Developing countries invested more in renewable energy than their developed counterparts for the first time last year, according to a report commissioned by the UN Environment Programme (UNEP).
Investment in large-scale renewable projects such as solar and wind farms totalled $72 billion in the developing world, outstripping industrialised economies by $2 billion in 2010. China accounted for 70 per cent, pumping $50 billion into clean energy projects, mostly in the form of wind technology. Excluding the BRIC countries, the Middle East and Africa saw the biggest jump in investment, doubling to $5 billion.
Udo Steffens, president of the Frankfurt School of Management that collaborated with UNEP on the report, said the trend was likely to continue: “The investment activity in the developing world is not only leading to innovations in renewable energy technologies” he said. “It will also open up new markets, as first mover investors are facilitating a range of new business models supporting entrepreneurship in the developing world”.
With Chinese investment soaring, Europe may be in danger of falling away. Chinese companies have leapfrogged the west as leading producers of solar panels and wind turbines over the last two years but positive growth is not matched on the continent, where investment in large-scale renewable projects was down 22% from 2009. In contrast to the developing economies, European green investment was concentrated on smaller scale projects such as rooftop solar installations in Germany.
However, in a record year for renewables, worldwide investment reached $211 billion, up a third on 2009. Green energy now accounts for over 5% of the world’s total power generation but is still below the targets of most developed nations. The EU has a base target of 20 per cent of total power generation from renewables by 2020.
The report also predicts further drops in the costs of solar and wind technologies. Wind turbine prices have dropped 18 per cent per megawatt in the last two years but the low price of natural gas continues to hurt the green sector. Competition from generators burning cheap gas contributed to a drop in clean energy share prices of nearly 15 per cent and M&A in the form of takeovers and acquisitions of windfarms, also fell 10 per cent in 2010.