The race to achieving net-zero emissions is a reality by now across industries and geographies. The timing is just right for investment in renewable energy and other sources of alternative power to bloom, as the sector has matured.
According to GlobalData’s FDI Projects Database, foreign direct investment (FDI) into greenfield renewables and alternative power projects has grown by 40% in the period between 2019 and 2021, going from 444 projects worldwide in 2019 to 789 in 2021.
Provisional data for 2022 shows that trend is being upheld with a total 811 projects in the period from January to October.
The data is testament to the growth journey that this sector has been on in the past decade. As the chart below shows, earlier renewables technologies such as wind and solar have matured to the point that they now have a strong foothold in investors’ portfolios.
Of the total 2,606 FDI in greenfield projects between 2019 and 2022, 38% were in photovoltaic solar power and 37% in onshore wind power. The remainder is split between offshore wind power (9%); miscellaneous renewables and alternative power (6%); and a variety of waste-to-energy, hydro, nuclear, cogeneration and geothermal power investments (10%).
Source and destination of FDI in renewable energy
European investors are the main driving force behind cross-border investment in renewables and alternative power. In the period between 2019 and 2022, European countries took the lion’s share of the top ten investors league in this space.
In 2022, the UK marginally surpassed Germany – which had been the top source since 2019 – with 88 versus 86 projects.
France, Italy and Spain have consistently followed Germany and the UK in the global top five, all ahead of the US. The US and Canada are the only two non-European countries to make the top ten.
The US, however, has consistently been the top destination of FDI into greenfield renewables and alternative power projects since 2019 by attracting a respective 61, 73, 77 and 80 projects per year.
The top ten for renewables and alternative power FDI destinations offers a more diversified picture compared with that in terms of sources. Brazil, Australia and Chile appear in the middle rankings and attracted 35, 41 and 25 projects, respectively, in the months from January to October 2022.