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Financing the transition to a low carbon economy
Substantial new investments in energy efficiency and renewable energy will be required to sufficiently decarbonize the energy sector to meet science-based emissions reduction targets. While investment in renewable energy, energy efficiency and ‘clean tech' sectors is currently undergoing dynamic growth, such investment remains small in comparison with investment in incumbent energy technologies
Recent reports on renewable energy investments worldwide include:
- Bloomberg New Energy Finance 2012 (January 2013)
- Renewables Global Status Report (June 2012)
- Global Trends in Renewable Energy Investment 2012 (June 2012)
Renewable power, excluding large hydro-electric, accounted for 44% of all new generating capacity added worldwide in 2011 (estimated at 208 gigawatts), up from 34% in 2010. This accounted for 31% of actual new power generated. By the end of 2011, total renewable power capacity worldwide exceeded 1,360 GW, up 8% over 2010; renewables comprised more than 25% of total global power-generating capacity (estimated at 5,360 GW in 2011) and supplied an estimated 20.3% of global electricity. [Source: UNEP]
Clean energy investment declined 11% in 2012. Overall global investment in 2012 was $268.7bn, down from $302.3bn in 2011. The 2012 investment total was the second highest ever, and five times that of 2004. [Source: BNEF]
Gross investment in fossil-fuel capacity in 2011 was $302 billion, compared to $237 billion for that in renewable energy capacity excluding large hydro. However, if we look at the amount of money invested in additional fossil-fuel capacity and compare it to the amount invested in renewables capacity (excluding large hydro), then the ﬁgures concerned are $223 billion and $237 billion - a gap in favour of renewables of $14 billion.
- China saw the highest level of clean energy investment in 2012, with a record $67.7bn outlay, up 20% on the previous year due to a surge in its solar sector. China led the world in the installation of wind turbines in 2011 and was also the top hydropower producer and leading manufacturer of PV modules in 2011.
- In the United States, clean energy investment fell to $44.2bn in 2012, a 32% drop over 2011 as stimulus-related programmes expired. Renewable energy (including large hydro) provided 12.7% of total domestic electricity in 2011, up from 10.2% in 2010, and 9.3% in 2009. An estimated 39% of electric capacity added in 2011 was from renewable sources, mostly wind power.
- In the European Union, renewable energy accounted for more than 71% of total electricity generating capacity additions in 2011, with solar PV alone representing nearly half (46.7%)of new capacity coming on stream. By region, the EU was home to nearly 37% of global non-hydro renewable capacity at the end of 2011.
The price of all major renewable energy technologies continued to fall in 2011 - to the point where they are challenging fossil-fuel sources, even before climate, health and other benefits are factored in.
Photovoltaic module prices fell by close to 50% and onshore wind turbine prices by around 10%. The result has been to reduce the levelised cost of PV-generated electricity (i.e. the cost before any subsidies or support mechanism) by more than 30% in 2011 alone.
Based on current trends, it is predicted that the average onshore wind project worldwide will be fully competitive with combined-cycle gas turbine generation by 2016 even in the US.
In solar, analysis suggests that the cost of producing power from rooftop PV panels for domestic use is already competitive with the retail (but not the wholesale) daytime electricity price in several countries including Germany, Denmark, Italy and Spain.