Following two years of declining investment in renewable energy, in 2014, global investments rose 17 percent, according to a report issued this week by the Frankfurt School – UNEP Collaborating Center for Climate & Sustainable Energy Finance.
“These climate-friendly energy technologies are now an indispensable component of the global energy mix and their importance will only increase as markets mature, technology prices continue to fall and the need to rein in carbon emissions becomes ever more urgent,” UN Under Secretary-General and executive director of UNEP, Achim Steiner, said in a statement.
Developing countries in particular boosted investment in renewables, accounting for $131.3 billion last year, a 36 percent increase over 2013.
“The growing penetration of renewable generation in the world’s developing economies is one of the important and encouraging aspects of the 2014 report,” Steiner added.
Around 103 GW of generating capacity from renewable sources was added around the world, equating to around half of the net power capacity added in the year. Wind and solar power capacity installments were record breaking — with 95 GW of capacity installed.
China far outstripped other countries, investing $83.3 billion in renewable energy. The US was a distant second with $38.3 billion, followed by Japan at $35.7 billion.
The report is consistent with others, including a report from GTM Research and the Solar Energy Industries Association that found that solar power installations in the US accounted for 32 percent of all new electrical capacity in 2014.
In addition, a recent estimate by the US Energy Information Association projected that renewable energy will comprise the majority of capacity added to the US electrical grid. And Deutsche Bank predicted recently that solar power will become the dominant source of energy worldwide in the next 15 years.
Nonetheless, the UNEP report highlights a number of obstacles in the coming years, primarily policy uncertainty, including the potential discontinuation of a US tax credit for wind producers, less predictable policies in the UK and Germany, and potential reductions to the feed-in tariff in Japan.
Udo Steffense, president of the Frankfurt School of Finance and Management said in the statement that “the erosion of investor confidence caused by increasing uncertainty surrounding government support policies for renewables” is a great concern.
Although the drop in oil price by about 50 percent seems like it could affect investment in renewables, the authors point out that typically oil and renewables do not compete for power investment dollars, so wind and solar should be able to continue “flourishing,” especially if costs continue to drop.