Having just returned from my second clean energy finance summit this year, I was relieved to find that despite the rumors, the renewable energy industries aren’t dying—indeed they’re booming.

Source: Michael Liebreich BNEF Summit Keynote, 23 April 2013

In 2012, according to Bloomberg New Energy Finance, $269 billion flowed into the clean energy sector worldwide—a big number by any standard.  Total global investment in renewable generating capacity now lags total investment in coal, oil, and gas generation combined by only 25 percent. With that much money you could purchase Google or Microsoft outright.

While clean energy investment in 2012 was down 11 percent from 2011, it is still 44 percent above the 2009 figure and 230 percent higher than it was in 2005.  Moreover, virtually all of the decline stems from the sharply falling prices for solar and wind equipment—a trend that in the long run will accelerate growth. While clean energy growth has understandably slowed from the extraordinary double-digit rates of the past decade, this remains one of the world’s largest and most dynamic industrial sectors.

The one dark cloud that hovered over both conferences (the Cleantech Investor Summit in Palm Springs and the Bloomberg New Energy Finance Summit in New York) was the United States, where declining government support and the uncertainty generated by a dysfunctional Congress led to a sharp decline in financing in 2012.  While the falling investment figures do presage a slowdown inU.S. clean energy growth in the next two years, it is still notable that theU.S. added more renewable capacity than any other single country last year.

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Globally, new investment in renewable energy fell 11 percent in 2012. But in Latin America and the Caribbean (not including Brazil), it grew at a remarkable rate of 127 percent, totaling US$4.6 billion. This was the opening context for the 3rd Annual Renewable Energy Finance Forum for Latin America and the Caribbean (REFF-LAC), held this week in Miami, Florida. The yearly event, coordinated by Euromoney Energy Events, the American Council on Renewable Energy (ACORE) and the Latin America and Caribbean Council on Renewable Energy (LAC-CORE), aims to connect developers and investors who can continue fostering the strong investment climate for renewables that is happening in the region.

LAC-CORE president, Carlos St. James, speaking at the 3rd Annual REFF-LAC conference. (Photo credit: Mark Konold)

Presenters included project developers, financiers, and government officials, all of whom had experiences to share about what’s working in the region. In some places, like Chile and Peru, project tendering is working to advance renewable energy deployment. In the Caribbean, mechanisms such as net metering and feed-in tariffs are still the preferred approach to fostering renewables development. Many presenters stressed that the key to continued success in the region is the political will that creates an environment conducive to successful renewable energy investment. They also highlighted how projects become more attractive the less they have to rely on subsidies or other support mechanisms.

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Across the developing world, retailers are selling solar-powered portable lamps that can meet basic lighting demands, reduce dependence on expensive and inefficient kerosene lighting, and contribute to important development goals like energy access and improved literacy rates.

Solar portable lamp companies must find innovative ways of restoring consumer confidence in their products after a flood of cheap, faulty models created a distrust of the technology (Source: OneDegreeSolar).

Small solar portable lamp companies are learning how to navigate the relatively unstructured business environments of developing countries, but a lack of consumer confidence in the unfamiliar technology is a serious deterrent to scalability. Confidence has been eroded further by the presence of low-quality lamps that mimic higher-quality products. To increase sales and improve both the social and environmental impact of solar portable lamps, companies must develop a dependable product and brand that is appealing to customers both familiar and unfamiliar with solar technology.

Gaurav Manchanda, an Indian-born entrepreneur and founder of One Degree Solar, found a new way to restore consumer confidence in a low-cost lamp that meets the standards of the Lighting Africa project. He developed a short messaging service (SMS) technology that both provides customer service and allows the company to monitor the social and environmental impacts of every lamp sold.

The use of mobile phone technology has skyrocketed in East Africa, and Manchanda’s development of a customer service practice that utilizes this unique market characteristic allows his product to penetrate markets previously characterized by uncertainty. Manchanda’s interest in tracking the social and environmental impact is based on his background in development work, but is also reflective of this market as a whole. Companies that operate in the solar portable lamp market are typically social enterprises interested in the triple bottom line of economic profit, social impact, and environmental health.

Manchanda realized that high-quality customer service is a competitive advantage and a way to generate confidence in relatively new and unfamiliar products among customers with very little purchasing power. With the help of an in-country partner, he developed an SMS platform hosted by Safaricom and Airtel that allows his company to send bulk text messages to purchasers of One Degree Solar products.

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Germany has seen success with solar power, despite having about the equivalent solar resource of Alaska. The U.S. contains vast solar resources, but could use more federal policies to utilize this renewable resource. Trans-Atlantic collaboration could boost the transition to sustainable energy systems on both sides of the Pond. (Source: German-American Chambers of Commerce)

The U.S. and Germany are obligated, as two of the largest economies and historic emitters of greenhouse gas emissions in the world, to lead the global transition to cleaner power systems. Their success or failure in transforming energy systems has immense global signaling effects. Closer cooperation in this innovative sector could revamp a faltering historic partnership.

