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Blog   |   Oct 2nd, 2013 Regaining Market Share for Renewable Energy Worldwide

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According to Bloomberg New Energy Finance (BNEF) and the United Nations Environmental Program-Centre (UNEP), new installations of global solar photovoltaics increased from 28.8 GW in 2011 to 30.5 GW in 2012 and wind increased from 42.1 GW in 2011 to 48.4 GW. Similarly, the US Energy Information Agency reported in its July 2013 Monthly Energy Review that energy consumption in the US originating from solar and wind sources increased by 50 percent between 2010 and 2012.

New investment in renewable energy was the second highest ever in 2012. However, global solar and wind investment experienced a four year low during the first quarter of 2013. Although investment recently recovered by 40%, according to BNEF, price volatility concerns within private equity and venture capital markets, and the occurrence of global trade protectionism and low natural gas prices all contributed to the decline.

Global Trade Protection

Market protectionism continues to create challenges in global trade and the renewable energy manufacturing sector is no exception. Recent tariffs levied by Europe and the US on Chinese made solar panels have resulted in reciprocal tariffs from China on US polysilicon- a key component in the manufacturing of solar panels. Industry is concerned that this could result in job losses within the US polysilicon sector.

A similar tariff structure has been approved for wind towers manufactured in China and Vietnam. In this case however, major wind equipment manufacturers still expect a quadruple increase in wind equipment manufacturing by 2030, as wind energy production continues to be competitive with lower European supplies of natural gas. Investment originating from Asia is also expected to promote sustained wind manufacturing growth and further solar development in Europe.

Excess Capacity

Excess solar capacity within the manufacturing sector also continues to be observed within the value chain, although demand for Tier 1 solar products is being spurred with rising demand in Asia. Market rationalization occurring as a result of mergers and acquisitions worldwide continues to address the oversupply of solar panels and discrepancies in product quality. Demand for products that alleviate investment risks is expected to increase by 50% by 2020 according to BNEF. Market rationalization is also leading to questions in equipment viability and industry backing of manufacturer warranties. Equipment defects observed within both the solar and wind sectors have increased the demand for insurance and investment products to diminish investment risk.

Investment Incentives

While incentives begin to wane in Europe and as grid parity is achieved, tax credits and other financial incentives in the US still continue to be important to utility-scale renewable energy investment. While Congress continues its debate over whether to renew the current incentive structure, several industry groups are pushing for the approval of a new investment technique already helping to develop conventional energy projects. The renewable energy marketplace has also been seeking to expand the sector through the development of Master Limited Partnerships (MLPs) to support the raising of capital from smaller investors, which may lower financing costs. The overall consensus within the renewable energy industry is that the existing federal incentives should be extended given the availability of subsidies for convention energy sources, which are also allowed to participate in MLP tax structures.

What challenges do you face as a solar or wind project developer/investor? How are global trade and federal tax issues impacting your business and your community? Please share your questions and experiences in the comments section below.


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Blog Author

Rob Jackson, PE

Rob Jackson, PE

Rob Jackson provides business strategy support, program and project management involving technical and business development efforts for an array of projects, primarily within the renewable energy and environmental sectors. Rob also provides policy, engineering and permitting consulting guidance to project financiers, developers and EPC contractors as part of all project phases including due diligence, design, permitting and construction project phases. Rob is currently developing renewable energy projects throughout the Northeast in collaboration with several project development teams. He is also the engineer of record for several landfill permitting projects for post-closure renewable energy development, including the first solar on landfill development project in Massachusetts. Rob is a graduate of Environmental Engineering from Colorado State University in Fort Collins, CO and earned his Master’s Degree from Boston University in Energy and Environmental Analysis. He is also a registered Professional Engineer in the Commonwealth of Massachusetts. Contact Rob at rjackson@trcsolutions.com.

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