Global investment in renewable energy reached a record $257 billion in 2011, with solar energy attracting nearly twice as much investment than wind power last year, according to a new report from the United Nations Environment Program (UNEP) and the Renewable Energy Policy Network for the 21st Century.
The report, which is based on data provided by Bloomberg New Energy Finance, found that despite an increasingly tough competitive landscape for manufacturers, total investment in renewable energy and fuels increased by 17% to a record $257 billion last year - a six-fold increase over the 2004 figure and 94% higher than the total in 2007.
Although last year's 17% increase was significantly smaller than the 37% growth recorded in 2010, it was achieved at a time of rapidly falling prices for renewable energy equipment and severe pressure on fiscal budgets in the developed world, the report notes.
In 2011, renewables continued to grow strongly in all end-use sectors (power, heating and cooling, and transport). Renewable sources have grown to supply 16.7% of global energy consumption. Of that, the share provided by traditional biomass has declined slightly, while the share sourced from modern renewable energy technologies has risen.
Renewable energy technologies also continued to expand into new markets - around 50 countries installed wind power capacity.
Renewable energy - excluding large-scale hydropower - accounted for 44% of all new generating capacity added worldwide in 2011 (up from 34% in 2010). This accounted for 31% of actual new power generated, due to lower capacity factors for wind and solar capacity.
On a capacity basis, wind power accounted for 40% of new renewable energy capacity added in 2011, while solar and hydropower rounded out the top three, at 30% and 25%, respectively.
By the end of last year, total renewable energy capacity worldwide exceeded 1,360 GW, up 8% over 2010, and renewables constituted more than 25% of total global power-generating capacity (estimated at 5,360 GW in 2011) and supplied an estimated 20.3% of global electricity.
Renewables accounted for almost half of the estimated 208 GW of electric capacity added globally during the year. At least 118 countries - more than half of which are developing countries - had renewable energy targets in place by early this year - up from 96 one year before, although some slackening of policy support was seen in developed countries.
The top seven countries for renewable electricity capacity (excluding large-scale hydro) were China, the U.S., Germany, Spain, Italy, India and Japan, which together accounted for about 70% of total non-hydro renewable energy capacity worldwide.
The U.S. surged back to within an inch of the top of the renewables investment rankings, with a 57% leap to $51 billion, as developers rushed to cash in on incentive programs before they expired in 2011 or 2012.
After leading the world for two years, China saw its lead over the U.S. shrink to just $1 billion in 2011, as it recorded renewable energy investment of $52 billion, up 17%. China again led the world in the installation of wind turbines and was the top hydropower producer and leading manufacturer of PV modules in 2011. Wind power generation increased by more than 48.2% during the year.
India's National Solar Mission helped to spur an impressive 62% increase to $12 billion, the fastest investment expansion of any large renewables market in the world. In Brazil, there was an 8% increase, to $7 billion.
In the European Union, renewable energy accounted for more than 71% of total electric generating capacity additions in 2011, with solar PV alone representing nearly half (46.7%) of new capacity coming on stream.
Germany remained the third-largest market for renewable energy investment, with renewable sources meeting 12.2% of total final energy consumption, and accounted for 20% of electricity consumption (up from 17.2% in 2010 and 16.4% in 2009).
The impressive deployment of all renewable energy technologies, combined with dramatic cost reductions and significant technology advances in recent years, create an important opportunity for rural renewable energy development that points to a brighter future, UNEP says.
However, further efforts will be necessary to reach the U.N.'s outlined objectives: Annual investment in the rural energy sector needs to increase more than fivefold to provide universal access to modern energy by 2030. Costs continue to drop The price of all major renewable energy technologies continued to fall in 2011 - to the point where they are challenging fossil-fuel sources, the UNEP report states.
The dominant reason for the price declines was that manufacturer margins were compressed as the industry continued the shift from a period of under-capacity a few years ago to overcapacity now as growing demand failed to keep up with a surge in supply.
In 2011, prices for onshore wind turbines to be delivered in the second half of 2013 were 25% lower than for devices delivered in the first half of 2009, according to the Bloomberg New Energy Finance Wind Turbine Price Index.
While 2011 saw significant falls in the costs of generating a megawatt of power from onshore wind (down 9%), and from PV technologies (down more than 30%), the cost of electricity generated by fossil-fuel sources changed less in most parts of the world - despite the sharp falls in U.S. natural-gas prices due to the increased use of "fracking.”
Based on current trends, it is predicted that the average onshore wind project worldwide will be fully competitive with combined-cycle gas turbine generation by 2016 - even in the U.S., where gas prices are expected to rebound to a point where they cover the cost of extraction, UNEP says. At present, this is true only of a minority of wind projects - those that use the most efficient turbines in locations with superior wind resources.
According to the report, stable renewable energy policies continue to be a driving force behind the development of green power capacity.
At least 118 countries - more than half of them in the developing world - have established renewable energy targets. These include shares of total primary energy, total end-use energy, electricity generation (typically 10% to 30%), heat supply, biofuels as shares of road transport fuels, and total installed capacities for specific technologies.
Support for renewable energy generation remains the most popular policy option, with at least 65 countries and 27 states now having feed-in tariffs (FITs). FIT payments vary widely among technologies and countries but are generally trending downward, mostly due to lower technology costs than expected.