'Eye-Catching' Gains in Renewable Energy Investment

2014 was a year of “eye-catching steps forward for renewable energy,” the United Nations Environment Program (UNEP) highlights in its Global Trends in Renewable Energy Investment 2015 report. Renewable power generation capacity – excluding large-scale hydropower – reached the historic 100-gigawatts level as investment “rallied strongly after two years of decline.”

Renewable energy investment in developing countries – China in particular – were big drivers last year, UNEP points out. Elsewhere, solar financing reached a record high in Japan, while European offshore wind power investment surged higher and set a new annual record.

With costs continuing to decline and performance continuing to improve, renewable energy has thus far been able to meet the challenge posed by lower oil prices, and, more significantly, the downward pressure this exerts on natural gas prices, UNEP notes. UNEP sees further declines in the cost of renewable energy ahead even as a record-shattering low bid price of less than 6 U.S. cents per kilowatt-hour was submitted for a utility-scale solar installation in Dubai.

A headline-grabbing rebound

Particularly notable: Global renewable energy investment, excluding that for large hydro power plants, rebounded from a two-year decline in 2014 -- rising 17 percent to reach $270.2 billion. Last year's total was just 3 percent lower than the record $278.8 billion set in 2011, UNEP highlights. The 2014 renewable energy investment total was even more impressive than that for 2011, given the sharp decline in capital costs of installing new wind and solar photovoltaics that occurred over the intervening three years, UNEP adds.

Overall an estimated 103 gigawatts of new renewable power capacity, excluding large hydro, was built around the world in 2014. That compares 86 GW in 2013 and 80.5 GW in 2011.

Newly installed wind and photovoltaic power capacity dominated last year's additions. New record amounts of 49 GW and 46 GW worth of new wind and solar PV capacity, respectively, were installed worldwide last year, UNEP says.

Investors plowed some $270.2 billion of capital into renewable energy in 2014. Venture capital (VC) funds invested $1 billion in the clean energy sector – 39 percent more than in 2013. Nonetheless, the 2014 VC total was less than half that of 2008 and each year from 2010 to 2012.

Across-the-board gains

Totaling $11.7 billion, renewable energy R&D investment was 2 percent higher year-over-year. Government investments in renewable energy R&D contributed $5.1 billion to the total while private-sector companies contributed $6.6 billion.

Private equity investments in renewable energy companies totaled $1.7 billion last year. That's up 20 percent from 2013, but still far less than the record $6.8 billion they pumped into renewable energy companies back in 2008, UNEP notes.

UNEP's report reveals growing confidence on the part of the broad investing public in making investments in renewable energy companies. Renewable energy companies listed on public stock exchanges rose sharply in 2014, increasing 43 percent to total $15.1 billion, UNEP reports.

The amount of equity capital renewable energy companies raised on public markets in 2014 was the second-highest annual total UNEP has recorded. A rally in renewable energy companies' shares of more than 100 percent from summer 2012 to March 2014 boosted investor confidence, UNEP says.

Asset-based financing for utility-scale renewable energy projects and in small, distributed capacity were the two leading categories of renewable energy investment worldwide last year. The former rose 10 percent year-over-year to reach $170.7 billion. Fueled primarily by newly-installed rooftop solar PV, the latter rose 34 percent to total $73.5 billion.

Solar and wind once again “were runaway leaders in terms of renewable energy investment” in 2014, according to UNEP. Investments in solar energy totaled $149.6 billion – 25 percent higher than the 2013 total and the second-highest figure ever recorded. Wind power investment was up 11 percent year-over-year, reaching $99.5 billion.

*Image credits: 1) DEWA; 2) "Global Trends in Renewable Energy Investment 2015," UNEP