As pressure mounts for countries to address their rising carbon emissions, the renewable power sector should be a major beneficiary.

Solar Review

Just to summarize, the solar sector continues to be the fastest growing renewable energy sector, as noted in the June 11 issue and discussed in the GSR. The BP Statistical Review further corroborates this, showing that global solar power consumption has increased 11-fold in just the past five years.

Germany has led the world in solar power consumption since 2006, and retained its top spot in 2013 with 30 terawatt-hours (TWh) of solar power consumption — 24 percent of the world’s total. Asia Pacific increased solar consumption by 75.5 percent over 2012, and cumulatively consumed 29.8 TWh. Behind Germany among the top five solar consumers were Italy (22.4 TWh), Spain (13.1 TWh), China (11.9 TWh) and Japan (10.7 TWh). The US was 6th globally, but the 114 percent increase in US solar consumption over 2012 was largest gain among the top 20 global consumers of solar power.

Wind Power

While the growth rate for solar photovoltaic (PV) capacity has been an impressive 55 percent a year on average over the past 5 years, wind power continues to be the world’s dominant non-hydropower renewable power option. In 2013, the world consumed 628 TWh of wind power — just over five times the world’s consumption of solar power. But the growth rate for wind power capacity was a more modest (but still impressive) 21 percent on average over the past 5 years, so solar is closing the gap. If the growth rates of the past five years continued for the rest of the decade, solar power would overtake wind power sometime around 2020.

More than 35 gigawatts (GW) of new wind power capacity was added in 2013, bringing global capacity to 318 GW. The top 10 countries accounted for 85 percent of year-end global capacity, but at least 85 countries have seen commercial wind power activity, and at least 71 had more than 10 megawatts (MW) of capacity by the end of 2013.


Asia was the largest market for the sixth consecutive year, accounting for almost 52 percent of capacity additions, followed by the EU (about 32 percent) and North America (less than 8 percent). Non-OECD countries were responsible for the majority of installations, and Latin America increased its share to more than 4.5 percent.

Despite China’s lead in wind power capacity, the US was actually the world’s largest consumer of wind power in 2013 with 169 TWh consumed — 27 percent of the global total. China was second with 132 TWh consumed, followed by Spain (56 TWh), Germany (53 TWh) and India (35 TWh).

Denmark’s Vestas Wind Systems (Copenhagen: VWS, OTC: VWDRY) was the world’s largest manufacturer of wind turbines with 13.1 percent of the global market in 2013. Vestas’ shares have risen nearly 200 percent over the past year, but the share price has been on a roller-coaster over the past five years. China’s Xinjiang Goldwind Science and Technology (OTC: XJNGF) was the world’s second leading manufacturer of wind turbines last year with 11 percent of the global total. German companies Enercon (9.8 percent share) and Siemens (Frankfurt: SIE, OTC: SIEGY) (7.4 percent share) were third and fourth, while General Electric (NYSE: GE) was fifth globally with a 6.6 percent share.

Hydropower

When renewables are discussed, they are often denoted as “non-hydropower” renewables. This is because the installed base for hydropower and the capacity factors (the output of an electricity-producing asset over a period of time divided by its maximum theoretical power output) for hydropower are much higher than those for wind and solar power. As a result, the amount of electricity produced from hydropower dwarfs that of other renewable options.

To put this into perspective, in 2013 the world consumed 3,782 TWh of hydropower, which was 30 times the world’s solar power consumption and 6 times the world’s wind power consumption. In fact, hydropower produced around 15 percent of the world’s electricity in 2013, more than provided by nuclear power.

China is the world’s leading consumer of hydropower, and it added the most capacity in 2013. But because hydropower is a mature technology with a limited inventory of suitable sites, the average annual growth rate for capacity additions has been running at only about 4 percent, much lower than for other renewables. This means that the opportunities for investment in hydropower aren’t necessarily as sexy as those in the fast growing solar PV arena.

There are a couple of ways to invest in hydropower. The first is through companies that produce hydroelectricity. Idaho Power (NYSE: IDA) and Portland General Electric (NYSE: POR) are two US-based public utilities with a substantial base of hydropower generating resources, but neither is a pure hydropower play. Investors looking for purer hydropower plays will have to look abroad at companies like Brazil’s Cia Energetica De Minas Gerais (NYSE: CIG), Austria’s Verbund (OTC: OEZVF), or China Yangtze Power, which operates the Three Gorges Dam and trades on the Shanghai stock exchange.

Alternatively, an investor can choose to invest in shares of turbine producers for the hydropower industry. Austria-based Andritz (Vienna: ANDR, OTC: ADRZF) and France’s Alstom (Paris: ALO, OTC: ALSMY) supply hydropower turbine-generators, but both reported a slowdown in demand in 2013. China’s Dongfang Electric (Hong Kong: 1072, OTC: DNGFF), on the other hand, reported a nearly 30 percent increase in the production of hydropower turbine-generators over 2012.

Geothermal

Geothermal electricity is produced when the heat from the earth is used to produce steam, which is then passed through a turbine. Electricity produced in this way generally requires fairly shallow geothermal reservoirs (less than 2 miles deep). Geothermal electricity has a high capacity factor, and the cost of generation is comparable to that of coal-fired generation. Its usage, however, is geographically limited.

Geothermal power produces little to no emissions during normal operation. Geothermal is also a “firm” renewable power source, which simply means that it’s available as needed, as opposed to intermittent power which may only be available when the sun shines or the wind blows. Like hydropower, geothermal is a relatively mature renewable technology, and it has had a similar 4 percent annual growth rate over the past five years.

In addition to electricity production, geothermal energy can be also be used for heating or cooling. Hot springs or water circulating in hot zones can be used to heat buildings. Over two-thirds of the geothermal energy used globally goes into geothermal heat pumps.

At least 530 MW of new geothermal power generating capacity came online in 2013, bringing total global capacity to 12 GW. The 76 TWh consumed in 2013 is equal to about 60 percent of global solar power consumption, but the growth rate for geothermal lags far behind that of solar power.

Countries that added geothermal power capacity in 2013 were New Zealand, Turkey, the US, Kenya, Mexico, the Philippines, Germany, Italy and Australia. The US is the world leader in geothermal electric generating capacity with 3.4 GW installed. Other countries with at least 1 GW of installed capacity are the Philippines (1.9 GW), Indonesia (1.3 GW), and Mexico (1 GW).