The United Nations Environment Programme’s Global Trends in Renewable Energy Investment reports, published annually since 2007, provide comprehensive information on international investments in renewable energy and show how these are impacting the profile of the global electricity system.
The most recent report, Global Trends in Renewable Energy Investment 2019 report – released ahead of the UN Global Climate Summit in September – highlights the latest recent market trends and ways to accelerate the transition to a renewable energy economy. Here are several key messages from the report:
A decade of unprecedented global investment in renewable energy has occurred between 2010 and 2019.
This decade saw global investment in new renewable energy capacity on course to hit $2.6 trillion by year end 2019 with more gigawatts of solar power capacity installed than any other generation technology.
China has been by far the biggest investor in renewables capacity over this decade, having committed $758 billion between 2010 and the first half of 2019, with the U.S. second with $356 billion and Japan third with $202 billion.
Europe as a whole invested $698 billion in renewables capacity over the same period, with Germany contributing the most with $179 billion and the United Kingdom $122 billion.
Solar power saw the greatest increase in gigawatts of power capacity installed this decade, more than any other generation technology.
In 2010, wind and sun were a small dot on the horizon of global electricity production, accounting for only 4% of global generation capacity and significantly less of electricity produced. Renewable energy was relatively expensive and dependent on subsidies; one could hardly have imagined that renewables (mainly wind and solar energy) would become cost competitive.
Since then, the cost- competitiveness of renewables has risen sharply. The levelized cost of electricity (a measure that allows comparison of different methods of electricity generation on a consistent basis) is down 81% for solar photovoltaics since 2009, and down 46% for onshore wind. These cost reductions in solar and wind could be explained by a combination of economies of scale in manufacturing, fierce competition along the supply chain – intensified by the introduction of auctions in many countries – record-low costs of finance, and improvements in the efficiency of generating equipment. These costs continue to fall while growth is expected to continue.
The global investment has roughly quadrupled renewable energy capacity (excluding large hydro) from 414 gigawatts (GW) at the end of 2009 to 1,650 GW at the end of 2019. Solar kept its position as the technology attracting the most capacity investment, with $133.5 billion, although this was down 22% in 2017. Wind secured $129.7 billion, up 3%. Including all generating technologies (fossil and zero-carbon), the decade is set to see a net 2,366 GW of power capacity installed, with solar accounting for the largest single share (638 GW), coal second (529 GW), and wind and gas in third and fourth positions (487 GW and 438 GW, respectively). Overall, solar power demonstrates the greatest increase in terms of development, investment and cost-competitiveness over the past 10 years.
Global investment in renewable energy capacity in 2018 continued on a sustained rhythm and reached $272.9 billion. While this was 12% down (excluding large hydro) over the previous year, 2018 was the ninth successive year in which capacity investment exceeded $200 billion and the fifth successive year above $250 billion, and the year struck an all-time record in terms of capacity financed.
Renewables capacity investment last year was three times more important than investments in coal and gas-fired generation capacity combined. The nominal decrease in overall investment in 2018 largely reflected the falling cost of installing renewable energy combined with lower average capital costs per megawatt for both solar and wind in most parts of the world, and lower solar financings in China in response to a tightening government support policy. Although global investment in renewable energy in 2018 was down, a record 167 GW of new renewable energy capacity was completed in 2018, up from 160 GW in 2017.
While China remained the largest single investor in 2018 ($88.5 billion, down 38%), renewable energy capacity investment was more spread out across the globe than ever last year, with 29 countries each investing more than $1 billion, compared to 21 and 25 countries in 2016 and 2017, respectively.
Acknowledging the transformation experienced by the energy sector over the past decade, UNEP is keen to point out that meeting the world’s climate and development goals requires an even more rapid switch to renewable sources of energy worldwide.
“Investing in renewable energy is investing in a sustainable and profitable future, as the last decade of incredible growth in renewables has shown,” according to Inger Andersen, Executive Director of the UN Environment Programme. “But we cannot afford to be complacent. Global power sector emissions have risen about 10% over this period. It is clear that we need to rapidly step up the pace of the global switch to renewables if we are to meet international climate and development goals.”
While renewable energy sources have helped to avoid about 2 billion tons of CO2 emissions last year, emissions from the global power sector have increased by about 10% overall. Much clearer and faster action is needed and the world is not investing nearly enough to decarbonize power generation. Beyond the power sector, the transport and heat sectors also have to experience a transformation of the same magnitude for the world to be in time to limit global warming to 2°C, or ideally 1.5°C.
By Francoise D'Estais, Head of the Finance Unit at UNEP’s Energy and Climate Branch.
The opinions expressed herein are solely those of the authors and do not necessarily reflect the official views of the GGKP or its Partners.