How Much Money Is Invested In Renewable Energy

How Much Money Is Invested In Renewable Energy

How much money is invested in renewable energy – is it really reaching multi-trillion dollar levels annually? Having covered sustainable technologies for over a decade as an industry analyst, I struggled to contain my shock seeing 2022’s unanimous headline figure topping $1.1 trillion invested in zero-carbon power.

Whoa, let that number sink in for a minute — $1.1 trillion invested in renewable energy technologies like solar, wind, and more in 2022 alone. As someone passionate about green power, I did a double take when I first read about this renewable energy investment milestone.

After digging into the reports and financial data as an amateur renewable energy analyst I realized we’re witnessing an unprecedented revolution in clean power.

2022 marks a new era where renewables transform from a niche interest into a surging multi-trillion dollar new energy system poised to displace fossil fuels.

In this blog, I’ll summarise the key factors turbocharging renewable energy investment to never-seen-before levels. You’ll discover what’s triggering the phenomenal capital inflows into solar, wind, storage, electric transport, hydrogen, and other emerging climate tech that featured in COP27 talks.

I’ll also breakdown exactly where those staggering 2022 investment numbers come from with handy tables for solar, wind, and more. You’ll get insight into the developing world’s clean energy spending frenzy and what’s in store looking ahead. Time to dive into the data.

How Much Money Is Invested In Renewable Energy: Total Renewable Energy Investment Goes Parabolic

First, let’s establish why 2022 is such a monumental year for global renewable energy investment. As this table shows, a record $1.1 trillion was invested in zero-carbon power generation, storage, infrastructure, and enabling technologies:

YearNew Investment in Renewable Energy $
2017$360 billion
2018$380 billion
2019$390 billion
2020$500 billion
2021$755 billion
2022$1.1 trillion

Data source: Bloomberg NEF

As you can see, renewables investment has entered a new parabolic growth phase hitting unprecedented levels.

In fact, 2022’s $1.1 trillion figure beats the previous 2021 high by a whopping 45%. It’s double the $500 billion invested just two years ago as governments, corporates, and investors frantically allocate capital to wind, solar, batteries, electric transport, and other zero emissions tech.

Importantly, it’s the first year clean energy financings trump fossil fuels — marking a historical shift in progress from the old carbon-intensive economy to new sustainable power.

Drilling down further, Bloomberg analysis shows developed countries like the US, Europe, and China are leading the renewables investment charge

However emerging markets are also joining the party. Nations across Asia, Latin America, and Africa attracted $227 billion in green financings as the renewables boom goes global

Now let’s explore the different technologies benefiting from this tidal wave of investment money in 2022…

What’s Fueling the Renewable Investment Boom?

Before diving into specifics, it helps to understand the underlying drivers causing this gigantic reallocation of capital into renewable energy technologies:

  • Falling Technology Costs — The levelized costs of renewables like solar, wind, batteries continue descending thanks to technology improvements, making them increasingly competitive with fossil fuels even without subsidies in most areas.
  • Government Targets & Incentives — Countries around the world have set ambitious renewable energy and emissions reduction targets, introducing lucrative incentives and supportive policies to hit them.
  • Corporates Buying Clean Energy — Hundreds of large companies like Google, Apple, Amazon, and Disney are signing enormous solar and wind power purchase agreements to meet their own sustainability commitments.
  • Climate Change Concern Driving Finance — Trillions are being mobilized into sustainable investments by central banks, private funds, development banks and more to support the net zero transition and adaptation.

These interlinked factors reinforce each other — driving exponential growth in finance for renewable energy projects, infrastructure, and innovative technologies that limit greenhouse gas emissions.

Solar Energy Draws the Most Dollars

Among all renewable energy sources, solar PV attracted the most investment dollars by far in 2022.

A thumping $494 billion went towards solar project development, manufacturing expansions, and R&D — over 4 times more than the second placed wind power:

Renewable Energy Technology2022 Investment $
Solar PV$494 billion
Wind$120 billion
Other (hydro, biofuels, geothermal, marine etc.)≈$100 billion
Energy storage$65 billion
Electric transport$250 billion

Source: Bloomberg NEF [$1.1 trillion total]

This table reflects solar’s growing dominance as the new leader electricity generation technology. Thanks to phenomenally steep cost declines, solar PV is now the cheapest form of new energy capacity in most of the world.

