(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.”