In clean energy, the 'growing' outweighs the 'pain'

The renewable energy industry might be suffering growing pains, but the key word there is “growing,” not “pain.”

For all the challenges the clean-power sector has faced in the past year — fast-dropping prices for solar panels, stiff competition from Chinese manufacturers and a number of high-profile bankruptcies — renewables have not only proven themselves in the market, but in some cases (as with solar) are coming close to price parity with traditional fossil fuels. That’s good for the environment and consumers  … if not always for the companies that make and install clean-energy technologies.

The market has now clearly moved into the maturing stage, with lots of action in mergers and acquisitions last year: a record $53.5 billion in deals in 2011, according to PwC. That’s 40 percent more than in 2010 ($38.2 billion). Of all the deals last year, one out of three involved solar energy.

If renewables were already enjoying good momentum, they got an extra boost following the March 2011 Japan earthquake and tsunami, which set in motion the Fukushima nuclear reactor disaster that’s still ongoing. In the wake of the nuclear plant disaster, countries like Germany and multinationals like Siemens have both announced plans to abandon nuclear power.

Nor are continued economic uncertainties, especially in Europe, likely to dampen development of the clean-energy industry into 2012 and beyond. By now, there’s enough big money in the sector to keep the renewables ship moving forward despite financial headwinds.

“Staying out of the markets in the hope things will improve cannot be assumed to be the right strategy,” said Paul Nillesen, a partner at PwC renewable. “The potential for further destabilization domestically, or at an inter-governmental level cannot be ruled out, but if a deal is highly strategic, and mission critical, then parties will still feel it is worth doing on the right terms.”