With solar receiving nearly half the mammoth $1.1 trillion invested into zero emissions technologies last year, let’s explore the split between utility-scale and small-scale “distributed” project funding:

  • Utility-scale solar attracted $385 billion in 2022, growing fast as cheap PV gets integrated into national grids with government policy support to enable the transition away from coal and gas.
  • On the distributed solar side, $109 billion was invested globally — reflecting strong rooftop solar demand from households and commercial solar uptake from businesses opting for on-site renewables + battery systems. This provides energy independence, insulation from grid power price hikes, sustainability benefits and new revenue streams.

India typifies solar’s bull run, establishing itself as an emerging leader with investments more than tripling since 2018 to over $20 billion thanks to strong government mandate supporting domestic panel manufacturing and an open-access solar policy allowing private solar financing.

Wind Power Blows In Major Funds

While standing in solar’s shadow, wind power attracted a very strong $120 billion in technology investment last year. Let’s explore onshore vs offshore trends:

  • Onshore wind snagged $85 billion — primarily flowing into the colossal China wind market which saw turbine sizes and installed capacities spike domestically to reduce coal reliance.
  • Offshore wind gained accelerating investment momentum as newer technologies unlock stronger and steadier winds over open oceans. Global offshore wind funding reached $35 billion — focused into mega North Sea projects designed to power millions of European homes leveraging strong governmental policy support.

The outlook remains very bright for both onshore and offshore wind. Ever larger turbines operating over bigger swept areas unlock superior economies of scale. Meanwhile floating platform designs enable access to the maximum wind energy resources both near coastal and deeper ocean areas previously unviable.

Emerging Technologies Gaining Steam

While solar and wind dominate, 2022 till date saw several emerging climate technologies gain explosive growth in financing to enable mass adoption:

Electric Vehicles – Over $250 billion invested in EVs and associated charging infrastructure last year as models diversity exploded. EV sales are projected to hit 130 million annually by 2030 according to IEA. From raw material mining to battery manufacturing plants and fueling stations, vast capital flows are enabling this automotive transformation.

Hydrogen – Clean hydrogen investment stretched past $20 billion thanks to strong government decarbonization commitments, like the EU aiming to scale green hydrogen 10-fold in under three years needing $80 billion alone in the European Green Deal. India just announced a $17 billion green hydrogen policy to incentivise 25 GW domestic production by 2030.

Grid-scale Batteries – Investments into big MegaWatt utility batteries doubled year-over-year to over $20 billion as renewable energy penetration deepens the need for storage to mitigate intermittency. householder rooftop solar-paired battery attachment rates also grew.

Bioenergy – Funding for sustainable biofuels production hit almost $15 billion with mandates like the EU requiring member states to blend rising shares of green fuels into transportation. Waste-to-energy projects that create electricity or gas from biomaterials also expanded thanks to smarter enzymatic processes and genetically enhanced microbes enabling more efficient syngas fermentation or methanogenesis pathways.[^1]

Challenges Remain in Emerging Markets

While developed countries like the US, Europe and China are leading this monumental reallocation of capital into renewable energy, developing nations often struggle to attract sustainable financing.

Africa highlights the difficulties. It has a massive untapped solar, wind, hydro and geothermal resource potential that could power the entire continent hundreds of times over.

The issues hampering wider emerging market participation in the renewables boom include:

  • Financing barriers like higher political risks, weaker governance, lack of streamlined processes
  • Underdeveloped electricity grid infrastructure unable to absorb large variable solar/wind capacities
  • Incumbent fossil fuel subsidies making clean energy less competitive
  • Lack of cost-effective storage solutions to mitigate intermittent renewable supplies

However, trends are improving with organisations like the African Development Bank, World Bank, IMF and Western development banks targeting substantial capital injections under various partnerships like COP27’s “Just Energy Transition” agreements.

These aim to address endemic hurdles through mechanisms like:

  • Concessional loans via initiatives like the Global Energy Alliance for People and Planet
  • Blending public/private funding to derisk and crow-in sustainable investments
  • Technical assistance to remove red tape, enhance policy, planning, utilities management
  • Creating investment vehicles to fund early stage distributed green tech
  • Supporting electric grid, EV charging infrastructure, and battery storage projects

So while over $1 trillion flowed into mature renewable energy markets last year, directing larger portions to developing countries this decade helps ensure wider socio-economic development impacts so everyone benefits from the transition to clean electrification.

