Renewables 2016 Global Status Report

04 investment flows

Vermont, United States Created: 2013
Participating utility customers: 49 | Capacity: 114kW solar PV

Citizens’ involvement beyond the community’s border
Vermont’s first community-owned solar facility in Putney serves 49 customers across nine counties. The customers not only consume the renewable electricity generated by the solar PV plant, but also financially participate in the utility and collectively own the facility. The project – a joint effort with the solar developer – enables citizens without suitable roofs or spaces to engage in bringing solar energy to their community. Working together with their local utility, this community demonstrated the potential for successful partnerships with the private sector to bring renewable energy to the local level.

Global new investment in renewable power and fuels (not including hydropower projects >50 MW) was USD 285.9 billion in 2015, as estimated by Bloomberg New Energy Finance (BNEF)­i. This represents a rise of 5% compared to the previous year and exceeds the previous record of USD 278.5 billion achieved in 2011ii. Investment in renewable power and fuels has exceeded USD 200 billion per year for the past six years. ( See Figure 35.)
Including investments in hydropower projects larger than 50 MW, total new investment in renewable power and fuels was at least USD 328.9 billion in 2015iii. 1 Note that these estimates do not include investment in renewable heating and cooling technologies. ( See Reference Tables R14 .)

In 2015, global investment in new renewable power capacity (excluding hydropower >50 MW), at USD 265.8 billioniv, was more than double the USD 130 billion allocated to new coal- and natural gas-fired generation capacity. This represents the largest difference in favour of renewables to date. If hydropower projects >50 MW are considered, the spread between renewables and fossil fuel investment in new power capacity is even greater.

Figure 35. Global New Investment in Renewable Power and Fuels, Developed, Emerging and Developing Countries, 2005–2015

i This chapter is derived from UNEP’s Global Trends in Renewable Energy Investment 2016 (Frankfurt: 2016), the sister publication to the GSR, prepared by the Frankfurt School–UNEP Collaborating Centre for Climate & Sustainable Energy Finance (FS-UNEP) in co-operation with BNEF. Data are based on the output of the desktop database of BNEF, unless otherwise noted, and reflect the timing of investment decisions. The following renewable energy projects are included: all biomass and waste-to-energy, geothermal and wind generation projects of more than 1 MW; all hydropower projects of between 1 and 50 MW; all solar power projects, with those less than 1 MW estimated separately and referred to as small-scale projects or small distributed capacity; all ocean energy projects; and all biofuel projects with an annual production capacity of 1 million litres or more. For more information, please refer to the FS-UNEP/BNEF Global Trends report. Where totals do not add up, the difference is due to rounding.

ii Note that declining costs of some renewable energy technologies (particularly solar PV and wind power) have a decremental impact on total investment (all else being equal). Thus, growth in investment (monetary) does not reflect actual growth in installed renewable power capacity.

iii Investment in large hydropower (>50 MW) is not included in the overall total for investment in renewable energy. BNEF tracks only hydropower projects of between 1 MW and 50 MW, but it does make estimates for hydro >50 MW.

iv This number is for renewable power asset finance and small-scale projects. It differs from the overall total for renewable energy investment (USD 285.9 billion) provided elsewhere in this chapter because it excludes biofuels and some types of noncapacity investment, such as equity-raising on public markets and development R&D.

Asset finance of utility-scalei projects such as wind farms and solar parks dominated investment in 2015 at USD 199 billion, or 6% above 2014. Small-scale solar PV installations accounted for the remainder, at USD 67.4 billion worldwide. Distributed solar PV systems are gaining ground in many developing countries as immediate and affordable alternatives to centralised, grid-based power systems.

For the first time in history, total investment in renewables (excluding large hydro) in developing countries exceeded that in developed economies. The developing world, including China, India and Brazil, committed a total of USD 156 billion, up 19% compared to 2014. China played a dominant role in this turnaround, increasing investment by 17% to USD 102.9 billion, or 36% of the global total. In 2015, renewable energy investment also increased significantly in India, South Africa, Mexico and Chile. Other developing countries investing more than USD 500 million in 2015 included Morocco, Uruguay, the Philippines, Pakistan and Honduras.

By contrast, investment in developed countries as a group declined by 8% in 2015, to USD 130 billion. The most significant decrease in investment was seen in Europe, down 21% to USD 48.8 billion, despite its record year financing offshore wind (USD 17 billion, up 11% from 2014). In the United States, investment (dominated largely by solar power) increased by 19%, the country’s largest increase since 2011.

