Over two months ago, the Chinese National Energy Administration (NEA) announced it would stop providing subsidies for onshore renewable energy projects. The announcement seems to have shaken investor confidence. In the first half of 2019, renewable energy investment in China dropped by 39%.
Since China accounts for around 24% of global investments in renewables, it led the charge in a global slowdown of investments in renewables. Overall renewable investment dropped around 14% with U.S. investment dropping 6% and European investment dropping 4%.
Will China Bounce Back?
Still, China’s future looks fairly green. Despite a decrease in investment, China is still providing incentives and power-purchase agreements for solar companies.
Furthermore, China’s goal is grid parity (making solar energy reach the price of coal power). China’s not known for its laissez-faire economics, so the country will probably support the solar industry more in the future.
Chinese renewables will also likely perform much better in the second half of 2019. Twenty-one gigawatts of new renewable energy projects were announced in late May, so investments in them should rise significantly.
Global Renewable Energy Investment Outlook
Even if China bounces back, global renewable investment does seem to be on the downturn. While the U.S. and Europe only experienced small decreases in investments, the world needs to significantly increase renewable capacity to stop climate change.
A combination of factors including detrimental tariffs and shifts in conservatism has caused renewable slowdowns in many developed areas. However, several countries have continued to expand renewable energy development. India increased investments in renewables by 10% and the U.K. increased investment by 35%.
The Big Picture for Renewable Energy
In the grand scheme of things, renewable energy is definitely gaining ground. Despite decreases in investments, renewable-generated-electricity has been growing in volume.
In the United States, renewables comprised 23% of the national energy supply in April. This April marked the first month in U.S. history where renewables contributed more electricity than coal. Although renewable energies always perform better in the Spring, this milestone still signals that renewable energies are becoming more and more cost-competitive.
Short term volatility is inevitable but the overall trend is clear: new technology favors renewables, and we can only expect the capacity of renewables to grow in the long run.
The real question is: will renewable energies scale up fast enough to prevent the worst effects of climate change?