PALO ALTO, California, USA,
September 5, 2007.
The market for renewable energy in North America was US$17.4 billion last year and is likely to be $24.6 billion by 2010, according to Frost & Sullivan.
“Faced with rising oil imports and mounting concerns over the environment, the U.S. and Canadian governments will undertake proactive initiatives to reduce their dependency on fossil fuels,” the consulting firm explains in ‘North American Renewable Energy Market: Investment Analysis & Growth Opportunities.’ The report examines the markets for wind, solar, hydro, ethanol, biomass and geothermal.
“In January 2007, the U.S. House of Representatives passed the Clean Energy Act; when enforced, this legislation expects to transfer more than $14 billion from certain subsidies to investments in clean energy,” it explains. “Likewise, the Canadian government has launched three new ecoENERGY initiatives for boosting renewable energy and reducing GHG emissions; these initiatives will likely provide new direction for the future growth of the North American renewable energy markets.”
“Rising oil imports and the volatility of oil prices drives the United States to increase its renewable energy capacity,” says analyst Saranya Sundaram. “The Energy Policy Act was passed in the year 2005, targeting that the amount of renewable energy fuels consumed each year should reach 7.5 billion gallons by the year 2012. This is in line with U.S. President George Bush's vision to reduce 75% of the country's oil imports from the Middle East region by 2025.”
Green power standards and green fuel mandates are likely to propel the growth of the market, with RPS designed as a flexible market-driven policy to ensure that a growing percentage of electricity is generated from renewables and enforced in 21 states. California has set a target of 12% of its total electricity to come from wind and geothermal, while New York state will make efforts to increase its total green power from 19% in 2006 to 25% by 2013.
Increasing raw material costs, high initial capital outlay and raw material availability pose “notable challenges” for market participants and could hamper market growth, the report notes.
“Raw materials supply constraints are being noted in the solar energy segment, where the manufacturers face a shortage of silicon, the key raw material for solar energy generation,” notes Sundaram. “The growth of the wind turbines sector could also be impacted by the short-term price increases caused by the high steel costs and shifting currency valuations.”
Solar companies will address these challenges by increasing their investments in research to find a suitable substitute for silicon. Some companies are starting to use copper alloy and copper-indium-gallium-diselenide, which are easier and flexible to use, and use of such technologies will reduce the costs of solar energy.
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