ABCs and GHGs in Asia

A report recently released by the UN Environment Programme sheds further light (no pun intended) on the fact that cities across Asia are getting dimmer. The Atmospheric Brown Cloud (ABC) Report named 13 cities as ABC hotspots, with Beijing, Shanghai and Shenzhen all making the cut. The thing I found most interesting about the report is that it illustrates the incredibly complex nature of the climate system.

Dimming
ABCs are made up of emissions and particulate matter released from the burning of fossil fuels and biomass. This particulate matter reduces the amount of sunlight hitting the earth’s surface in two ways. First, some particulates, such as sulfate, act as reflectors that bounce sunlight away from the earth. Second, other particulates, such as black carbon in soot, trap and absorb light before it hits the ground. The effect of these ABCs has been quite pronounced over the last quarter century: Guangzhou has seen a 20% reduction in sunlight since 1970.

Complicated Climate Effects
The effect of ABCs on the climate is quite complicated. The sulphates that reflect sunlight away from earth actually keep the climate cooler than it otherwise would be. In fact, the report estimates that ABCs may have reduced GHG-caused rises in global temperature by between 20 and 80%! This may help explain why eastern China has actually seen average temperatures decline over the past decade, globally the warmest on record.

The idea that pollution actually helps moderate climate change is pretty incredible. The scary thing is, though, as China continues to develop and eventually begins to aggressively reduce local pollution and the associated sulfates, this may actually increase the global warming effect of GHGs. As the report notes:

Simply tackling the pollution linked with brown cloud formation without simultaneously delivering big cuts in greenhouse gases could have a potentially disastrous effect.

But on the bright side (I’m really on today), if China were able to eliminate ABCs, presumably sunlight would return to pre-1970 levels and increase 10-25%. This would likely cause solar power generation to be more effective. SOM, designers of the Pearl River Tower, mentioned that the lack of strong sunlight somewhat impeded their energy generation from the PV systems. So, this brightening effect would seem to reduce GHG emissions by making solar generation more effective.


In other climate related news, the World Meteorological Organization (WMO) released their latest Annual Greenhouse Gas Bulletin, which shows that atmospheric CO2 concentrations have continued to rise, and are now at 383 parts per million (PPM). CO2 is by far the most important GHG, accounting for about 90% of radiative forcing (link to wiki or something) in recent years. This level of CO2 is particularly disturbing, as it is already higher than the 350 PPM level that NASA scientist James Hansen calls safe (PDF). Climate scientists are engaged in ongoing debate over what atmospheric CO2 level humanity ultimately needs to aim for (see Joe Romm's ClimateProgress blog for more), but the “safe” range will probably be somewhere between 350 and 450 PPM. The world added 2 PPM to the atmosphere last year, and this number is set to rise to 3 PPM annually as emissions continue to grow. This doesn’t give us much time, but I remain optimistic we can avoid the worst effects of climate change if we get our act together soon.

BTW Charlie- if you're reading, this title was not meant to be a rip-off of your recent post "The ABCs of SEDs"...

Net-Zero Energy

Today I want to follow up a little bit on the net-zero concept I described in yesterday’s post on the Pearl River Tower.

How Does Net-Zero Work?
Net-zero energy buildings (ZEBs) produce as much energy on-site as they use annually. The reason ZEBs are referred to as "net-zero" is that they are still connected to the grid. Sometimes they are producing more power than they are consuming and feeding power to the grid and running the meter back, and sometimes they are consuming more power than they are producing and pulling power from the grid. But for a ZEB, the energy given to the grid is equal to the amount of energy pulled from the grid on an annual basis.

Net-Zero Energy ≠ Carbon Neutral
It’s important to note that net-zero refers to energy use, and does not necessarily mean zero carbon emissions from energy use. A key issue here is what type of energy the building produces. For tall buildings, renewables probably will not be enough to power the entire building, and therefore some sort of carbon-based fuel source will have to be used.

The Pearl River Tower, for example, gets less than 10% of its energy needs from the wind turbines and BIPV. The designers planned to use natural gas microturbine co-generation for a significant portion of its electricity generation (although this ultimately was scrapped). Now, of course using natural gas-powered co-gen is not carbon neutral, but is incredibly efficient, generally in the range of 60-80% (versus ~45% for super high-efficiency coal plants). Given both the high-efficiency nature of this process and the relatively low level of carbon in natural gas, this type of process has the potential to significantly reduce emissions over drawing electricity from a predominantly coal-powered grid. So, net-zero-energy is not necessarily carbon neutral, but a really good intermediate step.