Germany’s chosen path to a clean energy future is ambitious and unprecedented amongst industrialized countries. The government passed a series of measures in 2011 to simultaneously move away from fossil fuels and phase out nuclear power. Renewable energy is to become the backbone of the country’s energy system – at least 60 percent of the nation’s primary energy consumption and 80 percent of electricity are to come from renewables in 2050. Meanwhile, the last nuclear reactor is to be shut down in 2022. (See the table below for an overview of German energy policy goals).

The country is already a leader in renewable energies. Few countries have a greater installed per capita capacity of renewables, excluding hydropower, than does Germany. Moreover, the government also envisions energy efficiency to be a key component in enabling the clean energy transition. Germany aims to reduce primary energy consumption by 50 percent by 2050 and increase energy productivity, or the GDP produced per unit of energy, by 2.1 percent per year.

The U.S. trails German ambition and lacks a federal clean energy strategy, but is nonetheless one of the most important and dynamic renewable energy markets in the world. As of the end of 2011, the U.S. led the world in installed biomass and geothermal power capacity, ranked second in total installed renewable power as well as wind power capacity, third in hydropower, and fifth in solar photovoltaic (PV) capacity. While total emissions in the U.S. have historically been higher than most other countries, no other country has seen a larger drop in energy-related greenhouse gas emissions over the past five years. Shifts from coal to natural gas in the power sector, as well as fuel efficiency improvements in the transportation sector, are the main reason for this reduction, but growing investments in renewable energies also contributed to this positive trend.

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By Cinthya Alfaro Zúñiga

As a native Costa Rican and Worldwatch Institute/INCAE Research Fellow, I was excited to attend the Energy and Environment Partnership’s (EEP) 21st Regional Forum in my home country earlier this month. EEP’s primary objective is providing finance for renewable energy projects, but it also seeks to build capacity by exploring diverse topics such as different energy technologies, policies needed for successful implementation, and regional obstacles and opportunities through stakeholder dialogues.

Worldwatch and INCAE presented Phase 1 of "The Way Forward for Renewable Energy in Central America" in Costa Rica in March.

Under the title “Biogas and Energy Efficiency in Central America,” the most recent Forum convened a group of 200 experts, project developers, governmental representatives, financiers, and the general public. The speakers addressed topics such as the contribution of energy efficiency policies and renewable energy toward carbon emissions reductions. Other important themes included the status of biogas and energy efficiency in Central America, as well as a run-through of EEP energy efficiency and biogas projects in the region.

The three-day event featured speakers from the German Cooperation Agency (GIZ), the Costa Rican Electricity Institute (ICE), the Economic Commission for Latin America and the Caribbean (ECLAC), the Central American Bank for Economic Integration (CABEI), and the Worldwatch Institute, among others.

On behalf of Worldwatch, President Emeritus Christopher Flavin presented on the global status of renewable energy and Climate & Energy Director Alexander Ochs summarized the results from the first phase of the Worldwatch/INCAE project, “The Way Forward for Renewable Energy in Central America,” which applies the Institute’s sustainable energy roadmap methodology to the region. Dr. Ana María Majano, Associate Director of the INCAE Business School’s Latin American Center for Competitiveness and Sustainable Development (CLACDS), joined Ochs as the lead in-country implementation partner.    

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Last month, the United States filed a complaint with the World Trade Organization (WTO) to challenge India’s domestic content requirements (DCR) for projects under the country’s Solar Mission – a national program aimed at reaching 20,000 megawatts (MW) of grid-connected solar power capacity in India by 2022, enough to power almost 30 million Indian homes at current average levels of consumption. According to U.S. Trade Representative Ron Kirk, the DCR provisions in the Solar Mission that require projects to use solar panels produced within the country, as well as subsidies to solar power producers using domestically manufactured equipment, violate WTO rules prohibiting discrimination in favor of domestic goods.

India's domestic content requirements for solar projects has prompted the United States to file a complaint with the WTO. (Source: Treehugger).

Phase I of India’s Solar Mission, which draws to a close at the end of this month, requires crystalline silicon (cSi) solar photovoltaic (PV) projects to use Indian-manufactured modules and concentrating solar power (CSP) projects to use at least 30 percent Indian-manufactured equipment. During Phase I, thin film solar PV panels were exempted from the DCR due to the lack of thin film manufacturing within India.

While the United States has long stated its opposition to India’s Solar Mission DCR provisions, the recent timing of the WTO challenge is likely due to the expectation that India will expand the DCR to cover thin film PV modules in Phase II, which starts next month. While there is significant competition in the global cSi PV manufacturing market, the United States is a dominant player in thin film manufacturing. First Solar, an American company, is by far the world’s largest thin film manufacturer. First Solar thin film systems currently make up more than 20 percent of India’s solar PV market. Conversely, solar projects in India accounted for eight percent of the thin film modules manufactured by First Solar in 2011, and the company continues to seek opportunities in the country. A DCR provision for thin film solar projects in India could deal a significant blow to U.S. solar manufacturers, in particular First Solar.

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Wind farm in Xinjiang welcomes a new dawn. (Source: Flickr user zhouyousifang)

Last year, China was the world’s top investor in renewable energy, and the country has expressed even greater ambition for 2013. But before it can realize its planned additional 49 gigawatts (GW) of clean power, it needs to first lead its clean energy industry out of the swamp of overproduction and low-end manufacturing. China’s recent embrace of a set of revised renewable energy policies might bring new hope for the industry’s—and the country’s—ambitions.

