Clean Energy's Big Year: Clean Energy's Stock On the Rise in 2006

It’s been a landmark year for clean energy, as solar and wind power blew past the records, despite supply shortages.

Michael Rogol, managing director for Photon Consulting, in October estimated that global solar industry sales would reach $19 billion this year. That expectation was raised from $16 billion in March, and represents a 58 percent increase from 2005.

Global numbers for wind power aren’t out yet, but at least two groups are predicting a record year.

The American Wind Energy Association estimates the wind industry will have installed a record 2.75 gigawatts of generating capacity this year, enough electricity to power the state of Rhode Island. The association in August said total U.S. wind energy installations surpassed 10 gigawatts, and the world’s largest wind farm, a 735-megawatt project in Texas, was also completed in the third quarter of 2006.

The British Wind Energy Association said the UK also had a record-breaking year. Wind power commissions grew 50 percent to 630 megawatts. Some 625-megawatts-worth of projects are under construction in the UK, and another 2,120 megawatts (2.12 gigawatts) have been approved.

Clean energy made plenty of news this year:

Confidence in Clean

Institutional investors were generous. Research firm New Energy Finance expects the renewable energy and low-carbon technology industries to set a record of $70.9 billion in investment this year, a 43-percent increase from 2005.

Of that amount, New Energy Finance expects venture capital and private equity investment to top $7 billion in 2006, a 167-percent increase from last year.

Numbers varied. According to a study by Dow Jones VentureOne and Ernst & Young, $761.4 million of venture capital was invested on a worldwide basis through the beginning of December, up 50 percent from $504.1 million invested during the first three quarters of 2005. In the United States alone, $585.6 million was invested in 60 cleantech companies during the first three quarters of 2006.

According to the Cleantech Venture Network, North America numbers were higher. Venture investment rose from $514 million in the first quarter to $843 million in the second quarter and $933 million in the third quarter, according to the Cleantech Venture Network. In Europe, investment grew in the first two quarters, reaching $268 million in the second quarter, then fell to $144 million in the third quarter.

Either way, it’s clear private investment is growing. Among other announcements, Virgin’s flamboyant Richard Branson said he would invest $3 billion in renewable energy technologies over the next 10 years, ethanol company Altra raised $120 million, and venture firm Kleiner Perkins Caufield & Byers said it would double their commitment to green technology, to $200 million.

Notable IPO

IPOs were also notable. According to New Energy Finance, money raised in clean-energy-related IPOs more than doubled, reaching $10.3 billion in 2006, up from $4.3 billion in 2005 and $0.7 billion in 2004.

After a stock dip starting in May, clean-energy stock values are back up more than 30 percent from the start of the year, according to the WilderHill New Energy Global Innovation Index, which launched in January to track clean-energy stocks globally.

According to New Energy Finance, solar companies raised the most on the public markets, raising $4.4 billion, more than double the $1.7 billion raised in 2005 (see Trina Solar Has Rollercoaster IPO, IPO Watch: Hot, Crude, and Hertz, Chinese Solar Firm IPOs, Big Deals: IPOs).

Biofuels raised the second-most, raising $2.5 billion, more than 10 times the amount raised last year (see Ethanol Firm Plans $300M IPO, High on Ethanol). Wind IPOs raised $1.2 billion, compared with $1.1 billion last year.

Solar Silicon Shortage

While demand for solar continued to grow rapidly this year, the industry was constrained by a supply shortage of silicon, the material that turns sunlight into electricity in most solar panels. The shortage boosted prices and led solar manufacturers to strike long-term deals with silicon producers, which began installing new plants.

The shortage also sparked new interest in silicon technologies, as well as in silicon-efficient technologies like thin-film solar, a solar technology that uses little to no silicon, and concentrator technologies, which use mirrors and lenses to concentrate the sun into smaller solar cells (see Solar’s Going Thin).

Predictions about when the shortage will end vary from between 2007 and 2012. An ease in supply is likely to bring lower prices, and manufacturers have been investing in technology to hone their competitive edge once the shortage ends. Others have been looking at expanding into other solar services, such as installation and distribution.

Ethanol Grows

Ethanol production grew as new plants came online. According to New Energy Finance as of September, 36 new commercial ethanol plants were financed worldwide in 2006, compared with 25 in 2005 and seven in 2004.

Ethanol from materials like corn stover, wood chips, and switchgrass, got a boost from high oil prices and government backing. Ethanol benefited from a mention from U.S. President Bush in February, a U.S. goal set last year to replace 30 percent of its transportation fuel with biofuel by 2030, and a declaration from Brazil’s government that it would reach energy independence through the alcoholic fuel this year (see The Fuel of the Future?).

A number of ethanol startups raised funding, including Mascoma, Iogen, and GreenShift. And cellulosic-ethanol companies announced a series of milestones, such as the first cellulosic plant in China and the world’s first “commercial-scale demonstration plant” (in other words, a plant that produces more than 1 million gallons per year).

Electric Cars Make Comeback

Electric cars enthusiasts had a great year, as startups came up with high-end electric sports cars like Tesla Motors’ Roadster and Venturi’s Fetish (see Green Machines Get Mean [and this previous Watthead post). Forget slow-moving, short-range neighborhood vehicles; these are meant to appeal to the mainstream, even if only the top echelon of earners can afford to actually buy one.

Plug-in hybrids are a mid-step between hybrids and electric cars, as they are hybrids with a plug so their owners can recharge at their wall outlets and reach up to 100 miles per gallon. Startups like EnergyCS and Hymotion started converting hybrids into plug-ins, and at the LA Auto Show, GM announced it would make a production version—but gave no timeline. (See GM, Nissan, Toyota Plugging In, US Could Plug In Most Cars, Plug-In Hybrids Get Pledges, Plug-In Hybrids Gets 100 MPG).

In the meantime, car manufacturers’ design teams won bragging rights at the LA Auto Show for coming up with the greenest concepts they could render.