Investment in low-carbon energy sources surged in the US, China, India, Latin America and Africa in 2015, driving the global total to a record $329.3 billion, a 4% rise from 2014’s revised $315.9 billion and topping the previous peak set in 2011 by 3%, Bloomberg New Energy Finance said on Thursday.

The growth, BNEF said, came despite four influences that might have been expected to restrain it:

• Further declines in the cost of solar photovoltaics (meaning that more capacity could be installed for the same price)
• A strong US dollar (reducing USD value of non-dollar investments)
• Continued weakness of the European economy (formerly the powerhouse of renewable energy investment)
• The plunge in fossil fuel prices including crude oil and natural gas (decreasing the prospects for potential investment returns)

“These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices,” said Michael Liebreich, chairman of the advisory board at BNEF.

“They highlight the improving cost-competitiveness of solar and wind power, driven in part by the move by many countries to reverse-auction new capacity rather than providing advantageous tariffs, a shift that has put producers under continuing price pressure.”

“Wind and solar power are now being adopted in many developing countries as a natural and substantial part of the generation mix: they can be produced more cheaply than often high wholesale power prices; they reduce a country’s exposure to expected future fossil fuel prices; and above all they can be built very quickly to meet unfulfilled demand for electricity. And it is very hard to see these trends going backwards, in the light of December’s Paris climate agreement.”

BNEF’s figures exclude more conventional low-carbon energy sources including large hydro and nuclear.

COUNTRIES

China was again far and away the largest low-carbon energy investor in 2015, increasing financing by by 17% to $110.5 billion, as the government spurred on wind and solar development to meet rising electricity demand and limit reliance on coal-fired power.

The US ranked second at $56 billion, marking an 8% year-on-year rise – the most since the era of the ‘green stimulus’ policies in 2011.

India grew 23% to $10.9 billion, also the most since 2011 but far short of the figures needed to implement Prime Minister Narendra Modi and his government’s ambitious plans, BNEF said.

Japan saw its investment rise 3% to $43.6 billion on the back of a boom in solar PV, Australia’s climbed by 16% to $2.9 billion, and Africa and the Middle East saw combined investment of $13.4 billion, up 54% on the previous year.

“A number of ‘new markets’ together committed tens of billions of dollars to clean energy last year. These include Mexico ($4.2 billion, up 114%), Chile ($3.5 billion, up 157%), South Africa ($4.5 billion, up 329%) and Morocco ($2 billion, up from almost zero in 2014),” BNEF said.

Meanwhile, European investment again dropped, falling 18% to $58.5 billion – the lowest since 2006.  The decline was led by Germany and France, which saw a cut in financing by 42% and 53% to $10.9 billion and $2.9 billion respectively.  However there were some increases, including UK growth of 24% to 23.4 billion.

In Canada, clean energy investment fell by 43% to $4.1 billion, while in Brazil it slipped 10% to $7.5 billion.

PROJECTS

At $199 billion, the majority of last year’s investment total came in the form of asset finance of utility-scale projects such as wind farms, solar parks, biomass and waste-to-energy plants and small hydro-electric schemes. This figure rose by 6% year-on-year.

The largest projects financed last year included a string of offshore wind arrays in the North Sea, such as the UK’s $2.9-billion 580MW Race Bank and $2.3-billion 336MW Galloper projects, as well as offshore wind farms in China including the Longyuan Haian Jiangjiasha and Datang & Jiangsu Binhai, each having capacity of 300MW and costing $850 million.

In term of onshore wind, the largest investment – some $2.2 billion – was aimed at the 1.6GW Nafin Mexico portfolio, BNEF said.

For solar PV it was the $744-million, 294MW Silver State South project, and for solar thermal or CSP it was the $1.8-billion, 350MW Moroccan NOORo portfolio.

The largest biomass project funded was the $921-million, 330MW Klabin Ortiguera plant in Brazil, and the largest geothermal installation was the estimated $717-million, 170MW Guris Efeler in Turkey.

After asset finance, the next largest segment was rooftop and other small-scale solar projects, which totalled $67.4 billion, up 12% from 2015.

Japan represented by far the largest market for this, followed by the US and China.

CAPACITY

BNEF said preliminary indications show that at a combined 121GW, both wind and solar PV saw around 30% more capacity installed worldwide in 2015 compared to 2014, and are estimated to have accounted for nearly half of global net capacity added in all generation technologies last year.

Total wind power capacity was likely to have ended the year at around 64GW, with solar not far behind at roughly 57GW.

BNEF added that there was some $20 billion of asset finance in clean energy technologies such as smart grid and utility-scale battery storage, representing an 11% rise on 2014 and the ninth straight year of growth.

Government and corporate research and development spending totalled $28.3 billion in 2015, up just 1%.

By Mike Szabo – mike@carbon-pulse.com