LONDON, (UPI) -- The 20 largest European utilities are to double investment in renewable energy generation over the coming five years, a new study by Emerging Energy Research says.

Driven by high fuel prices and emissions restrictions under the Kyoto Protocol, companies are increasingly viewing renewable energy as a key component of their generation portfolios, the report says.

EER, a research and advisory company based in Spain and the United States, predicts that investment in renewable energy will exceed $60 billion by 2011, excluding large-scale hydroelectricity. The top 20 utilities have already allocated $13.3 billion for renewable energy ventures, primarily onshore wind farms but also offshore wind, wave and tidal energy, solar, biomass and small-scale hydroelectric projects.

The growing focus on renewable generation has been prompted by regulatory pressures, increasing market competition, and a mounting awareness of renewable energy as both a growth opportunity and a means to improve business performance, the report states. In an era of spiraling fuel prices and global instability, security of supply is also a significant concern.

"Utilities in Europe are increasingly prioritizing different renewable technology solutions alongside conventional generation assets, leveraging renewables experience to enter new markets, and creating profitable renewable energy business units to drive growth," EER Analyst Alex Klein said.

The majority of investment in renewable generation has so far been in wind power, with farms producing a total of 40 GW already operative. The report forecasts this trend is likely to continue, with utilities planning to generate an extra 35 GW by 2011 and wind energy industries in countries such as Britain, France, Portugal and Italy booming.

After wind power, utilities are also exploring the possibilities of biopower, increasingly co-firing biomass in traditional combustion plants as a way to reduce emissions with minimal need for capital investment. Though co-firing is only considered a short-term measure, EER says, utilities are gaining experience that can in the longer term be used to develop stand-alone biomass projects.

Other renewable forms gaining momentum include concentrated solar power, of which southern Europe in particular has considerable resources. Spain is aiming to develop 200 MW of solar thermal generation capacity by 2010 and is deploying aggressive feed-in tariffs -- guaranteeing purchase at a long-term minimum price -- to spur project development in CSP technology. If successful in Spain, concentrated solar power could quickly emerge as a major energy source in other southern European countries, where governments are considering implementing greater, longer-term incentives.

Wave and tidal energy are also emerging as contenders, with Britain leading the way in developing technologies and Portugal currently installing the first commercial offshore wave farm in the world. Though wave and tidal energy have enormous potential for utility-scale projects, high initial costs are proving problematic; however Britain, Spain and Portugal have put in place market support mechanisms to encourage investment, and more commercial projects may become operative in the next few years. Some utilities, such as ScottishPower and Portugal's EDP, are partnering with wave technology companies to attract financing.

Proof perhaps that national and international targets are working, Simon MacMillan of ScottishPower said the "main driver" behind his utility's bid for renewable energy was the U.K. Renewables Obligation, a government requirement that utilities generate a certain percentage of their energy from renewable sources.

As Scotland was the windiest region in Europe, the company had also seen potential to develop and expand its generation portfolio, he said.

ScottishPower was primarily investing in wind power, with $1.75 billion earmarked for onshore and offshore wind projects by 2010, he continued; however it was also in the early stages of planning for marine projects.

Renewable energy sources now supplied 400MW of electricity, MacMillan told United Press International -- 6.5 percent of the utility's total output.

But it is Spain's Iberdrola that has surged to the forefront of renewable energy generation. Almost 15 percent of its total capacity comes from renewable energy sources -- excluding large-scale hydroelectric -- most of which is made up by wind power. Iberdrola is the largest wind power producer in the world and is also set to become Europe's largest solar power producer, with plans for a CSP pipeline of 600MW to be completed by 2010.

Klein explained: "To develop its wind strategy, Iberdrola has relied on partnerships with local and regional developers, as well as local banks and government agencies. They seem to be following some of the same patterns as they look to develop utility-scale solar CSP."

Other utilities that substantially increased renewable energy generation as a percentage of total capacity during 2005 were ScottishPower, EDP, Sweden's Vattenfall and Norway's Statkraft, according to the EER study. Italy's Enel has one of the largest renewable energy portfolios, second only to Iberdrola in real terms. When large-scale hydroelectric is taken into consideration, Iberdrola, Statkraft and Austria's Verbund all generate more than 50 percent of their total capacity base from renewables. Statkraft leads Europe on large scale hydroelectric, from which it derives 98 percent of its capacity. Seven large utilities -- British Energy, Iberdrola, Statkraft, Verbund, Vattenfall, France's EDF and Finland's Fortum -- generate more than 50 percent of total capacity from "carbon free" sources including nuclear energy.

The EER study says that in the past, Europe's largest utilities -- EDF and the two German giants E.ON and RWE -- have been reluctant to become involved in the renewables sector, only doing so when required to by law. However, that attitude is changing, and in future, the three utilities will become active and leading players in the renewables sector, the study predicts.

"The most aggressive renewables players on a Pan-European scale will be EDF, Enel, and E.ON, which have established massive war chests to pursue cross border acquisitions and large development in renewables," Klein said.

"Companies such as (Denmark's) DONG, ScottishPower, Iberdrola, (Belgium's) Electrabel and EDP will focus considerable efforts to lead the way in their regional markets and to leverage their previous experience in onshore wind to capture other scalable opportunities over the medium to long-term."

He added: "How the Pan-European market evolves will clearly effect how utilities choose to leverage renewable energy technologies as a competitive strategy. Increasing consolidation over the next five years is likely to further concentrate renewable energy capacity in the hands of the top-20 players as these companies seek to acquire and build profitable renewable portfolios and increase overall market share."

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