Welcome to Climatescope, an assessment of clean energy market conditions and opportunities in 58 emerging nations in Africa, Asia, the Caribbean, Latin America and the Middle East. This third global release of the project takes into account the extraordinary 12 months of clean energy investment, construction, and policy-making of 2015. Here we showcase some of the key findings.

Ethan Zindler Ethan Zindler Dario Traum Dario Traum

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The center of the clean energy universe has shifted decisively from "North" to "South". Climatescope countries in 2015 set a new record for clean energy installations with 69.8GW built, up 30% from the 48.4GW added in 2014. The 2015 total represents 10.6GW more than the 59.2GW of clean energy built in OECD countries, a group which includes the world’s wealthiest nations.

Annual clean energy capacity additions (GW)
Source: Climatescope 2016

Climatescope countries also for the first time nosed out OECD nations in 2015 to attract more clean energy capital. Investment in Climatescope countries grew 16% from 2014 to 2015 to reach $154bn. In addition, the $147bn invested into new clean energy generation in Climatescope nations in 2015 topped global investment in thermal power generation worldwide as recorded by the International Energy Agency.

Annual clean energy investment ($bn)
Source: Climatescope 2016

Steep solar equipment cost declines are catalyzing growth. PV investment in Climatescope countries has grown more than 11-fold since the turn of the decade from $6.4bn in 2010 to $71.8bn in 2015. This jump is also illustrated by installed capacity, which surged from 289MW built in 2010 to 49.3GW constructed in 2015. That latter figure is equivalent to South Africa’s generation capacity today. Among all clean energy technologies, PV has seen its costs fall fastest and furthest over the last decade. This has allowed capital expenditures (capex) for projects in Climatescope countries to drop by more than half since 2010. It has also allowed PV project developers to sell their power at lower, more competitive rates.

Average disclosed capex in Climatescope countries ($m/MW)
Source: Climatescope 2016

Equipment cost decline, most notably for solar, along with innovative business and financing models are revolutionizing how energy access issues are being addressed. Climatescope includes 23 nations classified as “off-grid”, primarily due to their low electrification rates. The 35 others in the survey are considered “on grid” and tend to fall more into what the World Bank would consider a “middle income” category. The gap between these groups of countries is wide when power generation capacity vs. population is compared.

Installed capacity in Climatescope's "on grid" countries (MW per million population)
Source: Climatescope 2016

However, the dramatic drop in PV equipment and associated technology costs have sparked a slew of start-ups aiming to address the energy access conundrum from the bottom up. In some cases, these firms distribute pico-scale solar systems, in others they build mini-grids to power small communities. These efforts are, in turn, prompting a reconsideration of how to confront the massive energy access challenge and empower the 1.4bn people whose basic energy needs today remain unmet.

Installed capacity in Climatescope's "off grid" countries (MW per million population)
Source: Climatescope 2016

Climatescope countries, particularly those in Eastern Africa, are home to some of the world’s most successful “pay-as-you-go” solar companies and these have attracted a growing interest from venture capital investors. Off-grid solar companies located in the African markets reviewed in Climatescope have attracted approximately $115m of venture capital investments since 2012, $90m of which was invested in East African countries. Globally, Bloomberg NEF has tracked $450m of investment into the off-grid renewables sector excluding minigrids through 2015.

Investment in off-grid solar and intermediaries by asset class ($m)
Source: Climatescope 2016

Developing countries, China and India especially, greatly contributed to the successful ratification of the Paris Agreement at the 21st meeting of the parties to the United Nations Framework Convention on Climate Change (UNFCCC) in December 2015. Every one of the 58 Climatescope countries with the exception of Nicaragua was a Paris signatory as of Q3 2016. More than three quarters of Climatescope countries had set emissions reductions and clean energy targets by year-end 2015, up markedly from 2013 when 18% had such goals and just half had set clean energy deployment objectives.

Emission reduction target (number of countries)
Source: Climatescope 2016

This is a key development in global efforts to mitigate climate change given that Climatescope countries accounted for half the world’s harmful greenhouse gas emissions in 2012. With the economies of emerging market countries growing at a much faster pace than more developed nations, they are expected to account for the lion’s share of future CO2 emissions growth.

Renewable energy target (number of countries)
Source: Climatescope 2016

The ambition and implementation of these targets will be all the more important considering the pace at which new fossil generation capacity is being added across Climatescope countries. In fact 2015 was a record for new coal with 77GW added in Climatescope countries.

Capacity installations (GW)
Source: Climatescope 2016

Wealthier nations are accelerating funding for clean energy in emerging markets. The majority of capital for clean energy projects in Climatescope nations originates from within the countries themselves. However, financial institutions based in OECD countries do appear to be taking a larger role in financing renewables in emerging markets. Organizations based in OECD countries were the source of $54.1bn of the fully disclosed private and public clean energy investment flows into Climatescope countries from 2010-2015 and their share of annual disclosed investment has nearly doubled since 2010.

Origin of investment (%)
Source: Climatescope 2016

The level of foreign capital involved in supporting clean energy varies widely between Climatescope countries. Almost all such investment in China and India, for example, came from sources within its borders. At the other end of the spectrum, clean energy in Mexico or Chile has been almost entirely funded externally and has included support from some of the world’s leading energy multinationals. Investment in Brazil and South Africa has come from a heterogeneous group of funders.

Domestic vs foreign share of 2010-2015 clean energy investment (% of disclosed deals)
Source: Climatescope 2016

Climatescope countries have seen some of the fastest growth in clean energy penetration rates globally. With record levels of investment and deployment inevitably come some growing pains. The surge in investment seen over the past five years has resulted in unprecedented levels of clean energy penetration, particularly in some of the smaller Climatescope nations. The sheer pace of the build-out, the shaky nature of a number of grids in these countries, and the intermittent nature of generation from renewables has contributed to technical and financial challenges. However, governments of many Climatescope countries are already rolling out far reaching reforms supporting the transition to decarbonized power systems.

Cumulative share of solar and wind (% of installed capacity)
Source: Climatescope 2016

The improving conditions are reflected in higher Climatescope scores achieved by the majority of countries surveyed. The average Climatescope score for the countries survey bumped up from 1.14 to 1.35. The number of countries scoring above 2 out of a maximum of 5 has jumped from just two in the 2014 and 2015 Climatescopes, to 10 this year.

Average and maximum score of Climatescope countries (out of 5)
Source: Climatescope 2016

Visit global-climatescope.org for the full results and insights.
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