Market Report Low Demand and Rising Producer Costs See Investments in Renewable Energy Decline by 18%
Global renewable energy investment fell 18 % in 2016 owing to sharp falls in equipment prices and a slowdown in China and Japan, a study recently found.
After reaching record levels in 2015, investment fell last year to $ 287.5 billion, according to researchers at Bloomberg New New Energy Finance (BNEF). The fall was due in part to ‘further sharp falls in equipment prices, particularly in photovoltaics,’ it said. But it was also down to a marked cooling in China and Japan, two key markets, where investment in renewable energies fell significantly on the previous year.
Investments in China and Japan
Following a record year in 2015, Chinese investment fell 26 per cent to $87.8 billion, down from $ 119.1 billion, while in Japan it dropped 43 per cent to $ 22.8 billion. After boosting spending on clean energies with some of the most generous subsidies in the world, both nations are now shifting their focus, “cutting back on building new large-scale projects and digesting the capacity they have already put in place,” said Asia head, BNEF, Justin Wu. “The government is now focused on investing in grids and reforming the power market so that the renewables in place can generate to their full potential.”
Despite falling oil prices, which tend to reduce investment in energy efficiency, the renewables sector is growing rapidly, with 2016 a record year for offshore wind power where investment pledges rose 40 per cent to $ 29.9 billion. The growth was driven by developers taking advantage of ‘improved economics’ resulting from the availability of bigger turbines and better construction knowhow, the study said.
Investments around the world
In the United States, investment in renewable energy fell 7 per cent to $ 58.6 billion, while in Canada, it slipped 46 per cent to $ 2.4 billion. Across the Asia-Pacific region, which accounts for 47 per cent of the global figure, there was an overall fall of 26 per cent to $ 135 billion, although Indian investment remained at almost the same level as 2015, at $ 9.6 billion.
By contrast, Europe bucked the overall trend, with a slight increase of 3 per cent to $ 70.9 billion, with the UK leading the pack for the third year in a row with investment of $ 25.9 billion, a rise of 2 per cent. Germany ploughed $ 15.2 billion into the sector, representing a 16 per cent fall on 2015, while France invested $ 3.6 billion, down 5 per cent on the previous year.
The picture was worse in developing countries where many projects did not secure funding before the year’s end. South Africa saw investment fall 74 per cent to $ 914 million, while it was down 80 per cent in Chile to $ 821 million.