Investment by Economy

Developing and developed countries alike saw reductions in renewable energy investments in 2013. Developing country investments fell for the first time since tracking began in 2004. Their outlays of USD 93 billion were down 14% from the record investment made in 2012, and just above the 2011 level. This compares with USD 122 billion in developed countries, the lowest investment level in the past four years. China accounted for 61% of developing-country investment in renewables in 2013, up from 55% in 2012.

Most regions of the world experienced reductions in investment relative to 2012. The exceptions were the Americas, excluding the United States and Brazil (both of which saw reductions), and Asia-Oceania, excluding China and India, where annual investment in renewable energy continued its uninterrupted rise. The Asia-Oceania region saw investment increase 47% over 2012, to a record high of USD 43.3 billion, due largely to the solar boom in Japan. (See Figure 24.) Europe and China continued to be the most significant investors, despite declines in each region; together they accounted for just short of half (49%) of the world total, down from a 59% share in 2012. Most of this decline was seen in Europe, where investment dropped by 44% in 2013 relative to 2012.

Figure 23. Global New Investment in Renewable Power and Fuels, Developed and Developing Countries, 2004-2013

Source: See Footnotes i and ii for this section.

i - This section is derived from Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance (FS-UNEP) and Bloomberg New Energy Finance (BNEF), Global Trends in Renewable Energy Investment 2014 (Frankfurt: 2014), the sister publication to the GSR. Data are based on the output of the Desktop database of BNEF, unless otherwise noted, and reflect the timing of investment decisions. The following renewable energy projects are included: all biomass, geothermal, and wind generation projects of more than 1 MW; all hydro projects of between 1 and 50 MW; all solar power projects, with those less than 1 MW estimated separately and referred to as small-scale projects or small distributed capacity; all ocean energy projects; and all biofuel projects with an annual production capacity of 1 million litres or more. For more information, please refer to the FS-UNEP/BNEF Global Trends report. Where totals do not add up, the difference is due to rounding.

ii - Investment in large hydropower (>50 MW) is not included in the overall total for investment in renewable energy. BNEF tracks only hydropower projects of between 1 MW and 50 MW.

At the national level, the top 10 investors consisted of three developing countries (all BRICS countries) and seven developed countries. China was again in the lead, with an investment of USD 54.2 billion, excluding R&D. It was followed by the United States (USD 33.9 billion), Japan (USD 28.6 billion), the United Kingdom (USD 12.1 billion), and Germany (USD9.9 billion). The next five were Canada (USD 6.4 billion), India (USD 6 billion), South Africa (USD 4.9 billion), Australia (USD 4.4 billion), and Italy (USD3.6 billion).i

China accounted for USD 56.3 billion (including R&D) of new investment in renewable energy, down 6% from 2012. Asset financing increased, but contributions from public markets and private equity shrank to low levels. Despite the overall decline, China's investment in additional renewable power capacity surpassed fossil fuel capacity additions in 2013 for the first time. The vast majority of the country's investment was for solar and wind power projects, and China was the top country by far for spending on utility-scaleii projects, followed distantly by the United States and the United Kingdom. China also invested significant sums in hydropower, bringing about 29 GW of new capacity into operation during the year, of which a large portion was projects >50 MW.iii 1 (See Hydropower section.)

i - National investment totals do not include government and corporate R&D because such data are not available for all countries. The South Africa number also does not include small-scale projects. Note, however, that data in Figure 24 do include government and corporate R&D.

ii - "Utility-scale" in this section refers to wind farms, solar parks, and other renewable power installations of 1 MW or more in size, and to biofuel plants of more than 1 million litres' capacity.

iii - The Chinese government estimates that China invested more than USD 20 billion (CNY 124.6 billion) in hydropower during 2013, including hydropower facilities of all sizes (this number may also include pumped storage).

