Global renewables investment hits record high, boosted by solar and offshore wind

Global renewable energy investment reached a record $US226 billion across the first six months of 2022, an 11% year-on-year increase which defied supply chain challenges and cost inflation to highlight growing demand for clean energy.

According to the latest Renewable Energy Investment Tracker 2H 2022 from BloombergNEF (BNEF), the majority of the record-breaking first-half investment was directed towards project deployment, with $US206 billion going towards asset financing and small-scale solar projects.

Investment in new large- and small-scale solar projects rose to another record-breaking $US120 billion through the first half of the year, up 33% from the same period a year earlier. Meanwhile, project financing for wind energy increased by 16% to $US84 billion.

What is most impressive about these numbers, though, is the fact that both sectors have been adversely challenged by the rising input costs for key materials such as steel and polysilicon, as well as both suffering from supply chain disruptions and rising financial costs.

Despite these challenges, BNEF’s new figures show that investor appetite for solar and wind projects is stronger than ever – though this has been helped by very high energy prices currently being seen in many global markets.

“Policy makers are increasingly recognising that renewable energy is the key to unlocking energy security goals and reducing dependence on volatile energy commodities,” said Albert Cheung, head of analysis at BloombergNEF.

“Despite the headwinds presented by ongoing cost inflation and supply chain challenges, demand for clean energy sources has never been higher, and we expect that the global energy crisis will continue to act as an accelerant for the clean energy transition.”

While the majority of renewable energy investment was focused on project investment, the first half of 2022 also saw an all-time record for venture capital and private equity investments into renewable energy and energy storage, with $US9.6 billion being raised, up 63% over the same period in 2021.

Unsurprisingly, China remained a dominant presence in the investment numbers for the first half of 2022, with large-scale solar investments totaling $US41 billion – up 173% from the year before – and with investment in new wind projects increasing by 107% to $US58 billion.

“Green infrastructure is the most important investment area that China is relying on to boost its weak economy in the second half of 2022,” said Nannan Kou, BNEF’s head of China analysis.

“The investment growth trend follows China’s strategy to build new renewable generation capacity so that it can replace its existing coal fleet. China is well on track to hit its 1,200GW wind and solar capacity target by 2030.”

While solar dominated globally, investment in offshore wind nevertheless increased by 52% on the first half of 2021, reaching $US32 billion.

“Investments in 2022 will flow into projects coming online in the next few years as the offshore wind installed base is set to grow tenfold from 53GW in 2021 to 504GW in 2035,” said Chelsea Jean-Michel, offshore wind analyst at BNEF.

“Offshore wind projects enable companies and governments to make progress towards their decarbonization goals at scale.

“The United Kingdom, France and Germany are just a few of the countries that have increased their offshore wind targets in the first half of 2022, signalling further support for investment in the technology.”