Global renewable investments surged 17% last year to near record — U.N. report 

Source: Daniel Cusick, E&E reporter • Posted: Wednesday, April 1, 2015

A solar boom in Asia and record spending on offshore wind projects in Europe helped propel renewable energy investment to $270 billion last year, a 17 percent increase over 2013, according to figures released this morning by the United Nations.

The 2014 spending resulted in 103 gigawatts of new generation capacity, reversed a two-year slump in renewable energy investment and came amid declining oil prices that some experts predicted would further undermine renewables’ growth prospects.In 2012 and 2013, annual renewable energy spending dropped to $256 billion and $232 billion, respectively, according to figures provided to the U.N. Environment Programme by the Frankfurt School-UNEP Collaborating Centre and Bloomberg New Energy Finance. Clean energy experts attributed some of the decline to generally falling prices for renewable energy technologies and greater economies of scale.

The 2014 figures show spending on renewables rebounding to within a few percentage points of 2011 levels, when the sector set an all-time investment record of $279 billion, according to the report.

According to the United Nations’ findings, renewable energy plants accounted for roughly 9.1 percent of world electricity generation in 2014, up from 8.5 percent of all power in 2013. Renewables also accounted for nearly half of all new generation capacity added worldwide last year, according to the report.

China and Japan led solar boom

Solar and wind energy accounted for 92 percent of all investment in renewable energy for 2014, with spending levels of $149.6 billion and $99.5 billion, respectively. Solar, which accounted for 46 GW of new capacity in 2015, saw a 25 percent increase in investment, while wind energy investment rose by 11 percent with 49 GW of new capacity, according to the UNEP.

“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,” said Achim Steiner, U.N. undersecretary-general and UNEP’s executive director, in a statement.

He added that “the growing penetration of renewable generation in the world’s developing countries is one of the important and encouraging aspects of the 2014 report.”

For the year, renewable energy spending in developing countries rose 36 percent, to $131.3 billion, according to the United Nations. In contrast, renewable energy investment in developed economies, including the United States and much of Europe, rose 3 percent to $138.9 billion.

As in previous years, China saw the largest renewable energy investment in 2014 — a record $83.3 billion, up 39 percent from 2013. The United States ranked second at $38.3 billion, up 7 percent from the previous year, with Japan trailing close behind at $35.7 billion, 10 percent higher than in 2013 and its highest figure ever.

Nearly half of the world’s total solar investment in 2014 went to two countries — China and Japan — which together spent nearly $75 billion on solar plants. Utility-scale projects represented roughly 75 percent of China’s total solar investment, while Japan’s solar investment “was dominated by small-scale projects of less than 1 megawatt,” the report said.

Biofuels lag behind other renewables

In Europe, offshore wind energy drew billions of dollars in new spending, driven by seven projects that entered the final investment decision stages over those 12 months. Those included the 600 MW Gemini installation off the coast of the Netherlands, which at $3.8 billion was the largest non-hydro renewable energy project funded globally.

The report noted that “a continuing sharp decline in technology costs — particularly in solar but also in wind — means that every dollar invested in renewable energy bought significantly more generating capacity in 2014.” For example, the money invested to add 103 GW of new renewable capacity last year would have added just 86 GW of capacity in 2013 and 81 GW in 2011.

Moreover, the report said, the 103 GW of capacity added by renewable energy firms last year equals the generating capacity of all 158 nuclear power reactors operating in the United States.

While traditional fossil fuels, including coal, oil and natural gas along with nuclear power, continue to represent the lion’s share of global energy production, experts have stressed the resilience of alternative energy sources, even when they are forced to compete against declining oil prices.

“Oil and renewables do not directly compete for power investment dollars,” said Udo Steffens, president of the Frankfurt School of Finance and Management in Germany, which helped compile the data for the “Global Trends in Renewable Energy Investments” report. “Wind and solar sectors should be able to carry on flourishing, particularly if they continue to cut costs per [megawatt-hour]. Their long-term story is just more convincing.”

One sector that appears to have been negatively influenced by falling oil prices was biofuels, which saw an 8 percent decline in investment for the year, to $5.1 billion. Waste-to-energy project investment also fell 10 percent to $8.4 billion, while small hydropower fell 17 percent to $4.5 billion.