Foreign Policy Blogs

UNEP — Global Renewable Investment Hits $211 Billion in 2010

Last year, the world investment in renewable energy rose to $211 billion according to the UN Environment Program, an increase of 32% over 2009. Using 2004 as a baseline, that is more than a five-fold increase. Not counting hydroelectric dams, renewable energy supplied 5% of global electricity, 30% of new electrical capacity overall. Thanks largely to $48.9 billion in investments in China, more investment in renewables occurred in developing countries than in the mature economies for the first time ever. The developing nations has investments totaling $72 billion to the developed world’s $70 billion.

Regionally, that broke down as follows:

South and Central America: up 39% to $13.1 billion;
Middle East and Africa: up 104% to $5 billion;
India: up 25% to $3.8 billion, and
Asian developing countries excluding China and India: up 31% to $4 billion.

Another interesting datum is the rise of small-scale projects in Europe at the expense of the big projects – the latter actually declined by 22%, falling to $32.5 billion. Because the price of photo-voltaic cells per megawatt has dropped about 60% in the last three years, these have become much more attractive to deploy. This helped with the increases: Germany’s small-distributed capacity investment rose 132% to $34 billion; Italy had a 59% increase rising to $5.5 billion; France increased by 150% to $2.7 billion, and the Czech Republic investments rose 163% to $2.3 billion.

Further good news was on the R&D side, where government-funded research (the kind that isn’t commercially viable now but could be one day – e.g., moon program, Internet) was up 121% to $5.3 billion. That isn’t bad considering the global economy’s condition back when the investment decisions were made in 2008-09.

The UNEP says, “Two areas of investment showed a fall in 2010 compared to 2009: corporate research, development and deployment (down 12% at US$3.3 billion, as companies retrenched in the face of economic hard times) and provision of expansion capital for renewable energy companies by private equity funds (down 1% to US$3.1 billion).”

Weighing on the development and deployment of renewables is the relatively low cost of natural gas, according to the UNEP. Trading between $3 and $5 per million BTU for almost all of 2010 (down from a $13 peak in 2008), natural gas is a “here-and-now” alternative to coal and oil. “This gave generators in the US, but also in Europe and elsewhere, an incentive to build more gas-fired power stations and depressed the terms of power purchasing agreements available to renewable energy projects,” says the report.

 

Author

Jeff Myhre

Jeff Myhre is a graduate of the University of Colorado where he double majored in history and international affairs. He earned his PhD at the London School of Economics in international relations, and his dissertation was published by Westview Press under the title The Antarctic Treaty System: Politics, Law and Diplomacy. He is the founder of The Kensington Review, an online journal of commentary launched in 2002 which discusses politics, economics and social developments. He has written on European politics, international finance, and energy and resource issues in numerous publications and for such private entities as Lloyd's of London Press and Moody's Investors Service. He is a member of both the Foreign Policy Association and the World Policy Institute.