New investment in clean energy worldwide was worth $287.5bn in 2016, research company Bloomberg New Energy Finance (BNEF) said in its annual report on the sector. This was almost one fifth lower than 2015's record investment of $348.5bn, and 9% lower than the $315bn invested in 2014, it said.
The drop in spending partly reflected a fall in equipment prices in solar and wind power, and partly a "marked cooling" in China and Japan. Investment in clean energy in China fell 26%, and 43% in Japan, BNEF said.
Justin Wu, head of Asia for BNEF, said: "After years of record-breaking investment driven by some of the world’s most generous feed-in tariffs, China and Japan are cutting back on building new large-scale projects and shifting towards digesting the capacity they have already put in place."
"China is facing slowing power demand and growing wind and solar curtailment. The government is now focused on investing in grids and reforming the power market so that the renewables in place can generate to their full potential. In Japan, future growth will come not from utility-scale projects but from rooftop solar systems installed by consumers attracted by the increasingly favourable economics of self-consumption," Wu said.
Capital spending commitments on offshore wind reached $29.9bn in 2016, up 40% on the previous year, BNEF said. This included the largest ever project, a $5.7bn array off the UK coast.
Jon Moore, chief executive of BNEF said: "The offshore wind record last year shows that this technology has made huge strides in terms of cost-effectiveness, and in proving its reliability and performance. Europe saw $25.8bn of offshore wind investment, but there was also $4.1bn in China, and new markets are set to open up in North America and Taiwan."
BNEF said that although overall investment in clean energy was down in 2016, the total capacity installed was not. A record 70GW of solar was added last year, up from 56GW in 2015, plus 56.5GW of wind, down from 63GW but the second-highest figure ever, it said.
Breaking investment down by region, BNEF said that investment in the US fell by 7% due to developers applying and waiting for tax credits, while Canada was down 46%. The Asia Pacific invested 26% less than in 2015, while India stayed steady with "several giant photovoltaic projects" going ahead.
European investment rose 3%, helped by a 1GW, $1.3bn complex in Norway that BNEF said is the biggest onshore wind project ever financed. The UK investment was the largest in Europe, up 2% to $25.9bn.
Many developing nations reduced their investment in clean energy last year, but Jordan increased its spend by 147% to $1.2bn, BNEF said.