The availability and cost of natural gas therefore will vary by location. This leads to several opportunities for renewable energy. First, large renewable energy facilities can supply national or regional transmission grids. In some regions, gas will compete robustly for this market. As the example of Japan illustrates, however, the flood of cheap gas will not swamp every market. The remaining "high ground" for renewables will include both rich and poor countries.

Where gas proves unavailable or too costly, renewables will also need to compete with coal or nuclear. In contrast to natural gas and renewable energy facilities, these technologies reward huge plants with economies of scale, and they exact a severe environmental price. Thus, without gas as a competitor, the non-price advantages of renewable energy (e.g., cleanliness, quick installation, and appropriateness for facilities of modest capacity) may count for more in some global markets than they do in the United States.

The second major market for renewable energy lies off-grid. Many people with the greatest need for energy services live far beyond the nearest electric transmission grid. Natural gas has some of the elements needed to compete strongly in this market. It produces relatively little local pollution and gas turbine generators now under development may soon efficiently serve loads as small as 24 kW.¹⁹ But where the electricity transmission grid has not arrived at all, the natural gas transmission system is likely to be equally distant. Diesel delivered by truck will continue to be the principal competitor for renewable energy in meeting this type of off-grid demand. Compared to diesel, renewables often offer greater convenience and reliability, not to mention lower cost and price volatility.²⁰

A third type of energy demand emerges where the transmission grid is operated at full capacity.²¹ Rather than paying to upgrade the transmission system, users may prefer to install their own small, distributed generation technologies, either free-standing or connected to the grid. These technologies may include gas-fired micro-turbines, photovoltaic panels, fuel cells, solar water heaters and other devices. (Energy efficiency measures deliver similar benefits.) Indeed, as renewable energy and gas technologies become smaller, less expensive, and more efficient and flexible, some analysts expect the market for distributed generation to expand far beyond its use as a solution to crowded transmission systems. (This topic is discussed in greater detail below.) Gas and renewables may well coexist in the distributed market.²²

The majority of grid-connected, off-grid and distributed energy demand for renewable energy today comes from overseas. For example, exports took 73% of U.S. photovoltaic production in 1996. Perhaps equally indicative, foreign firms had by then acquired about two-thirds of America's photovoltaic manufacturing capacity.²³ Also in 1996, as the American windpower sector merely held steady (adding only 10 MW of replacement machines) while other nations added 1196 MW of new capacity.²⁴

Growing overseas demand for renewables often indicates a strong environmental ethos and high energy prices. In several countries, including Japan, Denmark and Germany, it also reflects significant government support. In 1996, for instance, subsidized programs for early adopters accounted for all of the growth in the world photovoltaic market.²⁵

For some environmental purposes, where renewable energy markets develop matters. Solar energy in India will not reduce smog in the United States, although it may reduce global warming, to the benefit of both nations. Where renewable energy technologies are manufactured and used may have an indirect environmental impact as well: it may be easier to garner support for clean energy if citizens know that the industries in question employ Americans and channel profits into the U.S. economy. To achieve economies of scale and "learning by doing," however, the global market for renewables may be more important than the market in any particular country.

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