Renewable energy race heats up as forecast for investment triples

Creative Commons: Bernd Sieker, 2007
Creative Commons: Bernd Sieker, 2007

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New figures from Bloomberg New Energy Finance (BNEF) predict annual investment in renewable technologies could triple by 2030, proving the industry’s resilience as it forges ahead in the wake of the financial crisis, fluctuating investment and policy uncertainty.

The latest report forecasts growth across three possible scenarios. Under its central scenario, ‘the new normal’, it predicts annual investment could reach $630 billion a year by 2030.

Wind would account for 30% of new capacity under the scenario, while solar could account for 25%. When large hydro projects are also considered, the projection is for between 69-74% of new capacity to come from renewables by 2030.

Despite a recent slowdown that has been witnessed in renewable energy investment, this latest projection is more than a third higher than BNEF estimates last year.

The latest figures follow a whole host of parallel reports that have examined the current state of the global renewables industry.

A report from the Global Wind Energy Council found that wind installations worldwide rose 10% in 2012, providing enough new capacity to power over 33 million homes – showing that deployment of renewables continues to rise inexorably.

These positive figures coincided, however, with warnings, from the International Energy Agency (IEA), the PEW Charitable Trusts and BNEF, over the falling levels of investment in clean energy technology globally.

Despite a drop of 11% in investments for renewable energy last year, financial support for clean energy is still five-times greater now than it was in 2004.

The blame for much of the temporary decline witnessed last year can be placed on policy uncertainty in the leading markets, such as Germany and the US. However, it was also partly caused by reduced prices for wind turbines and solar panels, which also helped boost competitiveness and fuelled a record 88 GW of new clean energy installations around the world.

As the clean energy race heats up major Eastern economies are beginning to challenge the traditional leadership shown by Western countries, with both India and China rapidly accelerating their efforts and creating new incentives to boost domestic deployment.

Last week India’s Prime Minister Manmohan Singh pledged to double the countries’ renewable energy capacity to a massive 55 GW by 2017, confirming that the necessary subsidies for an urgent shift away from a fossil fuel based economy will be provided.

He told a Clean Energy Ministerial meeting in New Delhi that he saw an expanded role in India for both traditional clean energy sources, such as hydropower, and non-conventional sources including solar and wind.

This is a sharp contrast to Europe where the renewables industry is warning that governments may actually be driving up the cost of meeting their 2020 renewables targets and the continent is losing ground in the clean energy race.

The European Renewable Energy Council (EREC) have warned that policy certainty will still play a major role in driving renewable investment in the near future and called for an ambitious ‘hat-trick’ of EU climate targets to 2030 – including renewable energy, energy efficiency and greenhouse gas reductions – saying this would bring multiple benefits to the continent.

They believe such targets would result in a minimum 0.45% growth in Europe’s GDP while creating 4.4 million jobs and cutting 550 million tonnes of fossil fuel imports.

Strong targets in the EU now would also secure a position for renewable energy in the long-term, according to EREC, as it would help further cut decarbonisation costs and project financing, reducing the need for support mechanisms in the future.

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