Global Renewable Energy

Global Renewable Energy Market

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Table of Contents Executive Summary .......................................................................................................... 3 Renewable Energy Technology Status and Prospects ................................................... 5 Hydropower ..................................................................................................................... 7 Solar Energy .................................................................................................................... 8 Wind Power ..................................................................................................................... 9 Biomass ......................................................................................................................... 11 Geothermal .................................................................................................................... 12 Regional Assessment ....................................................................................................... 13 North America ............................................................................................................... 13 United States .............................................................................................................. 13 Canada ....................................................................................................................... 15 Europe ........................................................................................................................... 16 Asia-Pacific ................................................................................................................... 18 Japan .......................................................................................................................... 18 China.......................................................................................................................... 19 India ........................................................................................................................... 22 Policy Landscape............................................................................................................. 24 Removal of Market Distorting Policies ......................................................................... 24 Targets and Timetables for Renewable Energy ............................................................ 24 Grid-Connected Policies ............................................................................................... 25 Green Power Purchasing and Pricing ............................................................................ 26 Economics of Renewable Energy Development ........................................................... 28 Cost of Energy Generation ............................................................................................ 28 Financing ....................................................................................................................... 29 List of Figures Figure 1: Share of Renewable Energy in Total Global Energy Consumption, 2006 .......... 7 Figure 2: Solar PV, Existing World Capacity, 1995-2007 ................................................. 9 Figure 3: Global Total Installed Capacity ......................................................................... 11 List of Tables Table 1: Global Renewable Market Statistics ..................................................................... 6 Table 2: Leading Countries in Renewable Energy Industry ............................................... 7

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Executive Summary During the last century, the Earth's average surface temperature rose by around 0.6°C. Evidence is getting stronger that most of the global warming that has occurred over the last 50 years is attributable to human activities, especially the rapid consumption of the fossil fuels. The levels of greenhouse gases including carbon dioxide have reached unmatched levels. This has lead to the governments and industries thinking seriously about alternative sources of energy. This need was further affirmed by the 1973 oil embargo and the ever increasing oil prices since then. These issues along with declining availability of the fossil fuels has led to the fast development of renewable energy resources like solar energy, wind energy, etc. Renewable energy is defined as the energy derived from resources that are regenerative or for all practical purposes can not be depleted.

Renewable energy offers tremendous benefits for meeting global energy needs. Building on a foundation of hydropower, biomass combustion, and geothermal power pioneered during the industrial revolution, new forms of renewable energy began to be developed and commercialized, including solar, wind, and several forms of advanced bioenergy.

Today, the global renewable power capacity has almost reached 200 GW and by 2030, the overall demand for energy resources is expected to almost double the current levels.

And it is almost certain that renewables will play a major role in fulfilling most of that demand. These technologies are the fastest growing energy technologies – particularly wind and solar – and are cost competitive in a variety of grid, off-grid, and remote applications worldwide. They utilize locally available resources, off setting the need for costly fuel imports, are environmentally beneficial, without the harmful emissions of conventional energies, provide diversification to a country’s energy mix and create local job and income opportunities.

Nonetheless despite their advantages, the bulk of renewable energy development to date has occurred in industrialized countries, with the limited exception of a few emerging economies like China and India. The countries most in need of the positive attributes of these technologies are not yet beneficiaries. This is due in large part to a number of barriers that hinder renewable energy advancement. Most notably, renewable energy continues to be comparatively expensive for a variety of developing country needs.

Further, many of these countries have not yet put in place the policy and regulatory frameworks needed to induce investment in renewable energy, or eliminated subsidies for conventional fuels that make it difficult for the technologies to compete. Moreover, many developing countries have imperfect capital markets and insufficient access to affordable financing for developers and consumers, as well as inadequate institutional capacity to support the technologies.

Global Renewable Energy Market reports focuses on the current developments in the sector and its potential worldwide. History, current status and future for each of the renewable source – hydropower, solar, wind, biomass and geothermal – is discussed.

Further, assessment of the major markets has been done along with policies around the

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world and profiles of key companies in the industry. Also, report presents a detailed cost analysis of various renewable resources.

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Renewable Energy Technology Status and Prospects Renewable energy uses energy sources that are continually replenished by nature - the sun, the wind, water, the Earth’s heat, and plants. Renewable energy technologies turn these fuels into usable forms of energy - most often electricity, but also heat, chemicals, or mechanical power.

The present-day renewable energy industry is an energy industry focusing on "new" and "appropriate" renewable energy technologies, which excludes large-scale hydroelectricity. Investors worldwide have paid much greater attention to this emerging renewable energy industry in recent years. In many cases, this has translated into rapid renewable energy commercialization and considerable industry expansion. The wind power industry and solar photovoltaics (PV) industry provide good examples of this.

By mid-2007, some 140 publicly-traded renewable energy companies worldwide (or renewable energy divisions of major companies) each had a market capitalization greater than $40 million. (The number of companies in this category jumped from about 85 in mid-2006.) The estimated total market capitalization of these companies and divisions was more than $100 billion in mid-2007.

During 2006/2007, several renewable energy companies went through high profile Initial Public Offerings (IPOs), resulting in market capitalization near or above $1 billion. These corporations included the solar PV companies First Solar (USA), Trina Solar (USA), Centrosolar (Germany), and Renesola (U.K.), wind power company Iberdrola (Spain), and U.S. biofuels producers VeraSun Energy, Aventine, and Pacific Ethanol.

Renewable electricity generation capacity reached an estimated 240 gigawatts (GW) worldwide in 2007, an increase of 50 percent over 2004. Renewables represent five percent of global power capacity and 3.4 percent of global power generation. (Figures exclude large hydropower, which itself was 15 percent of global power generation.)

The largest component of renewables generation capacity is wind power, which grew by 28 percent worldwide in 2007 to reach an estimated 95 GW. Annual capacity additions increased even more: 40 percent higher in 2007 compared to 2006.

The fastest growing energy technology in the world is grid-connected solar photovoltaics (PV), with 50 percent annual increases in cumulative installed capacity in both 2006 and 2007, to an estimated 7.7 GW. This translates into 1.5 million homes with rooftop solar PV feeding into the grid worldwide.

Developing countries as a group have more than 40 percent of existing renewable power capacity, more than 70 percent of existing solar hot water capacity, and 45 percent of biofuels production.