However, renewables could provide enough power to get to net-zero energy use. Low-rise buildings with large, flat roofs are ideal siting grounds for PV panels and therefore are easier to bring to net-zero carbon. As renewables become more efficient, they will also increasingly be able to power taller buildings.

But there is also the issue of embodied energy, which as I mentioned in my post a few days ago, accounts for a significant portion of a buildings lifetime carbon emissions (20% in the West, 40% in China). So just being operationally net-zero-energy does not mean that a building is carbon neutral when looking at the entire lifecycle, but brings us a whole lot closer to where we need to go in terms of energy use and carbon emissions.

Opportunities for ZEBs in China
The following excerpt of a report by the US Nat'l Renewable Energy Lab (PDF) describes the feasibility of implementing ZEBs on a wide-scale in the US:

Using today’s technologies and practices, the technical potential is that 22% of the buildings could be ZEBs. With projected 2025 technologies, the technical potential is that 64% of the buildings could be ZEBs. If excess electricity production could be freely exported to the grid, then with the projected 2025 technology in every building, the commercial sector could generate as much as 37% more energy than it consumes.

Good news for the US built environment, and there is reason to suspect that there is an even larger opportunity in China. The conclusions of the NREL report only apply to existing buildings, but achieving net-zero is much easier in new construction. Since China will double it's floor space over the next 15 years, the Chinese have a great opportunity to implement net-zero designs on a massive scale. This isn't simply pie in the sky, since as the Pearl River Tower proved, net-zero design is already possible in China (although policy may have to change in some cases to accommodate running the meter back).

Moreover, the NREL report singled out warehouses as the best opportunity for ZEB penetration, estimating that fully 95% of warehouses could be ZEBs by 2025, versus less than 25% for offices (although as I mentioned above I think China can beat this level thanks to their large amounts of new construction). China's logistics market is (or at least was) hot, and grew at nearly twice the rate of GDP in the first half of this decade. While such rapid growth is probably not great from a green viewpoint, the fact is, this has created a lot of flat roof space, which can be viewed as a good opportunity to install a lot of PV and get a large number of Chinese buildings to net-zero.

But if Chinese owners are to pursue this opportunity, there are still hurdles to overcome. First and foremost is the fact that grids in places like Guangzhou do not yet have the infrastructure for net metering. Hopefully JUCCCE's smart grid program can help overcome this road block.

Second is the financing model for solar PV, the technology that NREL thinks is the best way to get to net-zero. Solar is expensive and many developers will be unwilling to spring for the expense. An alternative financing model needs to be developed. One promising scheme is the "rent-a-roof" model, where building owners lease their roof space to utilities who then install solar panels. I think this is a fantastic idea, since not only do building owners not have to pay for the solar panels, they actually get paid to rent their roof out! That's a real no-brainer. Utilities own and install the solar panels and use generate electricity for the grid. This will probably take some good policy to get it to scale, but pairing this financing scheme with a smart grid could allow China to really make progress on building CO2 emissions.

Peal River Tower

Last week I attended a GreenBuild lecture on the Pearl River Tower in Guangzhou. The building is designed by Skidmore, Owings and Merrill (SOM) and will be the new headquarters for a Guangzhou tobacco corporation.

Scheduled for completion in 2009, the 71-story, 2.3-million square-foot tower will be the most energy efficient supertall tower ever built, claims SOM.

In fact, there were rumors this building was going to be a “net-zero” building, i.e. it would produce as much energy as it consumed on an annual basis. Unfortunately, this relies on being able to “run the meter back”, or sell energy back to the grid at times when the building is producing more energy than it is consuming. The infrastructure and laws in Guangzhou do not yet allow for this, and therefore the key on-site microturbine co-generation system was scrapped. However, SOM did design the building to allow for the microturbine to be installed as Gaungzhou updates their grid policies.

Despite the fact that the building won’t be truly net-zero-energy, it will still be a showcase project for energy efficiency and onsite generation, both to China and the world. SOM made energy efficiency the core of their design, and designed the entire building around this goal. As Roger Frechette, Chief MEP Engineer of SOM told us at Greenbuild,

“Form for the sake of form is no longer good enough. Form now has to be apart of the performance of the building. The whole building should be built as a single unit that has a better level of performance than we’ve seen before.”

