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Global renewable energy expands rapidly

The global alternative and renewable energy industry expanded “rapidly” over the last year despite the global economic recession impact on worldwide energy demand, according to merger and acquisition (M&A) organisation IMAP Inc.

In its 2010 Global Alternative Energy Global Report, IMAP says 2009 saw the first decline in worldwide energy demand since 1982. “However, the combined revenue of the three major sources of alternative energy was US$144.5 billion, up 15.8% from 2008.”

Government support and stimulus packages helped renewable energy globally boosting wind capacity by 31%, solar by 47% and biofuels by 21%.

Furthermore, energy smart technologies such as digital energy applications, power saving appliances and electric vehicles attracted more venture capital and private equity investment “than any other renewable energy technology,” IMAP says.

From second quarter (Q2) 2009 to Q2 2010, the alternative and renewable energy industry saw 391 transactions valued at US$20.4bn in total transaction value – up 54.8%.

Technologies, countries and regions

Solar and wind accounted for almost 58% of the total volume. China was the country with the highest transaction value of US$5.4bn with a total of 23 alternative and renewable energy transactions over the period. US came second with US$2.6bn from 72 transactions, followed by Spain, the Philippines and India.

Asia was the leading region with 63 transactions followed by Europe with 183, North America with 110 and the Middle East with four.

Continued investment

Ketil Wig, Chairman of IMAP’s Energy & Power Industry Group, says: “Although investors are cautious, research and development spending by governments and corporations amounted to US$24.6bn in 2009.

“The cost of clean technologies is decreasing and these technologies are being utilised in more applications.

“Within the next decade, we expect solar photovoltaic (PV) installations, smart meters, energy storage devices, wind turbines and other clean technologies to become commodities and help the market to mature.”

Market drivers

“In addition to traditional drivers such as climate change and energy insecurity, we believe that renewable portfolio standards, renewable fuel standards, building codes and efficiency regulations will drive demand for alternative energy,” says Richard Wotterich, Senior Managing Director of IMAP’s Alternative Energy Group.

“Regulatory certainty is another big driver of renewable energy. For example, China initiated new laws in 2010 that require its power grids to buy power from renewable plants and wind farms, or face very stiff fines.

“The result has been a huge uptick in investment in the renewable energy sector. As demand increases, we also expect to see new trends in digital energy, hydrogen storage systems, CO2 capture and storage (CCS) and the implementation of nanotechnology to generate alternative energy.”

Developing economies

IMAP believes the growth of energy demand will largely be concentrated in developing economies. “As emerging markets rapidly expand their power generation capacity, IMAP advisers predict they will focus on wind, solar, bio and hydropower,” IMAP says.

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