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INVESTMENT FLOWS

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The Jurong Port in Singapore completed a SGD 30 million (USD 22.4 million) installation of solar panels on its warehouse rooftop in 2016, making it the then-largest port-based solar PV facility in the world. The facility has a peak capacity of 9.5 MW and is estimated to generate more than 12 MWhof solar energy per year, providing more than 60% of the port’s annual electricity needs.

Global new investment in renewable power and fuels (not including hydropower projects larger than 50 megawatts (MW)) totalled USD 279.8 billion in 2017, as estimated by Bloomberg New Energy Finance (BNEF)i. This represents an increase of 2% compared to the previous year, even as the costs of wind and solar power technologies fell further. Investment in renewable power and fuels has exceeded USD 200 billion annually since 2010. (→ See Figure 1) Investment in hydropower projects larger than 50 MW was an estimated additional USD 45 billion in 2017.

“Global new investment in renewable power and fuels reached in 2017”

These estimates do not include investment in renewable heating and cooling technologies, for which data are not collected comprehensively. The International Energy Agency. reports that global investment in solar thermal heating technologies increased steadily until 2013 but then fell each year through 2016 (latest data available).

Investment in new renewable power capacity (including all hydropower) was three times the level of investment in fossil fuel generating capacity and more than double the investment in fossil fuel and nuclear capacity combined.

Note: Figure does not include investment in hydropower projects larger than 50 MW. Investment totals have been rounded to nearest billion and are in current USD.Note: Figure does not include investment in hydropower projects larger than 50 MW. Investment totals have been rounded to nearest billion and are in current USD.Source: BNEF.

Investment in renewable energy continued to focus on solar power, particularly solar photovoltaics, which increased its lead over wind power in 2017. Asset finance of utility-scalev projects, such as wind farms and solar parks, dominated investment at USD 216.1 billion worldwide. Small-scale solar PV installations (less than 1 MW) accounted for USD 49.4 billion, representing an increase of 15%.

 

“Developing countries extended their lead over developed countries in 2017, with of global investment in renewable energy.”

Renewable energy investment in developed countries as a group fell 19% in 2017. Investment decreased in the two developed-country front-runners, the United States and Japan, as well as in the leading European countries, Germany and the United Kingdom. Among developing and emerging countries, renewable energy investment increased 20%, to USD 177 billion.

China played a dominant role, investing USD 126.6 billion,its highest figure ever. Substantial increases in developing countries were witnessed in Mexico, Egypt, the United Arab Emirates and Argentina.

INVESTMENT BY ECONOMY

Developing and emerging economies overtook developed countries in renewable energy investment for the first time in 2015; they extended their lead in 2017, accounting for a record 63% of global investment in renewable energy, due largely to China. Developments in renewable energy investment varied by regioni, rising in China, Latin America (including Brazil) and the Middle East and Africa, and falling in Europe, the United States, Asia-Oceania (excluding China), Japan and India.

“China accounted for a record of all financing in renewable energy”

Considering all financing of renewable energy (but excluding hydropower larger than 50 MW), China accounted for a record 45% of the global investment total, up from 35% in 2016. China was followed by Europe (15%), the United States (14%) and Asia-Oceania (excluding China and India; 11%). Smaller shares were seen in the Americas (excluding Brazil and the United States, 5%), India (4%), the Middle East and Africa (4%) and Brazil (2%).

The top 10 national investors consisted of four developing or emerging countries and six developed countries. In addition to China and the United States, top countries included Japan, India and Germany. The next five countries were Australia, the United Kingdom, Brazil, Mexico and Sweden.

China’s investment in renewable power and fuels reached a record USD 126.6 billion in 2017, up 31% over 2016. Most of this total (USD 103.3 billion) was in asset finance, which increased 14% relative to 2016. In 2016, China invested roughly the same amount in solar and wind power; however, in 2017 the country experienced a boom in overall solar power investment, up 58% to USD 86.5 billion, whereas total investment in wind power declined by 6%.

Utility-scale solar power arrays of more than 1 MW accounted for most of China’s solar power total, while the country’s investment in small-scale solar PV project development increased nearly five-fold. By comparison, China’s total investment in wind power was USD 36.1 billion; investment in onshore wind power was down 28%, while offshore wind power increased 180% to USD 10.8 billion. China also invested significant sums in large-scale hydropowerii, commissioning 7.3 gigawatts in 2017, a large portion of which was projects larger than 50 MW.

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Note: Data are in current USD and include government and corporate R&D. Source: BNEF.

 

Investment in Europe totalled USD 40.9 billion in 2017, a significant drop (36%) from 2016. Asset finance accounted for 74% of the region’s investment, at USD 30.4 billion, of which USD 26.7 billion was invested in wind power and USD 2.8 billion was invested in solar power. Small-scale distributed capacity in Europe fell sharply in 2017, to USD 6.6 billion, due in part to a significant reduction (by more than half) in the United Kingdom.

The United Kingdom – Europe’s largest national investor in renewable energy in 2016 – saw total investment fall 65% to USD 7.6 billion. This decline reflected an end of subsidies for onshore wind and utility-scale solar power and a substantial gap in time between auctions for offshore wind power projects. Germany took over as the largest European investor at USD 10.4 billion, despite a 35% reduction from 2016. Germany’s investment decline reflected investors’ uncertainty as the country shifts away from feed-in tariffs to auctions for all technologies. Although Europe’s two biggest markets saw reductions in 2017, investment increased in several other countries in the region, including Sweden (up 127% to USD 3.7 billion), the Netherlands (up 52% to USD 1.8 billion) and Greece (up 287% to USD 0.8 billion).

