Bloomberg New Energy Finance

2016 Sees Dips in Renewable Investment Levels

(3BL Media/Justmeans) — According to Bloomberg New Energy Finance (BNEF), global investment in renewable energy dropped 18% last year to a total of $287.5 billion. This could be sobering news indeed on Donald Trump’s inauguration, considering the indications that Trump has a preference for fossil fuels. Has the reversal already begun?

It’s worth looking into the numbers before jumping to conclusions. There were several factors that contributed to the decline. It’s important to keep in mind that because costs are dropping so fast, the installation of the same amount of renewable power this year would have cost less than it did last year. In fact, data from the Solar Energy Industries Association (SEIA) shows that solar prices in the US dropped by 19% for the 12 months ending September 30th.

That is, in fact, what happened. According to Veronika Henze at Bloomberg, purchased clean energy capacity grew from 127.6GW to 139 GW, an 8.9% increase, even as overall dollars fell. In fact, purchased solar capacity grew by 30% while wind saw a 10% drop. It shows that just following the dollars can, at times, be misleading. Bear in mind that the purchased capacity could take a year or more before it’s installed, particularly in the case of wind. A record level of 70GW of solar was installed last year as well, though wind installations were down 10.3% at 56.5GW. That was still the second highest annual figure ever.

There were other reasons  for the decline as well.

Investment in renewables dropped in both China and Japan, by 26% and 43% respectively. According to Justin Wu, head of Asia for BNEF, “After years of record-breaking investment driven by some of the world’s most generous feed-in tariffs, China and Japan are cutting back on building new large-scale projects and shifting towards digesting the capacity they have already put in place.”

Presumably, by digesting it, he means connecting it and integrating it into their grid, which is where considerable investment is now going. This then, in a central planning economy, is simply a pause, in which, says Wu, “The government is now focused on investing in grids and reforming the power market so that the renewables in place can generate to their full potential.”

SunEdison Bankruptcy Will Not Cast a Shadow on the Solar Industry

(3BL Media/Jusmeans) - Just when it seemed like solar was going gangbusters, with double-digit growth rates, studies showing that states could produce anywhere from 25-45% of their power from the sun, and overall growth in the five years starting 2010 of 418%, we get this news that SunEdision, one of the largest American producers, has gone bankrupt. Does this indicate that the solar boom is coming to a screeching halt? Or is this the story of one particular company whose fortunes have crashed and burned due to specific circumstances?
That question was answered right out of the gate in Jenny Chase’s post on Bloomberg New Energy Finance. “SunEdison’s bankruptcy says more about the company’s strategic decisions than about the solar industry as a whole.” She assures us that companies like SunPower and First Solar are doing just fine.
“What has distinguished SunEdison,” says Chase, “has been the relentless and unfocused pursuit of growth, in which it has invested vast amounts of borrowed money.” In short, the company took a lot of risks, with borrowed money, and not enough of them paid off.

In the world of big projects and high finance, timing is critical. Some of projects SunEdison invested in were not bad risks, per se. They just took a little too long to come to fruition. Others, like attempting to enter China in 2014 when six of the top ten producers in the world are Chinese, were probably unwise.

The company spent $3.1 billion on a two-year acquisition spree. By the time they declared bankruptcy, they were $16 billion in debt.

Report: Renewables Hit Major Global Milestones

(3BL Media/Justmeans) - A new report by the UN Environmental Programme (UNEP) on the growth in renewable energy showed some remarkable accomplishments. For one thing, new investment in traditional coal and gas-fired power plants accounted for less than half the investment in solar wind, and other renewables. According to Global Trends in Renewable Energy Investment 2016, the annual global investment in new renewables capacity, reached $266 billion last year, while investments in coal and gas power stations weighed in at $130 billion. If early stage and R&D projects are included, the number for renewables grows to $286. This topped the previous record set in 2011, by 3%. For purposes of this report, renewables includes hydro projects up to 50 MW, as well as biomass and waste-to-energy, biofuels, geothermal, and marine power sources. The report was produced in collaboration with Bloomberg New Energy Finance and the Frankfurt School UNEP Collaborating Centre.

Perhaps more surprising, was the fact that this year, for the first time, investment in renewable energy by developing countries, outpaced investment in the developed world. Renewable energy investments by developing countries, reached $156 billion last year, an increase of 19% over the previous year. That compares with investments totaling $130 billion by developed countries, which represents an 8% decrease, compared to the previous year. The decrease in investment by developed countries occurred primarily in Europe where investments have been on a downward trend since 2011. This was due to a number of factors including the economic downturn in Southern Europe.

In terms of capacity, the 134 GW of renewables added last year, outpaced all other forms of power generation combined. Renewables accounted for a full 53.6% of all capacity installed in 2015. This is the first time that has occurred. The vast majority of this energy capacity came from wind (62 GW) and solar PV (56 GW).

UNEP Executive Director, Achim Steiner, as he introduced the report, called 2015 “another remarkable year,” saying that the progress that has been achieved, “would have been unthinkable ten years ago.” Especially, given the financial instability and the surprisingly low fossil fuel prices, neither of which had “any dampening effect on this trend.”

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