Annual renewable energy investment has increased from $63 billion in 2006 to $104 billion in 2007 and $120 billion in 2008. In the four years from end-2004 to end-2008, solar photovoltaic (PV) capacity increased sixfold to more than 16 gigawatts (GW), wind power capacity increased 250 percent to 121 GW, and total power capacity from new renewables increased 75 percent to 280 GW, including significant gains in small hydro, geothermal, and biomass power generation. During the same period, solar heating capacity doubled to 145 gigawatts-thermal (GWth), while biodiesel production increased sixfold to 12 billion litres per year and ethanol production doubled to 67 billion litres per year.
Annual percentage gains for 2008 were even more dramatic and wind power grew by 29 percent and grid-tied solar PV by 70 percent. The capacity of utility-scale solar PV plants (larger than 200 kilowatts) tripled during 2008, to 3 GW. Solar hot water grew by 15 percent, and annual ethanol and biodiesel production both grew by 34 percent. Heat and power from biomass and geothermal sources continued to grow, and small hydro increased by about 8 percent.
During 2008, the United States became the leader in new capacity investment with $24 billion invested, or 20 percent of global total investment. The United States also led in added and total wind power capacity, surpassing long-time wind power leader Germany. Spain added 2.6 GW of solar PV, representing a full half of global grid-tied installations and a fivefold increase over Spain’s 2007 additions. China doubled its wind power capacity for the fifth year in a row, moving into fourth place worldwide. Another significant milestone was that for the first time, both the United States and the European Union added more power capacity from renewables than from conventional sources (including gas, coal, oil, and nuclear).
It’s impossible to separate the ‘technical’ and ‘financial’ aspects of the subject of renewable energy from the ‘politics’ which surround it. This is because the technical/financial/political aspects are intertwined; an available energy supply is the cornerstone of any economy and politicians are extremely interested in how economies perform. Politicians like short-term solutions and are reluctant to introduce measures which will make them unpopular.
Power generation using fossil fuels creates many economic externalities that are not taxed or banned by governments to control their use. For example, coal-fired power generation creates the negative externalities of emissions of mercury, NOx, SOx and COx. Many governments don’t limit these negative externalities, created by the power producers, for fear of impact upon the cost of electricity. Consequently, power generation using fossil fuels will always cost less than renewable energy until governments protect their citizens and the planet from the adverse effects of the emissions of mercury, NOx, SOx and COx.
Obviously, people do prefer renewable technologies. It is up to governments to use legislation and fiscal measures to create a level playing field where renewable energy cleanliness is rewarded and fossil fuel negative externalities like emissions of mercury, NOx, SOx and COx are penalized at the correct scale. By this method, renewable energy costs from sources like; solar, wind, tidal and hydro would be equal to those costs achieved with ‘clean’ fossil fuel power generation.