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Global Futures Report 2013 - Figure 5

33 € Finance experts interviewed in 2011 were quite optimistic about the clean energy sector in general. A typical expression was, “there is barely any renewable energy market that isn’t getting raised in discussions for investment.” One expert noted, “investors will reach the point—and this is happening already—where they perceive renewable energy as no more risky than ‘standard industrial risk’ for investments, equivalent to other standard forms of infrastructure investment.” Another said that, “by 2020, renewables will be the leading energy class for investment.”1 (Although global economic uncertainties in 2012 were clouding short-term business and investment prospects in many countries, such expert sentiments should be interpreted in a long-term context.) Global investment in renewable energy reached $260–290 billion in 2011, up from just $40 billion in 2004.a Solar PV received the largest share of annual investment, at $127 billion, followed by wind power at $84 billion. The year 2011 also saw record investment in solar thermal power (CSP) ($20 billion) and offshore wind power ($13 billion), offset by modest year-on-year declines in investment for biomass (to $11 billion in 2011) and biofuels (to $7 billion). Asset finance for utility-scale projects, biofuel refineries, and distributed projects together exceeded $160 billion. Globally, in 2011, net investment in renewable power capacity exceeded investment in all fossil fuel and nuclear power capacity combined. Since 2010, in fact, renewable energy has received more than half of new power- generation investment.2 Many finance experts interviewed in 2011 believed that annual private investment in renewables could exceed $500 billion annually by 2020. A few experts cited figures as high as $1 trillion by 2020. However, while most experts were generally optimistic about the opportunities for scaling up and extending many existing invest- ment sources and mechanisms, some also cautioned that there will be a clear need in the future to go beyond current financing sources. These experts asserted that utility balance-sheet finance, bank lending, private equity, and venture capital are only scalable to a certain point, and would not support $500 billion-plus annual investment levels; to reach these levels would require the involve- ment of other institutional investors and new equity sources at both small and large scales.3 Scenarios also show large investment volumes in the future, although estimates vary over a wide range. At the low end, the International Energy Agency (IEA) World Energy Outlook (2012) projects a $6.4 trillion total investment in renewable energy dur- ing the 23-year period 2012–2035, or an average of $280 billion per year. This is roughly equivalent to the actual investment volume in 2011, so the IEA’s projection does not show major growth in investment. Technology shares of this $6.4 trillion are led by wind power (33%), followed by hydro (24%), solar PV (20%), biomass and geothermal (12% together), and biofuels (6%). Investment in non- OECD countries accounts for fully half of the global total over the period 2012–2035, with larger investment shares for hydro relative to OECD countries, which in turn show larger shares for solar PV.4 Higher scenario projections for future investment better mirror the expert opinions noted previously. Bloomberg New Energy Finance (2011) projects $400 billion annual investment in renewable energy capacity by 2020, and $460 billion by 2030, three-quarters of which will be for wind and solar power. BNEF shows solar PV investment rising to $150 billion by 2020 and then remaining constant through 2030. It also shows wind power investment rising to $140 billion by 2020 and then $200 billion by 2030. And BNEF shows investment in biofuels, biomass, and waste-to-energy reaching $80 billion by 2020 and then declining slightly to $70 billion by 2030.5 Greenpeace, Average for 2011–2030 GEA, High Renewables by 2050 Expert Opinions of “Reasonable“ BNEF by 2030 BNEF by 2020 IEA WEO, Average for 2012–2035 2011 Actual $ €2000 400 600 800 1000 Billion USD Figure 5: Annual Investment Flows to Renewable Energy in Scenarios a) All dollar amounts in this chapter are in U.S. dollars. Investment data from Bloomberg New Energy Finance and Frankfurt School UNEP Collaborating Center, 2012, Global Trends in Renewable Energy Investment 2012. The numeric range shown here is approximated and reflects different reporting methods that include or exclude $10 billion for solar hot water and $25 billion for hydro projects larger than 50 MW. (Commonly reported BNEF figures exclude these items.) 03 Source: See Endnote 6 for this chapter. See Annex 2 for full scenario names and citations. Notes: All scenarios are 2012 except BNEF is 2011; figures are for renewable energy capacity additions, although accounting methods and counted investments vary across sources, see endnote.

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