The bankruptcy of Solyndra and other solar panel manufacturers in 2011 created a toxic political climate in the U.S. regarding renewable energy. Many believed that future growth projections in the renewable energy sector were nothing more than a hoax, and that government support over green energy should be abandoned immediately.
But outside the political realm, major investors were plunging into green energy with full force, including Warren Buffett and corporate giants Google and Hewlett-Packard. Clearly a discord has emerged between political sentiment and economic reality. If supporting green energy is supposedly a “losing game” than why are major investors continuing to invest in it?
Bloomberg New Energy Finance (BNEF) recently released two reports analyzing green energy. In its reports, BNEF made the comparison between the automobile industry in the early 20th century and renewable energy today.
BNEF Chief Executive Officer Michael Liebreich stated that “In 1903, the United States had over 500 car companies, most of which quickly fell by the wayside even as the automobile sector grew into an industrial juggernaut.”
At the dawn of the automobile era, many new automakers emerged on the scene to capitalize on the revolutionary technology. But not all of them made it past the few years. Indeed, many of the weaker companies were forced into bankruptcy and doubts proliferated regarding the future of the auto-industry.
It took some time, but eventually the automobile industry became a real powerhouse for the US economy. It would have seemed foolish to base future projections of the auto-sector based on a tepid start at the beginning of the century.
Fast forward to today, and the renewable energy sector is experiencing the same kind of struggles. Several of the weaker firms have gone under and many people feel that the strength of the green energy sector is waning. But in fact, quite the opposite is taking place. Green energy technology is improving every year, and many jurisdictions boast renewable prices that are cost-comparable to fossil fuels.
Renewable investment rose by 17% last year to $257 billion, contributing to 44% of new energy capacity. China has set ambitious targets for renewable energy installation over the past several years, and India achieved the most rapid renewable energy growth last year.
Even if the political climate in the US does not seem conducive to growth in renewable energy, it has not phased the sentiments of big private investors and countries such as China and India. Renewable energy could indeed become the next big powerhouse in the global economy, and those who fail to invest in it early could be left behind.
Image CC licensed by Intel Free Press: Solar installation Vietnam