Largely due to rapidly falling costs of clean energy, global renewable energy capacity jumped 8% last year despite a 23% drop in investment
According to the UN report titled â€˜Global Trends in Renewable Energy Investment 2017â€™, the world added 138.5 GW of renewable energy capacity (excluding large hydro projects) in 2016, up 8% from the previous year. This new record is largely attributed to the falling costs of clean energy, as last year the cost of each MW produced from renewables dropped by 10%, and it came despite a sharp drop in investment (reached $241.6 billion, 23% lower than the previous year and the lowest since 2013). "Ever-cheaper clean tech provides a real opportunity for investors to get more for less," said Erik Solheim, Executive Director of UN Environment. "This is exactly the kind of situation, where the needs of profit and people meet, that will drive the shift to a better world for all."
The new capacity is about equal to the world's 16 largest power producing facilities combined, and renewables now account for 11.3% of global electricity (excluding large hydro) in 2016 compared to 10.3% in 2015. Wind and solar made up most new capacity last year, with $112.5 billion and $113.7 billion invested, respectively.
However, there are countries and markets that cut renewable investments, such as China where it dropped 32% to $78.3 billion and this was the first time in a decade it bucked a rising trend. Japan's investment tumbled 56%. Mexico, Chile, Uruguay, South Africa and Morocco all had a slump in investment by more than 60%, driven by slowing electricity demand and financing issues. The US also saw investment dip 10% to $46.4 billion due to developers taking time to benefit from a five-year tax credit. Europe, on the other hand, invested 3% more than the previous year to reach $59.8 billion, as EUâ€™s target is to increase renewables to 27% of energy consumption by 2030.
Source: Deutsche Welle
Figure 1: GLOBAL NEW INVESTMENT IN RENEWABLE ENERGY BY REGION, 2004-2016, $BN
Figure 2: GLOBAL NEW INVESTMENT IN RENEWABLE ENERGY BY ASSET CLASS, 2004-2016, $BN