Investment in renewable capacity has been weighted increasingly towards wind and solar power. In 2015, investment in solar power capacity was up 12% to USD 148.3 billion, while investment in wind power capacity advanced 9% to USD 107 billion. Investment in other renewable capacity declined in the same period: biomass and waste-to-energy dropped 46% to USD 5.2 billion, small-scale hydropower dropped 26% to USD 3.5 billion, geothermal slipped 25% to USD 1.8 billion and biofuels dropped 67% to USD 669 million.

i “Utility-scale” in this chapter refers to wind farms, solar parks and other renewable power installations of 1 MW or more in size, and to biofuel plants of more than 1 million litres’ capacity.

Figure 36. Global New Investment in Renewable Power and Fuels, by Country/Region, 2005–2015

Investment by Economy

The shift in renewable energy investment from developed to developing and emerging economies is not surprising, as the latter have a rapidly rising electricity demand and need the most additional power generation capacity. Although the developed world has provided substantial financial support for the development and deployment of renewable energy technologies over the past three decades, such support has declined in many countries in recent years. At the same time, the falling costs of renewable energy technologies, mainly solar and wind power, have made projects viable in resource-rich developing and emerging economies, as well as in more locations in developed countries.

Trends in renewable energy investment varied by region in 2015, with increased investments in China, India, Africa and the Middle East, and the United States, and decreased investments in Canada and Europe. (See Figure 36.) The top 10 national investors consisted of six developing countries (four of which are BRICSi countries) and four developed countries. China led with more than double the investment of the next largest investor, the United States, followed by Japan, the United Kingdom and India. The next five were Germany, Brazil, South Africa, Mexico and Chile. While China, the United States, Japan and the United Kingdom maintained their positions relative to 2014, India moved up to displace Germany, which saw a sharp drop in investment. South Africa, which had slipped off the top 10 list in 2014, ranked eighth in 2015, and Mexico and Chile ranked among the top 10 for the first time in 2015.

i The five BRICS countries are Brazil, the Russian Federation, India, China and South Africa.

China witnessed the strongest dollar increase (up 17%) and accounted for USD 102.9 billion (including R&D) of new investment in renewable energy. Most of this total (USD 95.7 billion) was in asset finance, with USD 5.5 billion invested in small-scale projects. Wind power led investments in utility-scale projects, attracting USD 47.6 billion of asset finance, compared with USD 44.3 billion for solar power. Offshore wind had a breakthrough year in China, with nine projects financed for an estimated USD 5.6 billion. The country also invested significant sums in large-scale hydropoweri, commissioning 16 GW of new projects during the year, a large portion of which was projects >50 MW.2 (See Hydropower section in Market and Industry Trends chapter.)

The United States, which invested USD 44.1 billion (including R&D), continued to be the largest individual investor among developed economies. The increase was due primarily to utility-scale and rooftop solar PV. In terms of finance types, venture capital and private equity finance for renewables increased to USD 2.2 billion. Asset finance of utility-scale renewable energy projects rose 31% to USD 24.4 billion – solar increased 37% (USD 13 billion) and wind was up 24% (USD 10.6 billion). The rebound in wind asset finance and utility-scale solar PV investment in 2015 was driven largely by the on-off saga of national investment and production tax credits during the previous year.

i The Chinese government estimates that China invested USD 12 billion (CNY 78 billion) in 2015, down 17% from 2014, including hydropower facilities of all sizes, per National Energy Agency of China, National Electric Power Industry Statistics, sourced from the National Energy Board, 15 January 2016,; and National Energy Administration of China, National Electric Power Industry Statistics, sourced from the National Energy Board, 16 January 2015,

Japan’s investment of USD 36.2 billion (excluding R&D) remained relatively unchanged from 2014. Approximately 88% of total investment went to small-scale solar PV projects, driven by the country’s generous solar feed-in tariff. Japan accounted for most of the investment in the Pacific, excluding China and India, where investment was USD 47.6 billion, slightly below the 2014 total.

The United Kingdom saw a considerable rise (25%) in renewable energy investments – particularly for solar PV and wind power (both offshore and onshore) – to USD 22.2 billion (excluding R&D). Wind power was again the country’s best-performing sector, with USD 10.5 billion for offshore projects. This compared with USD 1.8 billion invested in small-scale solar PV.

