Wind turbine costs have been declining and the energy conversion efficiency of wind turbines has been increasing while fossil fuel costs are rising. Nonetheless, high up-front capital costs, the challenges of deploying and maintaining wind turbines in harsh offshore environments and the cost, time and difficulties of constructing and maintaining offshore-to-grid connections has lead to criticism and questioning of Germany and other European countries’ historic and ambitious offshore wind energy targets.

Stronger and more consistent than winds on-shore, offshore winds hold tremendous energy potential. Oil and gas companies have been operating offshore in environmentally sensitive, harsh conditions for decades now, and government proponents and industry participants believe the challenges can and will be surmounted.

Germany & Denmark: Blazing the Offshore Wind Power Trail

Germany’s plan to phase out all 17 of its nuclear power plants-which have met around 20% of its electrical power needs- and shift to renewable energy by 2022 is the largest infrastructure investment program in Europe since WW-II and the Marshall Plan. The Merkel government’s energy plan calls for building offshore wind farms covering an area six times the size of New York City and building power lines “that could stretch from London to Baghdad,” Bloomberg News reported recently.

Germany’s offshore wind and renewable energy drive is stimulating investment and sales across a wide range of alternative energy providers, including Denmark’s Vestas Wind Systems A/S, the largest maker of wind turbines, while also prompting radical restructurings at utilities, such as Germany’s RWE AG (RWE) and EON AG.

With wind energy supplying about 1/5 of its electricity, Denmark is the world leader when it comes to wind power’s contribution to national electricity demand, but the Danish government sees even greater gains ahead, particularly with regard to offshore wind.

Danish legislators on Thursday approved construction of two offshore wind farms with a total rated capacity of 1,000 MW, Reuters reported. Danish Minister for Climate, Energy and Building Martin Lidegaard announced that a 400 MW wind farm will be built at Horns Rev in the North Sea off the west coast of Jutland, while a second, 600 MW wind farm will be built Kriegers Flak in the Baltic Sea between Denmark and Sweden.

Management at Denmark’s Dong Energy said the pioneering offshore wind energy provider will invest 10 billion kroner ($1.8 billion) a year in offshore wind projects “to offset a ‘challenging’ environment for gas plants as it ceases to build new power facilities,” according to a Bloomberg Businessweek report.

The sharply rising costs of fossil fuels and declining profitability of even the most efficient combined-cycle natural gas turbine plants and the drive to cut CO2 and greenhouse gas emissions is leading Dong and other major European power utilities to make radical, fundamental shifts in their business strategies.

Dong management intends to fund its offshore wind and other renewable energy investments- which also includes converting coal-fired power plants to biomass-using retained earnings and selling shares in existing projects, Bloomberg Businessweek reported. Dong recently agreed to sell a 50% stake in German wind power park to Kirkbi A/S, the Lego Group’s parent company.

Belgium: Home to World’s Most Powerful Wind Turbine

German energy company RWE Innogy is installing the world’s most powerful wind turbine in waters about 30 kilometers (~18 miles) off the Belgian coast. With a rated capacity of 6.15 MW, RWE’s offshore wind turbine is expected to generate enough clean, renewable electrical power to meet the needs of some 6,000 people a year.

As one of an array of 30 such offshore wind turbines comprising the 48-turbine Thornton Bank wind farm, it will contribute to an anticipated rated maximum of 325 MW of electrical power, enough electricity to meet the needs of some 600,000 people a year.

Manufactured by REpower Systems, the wind turbine’s nacelle is the size of a two-family house, the rotor has a radius of more than 400 feet and it sweeps a surface area equivalent to two football fields, according to an RWE press release. Project plans call for 30 of these turbines to be installed at the Thornton Bank wind farm site by September, with the final 18 to be installed in 2013. A 40-km (~24 mile) cable will connect the wind farm to to Belgium’s grid.

