When breaking that total capacity down among technologies, wind leads with 93 GW of total installed capacity; small hydro has 73 GW; biomass has 44 GW; geothermal has 10 GW; and PV has just under 8 GW of total installed capacity. While renewables still only make up around 5.5% of the world’s 4,300 GW of total electrical generation capacity, the REN21 report concludes that the industry "has clearly become mainstream" over the last decade.
Michael Liebrich, CEO of the analysis firm New Energy Finance, might hesitate to call renewables mainstream — but he certainly believes the industry is close.
"I haven’t been calling renewable energy ‘alternative’ for years," he says. "This is an industry that is proving itself in markets around the world."
According to recently released figures from New Energy Finance, global public market transactions for renewable energy totaled approximately $17.5 billion, global venture capital investment totaled $21 billion, and liquidity from carbon funds totaled $12 billion in 2007. REN21 also reports that investment in new renewable energy capacity totaled $66 billion, up from $55 billion in 2006.
"If you put that [investment in renewables] into perspective compared to total energy investment, it’s around 10%. So it’s been another strong year in terms of flows of money into the sector," says Liebrich.
Europe and the U.S. each make up about 45% of that investment, while Asian countries such as India and China provide the other 10%. Capital flowing into the industry from Asia — especially China — is likely to grow more rapidly than in other regions of the world over the coming years. Some analysts predict that China could rival Europe or the U.S. in new development of wind and biomass within the decade. China is already far ahead of any other country in solar thermal capacity, accounting for 65% of the world’s installed solar hot water systems.
Last year, China began making changes to its renewable energy law in order to create a more attractive business climate for wind and solar manufacturers, modify feed-in tariffs to encourage growth of the PV industry, and expand biofuels and renewable electricity targets. The changes are expected to pass sometime this year.
"In my estimation, 2007 will be looked upon as the year in which the foundation was laid from a policy standpoint — and probably also from an industrial standpoint — for the very rapid development of China’s renewable energy industry," says Lou Schwartz, President of the consulting and analysis firm China Strategies, LLC.
China admits that it is not pursuing renewable energy because it is the morally correct thing to do. The country simply needs as much energy it can get to meet the various demands associated with its rapidly growing economy. Domestic sources such as wind, solar and biomass are a necessary part of the overall energy picture.
"The Chinese are looking for energy wherever they can find it. They recognize that renewables will be a very significant contribution to the total energy base," says Schwartz.
That attitude, along with the desire for energy independence, stable energy prices and the need to address climate change, is what has driven 58 countries to set renewable energy targets and 56 others to create renewable energy "promotion policies," ensuring a sixth consecutive year of double digit growth rates for wind, solar and biofuels, says Sawin.
"I think we’re seeing a critical shift in perception," she says. "While renewables still only make up a small portion of the total energy mix, there’s certainly a change in how countries are approaching the industry in relation to other forms of energy."
So while it is difficult — and perhaps futile — to determine when exactly the tipping point for the industry may occur, many analysts believe that 2007 will be viewed as a historic moment when the world accepted renewables not as "alternative energy" but simply as energy.