Policies to promote renewables have mushroomed in recent years. At least 60 countries 37 developed and transition countries and 23 developing countries - have some type of

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policy to promote renewable power generation. The most common policy is the feed-in law. By 2007, at least 37 countries and 9 states/provinces had adopted feed-in policies, more than half of which have been enacted since 2002. Strong momentum for feed-in tariffs continues around the world as countries enact new feed-in policies or revise existing ones. At least 44 states, provinces, and countries have enacted renewable portfolio standards (RPS), also called renewable obligations or quota policies.

There are many other forms of policy support for renewable power generation, including capital investment subsidies or rebates, tax incentives and credits, sales tax and valueadded tax exemptions, energy production payments or tax credits, net metering, public investment or financing, and public competitive bidding.

Table 1: Global Renewable Market Statistics

Source: REN21

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Table 2: Leading Countries in Renewable Energy Industry

Source: REN21 Figure 1: Share of Renewable Energy in Total Global Energy Consumption, 2006

Source: REN21

Hydropower For the power generation sector, large hydropower remains one of the lowest-cost energy technologies, although environmental constraints, resettlement impacts, and the availability of sites have limited further growth in many countries.

Large hydro supplied 15 percent of global electricity production in 2006, down from 19 percent a decade ago. Large hydro grew during the five-year period 2002–2006 at a global average of 3 percent per year (less than one percent in developed countries). China has seen the highest growth, at over eight percent per year during the period. The top five Š Energy Business Reports

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hydropower producers in 2006 were China (14 percent of world production), Canada and Brazil (12 percent each), the United States (10 percent), and Russia (6 percent).

China’s hydro growth has kept pace with its rapidly growing power sector, with about 6 gigawatts (GW) of large hydro and 6 GW of small hydro added in 2006.Many other developing countries continue to actively develop hydro. Small hydro is often used in autonomous or semiautonomous applications in developing countries to replace diesel generators or other small-scale power plants or to provide electricity to rural populations.

Solar Energy Grid-connected solar photovoltaics (PV) continues to be the fastest-growing power generation technology in the world, with 50 percent annual increases in cumulative installed capacity in both 2006 and 2007, to an estimated 7.8 GW by the end of 2007.

This capacity translates into an estimated 1.5 million homes with rooftop solar PV feeding into the grid worldwide. Germany accounted for half the global market in 2006, with on the order of 850–1,000 GW added.

Grid-connected solar PV increased by about 300 MW in Japan, 100 MW in the United States, and 100 MW in Spain in 2006.

The Spanish solar PV market grew the fastest of any country during 2007, in part due to new and revised policies, and an estimated 400 MW was added in 2007, a fourfold increase over 2006 additions.

Emerging strong growth in other European countries, especially Italy and Greece with the recent introductions of policies, is also changing the balance. France’s recently revised feed-in policies are beginning to accelerate what had been slow growth. Italy looked set to install 20 MW in 2007 and France 15 MW, both double the 2006 installation amounts.

In the United States, California remains the clear leader, after capturing 70 percent of the U.S. market in 2006. New Jersey is second, with other emerging markets in several southwestern and eastern states. Korea is also emerging as a strong market.

Most solar PV installations are just a few kilowatts (kW) or tens of kilowatts in size.

These include more and more “building-integrated” PV (BIPV), which has begun to capture the attention of the mainstream architecture community.

In addition, the growth of large-scale solar PV installations accelerated during 2006/2007, including scales of hundreds of kilowatts and megawatts. One well-known example was Google’s installation of a 1.6 MW array at its head office in California. And the 14 MW Nellis Air Force Base plant in Nevada recently became the largest solar PV plant in the United States. Spain now hosts the world’s two largest solar PV power plants, at 20 MW each, in the cities of Jumilla (Murcia region) and Beneixama (Alicante region).

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The concentrating solar thermal power (CSP) market remained stagnant from the early 1990s through 2004, when investment in new commercial- scale plants resumed. Since then, commercial plans in Israel, Portugal, Spain, and the United States have led a huge resurgence of interest, technology evolution, and investment. Three plants were completed during 2006/2007: a 64 MW parabolic trough plant in Nevada, a 1 MW trough plant in Arizona, and an 11 MW central receiver plant in Spain. By 2007, there were over 20 new CSP projects around the world either under construction, in planning stages, or undergoing feasibility studies.

Figure 2: Solar PV, Existing World Capacity, 1995-2007

Source: REN21

Worldwide, the solar industry is a $7-billion-a-year business, and it is expected to continue growing as solar cell manufacturing costs decrease. Worldwide demand is expected to reach 3.2 Gigawatts by 2010, a threefold increase over 2004 market size. The overall industry annual turnover should grow to reach $18.5 billion by 2010. Four new PV country markets are likely to emerge to establish a second tier behind the traditional German, Japanese and US leaders.

Wind Power The global wind industry installed close to 20,000 MW in 2007. This development was lead by the US, PR China and Spain, and it brought the world-wide installed capacity to 94,123 MW. This is an increase of 31% compared with the 2006 market, and represents an overall increase in global installed capacity of about 27%.

The top five countries in terms of installed capacity are Germany (22.3 GW), the US (16.8 GW), Spain (15.1 GW), India (7.8 GW) and PR China (5.9 GW). In terms of

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economic value, the global wind market in 2007 was worth about EUR25 billion or US$37 billion in new generating equipment. US market continues its boom The US reported a record 5,244 MW installed in 2007, more than double the 2006 figure, accounting for about 30% of the country’s new power-production capacity in 2007.

Overall US wind power generating capacity grew by 45% in 2007, with total installed capacity now standing at 16.8 GW. It is expected that the US will overtake Germany as the leader on wind energy by the end of 2009. Initial estimates indicate that another 5GW of new wind capacity will be installed in 2008. Developers report that with strong demand for wind power across the country, wind turbines are sold out for the year. However, AWEA projects that with more companies entering the market, more turbines will become available. The pace of growth in 2008 and beyond is expected to largely depend, not on turbine availability, but on the timing and duration of an extension of the federal production tax credit (PTC), which is due to expire at the end of 2008.

PR China added 3,304 MW of wind energy capacity during 2007, representing market growth of 145% over 2006, and now ranks fifth in total installed wind energy capacity with 5,906 MW at the end of 2007. However, experts estimate that this is just the beginning, and that the real growth in PR China is yet to come. Based on current growth rates, the Chinese Renewable Energy Industry Association (CREIA) forecasts a capacity of around 50,000 MW by 2015. The regions with the best wind regimes are located mainly along the South-East coast and Inner Mongolia, Xinjiang, Gansu Province’s Hexi Corridor and in some parts of North-East China, North-West China, Northern China and the Qinghai-Tibetan Plateau.

