A recent report from the United Nations Environment Programme demonstrated a strong surge in green energy investment around the world, thanks in large part to new solar and wind power installations. This boom in green energy development comes after a two-year dip in investment.
The two-year dip could be a misleading metric in that the years since the record-year investment total of $279 billion in 2011 saw the cost of renewable energy falling due to economies of scale. When we look at installed capacity, 2014 is the record-holder at 103 gigawatts (GW). What this all means is that around the globe, it is becoming more affordable to build larger solar and wind power installations. When it comes to renewable energy, we are getting more bang for our bucks.
What is even more surprising is that this investment comes at a time when crude oil is relatively cheap. Oil prices were down nearly 50% in the latter half of 2014. However, in most parts of the world oil and renewable energy do not directly compete with one another. Without oil prices distracting investors, it's easier to see the long-term value in renewable energy investments.
What's driving the lift in renewable energy investment?
In 2013, global green energy investments were totaled around $232 billion. In 2014, that figure rose to $270 billion. Analysts credit solar installation expansion in China and Japan and offshore wind development in Europe with a majority of the growth. China alone is responsible for more than $83 billion of investment in renewable energy. That's more than double the second largest investor in green energy – the U.S. at $38.3 billion. Japan was a close third at $35.7 billion – it's largest ever renewable energy investment year.
Solar development in China was focused on utility-scale projects to the tune of $40 billion. In Japan, small-scale solar installations [less than 1 megawatt (MW)] comprised 81% of the nation's overall solar investment of $34.8 billion.
Worldwide offshore-wind development projects totaled $18.6 billion, most of which was in Europe.
Interestingly, developing nations accounted for four of the top 10 investing countries. China led the group, followed by Brazil, India and South Africa, each with total renewable energy investments of more than $7 billion.
Developed countries face particular challenges to adopting new green energy generation regarding how to incorporate these technologies into existing infrastructure and expiring governmental policy support for new renewable power generation.
The report leaves us hopeful for future growth in renewable energy installations worldwide. China and India, two of the world’s biggest polluters in terms of greenhouse gas emissions associated with energy production, are leading the charge in the developing world and investing heavily in renewables. The developed world must follow suit and continue renewable energy investment and policy enactment that supports the growth of renewables.