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Renewable Energy, 2008

The renewable energy sector includes companies involved in upstream activities, midstream activities, equipment manufacturing, and services that contribute to the generation of electricity from solar, wind, bio-energy, geothermal, wave, and hydropower sources.

U.S. Market Overview

The market potential for renewable energy in the United States exceeds most European nations, despite its relatively small renewable energy portfolio. Renewable energy accounted for 7% of U.S. electricity supply in 2007. Biomass is the leading renewable energy source (56%), followed by hydropower (36%), wind (5%), geothermal (5%), and solar power, (1%).

The United States currently leads the world in installed wind generation capacity. 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, the rising prices of generating electricity from fossil fuels drives the demand for alternative energy sources.

U.S. policy makers at the federal, state, and local levels are responding to the demand for renewable energy with a variety of policies. As of June 2007, 30 states and the District of Columbia had adopted renewables portfolio standards (RPS), mandates, or aspirations 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 Wind Energy Production Tax Credit, drive the expansion of renewable energy projects in every subsector.

Investment Potential

Having identified the enormous market potential in the United States for renewable energy technologies, numerous foreign companies are investing in the U.S. renewable energy sector. In most cases, these are internationally competitive companies that are expanding to increase market share.

Demand for renewable energy, particularly for wind turbines, currently outstrips U.S. manufacturing capacity. The bulk of U.S. demand for wind turbines is met by imports. The lack of capacity in wind and other forms of renewable energy to meet U.S. demand represents a key opportunity for foreign investors. Foreign Direct Investment will also support the emerging trend of U.S. power companies accessing cutting edge technologies, such as concentrating solar power as soon as these advances become commercially available.