The United States remained the largest individual investor among developed economies, with a total of USD 40.5 billion in 2017, a decrease of 6% compared to 2016. Utility-scale asset finance remained stable, at USD 29.3 billion, with wind power accounting for the majority (67%). Although small distributed capacity (rooftop and other solar power systems of less than 1 MW) also attracted significant sums, the total of USD 8.9 billion was down 12% from 2016, due in part to a restructuring of the market. Investment in US public markets fell again in 2017, to USD 1.0 billion, from a high of USD 8.9 billion in 2015.

In Asia-Oceania (excluding China and India) investment fell 12% to USD 31.4 billion – the lowest amount since 2013, due largely to a decline in Japan. Japan’s investment continued to fall in 2017, down 28% from 2016 to USD 13.4 billion. Investment was hampered by uncertainties related to grid connection and to a shift in policy from a generous feed-in tariff (FIT) to tendering for projects larger than 2 MW. Investment in both solar and wind power declined in 2017, whereas investment in biomass increased 120%, due in part to a shift towards biomass on the part of some solar power developers as well as to a looming FIT reduction.

Other markets in the region with decreases included Thailand (down 72% to USD 700 million), Chinese Taipei (down 10% to USD 600 million) and the Philippines (down 77% to USD 300 million). However, some countries saw noteworthy increases in investment, including Indonesia (up 67% to USD 1.0 billion) and Pakistan (up 42% to USD 700 million). The modest renewable energy investment figures in the region resulted largely from policy uncertainty, particularly in Indonesia, the Philippines, Thailand and Vietnam.

Investment in India declined 20% compared to 2016, to a total of USD 10.9 billion. Approximately USD 6.7 billion was invested in new solar power capacity (up 3%), and USD 4 billion was invested in wind power during 2017 (down 41%).

In the Americas (beyond Brazil and the United States) investment totalled USD 13.4 billion (up 124%). Investment in both Mexico and Argentina jumped roughly nine-fold, to USD 6 billion and USD 1.8 billion, respectively. Other countries in the region saw smaller increases. For example, investment was up in Chile (up 55% to USD 1.5 billion), Peru (up 66% to USD 300 million) and Costa Rica (up 31% to USD 300 million).

Brazil’s total investment was USD 6 billion, an increase of 8% from 2016, but this was far below the peak total of USD 11.5 billion in 2008, when the global biofuels boom was still in full swing. Most of Brazil's 2017 investment was in wind power, at USD 3.6 billion (down 18% from 2016), and in solar power, which rose 204% to USD 1 billion.

Investment in the Middle East and Africa combined increased 11% in 2017, to USD 10.1 billion, with substantial increases in Egypt and the United Arab Emirates. Investment leapt nearly six-fold in Egypt, to USD 2.6 billion, and 29-fold in the United Arab Emirates, to USD 2.2 billion. In Jordan, investment rose 26% to a record USD 1.1 billion. At the same time, however, South Africa continued to experience a decline, with investment down to USD 102 million in 2017 from a high of USD 5.6 billion in 2012. Financing in Morocco also fell relative to 2016 (down 48% to USD 200 million).

i Regions presented in this chapter reflect those presented in UN Environment’s Global Trends in Renewable Energy Investment 2017 (Frankfurt: 2017), and differ from the regional definitions across the rest of the GSR

ii The Chinese government estimates that hydropower facilities of all sizes completed in 2017 represent an investment of CNY 61.8 billion (USD 9.8 billion), from China National Energy Administration, ”National electric power industry statistics in 2017, 22 January 2018

INVESTMENT BY TECHNOLOGY

New investment in renewable energy in 2017 continued to be dominated by solar PV and wind power, accounting for roughly 57% and 38%, respectively. Solar power was the only technology to witness an increase in 2017, with new investment up 18% relative to 2016, to USD 161 billion.

Investment in all other technologies was down in 2017. The most substantial declines in dollar value were seen in wind power (down 12% to USD 107 billion), in biomass/waste-to-energy (down 36% to USD 4.7 billion) and in geothermal power (down 34% to USD 1.6 billion). Investment in biofuels declined 3% to USD 2.0 billion.

Note: Total values include estimates for undisclosed deals as well as estimates for small distributed capacity and corporate and government R&D.

Source: BNEF.

In 2016, emerging and developing economies maintained a narrow lead in solar power investment and fell behind developed economies in wind power investment. In 2017, however, due primarily to China, these countries accounted for the bulk of solar power investment and recovered a small lead in wind power investment. Solar power investment declined 17% in developed countries (to USD 45.4 billion), while it increased 41% in developing countries (to USD 115.4 billion). Investment in wind power declined during 2017 in developed countries (down 19% to USD 52.4 billion) and in developing countries (down 4% to USD 54.8 billion).

Large-scale hydropower projects over 50 MW in size represented the third most important sector (after solar and wind power) for renewable energy investment in 2017. Translating hydropower capacity additions into asset finance dollars per year is not straightforward because the average project takes four years to build. Although BNEF does not track detailed statistics for large-scale hydropower projects, it estimates that asset financing for large-scale hydropower projects reaching financial go-ahead in 2017 totalled around USD 45 billion, up 108% from 2016.

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