Investment in India increased for the second consecutive year, for a total of USD 10.2 billion in 2015. India’s increase was due to a jump in utility-scale solar power financing, which reached USD 4.6 billion, up 75% on the previous year, a direct result of the new Indian government’s increased focus on renewable energy. USD 4.1 billion of asset finance was invested in wind power, an increase of 17% compared to 2014.

Apart from China, Japan and India, Thailand was the only other country in Asia to reach USD 1 billion in asset finance for renewables. Thailand was followed by the Philippines (USD  798 million), Pakistan (USD 723 million), the Republic of Korea (USD 395 million), Vietnam (USD 248 million) and Kazakhstan (USD 101 million).

Germany, which ranked sixth globally for total investment, saw overall financing fall by 46%, to USD 8.5 billion. This decline was a result of the changing policy framework. (See Policy Landscape chapter.) The total would have been even lower if not for investment in two large offshore wind projects, totalling USD 3.4 billion. Once Europe’s engine of growth for small-scale distributed solar PV, Germany saw its investment in this sector contract by 57% in 2015, to USD 1.3 billion. Europe in general saw investment fall 21% to its lowest total since 2006.

Brazil invested USD 7.1 billion in renewables, with wind power asset finance up 46% over 2014 to USD 5.7 billion; solar power projects received USD 657 million.

Elsewhere in the Americas (beyond Brazil and the United States), investment fell 3% to USD 12.8 billion. However, some countries saw significant growth. Mexico and Chile saw asset finance increase to USD 3.9 billion (more than doubling) and USD 3.4 billion (up 141%), respectively, and ranked ninth and tenth globally for total investment. Chile led the region for solar power by a large margin, investing USD 2.2 billion in the sector. Other Latin American countries with significant renewable energy investment were Uruguay (USD 1.1 billion), Honduras (USD 567 million), Jamaica (USD 167 million), Peru (USD 155 million) and the Dominican Republic (USD 129 million).

The Middle East and Africa saw investment increase from less than USD 1 billion in 2004 to a record USD 12.5 billion in 2015, thanks partly to South Africa’s successful Renewable Energy Independent Power Producer Programme (REIPPP). In South Africa, investment rebounded to USD 4.5 billion, up from USD 1 billion in 2014. Much of the investment in renewable energy occurred in the first quarter of 2015, which resulted from a delay in the financial close of the remaining projects from the Round 3 auction that occurred in 2014. The second largest investor in Africa was Morocco (USD 2 billion), followed by Kenya (USD 357  million), Uganda (USD 134 million) and Ethiopia (USD 100 million).

Investment by Technology

Solar power was again the leading sector by far in terms of new investment committed during 2015, accounting for USD 161 billion, or more than 56% of total new investment in renewable power and fuels (not including hydropower >50 MW). Investment in solar power was up 12% over 2014. Wind power followed with USD 109.6 billion, or 38.3% of the total (up 4%). The remaining 5.7% was made up of biomass and waste-to-energyi (USD 6 billion), biofuels (USD 3.1 billion), small-scale hydropower (<50 MW) (USD 3.9 billion), geothermal power (USD 2 billion) and ocean energy (USD 215 million). All technologies except solar and wind power saw investment decline relative to 2014: geothermal was down by 23%, ocean by 42%, biofuels by 35%, biomass and waste-to-energy by 42% and small-scale hydropower by 29%. (See Figure 37.)

Until 2014, developed countries (namely Germany, Italy and Japan) dominated investment in small-scale solar power. In 2015, China, India, Chile, South Africa and other developing and emerging countries ramped up deployment of both utility- and small-scale investment in solar PV, and to some extent concentrating solar power (CSP), closing the gap to less than USD 1 billion; solar power investment in developed countries was USD 80.8 billion, compared to USD 80.2 billion in developing and emerging economies.

A similar trend has been seen with wind power. In 2015, developing and emerging countries invested USD 67.4 billion in wind power, while developed countries invested only USD 42.2 billion.

Although BNEF does not track detailed statistics for large-scale hydropower (projects greater than 50 MW in size), this was the third most important sector for renewable energy investment in 2015 (after solar and wind power). Translating hydropower capacity additions into asset finance dollars per year is not straightforward because the average project takes four years to build. However, BNEF estimates that asset financing for large-scale hydropower projects reaching financial go-ahead in 2015 totalled at least USD 43 billion.

