Surge of investment in offshore wind projects worldwide sees clean energy project financing rise in 2018, but UK investment plummets 40 per cent

Global investment in renewable energy capacity hit $282.2bn in 2019, after a late surge of activity in the offshore wind sector drove a small one per cent uptick in clean energy financing for the year, new research from Bloomberg New Energy Finance (BNEF) today revealed.

The influential analyst firm said a subdued first few months of 2019 for renewable energy investment gave way to a busier second half of the year, with the wind energy sector in the US and the offshore wind industries in China and Europe all performing strongly.

Overall, worldwide capacity investment in offshore wind hit record levels last year, rising 19 per cent on 2018 levels to reach almost $30bn. The figure was almost $2bn higher than the previous offshore wind financing record which was reached in 2016, BNEF said.

The record came after a range of major offshore wind projects reached financial close late last year, including the $3.4bn Neart na Gaoithe 432MW project in Scotland and the $1.5bn 500MW Fuzhou Changle C installation in the East China Sea.

“Offshore wind developers in China brought forward 15 projects to beat a scheduled expiry of that country’s feed-in tariff,” said Tom Harries, head of wind research at BNEF. “We expect the sector’s global momentum to continue in 2020, with the focus on gigawatt-scale projects in the British North Sea and the first commercial arrays off the US east coast.”

Taking both onshore and offshore projects together, the global wind sector topped the renewable energy financing rankings last year reaching $132.2bn worldwide, up six per cent from 2018, according to BNEF. Solar was close behind, attracting $131.1bn of investment globally, marking a three per cent fall from the previous year as technology costs continued to decline.

“We expect the sector’s global momentum to continue in 2020, with the focus on gigawatt-scale projects in the British North Sea and the first commercial arrays off the US east coast.”

Thanks to rapidly falling capital costs for both wind and solar projects, BNEF estimated the two clean energy technologies combined are likely to have delivered 180GW of new capacity in 2019, up by around 20GW compared to 2018.

Other renewables technologies had a more mixed year, however. The figures indicate biomass and energy from waste projects enjoyed a nine per cent rise in investment to reach $9.7bn last year, but geothermal financing plummeted 56 per cent to just $1bn and biofuel financing fell 43 per cent to $500m. Small hydro project financing also saw a three per cent fall to $1.7bn.

On a national and regional basis, China was yet again the biggest investor in renewables, injecting $83.4bn into new capacity last year, although this is also down eight per cent on 2018 and represents the lowest level of investment in clean energy from the country since 2013, BNEF said.

In second place the US saw $55bn of renewable energy projects reach financial close last year, with a 28 per cent surge from 2018 thanks in part to a rush from wind and solar developers to qualify for federal tax credits, which are due to be scaled back in 2020.

And just behind the US last year after a seven per cent reduction in financing, Europe mobilised $54.3bn of investment in clean energy capacity, BNEF said. Spain led the way in Europe with $8.4bn of financing, up 25 per cent on 2018 to take the country to its highest annual figure since 2011.

But renewables investment in the UK was down 40 per cent to $5.3bn, its lowest figure since 2007, and Germany’s clean energy investment was also down 30 per cent to its lowest level since 2004 at $4.4bn. On the other hand, investment rose in the Netherlands, France, and Ukraine, BNEF said.

Pietro Radoia, senior associate for solar at BNEF, said the investment in solar in Spain – at $6bn last year – was particularly impressive “because these projects are going ahead at record-low costs per megawatt”.

“Developers are building PV parks on the back of low tariffs agreed in government-run auctions or, increasingly, without any subsidy support at all,” she said.

Elsewhere, the figures show Brazil’s renewables investment surged 74 per cent to $6.5bn in 2019, but investment levels fell across Japan, Australia, and India.

The results provide further evidence of both the growing cost competitiveness of renewables and the continuing failure of the sector to mobilise investment at a scale that is in line with the decarbonisation goals of the Paris Agreement.