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BUSINESS: Trillion-dollar clean tech industry grows; U.S. garners 15%

Posted by Industry News on Feb 20, 2014

Umair Irfan, E&E reporter

Published: Thursday, February 20, 2014

The advanced energy sector generated $1.13 trillion in global revenue in 2013, a 7 percent increase over the previous year, according to an industry report released yesterday.

However, policy uncertainty undermined gains in some segments in the United States, writing a cautionary tale for other areas, like solar energy, which faces a looming sunset for its policy incentives.

Market analysis firm Navigant Research prepared the report for Advanced Energy Economy, an American business consortium pushing for clean energy technologies like wind power, renewable fuels and building efficiency. The paper, titled "Advanced Energy Now 2014," surveys the size of the advanced energy market by revenue, globally and in the United States, defining "advanced energy" as the best available products and services to meet energy needs.

Dexter Gauntlett, a market research analyst at Navigant, described the report as "the largest, broadest analysis of this kind that has ever been done." Using both publicly available documents and proprietary studies, researchers calculated the market size for 41 product categories across seven market segments, looking at systems that augment energy supplies and reduce demand.

Researchers found that between 2011 and 2013, the global building efficiency market grew 27 percent, the market for fuels like ethanol and natural gas grew by 34 percent, and the advanced transportation market for technologies like hybrid vehicles expanded by 6 percent.

Solar heats up, wind not so much

They also found the United States held 15 percent of the world's advanced energy market in 2013, valued at $168.9 billion. "The results presented in Advanced Energy Now 2014 must be viewed, however, as a conservative assessment of advanced energy market size," the report notes, acknowledging that it doesn't encompass every product category, so the valuations are likely understated.

The findings indicate that the advanced energy sector in the United States is "enormous and beckoning," according to Graham Richard, CEO of Advanced Energy Economy. Revenue from advanced energy grew 18 percent from 2011 to 2012 and 14 percent from 2012 to 2013, with the notable exception of wind power.

Wavering support for the production tax credit, a crucial incentive driving the wind industry, led to a dramatic $23 billion drop in revenue for wind between 2012 and 2013. Photovoltaic revenue, on the other hand, grew 54 percent at the same time, making the United States the third-largest photovoltaic market in the world.

But the 30 percent investment tax credit, which helps photovoltaic projects get off the ground, winds down in 2016. "The reality is it's beginning to impact the business plans of a number of leaders in the solar industry," said Arno Harris, chairman of the Solar Energy Industries Association's board of directors.

To soften the blow, Harris suggested that the incentive should kick in when a solar project starts construction. "It essentially proves a couple years of extra runway for the industry to make this transition," he said. "The way it works today is the project qualifies for the credit when it reaches commercial operation."

Reprinted from EnergyWire with permission from Environment & Energy Publishing, LLC.