Massive flows of finance are needed to accelerate renewable energy investments. More investment in renewables would reduce energy-related carbon emissions, a key element in efforts to limit global warming.
The International Renewable Energy Agency (IRENA) and CPI have produced a concise, accessible summary of finance flows to renewables around the world. The study examines finance flows worldwide in 2013-2016, broken down by technology, financial instrument, and region.
Although investment in renewables dipped in dollar terms in 2016-2017, they have continued to gain ground against conventional energy sources, particularly for new power plants.
Following the format of CPI’s Global Landscape of Climate Finance series, the report highlights correlations between renewable energy finance, cost reductions, and megawatts and installed.
Report findings include:
- Renewable energy capacity has grown at record-high levels, even as investment has dipped in dollar terms in 2016. Investment levels are highly responsive to policy changes.
- Offshore wind investment has risen steadily – quadrupling in 2013-2016 – and is poised for further growth.
- Private sources provide the bulk of renewable energy investment globally – over 90% in 2016. Conventional debt and equity are the most prominent financing instruments.
- But public finance can play a key enabling role – covering early-stage project risk and getting new markets to maturity. Public spending on policy implementation far outweighs public investments.
- Project developers account for about two-fifths of private investment in the sector. Institutional investors – pension funds, insurance companies, sovereign wealth funds and others – only make up less than 5% of new investments.
- Private investors overwhelmingly favour domestic renewable energy projects (93% of the private portfolio in 2013-2015), whereas public investment is more balanced between in-country and international financing.