Figure 37. Global New Investment in Renewable Energy by Technology, Developed and Developing Countries, 2015

i Includes all waste-to-power technologies, but not waste-to-gas.

Investment by Type

Global research and developmenti (R&D) spending was almost unchanged in 2015, at USD 9.1 billion.

Government R&D was down 3% relative to 2014, to USD 4.4 billion, and corporate R&D was up by 3% (to USD 4.7 billion). China’s level of R&D spending challenged Europe’s for the first time; spending in Europe fell 8% compared to 2014 while that in China rose 4%, with each investing USD 2.8 billion. In third place, the United States spent USD 1.5 billion, a modest increase of 1%.

Total R&D spending on solar power rose 1% to USD 4.5 billion. For the fifth year in a row,, R&D spending for solar power equated that for all other sectors combined, and it was approximately 2.5 times that of the next closest technology, wind power. Investments in wind power were unchanged over 2014, at USD 1.8 billion. Investment in biofuels was down 3%, to USD 1.6 billion.

Asset finance of utility-scale projects accounted for the vast majority of total investment in renewable energy. It totalled USD 199 billion during the year, an increase of 6% relative to 2014.

Small-scale distributed capacity investment, largely rooftop solar PV, was USD 67.4 billion. Falling costs and innovative financing mechanisms are putting small-scale distributed solar PV within reach of more people in developed, emerging and developing economies.

Public market investment in renewable energy companies and funds fell 21%, to USD 12.8 billion. However, it remained three times higher than the total in 2012. Funds raised by initial public offerings (IPOs) fell by 35% relative to 2014, to USD 2.3 billion. However, secondary issues and private investment in public equity (PIPE) rose by 4% to a new record of USD 6.7 billion.

Investment via public markets in “yield companies” (yieldcos) started to emerge in 2013, with investors seeing this model as providing steady dividend income at relatively low risk, at a time of record-low interest rates. The noteworthy overall figure for public markets investment in 2015 (USD 12.8 billion) hides the fact that the year saw disproportionate equity-raising by renewable energy companies, with North American yieldcos and their European equivalents accounting for nearly half of the total. The yieldco model came under closer examination in the second half of 2015 in response to a sudden reassessment by investors of whether yieldcos were really growth stocks, and to a resulting sell-off.

Venture capital and private equity investment (VC/PE) in renewable energy increased by 34% to USD 3.4 billion in 2015, the second consecutive year of growth. Investment in early-stage venture capital jumped 60%, although from a very low base. There was a more modest 28% increase in late-stage venture capital, while private equity made solid gains of 32%. As in previous years, solar power companies led the field with USD 2.4 billion in venture capital and private equity investment, representing an increase of 58% compared to 2014. Due in part to the falling costs of solar PV, venture investors have begun to shift their focus away from improving the performance of the hardware, to making solar technologies available to new markets and previously unreachable sectors of society – for example, the development of mobile-enabled solar systems for off-grid communities in developing countries. (See Distributed Renewable Energy chapter.)

Acquisition activity – which is not counted as part of the USD 285.9 billion in new investment – jumped to a record USD 93.9 billion, up 7% compared to 2014. The scale of this total is a sign of how large the renewable energy sector has grown in terms of both annual sales and installed capacity. These figures include corporate mergers and acquisitions (M&A); power infrastructure acquisitions and debt refinancing; private equity buy-outs; and the purchase of stakes in specialist companies by trade buyers.

Corporate M&A – the buying and selling of companies – increased by 63% to USD 19.2 billion. This increase represents a substantial change from 2014, when corporate M&A fell 35%. Similar to past years, the largest category of acquisition activity was asset purchases and refinancing, which totalled USD 69.3 billion in 2015, down 3% from the all-time high reached in 2014. Public market investor exits were almost unchanged, at USD 1.8 billion, but private equity buy-outs increased some 36% to USD 3.5 billion. As usual, acquisition activity was dominated by wind power (at USD 57.6 billion) and solar power (at USD 29.4 billion).

i See Sidebar 5 in GSR 2013, “Investment Types and Terminology”, for an explanation of investment terms used in this section.

Sources of Investment

Debt makes up the majority of the investment going into many utility-scale renewable energy projects, either at the project level in the form of non-recourse loans, bonds or leasing; or at the corporate level in the form of borrowings by the utility or project developer. In 2015, commercial banks provided most of the project-level debt for wind farms and solar parks in established markets such as Europe, North America, China and India.

