Report: Clean Energy Investments Hit $333.5 Billion in 2017

Though some countries, including the U.S., have moved to support coal-fired power generation over the past year, investments in renewable energy continued to rise, according to a new report from Bloomberg New Energy Finance (BNEF).

The research group on January 16 said global investment in clean energy such as wind and solar reached about $333.5 billion in 2017, a 3% rise from the prior year, and just 7% below the record in 2015. BNEF said about half of all investment went to solar projects, with China accounting for nearly $133 billion-or about 40%-of the total investment in renewables. China's total is 24% more than it spent in 2016, according to BNEF.

The report said two dozen countries invested more than $1 billion in clean energy initiatives in 2017. It noted that the falling costs of equipment such as wind turbines and solar panels has opened new markets, and is bringing electrification to areas-particularly in developing countries-where there is limited access to a transmission grid.

Amy Grace, head of North America Research at BNEF, in an email to POWER on January 17 noted those lower capital costs for equipment, along with government mandates for renewable energy, are helping drive investments in clean energy. "And [there is] one smaller additional driver: corporations procuring green energy for sustainability purposes," she said. "In the U.S., as an example, although mandates do still exist, most have been met. With the federal subsidy, the price of renewable energy is often cheaper than the cost of running existing fossil generation. Therefore, utilities without mandates are procuring wind and solar."

U.S. No. 2 in Total Investment

The BNEF report said the U.S. ranked second in total investment, with about $57 billion poured into renewables in 2017. The report said U.S. investment rose by 1% year-over-year, even as the Trump administration moved to prop up coal and nuclear power generation, and soften government rules on power plant emissions, favoring the use of fossil fuels.

"Many of the factors spurring renewable energy development in the U.S. and internationally over the past couple of years continue to be in place and can be expected to lead to strong renewables development, at least over the next few years," Chris MacCracken, principal in the Energy Advisory Services practice at ICF, a global consulting and technology services company based in Fairfax, Virginia, told POWER on January 17. "Globally, above all else, these include improving technology cost and performance. Solar and wind are simply becoming more cost-effective. The adaptation of markets and technologies to integrate higher volumes of variable renewable production also support this trend."

Source: Bloomberg New Energy Finance. Note: Clean energy covers renewable energy excluding large hydro, plus energy smart technologies such as efficiency, demand response, storage and electric vehicles.

MacCracken listed several items that could continue to support U.S. investment in clean energy. "Though not a significant portion of the market yet, we are seeing more large, integrated renewable energy-plus-storage transactions announced in places like Arizona and Colorado," he said. "If that trend accelerates, you will see increasing volumes of solar and wind in markets with high renewables penetration where storage can support capacity performance, whether in the U.S. or internationally.

"Domestically, tax credits over the next few years and renewable portfolio standards (RPS), like California's 50% by 2030, support renewables," MacCracken said. "More than half of U.S. states have some form of RPS that continues to drive renewable development in those states and in neighboring states."

Commitment to Phase-out Coal

A group of 20 countries, including Canada and the UK, in November 2017 said they had formed a coalition of nations committed to phasing out coal-fired power by 2030, which also would likely increase global renewable generation. The UK already has said it will end coal-fired generation no later than 2025, though its investment in renewables dropped 56% in 2017 from 2016 levels, to $10.3 billion, due to changes in policies supporting renewables.

The countries in the coalition consume just more than 2% of the world's coal annually, according to the World Bank. The coalition does not include China, India, the U.S., Japan, or Russia, which rank 1 through 5 respectively in global coal use. Of those five, only Russia did not make the list of countries investing at least $1 billion in clean energy in 2017.

The U.S., Germany, and Spain in the past year all have enacted policies in support of coal, in part citing concerns about power reliability, though the German government continues to be pressured to phase out coal-fired power. Renewables accounted for 38% of Germany's generation in 2017, according to researcher Fraunhofer ISE, with coal's share at just more than 40%. However, German investment in renewables fell 26% from 2016 levels, to $14.6 billion.

The report said European countries in total invested $57.4 billion in clean energy in 2017, down 26% from 2016 levels.

Poland also continues to support coal (while also looking toward a future with nuclear power), in large part due to the country's economic reliance on the fuel and fear of job losses. The country has experienced shortages of domestic coal in recent months, however, and Polish imports of U.S. coal rose more than 500%-to nearly 4,100 short tons per day-through the first half of 2017, according to the U.S. Energy Information Administration (EIA).

Industrialization Driving Solar in China

China is the largest global market for renewable energy, in part due to its rapid industrialization. Many companies are installing solar panels in industrial parks to generate their own power and reduce energy costs.

In a news release, Justin Wu, head of Asia-Pacific for BNEF, said: "China installed about 20GW more solar capacity in 2017 than we forecast. This happened for two main reasons: first, despite a growing subsidy burden and worsening power curtailment, China's regulators, under pressure from the industry, were slow to curb build of utility-scale projects outside allocated government quotas. Developers of these projects are assuming they will be allocated subsidy in future years.

"Second, the cost of solar continues to fall in China, and more projects are being deployed on rooftops, in industrial parks or at other distributed locales. These systems are not limited by the government quota. Large energy consumers in China are now installing solar panels to meet their own demand, with a minimal premium subsidy."

The country's National Energy Administration said photovoltaic (PV) power installations in the country had total generation capacity of about 126 GW through November 2017, up 67% year-over-year.

Australia was among the countries showing a sharp rise in clean-energy investments, spending $9 billion, up 150% from 2016. Mexico was up 516% year-over-year, to $6.2 billion. Along with Germany and the UK, Japan also saw a drop, falling 16% year-over-year, to $23.4 billion.

Grace said installations of clean energy "will continue to grow as the technology costs decline further. Global clean energy investment has been effectively flat over the last several years [give or take], while installations have grown. Policies affecting coal and nuclear vary significantly by country, as does the availability of alternative dispatchable generation, such as gas, hydro, or batteries. Ultimately, the consumer will not accept paying a premium for dirtier energy where alternatives exist."

Other items of note in the report include:

• Asset finance of utility-scale projects made up 65% of the global investment total.
• Solar investment globally amounted to $160.8 billion in 2017, up 18% from 2016. Of that, $86.5 billion was spent in China.
• Investments in wind power projects totaled $107.2 billion, off 12% from 2016.
• Venture capital and private equity investment into clean energy dropped 38%, to $4 billion, the lowest point since 2005. BNEF said that's because "clean energy is increasingly seen as a mature, bankable industry."
• A record $49 billion was invested in technologies such as smart grids and energy storage. About half that total was asset finance of smart meter installations and lithium-ion batteries.
• Refinancing and acquisitions of clean-energy projects also reached an all-time high, at $128 billion, up 4% from 2016.

-Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine)

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