The first quarter 2012 new financial investment total included $24.2 billion in asset finance of utility-scale renewable energy projects, such as wind farms and solar parks, plus $1.9 billion of venture capital and private equity investment in specialist clean energy companies. Just $601 million was raised on the public markets by quoted companies during the period.
Michael Liebreich, chief executive of Bloomberg New Energy Finance, said, "A $27 billion quarterly figure is not a disaster, but it is the weakest since the dismal $20 billion seen in the first quarter of 2009, when the financial crisis was at its worst. The weak Q1 2012 number reflects the destabilizing uncertainty over future clean energy support in both the European Union -- driven by the financial crisis -- and the US -- driven by the expiry of stimulus programmes and the electoral cycle. There is no sign of a rapid turnaround in either of these regions in the next 12 months. Clean energy technologies, particularly solar photovoltaics and onshore wind, continue to fall in price and approach competitiveness with fossil-fuel power -- but politicians in many countries appear to be ducking the decisions that would ensure that the sector maintains its growth trajectory. We are seeing growth in some of the non-core markets around the world, but they will have a tough job replacing weakening demand in the developed world."
In the U.S., the key support mechanism for wind -- the Production Tax Credit -- is due to expire at the end of this year unless Congress agrees to extend it [See WIMS 4/9/12]; while in Europe, governments in key countries such as Spain, Italy, Germany, Poland and the UK have announced cuts in incentives for renewable power projects, in some cases leaving investors guessing about their likely future returns.
Looking at the different categories of investment in Q1, asset finance of $24.2 billion was 30% down from the fourth quarter and 13% below that in the first quarter of 2011. There continued to be some large renewable energy projects financed -- including the 396MW Marena Wind Portfolio in Mexico for $961 million, the 100MW KVK Chinnu solar thermal plant in India for approximately $400 million, and the 201MW Post Rock Wind farm in Kansas, US, for an estimated $376 million.
The largest projects financed in Europe in Q1 -- in the face of a difficult market for bank lending following last autumn's euro area crisis were the 150MW Monsson Pantelina wind farm in Romania at $317 million, and the 60.4MW SunEdison Karadzhalovo solar PV plant in Bulgaria at $248 million.
Venture capital and private equity investment held up well at $1.9 billion, just 2% below that in the fourth quarter of last year and 6% higher than the first quarter of 2011. The biggest deals were $130 million in equity raised by US electric vehicle company Fisker Automotive, a $102.6 million injection into UK-based biomass-to-power firm Tamar Energy, and an $81 million fund-raise by US PV installer SolarCity.
Public market investment in clean energy of $601 million was down 12% from the fourth quarter, and 87% from the first quarter of 2011 -- a plunge that was not surprising, given the poor performance of sector shares in the last year. The WilderHill New Energy Global Innovation Index, or NEX, which tracks the movements of 97 clean energy shares worldwide, fell 40% in 2011 and clawed back just 7% in the first quarter of 2012 as world stock markets rebounded. The largest two public market deals in clean energy in Q1 were both initial public offerings by US companies in the biofuel sector -- Ceres, a developer of genetically-modified energy crops, raised $74.8m, and Renewable Energy Group, a maker of biodiesel, raised $68.6 million.
Liebreich said, "The outlook for investment in the remainder of the year remains difficult. The rapidly improving cost-competitiveness of renewable energy technologies is stimulating activity, particularly in developing countries. However it is becoming harder to see the sector worldwide beating last year's record, unless the storm-clouds lift in Europe and U.S. Congress stops bickering sends some clear signals about the importance of new energy technologies. Meanwhile, continuing improvements in the sector's economics mean that companies which survive these next few years, whether on the industry's supply or demand side, will be extremely well positioned for the next growth phase."
BNEF reports that in 2011, overall clean energy investment, including the "financial new investment" measure calculated quarterly but also annually-calculated totals for government and corporate research and development and small-scale projects such as rooftop solar, was a record $263 billion. This compares to 2010's total of $247 billion and just $54 billion back in 2004. A final figure for 2011 will be published by mid-year as part of the UN Global Trends in Renewable Investment report, which will include information on late-reporting transactions from 2011.
Phyllis Cuttino, director of Pew's Clean Energy Program said, "Clean energy investment, excluding research and development, has grown by 600 percent since 2004, on the basis of effective national policies that create market certainty. This increase was due in part to the number of countries that have implemented effective national policies to support the clean energy market. In the United States, which attracted $48 billion last year, investors took advantage of the country's stimulus programs before they expired at the end of 2011, as well as the production tax credit for electricity from renewable energy, which is to end this December." Pew reports additional key findings from the report as follows:
- Led by 42 percent growth in the United States and 15 percent in Brazil, investment in the Americas region grew by more than 21 percent to $63.1 billion, faster than any other region.
- The clean energy sector in the Asia/Oceania region increased more than 10 percent to $75 billion. Relatively flat investment in China was mitigated by sharp gains in India, Japan, and Indonesia, which were among the fastest-growing clean energy markets in the world.
- The clean energy sector in the European region grew by a modest 4 percent but remains the leading destination for such investment, at $99.3 billion. Significant investment growth in Italy, the United Kingdom, and Spain helped to offset declines in other European Union member states. Germany and Italy continue to lead the world in deployment of small, distributed solar photovoltaic power installations, accounting for more than 50 percent of worldwide solar capacity additions, and 38 percent of G-20 solar technology investments.
- The United States remains the leader in venture capital financing, an important measure of energy innovation, attracting $6 billion, or 70 percent of the G-20 total. Germany and China were distant followers, with $635 million and $458 million, respectively, in venture capital investments.
32 Years of Environmental Reporting for serious Environmental Professionals