New investment in wind, solar, and other clean energy projects in developing nations dropped sharply in 2018, largely due to a slowdown in China. While the number of new clean power-generating plants completed stayed flat year-to-year, the volume of power derived from coal surged to a new high, according to Climatescope, an annual survey of 104 emerging markets conducted by research firm BloombergNEF (BNEF).
The findings suggest that developing nations are moving toward cleaner power but not nearly fast enough to limit global CO2 emissions or the consequences of climate change. The majority of new power-generating capacity added in developing nations in 2018 came from wind and solar, for instance. But the majority of power to be produced from the overall fleet of power plants added in 2018 will come from fossil sources and emit CO2. This is due to wind and solar projects generating only when natural resources are available while oil, coal, and gas plants can potentially produce around the clock.
Meanwhile, the volume of actual coal-fired power generated and consumed in developing countries jumped to 6.9 thousand TWh in 2018, up from 6.4 thousand in 2017. The approximately 500 TWh in new coal consumption is roughly equivalent to all the power consumed in Texas in a normal year. Across the 104 emerging markets surveyed in Climatescope, coal accounted for 47% of all generation.
China, both the world’s largest CO2 emitter and largest market for clean energy production and consumption, played a crucial role in the story. Investment in new wind, solar, and other non-large hydro renewables projects in the country fell to $86 billion in 2018 from $122 billion in 2017. That net decline mirrored a $36 billion drop in emerging markets’ clean energy investment figures.
The decline was not confined to China, however. Inflows to clean energy projects in India and Brazil slipped $2.4 billion and $2.7 billion, respectively from the year prior. Across all emerging markets surveyed, 2018 investment fell to $133 billion, lower than not just the 2017 total but the 2015 figure as well. Overall, declining costs for solar and wind played a considerable factor in the fall in absolute dollar investment in emerging economies.
Excluding China, India and Brazil, clean energy investment jumped to $34 billion in 2018 from $30 billion in 2017. Most notably, Vietnam, South Africa, Mexico and Morocco led the rankings with a combined investment of $16 billion in 2018. Excluding China alone, new clean energy installations in emerging markets grew 21% to achieve a new record, with 36 GW commissioned in 2018, up from 30 GW in 2017. This is twice the clean energy capacity added in 2015 and three times the capacity installed in 2013.
Despite the spike in coal-fired generation, the pace of new coal capacity added to grids in developing nations is slowing, according to Climatescope. New construction of coal-fired power plants fell to the lowest level in a decade in 2018. After peaking at 84 GW of new capacity added in 2015, coal project completions plummeted to 39 GW in 2018. China accounted for approximately two thirds of this decline.
In addition to presenting macro trends on clean energy in developing countries, Climatescope scores and ranks individual markets on their overall potential for clean energy development. For the first time since the country was included in the survey in 2014, India was the highest-scoring nation, due to a variety of factors, including supportive policies. The rest of the top five included Chile, Brazil, China, and Kenya, in that order.
Source: BloombergNEF (BNEF)