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Renewable energy more attractive to investors than fossil fuels

In 2016, renewable energy sector, excluding large hydro, experienced decline in global new investment. According to the latest report by the Frankfurt School for Climate & Sustainable Energy Finance global new investment in renewables fell by 23% to $241.6 billion in 2016.

Even despite this decline in investment, renewable energy sector accounted for the record installation of new renewable power capacity. Solar, wind, biomass, geothermal and small hydro were at 138.5 GW of total capacity, up from the 127.5 GW in 2015.

The numbers for 2016 accounted for 55% of all the generating capacity added globally, which represents the highest proportion in any year to date. For the fifth consecutive year, investment in renewable energy sector was roughly double the investment in fossil fuels.

Fossil fuels still rule the global electricity generation but in 2016, the percentage of electricity from renewable energy sources rose to 11.3% compared to 10.3% in 2015.

Biofuels sector experienced the sharpest decline in global investment, dropping 37% compared to 2015. On the other hand, geothermal energy investment increased by substantial 17% to a total of $2.7 billion, thanks largely to major geothermal energy projects in Bolivia and Kenya.

The main two reasons why renewable energy sector experienced decline in 2016 were lower costs of renewable energy technologies and the slowdown in large Asian markets of China and Japan.  China, for instance, saw a renewable energy investment decline of 32% in 2016. United States, experienced decline of 10% in the same period, while Europe saw an increase of 3% in comparison to 2015, mostly because of large investments into offshore wind energy sector.

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