Renewables at a crossroads

Published: March 17, 2011

Executive summary

The global economic downturn has cast at least a measure of doubt on the business case for renewable energy technologies, leaving some industry observers to point to previous periods of renewables growth in questioning whether the market is resilient enough this time to withstand volatile energy prices and a shifting political climate. Yet, despite this uncertainty, the market has evolved in important ways, setting the stage for it to maintain its economic viability and continue to grow. One of the hallmarks of the renewables sector today is its structural diversity in terms of the technologies, players, and geographic regions involved in its growth.

For that growth to continue, companies and investors participating in the sector will need to explicitly address uncertainty through effective risk management and contingency planning. In many cases, even those investments with promising near-term prospects will need to be evaluated on the basis of their ability to adapt to future fluctuations in demand. The relatively favorable investment climate of the past decade attracted a bevy of companies that lacked the expertise to build and sustain a competitive advantage. With industry consolidation now on the horizon, those that survive will be the ones that develop the strategic and operational capabilities required to capture value and manage regulatory and market risk.

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Renewables at a crossroads