SOM’s design process really took Mr Frechette’s principles to heart, using a four-pronged, whole systems approach to get to net-zero energy use:

Source: Architectural Record case study (good source for more info on the specifics of the building design)


1) Reduce- use “negawatts” as the primary energy source
2) Reclaim- take the waste from various processes and use it as inputs for other processes
3) Absorb- take advantage of the local climate for wind, solar, daylighting, etc
4) Generate- meet whatever energy needs remain with microturbines and co-gen

The building’s unique shape allows it to harness wind power more effectively. Tall buildings act as a sail, with wind pushing against them. In standard buildings, the designers use more concrete or steel to stiffen up the core to withstand the wind force. In the Pearl River Tower, by contrast, the openings on the side of the building allow wind through, which has the dual effect of relieving pressure on the building and driving wind turbines mounted in the throat of the openings. According to SOMs calculations, this design also reduces the sway at the upper portion of the building, allowing for less material to be used while still maintaining safety and comfort levels, reducing the building’s embodied energy that I keep harping on (please note however that the designers did not take advantage of this, but theoretically could have). The Pearl River Tower also uses building integrated photovoltaics (BIPVs) embedded in the glass curtain wall to produce energy.

Unfortunately, these systems can’t power the building on their own. Together, these technologies provide less than 10% of the buildings power. But the developer wanted them because they served as a powerful symbol. As Mr Frechette recounted:

“I asked the developer what he thought about the wind turbines. The developer asked, “do they spin?” and I said they did, and he said, “then I like them.”

He added that Guangzhou is a city of 15 million people and wind turbines on wind building won’t begin to dent the overall energy use, but hopefully other developers and owners will see these working wind turbines as a symbol. If every owner did this, it really would start to make an impact.

Economics
Given all the cool features and the incredible energy efficiency, this building must have cost a fortune, right? Not so. The building cost an extra 100MM RMB ($15MM) to build. Based on average construction prices for Class A office in China, this equates to ~10% premium.

SOM claims the investments in energy efficiency have a payback of 4.8 years. Not bad for a building a building that will have a lifetime of at least 50 years.

Why were the designers able to get so much energy efficiency with so little additional upfront cost? Because they tunneled through the cost barrier! This building is a great example of how proper whole-systems thinking can add value, both environmentally and economically.

SOM turned the conventional design model on its head. Instead of starting with a design that meets code and then slapping green features on as the budget allowed, they started with a design that was net-zero-energy and then removed the more expensive green features (ie microturbine co-gen) to get to the point that their budget allowed. They also smartly designed the building so that the microturbine co-gen can be added in the future as policy or economics change.

Radiant cooling was a cool example of how whole-systems thinking can add serious double bottom line value (good intro to radiant cooling). Radiant cooling uses significantly less space than more typical variable-air volume cooling while providing the same (or even higher) levels of comfort and less energy. Because the radiant cooling system uses less space, SOM was able to design five more floors into the building! That results in about a 7% increase in rentable floor area, which pays for the more expensive radiant cooling system. So radiant cooling not only provided better comfort with less energy, but also paid for itself through extra rentable space. That’s powerful stuff.

I don’t want to sound like I’ve drunk too much SOM Kool-Aid, but the design process is pretty exemplary. However, they are not the first to do this though, Bill Reed, RMI and other visionaries have been talking about the deeply integrated net-zero design approach for years. But SOM is one of the first to take this cutting-edge approach and apply it to such a landmark building. And for that, they deserve our kudos.

Tunneling Through the Cost Barrier- Using Whole-Systems Thinking to Save Energy and Money

Natural Capitalism , by Amory Lovins, L Hunter Lovins, and Paul Hawken, is a book that has profoundly shaped my current worldview, particularly my take on clean energy. A proper review of the various concepts described in the book would take more room than I have here, but today I will focus on one of the key concepts: tunneling through the cost barrier.

Now, the authors do a much better job of explaining this concept than I ever could, so you can read the chapter here. I'll just summarize my key takeaways:

1) Design really matters. Especially with long-life assets such as buildings, power plants, and infrastructure, smart energy-efficient design is critical. As Joe Romm says:

Although up-front building and design costs may represent only a fraction of the building's life-cycle costs, when just 1 percent of a project's up-front costs are spent, up to 70 percent of its life-cycle costs may already be committed.

2) System context matters. Systems existing in isolation is what has led us to our current energy and climate crisis. We must start thinking about systems as interrelated- see Green Leap Forward's post on watergy for a good example.

