Market News

 January 13, 2012
US wrests clean energy investment crown back from China

 Global clean energy investment reached a record $260bn in 2011 as the US usurped China to become the world's largest investor, analysts Bloomberg New Energy Finance (BNEF) confirmed yesterday.

Global investment in the sector rose five per cent compared to 2010, ensuring that investment levels have now risen almost five-fold since 2004.

The US had lost its title as the world's biggest clean energy investor to China in 2009 and 2010, but surged back in 2011 with $55.9bn invested over the year, a 33 per cent annual increase. In contrasct, China saw investment rise just one per cent to $47.4bn.

The strong performance was achieved despite scarce bank finance, cuts in government subsidies, and some notable bankruptcies, including high-profile solar panel manufacturer Solyndra.

However, BNEF warned that the increase in US investment was largely the result of a rush of projects attempting to take advantage of the US federal loan guarantee programme and Treasury grant programmes before they expired.

"The country's principal remaining support measure for renewable energy, the Production Tax Credit, is currently also scheduled to fall away at the end of 2012 unless it is extended," said Michael Liebreich, chief executive of BNEF, in a statement. "There may be a rush to get projects completed in 2012, followed by a slump in investment in 2013 if it expires."

Europe experienced a modest rise in investment levels of three per cent to $100.2bn, on the back of large-scale and distributed solar installations in Germany and Italy and offshore wind projects in the North Sea.

India delivered the fastest growth of any major market as investment soared 52 per cent to $10.3bn, while Brazil clocked up a 15 per cent increase to $8.2bn.
Asset finance of utility-scale renewable energy projects was the largest single type of investment, increasing from $138.3bn in 2010 to $145.6bn in 2011. In contrast, finance for distributed renewable power technology, particularly rooftop solar, stood at $73.8bn, up from $60.4bn in 2010, and venture capital spend in the sector crept up four per cent to $8.9bn.

Solar saw an impressive 36 per cent rise in total investment to £136.6bn, nearly double the $74.9bn the wind sector managed. BNEF said falling solar prices had helped modules sell in much greater quantities as the technology approached cost-parity with other forms of electricity generation.

A BNEF spokesman told BusinessGreen that the 17 per cent drop in wind energy investment could be attributed to plummeting turbine prices, slower growth in the Chinese market, and finance problems in the closing months of the year exacerbated by the Eurozone crisis.

The third-largest investment category after solar and wind was smart grids, including power storage, efficiency and advanced transport technologies, which saw total investment of $19.2bn -- down 17 per cent on 2010 levels.

Biofuels saw total investment edge up from $8.6bn to $9bn, while biomass and waste-to-energy suffered an 18 per cent setback to $10.8bn. Geothermal investment slipped from $3.2bn to $2.8bn, marine energy investment remained steady at $0.3bn, and small hydro fell 25 per cent to $3bn.

Liebreich added that while it had been a turbulent year, "rumours of the death of clean energy have been greatly exaggerated".

"Overall, 2011 was a far better year for the clean energy industry than the press coverage would lead one to believe," he said. "Remember that for every equipment company operating at thin or negative margins, there is an installer who is getting a good deal.

"We will be seeing a new generation of technology starting to hit the market, and we are expecting important announcements by some of the biggest energy and engineering companies in the world as they take advantage of current market conditions to establish themselves in the sector."