Clean Energy Spending Drops Most on Record as China Slows Growth

Global investments in renewable power dropped the most on record in 2016 as demand in China and Japan faltered.

Worldwide spending on clean energy fell 18 percent from 2015’s record high to $287.5 billion, according to a report Thursday by Bloomberg New Energy Finance. It was the first decline since 2013 and comes as environmental policies face pressure from populist movements that have fueled the rise of Donald Trump, the U.K. Independence Party and others.

Even as spending ebbs, the amount of wind and solar energy connected to power grids around the world continues to surge, gaining 19 percent in 2016, according to New Energy Finance. That’s in part because investors are getting more bang for their buck as competition and technological advances have dramatically reduced prices for photovoltaic panels and wind turbines.

“At the end of the day, investments in renewables are still outpacing conventional energy by two to one,” Michael Liebreich, founder of New Energy Finance, said in an interview. “But from a climate perspective, there is reason for concern over any slowdown.”

Spending in the U.S. fell 7 percent, to $58.6 billion, as developers slowed their ambitious building pace after lawmakers extended in late 2015 tax breaks for wind and solar projects. Investments in Europe rose 3 percent, thanks in part to the $1.3 billion Fosen wind farm in Norway.

Aside from lower prices, another reason for the discrepancy between declining investments and rising installations is timing. Some projects built in 2016 were financed during 2015, according to New Energy Finance editor Angus McCrone.

Developers are forecast to build a record 134 gigawatts of wind and solar in 2017, as rising demand in India, the Middle East and South American offsets the slowdown in China, according to New Energy Finance. Yet competition is expected to continue driving down prices. While BNEF hasn’t completed its 2017 forecast, McCrone said investments this year appear likely to be on par with 2016 levels.

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