3) Bigger savings can be cheaper than smaller savings. Economic theory correctly tells us that each additional unit of energy efficiency is more expensive than the last, assuming the same system. The trick to tunnel through the cost barrier is to redesign the system. Natural Capitalism uses the example of adding more insulation and removing the furnace: not only do we not have to pay for energy to run the furnace in the future, but we also don't have to pay for the capital cost of the furnace.



4) Start with downstream savings and work backwards. This is the gospel of energy efficiency and the fundamental reason why efficiency is 4-6x cheaper than building a new power plant. Distributing power from a power plant is inefficient: maybe 70% gets lost at generation and 10% gets lost in transmission, so 80% of the energy is wasted by the time it reaches the building to power the lights or the air conditioning. Now, reversing this calculation, if we reduce energy use in the building by 1 BTU, then we can reduce energy use at the power plant by 5BTU.

"Tunneling through the cost barrier" is an incredibly optimistic concept- one that says we can reduce energy use and at no- or low-additional cost. Pretty cool stuff.

Embodied Carbon in Chinese Commercial Buildings and Potential for Building Materials Innovation

Reducing energy consumption of a building is obviously vital to reducing CO2 emissions and winning the current war on global climate change and dirty energy. But what about all the CO2 that goes into the building? How much does it matter?

“Estimating Total Energy Consumption and Emissions of China’s Commercial and Office Buildings”, a recent report by LBNL, tries to answer this question. Their findings are quite interesting.

Commercial Buildings CO2 Emissions
China’s buildings officially account for 19% of China’s total energy consumption but according to various Chinese academics, buildings probably account for more like 23%. This is expected to rise to 30% by 2010, broadly in line with the US.

Unfortunately, the paper does not state explicitly what percentage of total CO2 emissions is accounted for by buildings, but since China’s fuel source is so predominantly coal driven, it’s probably fair to say that building energy use currently accounts for about a third of total CO2 emissions.

This is significant, especially when coupled with the data from the global McKinsey Carbon Abatement Cost Curve, which calculates building efficiency to be one of the cheapest sources of carbon abatement available globally. Buildings are therefore a key leverage point for reducing carbon emissions in a cost-effective manner.

Embodied Carbon Emissions Versus Operational Carbon Emissions
The most interesting takeaway from this report is how much carbon is embodied in a building when it is built. As you can see from the graph below, the building materials and construction account for approximately 40% of a Chinese commercial building’s lifetime CO2 emissions!

Note that the above conclusion is based on a 30-year building lifespan. If the building were to have a longer (shorter) lifespan, the share of CO2 emissions attributed to operations would increase (decrease).

The report indicated that China's embodied CO2 is pretty much in line with embodied CO2 of buildings in other countries. For reference, commercial buildings in the west typically have ~20% of their total lifetime carbon emissions embodied in construction, but this is mostly due to their higher overall energy use during their lifetimes.

These statistics point to massive opportunity to reduce CO2 emissions by focusing on reducing the embodied carbon of building materials.

Building Material Innovation
Not only are building materials a strong carbon reduction leverage point, but the building material industry has been a laggard for some time, allowing for new, innovative companies and ideas to produce low-carbon, high-performance and cost-competitive building materials.

One such company is Serious Materials. Serious is a venture backed startup firm based in Silicon Valley. Their primary product at this point is EcoRock, a low-embodied carbon drywall.
Traditional drywall manufacturing processes use significant energy, but Serious Materials has developed a proprietary chemical process that allows the drywall to essentially cook itself, resulting in 80% less energy use during the manufacturing process. EcoRock is also 80-85% composed of post-industrial recycled content. The product carries only a slight premium over traditional drywalls and will be rolling out in early 2009.

Serious Materials and EcoRock illustrate one example of the many possibilities for massive low-carbon innovation in the building materials industry. Mark Mitchell, VP of Business Development at Serious Materials, told me that the EcoRock innovation was easy: the drywall industry has had essentially zero innovation since it came about in the late 1890's. Serious Materials was able to leverage cutting edge materials science technology and will likely transform the industry.

Another company to watch is CalStar Cement. CO2 emissions from cement production represent 5% of annual CO2 emissions globally, an absolutely astounding number. Marc Porat, CEO of CalStar, notes that since 1824, "the fundamental technology platform (calcined limestone) has not changed. Until now, that is. CalStar is developing a cement product that produces 90% less CO2 than conventional products. Imagine the CO2 abatement potential if all cement were produced using this process. Khosla-backed Calera is also said to be developing a carbon-negative cement. By the way, China produces 45-50% of the world's cement, and will watch these emerging technologies with interest.

