Last year marked the first time that developing countries outspent their richer counterparts in renewable energy investments.
Renewable energy generating capacity saw its largest increase ever in 2015. By the end of last year, there was enough capacity to supply approximately 23.7% of the world’s electricity, growing 4.5% from 19.2% in 2014, according to the Renewables 2016 Global Status Report.
This is a result of the record investments renewables attracted last year. A total of US $265.8 billion was invested in new renewable power capacity, doubling the amount spent on new natural gas and coal-fired electricity generation capacity. To date, this is the largest difference witnessed in favor of renewables.
Of these investments, US $156 billion were made by China, India and Brazil, increasing the amount they invested by 19% from 2014. China increased its investment by 17% from 2014, reaching US $102.9 billion (approximately 36% of the global total). India, South Africa, Mexico and Chile also increased their investments in renewables drastically. While Morocco, Uruguay, Pakistan, the Philippines and Honduras invested more than US $500 million in 2015.
On the other hand, developed nations as a group, decreased their investments in renewables by 8% in 2015. With Europe slowing down their investments by 21%, showing the most significant decline.
The same can’t be said about the United States, who increased investments in renewables by 19% to USD $44.1 billion, the country’s largest increase since 2011.
The most impressive part of this is that these record levels were achieved at a time in which fossil fuel prices were at historic lows and despite the fact that global subsidies for fossil fuels outstrip those for renewables nearly 10-fold. These costs would increase another ten times if environmental and climate costs were taken into account.
Why is this going on?
Simple economics. Renewables are cheaper than fossil fuels in many places around the world.
Increasingly, countries are choosing renewable energy as their primary source of power because it’s the cheapest option.
Energy is the lifeblood of modern economies. We use energy as an input for nearly all goods and services, and, therefore, it’s vital to alleviate poverty, promote development. To do this, developing countries need an increasing amount of energy, requiring additional investments in power generating capacities.
While richer nations already made these energy infrastructure investments years ago, developing countries are making them for the first time, facing two different options: dirty fossil fuels or clean, renewable energy.
Which one will they choose? Probably the cheapest option.
And which one is that? Most likely renewables.
It’s simple economics.