Renewable power set for record year

Energy analysts say the boom is being spurred in part by improved technology, which has made wind and solar more competitive. Photo / iStock

Wind and solar power appear set for a record-breaking year in 2016 as a clean-energy construction boom gains momentum in spite of a global glut of cheap fossil fuels.

Installations of wind turbines and solar panels soared last year as utility companies went on a worldwide building binge, taking advantage of falling prices for clean technology as well as an improving regulatory and investment climate. Both industries have seen stock prices jump since US Congress approved an extension of tax credits for renewables as part of its US$1.14 trillion Budget deal.

Orders for 2016 solar and wind installations are up sharply, from the US to China to the developing economies of Africa and Latin America, all in defiance of stubbornly low prices for coal and natural gas, the industry's chief competitors.

"We're seeing very good momentum across the board globally," said Anders Runevad, chief executive of Vestas Wind Systems, the world's biggest producer of wind turbines. "We're seeing growth in every region."

Vestas, based in Denmark, is one of three major turbine makers whose stock price doubled last year amid a surge of new orders from North America, Europe, Africa and Asia. Last month wind energy in the US passed 70 gigawatts, with 50,000 spinning turbines producing enough power to light up 19 million homes.

Energy analysts say the boom is being spurred in part by improved technology, which has made wind and solar more competitive with fossil fuels in many regions.

But equally important is better access to financing, as major investment houses adopt a more bullish posture toward an industry once considered financially risky. In November, Goldman Sachs announced it was quadrupling its investments in renewables to $150 billion.

Renewables have turned a corner in a fundamental way.

Dan Reicher of Stanford University

While solar and wind power have been expanding in the US for years because of steadily falling costs, decisions by Congress and the White House last year have set the stage for continued growth, experts say.

Signs of the industry's momentum appear in surprising places.

In China, the leader in coal use and greenhouse-gas emissions, demand for coal is down for the second year, while investment in solar and wind is soaring, show International Energy Agency figures released last month. India plans to install 175GW of renewable energy by 2022, and African nations have committed to adding 300GW of clean-energy capacity by 2030.