Trends in Renewable Energy Investments

 It goes without saying that clean energy is better for the planet, and humanity, than energy derived from fossil fuels. Marginalized communities will benefit from access to energy through off-grid systems, reduced greenhouse gas emissions and an overall improvement in the resiliency of our existing energy infrastructure.

The world has a unique opportunity to accelerate clean energy deployments by putting renewable energy at the heart of the COVID-19 economic recovery plans. While there is great progress seen being made over the last decade, there is still room to do more and nations along with corporations have to make more ambitious clean energy commitments over the next decade. For example, according to the latest United Nations Environmental Program report on clean energy investment trends, nations have made commitments for 826GW of new non-hydro renewable power capacity by 2030, which will come at a cost of around $1 trillion. However, even these commitments fall short of what is needed to limit the rise in global temperate to less than 2 degrees Celsius under the Paris Agreement.

If governments take advantage of the ever-falling prices of renewables, instead of subsidizing the recovery of fossil-fuel industries, they can take a pivotal step towards clean energy acceleration, which ultimately will be our greatest insurance policy against future global pandemics.

Fortunately, investors and markets are becoming increasingly convinced of the reliability of renewable energy investments. Renewables such as solar and wind power already account for almost 80% of newly build capacity for electricity generation. In 2019, renewable energy capacity investment was $282.2 billion. One of the noticable trends in recent years has been the widening geographical spread of investments in renewables. The top 5 countries with investments in renewables capacity building in 2019 have been China, USA, Japan, India and Taiwan.

If you look at the lifetime cost of generating electricity from  clean energy sources such as wind or solar power, there has been a constant decline. The levelized cost, which not only takes into account the expenses of buying the equipment and constructing the plant, but also developing it through th permitting stages and operating and maintaning it, have evolved significantly over the last decade. Prices for solar have come down from $300/MWh in 2009 to $70/MWh in 2019. Companies such as Distributed Energy, an energy aggregator that offers investment opportunities in clean energy across several geographies, are able to further cut down costs of deployments by leveraging finance, technology and innovation.

In the public markets, investments in renewable energy companies grew 11% to $6.6 billion in 2019. The progress over the last decade has shown that the energy transition is in full swing, with the highest capacity of renewables financed ever. However, while the last decade produced huge progress, official targets for 2030 are far short of what is required to address climate change. As the world settles in to the current COVID-19 crisis era, governments will in parallel need to strenghten their ambitions and targets on renewable power.