At the end of 2007, they were 40 Chinese manufacturers involved in wind energy, accounting for about 56% of the equipment installed during the year, up from 41% in 2006.

While Europe remains the leading market for wind energy, new installations represented just 43% of the global total, down from nearly 75% in 2004. For the first time in decades, more than 50% of the annual wind market was outside Europe, and this trend is likely to continue into the future.

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Figure 3: Global Total Installed Capacity

Source: GWEC

GWEC is predicting the global wind market to grow by over 155% from its current size to reach 240 GW of total installed capacity by the year 2012. This would represent an addition of 146 GW in five years, equaling an investment of over 180bn EUR (277 bn US$, both in 2007 value). The electricity produced by wind energy will reach over 500 TWh in 2012 (up from 200 TWh in 2007), accounting for around 3% of global electricity production (up from just over 1% in 2007).

Biomass The IEA estimates the current bioenergy supply to be about 11% of the total primary energy demand of 50 EJ/year of which 7–10 EJ/year is used in industrial countries and 40–45 EJ/year is used in developing countries. Around two-thirds of current biomass use is for traditional cooking and heating and much of this biomass use is considered unsustainable. China and India are the largest biomass energy producers worldwide.

While most biomass electricity production occurs in OECD countries, several developing countries, especially India, Brazil, other Latin American/Caribbean, and African countries generate large amounts of electricity from combustion of bagasse from sugar alcohol production.

Denmark, Finland, Sweden, and the Baltic countries, and provides substantial shares (5– 50 percent) of district heating fuel. Among developing countries, small-scale power and heat production from agricultural waste is common, for example from rice or coconut husks. The use of bagasse (sugar cane after juice extraction) for power and heat production is significant in countries with a large sugar industry, including Australia, Brazil, China, Colombia, Cuba, India, the Philippines, and Thailand. Biomass pellets have become more common, with about six million tons consumed in Europe in 2005, about half for residential heating and half for power generation (often in small-scale CHP plants).

The main European countries employing pellets are Austria, Belgium, Denmark, Germany, Italy, the Netherlands, and Sweden. Although a global division of biomass © Energy Business Reports

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consumption for heating versus power is not available, in Europe twothirds of biomass is used for heating.

For the transport fuels sector, production of fuel ethanol for vehicles reached 39 billion liters in 2006, an 18 percent increase from 2005. Most of the increased production occurred in the United States, with significant increases also in Brazil, France, Germany, and Spain. The United States became the leading fuel ethanol producer in 2006, producing over 18 billion liters and jumping ahead of longstanding leader Brazil. U.S. production increased by 20 percent as dozens of new production plants came on-line.

Even so, production of ethanol in the United States could not keep up with demand during 2006, and ethanol imports increased six-fold, with about 2.3 billion liters imported in 2006. By 2007, most gasoline sold in the country was being blended with some share of ethanol as a substitute oxygenator for the chemical compound methyl tertiary-butyl ether (MTBE), which more and more states have banned due to environmental concerns (although biofuels raise environmental concerns as well).

Biodiesel production jumped 50 percent in 2006, to over 6 billion liters globally. Half of world biodiesel production continued to be in Germany. Significant production increases also took place in Italy and the United States (where production more than tripled). In Europe, supported by new policies, biodiesel gained broader acceptance and market share.

Geothermal In 2006, geothermal provided almost 10 GW of power capacity, growing at roughly 2–3 percent per year. Most of this is in Italy, Indonesia, Japan,Mexico, New Zealand, the Philippines, and the United States, with additional capacity in several other countries.

Iceland gets one-quarter of all its power from geothermal.

There is significant potential for expanded geothermal electricity generation, up to 73 GW with current technology, and up to 138 GW with enhanced geothermal systems (EGS) technology. There are significant opportunities for increased geothermal development in many countries around the world, especially France, Iceland, Indonesia, Kenya, Mexico, the Philippines, Russia, and the United States. Worldwide, there are resources that are under-utilized or undeveloped, which could provide cost-effective energy in the near to mid-term using existing technology. In the longer term, it is projected that very large bodies of warm and hot geologic formations could develop into competitive commercial power markets via permeability enhancements.

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Regional Assessment North America United States Solar Energy Solar power in the United States is the largest available energy source for the United States, although it currently accounts for less than 0.1% of electricity generation.

Renewable resources (solar, wind, geothermal, hydroelectric, biomass, and waste) currently provide nearly 12 percent of the Nation's electricity supply.

The U.S. solar energy industry continued its double-digit annual growth rate in 2006.

Fueling this growth were record high energy prices, the impact of state Renewable Portfolio Standards, increased focus on global warming, and the Energy Policy Act of 2005 (EPAct) which took effect in January 2006, providing tax credits for solar installations.

Wind Energy The U.S. wind energy industry shattered all previous records in 2007, installing 5,244 megawatts (MW) and expanding U.S. wind power generating capacity by 45%. U.S. wind power capacity now stands at 16,818 MW and spans 34 states, with Texas clearly in the lead. American wind farms will generate an estimated 48 billion kilowatthours (kWh) in 2008, just over 1% of U.S. electricity supply. The current U.S. electricity mix consists of about 50 % coal, 20% nuclear, 20 % natural gas, 6 % hydropower, with the rest generated from oil and non-hydro renewables, according to the U.S. Energy Information Administration.

Most interestingly, perhaps, is how quickly wind is growing as a share of current investment: new wind projects account for about 30% of the entire new power-producing capacity added in the U.S. in 2007, establishing wind power as a mainstream option for new electricity generation. 2007 was the third consecutive year of record-setting growth, establishing wind power as one of the largest sources of new electricity supply for the country. This remarkable and accelerating growth is driven by strong demand, favorable economics, and a period of welcome relief from the on-again, off-again, boom-and-bust, cycle of the federal production tax credit (PTC) for wind power.

But the PTC and tax incentives for other renewable energy sources will expire at the end of 2008, and if an extension does not occur early in the year, the U.S. wind industry could see installations plummet in 2009. Previously, when the credit was not extended well before its expiration date, installations have fallen by 93% (2000), 73% (2002) and 77% (2004). The U.S. wind industry is urging Congress and the President to\ quickly extend

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the PTC—the primary U.S. incentive for wind power—in order to sustain this remarkable growth along with the manufacturing jobs, fresh economic opportunities, and reduction of global warming pollution that it provides.

