redOrbit Staff & Wire Reports – Your Universe Online
Renewable energy accounted for 43.6 percent of the world’s newly installed electricity-generating capacity last year, despite a 14 percent drop in investments, according to the latest Global Trends in Renewable Energy Investment report.
The report, produced by the Frankfurt School, the United Nations Environment Program (UNEP) and Bloomberg New Energy Finance, has become the standard reference for global renewable energy investment figures in recent years. The data revealed that global investment in renewable energy fell $35.1 billion to $214.4 billion last year, due mainly to the falling cost of solar photovoltaic systems and policy uncertainty in many countries – an issue that also reduced investment in fossil fuel generation last year.
However, despite this drop in investment, renewable energy’s share of global electricity generation continued its steady climb.
In fact, were it not for renewables, global energy-related CO2 emissions would have been an estimated 1.2 gigatonnes higher in 2013, the researchers said. This would have caused a 12 percent increase in the gap between where emissions are heading and where they need to be in 2020 in order to have a realistic chance of keeping under a two degree Centigrade temperature rise, the authors of the report wrote.
“A long-term shift in investment over the next few decades towards a cleaner energy portfolio is needed to avoid dangerous climate change, with the energy sector accounting for around two thirds of total greenhouse gas emissions,” said Achim Steiner, UN Under-Secretary-General and Executive Director of UNEP. “The fact that renewable energy is gaining a bigger share of overall generation globally is encouraging. To support this further, we must re-evaluate investment priorities, shift incentives, build capacity and improve governance structures.”
“While some may point to the fact that overall investment in renewables fell in 2013, the drop masks the many positive signals of a dynamic market that is fast evolving and maturing,” he added.
“This should give governments the confidence to forge a new robust climate agreement to cut emissions at the 2015 climate change conference in Paris.”
Ulf Moslener, Head of Research of the Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance, called the overall decline in investment dollars in renewable energy disappointing, but added that the “foundations for future growth in the renewable energy market fell into place in 2013.”
Michael Liebreich, Chairman of the Advisory Board for Bloomberg New Energy Finance, pointed to several hopeful signs for renewable energy after years of painful shake-out in the sector, including “lower costs, a return to profitability on the part of some leading manufacturers, the phenomenon of unsubsidized market uptake in a number of countries, and a warmer attitude to renewables among public market investors.”
The report notes the end of a four-and-a-half year, 78 per cent decline in clean energy stocks, which bottomed out in July 2012 and then gained 54 percent in 2013. That improvement took place as many companies in the solar and wind manufacturing chains regained profitability after a tough period of over-capacity and corporate distress.
Large hydroelectric projects were another important area of investment, with at least 20 Gigawatts (GW) of capacity estimated to have come online in 2013, equivalent to approximately $35 billion of investment.
Although investment in renewable energy capacity (including all hydro) in 2013 was once again below the gross investment in fossil-fuel power – at $227 billion compared with $270 billion – it was roughly double the net figure for investment in fossil-fuel power excluding replacement plant.
Last year also marked a deepening involvement of long-term investors – pension funds, insurance companies, wealth managers and private individuals – in the equity and debt of wind and solar projects. Part of their new engagement was through clean energy bond issuance, which set a new record of $3.2 billion raised in 2013, as well as through new types of financing vehicles including North American “yield companies” and real estate investment trusts.
But the standout performer among investment types in 2013 was public market equity raising by renewable energy companies, which soared 201 percent to $11 billion, the highest since 2010. This was largely due to the rally in clean energy share prices and institutional investors’ appetite for funds offering solid yields.
Additional highlights from the report include:
• 2013 was the first year that China invested more in renewable energy than Europe. China’s total investment was down by six percent to $56 billion, while Europe’s fell 44 percent to $48 billion. Meanwhile, US investment fell 10 percent to $36 billion, while India’s dropped 15 percent to $6 billion and Brazil’s fell 54 percent to $3 billion, the lowest since 2005.
• The Americas, excluding the US and Brazil, increased investment in renewables by 26 percent, to $12 billion, in 2013. Japan’s solar boom helped to drive an 80 percent increase in renewable energy investment to $29 billion during that time.
• Installed solar was up 26 percent, from 31 GW in 2012 to a record 39 GW in 2013, despite a 23 percent decline in solar capacity investment from $135.6 billion to $104.1 billion.
• A handful of significant projects in Latin America, Middle East and Africa are taking place in wind and solar without any subsidy support, or in preference to more expensive fossil-fuel options.
• Renewables, excluding large hydro, accounted for 8.5 percent of global electricity generation in 2013, up from 7.8 percent in 2012, and have seen cumulative investment of over $1.5 trillion since 2006.
Key findings from the report will be showcased at the Bloomberg New Finance Initiative “Future of Energy Summit” in New York April 4-7.