Renewable energy investments reached an all-time high last year, totalling over US$328.9 billion globally, side-stepping cheap fossil fuels and government subsidies.
Excluding hydropower, renewable energy investments grew 5 per cent in 2015 to $285.8bn, according to the global policymaker Ren21. This also surpassed the previous record set in 2011 of $278.5bn.
Ren21 said the main catalyst was that renewables were now cost-competitive with fossil fuels in many markets as well as the implementation of government-driven policies.
“What is truly remarkable about these results is that they were achieved at a time when fossil fuel prices were at historic lows and renewables remained at a significant disadvantage in terms of government subsidies,” said Christine Lins, executive secretary of Ren21. “For every dollar spent boosting renewables, nearly $4 were spent to maintain our dependence on fossil fuels.”
Many believed that low oil prices would work against renewables, as historically the traditional forms of energy have been cheaper than that of wind or solar. As oil prices dipped for nearly two years from highs of $110 per barrel in June 2014, it pushes down the cost of products from oil.
Couple this with fuel subsidies, which have governments picking up a hefty chunk of the tab for fuel, and it seemed impossible for green energy to compete.
The IMF estimated that the GCC alone spent as much as $105bn on subsidising energy in 2011.
However, falling oil prices have resulted in decreased state revenues, which has triggered a series of energy price reforms which have included adding or increasing renewable energy targets. Saudi Arabia recently announced its goal to have 9 gigawatts of solar energy by 2023, whereas the UAE is seeing major movement with Dubai’s 3,000 megawatt solar park and the latest 350MW solar tender in Abu Dhabi.
And with this movement has come more jobs – which the Abu Dhabi-based International Renewable Energy Agency said last week increased 5 per cent to over 8 million people employed in the sector globally.
However, there is still work to be done. “The renewables train is barrelling down the tracks, but it’s running on 20th century infrastructure,” said Arthouros Zervos, the Ren21 chairman. “We need to build the equivalent of a high-speed rail network – a smarter, more flexible system that maximises the use of variable sources of renewable energy and accommodates decentralised and community-based generation.”
Follow The National’s Business section on Twitter