Renewables investment reaches record highs

Elaine Maslin
Tuesday, April 7, 2015

Global investment in renewable energy reached record levels in 2014, including the record-breaking US$3.8 billion financing of the largest ever renewable energy plant, a Dutch wind farm project, a new report has shown.

Image from Siemens.

The report, by Frankfurt School FS-UNEP Collaborating Centre and Bloomberg New Energy Finance, describes 2014 as “a year of eye-catching steps forward for renewable energy.”

It says that in 2014, total investment in global renewables, excluding hydropower, reached $270.2 billion, a 17% increase on 2013.

The rate of increase in investment was particularly high in offshore wind, driven by Europe. Globally, $18.6 billion worth of offshore wind projects were financed in 2014, some 148% up on the previous year and 45% above the next highest year ever - 2010. Europe accounted for $16.2 billion of this, with China the remaining $2.4 billion.

No fewer than seven projects costing $1 billion or more reached “final investment decision” stage during 2014 in Europe. The region also saw the record busting $3.8 billion financing by 12 banks, three export credit agencies, the European Investment Bank and a Danish pension fund of the 600 MW Gemini installation in waters off the coast of the Netherlands – the largest ever go-ahead for a renewable energy generation plant (excluding hydro) anywhere in the world and the largest single renewable energy asset finance deal ever.

Gemini, comprising 150, 7m-diameter monopile foundation turbines and two offshore transformer stations, will be built about 85km north of the coast of Groningen. The wind farm will have a capacity of 600 MW and will produce roughly 2.6 TWh of renewable electricity. While many wind farms are starting to use larger turbines, Gemini will deploy smaller, 4 MW Siemens units, saying these are more efficient due to high wind speeds in the location, averaging Force 5. Work on the onshore station for the wind farm has started. Offshore work, comprising piling operations, will start this summer by Dutch contractor Van Ord, which also has a stake in the project. Gemini is 60% owned by Northland Power, a Canadian renewable energy company. The wind farm is due to be fully operational by 2017.

Image from Siemens.

The global increase in investment in renewable power was the first increase for three years, and reflected several influences, including a boom in solar installations in China and Japan, totaling $74.9 billion between those two countries, and the record $18.6 billion of final investment decisions on offshore wind projects in Europe, says the report.

“Once again in 2014, renewables made up nearly half of the net power capacity added worldwide,” says Achim Steiner, UN under-secretary-general and executive director of UNEP. “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.”

However, offshore wind has been facing cost headwinds. “Offshore wind had been traveling in the wrong direction on liveliest costs, seeing these increase from $151 to $203/ MWh over 2009-14, as project developers moved out into deeper waters and had to deal with bottlenecks in the supply of vessels and cables,” the report says. But, it says, the latest snapshot, for 1H 2015, shows offshore wind liveliest costs falling back again in dollar terms, helped by low debt costs and exchange rate effects.

Renewables also still face challenges from policy uncertainty in markets such as the US and the UK, as well as retroactive policy changes in countries such as Italy and Romania, and concerns about grid access for small-scale solar in Japan and some US states.

Renewables have, however, brushed aside the 50%-plus collapse in the oil price in 2H 2014. “Although the oil price is likely to dampen investor confidence in parts of the sector, such as solar in oil-exporting countries, and biofuels, in most parts of the world, oil and renewables do not compete for power investment dollars,” the report says. “Wind and solar sectors should be able to carry on flourishing, particularly if they continue to cut costs per MWh.”

“Oil and renewables do not directly compete for power investment dollars,” says Udo Steffens, president of the Frankfurt School of Finance & Management Steffens. “Wind and solar sectors should be able to carry on flourishing, particularly if they continue to cut costs per MWh. Their long-term story is just more convincing."

Categories: Offshore Wind Europe Oil Asia North America Canada Renewables Installation China

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