Renewables

European renewable energy revenues expected to double

15 November 2006 — A Frost & Sullivan report predicts the European renewable energy industry will almost double its revenue within the next three years. Increasing awareness about renewable energy and favorable government legislations such as the Directive on Renewable Energy Sources (RES) are expected to drive the European renewable energy market, the report finds.

New analysis from Frost & Sullivan European Renewable Energy Market — Investment Analysis and Growth Opportunities reveals this market earned €8.89 billion in 2005 and estimates this to reach €14.54 billion in 2010.

“The RES directive of September 2001 introduced different national targets for each member country of the European Union,” says Frost & Sullivan Financial Analyst Saranya Sundaram. “It established indicative targets for the consumption of electricity generated from renewable energy sources, with the overall EU target set at 22 per cent in 2010.”

Frost & Sullivan said this government support is timely since the renewable energy market is at an important stage of development and requires continued support from consumers and investors. The rising threat of global warming has enhanced interest in clean energy, prompting significant and rapid investment in alternative energy by big companies.

While strategizing for this market, energy companies will have to take into account several issues including huge initial capital outlay, development of new transmission and distribution lines, rising export demand and high prices of raw materials. In the solar energy segment, not only are the raw materials prohibitively priced, but are also in short supplies.

“However, solar companies may overcome the shortage of raw materials by undertaking backward integration,” notes Sundaram. “This tactic will help them become one of the fastest growing renewable energy sources in Europe for the next 20 years.”

Meanwhile, the wind energy segment is going strong, claiming 69.4 per cent of the total renewable energy market in 2005. Companies in this segment have adopted restructuring programs to counter the slowdown in the installed capacity and this move is expected to pay off by 2008.

European wind energy companies are expected to increase sales to Asian countries in future. The demand from these end users grew by around 40 per cent in 2005, driven mainly by the rising requirements of China and India.