Clean energy investment fell 8% last year to just over $332bn, according to new research by BloombergNEF.
The biggest drop was in solar, which was down 24% on the previous year to $130.8bn, the analysis found.
BNEF said the reasons for the fall were declining capital costs – 12% lower than last year – and a drop off of 53% in China on the back of government restrictions on access to feed-in tariffs.
BNEF head of solar analysis Jenny Chase said: “2018 was certainly a difficult year for many solar manufacturers, and for developers in China.
“However, we estimate that global PV installations increased from 99GW in 2017 to approximately 109GW in 2018, as other countries took advantage of the technology’s fiercely improved competitiveness.”
Wind investment rose 3%, with the offshore sector having its second best year ever, the researchers said. Onshore wind saw $100.8bn of new finance last year, up 2%, while offshore was up 14% to $25.7bn.
BNEF head of wind analysis David Hostert said: “The balance of activity in offshore is tilting.
“Countries, such as the UK and Germany, pioneered this industry and will remain important, but China is taking over as the biggest market and new locations, such as Taiwan and the US east coast, are seeing strong interest from developers.”
Biomass and waste-to-energy investment rose 18% to $6.3bn, while biofuels grew 47% to $3bn.
Geothermal was up 10% at $1.8bn, small hydro down 50% at $1.7bn and marine up 16% at $180m, BNEF said.
Most investment was in China with $100.1bn, although this was down 32% on 2017 as a result of the solar drop off.
The US was second with $64.2bn, a 12% increase on the previous year. BNEF said developers had been rushing to finance projects in order to benefit from tax credit incentives before they expire.
In Europe, clean energy investment rose 27% to $74.5bn, on the back of investments in five offshore wind farms, a boost from the solar market in Spain and the Nordic wind sector.
The analysts said other categories of clean energy investment showed mixed trends last year. Corporate research and development was down 6% to $20.9bn, while government R&D rose 4% to $15bn.
Public markets investment in specialist clean energy companies increased 20% to $10.5bn.