The newest report from the United Nations Environment Program (UNEP), in cooperation with Bloomberg New Energy Finance, a clean tech analytics firm, shows that the combined impetus of stimulus funding, feed-in tariffs (FiTs) and renewable portfolio standards (RPS) generated a record $211 billion globally in 2010 in renewable energy investment.
Renewable technologies examined include wind, solar, biomass, geothermal, marine (wave) energy, and biofuels. Bypassed in favor of more in-depth reporting are smart grid options, electric vehicles (EVs), and power storage.
Sources of investment include venture capital and private equity, public company financing, asset financing, and mergers and acquisitions. Leading the investment push was venture capital, up 59 percent to $128 billion. Second was public market investment, gaining 23 percent, to $15.4 billion. Asset financing rose 19 percent, to $2.4 billion.
Only two investment venues suffered; corporate research (down 12 percent, or $3.3 billion), and private equity funding for expansion of renewable energy companies, down 1 percent, or $3.1 billion. Both are explained in terms of a persistent recession.
Commissioned by UNEP’s Division of Technology, Industry and Economics (DTIE), and prepared by Frankfurt School – UNEP Collaborating Centre for Climate & Sustainable Energy, the report shows some clear winners, like China, with $48 billion in clean tech investments for 2010, and Mexico, which saw a 350-percent increase in renewable energy capacity during that same year.
In fact, according to the forward by Achim Steiner, UN Under-Secretary General, there were no losers, with nations from Germany to Egypt joining the slow but inexorable march toward a renewable energy future.
The biggest gainers overall were small scale projects, up 91 percent or $60 billion, and government-backed R&D, up 121 percent or $5.3 billion. Big investment gainers, by geo-political regions, include the Middle East and Africa (up 104 percent), South and Central America (up 39 percent), China (up 28 percent), and India (up 25 percent).
The investment figures went the other way in Europe in 2010, falling 22 percent – a loss more than made up for by increased installation of small projects, notably in Germany, where distributed generation rose by 132 percent, or $34 billion.
Experts expect this market to stay strong through 2011, based on lowered prices for solar photovoltaic cells, in spite of European nations backpedaling on their formerly generous FiTs.
The biggest markets for renewable energy investment were emerging economies, with China leading the wave. For example, while global investment reached $143 billion overall in 2010, more than half that amount, or $72 billion, was spent by emerging economies. These emerging economies also led in the areas of small-scale renewable installation and R&D.
It seems counterintuitive, but emerging economies often chose renewable technology over traditional sources, not so much for renewable energy’s non-pollutive nature as for its cost effectiveness when deployed at a small scale. Take, for example, such non-grid options such as solar-powered lamps, biogas cooking units, and solar powered water pumping.
Throw in solar-powered food processing, or drying, and nations like Guatemala and Kenya were able to deliver more food exports with fewer losses; additionally, they saw their product produced cheaper and more sustainably. Fish drying in Kerala, India is a prime example, and – as experts hastened to point out – greater uptake of these technologies can’t help but lead to a future in which such systems become affordable even to small landholders in poorer countries.
Emerging economies made wind energy a favorite, investing 50.6 percent of funds to capture it, as compared to 7.2 percent for solar. Developed nations, on the other hand, were the big gainers in emerging technologies like biomass, waste-to-energy, biofuel production and small hydropower.
The biggest challenge to renewable investment and deployment in 2010 was the persistently low cost of natural gas - $3 to $5 per million Btu (MMBTu) for most of the year, and well below a peak 2008 price of $13.
In spite of evident setbacks, and some difficulty acquiring funding, by the end of 2010 119 countries had developed renewable portfolio standards. More than half of these were emerging economies, and worldwide production of energy from renewables accounted for 5.4 percent, or 954 terawatt hours (TWH); the equivalent of a 35 percent increase over 2009.
In all, the report is encouraging to those who read and heeded Goldman Sachs warning that Saudi Arabia will fail to meet oil demand next year – a warning that falls into line with persistent predictions of peak oil arriving within the decade, sending oil prices soaring.
Image credit: Ajay Tallam via Flickr
Any opinion contained in this article is solely that of the writers, and does not necessarily shape or reflect the editorial opinions of Energy Boom. Energy Boom content is for informational purposes only and is not intended to be advice regarding the investment merits of, or a recommendation regarding the purchase or sale of, any security identified on, or linked through, this site.