The slump in oil prices that’s brought upheaval and cost cutting to the traditional energy industry spared renewables such as solar and wind, which raked in a record $329.3 billion of investment last year.
The 4 percent increase in clean energy technology spending from 2014 reflected tumbling prices for photovoltaics and wind turbines as well as a few big financings for offshore wind farms on the drawing board for years, according to research from Bloomberg New Energy Finance released on Thursday.
“These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices,” said Michael Liebreich, founder of the London-based research arm of Bloomberg LP. “They highlight the improving cost-competitiveness of solar and wind power.”
While oil companies such as Exxon Mobil Corp. and Royal Dutch Shell Plc eliminate jobs and curb capital spending to cope with prices less than a third of their 2014 peak, renewables are enjoying a renaissance underpinned by rules designed to curb fossil-fuel emissions damaging the atmosphere.
Brent crude oil has traded near $30 a barrel this month, down from more than $110 in 2014 as exporters led by Saudi Arabia battled for market share. Coal and natural gas prices have followed, already pushing a handful of producers into bankruptcy. While BNEF has said lower prices may hurt funding for efficiency projects and the spread of electric cars, the main clean energy technologies enjoyed record installations in 2015.
Another “strong year” is in store for renewables in 2016, said Angus McCrone, chief analyst at BNEF, stopping short of saying another record will be reached. Balancing that is a potential slip in funding for yieldcos, which drew higher investment in 2015, and a clouded outlook for offshore wind in its biggest market.
“There is a lot of uncertainty on how strong U.K. support for offshore wind is going to be,” McCrone said. “It is conditional on costs coming down, and I think that will happen, but it’s hard to say how many will be supported.”
China remained the biggest market for renewables, increasing investment 17 percent to $110.5 billion. That’s almost double the $56 billion invested in the U.S., which was second in the BNEF rankings. The strength of the dollar helped boost the value of investment.
In India, funding for clean energy rose 23 percent to $10.9 billion, and new markets including Mexico, Chile and South Africa attracted tens of billions of dollars. Brazil bucked the trend with a 10 percent drop to $7.5 billion.
“Wind and solar power are now being adopted in many developing countries as a natural and substantial part of the generation mix,” Liebreich said. “They can be produced more cheaply than often high wholesale power prices. They reduce a country’s exposure to expected fossil fuel prices. And above all, they can be built very quickly to meet unfulfilled demand for electricity.”
New wind and solar power accounted for about half of all new generation last year. Around 64 gigawatts of new wind power and 57 gigawatts of new photovoltaics was added, representing an increase of 30 percent from to 2014.
Investment was driven mainly by large-scale projects, including a number of major offshore wind farms. The U.K.’s 580 megawatt Race Bank offshore wind farm was the largest project financed last year, attracting $2.9 billion, followed closely by the $2.3 billion Galloper offshore wind farm, also in the U.K.
U.K. Record
As a result, the U.K. was by far Europe’s strongest market last year despite Prime Minister David Cameron’s effort to roll back incentives for the industry. Renewables investment in the U.K. rose 24 percent to a record $23.4 billion from 2014, according to BNEF.
Rooftop solar installations like the ones championed by SolarCity Corp. were another big winner, reaping a 12 percent increase to $67.4 billion.
Europe recorded its weakest year since 2006, in part because of slower activity in Germany after the government cut subsidies and revealed plans for a new auctioning system in 2017. Investment in the continent’s biggest economy fell by 42 percent to $10.6 billion. The continent as a whole suffered an 18 percent drop to $58.5 billion.
