Global investors prefer solar to wind

Solar generation surged past wind power to become the renewable energy technology of choice for global investors in 2011. 

Solar attracted nearly twice as much investment as wind, driving the renewable energy sector to yet another record-breaking year, albeit one beset with challenges for the industry, according to two new reports on renewable energy trends issued today by the United Nations Environment Programme (UNEP) and the Renewable Energy Policy Network for the 21st Century (REN21).

Global Trends in Renewable Energy Investment 2012 is the fifth edition of the UNEP report, based on data from Bloomberg New Energy Finance, and has become the standard reference for global clean energy investment figures. 

This year it shows that despite an increasingly tough competitive landscape for manufacturers, total investment in renewable power and fuels last year increased by 17% to a record $257 billion, a six-fold increase on the 2004 figure and 94% higher than the total in 2007, the year before the world financial crisis. 

Although last year's 17% increase was significantly smaller than the 37% growth recorded in 2010, it was achieved at a time of rapidly falling prices for renewable energy equipment and severe pressure on fiscal budgets in the developed world.

The REN21 Renewables 2012 Global Status Report, which has become the most frequently referenced report on renewable energy market, industry and policy developments, notes that during 2011 renewables continued to grow strongly in all end-use sectors - power, heating and cooling and transport.  Renewable sources have grown to supply 16.7 % of global energy consumption.  Of that, the share provided by traditional biomass has declined slightly while the share sourced from modern renewable technologies has risen.

In 2011, renewable energy technologies continued to expand into new markets: around 50 countries installed wind power capacity, and solar PV capacity moved rapidly into new regions and countries. Solar hot water collectors are used by more than 200 million households as well as in many public and commercial buildings worldwide.

The two publications were launched jointly by Achim Steiner, UNEP Executive Director, Mohamed El-Ashry, Chairman of REN21, Michael Liebreich, Chief Executive of Bloomberg New Energy Finance, and Professor Dr. Udo Steffens, President and CEO of the Frankfurt School of Finance & Management, host of the Frankfurt School - UNEP Collaborating Centre for Climate & Sustainable Energy Finance.

Highlights 2011

• Total investment in solar power jumped 52% to $147 billion and featured booming rooftop photovoltaic (PV) installations in Italy and Germany, the rapid spread of small-scale PV to other countries from China to the UK and big investments in large-scale concentrating solar thermal (CSP) power projects in Spain and the US.

• The United States surged back to within an inch of the top of the renewables investment rankings, with a 57% leap to $51 billion, as developers rushed to cash in on three significant incentive programs before they expired during 2011 and 2012. After leading the world for two years, China saw its lead over the US shrink to just $1 billion in 2011, as it recorded renewable energy investment of $52 billion, up 17%.

• India's National Solar Mission helped to spur an impressive 62% increase to $12 billion, the fastest investment expansion of any large renewables market in the world. In Brazil, there was an 8% increase to $7 billion.

• Competitive challenges intensified sharply, leading to sharp drops in prices, especially in the solar market -- a boon to buyers but not to manufacturers, a number of whom went out of business or were forced to restructure.

• Renewable power, excluding large hydro-electric, accounted for 44% of all new generating capacity added worldwide in 2011 (up from 34% in 2010). This accounted for 31% of actual new power generated, due to lower capacity factors for solar and wind capacity. 

• Gross investment in fossil-fuel capacity in 2011 was $302 billion, compared to $237 billion for that in renewable energy capacity excluding large hydro.

• The top seven countries for renewable electricity capacity excluding large hydro - China, the United States, Germany, Spain, Italy, India and Japan - accounted for about 70% of total non-hydro renewable capacity worldwide. The ranking among these countries was quite different for non-hydro capacity on a per person basis: Germany, Spain, Italy, the US, Japan, China and India. By region, the EU was home to nearly 37% of global non-hydro renewable capacity at the end of 2011, China, India and Brazil accounted for roughly one quarter.

• Renewable technologies are expanding into new markets. In 2011, around 50 countries installed wind capacity; solar PV capacity is rapidly moving into new regions and countries; interest in geothermal power has taken hold in East Africa's Rift Valley and elsewhere; interest in solar heating and cooling is on the rise in countries around the world; and the use of modern biomass for energy purposes is expanding in all regions of the globe. 

• In the power sector, renewables accounted for almost half of the estimated 208 gigawatts (GW) of electric capacity added globally during the year. Wind and solar photovoltaic (PV) accounted for almost 40% and 30% of new renewable capacity, respectively, followed by hydropower (nearly 25%). By the end of 2011, total renewable power capacity worldwide exceeded 1,360 GW, up 8% over 2010; renewables comprised more than 25% of total global power-generating capacity (estimated at 5,360 GW in 2011) and supplied an estimated 20.3% of global electricity. 

• At least 118 countries, more than half of which are developing countries, had renewable energy targets in place by early 2012, up from 96 one year before, although some slackening of policy support was seen in developed countries. This weakening reflected austerity pressures, particularly in Europe, and legislative deadlock in the US Congress.

• Despite all the additional investments, share prices in the renewable energy sector had a dismal 2011 in the face of overcapacity in the solar and wind manufacturing chains and investor unease about the direction of support policies in both Europe and North America.