Biomass Biofuels made from abundant, renewable feedstocks can reduce U.S. dependence on oil, lower impacts on climate, and stimulate economic growth. Recognizing the potential for biofuels to address these issues, President Bush set a national goal in January 2007 to reduce U.S. gasoline use by 20 percent in the next 10 years via greater vehicle efficiency and use of alternative fuels. By the end of the year, Congress passed the Energy Independence and Security Act of 2007, which requires that renewable fuels collectively supply at least 36 billion gallons of U.S. motor fuel by 2022 and meet interim supply targets for specific advanced fuels.

The United States produces mainly biodiesel (the largest user is the U.S. Army) and ethanol fuel, which is mainly made from corn (food bioethanol). As of 2005, the United States is the largest producer of ethanol with 16 billion liters/year while Brazil produced nearly the same amount (15.5 billion liters). Cellulosic biofuels are under development, to avoid upward pressure on food prices and land use changes that would be expected to result from a major increase in use of food biofuels.

Ethanol currently constitutes only a small fraction of the United States' fuel supply, but domestic production capacity has more than doubled since 2001, to over 4.5 billion gallons per year. Most cars on the road today in the U.S. can run on blends of up to 10% ethanol, and motor vehicle manufacturers already produce vehicles designed to run on much higher ethanol blends. Portland, Oregon, recently became the first city in the United States to require all gasoline sold within city limits to contain at least 10% ethanol. “Flexible-fuel” cars, trucks, and minivans can use gasoline and ethanol blends ranging from pure gasoline up to 85% ethanol (E85). By mid-2006, there were approximately six million E85-compatible vehicles on U.S. roads.

The Renewable Fuels Association counts 113 U.S. ethanol distilleries in operation and another 78 under construction. Ethanol production is likely to soar over the next several years, since the Energy Policy Act of 2005 set a renewable fuels standard mandating 7.5 billion gallons of annual domestic renewable-fuel production by 2012. President Bush eventually seeks to generate a western-hemisphere dominated industry that can produce as much as 35 billion gallons (130 billion liters) a year, equal to the entire world's production as of 2007.

By 2007, the U.S. ethanol production industry consisted of 115 plants operating in nineteen states. The nearly 7 billion gallons production of these plants was a 38% increase over the previous year, and surpassed Brazil as the worlds largest ethanol producer in 2005. Dozens more plants are under development and due to come on line in 2008 and 2009, increasing U.S. production capacity to nearly 12 billion gallons.

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The Renewable Fuels Association counts 113 U.S. ethanol distilleries in operation and another 78 under construction, with capacity to produce 11.8 billion gallons within the next few years. The Energy Information Administration (EIA) predicts in its Annual Energy Outlook 2007 that ethanol consumption will reach 11.2 billion gallons by 2012, outstripping the 7.5 billion gallons required in the Renewable Fuel Standard that was enacted as part of the Energy Policy Act of 2005.

Meanwhile, the total U.S. production capacity for biodiesel reached million 2,240 US gallons (8,500 l) per year in 2007, although poor market conditions held 2007 production to about million 450 US gallons (1,700 l), according to the National Biodiesel Board (NBB).

Canada Solar Energy Canada’s total PV power installed capacity increased by 31% in 2006 to 20.5 MW compared to 16.75 MW at the end of 2006. The 2006 domestic PV module sales volume totalled 3.74 MW compared to 2.86 MW in 2005 – an increase of 31% in the one-year period. The 2006 export PV module sales totalled 990 kW compared to 1.77 MW in 2005 – a 44% decrease from the previous year. Total PV sales in Canada (domestic and export) in 2006 were at 4.73 MW a 2% increase over the previous year. The growth of the PV market in Canada has been averaging 25% annually since 1993. In 2006, the largest module sales domestically occurred in the off-grid market (both residential and nonresidential) with about 90% of market share. The remaining 10% attributed to sales in the on-grid distributed market.

Most PV applications in Canada (93%) consist of stand-alone systems comprising a PV array as the sole generator or as a hybrid system combined with a small wind turbine or diesel generator. These systems are usually sited remotely with or without battery storage, but are increasingly being applied closer to the electricity grid as costs change and design professionals and the public become more aware of opportunities. The nondomestic off-grid market represented 68% of PV sales in 2006 for water pumping, road signals, navigational buoys, telecommunication repeaters, and industrial sensing, monitoring, and controlling. Major new corporations and markets continue to emerge in manufacturing and selling stand-alone PV systems for use in bus stop signalling and small illumination.

Wind Energy Canada’s wind energy market experienced its second best year ever in 2007. A total of 386 MW of new wind energy capacity was installed in 2007, increasing Canada’s total by 26%. Canada now has 1,846 MW of installed wind energy capacity.

Canada entered 2008 with signed contracts in place for the installation of an additional 2,800 MW of wind energy, most of which is to be installed by 2010.

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In 2008, Ontario is planning to issue a call for another 500 MW of renewable energy (most of which is likely to be supplied by wind), Quebec will issue calls for another 500 MW of wind energy and British Columbia will issue a major new call for clean power.

Moreover, the removal of the 900 MW threshold on wind energy development in Alberta in late 2007, accompanied by new investments in transmission resources, is likely to stimulate significant new wind energy investment in that province.

Finally, several of Canada’s provincial governments (e.g., Saskatchewan, Manitoba, Ontario) have made commitments to significant additional future procurements of wind / renewable energy, although these will take place after 2008. If all of Canada’s provincial governments / utilities meet their stated targets for wind / renewable energy development, it is anticipated that Canada will have a minimum of 12,000 MW of installed wind energy capacity by 2016.

Europe Solar Energy The European photovoltaic sector has given a strong signal to all those who continue to doubt its ability to develop. The countries of the EU installed 1 541.2MWp in 2007, in this way bringing total European installed capacity up to 4 689.5 MWp. Even if a large part of this capacity has to be attributed to the dynamism of the German market, an ever larger portion comes from the long awaited rise in importance of new markets. These new markets, which took the time to structure themselves well, are going to make it possible to give European growth a new foundation. The ratio of photovoltaic capacity per EU inhabitant is now found at 8.5Wp per inhabitant.

More than ever, the European market remains focused on grid connected power plants, representing 99.5% of the newly installed supplementary capacity (graph 1 bis). Direct consumption of electricity for off-grid connections (electrification of isolated sites, public lighting, etc.) only represented 8.4 MWp in 2007.

Wind Energy The year 2006 was marked by a few nice surprises such as the German market’s return to growth, the expected take-off of the French market, the confirmation of the good condition of the British market and of its offshore market, as well as the confirmation of the spectacular progress made in the Portuguese market. Wind power capacity in Europe increased by 7 287.3 MW (with installations out of service having been deducted), bringing total EU installed capacity up to 48 009.8 MW. Wind power electricity production increased accordingly and reached 81.5 TWh, i.e. 11.6 TWh more than in 2005.

