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AfrElec GROWTH AfrElec

Green growth in emerging economies

continues in 2019, but 2020 will cause pain

GLOBAL THE outlook for renewable energy growth in (excluding Mainland China and India). Gas
developing economies was exceptionally bright build fell to its lowest level in these markets since
at the end of 2019, BloombergNEF (BNEF) has 2014, with just 17 GW added.
said in its annual Climatescope survey.
Power-generating capacity from solar plants Notable performers
such as photovoltaic (PV) projects reached 325 “2019 was a year of firsts, for the most part
GW, up from just 1 GW a decade earlier, the in good ways,” said BloombergNEF’s Luiza
report found. Demôro, Climatescope’s lead author. “The surge
Wind investment hit an all-time annual high, of capital we saw flow into emerging markets
with $89bn deployed to build projects in 30 suggests that investors had become quite com-
emerging markets, both onshore and offshore. fortable with the risks involved with financing
Powering the growth was the fundamental new wind or solar there.”
cost-competitiveness of these clean technolo- While Climatescope does not contain com-
gies compared to their fossil-fuel rivals, which prehensive 2020 data, early indications suggest
foreign investors duly noticed. pandemic-related disruptions have slowed
Total foreign direct investment (FDI) in sup- emerging markets’ clean energy investment
port of renewables set a new record at $32bn in flows and are giving investors grounds to pause.
2019, up from a previous high of $24bn in 2018. For the first time since 2016, BloombergNEF
The vast majority, 84%, of the 2019 total came has recorded quarters when capital flows into
from international project developers, utilities, developed markets exceeded flows into devel-
commercial banks and other private sources. oping markets.
However, in 2020, the coronavirus (COVD- While coronavirus (COVID-19) is by no
19) pandemic hit green investment, while the means the only factor at play in these figures,
pain in emerging markets has been particularly the slope and consistency of the decline through
acute, the report found. three quarters of 2020 suggest that full-year fig-
BNEF said that many developing economy ures will be down sharply compared to 2019.
governments have boosted spending and, in In 2019, support from development finance
turn, raised borrowing, only to watch their cur- institutions, including international develop-
rencies devaluate and their sovereign debt rat- ment banks, remained level at approximately
ings get downgraded. $4bn, but their share of total clean energy FDI
What had been a strong flow of clean energy fell to a 10-year low of 11%.
investment from abroad has become a drizzle as “Support from these development finance
many investors seek safer opportunities closer to institutions wasn’t really keeping pace with
home. growth in the market pre-pandemic,” said Ethan
Zindler, head of Americas for BloombergNEF.
Green dominance “Hopefully, they will step up in the year ahead, as
The report said that emerging economies COVID-19 is now shrinking the pool of available
accounted for 58% ($144bn) of the $249bn private capital.”
in asset finance invested in utility-scale clean The report found that Chile was the most
energy capacity worldwide during 2019. notable performer in 2019. The country set and
Three in 10 emerging markets installed more met a 2025 clean energy mandated target of 20%
solar capacity than capacity from any other and now aims for 60% by 2035.
source in 2019. In India, the government has one of the
Some 69 markets built new utility-scale or world’s most ambitious renewable energy tar-
small-scale solar in 2019, funded with over gets, aiming for 175 GW by 2022.
$48bn. Solar ended 2019 with 8% of emerging Meanwhile, Brazil has pioneered compet-
markets power-generating capacity and 2% of itive auctions to contract clean energy, which
generation. Today, 95 markets have at least 10 led to 30 GW of renewable energy contracted in
MW of solar installed. 2009-2019.
Mainland China and India remained the big- In Jordan, renewable energy installations
gest emerging markets for clean energy invest- have boomed over the past five years, with 1.5
ment. The two accounted for $94bn of new wind GW of PV and over 500 MW of wind capacity
and utility-scale solar investment and 76 GW of installed in 2015-2019.
wind and solar build in 2019. Finally, in China, clean energy investment
For the first time, renewables (including has been sinking since 2017 as a result of pol-
hydro) accounted for the majority of new capac- icy changes, especially the removal of generous
ity added in the 106 other emerging markets feed-in tariffs (FiTs) that were the norm for

P8 www. NEWSBASE .com Week 49 10•December•2020