Published on April 30th, 2014 | by Guest Contributor


Cleantech Sector Is Growing Fast, Yet Cost Drops Lead To Renewable Energy Investment Decline

April 30th, 2014 by  

Originally published on World Resources Institute.
By Letha Tawney, Bharath Jairaj and Xuege (Cathy) Lu 

have a sunny day_1

The United States, China, and Japan have been moving aggressively with solar photovoltaic (PV) installations. Photo credit: Activ Solar/Flickr

Investors worldwide spent less on renewable energy and related technologies—such as smart meters, electric vehicles, and storage—last year than in previous years. Global investments in renewable energy fell to $214 billion, down 14 percent from 2012. Venture capital investments in US-based cleantech companies fell 25 percent in 2013, according to Clean Edge’s latest report. And for the first time in a decade, China saw a decline in clean energy investment in 2013.

These isolated numbers make it appear as if the cleantech sector is on the decline. But take a deeper dive and it’s clear that there’s a much more complex story at play. In reality, renewable energy is on a strong growth path—and tools are emerging to push the sector even further.

Falling Renewable Energy Investments Actually Signal Progress

The recent fall in clean tech investments is partly driven by the fact that renewable energy has become much cheaper in the past few years. You can buy more energy output for less cash than you could have two or four years ago. At the 2014 Future of Energy Summit earlier this month, Michael Liebreich, founder of Bloomberg New Energy Finance (BNEF), said that roughly 80% of the reduced investment in clean energy over the last two years is due to these price reductions. Solar module prices, for example, have declined by about 80% since 2008. Increased competition among wind energy suppliers has also reduced prices. Research from the International Renewable Energy Agency (IRENA) finds that wind energy prices could drop from 10–30% further in the medium to long-term.

With the costs dropping substantially, growth in clean energy capacity remains at record highs. This is in spite of economic and policy turbulence in many countries. The United States, China, and Japan in particular have been moving aggressively with solar photovoltaic (PV) installations. China installed a whopping 12 gigawatts (GW) of solar capacity—nearly triple the 4.5 GW deployed the year before. And the world’s total installed wind energy capacity grew by about 19 percent in 2012, followed by another 12.4 percent increase in 2013.

In short, the renewable energy industry is maturing—and investors are starting to take notice. Investors like Citigroup are becoming more optimistic in the industry, claiming that the “age of renewables” has begun. “Green bonds”—which direct investment towards environmentally friendly projects—are becoming more and more popular. Energy-smart technology firms, including Opower, are marching into the stock market. These are all indicators that renewables are stepping onto the mainstream financial scene.

A Coalition of Renewable Energy Interpreters

The scale and impacts of declining renewable energy costs is not widely understood. This is an example of how real industry trends can be hidden by the headlines. Admittedly, the rapidly changing renewable energy industry can be difficult to keep up with. Decision-makers need both insightful analysis and proactive communication channels to help them understand what’s really going on with renewable energy development—and push this sector further faster.

Several organizations are starting to realize the importance of making sure that facts about renewable energy are fully examined, explained, and widely shared. For example, WRI recently joined with IRENA, IEA-RETP, Greenpeace, ACORE, WWF International and 36 leading renewable energy players to establish a “Coalition for Action to Bolster Public Support for Renewable Energy.” This Coalition, which includes think tanks, environmental NGOs, and leading renewable energy companies, will provide fact-based information to address questions and concerns about renewable energy technologies and help support the growth of the industry worldwide. The Coalition will host a knowledge platform to share the latest news, information, lessons, and training opportunities in the renewable energy sector.

As part of the coalition, WRI is producing evidence-based research, fact sheets, and tools on renewable energy through its Charge initiative. For example, our 10 Questions to Ask about Scaling On-Grid Renewable Energy paper raises the key questions decision makers need to answer in order to create a stable policy environment that will support the growth of grid-based renewable energy. Our Above and Beyond paper explores how utilities can use “green tariffs” to provide cost-competitive renewable energy to corporate customers. And forthcoming factsheets will help decision makers makes sense of the electricity cost data they encounter.

The Charge initiative at WRI and the IRENA Coalition can start to clear up some of the confusion surrounding renewable energy costs. However, truly moving toward a world where all communities have access to affordable, clean energy will require a greater effort. Decision-makers from government, business, and the electricity sector will need to use all tools at their disposal to look past the headlines and capitalize on the emerging opportunities presented by a rapidly changing renewable sector.

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  • Андрей Казанцев

    Look at a new third alternative – AIR HYDRO POWER –

    Each cloud over your head is NPP unit, but much more cheaper and cleaner…

    NB! Major trends in energetics are associated with the transition to renewable energy sources. It then becomes clear that resources are only sufficient for sun and (possibly) wind. Traditional hydropower does not have enough resources. However, the use of cloud energy changes this assessment. Principally it results from economics. All three methods of conversion (PV, wind, clouds) have the same order of magnitude of the energy density (~ 100 W/m2), but only for AIR HYDRO all this energy with virtually no loss can be merged into one point (pipe / turbine), making part of the proportional m2 far cheaper than for other alternatives. This implies the 1-2 orders of magnitude smaller the specific cost and Payback period that allows quickly rebuild the energetics and successfully avoid the collapse of climate & oil in 2050.

    • Bob_Wallace

      Please don’t spam the site.

      When you actually build a working prototype and collect some data get back to us.

  • Scott Hoppe

    Here is an App in California that shows you how much wind power you consume based on your hourly smart meter data.

  • sault

    The uncertain fate of the wind energy production tax credit in the USA led to a huge reduction in wind energy installations in 2013 compared to 2012. We have seen this several times before and the industry took a big hit every time the PTC was allowed to lapse. Meanwhile, fossil fuel subsidies continue indefinitely and seem to be sancrosinct in our tax policy due to the fact that the Republicans are basically in the pocket of polluters. Europe’s misguided austerity policies continued to slow growth in the affected countries as well.
    Let’s hope 2014 doesn’t move even further in the wrong direction.

    • Bob_Wallace

      Apparently there’s a very large number of wind projects underway.

      “The American wind industry continues the construction boom that started 2014, with more than 13,000 megawatts (MW) of wind energy projects under construction at the end of the first quarter.”
      With so much Republican state support for wind I think everyone assumes subsidies will be approved just as soon as the Republican House finished voting to repeal Obamacare for the 40th through 50th times.

      • LookingForward

        13GWh might be underconstructing, but I read in an article that another 24GWh is in the planning stages, “37GWh is in development” is what I read exactly.
        Since the PTC has been extented (or will be again) till 2016, even more will at to that.
        AWESOME!!!! (that needed caps :P)

      • GraceAdams830

        testing links to see if I can get them to work. OK it looks like both links work.

    • Yes, and the “investment drop” is also heightened by the fact that a bunch of projects were squeezed into 2012 instead of going up as planned in 2013.

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