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According to the BWE (German Wind Power Association), the German market is once again growing after a three-year period of decline, with 2 233.1 MW installed in 2006 (425 MW more than 2005), raising Germany’s total installed capacity to 20 621.9 MW (including a 26,2 MW decommissioning). This new capacity in turn represents an investment of 2.9 billion. The wind energy sector is counting more and more on the repowering market (the replacement of existing wind turbines by more powerful ones) (+ 130.7 MW in 2006) and above all on the offshore market to continue industrial development. Wind power origin electricity purchase conditions weren’t modified in 2006, thus conserving investor confidence.

Spain continued to be the second biggest European Union market in 2006 with an additional 1 587.2 MW installed, bringing total installed capacity up to 11 615.1 MW. The APPA (Renewable Energy Producers Association) and the AEE (Spanish Wind Power Association) estimate, however, that the rate of progress is not sufficient to reach the objective set by the Renewable Energies Plan, which is 20 155 MW for December 31, 2010. This situation is all the more worrying according to the sectors seeing that the Spanish government has decided to modify the legislative framework governing renewable energies. In the Spanish system established by Royal Decree in 2004, wind power electricity producers can choose to opt for either a classical feed-in tariff or sell their electricity at market price increased by a subsidy set each year by the government.

The situation of wind energy in the European Union is currently a very favourable one.

Germany and Spain are no longer the only countries keeping up growth for all the EU countries. France, the United Kingdom, Portugal, Ireland and a few others seem to be well decided to favour development of their wind power sectors. In Spain, the Renewable Energies Plan, adopted in 2005, is unequivocal in its political desire to develop wind power, with an objective of 20 000 MW by the year 2011. In Germany, the expected market decrease did not take place with, on the contrary, a marked market increase in 2006. The German market should continue to remain high in the next few years, sustained beginning in 2008 by the construction of the first German offshore wind farms.

Biomass Biogas primary energy production markedly increased once again in 2006, with 13.1% growth with respect to 2005 (i.e. 5 142.5 ktoe). This figure only includes production intended to be valorised, and it therefore does not include biogas that is burned off in flare stacks. Like in 2005, rubbish dump deposits (where the biogas is collected) represented the largest share of production (2 917.7 ktoe). On the other hand, methanisation biogas is no longer represented for the most part by sewage purification plants (942.1 ktoe). It has been overtaken since 2006 by the “other biogases” category (1 282.6 ktoe) that include agricultural biogas, biogas from collective co-digestion units and from the treatment of household waste.

Gross electricity production from biogas has risen very strongly (+ 28.6%, i.e. a total of 17.3 TWh), in particular due to a considerable increase in electricity produced in CHP

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plants that, for the first time, have moved ahead of installations producing electricity alone.

Geothermal Energy Geothermal electricity capacity for the whole of the countries of the European Union reached 854.6 MWe in 2006 (+ 10 MW with respect to 2005) and should reach nearly 862.6 MW this year. Geothermal electricity production rose by 3.64% in 2006, i.e. 5 693 GWh.

Asia-Pacific Japan Wind Energy Japan’s wind energy industry has surged forward in recent years, partly spurred by a government requirement for electricity companies to source an increasing percentage of their supply from renewables. Development has also been encouraged by the introduction of market incentives, both in terms of the price paid for the output from renewable plants and in the form of capital grants towards clean energy projects. Power purchase agreements for renewables also have a relatively long lifespan of 15 to 17 years, which helps to encourage investor confidence. The result has been an increase in Japan’s installed capacity from 136 MW at the end of 2000 to 1,538 MW at the end of 2007.

In pursuit of its Kyoto Protocol objectives, Japan has a target to reduce the level of its greenhouse gas emissions by six percent (compared with 1990 levels) in the period 200812. To help achieve this goal, the Japanese government introduced a Renewable Portfolio Standard (RPS) law in April 2003 with the aim of stimulating renewable energy to provide 1.35% of total electricity supply in 2010. The official government target for wind power in Japan by 2010 is 3,000 MW. However, the law has a number of weaknesses, including a very low target, the inclusion of electricity generated by waste incineration as “renewable” and insufficient market incentives. Apart from the RPS, the Japanese wind industry also benefits from the government’s initial subsidies such as the Field Test and New Energy Business Support Programs.

Biomass Until recently, Japanese biomass energy projects have been small in scale. This source of renewable energy accounts for only 0.8% of Japan’s total energy production. However, the potential is huge since the annual production of waste and unused biomass in Japan is estimated at 62 million dry tons or the energy equivalent of 29.9 million kilolitres of crude oil.

To capitalize on this valuable source of energy, the Japanese government introduced a national biomass strategy in 2002 that set a power generation objective of 330 MW by © Energy Business Reports

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2010. The market for biomass energy-related plants in Japan is estimated to be more than $1 billion in 2007.

The Japanese government has proposed a utilization target of 500 billion liters of biofuels by 2010. Unfortunately, the availability and stability of supply is currently a major problem facing the development of a biofuel market in Japan.

Geothermal In volcanic Japan, this form of renewable energy constitutes a valuable resource. Twenty geothermal power plants are currently in operation at 18 locations in Japan for a total installed capacity of 535 MW. There have not been large developments of geothermal power plants in Japan since 2004 when a 2-MW binary-cycle unit--the first of its type in Japan --was built at Hatchobaru.

In the residential sector, geothermal heating units are starting to appear on the market.

Japan has been lagging Europe and the United States in the production and utilization of such systems, which are expected to gain popularity as unit costs go down.

China Wind Energy China has chosen wind power as an important alternative source in order to rebalance the energy mix, combat global warming and ensure energy security. Supportive measures have been introduced. In order to encourage technical innovation, market expansion and commercialization, development targets have been established for 2010 and 2020, concession projects offered and policies introduced to encourage domestic production.

By the end of 2006, cumulative installed wind capacity had reached 2.6GW; the average annual growth rate over the past ten years has been 46%. Between 2004 and 2006, China's ranking in the world wind energy league moved up from the top 10 to the top 6, and the country is planning to host some of the biggest wind farms in the world. At the present growth rate, the 2010 target will be reached two years earlier. Wind power has not just contributed to supplying electricity but has lowered supply costs, reduced carbon emissions and helped to limit air pollution.

The year 2007 was a key point in the growth of the wind industry in China. After one year's operation of the Renewable Energy Law, a number of problems for wind development needed to be solved urgently.

Solar Energy Statistics show that China currently tops the world in production and retention of solar energy, it is also the largest producer of solar water heaters and a major consumer. The country is turning into the world largest market for solar energy.

