03/04/2016
The 2014 global investment of 270 billion USD in renewables followed investments of 232 billion USD (2013), 256 billion USD (2012), 279 billion USD (2011), 237 billion USD (2010), 178 billion USD (2009), 182 billion USD (2008), 154 billion USD (2007), 112 billion USD (2006), 73 billion USD (2005) and 45 billion USD (2004) - an 11 year total of 2.02 trillion USD (unadjusted for inflation)
Current status of green energy investments in the world
Global renewable energy invested in strongly in 2014, registering a solid 17% increase with the total investement to 270 billion USD compared with 232 billion USD invested in 2013. As a result, 103 GW of generating capacity added around the world that equals the energy of all 158 nucler power plant reactors in the USA made 2014 the best year ever for newly installed capacity, according to the UNEP’s 9th annual “Global Trends in Renewable Energy Investments” report.
Major expansion of solar installations in China and Japan and record investments in offshore wind projects in Europe accounted for 92% of overall investment in renewable power and fuels. Investment in solar jumped 25% to 149.6 billion USD, the 2nd highest figure ever, while wind investment increased 11% to a record 99.5 billion USD. In 2014, some 49 GW of wind capacity and 46 GW of solar PV capacity were added worldwide, both records. Therein, China saw by far the biggest renewable energy investments last year - a record 83.3 billion USD, up 39% from 2013. The US was 2nd at 38.3 billion USD, up 7% on the year (though this is below its all-time high reached in 2011). The 3rd came Japan, at 35.7 billion USD, 10% higher than in 2013 and its biggest total ever.
The dominant feature of the solar sector was unprecedented expansion in China and Asia. Between them, the 2 Asian giants invested 74.9 billion USD in solar in 2014, around half the world’s total.
In China, utility-scale projects of more than 1MW made up about 3/4 of the solar investment of 40 billion USD, which was a 45% increase on the previous year. In Japan, on the other hand, investment was dominated by small scale projects of less than 1 MW, which accounted for 81% of a total solar investment of 34.8 billion USD, a 13% increase on 2013.
A boom in European offshore wind development resulted in 7.1 billion USD - plus projects reaching “final investment decision” stage in 2014. Among these, the 3.8 billion USD 600MW Gemini installation off the cost of the Netherlands was the largest non-hydro renewable energy plant to get the go-ahead anywhere in the world.
Offshore wind projects worth 18.6 billion USD were financed globally in 2014. This was 148% higher than the previous year and 45% higher than the next highest year, 2010. Most of this total - 16.2 billion USD was in Europe and China accounting for the remaining 2.4 billion USD.
Other renewable energy sources did not perform so well by comparison. Biofuels fell 8% to 5.1 billion, biomass and waste-to-energy dropped 10% to 8.4 billion and small hydro was down 17% to 4.5 billion USD. Only geothermal bucked the trend with a 27% increase to 2.7 billion USD.
Another reason comes from the continuing sharp decline of technology costs - particularly in solar, as well as in wind. It proves that every dollar invested in renewable energy bought significantly more generating capacity in 2014.
UN Under Secretary General and Executive Director of UNEP, Achim Steiner said “Once again in 2014, renewables made up nearly half of the net power capacity added worldwide. These climate-friendly energy technologies are now an indispensable component of the global energy mix and their importance will only increase as markets mature, technology prices continue to fall and the need to rein in carbon emissions becomes ever more urgent.”
A salient feature of the 2014 result was the rapid expansion of renewables into new markets in developing countries, where investments jumped 36% to 131.3 billion. China with 83.3 billion USD, Brazil (7.6 billion USD), India (7.4 billion USD) and South Africa (5.5 billion USD) were all in the top 10 investing countries, while more than 1 billion was invested in Indonesia, Chile, Mexico, Kenya and Turkey.
In contrast, the total renewables investment in developed economies rose only 3% to 138.9 billion USD. Even accounting for the booming offshore wind sector, investments in Europe hardly changed at 57.5 billion USD.
 |
| Offshore wind projects in Europe |
In spite of revolution, challenges contiue
2014 was a remarkable year for renewables after 2 years of shrinkage, however, multiple challenges remain in the form of policy uncertainty, structural issues in the electricity system - even in the very nature of wind and solar generation, with their dependence on breeze and sunlight.
Another challenge was, at the 1st sight, the impact of the 50% - plus collapse in the oil price in the 2nd half of last year. According to Udo Steffens, President of the Frankfurt School of Finance and Management, however, the oil price is only likely to dampen investor confidence in parts of the sector, such as solar in oil-exporting countries, and biofuels in most parts of the world.
Of greater concern is the erosion of investor confidence caused by increasing uncertainty surrounding government support policies for renewables.
Michael Liebreich, Chairman of the Advisory Board for Bloomberg New Energy Finance noted that “Europe was the 1st mover in clean energy, but it is still in a process of restructuring those early support mechanisms. In the UK and German, we are seeing a move away from feed-in tariffs and green certificates, towards reverse auctions and subsidy caps, aimed at capping the cost of the transition to consumers. While, there is almost a no-go area for investors in Southern Europe due to retroactive policy changes, most recently those affecting solar farms in Italy. Despite uncertainty over the future of the Production Tax Credit for wind in the US, costs are now so low that the sector is more insulated than in the past. Meanwhile the rooftop solar sector is becoming unstoppable.”
There are also structural challenges in the electricity system as grids and utilities in many countries struggle to cope with the increasing penetration of wind and solar in the generation mix. Coping with 25% or more variable generation is more difficult for grids and utilities than managing a 5% proportion.
Therefore, Governments have often struggled to produce policy measures that keep up with the advance of renewable power and its knock-on effect on the rest of the electricity system.
2014 was a year of outstanding year of strong investement in renewable energy with investment rallying strongly. If these positive investment trends are to continue, major electricity market reforms will be needed of the sort that Germany is now attempting with its Energiewende energy transition. The structural challenges needing overcome are not simple ones, but are the sort that have only arisen from the success of renewables.
HT (UNEP Source)
