Renewable energy technologies have been around for some time, but until recently, fossil fuels were the dominant method of powering our world.
Over the last few years, however, investments in the generation of clean energy have started overtaking fossil fuels. In 2017, renewables supplied 12% of global power — the highest percentage ever.
Data from 2017 showed that despite various changes in the electric sector, investments in renewables are still leading the way toward the energy system of the future.
According to a recent report from the International Energy Agency (IEA), investments in renewables made up around two-thirds of all power generation spending in 2017. Solar PV and offshore wind both had record years.
While investments in oil and gas supply increased slightly, investments in power generation for fossil fuels lagged behind that of renewables in most parts of the world.
In 2017, investment in solar PV hit record levels, largely thanks to continued investments in China and India; In fact, 2017 marked the first time India’s investments in renewables exceeded its investments in fossil fuel generation. Solar attracted $160.8 billion in investment or 18% more than in 2016. So did offshore wind. The same year saw around four gigawatts of offshore wind commissioned, primarily in Europe.
However, investments in onshore wind decreased by around 15% and hydropower investments fell to their lowest level in a decade.
Renewables, however, still make up a relatively small portion of spending in sectors other than electricity generation. Transportation, heating, cooling, and other areas still use large amounts of fossil fuels. Fossil fuels as a percentage of total energy supply investment rose to 59% in 2017.
According to the IEA, however, the fossil fuel portion of energy supply investment may decrease over the long term. Under the IEA's Sustainable Development Scenario, it would fall to 40% by 2030.
Although investments in oil and gas supply increased last year, electricity received the most investment of any energy sector. The IEA noted in its report that this demonstrates the increasing electrification of the global economy; Renewables support this electrification much more than fossil fuels or nuclear power.
Overall Investment Trends
Despite growth in some areas, overall global investment in energy declined for the third year in a row. This past year, it fell by $1.8 trillion, or 2%. Most of the reductions came from power generation due to low amounts of new coal, nuclear, and hydro capacity.
Although investments in these energy sources declined, renewables still led the way in many areas as countries around the world continued to push for decarbonization.
China remained hugely influential in the area of energy investments and received one-fifth of the global total of energy investments, the most of any country. China is increasingly moving toward low-carbon energy. It decreased its investments in coal-fired plants by 55% last year.
The United States was the second-largest investor while Europe was responsible for about 15% of global investment in energy. Its investments were especially concentrated in energy efficiency and renewables.
Renewables may help the energy sector continue to meet energy demands even as it reduces investments in new fossil fuel generation. Energy efficiency may play a similar role. Efficiency investments saw a substantial increase this past year, garnering $236 billion in the areas of transport, buildings, and industry.
Although efficiency investments increased in 2017, they didn't grow quite as much as they did in prior years. Interest in high-tech efficiency solutions, such as those that use artificial intelligence, remains strong and could significantly reduce energy demand in the future.
Investments in the electricity network also continued to grow slowly but steadily, especially in the area of making the grid more flexible, which is crucial for the integration of renewables.
The electricity sector has its ups and downs and is quickly evolving thanks to new technologies and policies. The overarching trend remains clear, though: renewable energy is the future.
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