing highways, roads and bridges to improve efficiency, reduce fuel consumption and discourage sprawl.

The latest unemployment figures, released earlier this month, showed that more than 600,000 U.S. jobs have been lost this year. A centerpiece of The New Apollo Program is not only to create five million new jobs, but also to ensure that they are good-quality jobs. Manufacturing jobs, for example, pay an average of $25,000 more per year than service-sector jobs. The plan would increase funding for job-training programs that put workers on solid career paths, expand union apprenticeship programs and provide 100,000 scholarships annually to raise the number of college graduates with math, science and engineering degrees.

“This is an ambitious agenda,” said Angelides. “But the challenges facing us are equally large and the consequences of inaction even larger. We have the opportunity now to build a new clean energy economy that creates good jobs and shared prosperity. The new president and Congress must take bold action. Our economic health, the nation’s security, and the planet’s future are all at stake.”

The New Apollo Program, the Apollo Alliance’s national economic development strategy, is intended to accelerate the growth of the clean energy, good jobs sector. It calls for investing $500 billion over ten years in energy efficiency, conservation, renewable energy, transmission, transportation, green buildings, and research and development. The New Apollo Program specifically recommends doubling the national investment in clean energy research and technology to $8 billion annually from $4 billion today. A focused federal program of clean energy investment, says The New Apollo Program,  will significantly quicken the pace of development in what is already the fastest growing industrial sector in the United States.

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.