Worldwide investment in renewable energy rose 17 per cent in 2014 to $270 billion, throwing off the effects of lower oil prices.
It was a reversal of a downturn in interest in renewables over the past two years, according to the United Nations Environmental Program.
- Clean energy provides more jobs than oilsands, report says
- How market forces are winning the climate change battle
Solar and wind got the lions share of the investment, with a surge of spending in China and Japan helping to push the total higher.
Among the big spenders:
- China invested a record $83.3 billion, up 39 per cent from 2013.
- The U.S. invested $38.3 billion, up 7 per cent on the year.
- Japan invested $35.7 billion, its highest total ever.
- Europe invested $16.2 billion in offshore wind power.
In Canada, about $4.5 billion was invested in wind projects and about $2.8 billion in solar, according to the report.
Emerging economies invest
There has been acceleration of investment in renewable energy by emerging economies such as Brazil and China, UNEP reports, but spending is slowing in developed countries because of uncertainty over government incentives for renewable energy.
At the end of 2014, about 9.1 per cent of electricity worldwide came from wind, solar, biomass and waste-to-power, geothermal, small hydro and marine power, up from 8.5 per cent in 2013. About half of the new generating capacity created in 2014 was from renewables, UNEP found.
"These climate-friendly energy technologies are now an indispensable component of the global energy mix and their importance will only increase as markets mature, technology prices continue to fall and the need to rein in carbon emissions becomes ever more urgent." Achim Steiner, executive director of UNEP, said in a news release.
While much of the new investment was in large-scale power projects, additional new investment might be hampered by the problems of managing grids with large amounts of renewable power, according to the study.
Small scale projects grow
At the same time, the cost of solar panels and installation is falling and that’s made solar more attractive, especially in emerging economies where grids are not well developed, the report said. Investment in small-scale projects of less than 1MW rose by 34 per cent to $73.5 billion.
Researcher Udo Steffens of the Frankfurt School of Finance and Management said lower oil prices do not seem to have made a substantial difference in making decisions about investments in renewable.
"Oil and renewables do not directly compete for power investment dollars," said Steffens. "Wind and solar sectors should be able to carry on flourishing, particularly if they continue to cut costs per MWh."
The falling oil price might hurt investor confidence in solar in oil-exporting countries, Steffens said.
Private sector financing of renewable projects is on the rise with equity financing by renewable companies exceeding $15 billion in 2014.