Falling price of solar obscures rise in renewables generation share

Renewable energy’s share of world electricity generation continued to climb in 2013 despite a 14 per cent drop in investments to $214.4bn, claims a new report.

According to Global Trends in Renewable Energy Investment 2014 – produced by the Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance, the United Nations Environment Programme (UNEP) and Bloomberg New Energy Finance — the investment drop of $35bn was partly down to the falling cost of solar photovoltaic systems. The other main cause was policy uncertainty in many countries, an issue that also depressed investment in fossil fuel generation in 2013.

Globally, renewables excluding large hydro accounted for 43.6 per cent of newly installed generating capacity in 2013.

‘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,’ Steiner said in a statement. ‘This should give governments the confidence to forge a new robust climate agreement to cut emissions at the 2015 climate change conference in Paris.’

The report points to the end of a four-and-a-half year 78 per cent decline in clean energy stocks, which were lowest in July 2012 but gained 54 per cent in 2013, an improvement that took place as many companies in the solar and wind manufacturing chains moved back towards profitability.  

Large hydro-electric projects were another important area of investment with at least 20GW of capacity estimated to have come on stream in 2013, equivalent to approximately $35bn of investment.

Although investment in renewable energy capacity, including all hydro, in 2013 was once below gross investment in fossil-fuel power, at $227bn compared to $270bn, it was roughly double the net figure for investment in fossil-fuel power excluding replacement plant.

The year marked a deepening involvement of long-term investors such as 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 $3.2bn raised in 2013, as well as through new types of financing vehicles including North American ‘yield companies’ and real estate investment trusts. Public market equity raising by renewable energy companies rose 201 per cent to $11bn.

Regional highlights:

  • Last year was the first in which China invested more in renewable energy than Europe. China’s total was down by six per cent at $56bn, while Europe’s dropped 44 per cent to $48bn. The US saw a fall of 10 per cent to $36bn. India moved 15 per cent down to $6bn and Brazil 54 per cent down to $3bn, the lowest since 2005.
  • The Americas, excluding the US and Brazil, increased investment in renewables by 26 per cent (to $12bn) in 2013. Japan’s appetite for solar helped to drive an 80 per cent increase in renewable energy investment to $29bn in 2013.
  • Installed solar rose 26 per cent — from 31GW in 2012 to 39GW in 2013 even as investment in solar capacity decreased 23 per cent from $136bn to $104bn.