Green energy investments rise by 32 percent; boosted by European rooftop PV

According to the UN Environment Programme’s (UNEP’s) latest report, ‘Global Trends in Renewable Energy Investment 2011’, a record USD$211 billion was invested into the renewable energy industry last year. This has risen significantly from the $160 billion invested in 2009, and represents a 540 percent increase on 2004.

UNEP says that, for the first time, developing countries led the way in terms of "financial new investment", having sunk $72 billion into renewables in 2010, in comparison to the $70 million invested by developed countries.

China has been identified as the leading nation for renewable energy investment. Last year, the country invested $48.9 billion, which is up 28 percent on 2009.

South and Central America, meanwhile, upped its green investment ante, having paid out $13.1 billion – a 39 percent year-on year increase – in 2010. Green investment in the Middle East and Africa grew an impressive 104 percent to reach $5 billion last year, while India invested $3.8 billion, or 25 percent more than in 2009.

In the rest of the Asian developing countries, UNEP found that investment was up 31 percent to hit $4 billion.

R&D

The report found that, impressively, government research and development (R&D) reached $5 billion last year, which signals an annual increase of 120 percent.

UNEP Executive Director Achim Steiner commented: "The continuing growth in this core segment of the Green Economy is not happening by chance. The combination of government target-setting, policy support and stimulus funds is underpinning the renewable industry’s rise and bringing the much needed transformation of our global energy system within reach."

He added that both the UN climate convention meeting in Durban and the Rio+20 summit in Brazil in 2012, present "key opportunities" to increase this positive transition.

The report also identified two areas where renewable energy investment decreased: (i) corporate research, development and deployment; and (ii) provision of expansion capital for renewable energy companies by private equity funds.

The first area declined by 12 percent or US$3.3 billion, due to the after effects of the financial crisis, while the second fell by one percent or $3.1 billion.

Europe declining

The UNEP report found that there was a 22 percent decrease in investment in large-scale renewable energy projects in Europe last year. As such, 2010 saw $35.2 billion in new financial investment in this area.

UNEP points out however, that a surge in small-scale project installation market "more than made up" for this decline, primarily led by the rooftop photovoltaic market.

Michael Liebreich, chief executive of Bloomberg New Energy Finance, explained: "Europe’s small-scale solar energy boom owed much to feed-in tariffs, particularly in Germany, combined with a sharp fall in the cost of photovoltaic modules."

UNEP went on to point out that investments in Germany in "small distributed capacity" grew by 132 percent to hit $34 billion. Meanwhile, in Italy they rose 59 percent to $5.5 billion, in France by 150 percent to US$2.7 billion, and in the Czech Republic up 163 percent to $2.3 billion.

Furthermore, as has been widely reported this year, the price of photovoltaic modules per megawatt has fallen dramatically. UNEP calculates that prices have decreased by 60 percent, thus serving to make solar "far more competitive in a number of sunny countries".

Overall, the report believes that the small-scale solar market will stay strong this year. This, along with further cost decreases in renewable energy technologies, is "posing a growing threat" to fossil-fuels.

The report added: "In 2010, wind continued to dominate in terms of financial new investment in large scale renewables, with US$94.7 billion (up 30 percent from 2009). However, when investments in small scale projects are added in solar is catching up, with US$86 billion in 2010, up 52 percent on the previous year.

"With US$11 billion invested, biomass and waste-to-energy come in third in front of biofuels, which boomed at US$20.4 billion in 2006, but fell off dramatically – to US$5.5 billion last year."

New launch

In other news, UNEP and Frankfurt School of Finance & Management have launched a new Collaborating Centre for Climate & Sustainable Energy Finance.

According to the two parties, the goal is to develop cost-effective ways of reducing energy-related carbon emissions through sustainable energy investments.