Controlling reckless development

In the last decade, in order to increase the share of clean energy in the overall energy mix, the Chinese government released a series of laws and subsidies to give the industry a boost. While such efforts significantly ramped up China’s clean energy equipment manufacturing and renewable energy installations, they also led to reckless development that caused severe overproduction and wasteful investment practices and resource use.

To address these issues, the government has been taking regulatory and policy steps. In August 2011, the National Energy Administration (NEA) issued a new regulatory policy on wind power, requiring that all new projects, including those with installed capacity less than 50 megawatts (MW), be reviewed and registered at the NEA before they can receive government approval or subsidies. Such restrictions are aimed at containing the over-construction of small-scale wind power projects under 50 MW. (See Worldwatch’s earlier post on this issue.)

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A video circulated recently in which a Fox Business Network analyst made the laughable assertion that Germany’s success with solar power is due to its abundant solar resources (for those missing the humor here, Germany has about the equivalent solar resource of Alaska). While the gaff elicited plenty of chuckles from around the energy sector, the analyst also made another claim that received less attention, but may be similarly incorrect.

Shale gas operations, such as the one above, are multiplying across the U.S. But will unconventional gas resources produce as much energy as is typically touted? (Source: Flickr user Nexen)

In trying to make the argument that the United States should pursue natural gas as opposed to solar power for electricity generation, the Fox analyst states: “Now people are saying, well, solar may be dead in the water. What’s going to happen with nat. gas? You guys know this very well; we have a hundred years of energy.… Let’s take our focus off of solar, let’s move it to nat. gas, and let’s get this economy going.” (We can, for the sake of argument here, ignore the many other nuances in this debate, such as the fact that the U.S. Southwest has some of the best solar resources in the world, and that natural gas and solar are actually complementary technologies and are in no way mutually exclusive.)

The claim that natural gas resources will provide the United States with 100 years of energy is often thrown around (and not just by a fossil fuel-happy news organization like Fox) thanks to recent technological advancements in hydraulic fracturing and horizontal drilling techniques that sparked the so-called “shale revolution.” Shale gas now accounts for almost 40 percent of U.S. natural gas production and has reversed the trend of declining gas production numbers.

However, the estimated amount of natural gas that is available is not a hard number, and the upswing in gas production may not be as long-term a trend as many people believe. In January 2012, the U.S. Energy Information Administration slashed its estimate of unproven technically recoverable shale gas resources by 42 percent. This new estimate, along with proven shale gas reserves, amounts to 579 trillion cubic feet of available natural gas.

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CARICOM's Energy Programme Manager Joseph Williams with Worldwatch Institute Program Manager Mark Konold and Research Associates Evan Musolino and Katie Auth.

In the face of the many challenges inherent in getting 15 countries—each with their own resources, priorities, and political complexities—to agree to anything, let alone a comprehensive regional energy policy, the Caribbean is now on the brink of taking a significant (and impressive) step forward. For the past half decade, a Draft Caribbean Community (CARICOM) Regional Energy Policy—designed to address critical issues like energy security, affordability, energy efficiency, and renewable energy—has been circulating among CARICOM’s 15 member states, continually being revised to reflect the concerns of individual members, but never finalized.

Last week, a team from Worldwatch joined CARICOM Prime Ministers, Energy Ministers, government representatives, technical experts, and international organizations in Trinidad & Tobago for the Forty-First Special Meeting of the Council for Trade and Economic Development (COTED). On March 1, after more than five years of lengthy deliberation, delegates at the event provisionally adopted both the Draft Energy Policy and Worldwatch’s Sustainable Energy Targets for the region, marking an important step forward in the development of renewable energy and energy cooperation in the Caribbean.

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A team of Worldwatch researchers spent last week in Haiti meeting with energy sector stakeholders and visiting important energy project sites. The stakeholder meetings were incredibly enlightening and we learned a great deal about the obstacles to achieving improved and more widespread energy services throughout the country.

One successful energy project in Haiti is the solar installation on the roof of Hôpital Universitaire de Mirebalais. (Photo Credit: Matt Lucky)

Overall, there are a lot of determined people doing great work in Haiti, with the hope that they can improve the energy sector, including helping to expand electricity services beyond the 25 percent of the population that currently receives these services. A major barrier to expanded energy services, however, and something that was a common theme throughout our stakeholder meetings, is that Haiti currently lacks a clear and long-term energy framework.

While many energy plans have been developed by various government agencies, institutions, and consultancies, they remain interim, uncoordinated, and lack a common vision. As a result, plans often go unfulfilled or only accomplish isolated goals on a short-term basis. It is true that Haiti needs plans that can provide rapid results, as it is still recovering from the devastating 2010 earthquake and dealing with a number of other urgent, immediate challenges. However, Haiti is also in dire need of long-term and stable infrastructure development that will help it to prosper in the future, and a forward-thinking energy framework will go a long way in helping Haiti to accomplish this goal.

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