BOULDER - As the world struggles with climate change, energy independence and economic upheaval, at least one industry is booming - onsite renewable energy.

The global market increased 76 percent in 2008 to $29.9 billion, according to a Renewable Distributed Energy Generation study recently released by Boulder-based Pike Research. The clean technology research firm predicts the market will more than triple by 2013.

The world's market continues to be dominated by solar photovoltaic panels, which represent about 98 percent, with small wind turbines and fuel cells each accounting for about 1 percent. The report's lead author David Link said he expects that mix to remain constant during the next five years.

"Solar will be the main solution," Link said. "The main thing about solar is that it's so modular. You can fit the roof size." Solar power continues to be expensive, with government- and utility-backed incentives bolstering growth, Link said. But, he added, "The industry's gotten to be so big the scale benefits are starting to kick in."

The local market in the Boulder Valley is even more explosive than the global one. Colorado is the fourth-highest state in terms of PV installations, Link said, and had the fastest growth in 2007, jumping from 1 to 12.5 megawatts. Xcel Energy rebates and incentives at the state and federal levels, along with "general environmental awareness," are driving the fast pace. Unlike some of the other leading states, Colorado electricity prices are not particularly high, according to Link.

A separate report from Boulder-based American Solar Energy Society concluded that Colorado's renewable energy and energy efficiency industries are significant economic drivers, generating $10.3 billion in sales and providing more than 91,000 jobs in 2007. The Green Jobs report predicted these industries could grow to $61.5 billion and 613,000 jobs by 2030.

Local solar companies report business growth that supports these studies. The Boulder operations of Independent Power Systems, which also has an office in Bozeman, Mont., grew 155 percent in 2008, according to General Manager Jason Liehr. "We're seeing a huge increase on the Front Range. Montana stayed pretty flat."

The firm recently installed panels atop the new mixed-use project at 1655 Walnut St. in downtown Boulder. Its market split is about 80 percent residential and 20 percent institutional.

Last October, Xcel Energy reduced its rebate for solar panel installations from a total of $4.50 per watt to $3.50 per watt, after the federal tax credit cap of $2,000 per installation was eliminated.

"Looking back on it, it probably wasn't the best decision," Liehr said. "An instant rebate and a tax credit down the road are two different things. But, even at $3.50 a watt, it's still one of the best incentives in the nation."

Typically, the winter months are slow for solar, but the pace picked up in early spring with the implementation of Boulder County's ClimateSmart loan program, which offers low-interest loans to homeowners for renewable energy and efficiency projects.

While rebates and loans make solar power more accessible, Liehr said they also create a "cash flow nightmare" for installers. With the panels comprising about 65 percent of total costs, companies have to float the expense while waiting for rebate and loan payments. "We're waiting 45 to 60 days after the installation to get payment from Xcel, and we'll be waiting seven days after completion to get paid from loan program," he said." This presents a challenge for solar companies because we cannot collect a down payment on the project to help offset material costs at the beginning of the project."

On the positive side, Liehr said panel prices have dropped 10 percent since last year as several European countries have pulled back on their subsidies. "Panel manufacturers are sitting on inventory and want to move it."

Finding qualified employees as the industry grows has created a challenge for solar companies, Liehr said, adding that Red Rocks and Arapahoe community colleges are helping meet that demand with courses on solar installation.

Solar will continue to dominate the onsite renewable energy market in the Boulder Valley into the future, Liehr predicted. Although his company installs residential wind turbines in Montana, Boulder does not have ideal conditions. "We get into a lot of restrictions in terms of height," he said, adding, "the big micro-bursts we get on the Front Range are not great for wind power."

Boulder will still have a stake in the nation's growing distributed wind industry, however, thanks to Entegrity Wind Systems, which is headquartered here. The company fills the niche for mid-scale turbines that are typically sold to universities, small manufacturers and municipal buildings. At 120 feet high, its 50-kilowatt turbines are about a third of the size of the ones installed in wind farms and cost between $210,000 and $220,000 installed.

The engineering and manufacturing arms of Entegrity are based in Canada, but the company chose Boulder for its sales and operations headquarters. "We needed to penetrate the U.S. from one central location so it made sense," said William O'Donnell, managing director of business development. The proximity to the National Renewable Energy Laboratory in Golden was persuasive.

Entegrity has had a turbine installed at NREL since 1993 and in early March installed a new 50-kilowatt wind turbine there for independent testing.

Entegrity's U.S. business has been booming. "We increased 110 or 120 percent in '08, and we expect to grow 100 percent more in 2009," O'Donnell said.

The payback period for a wind investment varies greatly, anywhere from 4 to 20 years, depending on utility costs and local wind conditions, O'Donnell said.

The stimulus bill removed the $4,000 cap on the 30 percent federal tax credit for wind installations. But financing these high-cost projects has become more difficult with the credit crunch, according to O'Donnell. "Many of our clients will pay out of pocket with a combination of federal and state grants and tax credits. It's still a smart bet for them as long as they have expendable capital."

O'Donnell predicts that wind will grow beyond the 1 percent of the onsite renewable energy market predicted by the Pike Research report. "We expect to see wind to become a larger portion of that segment."

Fuel cells, the third category covered in the report, remain in the development stage, Link said. The Fuel Cell Store, the largest retail outlet in the country, was founded in Boulder in 1999, but was bought by Arizona-based ECOtality in 2007. Spokesman Colin Read said the market for fuel cells continues to be in the educational sector and that "the technology needs to advance" in order for fuel cells to become viable for consumers.

Hydrogen fuel cells, once the darling of the auto industry's efforts to find alternatives to the internal combustion engine, have fallen out of favor with the focus turning to electric vehicles. "For fuel cells to be mainstream, you'll have to create hydrogen infrastructure, which is very expensive," Read said.

Still, he sees enormous potential with more research and development. "Fuel cells have a role in our future, but we need to make significant strides in technology," Read said.

Whether onsite renewable energy is recession-proof remains to be seen. Link said he tempered his predictions for global growth of onsite solar in 2009 because of the financial crisis - 14 percent compared with last year's 100 percent growth in megawatt capacity of panels installed. In the U.S., he predicted robust growth for 2009 because of the federal tax credit, which was extended last October.

"Dependence on solar energy subsidies will taper off in Europe during the next three to five years, though we expect that horizon to be somewhat further in the U.S., approximately five to 10 years away," Link said.

Link sees opportunities in developing technology and products for storing the energy produced from intermittent sources like wind and solar. "We are doing some additional work with energy storage, ways to capture the electricity and release it into the grid," Link said. "This could be anything from batteries of all sorts to pumped hydro and compressed air storage."