Global renewable energy investment reached $288.9 billion in 2018, according to a report from the United Nations Environment Program. The report indicates that investment was down 11% compared to 2017. Most of the decline can be attributed to falling solar panel costs and a slowdown in solar installations in China. 2018 was the 9th consecutive year in which global renewable investment exceeded $200 billion and the fifth consecutive year above $250 billion.
Solar continues to be the largest focus of investment, with $139.7 billion in 2018. Wind power investment was $134.1 billion. Investment in other segments was relatively insignificant, but investment in biomass and waste-to-energy notably increased 54% to $8.7 billion. Renewable power investment compares to $95 billion of new coal- and gas-fired generating capacity, most of which was in India and China.
For Windmill Capital Management clients, it is notable that US renewable power investment increased 1% to $48.5 billion, the highest level since 2011. Though this growth may be attributed in part to the phase out of the ITC, prospects for continued growth in renewable energy are strong as the relative cost of renewables is generally lower than that of fossil fuel generation plants.
Continued strength in renewable power investment indicates the importance for institutions to understand opportunities in renewable power distributed energy resources (DERs). While utility scale development returns continue to function as a spread to corporate bond rates, commercial and industrial (C&I) returns are strong and the number and range of investment opportunities is growing.
Windmill Capital Management is dedicated to helping individual, family office, corporate, bank, insurance and institutional investors understand the C&I DER markets. Our network of clean energy developers around the US gives us unique access to information key to underwriting a range of projects that are of interest to our clients. Please contact us if you are interested in learning more about making clean energy DERs part of your investment strategy.