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Renewable Energy

There is one financial bright spot in the energy sector – renewable energy investment and production reached record levels in 2015 according to the latest report released by the Renewable Energy Policy Network.

While fossil fuel industries continue to face major economic headwinds this year, with crude oil markets still struggling to find a balance, and the coal industry in the U.S. facing a ruinous downtown (as production has fallen to the lowest level since 1981), there is one financial bright spot in the energy sector – renewable energy investment and production reached record levels in 2015 according to the latest report released by the Renewable Energy Policy Network.

As we’ve written before, this stands in sharp contrast to previous downturns in the energy sector, when depressed pricing for oil and gas had a directly negative effect on production and investment in renewables, which only seemed to flourish when fossil fuel prices soared. But the traditional and renewable energy sectors no longer seem to be moving in tandem.

The investment level in renewable sector power projects reached almost $286 billion in 2015, which represented only a 5% increase over the prior year but more tellingly is more than twice the amount spent to build new coal or natural gas-fired plants in the same period, according to the REPN report. Altogether countries added a total of 120,000 megawatts of clean power capacity and another 28,000 megawatts of hydropower projects.

Equally significant, last year, for the first time ever, the level of investment in renewable energy in the developing world exceeding the level of renewables investment in the developed world. REPN reports that significantly increased investment in India, South Africa, Mexico, China and Chile were key drivers tipping the scales in favor of developing world renewable deployments. China, the United States, Japan, the U.K. and India added the largest amount of new renewable capacity by country. However, smaller and less developed economies — including Mauritania, Honduras, Uruguay and Jamaica — invested the most in renewables projects when measured relative to their gross domestic products,

The primary focus of interest in renewables fell increasingly in the direction of wind and solar capacity. Solar power led the way with investment at the level of $161 billion, which represented more than 56% of the total new investment in the sector. The next most active area for investment was wind, which accounted for $109 billion or approximately 38% of the total.

The increasing level of investment in renewables may still have a long way to go considering that most of this growth is a matter of increasing market share relative to power generated from traditional fossil fuels. Renewable energy remains a relatively small slice of the world’s total electricity supplies, according to the REPN report, with more than three-fourths of global energy production last year coming from non-renewables such as coal and natural gas. The renewables sector — consisting of solar, wind, bio-power and geothermal by excluding hydropower — made up 7.1 percent of the total. In addition to that, a growing number of renewable energy transactions on BankerBay suggests that this could remain a significant investment trend for a number of years to come.

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