Wind farms in China and small-scale solar panels on rooftops in
Europe were largely responsible for last year’s 32% rise in green
energy investments worldwide according to the latest annual report
on renewable energy investment trends issued by the href=”http://www.unep.org/” target=”new”>UN Environment
Programme (UNEP). Last year, investors pumped a record US$211 
billion into renewables - about one-third more than the US$160 
billion invested in 2009, and a 540% rise since 2004. For the first
time, developing economies overtook developed ones in terms
of “financial new investment”-spending on utility-scale renewable
energy projects and provision of equity capital for renewable energy
companies. On this measure, US$72 billion was invested in developing
countries vs. US$70 billion in developed economies, which contrasts
with 2004, when financial new investments in developing countries
were about one quarter of those in developed countries.



The report, Global Trends in Renewable Energy Investment 2011, has
been prepared for UNEP by London-based Bloomberg New Energy Finance.
It was launched by UN Under-Secretary-General and UNEP Executive
Director Achim Steiner and Udo Steffens, President and CEO of the
Frankfurt School of Finance & Management as it was also announced
that a new UNEP Collaborating Centre for Climate & Sustainable
Energy Finance is being inaugurated at the Frankfurt School.



China, with US$48.9 billion in financial new investment in
renewables (up 28%), was the world leader in 2010. However, other
parts of the emerging world also showed strong growth: South and
Central America: up 39% to US$13.1 billion; Middle East and Africa:
up 104% to US$5 billion; India: up 25% to US$3.8 billion, and Asian
developing countries excluding China and India: up 31% to US$4 
billion.



Another positive development, highlighted in the report with
implications for long-term clean energy developments, was government
research and development. That category of investment climbed over
120 per cent to well over US$5 billion.



Mr. Steiner said: “The continuing growth in this core segment of the
Green Economy is not happening by chance. The combination of
government target-setting, policy support and stimulus funds is
underpinning the renewable industry’s rise and bringing the much
needed transformation of our global energy system within reach.”



“The UN climate convention meeting in Durban later in the year,
followed by the Rio+20 summit in Brazil in 2012, offer key
opportunities to accelerate and scale-up this positive transition to
a low carbon, resource efficient Green Economy in the context of
sustainable development and poverty eradication,” he added.



“The finance industry is still recovering from the recent financial
crisis,” adds Udo Steffens, President of the Frankfurt School of
Finance and Management. “The fact that the industry remains heavily
committed to renewables demonstrates its strong belief in the
prospects of sustainable energy investments. “



The report points out that not all areas enjoyed positive growth in
2010: there was a decline of 22% to US$35.2 billion in new financial
investment in large-scale renewable energy in Europe in 2010. But
this was more than made up for by a surge in small-scale project
installation, predominantly rooftop solar.



Michael Liebreich, chief executive of Bloomberg New Energy Finance,
said: “Europe’s small-scale solar energy boom owed much to feed-in
tariffs, particularly in Germany, combined with a sharp fall in the
cost of photovoltaic (PV) modules.”



Investments in Germany in “small distributed capacity” rose 132% to
US$34 billion, in Italy they rose 59% to US$5.5 billion, France up
150% to US$2.7 billion, and the Czech Republic up 163% to US$2.3 
billion. The price of PV modules per megawatt has fallen 60% since
mid-2008, making solar power far more competitive in a number of
sunny countries. By the end of 2010, many countries were rushing to
make their PV tariffs less generous. Indeed, Spain and the Czech
Republic both moving to make retroactive cuts in feed-in tariff
levels for already-operating projects “damaged investor confidence,”
the report says. “Other governments, such as those of Germany and
Italy, announced reductions in tariffs for new projects - logical
steps to reflect sharp falls in technology costs.”



Nevertheless the small-scale solar market is likely to stay strong
in 2011, the report suggests. Further drops in costs for solar, wind
and other technologies lie ahead, the report says, posing a growing
threat to the dominance of fossil-fuel generation sources in the
next few years. Throughout the last decade, wind was the most mature
renewable energy technology and enjoyed an apparently unassailable
lead over its rival power sources. Wind turbine prices have fallen
18% per megawatt in the last two years, reflecting, as with solar,
fierce competition in the supply chain.



In 2010, wind continued to dominate in terms of financial new
investment in large scale renewables, with US$94.7 billion (up 30%
from 2009). However, when investments in small scale projects are
added in solar is catching up, with US$86 billion in 2010, up 52% on
the previous year. With US$11 billion invested, biomass and waste-to-
energy come in third in front of biofuels, which boomed at US$20.4 
billion in 2006, but fell off dramatically - to US$5.5 billion last
year.



The sharpest percentage jumps in overall investment were seen in
small-scale projects - up 91% year-on-year at US$60 billion, and in
government-funded research and development, up 121% at US$5.3 
billion, as more of the “green stimulus” funds promised after the
financial crisis arrived in the sector. 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).



Acquisition activity in renewable energy, representing money
changing hands rather than new investment, fell from US$66 billion
in 2009 to US$58 billion in 2010. The two largest categories of M&A -
corporate takeovers and acquisitions of wind farms and other
assets - both fell by around 10%. The low price of natural gas-which
was between US$3 and US$5 per million BTU for almost all of 2010-
hurt the growth of renewables, the report says. The price of natural
gas was far less than it was in much of the mid-2000s, before it
peaked at US$13 in 2008.



“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.