That’s it folks. 2010 may have been the year when developing countries pulled away from the developed world’s fossil-fuel fouled past, toward a future powered by clean renewables. And despite the fact that much of that investment was state-subsidized, we are still at a turning point when renewables such as solar, geothermal and wind (those old whipping posts for critics arguing they won’t compete with subsidized oil and coal) began to stand on their own two feet, especially in the parts of the world where they are often the only source of power available.
According to a new report by UN Environment Program, collaborating with the Frankfurt School of Finance & Management and Bloomberg New Energy Finance, investors poured a record $211 billion into renewable energy in 2010, accounting for one-third of all new generating capacity. That’s a 540% rise since 2004, and during a global financial crisis.
A big chunk of this investment was for massive wind farms in China (the country’s clean-tech sector swallowed up $48 billion last year) and small-scale solar rooftops in Germany. Both are recipients of largess from governments through feed-in tariffs and subsidies. Yet the far more interesting story is the explosion of alternative energy in places that can’t afford such schemes, where the natural resource base (wind, sun and geothermal) is vast and the cost of generating clean energy is at or near competitive prices: Egypt, Morocco, Kenya, Argentina, Mexico and others. Even Pakistan– Pakistan!–took in $1.5 billion investment to boost its wind capacity.
“In many parts of the world, we could expect something like a leapfrog [of energy technologies],” writes Ulf Moslener of the Frankfurt School of Finance & Management in the report. “The strong message is growth… Fossil fuel investment is still dominant around the world but the gap is shrinking fast. If you look at the deals being made, much of the [conventional] investment is to replace old fossil plants, but renewable finance is for new capacity.”
Assuming cold-hard numbers are an indication–presumably they are–we are fast approaching a world where new energy resource bases will rely substantially on strong winds, blazing sun and hot springs. Investment in Kenya’s wind, geothermal, small-scale hydro and biofuel projects rocketed from virtually zero to $1.3 billion between 2009 and 2010. Although only 10% of the country’s population has access to electricity, Kenya is building a 280 megawatt geothermal plant as a down payment on the 3,000 MW it expects to need by 2018, roughly triple today’s demand.
In the Middle East and North Africa, Egypt and Morocco are teaming up with the World Bank to create a series of massive solar installations that will reshape the power dynamics of the region. Already, more than 600 megawatts (MW) of hybrid gas-solar plants have been installed. Morocco announced its design to install 2,000 MW of solar capacity on 36 square miles before the decade is out (potentially for export to Europe), while Egypt is planing to build its own 100 MW solar plant.
Renewables may still prove more expensive for some time to come. But economics change fast. If today’s trends are point to the future (the price of PV solar per megawatt has dropped 60% since mid-2008), then there’s no turning back.
[Image: Flickr user whiteafrican]