Investment Shifts from U.S. to EU as Renewable Energy Finance Hits New Record

Renewable energy financiers have begun shifting their attention from the United States to Europe, leading to a 36% plunge in the U.S. during a six-month span when global renewable energy investment hit a record $386 billion, BloombergNEF reported last week.

Global investment was up 10% in the first six months of this year, according to data from BNEF’s Renewable Energy Investment Tracker, with offshore wind and small-scale solar leading the way. Asset finance for utility-scale solar and onshore wind fell 13% compared to the first half of 2024.

China retained its commanding position in renewable energy development, with 44% of global activity between January and June, despite policy and market changes that slowed down the overall pace of investment, BNEF says.

The 36% drop-off in the U.S. “reflects the industry’s response to the 2024 U.S. federal elections, as developers rushed to begin construction toward the end of last year to lock in access to tax credits,” BNEF writes. After that, financiers “slowed activity in the first half of this year due to deteriorating policy conditions, particularly for wind, and growing tariff uncertainty.”

Elsewhere, “the markets that saw the largest year-on-year declines in investment—including mainland China, Spain, Greece, and Brazil—have seen rising curtailment and greater exposure to negative power prices, signaling that concerns over revenue were paramount for investors,” the BNEF states. “Utility-scale solar investor activity was stronger in markets with supportive government auctions or strong corporate energy demand.”

In sharp contrast to the U.S. and China, Bloomberg saw renewable energy investment in the European Union rise 63% compared to the last half of 2024. “These numbers support the idea that companies are reallocating capital out of the U.S. and into Europe—particularly in offshore wind, where several developers refocused to North Sea sites over U.S. projects.”

In a separate post, BNEF places the energy transition in Europe at a “pivotal moment, with companies and policymakers under pressure to decarbonize while ensuring energy security, affordability, and industrial competitiveness” despite rising geopolitical tensions. The continent’s challenges include:

• Bolstering trade and competitiveness without undercutting its low-carbon transition, even though one-quarter of Europe’s cleantech manufacturing exports are destined for the Trump administration’s United States;

• A ratio between clean energy and fossil fuel investment that still stands at about 1:2, but must rise to 4:1 this decade to align with countries’ net-zero carbon pledges;

• Wider power system flaws that were brought to light by the Iberian blackout in May.

In the EU and beyond, “renewable energy investors and developers are rethinking capital allocation and putting their money where project returns are strongest,” said BNEF’s head of clean power, Meredith Annex. “Markets with supportive revenue mechanisms have maintained momentum on renewable energy investment.” But “projects in markets where revenue certainty is shifting, particularly when it’s down to large swings in policy as in the U.S. or mainland China, are seeing a boom-bust cycle ahead of those changes.”

Oslo-based climate writer and analyst Ketan Joshi said renewable energy is steadily gaining ground and taking market share from fossil fuels, even if the ratio between the two still stood at 86.6% fossil, 10.7% clean as recently as 2023.

“For 1.5 decades, the proportion of fossil fuels in our species’ energy system has been falling—and it is far lower than it was in the 1980s, when the threat of their usage first became clear,” Joshi wrote on LinkedIn last month. “And this is a comparison that inherently favours fossil fuels, because it includes the ~60-70% of thermal, fossil-fuelled energy that ends up as waste heat, which a renewable and electrified society mostly doesn’t need to bother with.”

That’s a crucial point, since it means a 1% gain for renewable energy translates into a roughly 3% loss for fossil fuel use—one point for the usable energy the industry supplies, and two points for the energy it wastes.

“We are going way too slowly—catastrophically so,” Joshi affirms. “But if you’re ever compelled to claim that ‘nothing is happening’ and ‘there’s no energy transition’, know that you’re not supported by even the most basic facts and figures on the way humans use energy.”

Cover photo:  Gage Skidmore/Flickr