Global clean energy investment fell by 5% in the fourth quarter of 2014 compared to the same period one year earlier. This is part of a new report just released by Clean Energy Pipeline. The analysts did not speculate as to why investment has dropped or if it is tied to a lower global price for oil.
New investment in the global clean energy sector totalled $61.0 billion in Q1 15, a 14% decrease on Q4 14 ($71.3 billion) and a 5% decrease on the corresponding quarter in 2014 ($64.4 billion).
“The first quarter of 2015 provided mixed messages,” commented Douglas Lloyd, CEO of Clean Energy Pipeline.
Project finance performed well, registering a 10% increase over the same period last year. However, public market activity and venture capital and private equity investment underperformed significantly.
Project finance up 12% on South African and Asian deal activity
This brightest news from Q1 15 was a 12% annual increase in clean energy project finance to $44 billion. This was underpinned by a surge in deal activity in Asia – approximately $13 billion was raised for renewable energy projects in Asia in Q1 15, almost double the $6.9 billion invested in Q1 14.
Project finance was also boosted by the financial close of ten of the seventeen wind, solar and biomass projects in Round 3 of South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). Some $2.8 billion was secured for these projects, the most notable of which are the $880 million 100 MW Xina Solar One CSP plant backed by Spain-based Abengoa Solar and the $812 million 360 MW Khobab, Loeriesfontein 2 & Nouport wind portfolio developed by Irish project developer Mainstream Renewable Power.
There were also two notable offshore wind project finance deals in Q1 15. The 322 MW Nordsee 1 offshore wind farm in Germany secured $889 million debt financing from a group of ten lenders while the 30 MW Block Island offshore wind farm, which will be the first utility-scale project in US waters, also reached financial close.
YieldCos active despite weak quarter for public markets
Clean energy companies raised $2.9 billion on the public markets in Q1 15 through a mixture of IPOs, secondaries and convertible note issuances, a 42% decrease on the $5.0 billion secured during the corresponding period in 2014.
YieldCos continued to tap the public markets in Q1 15. Seven YieldCos raised a combined $1.4 billion, accounting for nearly half of the total volume secured. This is also a 47% increase on the $950 million quarterly average secured by YieldCos since the beginning of 2013. Notable public market deals by YieldCos in Q1 15 included the secondary offerings by TerraForm Power ($352 million), Pattern Energy Group ($351 million) and Abengoa Yield ($328 million).
Two notable IPOs also priced in Q1 15 – Chinese energy efficient lighting solutions provider MLS secured $155 million through an IPO on the Shenzhen Stock Exchange, and Israel-based solar optimisation firm SolarEdge Technologies raised $126 million through an IPO on NASDAQ.
M&A activity boosted by energy efficiency, wind and solar deals
Clean energy M&A activity totalled $12.5 billion in Q1 15, a 15% decrease on the $14.8 billion recorded during the corresponding quarter in 2014. The number of announced deals decreased 9% to 257 during the same period.
M&A activity in Q1 15 was driven by acquisitions in the energy efficiency, wind and solar sectors. Acquisitions of projects and companies in these sectors accounted for 80% ($10 billion) of total deal value in Q1 15. The most notable deals included GSR Ventures and Oak Investment Partners’ acquisition of an 80% stake in LED components producer Philips Lumileds Lighting Company for $2.6 billion, Centerbridge Partners’ buyout of wind turbine maker Senvion from Suzlon for $1.2 billion, and the Groupama’s disposal of a 5% stake in Veolia Environment for $543 million.
Venture capital and private equity sinks to five-year low
Venture capital and private equity investment in clean energy (excluding buyouts) totalled just $1 billion in Q1 15, a 46% decrease on the $1.9 billion invested in Q1 14, making it the weakest quarter for investment since Q1 10. Venture capital and private equity investment in clean energy has now fallen for a fourth consecutive quarter.
The sharp decrease in Q1 15 was the direct result of investment collapsing in solar and energy efficiency companies. Only $214 million was invested in the energy efficiency sector, less than half of the quarterly average during the past two years ($433 million). Similarly, solar companies only raised $190 million, a 46% decrease on the quarterly average during the past two years ($352 million).
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Picture credit: Sunedison