Despite a 12% drop to $244 billion globally, 2012 was the second highest year ever for investments in renewable energy, which have totaled $1.3 trillion since 2006. The decline in investment reflected the steep plunge in solar prices and the weakened U.S. and EU markets.
According to the reports, Global Trends in Renewable Energy Investment 2013, by the Frankfurt School and UNEP Centre and based on data from Bloomberg New Energy Finance, and REN21s Renewables 2013 Global Status Report, an upward trend continued in developing countries last year, with investments in the South topping $112 billion vs. $132 billon in developed countries — a dramatic change from 2007, when developed economies invested 2.5 times more in renewables (excluding large hydro) than developing countries, a gap that has closed to just 18%.
The overall decrease in global investment notwithstanding, renewable energy capacity worldwide rose 8% and exceeded 1,470 GW, with solar — including photovoltaic (PV), concentrated solar power (CSP) and solar thermal energy (STE) — accounting for approximately 26% of the total.
Solar PV installations achieved a record 30.5 GW worldwide in 2012 while PV capacity reached the 100 GW milestone. Solar energy, including PV, CSP, now totals 357.5 GW worldwide, behind hydropower (990 GW) but ahead of bio power (350 GW) and wind (283 GW).
Overall investment in PV installations was down from the previous year due to the 30%-40% fall in PV system prices, according to the reports. The lower costs spurred larger investment in small-scale solar, rising from $77 billion in 2011 to $80 billion in 2012, while spending on large-scale solar projects of more than 1 MW fell 24% to $52.7 billion.
An increasing number of countries are embracing renewable energy, particularly in the developing world. Of the 138 countries with renewables targets or policies in place, two-thirds are in the developing world. China surpassed the U.S. as the biggest renewable energy market last year, up 22% to $67 billion, due largely to a surge in solar investment. There were also sharp increases in South Africa, Morocco, Mexico, Chile and Kenya, with the Middle East and Africa showing the highest regional growth of 228% to $12 billion.
The development is especially encouraging for UNEP in view of the the UN Secretary General's Sustainable Energy for All objectives for universal access to modern energy services, which include doubling of both the global rate of improvement in energy efficiency and the share of renewable energy in the global energy mix by 2030.
In the U.S., the 2011 market leader, investment dropped 34% to $36 billion, mainly due to uncertainties over U.S. policy. Investment in Italy and Spain was also hit by abrupt changes in policy and growing concern about future support for the sector.
Germany added another 7.6 GW of solar capacity in 2012 (representing 27% of the world's new added capacity) but the nation's overall investment in renewables slipped 35% to $20 billion due to lower solar costs and a decrease in wind power investment.
By contrast, Japan saw a 73% boost in renewable energy investment in to $16 billion, reflecting a boom in small-scale solar projects on the back of new feed-in tariff subsidies for installations.
"The uptake of renewable energies continues world-wide as countries, companies and communities seize the linkages between low carbon Green Economies and a future of energy access and security, sustainable livelihoods and a stabilized climate," said UN Under-Secretary General Achim Steiner, adding that there had been a dramatic increase in the enumber and size of projects.
"There have also been sharp falls in manufacturing costs and in the selling prices of wind turbines and photovoltaic panels, contributing to a shake-out in the industry in 2012," he added. "This is not only normal in a rapidly growing, high tech industry but is likely to lead to even more competition, with even bigger gains for consumers, the climate and wider sustainability opportunities."
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