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Over the course of 2011, investments in renewable energy rose by about 5% to $260 billion, up from $247 billion in 2010 and $186.5 billion in 2009, according to numbers released by BNEF. Investments in 2010 were largely driven by wind energy while 2011 clearly belonged to solar.

New financial investment in solar peaked at $136.6 billion eclipsing the $74.9 billion investment seen in wind energy. Solar investments were bolstered by the strong increase in capacity additions over the year – predominantly in Germany and USA. Though the price of solar equipment has fallen considerably, the drop in price was offset by a significant increase in volume (driven in no small part by the fall in prices) to give the final large investment tally. Another reason could be the impending reduction of FiT to be effected across many geographies (primarily Germany) over the current year.

Solar also had a field day in India, where the capacity grew from about 20 MW to about 180 MW over the course of the year. Though this was not enough to keep pace with the capacity additions seen in the wind energy sector (close to 2827 MW installed in 2011). Solar though has only just started gathering momentum, it is expected that there would atleast 200 MW worth of capacity additions over the course of the next few months. The good news is that in terms of growth, India ranks the highest with 52% growth in new investment in the renewable energy sector. Adding to this, it was earlier revealed that about $100 million worth of VC funding was secured in India for solar PV projects in 2011. This is good news as considering the global scenario, VC funding for renewable energy has been surprisingly low.

It is very likely that 2012 will be another great year for renewables, with new financial investment in renewable energy projects reaching hitherto unseen heights. This would be driven by Solar capacity additions in China as the government has intended to boost the solar PV installations in the country and if were to follow the path taken for wind energy, it is very likely that solar capacity additions are going to be exponential. Wind would also see large scale capacity additions in USA and India as the countries have announced their plans to remove the production tax credit and accelerated depreciation benefits respectively by 2013. This is very likely to lead to a huge spike in wind energy installations.