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Global Renewable Energy Investment to Rise to $228.3 Billion in 2018 

Global investment in renewable energy will rise 0.7 percent, to $228.3 billion, in 2018, down slightly year-over-year due primarily to China scaling down its national solar capacity targets, according to Frost & Sullivan's Global Renewable Energy Outlook 2018.

Frost & Sullivan forecasts 154.6 GW of new renewable power capacity will come online globally by year-end 2018. New solar power capacity will lead the way, based on forecast installation of 90 GW, followed by new wind power capacity of 53 GW, according to the market research and consulting firm. 

Investment in biomass, geothermal and small hydro-power plants will grow as well as a result, the firm's analysts say, though growth will not be as fast as solar and wind power investment due to more limited resource availability, higher risks and higher upfront capital costs. Investment in ocean-based power capacity will continue to increase in 2018 as well, but it will take some time before they reach levels attained by solar and wind power generation, according to the report. 

2018 renewable power market trends

"The Chinese government's announcement of modifications to its solar policy dramatically changed the projections the renewable industry had for 2018 and the following years," said Frost & Sullivan Energy & Environment Senior Industry Analyst Maria Benintende. "Worldwide, we see that as the number of countries cutting subsidies increases, the market is compelled to consider purely commercial alternatives to feed-in tariffs, such as competitive auctions and private-sector power purchase agreements."

Persistently low natural gas prices and US President Donald Trump's energy policy is constraining growth in renewable power investment in the US. Nonetheless, Frost & Sullivan expects investment levels in North America will hold steady at $33.17 billion for 2018. 

Broadly speaking, rising electricity demand, the drive to achieve “decarbonization” goals and government incentives are fueling investment in renewable power capacity worldwide, however, Frost & Sullivan highlight. Renewable power industry players are relying on technological innovation, new business models and new organizational structures and processes, as well mergers and acquisitions and efforts to improve access to capital, to adapt to reduced incentives and changing market conditions. 

“Solutions such as remote monitoring and diagnostics, unplanned maintenance, refurbishment and revamps, and performance-enhancing digital applications are creating numerous revenue streams for OEMs and service providers,” according to Frost & Sullivan. “In addition to advanced solutions and technologies, developing strategic partnerships with other renewable OEMs and storage and grid service start-ups will open up numerous growth opportunities for participants.”

Hybrid renewable power systems will come to predominate as markets and industry evolve. Energy storage solutions will be an integral facet, Benintende added. "The pace of growth will depend on the level of government backing in terms of setting up support mechanisms to enable 100 percent renewable energy generation," she said. "To succeed in this market, OEMs need to evolve from being equipment and related service providers to being power generation solution providers."

Other key regional highlights from the study include:

  • Latin America: Power markets in Mexico, Argentina, Brazil, and Colombia, among others, are important to build momentum in the renewable energy market. In 2018, the region will witness 20.1 percent growth in total installed capacity and $17.7 billion in investment.
  • Asia: Asia will be responsible for 58 percent of the global new installed capacity in 2018. Solar, wind, and biomass will account for 96 percent of the total investment in the region, which will total to $114.96 billion in 2018.
  • Europe: Already on track to meet the Renewable Energy Directive of having 20 percent renewables in the energy mix by 2020, the region recently raised the bar by committing to 32 percent by 2030.
  • Africa and the Middle East: Investment in renewables will surpass investments in other power generation technologies, with solar PV utility-scale being a key market. However, infrastructure funding in Africa and the domination of fossil fuels in the Middle East remain challenges.
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