Global trends in renewable energy investments

Studies delivered by IRENA, the Climate Policy Initiative and the IEA suggest that in the last year, there was a decline in renewable energy investments. This reduction was mainly due to the continuing improvements in renewable energy technology and the resulting decrease in associated costs. This investment change was, however, counteracted by enhanced investment into energy efficiency technologies within the building and transport sectors.

Based on findings from Bloomberg New Energy Finance (BNEF), over $330 USD billion was invested in renewable energy last year. This doesn’t take into account large scale hydro-electric projects but does include equity raised by businesses investing in smart grids, digital energy, storage and electric vehicles. In the Clean Energy Investment Trends 2018, BNEF highlight the following:-

Total investment in solar energy decreased by 24% to just over $130 USD billion.

Wind investment increased by 3% to just over $128 USD billion, with the offshore market experiencing is the second biggest year of investment.

Investment into biomass and waste-to-energy increased by 18% to over $6 USD billion

 In regards to regional analysis, reports show that over the last year, clean energy investments did vary from country to country. China continues to lead the global market with total investments exceeding $100 USD billion, despite a significant drop in investment compared to its record year in 2017. This decline has been linked to the considerable reduction in solar commitments. In Europe, the region experienced a rise in clean energy investment by 27% to over $74 USD billion.

According to studies, the United States was ranked as the second largest nation in terms of investment, exceeding $64 USD billion.

Elsewhere, Japan, India and Germany experienced declines in investment, with Germany investing just over $10 USD billion in the last year, a reduction of 32%. Most nations, however, show a continued increasing trend in clean energy investments.

Renewable Energy Investment Plans

Since the end of last year, a number of clean energy investments have been announced. During the Katowice Climate Change Conference, the UK confirmed it plans to invest upwards of ￡100 million into 40 renewable energy projects in Africa over the next five years. The range of small scale solar, wind and hydro projects will enhance the availability of clean energy, reduce carbon emissions and generate new job opportunities. The funding announcement is just a small section of UK’s overall investment plan to allocate ￡5.8 billion into International Climate Finance by 2020, supporting governments, private sector and communities to combat climate change. The UK government believe this funding could generate an additional ￡156 million of private finance into African renewable energy markets within the next few years.

At the beginning of this year, The European Commission confirmed support for renewable energy schemes within Portugal and Lithuania. Portugal was allocated over ￡315 million into supporting a long term biomass installation project. The new installations will provide electricity and combined heat and power. Situated in forest areas, the residues collected via biomass energy will support the reduction of forest fires in the region and improve the share of renewable energy within the Portuguese energy sector.

The European Commission also granted funding support in Lithuania directly for producers within the wind, solar, hydro, biomass and biogas. The plan involves a ‘feed-in-premium’, an additional payment made to the generator that exceeds the overall market price. Small scale energy sites receive support from fixed feed-in-tariffs, providing a secure price for the energy generated.

In Ukraine, a wind farm project gained financial support via a loan valued at over ￡140 million through the European Bank for Reconstruction and Development (EBRD) with financing from the Green for Growth Fund, the Netherlands Development Finance Company and the Nordic Environment Finance Corporation. Once complete, the project is expected to generate 850,000 MWh of clean energy and result in a saving of 470,000 tonnes of carbon emissions every year.

Support for Transmission and Distribution Technology

Investment into transmission and distribution has risen worldwide with the aim to improve energy supplies in particular regions by increasing the electricity distribution network, enhancing efficiency with smart meters and as a result, reducing overall carbon emissions.

The World Resources Institute has suggested that transmission and distribution technologies that supporting new smart grid technologies can also mean support for fossil fuel power generation. However, investments into transmission and distribution are still considered to be part of clean energy financing if the investment creates a reduction in energy consumption, energy loss and supports renewable energy.

More recently, a report by WRI was focused on clean energy investments and ensuring they are consistent with climate change and the goals laid out in the Paris Agreement. The report ‘Aligning Electricity Transmission And Distribution Investments With A Paris Agreement Pathway’ states a criterion that calls for a clear report on such investments, highlighting its consistency with decarbonisation plans and the inclusion of a carbon price. The WRI explain that these criteria would highlight transmission and distribution investments and their overall support for the renewable energy market.