Chinese slowdown and falling
costs of solar power were two of the reasons global clean energy investment
fell 18% in dollar terms in 2016, according to Bloomberg
 |
| Source of renewable energy: Wind turbines. Global clean energy investment fell 18% in dollar terms in 2016. Photo credit: theenergycollective.com |
New investment in
clean energy worldwide fell 18% last year to $287.5 billion, despite a
record year for offshore wind financings, according to the latest authoritative figures released
on Thursday, 12 January 2017 by research company, Bloomberg New Energy Finance.
The 2016 setback in
global investment, signaled in advance by weak quarterly figures during the
course of last year, partly reflected further sharp falls in equipment prices,
particularly in solar photovoltaics. However, there was also a marked cooling
in two key markets, China and Japan. Clean energy investment in China in 2016
was $87.8 billion, down 26% on the all-time high of $119.1 billion reached in
2015, while the equivalent figure for Japan was $22.8 billion, down 43%.
Justin Wu, head of
Asia for BNEF, said: “After years of record-breaking investment driven by some
of the world’s most generous feed-in tariffs, China and Japan are cutting
back on building new large-scale projects and shifting towards digesting
the capacity they have already put in place.
“China is facing
slowing power demand and growing wind and solar curtailment. The government is
now focused on investing in grids and reforming the power market so that the
renewables in place can generate to their full potential. In Japan, future
growth will come not from utility-scale projects but from rooftop solar systems
installed by consumers attracted by the increasingly favorable economics of
self-consumption.”
Offshore wind was the
brightest spot in the global clean energy investment picture in 2016. Capital
spending commitments to this technology hit $29.9 billion in 2016, up 40% on
the previous year, as developers took advantage of improved economics,
resulting from bigger turbines and better construction knowhow.
Last year’s record
offshore wind tally included the go-ahead for the largest ever project, Dong
Energy’s 1.2GW Hornsea array off the UK coast, at a cost of $5.7 billion – plus
14 other parks of more than 100MW, worth anywhere between $391 million and $3.9
billion, in British, German, Belgian, Danish and Chinese waters.
Jon Moore, chief
executive of BNEF, commented: “The offshore wind record last year shows that
this technology has made huge strides in terms of cost-effectiveness, and in
proving its reliability and performance. Europe saw $25.8 billion of offshore
wind investment, but there was also $4.1 billion in China, and new markets are
set to open up in North America and Taiwan.”
Even though overall
investment in clean energy was down in 2016, the total capacity installed was
not. Estimates from BNEF’s analysis teams are that a record 70GW of solar were
added last year, up from 56GW in 2015, plus 56.5GW of wind, down from 63GW but
the second-highest figure ever.
Geographical split
Clean energy
investment in the US slipped 7% to $58.6 billion, as developers took time to
progress wind and solar projects eligible for the tax credits that were
extended by Congress in December 2015. Canada was down 46% at $2.4 billion.
Investment in the
whole Asia-Pacific region including India and China fell 26% to $135 billion,
some 47% of the world total. India was almost level with 2015, at $9.6 billion,
with several giant solar photovoltaic plants going ahead.
Europe was up 3% at
$70.9 billion, helped by offshore wind and also by the biggest onshore wind
project ever financed – the 1GW, $1.3 billion Fosen complex in Norway. The UK
led the European field for the third successive year, with investment of $25.9
billion, up 2%, while Germany was second at $15.2 billion, down 16%. France got
$3.6 billion, down 5%, and Belgium $3 billion, up 179%, while Denmark was 102%
higher at $2.7 billion, Sweden up 85% at $2 billion and Italy up 11% at $2.3
billion.
Among developing
nations, many saw investment slip as projects that won capacity in renewable
energy auctions during 2016 did not secure finance before the year-end.
Investment in South Africa fell 76% to $914 million, while that in Chile
dropped 80% to $821 million, Mexico fell 59% to $1 billion and Uruguay 74% to
$429 million. Brazil edged down 5% to $6.8 billion.
One of the emerging
markets to go the other way was Jordan, which broke the $1 billion barrier for
the first time, its clean energy investment increasing 147% to $1.2 billion in
2016.
2016 investment by
category and sector
The biggest category
of investment in clean energy in 2016 was, as usual, asset finance of
utility-scale renewable energy projects. This totalled $187.1 billion last
year, down 21% on 2015. The biggest seven financings were all in offshore wind
in Europe, but there were also large deals in Chinese offshore wind (the Hebei
Laoting Putidao array, at 300MW and an estimated $810 million), in solar
thermal (the 110MW, $805 million Ashalim II Negev plant in Israel), solar PV
(the 580MW, 31 Dominion SBL Portfolio in the US, at an estimated $702 million),
biomass (the 299MW, $841 million Tees project in the UK) and geothermal (the
ENDE Laguna Colorada installation in Bolivia, at 100MW and $612 million).
Among other categories
of investment, small-scale projects of less than 1MW – including rooftop PV –
attracted 28% less investment than the previous year, the 2016 total finishing
at $39.8 billion. Most of this year-on-year drop reflected falling costs of
solar systems rather than a decline in interest from buyers.
Public markets
investment in quoted clean energy companies was $12.1 billion in 2016, down
21%. Most cash was raised by Innogy, the renewable power offshoot of German
utility RWE, which secured just over $2.2 billion of new money in an initial
public offering, and BYD, the Chinese electric vehicle maker, which took just
under $2.2 billion via a secondary share issue.
Venture capital and
private equity investment in clean energy firms rose 19% to $7.5 billion, with
the largest rounds coming from two Chinese electric vehicle businesses, Le
Holdings and WM Motor Technology, raising $1.1 billion and $1 billion
respectively. US solar developer Sunnova took the third most, at $300 million.
Corporate research and
development spending on clean energy fell 21% to $13.4 billion, while
government R&D moved up 8% to $14.4 billion. Last but not least, asset
finance of energy smart technologies surged 68% last year to $16 billion,
helped by a jump in global smart meter spending, from 8.8 billion in 2015, to
$14.4 billion.
Taking all categories
of investment into account, solar was the leading sector once again, at $116
billion, but this was 32% down on 2015 levels, due in large part to lower costs
per MW. Wind saw $110.3 billion invested, down 11%, while energy smart
technologies attracted $41.6 billion, up 29%, biomass was more or less level on
2015 at $6.7 billion, and biofuels secured just $2.2 billion, down 37%. Small
hydro showed a 1% dip in investment to $3.4 billion, while low-carbon services
attracted $4.3 billion, up 5%, geothermal $2.7 billion, up 17%, and marine
energy $194 million, down 7%.
Record acquisition activity
Also measured by BNEF,
but not included in the figures for new investment, is acquisition activity in
clean energy. This totaled $117.5 billion in 2016, up from $97 billion in 2015
and the first time this has broken the $100 billion level. Behind the surge was
a rise in renewable energy project acquisitions to $72.7 billion and, in
particular, a leap in corporate M&A to a record $33 billion. The top
takeovers included Tesla’s acquisition of SolarCity for $4.9 billion and Enel’s
buy-back of the minority holders in Enel Green Power for $3.5 billion.
*** From Environews
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