Record New Renewable Power
Capacity Added at Lower Cost
United Nations Environmental Program
As
the cost of clean technology continues to fall, the world added record levels
of renewable energy capacity in 2016, at an investment level 23 per cent lower
than the previous year, according to new research published by UN Environment, the Frankfurt School-UNEP Collaborating Centre, and Bloomberg New Energy Finance.
Global
Trends in Renewable Energy Investment 2017 finds that wind, solar,
biomass and waste-to-energy, geothermal, small hydro and marine sources added
138.5 gigawatts to global power capacity in 2016, up 8 per cent from the 127.5
gigawatts added the year before.
The added generating capacity roughly equals
that of the world's 16 largest existing power producing facilities combined.
Investment in renewables capacity was roughly double that in fossil fuel generation; the corresponding new capacity from renewables was equivalent to 55 per cent of all new power, the highest to date.
The proportion of electricity coming from renewables excluding large hydro rose from 10.3 per cent to 11.3 per cent. This prevented the emission of an estimated 1.7 gigatonnes of carbon dioxide.
The
total investment was $241.6 billion (excluding large hydro), the lowest since
2013. This was in large part a result of falling costs: the average dollar
capital expenditure per megawatt for solar photovoltaics and wind dropped by
over 10 per cent.
"Ever-cheaper
clean tech provides a real opportunity for investors to get more for
less," said Erik Solheim, Executive Director of UN Environment. "This is exactly the kind of situation,
where the needs of profit and people meet, that will drive the shift to a
better world for all."
New
investment in solar totalled $113.7 billion, down 34 per cent from the record
high in 2015. Solar capacity additions, however, rose to an all-time high of 75
gigawatts. Wind made up $112.5 billion of investment globally, down 9 per cent;
wind capacity additions fell to 54 gigawatts from the previous year's high of
63 gigawatts.
"The
investor hunger for existing wind and solar farms is a strong signal for the
world to move to renewables," said Prof. Dr. Udo Steffens, President of
Frankfurt School of Finance & Management, commenting on record acquisition
activity in the clean power sector, which rose 17 per cent to $110.2 billion.
While
much of the drop in financing was due to reduced technology costs, the report
documented a slowdown in China, Japan and some emerging markets, for a variety
of reasons.
Renewable
energy investment in developing countries fell 30 per cent to $117 billion,
while that in developed economies dropped 14 per cent to $125 billion. China
saw investment drop 32 per cent to $78.3 billion, breaking an 11-year rising
trend.
Mexico,
Chile, Uruguay, South Africa and Morocco all saw falls of 60 per cent or more,
due to slower than expected growth in electricity demand, and delays to
auctions and financings. Jordan was one of the few new markets to buck the
trend, investment there rising 148 per cent to $1.2 billion.
The
US saw commitments slip 10 per cent to $46.4 billion, as developers took their
time to build out projects to benefit from the five-year extension of the tax
credit system. Japan slumped 56 per cent to $14.4 billion.
"The
question always used to be 'will renewables ever be grid competitive?',"
said Michael Liebreich, Chairman of the Advisory Board at BNEF. "Well,
after the dramatic cost reductions of the past few years, unsubsidised wind and
solar can provide the lowest cost new electrical power in an increasing number
of countries, even in the developing world - sometimes by a factor of
two."
"It's
a whole new world: even though investment is down, annual installations are
still up; instead of having to subsidise renewables, now authorities may have
to subsidise natural gas plants to help them provide grid reliability."
Recent
figures from the International Energy Agency cited the switch to renewables as
one of the main reasons for greenhouse gas emissions staying flat in 2016, for
the third year running, even though output in the global economy rose by 3.1
per cent.
Investment
in renewables did not drop across the board. Europe enjoyed a 3 per cent
increase to $59.8 billion, led by the UK ($24 billion) and Germany ($13.2
billion). Offshore wind ($25.9 billion) dominated Europe's investment, up 53
per cent thanks to mega-arrays such as the 1.2 gigawatt Hornsea project in the
North Sea, estimated to cost $5.7 billion. China also invested $4.1 billion in
offshore wind, its highest figure to date.
Another
positive sign came in winning bids for solar and wind in auctions around the
world, at tariffs that would have seemed inconceivably low a few years ago. The
records set last year were $29.10 per megawatt hour for solar in Chile and $30
per megawatt hour for onshore wind in Morocco.
Additional highlights
Purchases
of assets such as wind farms and solar parks reached a new high, $72.7
billion.
Corporate
takeovers reached $27.6 billion, 58 per cent more than 2015.
The
smaller sectors had mixed fortunes in terms of new investment. Biofuels fell 37
per cent to $2.2 billion, the lowest for at least 13 years; biomass and waste
held steady at $6.8 billion and small hydro at $3.5 billion. Geothermal rallied
17 per cent to $2.7 billion. Marine edged down 7 per cent to $194
million.
Siting
two different technologies in the same location - to make use of shared land,
grid connections and maintenance, and to reduce intermittency - is growing.
Some 5.6 gigawatts of these 'hybrid' projects have been built or are under
development worldwide.
The
Ramanathapuram solar complex in India, billed as the world's largest ever solar
voltaic project (648 megawatts), was constructed.
The
report in full can be downloaded at fs-unep-centre.org