Good news! Despite a range of uncertainties in 2017 and the beginning part of 2018, clean energy remains a strong economic driver with untapped investment opportunity. Clean energy investments are high, the private sector continues to be a driving force, and corporations are demanding clean energy at unprecedented levels.
There are a lot ways to look back at 2017 when it comes to clean energy and the economy. There were many uncertainties facing the industry in 2017 that challenged the clean energy markets in new and unforeseen ways, however a recent report from the Business Council for Sustainable Energy (BCSE) and Bloomberg New Energy Finance (BNEF), the Sustainable Energy in America Factbook demonstrates how innovative and resilient the global and domestic clean energy market remains.
As pointed out by a recent Wall Street Journal article, action by the Trump Administration like “tariffs may slow the rate of solar expansion, local and state policies requiring utilities to procure renewable energy will continue to help create a baseline market for solar power”
Clean Energy is an Investment Opportunity
Clean energy is maturing as an asset class ripe for investment. With 18.4 GW of global clean energy deployed in 2017, it’s not a surprise that more and more institutional investors continue to be drawn to these stable, long term cash flows. As a result, global clean energy investment rebounded in 2017 to the second-highest amount on record. In total $333 billion was invested in the sector in 2017, second only to the $360 billion spent in 2015.
Private Sector and Localities Back Clean Energy
The federal government may have backtracked from national and international engagement on climate change issues in 2017, but the private sector companies showed a united front regarding their commitment to address climate change.
After the President indicated the U.S. would withdraw from the Paris Treaty, the “We Are Still In” movement responded with 2,642 mayors, governors, CEOs, college presidents, faith organizations, tribal leaders, and other small businesses (including CleanCapital) with renewed commitments to address climate change and reduce emissions. Similar initiatives like the U.S. Climate Alliance, includes 16 governors representing over 40% of the U.S. population and $7.4 trillion in economic output.
Federal-level actions posed a number of threats to the clean energy economy beyond Paris, from trade cases to tax reform, the market was rife with uncertainty. Despite these policy uncertainties, the clean energy market expanded rapidly in 2017, demonstrating the industry’s resiliency. For example, according to the BCSE Factbook, wind and solar capacity in the US has increased more than 471% since 2008 (from 25 GW to 143 GW). Renewable generation soared 14% in 2017, adding 18.4 GW of capacity, now accounting for 18% of total U.S. generation—double the contribution a decade ago.
Corporations Demand Clean Energy
The Factbook also highlights that corporations continue to play an increasingly powerful role in the global energy transformation, demanding cleaner energy and seeking to capture savings from energy efficiency efforts. In the US, off-site corporate clean energy contracts rose to 2.9 GW in 2017, second only to the surge seen in 2015. Some of the world’s largest corporations now have ambitious clean energy goals, including Google, Apple and Facebook which continue to contract more clean energy. Kimberly-Clark, T-Mobile, General Mills and Cummins all signed their first clean energy contracts in 2017.
In addition, renewables increasingly just make better economic sense. New solar PV plants can now undercut new coal builds on a levelized cost of energy (LCOE) basis in the U.S. LCOE measures the lifetime cost over the lifetime energy production of a system, plant or technology in order to more fairly compare costs of various types of energy technologies. In other words, LCOE is a summary measure of the overall competitiveness of different generating technologies.
The bottom line is clean energy is here to stay and will continue to grow. These reports show that it is no longer an alternative energy, but a mainstream source of power. Now more than ever before it is going to be incumbent upon innovators to overcome the new challenges imposed by the federal government. CleanCapital is working to be a key player in this global clean energy transformation to more efficiently originate and invest in the clean energy infrastructure that is so critical to the future of the global economy.