Clean energy investment surged in China, Africa, the US, Latin America and India in 2015, driving the world total to its highest ever figure, of $328.9bn, up 4% from 2014 and beating the previous record from 2011 by 3%, according to new figures from Bloomberg New Energy Finance. However, Europe was an exception with the lowest clean energy investment since 2006. In other news the International Renewable Energy Agency (IRENA) published a new report on Saturday showing that a 36 per cent share of renewable energy in the global energy mix by 2030 would increase global gross domestic product (GDP) by up to 1.1 per cent.
The latest figures from Bloomberg New Energy Finance (BNEF) show dollar investment globally growing in 2015 to nearly six times its 2004 total, despite the oil price collapse and “the continued weakness of the European economy”.
According to Michael Liebreich, founder and now chairman of the advisory board of BNEF, “these figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices. They highlight the improving cost-competitiveness of solar and wind power, driven in part by the move by many countries to reverse-auction new capacity rather than providing advantageous tariffs, a shift that has put producers under continuing price pressure.”
“Wind and solar power are now being adopted in many developing countries as a natural and substantial part of the generation mix: they can be produced more cheaply than often high wholesale power prices; they reduce a country’s exposure to expected future fossil fuel prices; and above all they can be built very quickly to meet unfulfilled demand for electricity. And it is very hard to see these trends going backwards, in the light of December’s Paris Climate Agreement.”
Interestingly, the BNEF figures show that “the biggest piece of the $328.9bn invested in clean energy in 2015 was asset finance of utility-scale projects such as wind farms, solar parks, biomass and waste-to-energy plants and small hydro-electric schemes.” These totalled $199bn in 2015, up 6% on the previous year.
After asset finance, the next largest piece of clean energy investment was “spending on rooftop and other small-scale solar projects. This totaled $67.4bn in 2015, up 12% on the previous year, with Japan by far the biggest market, followed by the US and China.
Both wind and solar PV saw around 30% more capacity installed worldwide in 2015 than in 2014, reports BNEF. “The wind total for last year is likely to end up at around 64GW, with that for solar just behind at about 57GW. This combined total of 121GW will have made up around half of the net capacity added in all generation technologies (fossil fuel, nuclear and renewable) globally in 2015.”
China “was again by far the largest investor in clean energy in 2015, increasing its dominance with a 17% increase to $110.5bn, as its government spurred on wind and solar development to meet electricity demand, limit reliance on polluting coal-fired power stations and create international champions”, notes BNEF.
Second was the US, which invested $56bn, up 8% on the previous year and the strongest figure since the era of the ‘green stimulus’ policies in 2011. Money-raising by quoted ‘yieldcos’, plus solid growth in investment in new solar and wind projects, supported the US total.
Europe again saw lower investment in 2015, at $58.5bn, down 18% on 2014 and its weakest figure since 2006. The UK was by far the strongest market, with investment up 24% to $23.4bn thanks in part to large offshore wind projects. Germany invested $10.6bn, down 42% on a move to less generous support for solar and, in wind, uncertainty about how a new auction system will work from 2017. France saw an even bigger fall in investment, of 53% to $2.9bn.
A number of “new markets” together committed tens of billions of dollars to clean energy last year. These include Mexico ($4.2bn, up 114%), Chile ($3.5bn, up 157%), South Africa ($4.5bn, up 329%) and Morocco ($2bn, up from almost zero in 2014).
Africa and the Middle East are two regions with big potential for clean energy, notes BNEF, “given their growing populations, plentiful solar and wind resources and, in many African countries, low rates of electricity access. In 2015, these regions combined saw investment of $13.4bn, up 54% on the previous year.”
The figure below shows the trend in global clean energy investment since 2004:
A new report from the International Renewable Energy Agency (IRENA), Renewable Energy Benefits: Measuring the Economics, shows that “achieving a 36 per cent share of renewable energy in the global energy mix by 2030 would increase global gross domestic product (GDP) by up to 1.1 per cent, roughly USD 1.3 trillion.”
According to IRENA, the report “provides the first global estimate of the macroeconomic impacts of renewable energy deployment. Specifically, it outlines the benefits that would be achieved under the scenario of doubling the global share of renewable energy by 2030 from 2010 levels.”
“The recent Paris Agreement sent a strong signal for countries to move from negotiation to action and rapidly decarbonise the energy sector,” said Adnan Z. Amin, IRENA Director-General. “This analysis provides compelling evidence that achieving the needed energy transition would not only mitigate climate change, but also stimulate the economy, improve human welfare and boost employment worldwide.”
According to the report, Japan would see the largest positive GDP impact (2.3 per cent) but Australia, Brazil, Germany, Mexico, South Africa and South Korea would also see growth of more than 1 per cent each. For major oil and gas exporters, such as Saudi Arabia, Russia, Venezuela and Nigeria, the impacts are negative, unless these countries themselves expand their green energy investments.
According to the report, improvements in human welfare would go well beyond gains in GDP thanks to a range of social and environmental benefits. The impact of renewable energy deployment on welfare (which includes economic, social, health and environmental impacts) is estimated to be three to four times larger than its impact on GDP, with global welfare increasing as much as 3.7 per cent. Employment in the renewable energy sector would increase from 9.2 million global jobs today, to more than 24 million by 2030.
“A transition towards greater shares of renewables in the global energy mix would also cause a shift in trade patterns, as it would more than halve global imports of coal and reduce oil and gas imports, benefiting large importers like Japan, India, Korea and the European Union”, notes IRENA. The consequences for the global trade balance are shown in the graphic below: