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Solar technologies tops list of investments

Oct 11, 2012

Spurred by growing anxiety over sustainability and the environmental impact of fossil fuels, the world is reaching for clean power with renewed energy, according to a recent Worldwatch Institute report.

Fresh research on renewable energy from Worldwatch Institute's Climate and Energy Program shows that the world is putting its money where its mouth is. In 2011, total investment on clean fuels, excluding hydro and solar, jumped to US $ 257 billion from US $ 210 billion. Alongside, the world spent $ 40 billion more on building capacity for renewable power as compared to fossil-fuel.

These moves reflect the growing global anxiety on the sustainability of fossil fuels, their adverse impact on environment and the falling costs of renewable energy technologies. Worldwatch conducted the study for the Vital Signs Online service.

Industrial countries contributed $ 168 billion or 65 per cent of the global investment on renewable energy in 2011, translating into an increase of 21 per cent to over the previous year. Of the remaining 35 per cent, totaling $ 89 billion, China, India & Brazil accounted for 10 per cent. In 2011, industrial countries invested more in renewable energy installations than the developing nations, reversing the 2010 trend, when for the first time the opposite was true.

The year was particularly sunny for solar power as it attracted $147.4 billion in investments as compared to $83.8 and $10.6 billion by wind and biomass technologies respectively. Never before had solar outstripped wind by such a wide margin.

Biofuels, which as recently as 2006 ranked second in the renewable energy pecking order, attracted the fourth highest total investment of $6.8 billion, followed by $5.8 billion by small hydro and $2.9 billion by geothermal installations. Marine energy technologies received only $200 million, as they had not yet been commercially deployed.

China attracted $52.2 billion in new investments in 2011, the highest for any country, representing nearly 60 per cent of the total new investments across all developing countries and more than 20 per cent of the global total. In terms of the pace of growth, however, the investments in the US grew by an impressive 57 per cent growth, next only to India’s 62 per cent. Overall, the US ranks second in total national renewable energy investment at $50.8 billion, followed by Germany at $31 billion.

According to the International Energy Agency, 90 per cent of the growth in global demand for energy over the next 25 years will come from developing countries. In view of this renewable energy already receives the lion’s share of funding from "climate finance" funds, which aim to help poorer nations meet their development challenges. Significant new investment on cleaner energy is required to reduce the proportion of fossil fuels in the total energy consumed by the world and thereby check greenhouse gas emissions and contain global warming within a 2-degrees-celsius range. IEA estimates that $48 billion per year is needed to provide universal modern electricity access by 2030.

"Renewable energy technologies can enhance access to reliable, affordable, and clean modern energy services," said Evan Musolino, Climate and Energy Research Associate and report co-author. "They are particularly well suited for remote rural populations, and in many instances they can provide the lowest-cost option for energy access. For these potentials to be met, new investment in the sector is essential."

Report Highlights:
•    Driven by a 52 per cent growth, solar technologies topped the list of investments in renewable energy.
•    Investments in power projects with capacities of less than 1 megawatt grew by 25 per cent to $75.8 billion in 2011.
•    In 2011 total R&D investment in renewable energy technologies fell 16 per cent to $8.3 billion and investments in venture capital and private equity fell by 6 per cent to $5 billion. However, asset financing----an indicator of current sector activity---- increased to $164 billion in 2011 from $139 billion in 2010.
•    Initial trends from the first two quarters of 2012 indicate that investment in the renewables sector is lagging the impressive pace set last year.

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