The growth in renewable energy power plants

Box 3.5. The growth in renewable energy power plants Figure 3.15 gives an overview of the total plant entry capacities (measured in megawatts electric) for major renewable energy sources - wind, solar, biomass and geothermal – built between 1978 and 2008. The increasing trend for investment in renewable energy power facilities in all regions since 1997 coincides with the agreement and implementation of the Kyoto Protocol. In this period, developed-country governments have provided targeted support for renewable energy investment, which can be justified by the relative immaturity of these technologies. This immaturity makes it more difficult for lenders to accurately price relative risk of investments in "clean" energy, and thus for investors in the sector to obtain financing at reasonable cost. Moreover, in some cases there can be important leaming and demonstration effects, which will not be realised without initial support (Kalamova et al., 2011). At the same time, the rate of entry of coal and oil-based plants plummeted in these countries. Figure 3.15. New plant entry by type of renewable energy in North America, Pacific and EU-15 regions, 1978-2008 14 IGeothermal Solar O Biomass OWind 13 12 11 3 2 1 1978 1981 1984 1987 1990 1983 1996 1900 2002 2005 2008 Source: Kalamova. M., C. Kaminker and N. Johnstone (2011). "Sources of Finance, Investment Policies and Plant Entry in the Renewable Energy Sector", OECD Environment Working Papers, No. 37. Gross entry cap acity ingigawatts