Clean energy investment declined 11% in 2012, weighed down by regulatory uncertainty and policy changes in major markets such as the U.S., India, Spain and Italy, according to new data from Bloomberg New Energy Finance (BNEF).
Sharply lower prices of solar and wind technology also exerted downward pressure on investment volumes, though they allow higher installation levels per dollar of funding.
BNEF found that overall global clean energy investment in 2012 was $268.7 billion – down from a revised figure of $302.3 billion in 2011. The 2012 investment total was the second highest ever, and five times that of 2004.
The highlight of the 2012 total for clean energy investment was a record $67.7 billion outlay by China, up 20% over the previous year's totals thanks to a surge in China's solar sector.
China's total was more than 50% above that of the second-place country, the U.S., which reached $44.2 billion. In 2011, the U.S. beat China for first position as investors rushed to take advantage of stimulus-related programs before they expired.
Other strong performers were South Africa, which saw investment leap to $5.5 billion, from just a few tens of millions in 2011, as its tender process for wind and solar led to a string of large project financings, and Japan, where the fresh emphasis on renewable power after the Fukushima nuclear disaster in 2011 and the start of a new subsidy program, helped investment soar 75% in 2012 to $16.3 billion .
Among countries experiencing falls in investment were the U.S., with a 32% drop in the face of worries during most of the year about the expiration of a key support program and competition from gas-fired projects, the report adds.
Meanwhile, Italy saw a 51% plunge in investment to $14.7 billion, as policy changes curbed the country's solar photovoltaics boom. Spain's investment total dropped 68%, to just $3 billion, as its government announced a moratorium on subsidies for projects not yet approved. India saw a 44% decrease, reflecting the expiry of incentives for wind and fewer project approvals for solar.
‘We warned at the start of last year that investment in 2012 was likely to fall below 2011 levels, but rumors of the death of clean energy investment have been greatly exaggerated,’ notes Michael Liebreich, chief executive of BNEF.
‘Indeed, the most striking aspect of these figures is that the decline was not bigger – given the fierce headwinds the clean energy sector faced in 2012 as a result of policy uncertainty, the ongoing European fiscal crisis, and continuing sharp falls in technology costs,’ he adds. ‘Solar PV module prices, for instance, fell another 24 percent over the course of last year.’
The largest segment of investment in 2012 was asset finance of utility-scale renewable energy projects, such as solar parks, BNEF adds. This segment totaled $148.6 billion, down from $180 billion in 2011.
The next biggest segment was small-scale project investment – primarily rooftop solar – which came in at $80.2 billion – up from $76.5 billion in the previous year. Corporate and government research and development totaled $30.2 billion in 2012, up marginally from 2011.
Solar was once again the dominant sector in terms of overall clean energy investment in 2012. It accounted for $142.5 billion, down 9% from its 2011 record. Additionally, the largest venture capital and private equity deals of the year included a $200 million round for solar installer SolarCity.
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