Clean energy investment surged in China, Africa, the U.S., Latin America, and India in 2015, driving the world total to its highest ever figure, of $329.3bn, up 4% from 2014’s revised $315.9bn and beating the previous record, set in 2011 by 3%.
These latest figures from Bloomberg New Energy Finance show dollar investment globally growing in 2015 to nearly six times its 2004 total and a new record of one third of a trillion dollars, despite four influences that might have been expected to restrain it.
- Further declines in the cost of solar photovoltaics and wind, meaning that more capacity could be installed for the same price,
- The strength of the U.S. currency,
- Reducing the dollar value of non-dollar investment; the continued weakness of the European economy, formerly the powerhouse of renewable energy investment, and,
- The plunge in fossil fuel commodity prices.
Over the 18 months to the end of 2015, the price of Brent crude plunged 67% from $112.36 to $37.28 per barrel, international steam coal delivered to the north west Europe hub dropped 35% from $73.70 to $47.60 per tonne.
Natural gas in the U.S. fell 48% on the Henry Hub index from $4.42 to $2.31 per million British Thermal Units.
“These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices. 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,” shared Michael Liebreich, Chairman of the Advisory Board at Bloomberg New Energy Finance.
He added: “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.”
Looking at the figures in detail, the biggest piece of the $329.3bn invested in clean energy in 2015 was asset finance of utility-scale projects such as wind farms, solar parks, biomass, and waste-to-energy plants and small hydro-electric schemes. This totaled $199bn in 2015, up 6% on the previous year.
The biggest projects financed last year included a string of large offshore wind arrays in the North Sea and off the coast of China. These included:
- The UK’s 580-MW Race Bank and 336-MW Galloper, with estimated costs of $2.9bn and $2.3bn respectively,
- Germany’s 402-MW Veja Mate, at $2.1bn, and
- China’s Longyuan Haian Jiangjiasha and Datang & Jiangsu Binhai, each of 300 MW and $850m.
The biggest financing in onshore wind was of the 1.6-GW Nafin Mexico portfolio, for an estimated $2.2bn. For solar PV, it was the Silver State South project, at 294 MW and about $744m, and for solar thermal or CSP, it was the NOORo portfolio in Morocco, at 350 MW and around $1.8bn.
The wind total for last year is likely to end up at around 64 GW, with that for solar just behind at about 57 GW. This combined total of 121 GW will have made up around half of the net capacity added in all generation technologies (fossil fuel, nuclear, and renewable) globally in 2015.
Public market investment in clean energy companies was $14.4bn last year, down 27% from 2014 but in line with the 10-year average. Top deals included a $750m secondary share issue by electric car maker Tesla Motors, and a $688m initial public offering by TerraForm Global, a U.S.-based Yieldco owning renewable energy projects in emerging markets.
There was also $20bn of asset finance in clean-energy technologies, such as smart grid and utility-scale battery storage, representing an 11% rise on 2014, the latest in an unbroken series of annual increases over the past nine years. The final category of clean energy investment, government and corporate research and development spending, totaled $28.3bn in 2015, up just 1%. This figure provides a benchmark for any surge in spending in the wake of announcements at COP21 in Paris by consortia of governments and private investors, led by Bill Gates and Mark Zuckerberg.
China was again by far the largest investor in clean energy in 2015, increasing its dominance with a 17% increase to $110.5bn, as its government spurred on wind and solar development to meet electricity demand, limit reliance on polluting coal-fired power stations, and create international champions.
Second was the U.S., which invested $56bn, up 8% on the previous year and the strongest figure since the era of the ‘green stimulus’ policies in 2011. Money-raising by quoted Yieldcos, plus solid growth in Europe again saw lower investment in 2015, at $58.5bn, down 18% on 2014 and its weakest figure since 2006.
The UK was by far the strongest market, with investment up 24% to $23.4bn. Germany invested $10.6bn, down 42% on a move to less generous support for solar and, in wind, uncertainty about how a new auction system will work from 2017. France saw an even bigger fall in investment, of 53% to $2.9bn. Brazil’s clean energy investment slipped 10% to $7.5bn in 2015, while India’s gained 23% to $10.9n, the highest since 2011 but a far cry for the figures needed to implement the Modi government’s ambitious plans. Japan saw investment rise 3% to $43.6bn, on the back of a continuing PV boom.
In Canada, clean-energy investment fell 43% to $4.1bn, while in Australia it edged up 16% to $2.9bn. A number of “new markets” together committed tens of billions of dollars to clean energy last year. These include Mexico ($4.2bn, up 114%), Chile ($3.5bn, up 157%), South Africa ($4.5bn, up 329%), and Morocco ($2bn, up from almost zero in 2014).
Africa and the Middle East are two regions with big potential for clean energy, given their growing populations, plentiful solar and wind resources and, in many African countries, low rates of electricity access. In 2015, these regions combined saw investment of $13.4bn, up 54% on the previous year.
Filed Under: Financing, News