LONDON (Reuters) - Clean energy investment worldwide fell by 18 percent to $287.5 billion last year due to sharp falls in renewable technology prices and less spending on projects by large markets China and Japan, research showed on Thursday.

Chinese investment in renewable sources of energy, such as wind and solar, was $87.8 billion last year, 26 percent lower than an all-time high of $119 billion in 2015, while Japanese investment was 43 percent lower at $22.8 billion, Bloomberg New Energy Finance (BNEF) said in an annual report.

“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,” said Justin Wu, head of Asia for BNEF.

China faces slowing power demand and the government is focusing on grid investment so renewable energy can generate to its full potential.

Growth in Japan, meanwhile, will not come from utility-scale projects but from small-scale solar systems, BNEF said.

Even though overall investment was down, offshore wind experienced a record financing of $29.9 billion in 2016, 40 percent higher than the previous year, as developers in Europe and China took advantage of bigger turbines and improved economics.

Acquisition activity in clean energy broke the $100 billion mark for the first time at $117.5 billion in 2016, up from $97 billion in 2015, due to a rise in corporate mergers and acquisitions and renewable energy project purchases, the report said.

Renewable technology costs have fallen with raw material costs, improved technology and policy changes that have encouraged the installation of more solar and wind power.