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Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

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$329 Billion Invested in Clean Energy in 2015

Last year was a record year for clean energy investment, and 2016 should be even better.

That comes from Bloomberg New Energy Finance (BNEF), which publishes global figures on the clean energy sector. According to BNEF, the world saw an all-time high of $329 billion invested in clean energy in 2015, which beat the previous record of $318 billion set back in 2011.

The main takeaway from the BNEF report is that the epochal transition from fossil fuels to clean energy is very much underway. Find that hard to believe? Consider this: solar and wind alone accounted for 121 GW of new electric generation capacity in 2015, about half of the total new capacity installed. That came even as oil and gas prices plunged to their lowest levels in more than a decade. In other words, as Michael Liebrich of BNEF put it, “[t]he world is now adding more renewable energy generating capacity than non-renewable.” Related:The Condensate Con: How Real Is The Oil Glut?

Or consider this: in the same week that BNEF announced that the clean energy sector saw a record $329 billion in investment, Wood Mackenzie said that $380 billion worth of oil exploration projects have been cancelled. While the damage done to the oil and gas industry has been self-inflicted, the shift in capital is notable and could be a harbinger of what is to come. Clean energy saw record investment even while oil and gas prices plunged.

Underpinning the strong growth for new solar and wind are falling costs for equipment and installation, stronger companies with competitive supply chains, and increasingly supportive policy. The Paris climate agreement reached in December, although non-binding, will add more momentum to clean energy moving forward. Liebrich of BNEF said the Paris agreement was the equivalent to “the world serving divorce papers to the fossil fuel industry.” Also, the U.S. Congress extended expiring solar and wind tax credits through the end of the decade.

What many may not know about the clean energy sector in 2015 is that China alone accounted for more than $110 billion in clean energy investment, or nearly one-third of the total investment dollars. China is cracking down on its coal consumption (and even on coal production), while aggressively installing new solar and wind. China will again be the largest clean energy market in 2016, BNEF says. China had a handful of 300 MW offshore wind projects receive investment in 2015, for example. Related: Is This The Bottom? Balance In Oil Markets Closer Than Many Think

The U.S. saw clean energy investment jump by 8 percent in 2015, with rooftop solar leading the way. Still, the total $56 billion invested is still half of the level seen in China. Nevertheless, the U.S. will be a key growth market moving forward.

Elsewhere, Brazil saw clean energy investment fall by 10 percent as the country entered its worst recession in recent memory. India, on the other hand, achieved an impressive 23 percent increase in investment. BNEF says that India is one of the key countries to watch – the government of Prime Minister Narendra Modi has issued ambitious clean energy goals, which will require a rapid increase in investment over today’s figures if they are to be reached. BNEF also highlighted other emerging clean energy markets: Mexico ($4.2 billion), Chile ($3.5 billion), South Africa ($4.5 billion), and Morocco ($2 billion) all have billion-dollar clean energy sectors.

A few interesting developments for clean energy could unfold in 2016 and beyond. BNEF’s Liebrich predicts that solar could overtake wind in terms of new capacity additions. The only other time that such a thing occurred was in 2013 when wind tax credits in the U.S. expired and wind installations fell. BNEF predicts that the world will see 67 GW of new solar PV in 2016, compared to wind’s expected 63 GW.

Also, while it is still a little early, BNEF sees energy storage as unlocking even more growth for clean energy as issues with variability are addressed. Lithium-ion batteries continue to see cost declines, and 2016 could see 750 MW of new energy storage. While very small by global standards, it is double the 2015 figure. The sector is still maturing, but will see rapid growth. Around 11 GW of cumulative energy storage could come online by 2020, although there is some uncertainty around that prediction. Related: $20 Oil No Longer Seen As Good For The Economy

There are a few dark clouds on the horizon that could upset the banner year for clean energy. China’s economic problems could put a dent in investment. The U.S. Federal Reserve raising interest rates, and supporting a strengthening of the U.S. dollar, will increase the cost of capital for new solar and wind projects. And while cheap fossil fuels did not head off the clean energy boom in 2015, persistently low oil and gas prices could prevent much stronger growth.

Still, the clean energy sector is now a-third-of-a-trillion-dollar industry, BNEF says, with much more room on the upside. The transition to clean energy is already underway and there is probably no going back.

By Nick Cunningham of Oilprice.com

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Leave a comment
  • Carl on January 20 2016 said:
    Its amazing what we can do when the government subsidizes it. Now that most countries are bankrupt, what will we do when solar panels and wind turbines need replacing in 20-25 years?
  • Lee James on January 20 2016 said:
    We may want to watch the growth of installed capacity (mW) more than the number of dollars invested. The reason is: efficiency gains. When you double efficiency every few years for the same amount invested, installed capacity leaps ahead. This is unlike what we are accustomed to with fossil fuel generation.

    I agree with the author that we are probably not going back. Clean energy is the future.
  • Eric Jennings on January 21 2016 said:
    "and 2016 should be even better."

    Well, maybe.

    "Flare Out? Mega-solar company slashing jobs despite gov't benefits"


    "SolarCity, owned by billionaire Elon Musk, is now contending with mass layoffs, plummeting stock and mounting debt.

    “This is what happens when you have a government that artificially props up a sector with subsidies so it can generate more production than they otherwise would,” said energy analyst Nick Loris, a research fellow with the conservative Heritage Foundation."

    I saw the link to this OilPrice.com article on Real Clear Politics. Right next to it is an article titled, "Nuclear, the clean energy future?"

    So I guess the operative question at the moment is, "How many hours would a nuke plant have to run to produce all the electricity currently generated in the U.S. from solar and wind power?" Four? Five? Given the massive difference in output, you wouldn't think it'd be much. The last I heard, every solar panel combined produced a whopping 1% of our energy needs, streaking up to 2.6% when wind power was included.
  • Jimfact on January 22 2016 said:
    Okay, so your including every solar panel purchased as investment? When your govt local, state, federal (taxes) can offer to pay for 80% of that investment? This is a subsidy for the rich who can pay the 20% and have electric bills high enough to pay back that investment. Are you including caulking your windows as 'clean'? Your numbers are full of crap. 121GW? Seriously? That is about half of all new sources of energy? How much of that is Nuclear? A wind mill will never pay for itself w/o govt subsidies. The reason is because their GE Dynamo will need replacement in 8 years and to replace that dynamo costs more than building a new windmill. Since a windmill requires 18 yrs w/o subsidy to pay for itself it could never pay for itself just in the cost of the raw copper for the dynamo to generate the electricity.

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