Emerging markets lead green energy charge

Recently released figures are proving that the global pursuit to utilise sustainable energy is being led by emerging markets.

Today, everyone is becoming increasingly aware of the environmental impacts their country, economy, and businesses are having on the world, sustainable energy is widely thought to be most prevalent in the developed world. However, it seems that developing countries are becoming real pioneers of the revolution.

Part of the reason is that developing economies are growing at a much faster pace than their Western counterparts, but there’s also the fact that these countries are more open to change - where energy businesses aren’t so well established in these areas.

Plus, there’s the factor of cost-effectiveness when traditional means for supplying electricity aren’t feasible, in places like rural Africa, where off-grid, small-scale, solar power is becoming widespread.

Global green energy investment rises

Worldwide investments in green energy surged by 17 per cent in 2014 to $270 billion, according to a report from the United Nations Environment Program (UNEP). The report showed that an extra 103 gigawatts (GW) of green energy was added across the planet in 2014, making it the best year ever for newly installed capacity, due to declining technology costs.

Furthermore, most of the renewable energy investment was made in China last year, where a record $83.3 billion was spent, an increase of 39 per cent from 2013.

"The growing penetration of renewable generation in the world's developing economies is one of the important and encouraging aspects of the 2014 report," said Achim Steiner, executive director of UNEP.

In addition, another study from the Global Wind Energy Council highlighted that last year’s wind energy growth was led by emerging markets in Africa and Latin America.

The Global Wind Report: Annual Market Update showed that China added 23 GW of new wind capacity in 2014, bringing its cumulative total up to a staggering 114 GW, while Africa increased its wind capacity by 58 per cent and Latin America by 78.5 per cent.

Therefore, it comes as no surprise then that the trend of growing investment in sustainable energy will be led by emerging markets.

India’s green pledge

Massive solar power plans are in the pipeline in India and seem close to becoming a reality.

Funding for the plans was pledged from a number of potential investors, bringing the nation’s ambitious goal to produce 100 GW of solar energy by 2022 within reach. In fact, over 200 companies promised to increase the $100 billion investment needed for India to accomplish its commitments to over $200 billion.

Furthermore, the Indian government recently announced the hiring of PwC to formulate a plan to scale-up solar energy capacity in India, which will surely aid the developing country to build a realistic path to attain its 100 GW goal.

Developers in the western Indian state of Rajasthan signed a memoranda of understanding to set up 40 GW of solar power projects in the state over the next 5 years. As that’s almost half of the 100 GW target it is possible that the state could become the undisputed leader in solar power across India.

Investment pledges

The high levels of growth in emerging markets has some companies looking to tap this potential, particularly in the renewable energy sector. It’s a rising trend that has been driven by weak energy demand in slow growing economies such as Europe.

Recently Italy’s biggest utility provider, Enel, said it would invest $19 billion in renewables, with more than half earmarked for emerging markets such as Latin America and Africa. The company plans to focus on a large number of small projects instead of traditional big plants in a bid to mitigate risks.

It’s the latest move by an industry giant to clean up finances and meet the increasing demand for renewable energy.

Furthermore, lending for green energy is shown to be on the rise, especially after the World Bank approved a $265 million loan to Argentina for financing projects focused on expanding access to renewable energy and protecting vulnerable natural areas.

While over in South Africa, the Public Investment Corporation invested in two solar power plants worth a combined sum of $1.8 billion. It brings the number of renewable energy projects that Africa’s biggest money manager has invested in to a grand total of nine.

It remains to be seen which company will benefit the most from the race to invest in green energy in emerging markets. However, it is certain that the environment will benefit and that the cause will teach lessons to western economies.