Building materials, thanks to their large contribution to carbon emissions and the historic lack of innovation in the industry, present an enormous opportunity for entrepreneurial companies to make money and reduce carbon emissions.

Green Leap Forward post on Tianjin eco-city

Julian has just put up a good post on Tianjin's new eco-city at Green Leap Forward. Definitely worth the read.

Currently at GreenBuild in Boston, and will have more to report soon.

Chinese Energy Use and CO2 Emissions Data

This post is based on data pulled from Dr. Mark Levine's presentation addressing the myths and realities of Chinese energy use and CO2 emissions. Dr. Levine is the head of the China Energy Group at Lawrence Berkeley National Laboratory and delivered this presentation at the JUCCCE forum last week in Beijing. Download the presentation here.

Energy Prices
Energy prices in China are at or above international levels. For example:

• Residents of Guangzhou pay $0.16/kWh, higher than San Francisco
• Natural gas prices in Guangzhou are $10/ mcf, same as San Francisco
• Coal prices cost $147/ ton, higher than the US

This flies in the face of the notion that low, subsidized energy prices cause Chinese industry to ignore energy efficiency.

Energy Intensity and Carbon Savings
China has reduced it's energy intensity (amount of energy used per dollar of GDP) dramatically since 1980. Between 1980 and 2000, China's GDP quadrupled but energy use only doubled. This is good news. The central government has also committed to a 20% decrease in energy intensity from 2005-2010 and looks to be on track to achieve at least 2/3 of that goal.

Of course, absolute emissions levels have risen dramatically over that period, but the CO2 savings over what would have happened are remarkable. Thanks to the 20% energy intensity goal, China will save 1 billion metric tons of CO2 in 5 years. For comparisons sake, the EU's commitment under Kyoto will save 300 million metric tons. So, China has taken action, but it's important to note that the EU's commitment is an absolute reduction of CO2 emissions, while China's reduction is only relative to otherwise massive growth in CO2 emissions.


Energy Use per Capita
The really scary thing, though, is the graph to the right. China is currently at 1/8 of the US's level of energy use per capita. Based on what I've seen here in Beijing, as Chinese get wealthier, they will follow the US's model of higher energy consumption. If China were to use the same amount of energy per person that the US currently does, the additional emissions would equal 122% of the world's current CO2 emissions. I.e., if China starts using as much energy per capita as the US tomorrow, world emissions would double and then some.

Given that China (and India, Brazil, on down the line) will not give up their ambitions of wealth and the energy use that comes with it, it is imperative that economic growth and increased energy use become decoupled from carbon emissions. Bring on the disruptive technological change! (For more on this, see Green Leap Forward's interview with David Tyfield)

Coal Use and Reserves
As we all know, China has huge reserves of cheap, dirty coal and is not afraid to use it, right? Well, sort of. China only uses twice as much coal per capita as the US, but in light of the graph above showing that China only uses 1/8 as much energy as the US, it's clear that China is more dependent on coal and not yet using as much natural gas at the US for power. Importantly, China has only about 1/10 of the coal reserves of the US on a per capita basis, which means the US has about twice as much coal as China on an absolute basis.

The key takeaway from these statistics is that the US must lead the way on coal. The US is already a huge user of coal and has massive reserves of the stuff, and will likely show China the way on coal. Will clean coal become an option? Or carbon capture and storage? Or will disruptive technological change make coal obsolete? Likely it will be a blend of these three, but I would love to see cheap, clean energy beat coal at it's own game.

CO2 Emissions
In Dr. Levine's view, "by any measure of contribution to atmospheric CO2, the Chinese have done far less harm than the United States." He points to the fact that the US is not only emitting more on a per capita basis now, but has been emitting far more for the past 100+ years. As you can see in the graph to the left, from a cumulative per capita perspective, US emissions far outstripped China's. Since CO2 emissions are persistent, Dr. Levine feels cumulative historic emissions is the most relevant data point for climate negotiations. Therefore, the US must take significant action on capping and reducing CO2 before China should be expected to do anything.