Figure 24. Global New Investment in Renewable Power and Fuels, by Region, 2004-2013

The United States, which invested USD 35.8 billion (including R&D), continued to be the largest individual investor among the developed economies. This was despite a decline in investment of nearly 10% in 2013, attributed largely to the impact of low natural gas prices caused by the shale gas boom, and to uncertainty over the continuation of policy support for renewables. U.S. venture capital and private equity investment in renewables fell to just USD 1 billion, the lowest since 2005, indicative of a loss of confidence among early-stage capital providers. However, this decline was offset by a big jump in U.S. public markets investment, from USD 949 million in 2012 to USD 5.3 billion in 2013 (mainly for solar power and biofuels).

Japan saw a record increase in renewable energy investment, up 80% from 2012 to USD 28.6 billion, excluding R&D. The largest part of that commitment was for small-scale solar PV projects, as investors sought to capitalise on the generous feed-in tariff that was introduced in 2012. An increase of 76% in 2013, to USD 23 billion, made Japan the top country for investments in small-scale distributed renewables, followed distantly by the United States and Germany. Japan's asset finance in utility-scale projects nearly doubled, to USD 5.6 billion.

The United Kingdom also saw investments rise, by 14%, with the largest component coming from asset financing of utility-scale projects. This was followed by public markets, where a new breed of funds that owns and operates wind and solar power assets raised significant money during the year.

In stark contrast to these increases, Germany's investment declined again in 2013, landing at less than one-third of its 2010 peak (USD 33.7 billion), and bringing it from third to fifth position globally for renewable energy investment. The low investment level in 2013 can be attributed in part to the policy uncertainty faced by investors ahead of the general election in September 2013. However, other factors contributed to the dampened activity levels, including reduced prices of solar PV and a shortage of good quality, unexploited wind sites on land.

Canada has been a steady investor in renewable energy in recent years and, in 2013, moved into the list of top 10 countries, investment increased relative to the period 2007-2012, with most of this from asset finance—principally for large-scale wind and solar PV projects in Ontario.

Investment in India in 2013 fell tojust under halfofthe peaktotal recorded in 2011 (USD 12.5 billion). Almost all of the decline was due to a slowdown in asset finance, which was particularly apparent in the solar power market. However, small-scale project investment increased in 2013 to a record USD 0.4 billion. Beyond the top three countries in Asia, Thailand, Hong Kong, and the Philippines dominated investment in renewable energy in emerging Asia (collectively investing over USD 3 billion).

Data include government and corporate R&D

Source: BNEF

Figure 25. Global New Investment in Renewable Energy by Technology, Developed and Developing Countries, 2013

Source: BNEF

South Africa led the African continent, although it was down from USD 5.7 the previous year, recording investment of USD 4.9 billion (excluding R&D and small-scale projects). This was almost entirely in the form of asset financing for wind and solar power, including CSP; overall, South Africa was one of the world's most active CSP markets in 2013. The second largest investor in Africa was Kenya (USD 249 million), followed by Mauritius and Burkina Faso.

The countries holding the ninth- and tenth-place positions in the nvestor country list were Australia and Italy. Australia led in the Pacific, with USD 4.4 billion split roughly evenly between small-scale solar PV and utility-scale asset finance. Italy remained in the top 10, but it recorded a 75% decline in renewable energy investment relative to 2012. This was due largely to the government's cap on the amount of solar PV capacity that is eligible for feed-in tariffs. Other European countries investing more than USD 1 billion included Denmark, France, Greece, the Netherlands, Sweden, and Switzerland.

Brazil continued to lead in Latin America, despite a 54% drop relative to 2012, which made it the country's weakest year since 2005, and took it out of the list of top 10 investing countries. Brazil's investment, totalling USD 3.1 billion, was dominated by asset finance, with the vast majority (USD 2.1 billion) going towards wind power projects and most of the remainder towards biofuel plant capacity. Outside of Brazil, the region's USD 6 billion invested in renewable energy was widely distributed, with Chile up 72% to USD 1.6 billion in 2013, followed by Mexico, Uruguay, Costa Rica, and Peru.

1 China Electricity Council, provided by Shi Pengfei, China Wind Energy Association, personal communication with REN21, 12 March 2014; China Electricity Council, Planning and Statistics Department, "2013 National Electricity Industry Statistics," 26 January 2014, (using Google Translate).