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New Reports Show 2011 was a Banner Year for Renewable Energy

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The United Nations Environment Program (UNEP)’s Global Trends in Renewable Energy Investment 2011, and the Renewable Energy Policy Network for the 21st Century (REN21)’s Renewables 2012 Global Status Report were both released today. The reports highlight that 2011 was a very strong year for renewable energy despite the ongoing global economic crisis.

Total global investment in renewables (excluding large hydro) last year was a record $257 billion, an increase of 17 percent from the previous year. According to the UNEP report, renewable power (excluding large hydro) accounted for 44% of new generation capacity added worldwide in 2011, up from 34% in 2010. The U.S. saw a 57 percent increase in investment in renewable energy in 2011, adding up to $51 billion (which nearly tied with China which ranked first at $52 billion. The U.S. would be ahead of China if investments in efficiency and smart grid technologies were included)

Some major findings of the REN21 report:

  • The top five countries for total renewable energy investment were China, which led the world for the third year running, followed closely by the United States, and by Germany, Italy, and India. Detailed country information is available on REN21’s Renewables Interactive Map at www.map.ren21.net
  •  In the United States, renewable energy made up an estimated 39 percent of national electric capacity additions in 2011. The share of U.S. net electricity generation from non-hydropower renewables has increased from 3.7 percent in 2009 to 4.7 percent in 2011. Nine states generated more than 10 percent of their electricity with non-hydro renewables in 2011.
  • Wind power was one of the biggest success stories in 2011. According to the REN21 report, several countries and states met higher shares of their electricity demand with wind power in 2011 than in 2010, including Denmark, where wind provided nearly 26 percent of electricity demand, Spain (15.9 percent), and Portugal (15.6 percent); four German states met more than 46 percent of their electricity needs with wind; the state of South Australia generated 20 percent of its demand from wind; and the U.S. states of South Dakota and Iowa produced 22 percent and 19 percent of their power from wind, respectively.
  • Solar power also saw a major jump in investment, a 52 increase from last year, to $147 billion. India’s National Solar Mission helped to spur an impressive 62 percent increase in renewable energy investment to $12 billion, the fastest investment expansion of any large renewables market in the world.

The key drivers for these global trends are policies that support renewable energy development, such as renewable energy standards, feed-in tariffs and tax credits. As of the beginning of 2012 at least 118 countries now have renewable energy targets in place.

Another very important factor has been the steeply falling costs of solar PV and onshore wind in recent years. According to Bloomberg New Energy Finance, PV module prices fell nearly 50 percent during 2011, and are now 75 percent lower than they were in mid-2008. Similarly, according to the Bloomberg New Energy Finance Wind Turbine Price Index, in 2011, the prices for wind turbines to be delivered in the second half of 2013 were 25 percent lower than for devices delivered in the first half of 2009.

However, uncertainties in the policy landscape could affect future trends in renewable energy. For example, in the U.S., the production tax credit (PTC) for wind energy is set to expire at the end of 2012 unless Congress takes action. (In fact, this looming deadline is partly responsible for the tremendous surge in renewables investment in 2011.) This could have a very disruptive effect on wind deployment and employment in the industry. A recent news report quoted Vestas CEO, Ditlev Engel, saying that the US wind market could be down as much as 80 percent in 2013 compared with 2012. (Vestas is the world’s biggest wind turbine maker and employs 3,500 U.S. workers at its manufacturing facilities, mainly in Colorado.) Engel cited a study from IHS Emerging Energy Research showing there is a risk that the U.S. market could drop from about 11 gigawatts (GW) in 2012 to just over 2 GW in 2013 if the PTC is abolished.

The ongoing economic crisis, of course, poses another significant challenge to the investment climate. Yet here too, these reports point to the large jobs creation potential of the renewable energy sector. Around the world approximately 5 million people work either directly or indirectly in the renewable energy industries. In the U.S. that figure is estimated to be between 392,000 and 505,000.

As these new reports released today show, we are in the midst of a revolution in our global energy system. But, encouraging as these investment figures are, the fact is that a lot remains to be done in terms of aligning policies and incentives so that we can complete the transition to a low-carbon economy in a time frame that accords with the climate challenge.

Posted in: Energy Tags: , , ,

About the author: Rachel Cleetus is an expert on the design and economic evaluation of climate and energy policies, as well as the costs of climate change. She holds a Ph.D. in economics. See Rachel's full bio.

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2 Responses

  1. Thomas A. E. says:

    Renewable energy is wholly dependent upon government handouts. Does that not bring the sustainability of renewables into question? Who in their right mind would press to divorce renewability from sustainability on such terms? An agenda-driven activist cult like UCS, that’s who. What a sad, sad farce.