Why 2016’s drop in renewables investment was good news in disguise

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email
2016 saw a 10% drop in average cost per megawatt for setting up solar PV and wind projects - UNEP, BNEF, Frankfurt School report. Credit: UNEP

Despite a significant drop in global renewable energy investment last year, a corresponding rise in renewables deployment spelled encouraging news for the sector, according to a new UN Environment Programme (UNEP) report entitled ‘More Bang for the Buck’.

The drop in investment did not demonstrate a lowering of interest in the technologies, but instead came as an indicator that the costs of renewables are coming down. Indeed, during 2016 there was a 10% drop in average cost per megawatt for setting up solar PV and wind projects. Moreover, investment in renewables was roughly double the amount invested in fossil fuel generation – its highest proportion to date.

The report did however acknowledge a slowdown in China, Japan and some emerging markets as part of the reason for reduced investment.

Notably, the report which does not include large hydro capacity in its figures, was also delivered in partnership with Bloomberg New Energy Finance (BNEF) and the Frankfurt School-UNEP Collaborating Centre.

Worldwide renewables investment dropped 23% to US$241.6 billion in 2016, its lowest levels since 2013, yet installations grew 8% from 127.5GW in 2015 to a record 138.5GW in 2016. This trend was made possible predominantly by the drop in renewable energy install costs.

BNEF figues showing the change in LCOE for various renewable energy technologies since 2009. parabolic trough refers to solar thermal. credit: BNEF

Solar investment was down 34% to US$113.7 billion last year, at the same time as PV installations grew to a record 75GW.

The regions with the most noteworthy tail off in clean energy investments were China (down 32%), Japan (down 56%) and Mexico, Chile, Uruguay, South Africa and Morocco (down 60% or more). This was blamed on lower than expected electricity demand growth as well as auction and financing delays. The US only dropped 10%, while Europe grew 3% and Jordan saw a 148% rise.

There was also record acquisition activity in renewables rising 17% to US$110.2 billion.

Michael Liebreich, chairman of the advisory board at BNEF, said: “After the dramatic cost reductions of the past few years, unsubsidised wind and solar can provide the lowest cost new electrical power in an increasing number of countries, even in the developing world – sometimes by a factor of two.

“Instead of having to subsidise renewables, now authorities may have to subsidise natural gas plants to help them provide grid reliability.”

Erik Solheim, executive director of UN Environment, added: “Ever-cheaper clean tech provides a real opportunity for investors to get more for less.”

UNEP also praised the continued raduction in solar tariffs driven by aucitons round the world. Yesterday PV Tech reported that GTM Research was expecting the upcoming tender in Saudi Arabia to potentially drop below two US cents per kWh for the first time.

Read Next

January 20, 2022
Independent power producer (IPP) Cordelio Power has secured a 900MWac pipeline of solar projects in New York and Pennsylvania from project developer SunEast Renewables.
January 19, 2022
Innovative Solar Systems (ISS), a utility-scale solar developer with a 12GW pipeline, has put itself up for sale, as it seeks partners to support the company in its development of ever larger PV projects across the US.
January 19, 2022
US solar developer 8minute Solar Energy has closed US$400 million in financing from institutional investor EIG to bolster its US solar PV and energy storage pipeline.
January 18, 2022
Prefabricated solar solutions manufacturer 5B is looking to improve the scalability and cost of its technology through an AU$33.4 million (US$24 million) innovation programme and support from the Australian Renewable Energy Agency (ARENA).
January 18, 2022
Corporate funding in the global solar sector reached a ten-year high in 2021 as the industry recovered from a COVID-affected 2020, new research from Mercom Capital Group reveals.
PV Tech Premium
January 14, 2022
Raising more than US$1 billion in equity capital in the past year, US independent power producer (IPP) Silicon Ranch is looking to expand its model of developing, owning and operating large-scale PV plants while maintaining a strategy of co-locating projects with regenerative agriculture.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
January 26, 2022
Free Webinar
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 8, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal