Isra-Mart srl: Wind leads global green energy investments to record $211bn

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Green energy investments rose by almost a third to $211bn last year, primarily on the back of large wind projects in China and schemes to fit solar panels on European rooftops, a UN report today concludes.

Total renewable energy investments rose $51bn during 2010, representing an increase of 32 per cent on 2009 and 540 per cent on 2004.

Investments in wind energy led the way, rising 30 per cent during 2010 to $94.7bn. Spending on solar rose to $86bn, up 52 per cent on the previous year, while investment in biomass and waste-to-energy plants reached $11bn.

Only the biofuels sector saw investment levels slide, the $5.5bn spent during 2010 representing a significant fall on the $20.4bn invested in 2006.

The United Nations Environment Programme (UNEP) report, entitled Global Trends in Renewable Energy Investment 2011, also suggested that 2010 represented a tipping point for the sector as clean energy investment in developing countries overtook that in industrialised countries for the first time. Developing countries invested $72bn in renewable energy against $70bn in developed nations.

Much of this rise in new financial investment was driven by China, where a 28 per cent increase in renewable energy spending to $48.9bn dwarfed the rest of the world.

"The investment activity in the developing world is leading to innovations in renewable energy technologies," said Udo Steffens, president of the Frankfurt School of Finance and Management, which produced the report in conjunction with UNEP and Bloomberg New Energy Finance.

"Furthermore, it will open up new markets as first-mover investors facilitate a range of new business models and support entrepreneurship in the developing world."

By contrast, investment in Europe fell 22 per cent to $35.2bn and the UK saw spending drop from $10.8bn to $2.9bn, reflecting a plunge in wind investments from $9.6bn to $1.3bn that has largely resulted from the current phase of the offshore wind investment cycle.

However, the report also noted that "uncertainty over policy" under the coalition government had affected renewable energy investor confidence.

Europe's major success came in a surge in small-scale roof-top solar investments inspired by the rollout of feed-in tariff schemes.

Germany alone saw small distributed capacity investment of $34bn, up 132 per cent year on year, and Italian investment in small scale renewables rose 59 per cent to $5.5bn.

French spending climbed 150 per cent to $2.7bn, and the Czech Republic saw its small scale energy sector expand 163 per cent to $2.3bn.

However, this rapid take up of solar technologies forced Germany, Italy, Spain and the Czech Republic to lower their subsidy levels, resulting in companies rushing to beat the expiry date.

There are also worrying signs that renewable energy investment levels may have stalled in recent months. The report claims that, while the last three months of 2010 racked up $44bn of investment worldwide, January to March 2011 saw only $29bn invested, the lowest quarterly level since the beginning of 2009.

However, despite the recent slowdown, UNEP expects the falling costs of solar, wind and other technologies to pose "a growing threat to the dominance of fossil-fuel generation sources in the next few years".

Solar PV prices have fallen 60 per cent per megawatt, and wind turbines 18 per cent per megawatt, over the past two years thanks to competition in the supply chain, the report said, edging these technologies closer to competing on a level footing with the retail price of electricity.

However, the report noted that record low prices for gas, and scepticism in the markets where clean energy shares under-perform wider indices by more than 20 per cent, have combined with subsidy cuts to pose short-term challenges for renewable energy expansion.

The report also noted that acquisition activity in renewable energy fell from $66bn in 2009 to $58bn in 2010, while corporate takeovers and acquisitions of wind farms and other assets fell by around 10 per cent.