RWE Innogy owns 26.7% of the Thornton Bank wind farm, the world’s largest project-funded offshore wind farm, according to the company. Eight European banks, including the European Investment Bank and the German and Danish Export Credit Agency, are providing 900 million euros worth of financing to develop Thornton Bank, which has been generating renewable power since 2009. A total 1.3 billion euros is being invested in the project.

Source: www.ibtimes.co.uk

There are big differences between wind and solar, though. Differences that investors should consider when looking at renewable energy stocks. Let the battle begin.

Space matters

The sheer area it takes to generate renewable energy is one of the drawbacks compared to traditional fossil fuel sources. Anyone who’s driven past wind farms in Iowa, Texas, or California has seen just how expansive they can be.

Solar clearly packs more power into the space it has available, but wind has its own advantages. Much of the space under a wind farm is still available for farming or other uses, while solar plants aren’t really multipurpose plots of land.

The land viable for building solar and wind plants is also very different. Wind development has been focused on a relatively small sampling of land where wind blows consistently. Solar, on the other hand, is generally viable in more locations.

Base load vs. peak power

Wind and solar have different power-generation profiles that depend on the weather and how the world turns. Both require backup power or energy storage to smooth out generation peaks and valleys. But how should we look at their generation profiles?

Wind is more comparable to a base-load power source because it can generate power 24 hours a day. Solar, on the other hand, generates power only during the daytime hours, making it a perfect peak power source. This doesn’t make one better than the other, though; in fact, it means they complement each other quite well.

Cost trajectory

Costs have been falling for both wind and solar, but the trajectory of solar has definitely outpaced wind in the last 12 months. According to GTM Research, solar module prices will fall from $1.80 per watt at the start of 2011 to $0.70 per watt by the end of 2012. As innovations like tracking, integrated inverters, and more efficient cells spread through the market, costs for modules and the balance of the system will continue to fall.

Wind, on the other hand, is a relatively mature energy market by comparison. Onshore turbines from General Electric (NYS: GE) , Siemens, Vestas, and other manufacturers aren’t seeing costs fall 50% per year like solar, and improvements are made by making wind turbines bigger.

American Superconductor (NAS: AMSC) as well as other manufacturers have their eyes on turbines up to 10 MW for offshore markets. For now, a project like Cape Wind is providing electricity to the grid for $0.244 per kWh, partially elevated because the infrastructure for offshore development isn’t as strong as onshore. Nevertheless, the cost trajectory of wind just isn’t on the same steep downward path as solar.

Will solar crash like wind?

The similarities between the development of wind and solar technologies, as well as wind and solar companies, are striking. Both were initially developed in the U.S. and Europe, where most of the demand has been for decades. China entered both wind and solar at a fast and furious pace over the past decade, taking market share and putting pressure on older manufacturers.

That’s left many of the traditional wind manufacturers struggling in the current environment. Vestas recently reported that 2011 revenue fell 16% from a year earlier, partly because of competition, but also because wind installers have exploited the easy-to-develop areas. Future developments offshore and further off the current grid require more infrastructure, which will impact both wind and solar.

Solar manufacturers will have to continue cutting costs to make sure the industry doesn’t stagnate the way wind has in recent years. First Solar (NAS: FSLR) and SunPower (NAS: SPWR) , established U.S. manufacturers, have felt the pressure from Chinese manufacturers just like GE, Vestas, and Siemens have in the wind business, and the pressure will continue. But there are ways for investors to profit from this pressure, including top-tier suppliers Trina Solar and Yingli Green Energy.

I think the big difference between the industries is how technology impacts them. This might save U.S. solar manufacturers from suffering a fall in demand long term like wind manufacturers have.

Betting on the future of energy

No doubt, wind will play a role in our energy future. But based on the cost trajectory, energy density, and diverse installation applications, I think solar is the real future of renewable energy. Investors should look for companies differentiating themselves on cost or technology to find winners in the industry.

