What’s driving investment dollars shift towards clean energy?

A new report by the United Nations Environmental Programme (UNEP), the Frankfurt School-UNEP Collaborating Centre and Bloomberg New Energy Finance found that investment in new renewable energies was roughly double the amount going into fossil fuel plants and the clean technologies accounted for 55 per cent of capacity added worldwide in 2016.

The report also found that the spending per unit of power capacity from solar and wind dropped by more than a tenth in 2016 and this is largely due to fall in the prices of solar and wind infrastructure.

It also showed that electricity sourced from renewables, apart from large hydroelectric dams, rose from 10.3 per cent of total generation in 2015 to 11.3 per cent in 2016. The report says this prevented an estimated 1.7 billion tonnes of carbon dioxide emissions.

This report also agrees with the findings by International Renewable Energy Agency (IRENA), a body that collects data on renewable energy globally which indicated that efforts to decarbonise the energy sector may be paying off as additional 161GW capacity was added in 2016 bringing total capacity to 2,006GW.

This is an 8.7 percent increase from capacity obtained in 2015 and data shows that even the African continent were renewable energy investments have been slow saw uptick in capacity by over 4 percent

Global professional service company, PwC investigated the phenomenon last year and came up with the conclusion that sustainability and greenhouse gas emissions goals are some of the top drivers of this shift.

A survey carried out by the company on US renewables leaders – companies that are engaged in the renewables marketplace and are driving corporate renewables purchases – indicated that 85 percent of those companies actively pursuing purchases of renewable energy infrastructure do so on the basis of a concern for the environment.

PwC further finds that 76 percent are looking to generate an attractive ROI, and 59 percent are focused on limiting exposure to energy price variability.

The goal to lower carbon emissions is inching closer to reality. According to the International Energy Agency (IEA), carbon emissions from the energy sector flat-lined over the last three years despite a growing global economy.

The IEA said this was due to growth in renewables as well as a switch from coal to natural gas and better energy-efficiency.

A research work by Polzin, Friedemann and von den Hoff, Maximilian and Jung, Maximilian on the drivers and barriers for renewable energy investments in emerging countries such as China, India and Brazil finds that a key driver for the diffusion of renewable energies is represented by governmental policies.

“Without the promotion of renewable energies, a technological lock-in would be likely as renewable energies are more expensive than conventional energies in their early phase of diffusion. Hence, financial support policies can help to incentivize investments and make returns from investing in renewable energies more attractive

The researchers further found that another factor involves the countries’ strong development prospects regarding population, economy, and electricity which are intertwined.

“An increasing number of population is connected with a rise in energy demand and since governments aim to reduce environmental harmful emissions, renewable energies become increasingly important to satisfy the rising energy demand,” they said.

Africa added only about 4.2 percent to the global growth in renewable energy and this was mainly due to increased investments from countries like Morocco and South Africa.

However, since Africa is at a greater risk for climate change impacts the current capacity achieved which is an increase over 2015 figures, shows that the need to increase investments in renewable energy sources has never been more pressing.

ISAAC ANYAOGU