In a new report, BloombergNEF notes a significant uptake in renewable energy in developing countries, which are clearly outperforming OECD countries. The trend is due to reductions in equipment costs and new business models that enable access to capital. Still, many emerging markets are also the biggest installers of new coal capacity. India and China alone, are said to account for 81% of newly added coal-fired power stations. For this year’s Climatescope report, BlommbergNEF collected data from more than 100 non-OECD countries, to determine each market’s conduciveness for renewable energy investment and development. Since its inception in 2012, the analysts have updated their methodology to more accurately reflect market realities. This year’s report finds that Chile is the most attractive renewable energy market for investors. Reportedly, the country has presented a strong track record of government policy, clean energy investment and a commitment to de-carbonize, irrespective of grid constraints. India, Jordan, Brazil, and Rwanda placed second to fifth, in that order. While China took poll position in 2017, it placed just seventh this year. BloombergNEF highlights that non-OECD countries are the biggest installers of renewable energy resources. Reportedly, in 2017 developing nations added 114 GW of zero-carbon generating capacity, of which 94 GW accounted for solar PV and wind. At the same time, coal capacity additions dropped by 38% to 48 GW, representing half of the additions in 2015, when growth peaked at 97 GW of additional capacity. “It’s been quite a turnaround. Just a few years ago, some argued that less developed nations could not, or even should not, expand power generation with zero-carbon sources because these were too expensive,” said Dario Traum, BloombergNEF senior associate, and Climatescope project manager. “Today, these countries are leading the charge when it comes to deployment, investment, policy innovation, and cost reductions.” New economies The analyst outfit connects the change to the new economics of renewable energies. Indeed, generation costs for wind and solar have significantly dropped over the past few years, with new business models, suitable climate conditions and dramatically lower equipment costs allowing renewables to outcompete new fossil fuel generators on price, and without subsidies. According to the 2017 report, about 28 GW of wind and solar capacity had been added in developing countries, with prices often as low as US$17.7/MWh for wind and $18.9/MWh for solar. Pivotal to this development are development banks, export credit agencies and other financial stakeholders of the industries, which enable access to capital flows. After the first movers have paved the way, private players, like multinational utilities, then move into the developing countries. “European players, in particular, have moved aggressively to finance projects, particularly in Latin America,” said BloombergNEF head of Americas Ethan Zindler, who helped found Climatescope. He added, “While concessional capital is still clearly required in least developed countries or in others just beginning to adopt clean energy, elsewhere private funders appear quite comfortable deploying capital at volume.” Lows as well as highs The report also highlights some less celebratory facts. While it has been said that coal capacity additions fell to record lows, the report finds that actual generation capacity has grown 4% year-on-year to 6.4 TWh. Currently, there are 193 GW of coal capacity additions under construction, 86% of which are in China, India, Indonesia and South Africa. India and China also installed 432 GW of coal capacity between 2010 and 2017, says BloombergNEF. In comparison, the U.S. has a coal capacity of 260 GW. Faced with pressure to enable energy access and keep energy costs low, a timely decommissioning of this capacity seems unlikely, BlooombergNEF says in its report. Currently, the two markets account for 81% of the emerging market’s coal generation capacity.
Developing countries are installing more renewable energy than their OECD counterparts, according to Bloomberg New Energy Finance’s (BNEF) 2017 Climatescope report. These nations, led by Chile and including Brazil, India, Rwanda and China, installed 114 GW of zero-carbon generating capacity in 2017, with 94 GW accounting for solar PV and wind. Around 28 GW of capacity has been added, priced as cheap as $18.90/MWh for solar and $17.70/MWh for wind. The report credits lower equipment costs, changing business models and suitable climate conditions. Development banks, credit agencies and other industry stakeholders ensuring capital flow have been crucial to facilitating the uptake in renewables.