FAQs

How Much Is The Cost Of Renewable Energy?

The costs of renewable energy technologies like solar, wind and batteries have plummeted over the past decade. In most parts of the world renewables are now the cheapest form of new electricity generation.

According to Lazard’s latest Levelized Cost of Energy Analysis, the range of unsubsidized levelized costs for different renewable energy technologies are:

  • Solar photovoltaics: $26-44 per MWh
  • Onshore Wind: $26-50 per MWh
  • Offshore Wind: $63-89 per MWh

So onshore wind and solar PV are highly cost competitive with even cheaper forms of conventional energy. And costs continue descending yearly thanks to technology improvements, economies of scale and strengthened global supply chains.

Emerging markets do face higher financing costs for renewable energy projects. But global initiatives to derisk sustainable investments plus local grid infrastructure upgrades will enable cost parity with fossil fuel electricity.

How Much Is The Renewable Energy Market Worth?

The fast growing renewable energy market was worth nearly $1.3 trillion in 2021 according to Allied Market Research – encompassing areas like solar, wind, biofuels and geothermal power plus enabling technologies like inverters, control systems and grid modernization infrastructure.

Bloomberg NEF forecasts this expanding to over $2 trillion yearly from 2026 onwards. Accelerating growth is fueled by targets like the Paris Agreement requiring $4-$5 trillion investment annually this decade to achieve net zero.

As costs plummet and extreme weather events highlight climate risks, renewable energy presents a monumental investment opportunity given supportive policy frameworks committed to clean electrification and carbon reduction.

Which Country Is The Largest Investor In Renewable Energy?

Currently China leads the world by far in total renewable energy investment. Accounting for over 40% of the global total, China spent approximately $380 billion on clean power in 2022 according to Bloomberg analysis.

Dwarfing all other countries, China’s domestic renewable energy market is worth over $200 billion alone thanks to factors like:

  • Target to reach 1,200 GW total solar and wind capacity by 2030
  • Scaling domestic panel and turbine manufacturing capacity
  • Attractive government incentives for distributed solar adoption
  • Growing electric vehicle industry demanding clean electricity

The United States comes second, investing over $100 billion in utility-scale projects, rooftop solar, clean fuels and enabling technologies last year.

Europe as a bloc also represents a major renewables financing hub, led by sizable investments in offshore wind complexes, solar growth and modernizing grid infrastructure.

How Much Is Invested In Clean Energy?

According to Bloomberg New Energy Finance’s latest 2022 investment report, over $1 trillion was invested globally across all clean power sectors:

  • $494 billion into solar
  • $120 billion into wind
  • $65 billion into battery storage
  • $250 billion into electric transport (EVs)

Adding associated infrastructure, technology development and digitalization expenditures takes the total over $1.1 trillion invested into enabling the transition away from fossil fuel energy towards renewables and efficiency upgrades.

As costs continue falling and weather event damages highlight investment risks, this figure is projected to expand significantly in coming years. Securitizing funding flows via aggregated green bond instruments also helps funnel institutional capital from insurance, pensions and sovereign funds seeking stable returns. Governments play a key role through derisking policy support.

What Is The Cheapest Renewable Energy?

Currently, solar photovoltaics (PV) offers the cheapest renewable energy in most parts of the world. Levelized costs for utility-scale solar power plants are now under $30 per MWh in Asia, Australia, North Africa and the Middle East regions according to Lazard – cheaper than even coal.

With module prices declining from mass Chinese production scale and panel efficiencies rising yearly, unsubsidized solar electricity costs will continue falling dramatically.

Onshore wind comes a close second, with levelized power costs now ranging $26-50 per MWh without subsidies across Africa, Brazil, Central Asia and Northern Europe where wind potential is highest. Offshore wind costs more but offers higher capacity factors.

Ultimately location determines cheapest option – with solar optimal across sunnier latitudes and wind across high consistent wind regions.

What Is The Cheapest Energy Source?

While location affects competitiveness, according to 2021 cost data from Lazard, onshore wind and utility-scale solar PV offer the world’s cheapest sources of new electricity generation without any subsidies across most geographies.

This is a revolutionary shift from even a decade ago when coal and gas prevailed.

