The Vector: The World Gradually Turns to Renewables
In 2009, for the second year in a row, both the US and Europe added more power capacity from renewable sources such as wind and solar than conventional sources like coal, gas and nuclear, according to reports by the United Nations Environment Programme and the Renewable Energy Policy Network for the 21st Century (REN21).
Renewables accounted for 60% of newly installed capacity in Europe and more than 50% in the USA in 2009. This year or next, the world as a whole is expected to add more capacity to the electricity supply from renewable than non-renewable sources.
Investment in core clean energy (new renewables, biofuels and energy efficiency) decreased by 7% in 2009, to $162 billion. Many sub-sectors declined significantly in money invested, including utility scale solar power and biofuels. However, there was record investment in wind power. If spending on solar water heaters, as well as total installation costs for rooftop solar PV, were included, total investment in 2009 actually increased in 2009, bucking the economic trend.
In China private and public sector investments in core clean energy grew 53% in 2009. China added 37 GW of renewable power capacity, more than any other country.
Globally, nearly 80 GW of renewable power capacity was added in 2009, including 31 GW of hydro and 48 GW of non-hydro capacity. This combined renewables figure is now closing in on the 83 GW of fossil-fuel, thermal capacity installed in the same year. If the trend continues, then 2010 or 2011 could be the first year that new capacity added in low carbon power exceeds that in fossil-fuel stations.
New renewable generation matching fossil fuels
Investment in renewable energy power capacity (excluding large hydro) in 2009 was comparable to that in fossil-fuel generation, at around $100 billion each. If the estimated $39 billion of investment in large hydro is included, then total investment in renewables exceeded that in fossil-fuel generation for the second successive year. China surpassed the US in 2009 as the country with the greatest investment in clean energy.
China’s wind farm development was the strongest investment feature of the year by far, although there were other areas of strength worldwide in 2009, notably North Sea offshore wind investment and the financing of power storage and electric vehicle technology companies. Wind power and solar PV additions reached a record high of 38 GW and 7 GW, respectively.
Investment totals in utility-scale solar PV declined relative to 2008, partly a result of large drops in the costs of solar PV. However, this decline was offset by record investment in small-scale (rooftop) solar PV projects.
The reports also show that countries with policies encouraging renewable energy have roughly doubled from 55 in 2005 to more than 100 today – half of them in the developing world – and have played a critically important role in the sector’s rapid growth.
According to Achim Steiner, UNEP’s Executive Director:
“There remains however a serious gap between the ambition and the science in terms of where the world needs to be in 2020 to avoid dangerous climate change.
“This gap is not unbridgeable. Indeed, renewable energy is consistently and persistently bucking the trends and can play its part in realizing a low carbon, resource efficient green economy if government policy sends ever harder market signals to investors.”.
Where the growth is
From 2005 to 2009 inclusive, the annual average rate of growth in wind power capacity was 27%; solar hot water 21% rate; ethanol production 20% and biodiesel production 51%. The use of biomass and geothermal for power and heat also grew strongly.
In 2008, wind accounted for $59 billion or 45% of all financial investment in sustainable energy; in 2009, it accounted for $67 billion and its share rose to 56%.
Wind power additions reached a record high of 38 GW, 13.8 GW of which was installed in China, 10 GW in the US, and 2.5 GW in Spain. Wind power existed in just a handful of countries in the 1990s, but now exists in over 82 countries.
Total global investment in solar PV reached a record $40 billion in 2009. Grid-connected solar power has grown by an average of 60% every year for the past decade, from 0.2 GW at the start of 2000 to 21 GW at the end of 2009. The year 2009 was very different for large-scale (utility-scale) solar however, suffering a 27% fall in financial investment in the year, to $24 billion.
The sharp decline links to several factors, including falling prices, a sudden over-supply of photo-voltaic products, new caution on the part of investors towards equity in young solar companies, a shortage of bank financing for projects in Europe and North America and a temporary freeze on permits for new capacity in Spain, the most active solar market in 2008. Solar PV additions nevertheless reached a record high of 7 GW in 2009.
Biofuels, which ranked third after wind and solar in 2008 with $18 billion of financial
investment, ended up fourth last year with just $7 billion. Biomass and waste-to-energy, which was fourth in 2008 with $9 billion, moved up to third in 2009 with $11 billion.
Biofuels displaced the energy equivalent of 8% of global gasoline consumption.
Latin America is seeing many new biofuels producers in countries like Argentina, Brazil,
Colombia, Ecuador, and Peru, as well as expansion in many other renewable technologies.
Investment in new biofuels plants also declined from 2008 rates, as corn ethanol production capacity was not fully utilized in the United States and several firms went bankrupt. The Brazilian sugar ethanol industry likewise faced economic troubles, with no growth despite ongoing expansion plans. Europe faced similar softening in biodiesel, with production capacity only half utilized.
Geothermal suffered a 29% drop in financial investment in 2009, to $2 billion,
Energy-smart technologies such as power storage and efficiency saw a 34% rise in
investment, to $4 billion. For the first time, energy-smart technologies attracted more venture capital and private equity investment than any other clean energy sector.
More than 100 countries had enacted some type of policy target and/or promotion policy related to renewable energy, up from 55 countries in early 2005. Many new targets enacted in the past three years call for shares of energy or electricity from renewables in the 15–25% range by 2020.
Manufacturing leadership is shifting from Europe to Asia, as countries like China, India, and South Korea continue to increase their commitments to renewable energy.
As a group, developing countries have more than half of global renewable power capacity.
