Green Rush to Finance Solar

Environmental & Economic Benefits

The “green gold rush” is on. Global investment in renewable energy surged some 60 percent, to $148 billion last year. Investment in clean energy from wind, solar and biofuels rose three times faster in 2007 than predicted by the UN Environmental Program, with wind power attracting $50.2 billion, a third of all clean energy investments. Investment in solar energy soared by 254 percent to $28.6 billion last year. This “green gold rush” is propelled by the soaring fossil-fuel prices, and concerns over carbon dioxide emissions that fuel global warming.

The world is at an undeniable crossroad. Projections show three to four times more electrical power could be required over the next 50 years to support continued growth in population and economic output. Clean, renewable sources are the answer. “Unlike other major energy transitions, such as wood-to-coal and coal-to-oil, moving from oil to alternatives will be forced and rapid,” writes Charles Cresson Wood, President of Post-Petroleum Transportation, a consulting firm.

The Cost of Conventional Energy

In the last six years, uranium prices have moved from $7 a pound to $80 a pound. Coal has moved from $22 a ton delivered at the plant to $55 a ton, and natural gas has gone from $2 per million BTUs to $12 per million BTUs. Oil went from $20 a barrel to $145 a barrel.

As these dirty energy resources become more costly, so follows the delivered price of electricity jumping by 70 percent in the last six years in New Jersey and many other states. All analysts expect continued increases in electricity costs.

Americans Want Solar

94% of Americans say it’s important for the U.S. to develop and use solar energy. 72% favor extension of Federal tax credits for renewable technologies, and 77% of Americans want the government to make solar power development a national priority, according to the independent polling firm, Kelton Research, June 10, 2008. “These results are an undeniable signal to our elected leaders that Americans want job-creating solar power, now,” said Rhone Resch, President of the Solar Energy Industries Association (SEIA).

“Solar development means job growth for Americans, by Americans, in an industry that will benefit America,” said Dr. Gerald Fine, President & CEO of SCHOTT North America. “Rather than solar power wauchope rely on foreign sources for fuel, the U.S. can aspire to become the world’s leader in clean energy.”

General Electric, with a goal of investing $6 billion in renewable energy by 2010, already surpassed the $4 billion mark this July. GE says that within two years, renewable energy will make up almost a quarter of its total investments in energy, up from 10% in 2006. Investment banks Morgan Stanley, Merrill Lynch and Goldman Sachs all plan to take advantage of global interest in renewable investments. Meanwhile, NYMEX, the New York-based stock exchange, recently formed a consortium of financial institutions to launch a Green Exchange to trade Renewable Energy Credits.

The Market Speaks: Renewable Energy Finance Forum Wall Street
Over 600 senior executives attended the 5th annual Renewable Energy Finance Forum (REFF) held this June in New York City. “Each year, we have increasingly seen financial leaders on Wall Street recognize renewable energy companies as an important growth sector for the US economy,” said Michael Eckhart, President of the American Council On Renewable Energy (ACORE) who hosted the forum along with Euromoney Energy Events. “This new reality has helped launch renewable energy investing into mainstream financial arenas and continues to drive the momentum of the industry,” said Eckhart.

Top analysts forecasted the industry’s potential in the US, for solar power, wind power and bio-fuels. Speakers also drew attention to wavering political issues threatening the viability of renewable developments as Congress currently debates the extension of critical investment catalysts like the Investment Tax Credit and the Production Tax Credit.

“Wall Street has shown us that the full forces of American innovation are ready to be deployed to meet our energy challenges. If government leaders can provide a stable long-term climate for investment, the renewable energy sector will see unprecedented growth, providing extensive economic opportunities and environmental benefits,” said John Geesman, Co-Chair of the ACORE Board of Directors and former Calif. Secretary of Energy.

GE Financial Services and ACORE released a report at the REFF weighing the long-term economic impact of wind development with the up-front cost of the production tax credit. The report found that the net present value of 2007 US wind development is worth $250 million more than the price tag for the tax credits, which was about $9 billion last year. According to the report, the tax credit pays for itself because of tax revenue received from wind projects, worker wages and other taxes. Once the PTC and ITC issues are behind the industry, the next big battle on Capitol Hill will be over a carbon-weighted policy like cap and trade, according to presenters.

“We simply need more energy. We’re not waiting around for governments to craft the perfect policies,” said Vivienne Cox, Executive Vice President of BP’s alternative energy business. “This is an important market, and we’re going to build a business around it.”
The US is currently the world’s fourth-largest solar power market after Germany, Japan and Spain. Japan is aiming for 30 percent of all its homes to have solar panels installed by 2030, bringing the number of installations to 14 million, according to Kyodo News. Japanese solar panel manufacturers, which include Sharp, account for half of the world output of solar power equipment.

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