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The development of PV industry is very fast recent years in China pushed by world PV market. The share of PV production reached nine percent in 2006 from one percent of few years ago, only less than Japan and Europe, China has become one of the most important PV production countries. However, The development of PV market is very slow in China. A deep understanding of the PV development situation is very important for analysis of development potential and study of development strategy and taking active measures.

Based on the ambitions of the 20 cell manufacturers already active in this market, production capacity is expected to grow to 820 MW per annum in 2006. Several new cell and module manufacturers have started production over the past 4 years and are now growing towards the top-ten ranking of the world’s largest manufacturers. Currently, over 90% of all PV products produced (cells, modules) are being exported to Western countries, such as Germany, as well as to Japan and the rest of the world.

The average selling price of PV panels and components alone was 42 yuan/Wp, or about US$5/Wp, higher than the average price on the international market. The high price is mainly attributed to the high manufacturing cost of components. When the entire system is considered (including the battery), the most common current household photovoltaic systems of 20 Wp, 38 Wp and 50 Wp sell at 1850 Yuan, 3500 and 4200 Yuan respectively. The average price per watt is 84-92 Yuan.

However, China’s domestic PV market is still in its relative infancy, but it is growing and has the potential and ambition to become one of the world’s most important PV markets.

The market is controlled by central government, and incentives and (international) support still require Beijing’s approval. China offers solar radiation conditions for PV applications that range from good to excellent, and it has an infinite availability of space.

The main market segment in China is rural electrification (some seven million people have no access to electricity, mainly in the North and West). Central government has initiated the Village Electrification Program (“Song Dian Dao Cun”), which aims to electrify a further 20,000 villages with PV power in China’s off-grid western region between 2005 and 2010.

The overall goal of the Chinese government is to have 450 MW of cumulative PV power installed in China by 2010. This is in comparison to the estimated 75 MW which was current in 2005. Average sales growth of 40% per annum until 2010 is needed to achieve this. For the next decade, a target has even been set for 8,000 MW by 2020, when PV might already be cost competitive. For the coming years, rural electrification will remain the dominant segment.

Hydro Power Small-scale hydropower already plays a very important role in the provision of electricity of China, particularly in rural areas. There is 30 GW of capacity installed and about onethird of China’s counties rely on small-scale hydropower as their main source of electricity. Water resources appropriate to small-scale hydropower are plentiful in China. © Energy Business Reports

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According to the results of China’s latest hydropower resource survey, the potential total capacity of small-scale hydropower that could be feasibly developed in the country is 125 GW. The resource base is widely distributed, including sites in over 1,600 counties (or cities), spread over 30 of China’s provinces. Of the 1600 counties, 65% are located in south-west China, accounting for over 50% of total national potential capacity.

The Chinese government is prioritizing hydropower in the country’s new energy agenda because the technology is mature and China has relatively rich experience in this area, along with a fairly well developed domestic industry. The country is also blessed with large reserves of this clean and renewable energy source. Official figures estimate China’s exploitable water power resource at more than 500 million kilowatts (kW).

Installed capacity by the end of 2005 was 117 million kW, or about 24 percent of the potential. The central government wishes to boost the capacity to 180 million kW by year 2010 and 300 million kW in 2020.

Statistics show that by the end of 2006, China had 40,000 small hydropower stations of under 50,000 kW in capacity. Combined, they represent 40 million kW, or more than two Three Gorges stations put together. These small facilities frequently come under attack as well, for more or less the same reasons as those mentioned above. Small projects are usually approved by local governments, and many have adhered less strictly to environment impact requirements, resulting in problems such as the drying up of waterways, damage to vegetation, flooding, and soil erosion.

Geothermal China has a significant amount of geothermal energy potential, estimated at 8% of the world’s total, though it is still not very well mapped. Most of the high-temperature resources suitable for power generation are in the Tibetan Himalayan highlands and the western parts of Yunnan and Sichuan sheng, which border the Tibetan plateau. Currently the only geothermal generating power plant of any significant size is the 25 MW Yangbajing facility in Xizang (Tibet) sheng, which is owned by the State Power Corporation of China. To date, most of the geothermal energy use in China has been for space heating, agriculture and aquaculture, bathing and medicinal healing purposes, and cloth dyeing. Two key barriers are China’s geothermal resources are generally located far away from high demand areas, and that geothermal development requires a degree of specialized technical capacity, which is currently lacking in China.

Taking into account the resources, market demand, environmental protection, government policies and other factors, the installed capacities will be equal to 100 MW by 2010, and up to 500-1,000 MW by 2050.

Biomass With the implementation of China's Natural Forest Protection Program (which includes logging bans and logging reductions over much of the nation’s natural forests) and its Sloping Cropland Conversion Program (which calls for the conversion of much of the

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nation's sloping cropland to trees and grasses), it is expected that the amount of waste from forestry and forest product industries used in energy applications will increase substantially, with the potential of reaching 12,000 PJ per annum by 2020.

Biomass power generation in China, with an installed capacity of almost 2000 MW, consists mainly of combined heat and power (CHP) in sugar mills and power generation using rice husks. Other types of biomass power generation, such as that achieved through biomass gasification or hybrid fuel technologies, have not yet reached significant scale in China. China currently has a total of over 12 million household biogas digesters and over 1500 industrial-scale biogas plants, which together produce over five billion cubic meters of biogas annually. Currently, the main technologies developed and in use are ethanol fuel technology and bio-oil technology. China has two large ethanol fuel production bases, one in the north and one in the south, with a total annual production capacity of over one million tons. Production of bio-oils in China has reached about 500,000 tons annually.

In 2006, sugar cane slugs (bagass) were used to generate 1,000 MW of electricity. With 164 centralized gas demonstration projects – using crop stalks at the village level – total gas production came to 45 million m3, none of which is now used to generate electricity.

The potential for biomass power in China could reach 3 GW by 2010 and 10-15 GW by 2020.

India Solar Energy India has developed a strong research base with indigenous production capabilities in the entire area starting from silicon material to solar cells, PV modules, complete systems and power plants. MNES is implementing a countrywide program for the demonstration and utilization of SPV systems for various applications. The solar PV annual production capacity in India reached 20 MW and the export has rapidly increased from 4 MW in the year 1998-99 to 46 MW as on March 2003. Solar photovoltaic is identified as a major technology for the MNES rural electrification program of electrifying 18,000 villages by 2012.

