The financing of two huge solar photovoltaic projects in the United Arab Emirates (U.A.E.) helped to drive a recovery in global clean energy investment to $64.8 billion in the second quarter of this year (Q2’17), the highest for any quarter since Q2’16, according to Bloomberg New Energy Finance (BNEF).
In a new report, BNEF says the Sheikh Mohammed Bin Rashid Al-Maktoum III plant in Dubai and the Marubeni, JinkoSolar and Adwea Sweihan project in Abu Dhabi, at 800 MW and 1.2 GW, respectively, contributed $1.9 billion between them to the global investment total in Q2’17.
Other highlights of the data include bounce-backs in investment in the April-to-June quarter in China and the U.S., as well as sharply increased funding for projects in Mexico, Australia and Sweden. In addition, the report says Egypt and Argentina, two new markets for renewables, saw record quarterly figures. The weakest feature was the U.K., where investment slumped more than 90% compared to Q2’16.
Victoria Cuming, head of policy for Europe, Middle East and Africa at BNEF, says: “The U.A.E. deals are the largest in that country to date by far and show that its auction programs are leading to the commitment of hard cash by banks and equity providers. They also signal that oil-producing countries are warming to renewables as part of moves to diversify their economies.”
Overall, the report says solar was the star sector in Q2’17, notching up investment of $35.6 billion, up 19% year-on-year and 20% quarter-on-quarter. Wind power had a weaker three months, seeing investment slip 29% year-on-year to $26.2 billion, although it was 43% higher than in the first quarter of this year.
The report notes commitments made to both solar and wind were less in dollar terms per megawatt in Q2’17 than they would have been in previous years because of sharp reductions in costs. BNEF estimates that global capital costs for PV and onshore wind have dropped by 15% and 14%, respectively, in the last 12 months, in response to fierce competition in manufacturing and technology improvements.
Abraham Louw, analyst of clean energy economics at BNEF, says, “The $64.8 billion investment total in Q2 was quite firm given that backdrop of falling costs. There was also a good spread of big projects financed in different countries and less reliance on European offshore wind than in some recent quarters.”
According to the report, there were only two large offshore wind arrays financed in Europe in Q2’17 – the 200 MW Borkum West II and 112 MW Albatros projects in German waters, at $918 million and $532 million. Other top project deals of the quarter were two Chinese 300 MW offshore wind arrays, Three Gorges Dafeng and Three Gorges Zhuanghe, costing an estimated $1.8 billion in total, the 396 MW Juchitan de Zaragoza onshore wind farm in Mexico, at $721 million, and the Avangrid La Joya onshore wind park in the U.S., at 400 MW and an estimated $620 million.
Outside solar and wind, other clean energy sectors saw modest flows in Q2’17. The report says biomass and waste-to-energy had investment of $387 million, down 76% year-on-year; small hydro had $595 million, down 20%; geothermal had $423 million, down 24%; and investment in energy smart technology companies (in areas such as smart grid, energy storage and electric vehicles) was $1.5 billion, down 50% year-on-year.
Overall asset finance of utility-scale renewable energy projects was $51.7 billion in Q2’17, down 13% year-on-year but up 32% from Q1’17. Small-scale solar projects of less than 1 MW attracted $10.8 billion in Q2’17, up 8% year-on-year.
Public markets investment in specialist clean energy companies totaled $1.2 billion in the Q2’17, down 65% year-on-year and 47% quarter-on-quarter. The report says the largest equity raisings on stock markets were for two Chinese companies, project developer Huaneng Renewables ($281 million) and solar glass maker Xinyi Solar ($194 million).
Venture capital and private equity investment in clean energy continued its recent upswing, with $1.9 billion raised in Q2’17, up 50% year-on-year and 15% from Q1’17. The report says the top VC/PE deals were $400 million for Microvast Power System, a Chinese maker of batteries for electric and hybrid-electric vehicles, $113 million for French solar developer EREN Renewable Energy and $100 million for U.S. energy-efficient window company View Inc.
Taking all those categories of investment together, the report says country-level results for the second quarter included the following:
• China – $23.3 billion, down 16% compared to Q2’16, up 32% from Q1’1717.
• The U.S. – $14.7 billion, up 6% year-on-year, up 51% quarter-on-quarter.
• Europe -$8.8 billion, down 49% year-on-year, up 10% quarter-on-quarter.
• Germany – $3.2 billion, down 34% year-on-year, down 7% quarter-on-quarter.
• Japan – $2.9 billion, up 12% year-on-year, down 11% quarter-on-quarter.
• India – $2.6 billion, up 11% year-on-year, down 4% quarter-on-quarter.
• U.A.E. – $2.1 billion, up from almost nothing in Q2’16 and Q1’17.
• Brazil – $1.9 billion, down 1% year-on-year, up 10% quarter-on-quarter.
• Mexico – $1.8 billion, up 261% year-on-year, down 10% quarter-on-quarter.
• Australia – $1.5 billion, up 77% year-on-year, down 29% quarter-on-quarter.
• Sweden – $887 million, up 213% year-on-year, and up from almost nothing in Q1’17.
• France – $845 million, up 43% year-on-year, down 1% quarter-on-quarter.
• Egypt – $805 million, up from almost nothing in Q2’16 and Q1’17.
• Argentina – $464 million, up from almost nothing in Q2’16 and Q1’17.
• The U.K. – $407 million, down 93% year-on-year, down 60% quarter-on-quarter.