Renewable investment stalls, shifts to developing countries

Two key reports on the progress of global renewable energy investment suggest the biggest growth in the past few years is coming from developing countries, as the likes of China, and north African and southern American nations accelerate their switch from fossil fuel investments.

The reports – one prepared by REn21, and the other a collaboration between the UN Environment program, Bloomberg New Energy Finance, and the Frankfurt School of Finance and Management – concluded that $US244 billion was invested in renewables in 2012 – the second highest ever, although the second time in six years that it has fallen below the previous year – a fall blamed on the lack of consistent policies.

Total investment in renewables since 2006 is now $US1.3 trillion.

Interestingly, the developing world spent $US112 billion in 2012 (just over half of this coming from China), and could well overtake the developed world in annual spending in 2013.

Some of the interesting highlights of the report include:

•  Morocco going ahead with a $US1.2 billion investment to finance the Masen Ouarzazate solar thermal project.
•  The completion of a 605MW solar PV plant in the Indian state of Gujarat, that will save around 8 million tonnes of CO2 and 900,000 tonnes of natural gas per year.
•  Close to $US1 billion was announced for a 396MW wind project in Oaxaca State, Mexico.
•  After the shift away from a nuclear power-dependent energy policy in the wake of the Fukushima nuclear accident, TEPCO commissioned its first three solar plants in 2011 and 2012 at Kawasaki and Mt. Komekura for a total of 30MW.
•  Warren Buffett’s MidAmerican Holdings launched an $850 million bond issue in February 2012 to finance its 550MW Topaz Solar Farm in California, only to see it oversubscribed by more than $400 million.
•  $US5 billion of ‘green’ bonds were issued in 2012, a 44 per cent increase over 2011.
•   The phenomenon of crowd sourcing—in which capital is raised from large numbers of small investors—took off in small-scale solar in Europe and the United States.

There were particularly sharp increases in renewables investment in South Africa, Morocco, Mexico, Chile and Kenya, with Middle East and Africa showing the highest regional growth of 228 per cent to $US12 billion.

By the end of 2012, total renewable power capacity worldwide exceeded 1,470 GW, up 8.5 per cent from 2011.Wind power accounted for about 39 per cent of this, followed by hydropower and solar PV with about 26 per cent each.

UNEP executive director Achim Steiner said there had has been a dramatic increase in number and size of projects.

“There have also been sharp falls in manufacturing costs and in the selling prices of wind turbines and photovoltaic panels, contributing to a shake-out in the industry in 2012,” he said. This is not only normal in a rapidly growing, high tech industry but is likely to lead to even more competition, with even bigger gains for consumers, the climate and wider sustainability opportunities.”

The brightest news from amongst the developed countries came from Japan, where investment in renewable energy (excluding research and development) surged 73 per cent to $US16 billion, thanks largely to a boom in small-scale solar on the back of new feed-in tariff subsidies for installations.

In 2012, an estimated 5.7 million people worldwide worked directly or indirectly in the renewable energy sector. The selling, installing, and maintaining small solar panels in rural Bangladesh, for instance, employs 150,000 people directly and indirectly.

Christiana Figueres, the executive secretary of the United Nations Framework Convention on Climate Change, said the increasing deployment of wind, solar, geothermal and other clean energy power sources “serve as a powerful antidote to those who claim that a transition to a low-carbon, resource-efficient future is unobtainable.”

However, Michael Liebrich, the head of BNEF, said that while the cost competitiveness of wind and solar is improving all the time … “what remains daunting is that the world has hardly scratched the surface. CO2 emissions are still on a firm upward (trend).”