Thursday, March 08, 2007

Clean energy market will reach $230 billion in 10 years

Revenues from clean energy will grow to $226.5 billion in the next decade, up from $55.4 billion last year, according to Clean Edge.

In its annual report on clean energy, the US-based cleantech consultancy said that the market for biofuels, wind power, solar photovoltaics (PV), fuel cells and hydrogen grew 39% in the last year, and is expected to quadruple by 2016.

Much of this growth will come from the biofuels sector, which it expects to expand from a $20.5 billion business in 2006 to an $80.9 billion a year business in 2016.

Solar power revenues are also set to grow to $69.3 billion from $15.6 billion over the same period, with wind expanding more slowly from $17.9 billion to $60.8 billion. Revenues from fuel cells will also rise from $1.4 billion in 2006 to $15.6 billion in 2016, the report projects.

Ron Pernick, a principle at Clean Edge, said that one of the factors behind last year's growth was the growing acceptance of the science of climate change. "The most ardent nay-sayers began to change their tune," he said.

And Wal-Mart is likely to be a driving force behind future expansion, the report says, along with other factors including the push for a cap-and-trade scheme to control greenhouse gas emissions in the US.

The retail behemoth is planning a major drive to improve its own energy efficiency and install renewable generation in its stores, which is likely to result in huge orders for technology. "Could Wal-Mart do for renewables what it already has done for everything from laptops to lingerie: make them affordable by the masses?" the report asks.

Meanwhile, Clean Edge says, US venture capital investment in energy technology has tripled from $917 million in 2005 to $2.4 billion in 2006, while the percentage of total VC investment being put into energy has risen from 4.2% to 9.4% during the year.

Clean Edge also identifies an unusual trend, with venture capitalists now willing to plough more money into less risky investments which involve building production lines for PV, ethanol and biodiesel. "Investors looked to basically build refineries with VC dollars," said Rodrigo Prudencio, a partner at cleantech venture capital firm Nth Power, raising the prospect that investor returns may not be as high as usual in the sector.

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