BNEF: Clean Energy Investment Market Was A Mixed Bag In Q1

Global clean energy investment totaled $53.6 billion in the first quarter of this year (Q1’17), down 17% from Q1’16 but only 7% lower than the final quarter of last year, according to a report from Bloomberg New Energy Finance (BNEF).

The study provides a mix of strong and weak features in Q1’17. The report says strong points included $1.4 billion of public market share issues by electric vehicle (EV) pioneer Tesla, as well as the estimated $650 million financing by Enel of its Villanueva photovoltaic complex in Mexico – at 754 MW, arguably the biggest solar project to reach this stage anywhere in the world so far.

Meanwhile, the report says the weaker features included a 60% year-on-year fall in offshore wind financings, to $4.6 billion from a bumper $11.5 billion in Q1’16, and lower investment in the two biggest markets: the U.S. and China. The U.S. saw $9.4 billion invested in Q1’17, down 24%, and China $17.2 billion, down 11%.

Jon Moore, chief executive of BNEF, comments, “Q1 this year reflects, once again, the declines in average capital costs per megawatt for wind and solar. This trend means that, year-by-year, it’s possible to finance equivalent amounts of capacity in these technologies for fewer dollars.”

Abraham Louw, analyst of clean energy economics at BNEF, adds, “It was a relatively quiet first quarter for global investment, but it’s too early to assume that 2017 as a whole will be lower than last year. BNEF analysts are currently expecting both wind and solar to see similar – or higher – numbers of megawatts added this year than last.”

Looking at the Q1’7 data by type of investment, the report says the largest category, as usual, was asset finance of utility-scale renewable energy projects. It totaled $39 billion in the first quarter, down 28% from Q1’16. The biggest projects financed included the 497 MW Hohe See offshore wind farm in German waters, at $1.9 billion, and the CPI Binhai H2 offshore wind array of China, at 400MW and $911 million.

In onshore wind, the report continues, the biggest deal was for the Texoma wind portfolio in the U.S., at 500 MW. In solar PV, the top transaction was Villanueva in Mexico, while in geothermal it was the Supreme Energy Muara Laboh plant, at 80 MW and $590 million.

The second largest category of investment was small-scale solar projects of less than 1 MW, with a Q1’16 tally of $10.7 billion, up 8% from the same quarter a year earlier. Public markets investment in clean energy leaped 215% year-on-year to $2.1 billion, thanks mainly to cash calls by Tesla. The report says the EV maker and PV systems integrator raised $977.5 million via a convertible issue, as well as another $402.5 million via a secondary share issue.

Venture capital and private equity funding of clean energy companies reached $2.3 billion in Q1’17, up 55%, thanks to a string of medium-sized deals involving a wide variety of businesses. The biggest were $155 million for Indian wind and solar project developer Greenko, $140 million for U.S. electric bus company Proterra, $130 million for U.S. solar service provider Sunlight Financial, $125 million for India wind developer Hero Future Energies, and $100 million each for U.S. energy-efficient window firm View and U.S. solar generator Orazul Energy.

Splitting the figures geographically, the report says Q1’17 saw declines in investment in the U.S. and China and a particularly sharp one (down 91% to $1.2 billion) in the U.K., where there were no new offshore wind financings to rival last year’s crop. However, German investment was up 96% year-on-year at $3 billion, while France was up 145% at $1.1 billion and Japan up 36% at $4.1 billion.

BNEF: Clean Energy Investment Market Was A Mixed Bag In Q1
Source: BNEF. Note: In this chart, asset finance is adjusted for re-invested equity. Clean energy covers renewable energy excluding large hydro, plus energy smart technologies such as energy efficiency, demand response, energy storage and electric vehicles.

The report says developing countries also had varying fortunes in Q1’16. Indian investment was $2.8 billion, down just 2%, while Mexico was up 47-fold at $2.3 billion and Brazil down 3% at $1.8 billion. In Africa, one of the highlights was the $350 million financing of an 80 MW biomass plant in Rwanda by HQ Power.

According to the report, the annual totals for clean energy investment in past years are as follows: $61.7 billion in 2004, $88 billion in 2005, $129.9 billion in 2006, $182.5 billion in 2007, $205.2 billion in 2008, $206.8 billion in 2009, $276.1 billion in 2010, $317.5 billion in 2011, $290.7 billion in 2012, $268.6 billion in 2013, $315 billion in 2014, $348.5 billion in 2015, and $287.5 billion in 2016. BNEF notes the annual figures include certain categories of investment that are not in the quarterly data – namely corporate and government R&D in clean energy and asset finance of smart meters and energy storage projects.


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