Bloomberg New Energy Finance (BNEF) reported on July 10 that renewable energy investments fell in China, the US, and Europe in the first half of 2019. The year-on-year declines for the US and Europe were 6% and 4% respectively. China saw the steepest drop in seven years with the magnitude of decline coming to 39%. Changes in government policies have been the chief factor that caused renewable energy investments in China to contract significantly in the recent period. On the whole, the slowdown in these three major markets also caused the global renewable energy investments to slide by 14% year on year for the first half of 2019.
The latest renewable energy investment figures released by BNEF show that China remains one of the leading countries in terms of activities. Its share of the global investments in the first half of the year came to 24%. Moreover, the growth of renewable energies in China continues to far outpace the growths of fossil fuels and nuclear power. In particular, the country is the world’s largest market for solar PV, with an annual installed capacity of 43GW for 2018 and a cumulative installed capacity surpassing 170GW.
The Chinese government acted to rein in the breakneck growth of the domestic PV market in the middle of 2018 with the implementation of the “531 New Deal.” Under the new arrangement, FiT rates were substantially reduced, and strict limits were imposed on the building of new PV power plants. Due to this radical shift in policies, investments in the country’s PV market for 2018 were halved (a 53% drop compared with 2017). Also, CleanTechnica reported that PV installations in China came to just 5.2GW in the first quarter of 2019, translating to a decrease of 46% year on year. Looking ahead, there is a high degree of uncertainty in China’s PV market as the state takes on a new approach in renewable energy policies and programs.
On the other hand, China’s outlook is not as pessimistic as it seems. Justin Wu, head of BNEF’s Asia-Pacific operation, said that while renewable energy investments in the country have dropped lately, the figures for the first half of 2019 “probably overstate” the severity of the situation. Wu pointed out that the Chinese are now adopting an auction mechanism for setting up renewable energy projects. Hence, new solar tenders around the country will again inject a lot of capital into the domestic PV market in the near future. Wu also added that China is expected to initiate several large-scale wind projects in the second half of 2019.
In tandem with the cuts made to FiT rates, the Chinese government is now enforcing higher performance standards for PV power plants. Project developers are thus encouraged to pursue business models that need less or no subsidy. China’s FiT scheme for 2019 was formally released in April. In the following month, the Chinese government also approved a series of grid-parity (or low-subsidy) PV and wind projects totaling around 21GW. On account of these factors, BNEF expects China’s renewable energy market to become notably stronger in the second half of 2019.
In contrast to China’s downturn, several other countries saw surges in renewable investments during the year’s first half. Two examples that BNEF brought up in its data release are Dubai and Taiwan, where projects running up to billions of US dollars are being developed. In Dubai, the fourth phase of the Mohammed bin Rashid Al Maktoum Solar Park – Noor Energy 1 – is currently under construction. Scheduled for completion in 2020, this 950MW hybrid CSP+PV project is the largest of its kind in the world.
The offshore wind farms along the west coast of Taiwan are also on the list of the major sources of investments. Denmark’s Ørsted is responsible for developing two sites next to the shores of Changhua County. The total generation capacity of these two projects is set at 900MW. Germany’s WPD is also working on a 640MW wind farm at another site off Yunlin County. By and large, Taiwan’s offshore wind projects will make significant contribution to renewable energy investments worldwide during 2019.
On an even more positive note, Japan, India, Brazil, and Spain all exhibited growth during the first half of 2019. In Europe, Spain is a very noticeable bright spot with investments for the half-year period soaring by a massive 235% year on year to US$3.7 billion. As many countries around the world are maintaining or raising the level of investments in renewable energies, their growth has helped partially offset the slowdown in the three major markets. Consequently, the decline in the overall global investments for the first half of 2019 was not particularly serious in BNEF’s view.
(This article is an English translation of news content provided by EnergyTrend’s media partner TechNews. Photo credit: Pixabay)