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Six Renewables to Watch

The fall in fossil fuel prices hasn't turned out the lights of alternative energy. Some of them are burning quite brightly.

Petroleum has always known boom and bust. Some years oilmen are quaffing champagne; others they're pawning the crystal they drank it from. So, will the recent, 50 percent oil-price plunge knock the props out of energy alternatives, as did the last crash in the mid-1980s? No, says Credit Suisse's Global Energy Team. First, today's supply overhang is much less than that of three decades ago. Prices, they expect, will rebound later this year. Second, in power generation, where renewables are seeing their greatest growth, oil is not much of a player anyway – accounting for only 4 percent of global electricity output. Third, governments this time have another pressing reason to push renewables: they deliver badly-needed benefits of lower carbon emissions and higher air quality.

So, while oil and gas markets gyrate, renewables should continue their rise in 2015. Here's an overview of the 'clean half-dozen' – the major types of non-fossil energy sources.

Shining solar

Until recently, photovoltaics were a niche. Fine for powering portable calculators or space stations; too expensive for conventional electricity. But that was yesterday, says Credit Suisse's '2015 Solar Outlook'. Solar panels account for only 1.2 percent of electricity now, but capacity is expected nearly to quadruple by 2020, thanks to two trends. One, costs have fallen by a whopping 80 percent in the past seven years. The industry is riding a classic 'learning curve', with products and production methods steadily getting better. So much so that in countries such as Australia, Spain, Germany, Chile, Italy and five others, it's cheaper for homeowners to install sunpower than to plug into the local electric supplier. Two, some big orders are in the works. China, India, the European Union and the USA all have major programmes (or incentives for them) to add several hundred gigawatts of capacity in the coming decade. The outlook: sunny.

Widening wind

How our horizons have changed – literally. These days it's nearly impossible to travel the countryside by plane, train or car and not see giant blades scraping the sky. Expect to see even more windmills in future, says a 'China Power Equipment Sector' report from Credit Suisse, which forecasts capacity will triple over 2013-2020, and account for 12 percent of world electricity by the decade's end. More and more of the new windparks will be at sea – literally. Wind offshore often is steadier, and more space is available. Giant generators already are in action off the coasts of the United Kingdom, Denmark, Germany and Belgium, and more are planned, not only in and around the North Sea, but adjacent to China and the USA. Costs of windpower have proven to be higher than was initially expected, say industry insiders, and the downtime (when it blows too little or too much) greater than originally planned. Still, the outlook: wind at your back.

Healthy hydro

In modern times, falling water is the senior citizen of renewable energies. Hydro powered the onset of the industrial revolution of the mid-18th century. As early as the 1880s, commercial electricity plants debuted in places such as Niagara Falls on the American-Canadian border. But old doesn't mean tired. Although hydro is by far the most developed renewable (generating one-sixth of the world's electricity), growth is still robust off that large base. Over 2013-2020, forecasts Credit Suisse's 'China Power Equipment Sector' report, hydropower capacity will climb by nearly two-thirds. Many of the biggest additions are expected to come in China, home to the world's largest hydroelectric plant at Three Gorges on the Yangtze River, and in neighboring India. Projects in both countries highlight the positives of hydro: low-cost, low-carbon power. And they highlight the negatives: potentially major disruptions of human and natural communities, both upstream and downstream. The outlook: fast flowing.

Gushing geothermal

Heat pumps can sound mystifying, until one realizes that most of us deal with them daily – in the form of refrigerators and air-conditioners. Indeed, a typical A/C unit is nearly identical to a typical heat pump, except that the latter usually pumps heat into a building, while the former pumps it out. Most run on electricity, with a few driven by gas, which means that unlike solar, wind and hydro, heat pumps are not nearly-zero-carbon. In many countries they are relatively low carbon, but in certain circumstances – say, where electricity comes from coal – they emit more global warmers than a conventional boiler fired by heating oil, gas or LPG. Although heat pumps supply less than 1 percent of world energy, their annual growth is expected to continue at 10 percent through the end of the decade, say several market studies. Output is also expected to climb at a similar rate from the other geothermal energy, sometimes called 'hot rocks', which captures subterranean steam and water to deliver electricity or space heating. Such projects are focused in areas where hot rocks are close to the surface, says the Renewable Energy Policy Network, a think-tank affiliated with the United Nations' Environment Programme. Some of the more obvious sites include New Zealand, Iceland, Japan and Turkey, but substantial capacities are also found in the USA, the Philippines, Indonesia, Mexico and Kenya. The outlook: hotting up.

Open ocean

Least known among renewable energies is something called ocean power. And for good reason: it's also the least successful. One approach is to turn electric turbines with the tides, which in geographies such as Canada's Bay of Fundy or the United Kingdom's Bristol Channel can be enormous. Sounds great, but worldwide only 10 such plants operate, and most of them are more experimental than commercial. Another approach is to win energy from waves. Breakers can spin a turbine, drive a piston or – in something called a Pelamis machine – do a bit of both. A final approach has some parallels to geothermal. With 'Ocean Thermal Energy Conversion', or OTEC, cold water from the deep is coupled with warm water at the surface to create a heat pump that that generates electricity. Sounds crazy, but experimental plants have proven the concept off the coasts of Brazil, Cuba, Hawaii and Japan. What they have not proven (and neither has wave power), is that they overcome their enormous capital and maintenance costs to become economically viable. The outlook: low tide.

Booming (and busting) biofuels

Biofuels are not for the faint hearted. The industry has its share of winners, but also a notable string of failures and bankruptcies. The problem, says Russell Heinen, a Senior Director at consultancy IHS, is usually that of undercapitalization, fickle government incentives or a combination of the two. Numerous biodiesel producers, for instance, were forced to shut down in the back half of the previous decade, when one European government after another withdrew generous tax waivers. Bioethanol producers have been more stable, as governments in Brazil and the USA have been more consistent in their support (which, for all renewables, is essential to success). A more recent boom has emerged in wood chips and pellets, which are increasingly shipped from the USA to fuel European power plants. The worry, analysts warn, is that a change in the arcane rules governing renewables and carbon credits can torpedo growth in a hurry. The outlook: up and down.