Investment in clean energy is slowing in developing countries this year after a record-breaking $32 billion flowed into the business in 2019, according to an analysis by BloombergNEF.
Last year’s foreign direct investment in developing countries rose by a third from 2018 as solar and wind farms increasingly became a cost-competitive alternative to fossil fuels, BNEF found in its annual Climatescope survey.
The report examining investment trends in more than 100 nations showed that emerging-market economies made up about 58 per cent of the $249 billion in asset finance plowed into utility-scale clean energy capacity worldwide last year.
“2019 was a year of firsts, for the most part in good ways,” said Luiza Demoro, the lead author of the BNEF report. “The surge of capital we saw flow into emerging markets suggests that investors had become quite comfortable with the risks involved with financing new wind or solar there.”
While the BNEF report didn’t cover 2020 in detail, early signs show this year will see a reversal of last year’s trend. Capital flows into developed markets outpaced flows into developing markets during some quarters this year, the first time that’s happened since 2016.
“Support from these development finance institutions wasn’t really keeping pace with growth in the market pre-pandemic,” said Ethan Zindler, head of Americas for BNEF. “Hopefully, they will step up in the year ahead as COVID-19 is now shrinking the pool of available private capital.”
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