I am still deciding what I think about this argument over CO2 and who should be responsible for cleaning up. I think there are several things in favor of Dr. Levine's point, namely the graph above as well as the fact that many of the goods China produce ultimately get sent over the sea for us to consume. According to an Boston Globe op-ed by China environmental and social researcher Josh Muldavin, "the carbon dioxide embedded in China's exports to the United States in 2004 alone is estimated at 1.8 billion tons, equivalent to 30 percent of the US total." Wow.

But China Environmental Law blog (CELB) had a pretty interesting take on this stuff:

In the “myth busters” session we were treated to the fun you can have with numbers when you place 1.3 billion in the denominator. Apparently China has no bigger role to play in climate change negotiations than say, Botswana. But while were playing this game, the next time someone tells you how green China is and points to where China ranks with respect to total installed wind power (for instance), ask them how China compares with Germany or the US on a per capita basis.

CELB also brought up the contradiction between China wanting to be seen as an international powerhouse when it suits it, but wanting to be treated like just any other developing country when it comes to climate change:

Does anyone think (regardless of who wins the election next Tuesday), that the US Senate will ratify a treaty that commits a recession-plagued US to a treaty where it must undertake real GHG reduction limits, while a growing economic power house like China (associated now in US public perception with a spectacular and lavish Olympics and a Shenzhou space program complete with vanity space walks) gets to continue to increase its GHG emissions and gets lots of money and free technology to boot?

Both sides have a point. Climate change discussions will likely become the most critical element of US-China relations over the coming decades. Both sides need to give a little bit and stop waiting around for the other to act first, but obviously, given the overwhelming advantage in both GDP per capita and emissions contributions per capita, the US should move first and much, much farther than China in the near term.

Fundamentally, the current climate change stalemate is based on the prevailing view that carbon emission reductions inhibits economic growth. The "CO2 limits= reduced economic growth" paradigm needs to be innovated away. CO2 caps are important, but unless the heretofore existing link between CO2 and economic growth is broken, CO2 emissions won't be significantly reduced. Thankfully, the new model for economic growth is quickly becoming CO2 limits + innovation + massive investment in green infrastructure, technology and jobs = economic growth. Hopefully, Obama and Hu both grasp this and can find ways to work together and move past the old debate of who should give up growth.

Tightening Credit

This is the second in a two part series examining the effect two recent trends - falling energy prices and tightening credit- are having on the market for cleantech and green buildings.

Last time we discussed how falling energy prices make the returns from renewable energy projects less attractive. Today we will focus on how tightening credit is negatively affecting renewable energy project finance.

As I mentioned last time, the standard method of underwriting and valuing investments in clean energy projects is as follows:

1) Calculate the upfront capital cost
2) Calculate the future savings from avoided energy use- this is the income stream of the investment
3) Compute an internal rate of return (IRR) and decide if it meets some hurdle rate. If so, invest. If not, throw it out.

Tight credit means banks and other financial institutions do two things that hurt IRRs for equity investors in clean energy projects: require more equity and charge higher interest rates.

Banks are now requiring investors to put up more equity up front. At last week's US China Green Tech Summit in Shanghai, Shawn Qu, CEO of Canadian Solar, said that before the credit crunch began, banks would typically require investors to put in 15% of the total project cost and finance the rest. Now, banks are requiring 20-25%. This makes it harder for projects to meet their IRR hurdle rates and therefore more projects are "thrown out".

Banks are also charging higher interest rates thanks to the general aversion to risk in the market now. Higher interest rates reduce the free cash flow, or the savings from the avoided energy minus the financing costs, making the future income stream and the overall investment less attractive.

Luckily, several other equity investors at the Green Tech Summit said they see tight credit and lower energy prices as a blip on the radar screen. It will negatively affect clean energy investment in the short term, but likely won't significantly affect it in the long term. Also, Shawn Qu also mentioned that prices of silicon and other parts have been dropping, lowering upfront capital costs and helping make investments look more attractive.

One option for helping to reduce the dampening effects of tight credit is for governments to offer loans to clean energy project investors. I suspect that Obama's energy/ economic stimulus plan will include something like this.

Another related option is for sovereign wealth funds (SWFs) to start investing in clean energy loans. SWFs are gov't run, opaque pools of capital and can essentially invest in whatever they want. Several countries with big SWFs like Norway, Abu Dhabi and Australia, are increasingly interested in sustainability and might be good candidates to invest significant funds in clean energy project debt. China might also consider investing in clean energy projects. This could help provide its growing number of wind and solar manufacturers find markets for their products, and likely produce significantly better returns than their investment in Blackstone, which is down ~80%.