Bonds have been an alternative to conventional bank project finance for many years. Issuance of green bonds hit a new record of USD 48 billion in 2015, up 28% compared to 2014. A significant proportion of the green bond issuance came from development banks, commercial banks and utilities. Project bonds accounted for a relatively small fraction of the world market for green bonds.

Apart from commercial banks and bond issues, the other major source of debt for renewable power assets is borrowing directly from the world’s array of national and multilateral development banks. Aggregate figures for development bank lending to renewables in 2015 were not yet available at the time of publication. Among those that released preliminary figures in early 2016, the European Investment Bank lent USD 3.4 billion to renewable energy in 2015, down 42% from 2014; Germany’s KfW indicated that its renewable energy programme provided EUR 4.5 billion (USD 4.9 billion), up from EUR 4.1 billion (USD 4.48 billion); and Brazil’s BNDES provided USD 1.8 billion to wind power projects, with lending up by 85% in 2015.

Utilities continued to be an important source of equity for renewable energy projects at the development or pre-construction stage. Institutional investors such as insurance companies or pension funds tend to be more risk-averse and therefore interested in the predictable cash flows of an operating-stage project. In Europe, direct investment by institutional investors totalled USD 1.1 billion in 2014.

The year 2015 also saw several new approaches for channelling debt and equity financing into renewable power projects worldwide. This involved the establishment of platforms through which institutional investors could have exposure to the equity of clean energy assets but with the reassurance of having a technically experienced bank involved alongside them. These are akin to unquoted funds, except that the manager is an investment bank that invests its own capital, rather than a conventional private equity or infrastructure fund manager.

Early Investment Trends in 2016

Global investment in renewable energy was USD 52.7 billion in the first quarter (Q1) of 2016, down 12.5% from Q1 in 2015 (USD 60.2 billion). There were substantial wind power investments in the United Kingdom and Norway; the decrease was due largely to a decline in investment activity in China (USD 11.8 billion in Q1), down 50% from Q4 and 37% lower than in Q1 2015. The reason for this drop in China was a pause in investment following a rush by wind and solar power developers in late 2015 to qualify for electricity tariffs that were set to expire.

Investments in Europe were strong in early 2016, bucking the trend of recent years. This was thanks largely to three billion-dollar wind power projects that boosted Q1 investment to USD 17 billion, up by 23% compared to Q4 in 2015 and up by no less than 70% compared to Q1 in 2015. Investment in the United States rose 9% compared to the first quarter of 2015 (at USD 9.4 billion), and in India it was up 6% (USD 1.9 billion). Large projects also were financed in Africa in early 2016: the 300 MW Grand Para solar PV installation in Djibouti and the 140 MW Olkaria V geothermal plant in Kenya.

Brazil (down 27% compared to Q1 in 2015 to USD 1 billion) and Japan (down 19% to USD 6.8 billion) also saw declines in early 2016. South Africa recorded almost no deals in Q1 2016, compared to USD 3.7 billion in the same quarter of 2015, due to the timing of its auction rounds. Chile, Mexico and Uruguay also had quiet starts to 2016.

Asset finance of utility-scale renewable energy projects amounted to USD 34.3 billion worldwide in Q1 2016, down 16% compared to the same quarter in 2015. Small-scale solar projects (< 1MW) represented the second-biggest category of spending, worth an estimated USD 17.4 billion in Q1, up 3% compared to Q1 in 2015.


Investment Flows

  1. The BNEF estimate for investment in large hydropower (>50 MW) is based on about 26.3 GW. BNEF estimates that large hydro projects totalling some 26.3 GW received financial go-ahead in 2015, equivalent to around USD 43 billion of asset finance. Costs per MW for large hydro vary significantly from region to region, and this is why investment was estimated by BNEF to be lower in 2015 than in 2014 even though the capacity financed in 2015 was significantly higher. Estimating the value of large hydro dams reaching ‘final investment decision’ stage in any given year is complicated by the fact that many projects begin initial construction several years before the point of no return, or even the award of full permitting, is reached. Some also run into delays during the long construction process. (See Hydropower section in Market and Industry Trends chapter.)
  2. National Energy Agency of China, National Electric Power Industry Statistics, sourced from the National Energy Board, 15 January 2016,