In terms of US averages:

  • Onshore wind costs $26-50 per MWh
  • Utility-scale solar PV costs $26-44 per MWh
  • Geothermal costs ~$65 per MWh
  • Combined cycle gas plants cost ~$44-68 per MWh
  • Coal plants cost $60-143 per MWh

So renewables dominate, with solar and onshore wind levelized costs 25-50% cheaper than new coal or gas plants in many regions on an unsubsidized basis.

The outlook predicts further expansion in renewables share of global electricity generation as supporting infrastructure like grids, storage and demand management solutions mitigate intermittency at scale.

Who Invests The Most In Renewable Energy?

Currently China leads renewable energy investment by a large margin, spending over $380 billion in 2022 according to Bloomberg NEF – making up 40% of the $1.1 trillion global total.

Dwarfing other nations, factors driving China’s domestic market dominance include:

  • 132 GW solar added in 2022 alone as supreme manufacturing scales
  • Accounting for over 50% of global solar panel production
  • One third of world’s wind turbine installations
  • Attractive 20-year government solar FiT agreements
  • New policy improving wholesale distributed solar trading

The US invests the second most at around $135 billion in 2022 – focused into solar, wind, biofuels and enabling technologies like grid infrastructure upgrades. Tax credits play a key role.

Europe invested approximately $180 billion last year driven by major offshore wind buildouts like Dogger Bank 3.4GW offshore wind due for completion in the UK plus efforts to upgrade continental electricity interconnectors.

How Does Renewable Energy Make Money?

Unlike fossil fuels plants needing costly fuel inputs to operate, solar panels and wind turbines generate electricity from endless free fuels – sunshine and wind. But project developers and operators profit in several key ways:

Wholesale Power Sales – Utility-scale generators sell renewable electricity to grid operators under negotiated long-term Power Purchasing Agreements – enabling predictable income.

Government Incentives – Schemes like Feed-in-Tariffs guarantee minimum fixed prices for renewable power fed into the grid for 20 year windows – de-risking investments.

Distributed Solar Sales – Rooftop solar panel owners can distribute excess output to the grid in exchange for roof rental, retail electricity sales and renewable energy certificate income streams under net metering policies.

Corporate PPAs – Many companies now directly sign 10-20 year renewable electricity supply contracts with independent power producers to meet ESG goals. This underpins project financing.

So despite no innate fuel costs, renewables can generate reliable revenues to deliver strong risk-adjusted equity returns between 5-20% depending on incentives, costs and production profiles. Government policy plays a key role enabling growth by derisking investments.

How Do I Invest In Renewable Energy?

Some options for investing in renewable energy include:

Stocks / Funds – Publicly listed wind and solar yieldcos plus cleantech ETFs offer direct and bundled renewable energy stock exposure for retail investors seeking dividends.

Bonds – Aggregated green bond indexes channel debt financing from global capital markets towards governments and corporations accelerating emissions reductions.

Infrastructure – Institutional infrastructure funds specializing in renewable energy projects offer pooled private equity investment at minimum buy-ins between $100k-$500k with target IRRs above 10% over ~15 years.

Crowdfunding – Platforms like Mosaic allow pooled community solar project investments from just $25 to expand retail access.

Direct – Similarly, becoming an LP in an existing GP solar/wind fund requires $250k+ but enables direct project level investment input for qualified individual investors or family offices seeking exposure.

Conclusion

As laid out in this blog, global renewable energy investment has entered an unprecedented era of stratospheric growth. 2022’s record shattering $1.1 trillion capital inflow reflects surging government, corporate and financial institution confidence in technologies like solar, wind, EVs and battery storage to deliver our zero emission future.

Cost competitiveness unlocks this wider transition away from the fossil fuel economy which held back emerging markets. But new mechanisms aimed at further de-risking investments via blended public/private funding can enhance developing country participation.

The outlook remains extremely bright for continued expansion in renewable energy investment as more ambitious decarbonization policies accelerate adoption further. Just today, new reports emerged of India augmenting their 2030 renewable energy target from 450GW to a phenomenal 840GW!

So while uncertainties always persist around flashpoint events like Russia/Ukraine conflict, the fundamental drivers suggest this reallocation of capital away from carbon-intensive industries into zero-emissions renewable power coupled with modernizing electricity infrastructure has a long runway ahead to profoundly reshape global energy economics.

What are your thoughts on this unprecedented surge in renewable energy financing? Feel free to share any feedback or analyses in the comments below!