Growth of renewable energy outpaces conventional sources | Business| Economy and finance news from a German perspective | DW | 15.07.2010
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Growth of renewable energy outpaces conventional sources

The renewable energy sector experienced faster global growth than conventional sources last year as policy-makers and investors chose to go green despite the economic downturn.

A wind turbine

Renewablesgrew faster than conventional energy in 2009

Reports issued by the United Nations Environment Program (UNEP)and the Renewable Energy Policy Network for the 21st Century (REN21) show that wind power grew at an annual average rate of 27 percent between 2005 and 2009. Solar hot water grew 21 percent, while ethanol and biodiesel production rose 20 and 51 percent respectively.

Nearly 80 gigawatts (GW) of renewable energy capacity were added to grids around the world in 2009, 31 GW of which were generated by hydroelectric sources. China added 37 GW of renewable energy capacity in 2009 - more than any other country.

In terms of capital, the fastest growth took place in Asia and Oceania, where total investments in renewable energy sources jumped from 24.5 billion euros ($31.3 billion) in 2008 to 32 billion euros ($40.8 billion) in 2009.

Although 60 percent of new power capacity created in Europe in 2009 was based on renewable sources, private investment in the sector actually dropped to 34.2 billion euros compared to 38 billion in 2008. It was a similar story in North America, where investment in renewables fell from 26 billion euros to 16.2 billion.

A solar cell producer

Renewable energy is drawing ever more private capital

More still needed

UNEP Executive Director Achim Steiner said despite rapid global growth, more progress is needed to position the world where it "needs to be in 2020 to avoid dangerous climate change."

"This gap is not unbridgeable. Indeed, renewable energy is consistently and persistently bucking the trends and can play its part in realizing a low carbon, resource efficient green economy if government policy sends ever harder market signals to investors," he said in a statement.

The report found that developing countries now account for more than half of the world's renewable power capacity. They also make up half of all countries with some type of green energy promotion policy (41 out of 81 countries) and nearly half of all countries with policy targets (38 out of 80 countries).

Markets for renewables are growing at rapid rates in countries such as Argentina, Egypt, Tunisia, Kenya, Indonesia, to name a few.

Development assistance, which increased to more than 3.9 billion euros in 2009 from 1.5 billion in 2008, has spurred investment. Loans, financing and technical assistance from organizations including the World Bank Group, the Inter-American Group and the Asian Development Bank have all contributed to growth.

Demand growing in developing countries

Klaus-Peter Pischke of the KfW Development Bank in Frankfurt said his organization often provides funding for projects in developing countries through direct grants along with professional support. In some instances, the organization lends money to local development banks for projects ranging from home solar or biogas systems to small hydroelectric plants and wind turbines.

"Demand for new investment in energy infrastructure is growing most there because of economic and population growth," he told Deutsche Welle.

A solar cell

Financial and professional support has helped developing countries go green

"We want to be able to prove there is a way to develop a sustainable energy infrastructure that will still be viable in 30 or 40 years – which already takes climate change into account."

The KfW is a public bank charged with administering German state development programs. Pischke said the bank is trying to "pave the road" for more private capital flows into developing nations' renewable energy sectors.

"It's also very clear that part of our assignment is to further the development of these countries - and part of development is a reliable energy infrastructure," he said.

"Ultimately, public money will not be enough to restructure energy systems enough to stop climate change."

Author: Gerhard Schneibel
Editor: Sam Edmonds

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