Investment in new renewable energy is on track to hit $2.6 trillion this decade (2010-2019), according to a study by BloombergNEF, conducted on behalf of the United Nations Environment Program and Frankfurt School’s UNEP Center. The investment boom has been driven in part by the falling costs of wind and solar power plants, which have now become affordable new markets, and at prices rivaling fossil fuels.
“Sharp falls in the cost of electricity from wind and solar over recent years have transformed the choice facing policy makers,” said Jon Moore, CEO of BloombergNEF, in a statement from the organization. “Now, in many countries around the world, either wind or solar is the cheapest option for electricity generation.”
Renewables such as wind, solar and hydroelectric plants will draw $322 billion a year through 2025, according to the International Energy Agency — almost triple the $116 billion a year that will be devoted to fossil fuel plants, and about the same as will be invested in power grids.
Solar and wind farms are far and away the largest recipients of new investment. Solar power capacity is expected to expand by more than 2,500 percent globally this decade, from 25 gigawatts at the start of 2010 to 663 gigawatts anticipated by the end of 2019. The report noted, however, that funds moving into solar declined in some of the biggest markets during 2018 compared with the year prior.
China has accounted for nearly one-third of investment in renewable energy, making it by far the largest market for renewable investments. Yet, solar investment in China fell by 56 percent during the second half of 2018 (versus the same period of 2017) after the Chinese government announced restrictions on the number of new solar installations that would qualify for support.
Despite the gains by renewables, they still make up a relatively small proportion of global power generation. Even as China led the way in buying wind and solar plants, it poured money into new coal plants as well. Europe and the United States have closed down coal plants, but that has been offset by an increase in coal plants in Asia, especially in India, and that has contributed to a global increase in carbon emissions of at least 10 percent from the end of 2009 through 2019.
During the decades to come, many more renewable projects are expected to be funded and constructed, according to BloombergNEF, with solar and wind forecast to contribute 48 percent of power generation by 2050.
The report notes the rapid expansion in electricity generation from low-carbon sources has lent credence to efforts by world leaders to slash greenhouse gases.
Mike Consol (email@example.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.