Trina Solar and Yingli Green Energy are both low-cost leaders in China, benefiting from easy money there. In the U.S., SunPower provides the most efficient panels and has a large pipeline of projects. It’s also my pick as top energy stock for 2012.

For another top energy pick from our analysts, check out our report: “The Only Energy Stock You’ll Ever Need.” It’s free, while it lasts.

Source: www.dailyfinance.com

Natural gas has a bad rap in some parts of the country, because the process of fracking is not popular. But many people looking at cheap natural gas from the global perspective see it as a good thing.

Henry Jacoby, an economist at the Center for Energy and Environmental Policy Research at MIT, says cheap energy will help pump up the economy.

“Overall, this is a great boon to the United States,” he says. “It’s not a bad thing to have this new and available domestic resource.” He says cheap energy can boost the economy, and he notes that natural gas is half as polluting as coal when it’s burned for electricity.

“But we have to keep our eye on the ball long-term,” Jacoby says. He’s concerned about how cheap gas will affect much cleaner sources of energy. Wind and solar power are more expensive than natural gas, and though those prices have been coming down, they’re chasing a moving target that has fallen fast: natural gas.

“It makes the prospects for large-scale expansion of those technologies more chancy,” Jacoby says.

Natural Gas: ‘A Bridge To Nowhere’?

From an environmental perspective, natural gas could help transition our economy from fossil fuels to clean energy. It’s often portrayed as a bridge fuel to help us through the transition, because it’s so much cleaner than coal and it’s abundant. But Jacoby says that bridge could be in trouble if cheap gas kills the incentive to develop renewable industry.

“You’d better be thinking about a landing of the bridge at the other end. If there’s no landing at the other end, it’s just a bridge to nowhere,” he says.

In the short run, at least, the wind industry isn’t too worried about this. Denise Bode, who heads the American Wind Energy Association, says low gas prices don’t undercut current prices for wind, because those are mostly fixed by 20-year contracts, not market prices.

And even if wind is a bit more expensive than natural gas, she says utilities still want it in their mix. Windmills aren’t subject to changing fuel prices, so the cost of production is quite predictable. That’s not true for natural gas — there’s no guarantee that today’s cheap prices will stay as low as some predict.

“It’s very difficult to really know how certain that is, so you always want to balance that with something that is certain,” Bode says.

Reducing Political Will For Renewables?

What really worries her isn’t natural gas — it’s politics. Wind could lose a huge tax break at the end of this year. And that would have a much more dramatic effect than low natural gas prices.

“You’ll see very low numbers” for new wind installations if the federal production tax credit expires,” Bode says. “In fact, I think EIA [the U.S. Energy Information Administration] projects almost zero for 2013.”

The solar industry’s subsidies run for several more years, so they are not in that bind, at least not yet. But Trevor Houser, an energy analyst at the Rhodium Group, says these tax credits and other incentives like state renewable standards are key if renewables are to grow and mature during the natural-gas glut.

“Long-term renewable deployment in the U.S. is going to depend primarily on policy,” Houser says. “Is there enough concern about environmental consequences to put in place incentives for renewable energy?”

That partly depends on how much of a premium people and companies will be willing to pay for cleaner energy. Right now, with natural gas so cheap, that premium is fairly substantial.

“If those prices hang around for another three or four years, then I think you’ll definitely see reduced political will for renewable energy deployment, ” Houser says. “But we don’t expect prices that low to hang around that long, because low prices are in many ways self-correcting.”

Gas is so cheap now that companies that produce it are struggling to make a profit. So Houser expects prices to move up. That will help close the price gap between gas and renewable energy.

Even so, there’s still a huge way to go before prices and government policies do enough to significantly reduce emissions of the gases that contribute to global warming.

Source: www.npr.org

But it’s the type of thin-film solar panels and where the photovoltaic power plant will be built that foreshadows a potentially sizable business opportunity as well as a way to maximize renewable energy production.

Energy producer Invenergy will build the Grand Ridge Solar project in Illinois adjacent to its 210-megawatt wind farm. (Powered, not coincidentally, by GE wind turbines.)

