U.S. leads the world in wind and solar investment

Source: Lisa Friedman, E&E reporte • Posted: Friday, April 13, 2012

The United States for the first time since 2009 outpaced all other major economies in clean energy investment, pouring $48.1 billion into wind, solar and other technologies last year, according to a new report out today.

In doing so, the United States pulled itself up from third place, where it had lagged behind China and Germany. But the top slot could be short-lived. The authors of the “Who’s Winning the Clean Energy Race?” study by the Pew Charitable Trusts attribute the unprecedented 2011 investment in the United States to a likely one-time rush before renewable energy tax credits bite the dust.

“We have expiring policies,” said Phyllis Cuttino, director of Pew’s clean energy program. Past studies have shown, she said, that when tax credits and other policies are poised to conclude, “investors rush in to take advantage of it.”

The study, conducted with Bloomberg New Energy Finance, an international consulting group, is the third annual examination of global public and private spending for clean energy equipment, as well as venture capital finance, among G-20 nations. All told, they found, green investment continued a nearly decadelong increase, rising 6.5 percent last year to a record $263 billion.

Cuttino noted that investment worldwide has steadily risen, despite falling prices and dire predictions about the industry’s ability to thrive. And, she said, excluding research and development, investment in green energy is now more than 600 percent higher than in 2004. Meanwhile, global levels of installed generating capacity for wind and solar energy also are at an all-time high.

“A lot of people have been saying, ‘We can’t sustain continued growth over time.’ And each year, they’ve been wrong,” she said.

The report comes amid warnings from renewable energy industry leaders, major companies like General Electric Co., and the National Governors Association that the expiration of federal tax credits could endanger future projects. The federal production tax credit (PTC) expires at the end of the year. Republicans in Congress have objected to extending either tax credits or loan guarantees, particularly in the wake of the Solyndra bankruptcy.

Meanwhile, the report points to a number of other credits that expired in 2011, including the Advanced Energy Manufacturing Tax Credit, grant programs through the U.S. Treasury and Department of Energy, and energy-efficient appliance and home credits for builders.

Governors lend their support

In a letter last week to House and Senate leaders, the National Governors Association urged Congress to approve a long-term extension of renewable energy tax credits, saying such measures would “diversify our nation’s energy portfolio” and create jobs and economic development.

“Continued development of renewable energy resources and manufacturing is an important component of these efforts. Renewable energy provides Americans with high-tech manufacturing jobs, secure sources of energy, and our states with crucial economic development opportunities,” the association wrote.

Cuttino said the absence of sustained tax policy means that the United States is not able to develop the ability to manufacture and export what it develops. The report notes that despite the 2011 investment spike in the United States and a long-standing high level of venture capital investment, the United States lags behind most other major economies in its five-year rate of investment growth. China as of last year had 133 gigawatts of installed renewable generating capacity, compared to 93 GW in the United States.

“The contrast between venture capital investments and capacity additions in the United States highlights a persistent phenomenon in which the country fails to deploy into the marketplace the clean energy innovations it creates in the laboratory,” the authors wrote.

The authors cited slowed investment in China, growing 1 percent to $45.5 billion. “Nonetheless, China remains a dynamic hub of clean energy activity in terms of manufacturing and deployment,” they wrote. Germany declined 5 percent to $30.6 billion, which the authors attributed to reduced feed-in tariffs. Still, they said, “This did little to stem the demand of project developers for small distributed photovoltaic projects as more than $20 billion was invested in the sector and 7.4 GW of capacity was installed, replicating 2010 deployment levels.”

Together, Germany and Italy lead the world again in deployment of small distributed solar photovoltaic power, accounting for more than half of worldwide solar capacity and 38 percent of solar technology investments among major economies, according to the report.

India jumped from 10th to sixth place among major economies, with $10.2 billion in investment, and Indonesia recorded the fastest rate of growth of any G-20 country. Indonesia’s investments in clean energy exceeded $1 billion last year for the first time.