Clean Energy Investment Fell 18% In 2016 To Only $287 Billion, According To BNEF

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Global investment in clean energy fell by 18% in 2016, down to $287.5 billion from a record $329 billion in 2015, according to research company Bloomberg New Energy Finance.

Bloomberg New Energy Finance’s (BNEF) findings are unsurprising for anyone who watched its quarter-by-quarter reports, which fell compared to its year-previous comparisons each quarter: the first quarter was down 12% from a year earlier, the second quarter down 32%, and the third quarter down 43%.

That 2015 was a record year shouldn’t impact our disappointment much, highlighted primarily by news that offshore wind financing didn’t suffer from the same slump in new investments.

According to BNEF, the new investment slump in 2016 was partly due to “further sharp falls in equipment prices, particularly in solar photovoltaics” as well as “a marked cooling in two key markets” — China, which saw investment drop 26% to $87.8 billion, and Japan, down 43% to $22.8 billion.

Importantly, however, even though overall investment was down, overall capacity installed was not — solar installed a record 70 gigawatt (GW), up from 56 GW, and wind installed 56.6 GW, down from 63 GW.

“After years of record-breaking investment driven by some of the world’s most generous feed-in tariffs, China and Japan are cutting back on building new large-scale projects and shifting towards digesting the capacity they have already put in place,” said Justin Wu, head of Asia for BNEF.

“China is facing slowing power demand and growing wind and solar curtailment. The government is now focused on investing in grids and reforming the power market so that the renewables in place can generate to their full potential. In Japan, future growth will come not from utility-scale projects but from rooftop solar systems installed by consumers attracted by the increasingly favorable economics of self-consumption.”

As mentioned, new investment in offshore wind was the lone highlight for the year, increasing by 40% to $29.9 billion for the whole year, “as developers took advantage of improved economics, resulting from bigger turbines and better construction knowhow.”

We covered several of the highlighted offshore wind projects which helped make 2016 such an impressive year for the industry — including the 1.2 GW Hornsea Array, the world’s largest offshore wind project, being developed off the UK coast by DONG Energy at a cost of $5.7 billion.

“The offshore wind record last year shows that this technology has made huge strides in terms of cost-effectiveness, and in proving its reliability and performance,” explained Jon Moore, chief executive of BNEF. “Europe saw $25.8 billion of offshore wind investment, but there was also $4.1 billion in China, and new markets are set to open up in North America and Taiwan.”

Investment in the whole Asia Pacific region fell by 26% down to $135 billion, including India and China, accounting for 47% of the world total. While China and Japan both saw their investment levels drop, India remained relatively level at $9.6 billion.

The United States also saw its new investment figures drop, down 7% to $58.6 billion, while Canada was down a more dramatic 46% to only $2.4 billion.

Europe’s new investment figures actually increased by 3%, reaching $70.9 billion, thanks in part to the success of offshore wind, as well as the largest onshore wind project, the 1 GW, $1.3 billion Fosen wind project in Norway. Unsurprisingly, the UK led Europe for the third year in a row, with investment up 2% to $25.9 billion. Germany came second with investment dropping 16% to $15.2 billion. France saw its investment levels drop by 5% to $3.6 billion, while Belgium invested $3 billion, up a fantastic 179%. Denmark also saw an impressive increase, up 102% to $2.7 billion, as did Sweden with an 85% increase to $ 2 billion.

Unfortunately, according to the new figures, developing nations saw investment figures drop as projects that won renewable energy auctions during the year did not secure financing before the year closed out. Subsequently, investments in South Africa fell by 76% to $914 million, Chile dropped 80% to $821 million, Mexico dropped 59% to $1 billion, and Uruguay dropped 74% to $429 million.

Brazil managed to only drop its investment down 5%, reaching a still impressive $6.8 billion.

Meanwhile, Jordan exceeded $1 billion for the first time, with new clean energy investment increasing by 147% to $1.2 billion.

Further information, including a public fact pack, can be downloaded from BNEF’s Clean Energy Investment End of Year 2016 page.

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