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Expanding Global Markets for Renewable Energy Services Offer Opportunity for U.S. Exporters

Friday, October 04, 2013
Sandler, Travis & Rosenberg Trade Report

The International Trade Commission released Sept. 30 a report finding that global demand for renewable energy services (consulting, engineering, construction, equipment maintenance and repair, etc.) has grown rapidly in the past five years as countries have worked to meet rising energy needs, reduce carbon output and strengthen energy security. This growth presents an opportunity for U.S. exporters, the ITC states, because few other countries currently possess the capacity to provide these services.

The report offers estimates of the U.S. and global markets for trade and investment in services essential to the development, generation and distribution of energy in the solar, wind, small hydropower and geothermal sectors. It also discusses trade barriers affecting these services. The report’s findings include the following.

- Global renewable energy capacity more than doubled to 653 gigawatts between 2007 and 2012, during which time global investment rose 71% to a record $244 billion. Solar energy was the fastest-growing renewable energy, fueled by growth in solar installations in Europe (primarily Germany, Italy and Spain), China and the U.S.

- The U.S., the European Union, Canada and China are the leading markets for wind and solar energy services, but many emerging markets in Asia and Latin America are also seeing growth in spending on installations and services. Services related to other renewable energy sources (mainly small hydropower and geothermal) are also on the rise, though to a lesser degree and in more widely distributed areas.

- The U.S. and the EU collectively account for roughly 60% of both global capacity and investment in renewable energy and are likely the largest suppliers and consumers of renewable energy services as well. Countries that have demonstrated an interest in increasing their use of renewable energy resources still lack the domestic capacity to design, implement and maintain renewable energy projects, presenting an opportunity for U.S. exporters of renewable energy services. Even in countries that have the domestic expertise to provide renewable energy services, project developers may choose to import services from an international supplier based on cost, quality or other needs. In this case, U.S. exporters of renewable energy services may also find opportunities in more mature markets.

- The value of global solar photovoltaic services associated with installations was estimated to be $34 billion in 2011. The largest markets for such services were Italy ($9.8 billion), Germany ($5.1 billion), the United States ($3.1 billion) and Japan ($3.0 billion).

- The global market for services related to installation of wind equipment was estimated at nearly $23 billion in 2011, with the largest markets including China, the United States, Germany and Canada. The global market for wind operations and maintenance services in 2011 was estimated at between $6.2 billion and $7.2 billion, with Europe believed to account for roughly half of that market.

- The value of the global market for services associated with all hydropower installations in 2010 was nearly $71 billion, of which small hydropower accounted for an estimated $2.3 billion.

- Geothermal installation services in the global market were estimated at $315 million in 2010, while the operations and maintenance of existing geothermal facilities required services expenditures estimated at $2.5 billion.

- Local-content requirements are the most significant trade barrier in this field. Although largely applied to renewable energy equipment, these requirements often act as de facto barriers to services exports because many renewable energy equipment manufacturers also provide services in support of their products. Restrictions on investment and on temporarily moving employees into foreign markets also hinder exports of renewable energy services. Some regional and bilateral trade negotiations are now working to liberalize the market by loosening these requirements.

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