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Let's be clear: The perception of clean technology these days is far less sunny than the reality.
The perception, at least in the political arena, is that cleantech was a promise that largely failed, like universal health care or a balanced federal budget. After all, 2011 saw a few spectacular swan dives by promising companies, several of which had received US government funding, at least one of whose name is destined to be synonymous with wasteful taxpayer subsidies. The prevailing narrative is that solar and other clean technologies have not lived up to their promise and remain costly and unreliable, out of reach for most mainstream uses.
The reality is quite different. Cleantech is maturing, growing, and doing reasonably well. In 2011, for the first time, power plants operating on solar, wind, and biomass energy garnered more investment than those powered by natural gas, oil, and coal -- $187 billion for renewables compared to $157 billion for fossil fuels, according to Bloomberg New Energy Finance. The group predicted that renewable energy investments will double over the next eight years.
Solar energy, for all the high-voltage company failures, hit record growth in the United States -- more than 1,000 megawatts installed during the first three quarters of 2011, compared with 887 MW in all of 2010, according to GTM Research and the Solar Energy Industries Association (SEIA). The solar market grew globally, as well. According to a report by GTM Research and Bridge, India is facing a perfect storm of factors that will drive solar photovoltaic adoption at a "furious pace over the next five years and beyond." And NDP Solarbuzz forecast that in 2011, China would surpass United States and Japanese solar installations for the first time.
2011 was also a boom year for wind energy, which now provides 20 percent of electricity in Iowa and South Dakota, according to the American Wind Energy Association, and at key moments surges to 50 percent in Colorado. The market research firm Lucintel predicts that the world market for wind energy will grow at a compound annual rate of 12 percent for at least the next five years. In some parts of the world -- Brazil, for example -- the price of wind energy is now below that of natural gas.
All this turmoil notwithstanding, the United States became a net exporter of solar products to the tune of $1.8 billion in 2010, according to GTM Research and the SEIA, primarily through sales of solar manufacturing equipment and polysilicon, solar modules' main ingredient.
With all this growth, why are companies failing? It has to do largely with natural technology growth cycles, seen with nearly every technology over the past century, from cars to computers to cell phones. As technologies mature, industries consolidate, with a handful of winners emerging. In the early 1900s, for example, there were more than 1,000 American automobile manufacturers, from Acme (1903-11) to Zip (1913-14). All but a few are gone.
As technologies mature, the winners become the value-added players -- in solar, companies like SolarCity, Sungevity, and SunRun -- nonmanufacturers all -- which provide turnkey solar installation for homes and businesses, often for little or no money down. So, too, with other clean technologies, like LED lighting, where bulb makers are getting squeezed by ever-dropping prices, but downstream value-add players like Adura and Digital Lumens, which package LED bulbs into modules for commercial use, are growing. Rodrigo Prudencio, a partner at Nth Power, a longtime energy-tech investment firm, calls it finding new value in "old" clean technologies, noting: "Value creation around commoditization happens in any industry."
So, cleantech is going through a reset, not a retrenchment. And it portends more roiling of cleantech markets, as competition continues to squeeze out weaker or inefficient players and new, innovative companies enter the field. At the end of 2011, the venerable energy industry journal Platts noted: "Heading into 2012, renewable energy is entering a new phase, with winners and losers emerging both within renewable energy sectors and as part of larger energy markets. Renewables are no longer just one energy source among many but in some markets are a direct competitor with fossil fuels."
Cleantech is more than just electricity, of course, though these technologies often get the most attention. It also includes next-gen electric vehicles, advanced materials, biofuels, water efficiency and purification, and more. Each of these is maturing at its own pace, as technologies and markets develop and grow. And each holds great promise to address critical societal needs.
Put together, it suggests that cleantech still has bright times ahead.
Wind turbine photo via Shutterstock.