By Jeanny Lim

How has the global economic crisis been affecting the renewable energy industry? Is there a specific technology sector that has been affected more severely? And is there a specific geographical region that has been affected more severely?

As the credit markets froze in the wake of the slowdown, lenders held onto cash reserves and available credit and financing for projects and plant expansions became increasingly scarce. When credit was available, investors began to invest in “proven” technologies which had a longer track record which, thereby, decreased overall investment risk and return uncertainty. Certainly, newer technologies such as a-Si took a step back from a growth perspective but “proven” alone was not an indicator of winners. First Solar and Solyndra, which have relatively new technologies in CdTe and CIGS, respectively, were able to sell out capacity based on exceptional cost per watt projections and unique selling propositions.

As the world has transitioned into a global economy, the effects from the slowdown were not contained to any specific region, but areas with established renewable manufacturing bases such as Germany and China experience depressed average selling prices amid falling demand and significantly increased inventories.

What kind of correlation is there between the price of raw materials, oil and electricity and the renewable energy industry?

Sharp increases or “shocks” in the global energy markets driven primary due to oil gripped certain regions of the world throughout 2008 and sparked government and consumers alike to demand a greater portion of the energy portfolio to come from renewable sources. A segment of the world economy gravitated towards renewables as a method to ensure national security while others believed that renewable energy would ensure environmental sustainability. Others simply believe that renewable energy would provide lower delivered cost in the long term assuming oil price increases were to be the norm moving forward. Regardless, even as energy prices subsided in the wake of global economic slowdown, the demand for renewable energy has remained as governments seek to diversity their energy portfolio while ensuring power to growing populations.

Interestingly enough, even within the renewable sector, raw material fluctuations have shifted demand to other forms. For example, in the solar energy segment, the cost of silicon, a primary raw material used in crystalline solar module witnessed dramatic increases in spot prices over US$300/kg during 2008. This sharp increase drove the emergence of thin-film solar modules since they used little to no silicon in their bill of materials. Conversely, in 2009, demand shifted back toward crystalline as silicon prices drops coupled with installed crystalline capacity utilization led to rock bottom crystalline ASP’s.

How much growth do you expect for the renewable energy industry?

There are two answers to that question based on the stage an economy that renewable is addressing is in. In the more developed markets (Europe and North America), renewable energy is aspirational from an energy independence and security perspective. Further, the social collective is starting to push sustainable use in many things these regions do and renewable energy is a strong fit with this movement.

In developing regions such as the large countries in Asia (India, China, etc.) the need for energy is so strong that any resource is being installed at this time. While the benefits of lower emissions and long-term sustainability are nice, the primary driver of renewables in these areas is power need.

This highlights the fact that as the world’s population continues to increase, so will its appetite for energy. Fossil fuels alone cannot indefinitely sustain the world’s energy demand and countries and companies will turn to renewable energy sources as a means to guarantee energy supplies.

Jeanny Lim is Editor-in-Chief of InterPV. Send your comments to swied@infothe.com.

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