Uncertainty and turbulence due to political instability directly reflects on the energy sector. Further dominoes, the effect continues. Regardless of whether it is gas, electricity, oil, renewables or something else, energy is the “blood stream” of the economy without exception. Uncertainty in the energy sector caused an increase in the prices of products and services, as well as difficult conditions in the procurement channels.
However, despite this unfavorable trend, investments in the energy sector show an upward trend. According to estimates, investments in renewable energy sources should grow by 8% this year, and the value should reach somewhere around 2.4 trillion US dollars. This amount, which should be reached through project investments in various areas in the renewable energy sector, is not enough, but it paves the way for sustainable development based on clean energy.
According to IRENA’s latest report on investments in renewable energy sources, in 2020 investments increased by 7.4%. Looking at sectors, the biggest growth is in investments in solar energy 22% and wind energy 12%. Compared to 2016, the installed capacity in these two sectors (solar and wind), as a result of intensive investment cycles, grew by 73%.
Investments in projects in the renewable energy sector are not evenly distributed around the world. Despite this fact, the upward trend of investment in this area is encouraging, and especially the support of various sources of financing. In this sector, the growth is due to the interest in investing, despite the political and energy crisis, of private financial institutions, investors and public investments.
In 2020, Asia has the largest growth in installed capacity in renewable energy sources. The growth of this continent in the sector is 42%, and the installed power has increased by 236 TWh. The European continent and the United States in 2020 have half the growth of Asia. Europe increased its renewable energy capacity by 19%, the US by 18%, and South America by 11%.
From an investment point of view, Asia will continue to be the leader in investments in renewable energy sources this year, primarily due to the large projects in the sector in which China is involved. On the other hand, for investors, investments in the European Union in renewable sources remain, and we should not forget about Africa, whose potential for renewable sources, especially in the sun and wind segment, is huge. On the other hand, the African continent is a huge emerging market in terms of renewable energy sources and because of the large need for electricity for both households and the economy. Namely, renewable energy is a source of basic energy for households – especially in central Africa. The model of providing clean energy for cooking is a concept in which a lot of investment is made. Innovations in this concept offer more and more solutions, the realization of which will require the support of investors.
Fiscal support from governments boosted investment growth. As much as 80% of the total investments are for renewable energy sources and storage, electric vehicles, batteries and the like. Investments in energy storage alone are expected to double this year. Investments in renewable energy sources continue in the next period despite the turbulence, but it is important to increase the consumption of energy from renewable energy sources together with the growth of investments.