Wind Energy The total potential for wind power in India was first estimated by the Centre for Wind Energy Technology (CWET) at around 45,000 MW. This figure was also adopted by the MNRE as the official estimate of the wind power potential in the country. However, since 1990, a massive exercise of wind monitoring and wind resource assessment has been carried out by government agencies and private sector has identified many more resource areas. Currently, the Indian Wind Turbine Manufacturers Association (IWTMA) estimates the potential to be of the order of 65,000 MW.

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Wind energy is continuing to grow strongly in India, with over 1,500 MW of new installed capacity in 2007, hitting 7,845 MW in total. This represents a year on year growth of 28%.

Biomass The prime technologies popularly employed for conversion of biomass into either thermal or electrical energy are Co-generation, Combustion and Gasification. Some 19,500 MW (including 3,500 MW from cogeneration) can be generated from fuel wood and crop residues and bagasse in sugar industry. Further, there are Improved Cooking Stoves (ICS) called as Chulhas for optimal regulation of heat flow and efficient utilization of firewood / other biomass for cooking applications. Cogeneration provides an additional source of income for the industry and a source of clean, renewable energy to the utility. Recognizing the benefits, the sugar mills have adopted cogeneration aggressively in states where the State Electricity Boards have a favorable power purchase policy. The market forces are being catalyzed through various fiscal and promotional incentives. At present, the focus is on promoting high pressure / higher technology configurations for better steam economy, efficient off-seasonal operation and higher returns.

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Policy Landscape Removal of Market Distorting Policies Removal of market distortion policies can be the most effective policy instrument to promote investment in economically viable renewable energy technologies. These are not promotional policies for renewables; rather they are removing market barriers. Examples include: •

Thailand and Sri Lanka have put in place regulations and rules to adopt avoided cost principles for the purchase of renewable electricity as a means of leveling the playing field for renewables as compared to fossil-based solutions. These countries also put in place other mechanisms to advance the use of renewables such as regulatory frameworks for independent power producers to operate, standardized power purchase agreements, and tariffs and incentives for developers (e.g., import duty waivers, income tax concessions, etc.)

•

Several countries have begun to reduce/eliminate fossil fuel subsidies, estimated at $200 billion per year. These subsidies lead to artificially low prices for fossil fuels, encourage their use and dependency, and make it difficult for renewable energy options to compete. Removal of energy price supports makes renewable energy more financially attractive. The recent surge in petroleum prices is accelerating reductions in fossil fuel subsidies as countries are forced to make tough decisions as to whether to pay fuel bills or cut social and other programs.

Targets and Timetables for Renewable Energy Policy targets for renewable energy exist in at least 66 countries worldwide. By 2007, at least 64 countries had a national target for renewable energy supply, including all 27 European Union countries. In addition to these 64 countries, 29 U.S. states (and the District of Columbia) and 9 Canadian provinces have targets based on renewables portfolio standards or policy goals, although neither the United States nor Canada has a national target. Most national targets are for shares of electricity production, typically 5– 30 percent, but ranging all the way from 2 percent to 78 percent. Other targets are for shares of total primary or final energy supply, specific installed capacity, or total amounts of energy production from renewables, including heat.

Most targets aim for the 2010–2012 timeframe, although an increasing number of targets now aim for 2020 and 2025. Targets also exist for biofuels in many countries.

In early 2007, the European Commission adopted new binding targets for 2020, including 20 percent of final energy and 10 percent of transport fuels. These new targets extend the existing targets of 21 percent of electricity and 12 percent of primary energy by 2010.

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The 20 percent final energy target could imply 34 percent of electricity provided by renewables by 2020, according to the European Commission.

Similar to the existing electricity targets, individual countries will need to agree on and adopt their own targets to meet the 20 percent EU-wide target. Some countries have already enacted individual measures: for example, the Netherlands had earlier adopted a 20 percent target for share of final energy by 2020. Germany plans to increase the share of electricity to 25–30 percent by 2020 and then continue to increase the share, with some proposals to 45 percent by 2030.46 The 64 countries with national targets include 22 developing countries: Algeria, Argentina, Brazil, China, the Dominican Republic, Egypt, India, Indonesia, Iran, Jordan,Malaysia,Mali,Morocco, Nigeria, Pakistan, the Philippines, Senegal, South Africa, Syria, Thailand, Tunisia, and Uganda.

Among developing countries, China received considerable attention when it confirmed its targets in its new long-term renewables development plan, issued in September 2007.

China’s national target is 15 percent of primary energy by 2020, and there are individual technology targets as well, including 300 GW of hydro, 30 GW of wind, 30 GW of biomass, and 1.8 GW of solar PV.Meeting these targets would almost triple China’s renewable energy capacity by 2020.

Grid-Connected Policies At least 60 countries - 37 developed and transition countries and 23 developing countries—have some type of policy to promote renewable power generation. The most common policy is the feed-in law, which has been enacted in many new countries and regions in recent years. The United States was the first country to enact a national feed-in law, in 1978. Feed-in policies were next adopted in Denmark, Germany, Greece, India, Italy, Spain, and Switzerland in the early 1990s. By 2007, at least 37 countries and 9 states/provinces had adopted such policies, more than half of which have been enacted since 2002.

Feed-in tariffs have clearly spurred innovation and increased interest and investment in many countries. These policies have had the largest effect on wind power, but have also influenced solar PV, biomass and small hydro development.

Strong momentum for feed-in tariffs continues around the world as countries enact new feed-in policies or revise existing ones. Many changes and additions were made during 2006/2007, particularly in Europe. For example, Portugal modified its feed-in tariff to account for technology differences, environmental impacts, and inflation. Austria amended its renewable electricity law to permit a new feed- in tariff system. Spain modified feed-in tariff premiums (which are added to base power prices) to de-couple premiums from electricity prices and avoid windfall profits when electricity prices rose significantly. And Germany proposed modifications to its “EEG” feed-in law.

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Many new feed-in tariffs directed specifically at solar PV appeared during 2006/2007. In Europe, Italy’s new feed-in tariff targets 3,000 MW of solar PV by 2016, or almost a million homes if used for residential installations. Italy’s policy contains an increasingly common provision: tariffs are 5 eurocents/kWh (7 cents/kWh) higher for architecturally building-integrated installations than for ordinary rooftop installations. France reevaluated its feed-in policies for solar PV and increased tariffs to 30 eurocents/kWh (42 cents/kWh) for metropolitan areas, with a 25 eurocents/kWh (35 cents/kWh) bonus for building-integrated installations.

