Renewable energy is the fastest growing sector for FDI despite uncertainty facing the industry, according to The fDi Report 2012, released by fDi Intelligence.
Climate change, the depletion of natural resources and opportunities for renewable energy have been among the important global topics in the past decade. Years of large-scale government tax incentives and subsidies have encouraged rapid growth in the sector. However, in the wake of the global economic crisis, oil prices have fallen and government budgets have been slashed, reducing the incentives available to renewable energy companies. With demand for renewable energy under pressure and with huge growth in manufacturing capacity for the solar and wind industries in China, prices for key components have fallen dramatically leading to several bankruptcies of major renewable energy companies.
According to greenfield investment monitor fDi Markets, which has been tracking FDI in renewable energy since 2003, the volume of FDI projects in renewable energy has increased nearly six-fold from 2003 to 2011 – the fastest growth of all sectors for FDI, reflecting the trend of increasing levels of global renewable energy consumption. In 2011, FDI in renewable energy was an estimated $77bn. If the engines, turbines and solar components feeding the sector are included, total FDI in 2011 was an estimated $91bn. This is equivalent to almost 11% of global FDI and, as shown in the FDI by region sections of this report, renewable energy was the number one sector for FDI in Europe, number two in North America, and the fourth largest sector for FDI in Latin America.
Despite the uncertainties facing the sector, with reduced government support and excess supply, FDI showed very strong growth in 2011. Renewable energy was the fastest growing sector worldwide for FDI in 2011 with 19.9% growth in the number of projects. Estimated job creation associated with these projects grew by 54%. In contrast, the number of projects in coal, oil and natural gas fell by 6% in 2011 with an overall decline of 54% from 2008 to 2011.
To download the full report, please visit www.fdiintelligence.com/fDiReport