In 2017, renewable energy investments in developing countries were $74bn (£56bn) higher than those in advanced economies - but which nations are leading the way?

Renewable energy-solar panels IRENA

While funding clean tech in advanced economies has declined over the past decade, the opposite is true of renewable energy investments in developing countries.

There is often talk in international circles about the importance of building s sustainable future by making such investments but in the US and European Union, they have not always practised what they preached.

Instead, nations with higher rates of poverty and emerging markets are leading the charge towards a global economy based on alternative energy.

Developing countries first overtook developed nations in 2015 and the investment gap grew to $74bn (£56bn) last year, according to Statista.

Will this trend continue? The answer is a firm “yes” for at least the foreseeable future, believes economics and finance expert Austin Hooe – who looks at five countries that are leading the way.


Renewable energy investments in developing countries: The trends

Renewable energy investments graph in developing countries

As the graph above demonstrates, renewable energy investments were low for both developing and developed countries in the early 2000s.

In 2004, developed countries spent $38bn (£29bn) on renewable energy investments.

During the same year, renewable energy investments in developing countries totalled $9bn (£6.9bn).

Investments in developing countries continued to grow until 2011.

That year, renewable energy investments reached an all-time high of about $200bn (£152bn) in developed countries. Developing countries invested just under $100bn (£76bn) during that period.

Interestingly, the trends change after 2011. This shift is likely due to falling solar energy prices and Chinese state-led development.

While developing countries continued to ramp up their investments year after year, developed countries reduced their investments.

2017 global investment in renewable energy by region (Michael Hooe)

In 2017, developed countries invested just $103bn (£78bn) in the renewable energy sector.

This figure is about half of the contributions of developed countries in 2011. We should take note that renewable energy investments by developing countries swelled to $177bn (£135bn) in 2017.

This figure has not yet matched the contributions of developed economies in 2011, but it is close.

Developing countries represent about 63% of all renewable energy investments.


Renewable energy investments in developing countries: The leading nations


Given that it has the second largest economy in the world, it might be a surprise to see China on this list but the World Bank regards it as a developing country because its per capita income is still a fraction of that in advanced countries, while its market reforms are incomplete.

It adds: “According to China’s current poverty standard (per capita rural net income of 2,300 Chinese yuan per year in 2010 constant prices), there were 55 million poor in rural areas in 2015.”

Out of the $177bn (£135bn) invested by developing countries in 2017, China contributed $126.6bn (£96.5bn).

China is driving more than 70% of renewable energy investments among developing countries, according to the Frankfurt School.


Most of Chinese investments are focused on solar and wind energy industries.

China invested $86.5bn (£66bn) and $36.1bn (£27.5bn) in in solar and wind, respectively.

When you consider the entire mix of players among both developed and developing countries in the renewable energy sector, China is still a dominant investor.

The country accounts for 45% of all global renewable energy investments.

This figure is impressive, but it is unclear if it can maintain its contributions over the long-run due to a growing deficit.

While most global renewable energy investments are driven by the private sector, a significant portion of alternative energy investments are credited to state-led financing and subsidies.

Economists are particularly concerned that China’s state-led investments concerning renewable energies and infrastructure may be met with the problems that undermined Latin American development between the 1960s and 1980s.

State-led investments and enterprises are notorious for corruption and misallocation problems.

While China may help trigger a global shift to renewable energy, the investments are not driven by altruism.

Chinese investments are an effort to curb pollution, usher in an era of energy independence, and develop the economy..


eike batista
Rio de Janeiro, Brazil

Brazil is a much smaller player than China, but the country still contributes a sizeable portion to the global mix of renewable energy investments.

In 2017, Brazil invested $6bn (£4.6bn) in the renewable energy sector. Brazilian investments increased by 8% since 2016, according to the Frankfurt School.

Despite recent growth in the renewable energy sector, Brazil is still lagging behind 2008’s massive investment of $11.5bn (£8.8bn) in biofuels.

In 2017, Brazil contributed $3.6bn (£2.7bn) to the wind energy industry. It invested $2.1bn (£1.6bn) in solar projects.

Brazil is currently facing a variety of economic and political problems, so renewable investment growth may be sluggish in the near future.


In 2017, India was the second-largest developing country investing in renewable energy technologies.

However, unlike China, India’s investments have declined by 20% since 2016.

In 2017, India invested $10.6bn (£8.1bn) across the renewable energy sector.

Taj Mahal, India

India focused its investment efforts on solar and wind energy during in 2017.

The Frankfurt School invested $6.7bn (£5.1bn) in solar projects. About $4bn (£3bn) was invested in wind energy companies.

India aims to reach 100 gigawatts (GW) of solar energy by 2022, but recent estimates suggest that India is not on track to reach this goal.

Perhaps the government of India will ramp up state-led investments, subsidies, and tax credits to spur progress in the coming years.


Costa Rica

Costa Rica
Costa Rica (Flickr/kansasphoto)

Costa Rica is leading the renewable energy sector in Central America.

Since 2016, interest in sustainable power surged dramatically. In 2016 and 2017, 27 impact studies were carried out in preparation for Central American renewable energy projects, with seven of these studies were conducted in Costa Rica.

The renewable energy projects will require an investment of $254m (£194m).

Planners aim to take advantage of Costa Rica’s coasts and windy areas by completing five wind energy projects.

They also plan to complete a solar plant and a hydro energy project. Plans for geothermal energy projects are also in the works.

Costa Rica should be able to obtain all the capital it needs for the renewable energy projects.

In 2017, the Central American country obtained 100% of its energy from alternative sources. This publicity is attracting global investors to Costa Rica.



Lagos, Nigeria (Credit: Anchor University, Lagos)

African markets have been heavily invested in by Chinese nationals.

Despite the high flow of capital into the continent, rapidly growing countries are facing energy supply shortages.

Nigeria, a country with a large supply of oil, is turning to renewable energy to solve its energy dilemma.

Planners in Nigeria plan to produce 30% of the nation’s energy from renewables by 2030.

The plan will focus on the development of hydropower stations along major rivers throughout the country.

The most important project is the Mambilla Power Station. This project was made possible through a $5.79nm (£4.4bn) investment by a Chinese financial group.

If successful, the Mambilla Power Station will expand Nigeria’s renewable energy capacity by 3,050 megawatts (MW).

The World Bank has offered the Nigerian government a $350m (£267m) loan to construct miniature solar grids in rural regions of the country.