Developing countries are now investing almost as much as developed countries in renewable energy, with 46 per cent of the global total in 2012, according to the UN Environment Programme.
Its latest report, Global Trends in Renewable Energy Investment 2013, confirms that a "geographic shift" is under way and that renewables account for an ever-growing share of electricity generation capacity added worldwide – including China.
Although global investments in renewable energy last year failed to top the year before, 2012 scored as the “second highest year ever” for the sector. The 12 per cent drop from 2011 is attributed to much lower prices for solar energy and weakened EU and US demand.
The continuing upward trend in developing countries saw investments topping $112 billion in 2012, compared to $132 billon in developed countries – a dramatic change from 2007, when the developed world invested 2.5 times more in renewables (excluding large hydro).
The 2012 global investment for renewable energy was $244 billion, bringing renewables capacity worldwide to 1,470 gigawatts – up by 8.5 per cent on the previous year. Altogether, since 2006 global investment in renewables is estimated at $1.3 trillion.
Wind power accounted for about 39 per cent of renewable power capacity added last year, followed by hydropower and solar photovoltaics (PVs), which each accounted for 26 per cent. Solar PV capacity also reached the 100-gigawatt milestone in 2012.
This puts solar ahead of bio-energy as the third largest renewable technology after hydro and wind. But the market has become distorted by China's "dumping" of solar panels in Europe, leading to the imposition of EU tariffs set to rise to 47.6 per cent in August.
The main issue holding back investment last year was “ongoing renewable energy policy instability in important developed-economy markets”, according to both the Unep report and another – the REN21 (Renewables 2013 Global Status Report).
Sharp falls in manufacturing costs and in the selling prices of wind turbines and PV panels also contributed to a "shake-out in the industry in 2012", said Unep executive director Achim Steiner.
But he insisted this was “normal” in such a rapidly-growing industry. “The uptake of renewable energies continues worldwide as countries, companies and communities seize the linkages between low-carbon green economies and a future of energy access and security, sustainable livelihoods and a stabilised climate.”
Of the 138 countries with renewables targets or policies in place, two-thirds are in the developing world while China "consolidated its position as the world's dominant renewable energy market player" with investment up last year by 22 per cent to $67 billion.
Elsewhere there were sharp increases in South Africa, Morocco, Mexico, Chile and Kenya, with the Middle East and Africa showing the highest regional growth of 228 per cent to $12 billion. In the US, however, investment was down 34 per cent to $36 billion.
Investment in Italy and Spain was hit by abrupt changes in policy and concern over future support for the sector. Germany added an impressive 7.6 gigawatts of solar capacity in 2012, but its overall investment in renewables slipped 35 per cent to $20 billion.
The brightest star among the developed countries was Japan, where investment in renewable energy surged by 73 per cent to $16 billion, thanks largely to a boom in small-scale solar boosted by new feed-in tariff subsidies and the aftermath of Fukushima. After the shift away from a nuclear power-dependent energy policy in the wake of the nuclear accident, the Tokyo electric power company commissioned its first three solar plants while Morocco approved the $1.2 billion Masen Ouarzazate solar thermal project.
Warren Buffett's MidAmerican Holdings launched an $850 million bond issue in February 2012 to finance its 550MW Topaz Solar Farm in California, only to see it oversubscribed by more than $400 million. Clearly, even pension funds are waking up to renewables.
Installed wind capacity also hit a new record of 48.4 gigawatts, up from 42.1 gigawatts in 2011. Dollar investments fell 10 per cent, however, while costs also fell with average prices paid for onshore turbines falling by a few percentage points.
Although a growing number of countries invest in renewable energy, the bulk of employment – 5.7 million – remains concentrated in a relatively small number of countries, including Brazil, China, India, member states of the EU and the US.