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01 GLOBAL OVERVIEW
Global oil prices plummeted more than 70% between June 2014
and January 2016, due to oversupply and slowdown in economic
growth in China and Europe. 41 Coal and natural gas prices were
down as well. 42 While these trends affected markets for some
renewables, they also highlighted the improving cost-competitiveness
of solar and wind power. 43 Further, these trends reinforced
concerns about the volatility of fossil fuel prices. 44
The dramatic rise in global coal consumption that occurred over
the past decade, due largely to China, appears to be slowing
somewhat. 45 China’s government announced plans to close more
mines and to reduce coal’s share of the energy mix in 2016, due
in part to a virtual flat-lining in electricity demand; however, some
countries – particularly in Asia – still have big plans for coal. 46 Other
countries and regions have introduced regulations that could constrain
coal use (e.g., the US Clean Power Plan), have announced
plans to phase it out (including Austria, Finland, Portugal and the
United Kingdom) or have already achieved phase-out targets (e.g.,
Ontario, Canada and Scotland). 47 In 2015, the United States (the
world’s second largest coal consumer after China) saw the acceleration
of a downward trend in coal consumption. 48
Low oil prices facilitated reductions in subsidies, but globally
fossil fuel subsidies remained substantial – estimated at over
USD 490 billion i (compared with USD 135 billion for renewables)
in 2014 – and continued to temper renewable energy growth. 49
Other challenges faced by renewables in 2015 included the
integration of rising shares of renewable generation, policy and
political instability, regulatory barriers and fiscal constraints. 50
(p See, for example, Sidebar 1.) In Europe, markets have slowed
due in part to relatively high penetrations of renewables and to
challenges related to their integration, but also to the ongoing
shift in support policies that began during the financial crisis. 51
Elsewhere, national energy monopolies lack awareness of renewables
or demonstrate resistance to their adoption, and in many
economies concerns remain about how to integrate variable
renewable generation. 52 In addition, in many developing countries,
policy and political instability combined with corruption
have made it difficult to access financing (particularly for energy
access projects), which slows advances despite extensive renewable
resources and positive technology developments. 53 Even so,
markets continued their geographic spread, further establishing
renewable energy as a mainstream energy source worldwide. 54
Although Europe remained an important regional market and a
centre for innovation, activity continued to shift towards other
regions. China again led the world in new renewable power
capacity installations. 55 Many other countries – including Brazil,
Chile, India, Mexico, Morocco and South Africa – accelerated
their efforts in 2015, and the number of developing countries
across Asia, Africa and Latin America that were manufacturing
and deploying renewable technologies continued to expand. 56
Employment and investment during 2015 followed the market
expansion into new countries. The number of jobs in renewable
energy rose again during 2015, reaching an estimated 8.1 direct
and indirect jobs worldwide, plus an estimated 1.3 million direct
jobs associated with large-scale hydropower. 57 (p See Sidebar 2.)
Global investment climbed to a new record level. This occurred
in spite of the plunge in fossil fuel prices, the strength of the
US dollar (which reduced the dollar value of non-dollar investments),
the continued weakness of the European economy and
further declines in per unit costs of wind power and solar PV. 58
For the sixth consecutive year, renewables outpaced fossil fuels
for net investment in power capacity additions. 59 However, the
increase in investment was due entirely to increases in solar
and wind power; investment in all other renewable power technologies,
as well as biofuels, declined relative to 2014. 60
Private investors stepped up their commitments to renewable
energy significantly during 2015, and an increasing number of
investors opted to divest from fossil fuels. 61 Some in the financial
community backed away from coal due to its perceived high
risk, and focused on clean energy. 62 The year witnessed both an
increase in the number of large banks active in the renewables
sector and an increase in loan size, with major new commitments
from international investment firms to renewables and energy
efficiency. 63
New investment vehicles – including green bonds, crowdfunding
and yieldcos – expanded during the year. Although their levels
remained relatively small, green bonds supporting renewable
energy (as well as energy efficiency) grew many-fold from 2012 to
2015 and have helped to address a major challenge for renewable
energy financing: lack of liquidity. 64 Funding for emerging markets
increased with the creation of innovative financial instruments for
the African market and with the increase in financing of companies
selling distributed energy products in Africa and India. 65 (p See
Distributed Renewable Energy chapter.) Mainstream financing and
securitisation structures also continued to move into developing
country markets as companies (particularly solar PV) and investors
sought higher yield, even at the expense of higher risk. 66
For the first time, developing countries, including China, were
ahead of developed countries for total investment in renewable
energy. Several developing countries saw substantial increases,
due at least in part to rapidly expanding markets driven by falling
solar and wind power technology costs, whereas developed
countries as a group saw an 8% decline in investment. China
alone accounted for more than one-third of the global total ii and
was the first country to break the USD 100 billion threshold. 67 By
dollars spent, the leading countries for investment were China,
the United States, Japan, the United Kingdom, India, Germany,
Brazil, South Africa, Mexico and Chile. 68 Considering investments
made in new renewable power and fuels relative to annual GDP,
top countries included Mauritania, Honduras, Uruguay, Morocco
and Jamaica. 69 Among the leading countries for investment per
inhabitant were Iceland, the United Kingdom, Uruguay, Japan
and Ireland. 70 (p See Investment Flows chapter.)
In parallel with growth in renewable energy markets and
investments, 2015 saw continued advances in renewable energy
technologies, including improvements in materials and efficiency
i International Energy Agency (IEA) estimates include subsidies to fossil fuels consumed by end-users and subsidies to consumption of electricity
generated by fossil fuels. IEA, World Energy Outlook 2015 (Paris: 2015), p. 96, http://www.worldenergyoutlook.org/weo2015/.
ii Note that this estimate does not include investment in hydropower projects >50 MW, which ranked third, behind solar and wind power, for total investment
in 2015. See Frankfurt School–UNEP Collaborating Centre for Climate & Sustainable Energy Finance and Bloomberg New Energy Finance (BNEF),
Global Trends in Renewable Energy Investment 2016 (Frankfurt: March 2016), http://fs-unep-centre.org/publications/global-trends-renewable-energyinvestment-2016.
China was responsible for a large share of new large-scale hydropower capacity in 2015. (p See Hydropower section.)
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