A new report from Bloomberg New Energy Finance has highlighted the rising importance of developing nations in driving clean energy adoption worldwide, and finds they are seizing the mantle of global clean energy leadership from wealthier, more developed nations.
A combination of surging electricity demand, declining technology costs, and a surge in innovative policy-making have resulted in developing nations stepping up to seize the mantle of global clean energy leadership from wealthier nations, according to a comprehensive new report published by Bloomberg New Energy Finance (BNEF) as part of its annual Climatescope project.
According to the report, emerging market nations surveyed by Climatescope accounted for the majorities of clean energy capacity added, and new funds deployed, globally in 2017. Specifically, developing nations added an impressive total of 114 gigawatts (GW) worth of zero-carbon generating capacity — including 94 GW worth of wind and solar. At the same time, developing nations brought online the least amount of new coal-fired power generating capacity since at least 2006 — with new build coal falling 38% year-over-year to 48 GW, half of what was added in 2015.
“It’s been quite a turnaround,” said Dario Traum, BNEF senior associate and Climatescope project manager. “Just a few years ago, some argued that less developed nations could not, or even should not, expand power generation with zero-carbon sources because these were too expensive. Today, these countries are leading the charge when it comes to deployment, investment, policy innovation and cost reductions.”
In addition to the increasing economic viability of clean energy technologies — specifically technologies such as wind and solar — which are further bolstered by the “exceptional” natural resources boasted by many developing nations, when combined with continually declining technology equipment costs, new renewable energy projects in developing nations are regularly outcompeting new fossil fuel projects on price. This has been most evident in the 28+ GW worth of generation contracted through tenders in emerging markets in 2017.
Financing for renewable energy projects in developing nations is similarly increasing, with 54 developing nations recording investment in at least one utility-scale wind farm, and 76 countries receiving financing for solar projects of 1.5 megawatts (MW) or larger (up from 20 and 3, respectively, a year ago). Further, development banks, export credit agencies, and other traditional backers are all combining to ensure investment and project backing continues to support the development of clean technology projects in emerging nations.
“European players, in particular, have moved aggressively to finance projects, particularly in Latin America,” said BNEF head of Americas Ethan Zindler, who helped found Climatescope. “While concessional capital is still clearly required in least developed countries or in others just beginning to adopt clean energy, elsewhere private funders appear quite comfortable deploying capital at volume.”
The report further highlights the growing trend that shows developing nations are skipping the fossil fuel stage of economic development which has so plagued their more developed brethren.
“I think it’s undeniable that for an equivalent level of economic development (GDP/capita), a number of emerging markets have a much higher penetration of solar and wind than their most developed peers had,” explained Dario Traum, who spoke to me via email.
“That’s a factor of technology change but also of course of cost. Emerging markets are where renewables most frequently undercut existing power procurement cost. In particular, Latin America has a number of countries that are amongst the countries with the highest level of solar + wind penetration, often facilitated by hydro and interconnection with neighbours.
“Caveat to all that is that big manufacturing and demographic hubs in Asia haven’t yet been able to get around coal as a cheap way to power industry around the clock. But they are seeing the consequences too, in particular air pollution. So a strong support for renewables there to.”