Two important policy developments for renewable electricity occurred at the federal level in the United States during 2006/2007. The first was extension of the U.S. production tax credit (PTC) through the end of 2008, along with further legislative discussion about longer-term extensions to 2012–2013. Originally established in 1994 at 1.5 cents/kWh and inflation-adjusted over time to 2 cents/kWh by 2007, the credit has supported wind power and other renewables in conjunction with state-level policies. Second, a landmark national open-access transmission rule puts renewable energy on more equal footing with conventional electricity. That rule creates a new category of transmission service, called “conditional firm” service, which recognizes the intermittent nature of some renewable resources. Imbalance charges, which reflect differences between scheduled and actual energy,must account for renewables’ limited ability to forecast or control output.

Green Power Purchasing and Pricing There are currently more than four million green power consumers in Europe, the United States, Canada, Australia, and Japan. Green power purchasing and utility green pricing programs are growing, aided by a combination of supporting policies, private initiatives, utility programs, and government purchases. The three main vehicles for green power purchases are: utility green pricing programs, competitive retail sales by third-party producers enabled through electricity deregulation/liberalization (also called “green marketing”), and voluntary trading of renewable energy certificates. As markets expand, the price premiums for green power over conventional power have generally continued to decline.

In Europe, green power purchasing and utility green pricing have existed in some countries since the late 1990s. In most countries, the market share of green power is still small, less than five percent, even in countries with liberalized retail markets, such as Finland, Germany, Sweden, Switzerland, and the United Kingdom. The Netherlands has been the leader in the number of green power consumers, due in part to large fossil-fuel electricity taxes combined with tax exemptions for green power, along with media campaigns.

During 2006/2007 there were an estimated 2.3 million green power consumers, about 30 percent of all Dutch households. However, this number had declined from more than 3 million in earlier years, as the fossil-fuel tax and exemption were rescinded. Sweden also has a sizable green power market, composed largely of non-residential purchasers.

Germany’s green power market has grown steadily since 1998, with more than 750,000

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consumers in 2006. In some European countries, green power labels have been introduced to strengthen consumer confidence, such as “ok-power” in Germany and “nature-made star” in Switzerland.

The United States had more than 600,000 green power consumers purchasing an estimated 12 TWh in 2006, up from 8.5 TWh in 2005. Retail green power premiums for residential and small commercial consumers are typically 1–3 cents/kWh, with some premiums now below 1 cent/kWh. Green power purchasing began in earnest in the late 1990s and the market has grown rapidly in recent years. At least 3 GW of renewable energy capacity is supported by the green power market. Currently, more than 700 utilities throughout the United States offer green pricing programs. Regulations in more than half a dozen states require utilities or electricity suppliers to offer green power products to their customers.

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Economics of Renewable Energy Development Cost of Energy Generation Hydro Power Large hydropower projects provide some of the cheapest electricity in the United States, with an average cost of 2.4 cents per kilowatt-hour, not including the costs of environmental impacts.1 Small hydropower systems are somewhat more expensive, ranging somewhere between three and twenty-five cents per kilowatt-hour.

Solar Concentrating solar power technologies currently offer the lowest-cost solar electricity for large-scale power generation (10 megawatt-electric and above). Current technologies cost $2–$3 per watt. This results in a cost of solar power of 9¢–12¢ per kilowatt-hour.

New innovative hybrid systems that combine large concentrating solar power plants with conventional natural gas combined cycle or coal plants can reduce costs to $1.5 per watt and drive the cost of solar power to below 8¢ per kilowatt-hour.

Advancements in the technology and the use of low-cost thermal storage will allow future concentrating solar power plants to operate for more hours during the day and shift solar power generation to evening hours. Future advances are expected to allow solar power to be generated for 4¢–5¢ per kilowatt-hour in the next few decades.

Wind In the early 1980's, when the first utility-scale wind turbines were installed, windgenerated electricity cost as much as 30 cents per kilowatt-hour. Now, state-of-the-art wind power plants at excellent sites are generating electricity at less than 5 cents/kWh .

Costs are continuing to decline as more and larger plants are built and advanced technology is introduced.

Biomass Today, co-firing offers power plant managers a relatively low cost and low risk route to add biomass capacity. These projects require small capital investments per unit of power generation capacity. Co-firing systems range in size from 1 to 30 MW of BioPower capacity. When low cost biomass fuels are used, co-firing systems can result in payback periods as low as 2 years.

In today’s direct-fired biomass power plants, generation costs are about 9 ¢/kWh. In the future, advanced technologies such as gasification-based systems could generate power for as little as 5 ¢/kWh. A typical existing coal fueled power plant produces power for about 2.3 ¢/kWh. Co-firing inexpensive biomass fuels can reduce this cost to 2.1 ¢/kWh. © Energy Business Reports

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Geothermal The lowest cost of geothermal electricity is now about $0.015 per kWh. A power plant built today would probably require about $0.05 per kWh. The initial cost for the field and power plant is around $2000 per installed kW in the U.S., probably $3000 to $5000/kW for a small (<1Mw) power plant, and $1500 to $2500/kW for larger plants, depending on the resource temperature and chemistry. Operating and maintenance costs range from $0.015 to $0.045 per kWh, depending on the contract price for the electricity.

Financing An estimated $71 billion was invested in new renewable energy capacity worldwide in 2007, up from $55 billion in 2006 and $40 billion in 2005. Almost all of the increase was due to increased investment in solar PV and wind power. Technology shares of the $71 billion annual investment were wind power (47 percent), solar PV (30 percent), and solar hot water (9 percent), followed by smaller shares of small hydropower, biomass power and heat, and geothermal power and heat.

The largest country shares of renewables annual investment were in Germany, China, the United States, Spain, Japan, and India. Investment in Germany increased to over $14 billion in 2007, mostly for wind and solar PV, and investment in China was $12 billion, mostly in small hydropower, solar hot water, and wind power. The United States was number three, with over $10 billion.

In addition to renewable energy capacity investment, there were substantial capital investments in new manufacturing plants and equipment during 2006/2007 for solar PV and biofuels. Investment in solar PV plant and equipment was expected to reach $10 billion in 2007, up from $8 billion in 2006. Investment in new biofuels production capacity worldwide has also been growing rapidly, and was expected to exceed $4 billion in 2007. The value of biofuels production plants under construction and announced construction plans through 2009 exceeded $4 billion in the United States, $4 billion in Brazil, and $2 billion in France.

Considering investments in renewable energy capacity additions (excluding large hydropower), new manufacturing capacity, and research and development spending (estimated at over $16 billion in 2006 from both public and private sources), there is no doubt that more than $100 billion was invested in renewable energy in 2007â&#x20AC;&#x201D;marking a significant global milestone.

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