By pairing wind and solar farms, Invenergy makes more efficient use of the transmission system, given that both sources of electricity are intermittent and tend to hit peak production at different times of day. That helps power grid operators balance supply and demand.

“You put those two together you have a much more dispatchable and local renewable system,” Victor Abate, vice president of GE’s renewable energy business, told me Thursday. “We’ve built 30 gigawatts of wind farms so adding solar is a good utilization of assets.”

Abate says it’s too early to tell how big a market that could be but notes that installing solar at just 10% of those wind farm sites would sell out GE’s solar panel production for the next five or six years.

The company is building the U.S.’s largest solar panel factory in Colorado, which will annually manufacture 400 megawatts of cadmium-telluride thin-film photovoltaic panels. (That poses a competitive threat to First Solar, the industry leader that dominates the market for cadmium-telluride solar panels.)

But GE will be supplying a different type of thin-film solar panels made by Japan’s Solar Frontier to the Invenergy project in Illinois. It’s the second win this week for Solar Frontier’s CIGS (copper indium gallium selenide) technology.

On Monday, renewable energy developer enXco announced that it would build a 150-megawatt solar farm in the Southern California desert using Solar Frontier panels near its wind farms in the Tehachapi Mountains. Those wind and solar farms will share a 4,500-megawatt renewable energy transmission line under construction in the Tehachapi.

That is by far the biggest deployment of CIGS technology, which a number of Silicon Valley startups have been working on for years to commercialize as it promises cheaper solar electricity through by lowering production costs.

Source: www.forbes.com

The latest Energy Statistics (PDF) from the Department of Energy and Climate Change (DECC) show that, over the first three quarters of 2011, Scotland delivered 94 per cent of last year’s totals and 83 per cent of the previous record year.

The Scottish government said that, if the trend continues over the fourth quarter, 2011 will be a record year for renewable electricity in Scotland.

It added that the country’s goal of 100 per cent green energy by 2020 is also on track, as the statistics reveal sufficient capacity in Scotland to meet its interim target of 31 per cent of electricity demand from renewables in 2011.

Installed capacity reached a record high of 4.3GW over the year, while Scotland continued to be a net exporter of electricity in 2010, exporting 21 per cent of electricity generated.

Scottish energy minister Fergus Ewing said that £750m worth of renewables projects were switched on in 2011, while another £46bn worth are in the pipeline.

“2011 has been an exceptional year for renewable energy in Scotland,” he said in a statement. “These figures show that it is on course to be truly the best year yet.”

DECC’s figures also show that the amount of electricity from renewable sources in the UK’s overall energy mix increased by almost 12 per cent on the previous year to 7.45 terawatt hours (TWh). The contribution of coal and gas fell by around four and six per cent respectively to 19TWh and 38TWh, while nuclear shot up 21 per cent to around 16TWh.

Renewables’ share of electricity generation increased from just over eight per cent in the third quarter of 2010 to nine per cent a year later, while overall renewable electricity capacity stood at 10.2GW.

The amount of electricity from onshore wind fell 2.4 per cent to 1.9TWh, but growing offshore wind capacity sparked a 30.5 per cent increase and high rainfall saw hydro generation rise 41.3 per cent.

The figures come as the government gave its consent today for a 53MW biomass station in Yorkshire, the eighth GW and 15th power station approved this year, which marks a new record for capacity consented since the Electricity Act came into force in 1989.

Developer Dalkia’s plant at the former RAF airfield at Pollington will be fuelled by 360,000 tonnes of waste wood per year, set to be delivered to the site via the Aire and Calder Navigation Canal.

“It has been a priority for this administration to remove the backlog in planning applications [and] to demonstrate our commitment to economic growth,” said energy minister Charles Hendry. “A record number of decisions shows that we have delivered on this, helping ensure our long-term energy security and creating jobs.”

Source: www.guardian.co.uk