Renewable Energy Sector, 2007

U.S. Market Overview

The renewable energy sector includes companies engaged in manufacturing equipment or providing services related to generation of electricity, such as solar, wind, bio-energy, geothermal, wave, and hydropower sources. The market potential for renewable energy in the United States exceeds most European nations, despite a relatively small renewable energy portfolio. In 2005, the U.S. was the leader in wind energy installations for the first time since 1992, with 2400 Megawatts installed. The U.S. market for renewable energy capacity in 2005 was approximately $3.5 billion, excluding large hydropower.

Renewable energy accounted for 8.8% of U.S. electricity supply in 2005. Hydropower leads renewable sources of electricity generation (6.5%), followed by biomass (1.5%), wind (.44%), geothermal (.36%), and solar power, (.01%).

By some estimates, the sheer size of the U.S. energy market, the availability of infrastructure, and the growth potential of key industries places the United States behind only Spain as the most attractive market for renewable energy. The contribution of renewable energy to U.S. electricity supply is expected to rise in the near future as energy security, environmental concerns, and the rising prices of generating electricity from fossil fuels drives the demand for alternative energy sources.

U.S. policy makers at all levels are responding to the demand for renewable energy with a variety of policies. As of February 2007, 23 states and the District of Columbia had adopted renewables portfolio standards (RPS) or mandates aimed at increasing the share of renewable power in the energy mix. Several other states are considering adoption of an RPS, while others with RPS already in place are looking for ways to accelerate the development of renewables. Additionally, incentive mechanisms, such as the Production Tax Credit, drive the expansion of renewable energy projects in every subsector.