China is now the world’s biggest investor in renewables, according to a sustainability report by Swiss private bank, Bank Sarasin, which said the country spent close to $52.5 billion in 2011, mainly on wind and solar power, as confirmed in its latest Five-Year Plan.

The report said that double-digit growth rates over the past 10 years emphasise the uninterrupted progression of renewable energies, adding that further technological developments, such as ocean and geothermal power, could provide an additional boost to the sector.

However, Bank Sarasin also highlighted the need for key industry players to cooperate closely in order to respond more effectively to new challenges, such as energy storage, network integration and stabilisation of the supply.

India saw the biggest increase in investment, up 62 per cent to $12.4 billion in 2011, as it seeks to reduce its heavy dependence on coal, gas and oil imports. For wind installations, Asia had a global market share of 52 per cent in 2011, with China and India being the main growth markets for that year, the report said.

Energy demand will soar in emerging markets such as China, India, South Africa and Brazil as their economies continue to boom, said the study. And in industrialised countries such as the US, Japan or within the European Union, many conventional power stations have already reached the end of their service life, or are more than half way through, paving the way for newcomers.

Globally, in 2012, renewable technologies will account for more than half of all newly installed electricity generation capacities, with wind and solar power continuing to be the most prominent, accounting for 80 per cent.

Equities unimpressed

However, this notable market growth has failed to impress the stock market. The shares of many renewable energy companies are currently trading well down, according to Sarasin. The renewable energies index, RENIXX, has fallen by 25 per cent per year on average since the outbreak of the banking crisis in September 2008. This is partly due to heavy cost pressures, more intense global competition, and cuts in state subsidies for renewable technologies. Investors are also turning their attention to concrete energy infrastructure projects such as wind or solar farms as new, attractive investment opportunities.

For China, there have been even more obstacles in the renewables sector. Despite the steady industry growth rate and incoming investment, there have been issues connecting wind parks to the main electricity grids, leaving many initiatives behind schedule. In addition, Chinese manufacturers are facing stiff price competition which has led them to engage in below-cost selling, resulting in ongoing investigations and fines.

Sarasin concluded that over the coming years, further changes in the general conditions will necessitate a new architecture for the energy system and closer cooperation among the different industry players - the key task in the future will be to find the best possible technical and economic mix of different types of energy generation, storage and network expansion, it said.

Through a coordinated effort, reductions in costs and continued high volumes of investment, renewable energy could make up 80 per cent or more of the power supply by 2050 in Europe, America and many other regions of the world.

Despite the challenges outlined in the report, the bank’s sustainability research team predicts the global market will enjoy an average annual growth rate of 17 per cent up to 2016, with installed wind capacity anticipated to increase by an average of 10 per cent per annum, during the same time period.