TODAY’S STUDY: New Energy Investment Trends Now

Global Trends In Renewable Energy Investment 2019

August 2019 (Frankfurt School via (UN Environment Program and Bloomberg NEF)

KEY FINDINGS

ABOUT THE DECADE 2010-2019:

n The years 2010-2019 will have seen $2.6 trillion invested in renewable energy capacity (excluding large hydro), more than treble the amount invested in the previous decade. Solar is set to have attracted the most in 2010-2019, at $1.3 trillion, with wind securing $1 trillion and biomass and waste-to-energy $115 billion.

n China will be the top country by far in terms of the sums invested in renewables capacity during the current decade. It committed $758 billion between 2010 and the first half of 2019, with the U.S. second on $356 billion and Japan third on $202 billion.1

n Europe as a whole invested $698 billion in 2010 to first-half 2019, with Germany contributing the most, at $179 billion, and the U.K. $122 billion. India is an increasingly important investor in renewables, and had committed $90 billion by the end of the first half of this year.

n The decade has seen a spectacular improvement in the cost-competitiveness of renewables, with the levelized cost of electricity for solar photovoltaics 2 down 81%, for onshore wind down 46% and for offshore wind down 44%. One or other renewables technology is now the cheapest option for new generation in many countries around the world.

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n Behind these cost reductions in solar and wind have been a combination of economies of scale in manufacturing, fierce competition along the supply chain – intensified by the introduction of auctions in many countries – record-low costs of finance, and improvements in the efficiency of generating equipment.

n There will have been more solar capacity installed during the decade than any other generating technology, fossil or renewable. Solar's additions, of some 638GW during 2010-2019, is a remarkable figure given that there were only 25GW of solar power capacity worldwide at the end of 2009.

n The 2010-2019 period is set to have seen a net 2.4 terawatts of power capacity of all sorts installed, with solar first, coal second, and wind narrowly beating gas for third place. Nevertheless, the stock of fossil fuel power already installed, and those added this decade, has meant that global power sector emissions are likely to have risen by at least 10% between the end of 2009 and 2019

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ABOUT 2018:

n Global investment in renewable energy capacity in 2018 was $272.9 billion, the fifth successive year in which it has exceeded $250 billion, but down 12% compared to 2017 – due in large part to a policy change that hit the financing of Chinese solar in the second half of the year.

n The global investment figure for 2018 was achieved despite continuing falls in the capital cost of solar and wind projects. Solar kept its position as the technology attracting the most capacity investment, at $133.5 billion, although this was down 22% on 2017. Wind secured $129.7 billion, up 3%.

n Renewable energy capacity investment was more spread out across the globe than ever, with 29 countries each investing more than $1 billion in 2018, up from 25 in 2017 and 21 in 2016. China invested the most, at $88.5 billion, down 38%, with Europe on $59.9 billion, up 45%, and the U.S. on $42.8 billion, down 6%.

n Spain, Vietnam, Ukraine and South Africa were among the countries in the "$1 billion-plus club" that saw capacity investment jump by more than fivefold in 2018. There were also increases of 100% or more in investment in the Netherlands, Sweden, Morocco, Russia and Taiwan.

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n Investment in renewables capacity in 2018 was about three times global investment in coal and gas-fired generation capacity combined. This came despite further reductions last year in the average capital cost per MW of solar and wind projects.

n The world added a record 167GW of new capacity of renewables excluding large hydro in 2018, with solar additions hitting their own record of 108GW. This helped renewables excluding large hydro to raise its share of global electricity generation, from 11.6% in 2017 to 12.9% in 2018, helping the world to avoid an estimated 2 gigatonnes of carbon dioxide emissions.

n Other types of investment in renewables showed increases in 2018. Government and corporate research and development was up 10% at $13.1 billion, while equity raising by specialist companies on public markets was 6% higher at $6 billion, and venture capital and private equity investment was up 35% at $2 billion. Overall renewable energy investment, including these categories as well as capacity investment, was down 11% at $288.3 billion in 2018.

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A DECADE OF RENEWABLES INVESTMENT

n At the dawn of this decade, in January 2010, wind and solar were dots on the horizon of the world power system, accounting for only 4% of global generating capacity and much less of total electricity produced. They were also relatively expensive, and reliant on subsidies.

n A startling transformation has since taken place. By the end of the decade of 2010-2019, in a few short months’ time, the two leading renewable energy technologies are expected to account for some 18% of global generating capacity, after the investment of some $2.4 trillion in new projects over the 10 years.

n The cost comparison has also changed out of all recognition. Since the second half of 2009, the benchmark global levelized cost of electricity 3 for solar photovoltaics without tracking systems has fallen by 81%, the equivalent for onshore wind by 46% and offshore wind by 44%. In many countries, the cheapest source of new generating capacity in 2019 is either solar or wind.

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n Overall, including other renewable energy technologies but not large hydro, capacity investment over the 2010-2019 period is set to reach $2.6 trillion. The biggest investing country, by far, during the decade is set to be China, which committed $758 billion between the beginning of 2010 and mid-year 2019. Europe as a whole invested $698 billion in that time, and the U.S. $356 billion.

n Interest rates at record lows in major economies during the decade have been an important factor in making this possible. A much higher proportion of lifetime costs for wind and solar are incurred in advance rather than during the operating phase than for coal and gas. This upfront capital has to come from equity providers and lenders.

n Few would have dreamt at the start of 2010 that solar would see more capacity added during the decade ahead, at 638GW, than any other generating technology – renewable, fossil fuel or nuclear. However, the greening of the electricity system still has a very long way to go. The 2010-2019 period will have seen more than 500GW of new coal plants added worldwide, pushing up overall power system emissions…

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