Sustainable Energy Needs a Boost:
Legislation’s Impact on Renewable Technologies
Roberta Gamble, Director
Georgina Benedetti, Research Analyst
Energy and Power Systems
April 28, 2009
Focus Points
Economic Downturn - Genesis
Incentives and Regulations in Increasing Renewable Energy Deployment
•
Decrease in Technology Cost
•
Reduction in Generation Cost
•
Higher installed Capacity
Renewable Energy Outlook
Wind and Solar Installed Capacity Forecasts
Key Take-away: Renewable Energy needs legislation to get started, but
competitiveness of solar and wind is improving remarkably
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Economic Downturn
Genesis: From Financial Sector to Real Sector
Defaults
Lack of Trust in Financial Institutions
Sub-Prime Mortgages
Financial Institution
Losses
Lack of Capital
for Companies

Tightening Credit Markets

Suspension of
Interbank Lending
Banks Slow Lending Down

Lack of Lending for
Small Business
Slower Growth
Consumers Reduce Spending

Lack of Retail
Credit

Economy Slows Down/Contracts
3
Economic Downturn
Economic Impact Analysis
Overall, renewable energy market* growth has not been as dramatically affected by
the 2008 global economic slowdown. However, Frost & Sullivan expects that early
to mid 2009 could witness a general slowdown in growth resulting from demand
fluctuations. The following trends are affecting the market at this time:
•
Decline in new equipment spending will possibly limit evaluations of alternative
energy solutions
•
Constricted availability of private funding
•
Past limit of raw material suppliers and fluctuating material prices drove up
costs, though prices have declined for key in-puts
•
Wind and solar power still remain more expensive to develop due to higher
associated costs
•
The economic slow-down, coupled with falling gasoline prices, will likely
reduce the demand for renewable energy technologies
*Renewable energy markets include solar, wind, biomass, geothermal, waste to energy, etc. The rest of this presentation
will focus on solar and wind markets
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The Role of Incentives and Regulations in Increasing
Renewable Energy Deployment:
Is Change Coming to the Market?
5
Big Change to the Industry: Decrease in Cost for Solar
Solar Market

Photovoltaic (PV) modules represent 40 to 60 percent total
installed cost

PV modules prices increased 2006-08 from massive demand for
silicon from:


Solar makers
Computer chip makers.

New manufacturing capacity in 2009 and 2010 are projected to
reduce costs

Removal of $2,000 cap/eight-year extension of 30% federal solar
tax credit for homeowners in stimulus plan

Increased confidence by PV manufacturers may lead to increased
manufacturing capacity, higher product output, and greater
economies of scale => lower price
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Decrease in Technology Cost (Contd…)
Renewable Energy Market: PV Module Price Forecasts (U.S.) 2005-2015
Note: All figures are rounded; the base year is 2008. Source: Frost & Sullivan
PV modules prices are expected to decrease at a compound annual growth rate (CAGR) of 5.3 percent from 2008 to 2015.
Prices account for the average retail price of PV modules in the United States. The cost of services such as installation and
integration are not added to price.
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PTC Reduces Wind Generation Costs
 Renewable
energy still not competitive on its own in price
per kilowatt-hour with conventional generation
 Production
Tax Credit (PTC) has helped level the economic
playing field for wind
 PTC
has reduced wind-generated power rates in some parts
of the US to a competitive 5 cents/kWh or less
 R&D
efforts have also helped increase efficiency and thereby improve ROI
 The
leveled cost of energy from wind turbines in 1990 was about 7.5 cents/kWh.
Currently, the average wind energy price is 5.4 cents/kWh without incentives

New technologies could be as low as 3.5 cents/kWh
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Market Stability
In contrast to the solar market, which has a sustained growth during the period from 2003 to 2008, the wind
energy market demonstrated pronounced decline during 2004 when the PTC lapsed for some period of
time, before being subsequently extended, thereby substantially dampening development activity.
Renewable Energy Market: Solar and Wind Energy Market Growth (U.S.), 20032009
Note: All figures are rounded; the base year is 2008 Source: Frost & Sullivan
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Reduction in Generation Cost
Renewable Energy Market: Average Wind Power Cost (U.S.), 2008
Note: All figures are rounded; the base year is 2008. Source: AWEA and Frost & Sullivan
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Higher Installed Capacity
Renewable portfolio standards (RPS)

As of 2008, Canada, 26 states and the District of Columbia have adopted RPS

Five other states (Michigan, Missouri, North Dakota, Virginia, and Vermont) have set
voluntary goals for adopting renewable energy, instead of portfolio standards with binding
targets

Indication that RPS works: Over 80% of non-hydro renewable net summer capacity in the
United States in 2007 – 23+GW - installed in states with active, mandatory RPS

Total non-hydro renewable power: 60% wind, 27% biomass*, 10% geothermal, 2.2 %
solar

California is top renewable energy state: 5,759 MW and 25.3 percent of the total
capacity, the majority of which is wind power.
*Biomass includes: landfill gas, municipal solid waste, biogenic, black liquor, wood waste, and derived fuels),
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Higher Installed Capacity (Contd…)
Renewable Energy Market: Cumulative Non-Hydro Renewable
Capacity in RPS and Non-RPS States (U.S.) 2005-2007
Note: All figures are rounded; the base year is 2008. Source: Frost & Sullivan
From 2005 to 2007, more than 75 percent of the total non-hydro renewable energy capacity took place in
states with renewable energy goals.
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Reduction in Generation Cost
Comparison of Costs by Generation Type
30
Price per kWh
25
20
15
10
5
0
Solar Solar Wind NuclearNatural Coal Hydro WTE
by
Gas
2015
Generation Type
Note: All figures are rounded; the base year is 2008. Source: EIA and Frost & Sullivan
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Renewable Energy Outlook
The New Administration Energy Plan
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The American Recovery and Reinvestment Plan
The American recovery and reinvestment plan 2009
Source: Frost & Sullivan
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The American Recovery and Reinvestment Plan
The American recovery and reinvestment plan 2009
Source: Frost & Sullivan
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OPTIONS
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Wind Energy Installed Capacity Forecasts
Renewable Energy Market: Wind Installed Capacity Forecasts (North America), 20092015
Note: All figures are rounded; the base year is 2008. Source: Frost & Sullivan
Wind energy installed capacity is projected to increase at a CAGR of 31.6 percent during the forecast period,
from 27,056 MW installed in 2009 to 140,686 MW in 2015.
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Solar Energy Installed Capacity Forecasts
Renewable Energy Market: PV Solar Installed Capacity Forecasts (North America),
2009-2015
Note: All figures are rounded; the base year is 2008. Source: Frost & Sullivan
The solar energy market is expected to grow at a CAGR of 39.9 percent from 2009 to 2015, reaching 12,129
MW in 2015.
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For Additional Information
Johanna Haynes
Corporate Communications
(210) 247-3870
johanna.haynes@frost.com
Diana Bragg
Director of Sales, Energy & Power
Systems
(210) 247-3879
diana.bragg@frost.com
Roberta Gamble
Director, Energy & Power Systems
(650) 475-4522
roberta.gamble@frost.com
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