US, China and South Africa Lead Rebound in Clean Energy Investment

Clean Energy Investment ( Solar Thermal Magazine ) – July 2013. Second quarter investment rises 22% compared to Q1, but shrunken figure for Europe ensures that world total stays below that for Q2 last year. London and New York: Global investment in clean energy was $53.1bn in the second quarter of 2013, up 22% from the first quarter thanks to an upturn in the financing of wind and solar projects and a 170% surge in equity funding for specialist companies on public markets.

The Q2 rebound was led by the US, which saw investment jump 155% compared to a weak first quarter, to reach $9.5bn, and also China (up 63% at $13.8bn) and South Africa (up from almost nothing in Q1 to $2.8bn in Q2).

However Europe, for many years the mainstay of clean energy activity worldwide, saw investment fall 44% compared to Q1, reaching just $9.5bn – that continent’s lowest quarter total for more than six years. The downturn in Europe helped ensure that global investment in clean energy in Q2 2013 ended up 16% below the figure for the second quarter of last year.

Michael Liebreich, chief executive of Bloomberg New Energy Finance, commented:

These figures are a mixture of sweet and sour. On the sour side, 2013 globally is still running below 2012, which was itself down on the 2011 investment record. And European investment is clearly being hit by cuts in support for renewable energy and by policy uncertainty, notably ahead of the German election in September.

“On the sweet side, the US is back in business following the hiatus that resulted from fears about the possible expiry of the Production Tax Credit for wind at the end of 2012. And the 50% rally in clean energy share prices since their lows last summer, with rises of 200% or more for Tesla Motors and a clutch of major wind and solar manufacturers, is rekindling – at least for the moment – the appetite of stock market investors for equity raisings.”

The figures, drawn from Bloomberg New Energy Finance’s authoritative database of deals and projects worldwide in renewable energy and energy smart technologies, show that global investment of $53.1bn in Q2 was up from $43.6bn in Q1 but down from $63.1bn in Q2 2012.

The biggest category of investment between April and June 2013 was asset finance of utility-scale projects such as wind farms and solar parks. This was $31.9bn, up 39% on the first quarter but down 21% year-on-year. Among the projects financed were MidAmerican Renewables’ 681MW Solar Star photovoltaic project in California, at $2.5bn, and EDF’s Blackspring Ridge wind farm phase one, at 299MW and $588m, in Alberta, Canada.

Investment in small-scale PV projects of less than 1MW continued to be another busy area of activity, accounting for $17bn of outlays in the second quarter, in line with Q1, but down 15% year-on-year, largely because of reductions in the cost of PV panels.

Public markets investment in clean energy companies totalled $3.8bn in Q2, up from $1.4bn in Q1 and the highest quarterly figure for two years. The biggest deal was a $1.4bn initial public offering by New Zealand-based geothermal developer Mighty River Power, followed by a $660m convertible issue by US electric car maker Tesla Motors. Tesla also raised $360m via an issue of ordinary shares.

During the second quarter, clean energy shares rose nearly 14%. The WilderHill New Energy Global Innovation Index, or NEX, which tracks the performance of 98 clean energy stocks worldwide, was at 151.32 on Tuesday this week, up from a nine-year low of 102.20 reached in July last year.

The final major category of investment in clean energy – funding of unquoted companies by venture capital and private equity players – had a subdued Q2, its total of $1.3bn being down 48% from a relatively strong first quarter and also 20% lower than in the second quarter of 2012. The largest VC/PE transactions of April-to-June were a $130m expansion capital round by US fuel cell company Bloom Energy Corporation and an $84m bridge-funding round by Irish wind specialist Gaelectric Developments.

Breaking the data down by country, China was the largest investor in clean energy in Q2 at $13.8bn, followed by the US at $9.5bn, Japan, down 5% at $7.6bn, South Africa at $2.8bn, and Australia, up nearly sixfold at $2.3bn. Among European countries, Germany led the way with $1.9bn, but this was down from $6.3bn in Q1. The UK was second with $1.7bn, down from $2.8bn, with France at $1.2bn, up from $919m, and Italy, also at $1.2bn, down from $1.3bn.

Today, for the first time, Bloomberg New Energy Finance is extending its annual coverage for investment in clean energy to include asset finance of energy smart technologies. This amounted to $14.2bn in 2012, taking the research company’s overall figure for investment in clean energy last year to $281.1bn, compared to 2011’s record $317.2bn.

Nicole Aspinall, lead analyst on Bloomberg New Energy Finance’s statistics team, commented: “We have revised our methodology for clean energy investment to include digital energy and energy storage infrastructure projects, which are increasingly seen as integral to the future. These include storage technologies such as batteries, flywheels and compressed air energy storage, and smart grid applications such as smart metering and distribution automation.”

Other new figures published today by Bloomberg New Energy Finance show that of the $148.5bn invested in asset finance of renewable power and fuels in 2012, over two thirds – or $102.7bn – came from local sources in the country concerned, while $40.3bn was deployed across borders. The proportion of cross border investment from developed to developing countries reached a new peak in 2012, at 27%, with $10.8bn deployed – compared to 17% in 2011 with a revised ‘North-South’ figure of $9.8bn. In 2013 so far, asset finance is continuing to show an approximate 70:30 split between domestic and cross-border investment.

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