Wind And Solar Power

Renewables: Solar power sees light at end of tunnelSource: Copyright 2008, Financial TimesDate: September 15, 2008Byline: Fiona HarveyOriginal URL
Wind power has long been the big beast of the renewable energy jungle. The technology to generate electricity from wind has been established for more than two decades, and in the past five years has been refined and expanded towards much larger and more powerful turbines including ones that can be used at sea, and towards very small turbines that can be fixed to office buildings or houses.
Last year, the US led the world in wind power installations for the third consecutive year, according to the American Wind Energy Association. Global wind capacity increased by more than 20 gigawatts last year, of which more than 5GW was in the US. Spain and China each built about 3.5GW of new capacity, and the rate of expansion in all these big markets is increasing.
Wind, however, is running into some problems. The massive expansion of wind generation capacity has outstripped the ability of manufacturers to keep up, leading to big order backlogs – which, along with rising raw material costs, have raised turbine prices by more than half.
Solar energy is the other main renewable contender. Solar power has lagged behind wind, partly because it has relied on expensive technologies such as silicon-based electronics, partly because solar installations have tended to produce less energy.
But this too is changing – silicon is falling in price, some massive solar installations are under construction, and new forms of solar energy have dispensed with the need for silicon altogether.
Both technologies face a bright future, however, says Simon Wannop, of the renewable energy team at consultancy Ernst & Young: “Constantly evolving technology and the increasing importance of renewables in the eyes of policy-makers makes this a particularly mouth-watering industry for investors.” Old objections to sun and wind power – that they are expensive and intermittent compared with fossil fuels – are falling away, he says.
Wind power is now becoming “cost-competitive” with fossil fuel electricity generation, says James Dehlsen, chief executive of Clipper Windpower, a US wind power specialist listed on the Alternative Investment Market in London.
Ivan Brems, chief executive of Hansen Transmissions, which supplies gearboxes for turbines and is owned by Suzlon of India, one of the world’s biggest turbine makers, says developing countries are catching up fast. According to the consultancy BTM, the European wind market will more than double between 2008 and 2012. But the Chinese wind market will nearly triple, and the Indian market will increase seven-fold, albeit from a smaller base.
According to Mr Wannop, “Capacity shortages, in terms of bottlenecks in parts of the wind turbine supply chain, are likely to remain in place for at least four to five years and perhaps longer until a global player emerges from China.”
Wind companies have traditionally been closely allied to conventional electricity companies. But Mr Dehlsen suggests that transport companies are the new natural allies of wind generators.
He predicts a massive expansion in the world’s electric vehicle fleet, which he says will play to wind’s strengths. Most wind energy is generated at night, when electricity demand is lower – but electricity is hard to store in quantity.
If more people use electric cars, and charge them up at night, that would solve this problem as the vehicle fleet will effectively act as a massive collective battery.
He says: “This presents a growth opportunity for wind technology perhaps unparalleled by other energy technologies in the history of electric power generation.”
Solar power is also taking off fast, with the world’s capacity to manufacture photovoltaic cells ramping up rapidly. A consequence is that the price of photovoltaic cells is dropping.
This is good news as it means that they are more affordable, and solar electricity will soon be comparable in cost to fossil fuel generation. However, it also means that solar companies will find their profit margins falling.
Dean Cooper, analyst at Ambrian, says the global capacity for solar module production is set to increase “dramatically”, from 3GW last year to 15 to 20GW of production in 2010.
Much of the growth is coming from China. This increase will mean that supply will outstrip demand for solar for the first time in many years – by the end of next year, according to several forecasts.
Copyright 2008, Financial Times