With the release of “Global Trends in Renewable Energy Investment 2011” from the UN Environment Program, many publications are lauding the $211 billion worth of global investment in renewable energy in 2010. The impact investing industry contributed to that number. This week, we looked at articles discussing the rising amounts of capital invested in clean tech and renewable energy, especially in developing countries.
“For The First Time, Developing Countries Spending The Most On Renewables” by Michael J. Coren via Fast Company
In 2010, developing countries propelled themselves “toward a future powered by clean renewables” like solar, geothermal, and wind “in parts of the world where they are often the only source of power available.” In 2010, “investors poured a record $211 billion into renewable energy in 2010… a 540% rise since 2004,” according to the new UNEP report. It’s remarkable that countries like Kenya, Pakistan, and Argentina are beginning to increase their energy accessibility, specifically with renewable energy. If our neighbors in the developing world can afford renewable energy, surely the developed world can do the same, especially considering that “the price of PV solar per megawatt has dropped 60% since mid-2008.”
“Renewable Energy Investments Set New Record, Up 32% in 2010” by Andrew Burger via Triple Pundit
Further to the fact that $211 billion was invested in renewable energy in 2010, $72 billion was invested in “faster-growing developing economies.” Notably, renewable energy investments were highest in China at $48.9 billion, followed by “$13.1 billion in South and Central America… $5 billion in the Middle East and Africa… $3.8 billion in India…. $4 billion in [other] Asian developing countries.” In addition to capital, research and development expenditures on renewable energy have increased globally. A combination of government policy and private equity are contributing to the electrification of rural markets along with sustainable economic development.
“A research revolution to save the planet” by Jonathan Glennie via The Guardian UK
The world is approaching the 7 billion population mark and global energy demands are increasing. At a climate change workshop held by the Asia Europe Foundation, Shell argued that “the world will need to be producing about twice as much energy in 2050 as we are today,” while lowering carbon emissions simultaneously. The obvious solution is clean tech, the only problem is the high expense when compared to dirty energy. Research and development propels technological advances and “if we were to invest more [in clean technology], progress would be rapid. It is the difference between having 1,000 university working on a problem instead of 100.” Developing countries have had the smallest impact on the environment, but are now adopting clean technology faster than the damaging, developed countries because any changes in the environment will dramatically affect their citizens. Consider India, where “300 million people live by the coast – a rise in sea level matters.” Investment in clean technology will proactively prevent poverty caused by climate change and actively combat poverty by increasing global access to energy.
“Unlocking investment in Africa: could private equity be the key?” by Yingni Lu and John Battersby via The Africa Report
More and more private equity funds are looking for African investments. In addition to less competition and good deals, African investments have significant potential for social impact, which appeals to impact investors like us. Additionally, “the average Africa fund performs as well as average global funds,” which appeals to investors of all types, whether impact driven or not. Investors and governments are seeking to utilize the growing investment in renewable energy for sustainable economic development. For example, South Africa has vowed to reduce carbon emissions with a set “target of 42% of new electricity generation to be met by renewable energy sources such as solar, wind, and wave-generation by 2030.” With a combination of government policy, foreign direct investment, and private equity, South Africa’s goal is very possible.
“Unprecedented success in Beijing paves avenues for impact investment” by Kevin Short via New Ventures
In the impact investing industry, it is often difficult to match entrepreneurs with the right impact investors and vice versa. New Ventures hosted an Investor Forum in China last month centered on “the region’s development towards becoming a vibrant hub of environmental entrepreneurship.” Social entrepreneurs came together to present and discuss business models and to connect with impact investors. The Investor Forum attracted many different types of clean tech businesses and “marked the intersection of environment and development in China.” New Ventures is responsible for connecting Chinese environmental entrepreneurs with $150 million in capital from impact investors. Following the success of the Investor Forum, “New Ventures is now considering facilitating creation of a China-based impact investment fund that directly targets SMEs in the environmental sector.” China will continue to lead the way as an example of increased investment in clean tech in the years to come.