Investment in renewable energy surged again in 2011, according to two new reports issued by United Nations Environment Programme (UNEP) and the Renewable Energy Policy Network for the 21st Century (REN21).
Using data collected by Bloomberg New Energy Finance, the world's authority on cleantech financing, UNEP's Global Trends in Renewable Energy Investment 2012 report found that investment in renewable energy grew 17% to $253 billion in 2011, despite an increasingly tough competitive landscape. This is a six-fold increase from the investment numbers of 2004.
In relation, gross investment in fossil fuels in 2011 was $302 billion. Nevertheless, renewables continue to gain ground in the power sector. Last year, 44% of the power generated at new power installations came from renewable sources. This is up from 34% in 2010.
The big winner in 2011 appears to be the solar power. The industry saw investment grow 52% to $147 billion last year, making it the most attractive cleantech sector for investors -- surpassing wind power, the long-time favourite for clean energy financiers.
In response to the report, Dr. Udo Steffens, President and CEO of the Frankfurt School of Finance & Management, said: "Renewables are starting to have a very consequential impact on energy supply, but we're also witnessing many classic symptoms of rapid sectoral growth -- big successes, painful bankruptcies, international trade disputes and more. This is an important moment for strategic policymaking as winners in the new economy form and solidify.
The United States offers a fantastic case study for Dr. Steffens. New national energy policy focused around developing a new energy economy is completely impossible in the short-term. Nevertheless, other policies and regulations such as the Production Tax Credit for Renewable Energy helped spur a 57% increase in renewable investments in the U.S. last year, as companies scrambled to take advantage of the expiring incentives.
Renewable energy investment in the U.S. grew to $51 billion in 2011, almost returning the economic giant to the top of the list of global renewable energy investors. Only China, stands ahead of the United States. After supplanting the U.S. in 2009, China maintained its title as the world's largest cleantech financier by increasing its investments by 17% to $52 billion.
Despite the influx of capital and an increase in renewable energy capacity, solar power, for example, grew by 140% in 2011, the United States felt the pain of an expanding and maturing industry as several manufacturers filed bankruptcies. Solyndra, Beacon Power, Evergreen Solar, Stirling Energy, and most recently Konarka Technologies are the most notable companies that have been forced out of the market this year.
Critics, in particular, members of the Republican party, have pointed to these failings as a sign of an unstable, and deteriorating industry. Michael Liebrich, CEO of Bloomberg New Energy Finance, see the situation in a completely different light.
"Right now we are seeing a lot of pain on the supply-side as prices are being compressed, but it is important to remember that installers, generators and consumers are benefiting. It is all part of the maturing of the sector."
He continued, "In 1903, the United States had over 500 car companies, most of which quickly fell by the wayside even as the automobile sector grew into an industrial juggernaut. A century ago, writing off the auto industry based on the failures of weaker firms would have been foolish. Today, the renewable energy sector is experiencing similar growing pains as the sector consolidates."
Both the UNEP and REN21 reports join a symphony of reports concluding the single most important catalyst to developing a robust clean energy economy is implementing strong, stable renewable energy policies.
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