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Rise in global clean energy investment

Global investment in clean energy in Q2 was up 22% from Q1, due to upturn in the financing of wind and solar projects and a 170% surge in equity funding for specialist companies on public markets.

The investment rose to US$53.1 bn, led by the US, which saw investment jump 155% compared to a weak first quarter, to reach US$9.5 bn, and China (up 63% at US$13.8 bn) and South Africa (up from almost nothing in Q1 to US$2.8 bn in Q2).

China was the largest investor in clean energy in Q2, followed by the US. Third on the list was Japan, down 5% at US$7.6 bn followed by South Africa and Australia, up nearly sixfold at US$2.3 bn. Among European countries, Germany led the way with US$1.9 bn, but this was down from US$6.3 bn in Q1. The UK was second with US$1.7 bn, down from$2.8 bn, with France at US$1.2 bn, up from $919 m, and Italy, also at US$1.2 bn, down from $1.3 bn.

Europe saw investment fall 44% compared to Q1, reaching just US$9.5 bn – its slowest quarter total for more than six years. The downturn in Europe helped ensure that global investment in clean energy in Q2 2013 ended up 16% below the figure for the second quarter of last year, of US$63.1 bn.

“These figures are a mixture of sweet and sour. On the sour side, 2013 globally is still running below 2012, which was itself down on the 2011 investment record. And European investment is clearly being hit by cuts in support for renewable energy and by policy uncertainty, notably ahead of the German election in September,” said Michael Liebreich, chief executive of Bloomberg New Energy Finance. “On the sweet side, the US is back in business following the hiatus that resulted from fears about the possible expiry of the Production Tax Credit for wind at the end of 2012. And the 50% rally in clean energy share prices since their lows last summer, with rises of 200% or more for Tesla Motors and a clutch of major wind and solar manufacturers, is rekindling – at least for the moment – the appetite of stockmarket investors for equity raisings.”

The biggest category of investment between April and June 2013 was asset finance of utility-scale projects such as wind farms and solar parks. This was US$31.9 bn, up 39% on the first quarter but down 21% year-on-year. Among the projects financed were Mid American Renewables’ 681MW Solar Star photovoltaic project in California, at US$2.5 bn, and EDF’s Blackspring Ridge wind farm phase one, at 299MW and US$588 m, in Alberta, Canada.

Investment in small-scale PV projects of less than 1MW continued to be another busy area of activity, accounting for US$17 bn of outlays in the second quarter, in line with Q1, but down 15% year-on-year, largely because of reductions in the cost of PV panels. Public markets’ investment in clean energy companies totalled US$3.8 bn in Q2, up from US$1.4bn in Q1 and the highest quarterly figure for two years. The biggest deal was a US$1.4 bn initial public offering by New Zealand-based geothermal developer Mighty River Power, followed by a US$660 m convertible issue by US electric carmaker Tesla Motors. Tesla also raised US$360m via an issue of ordinary shares.

During the second quarter, clean energy shares rose nearly 14%. The Wilder Hill New Energy Global Innovation Index, or NEX, which tracks the performance of 98 clean energy stocks worldwide, was at 151.32 on Tuesday this week, up from a nine-year low of 102.20 reached in July last year.

The final major category of investment in clean energy – funding of unquoted companies by venture capital and private equity players – had a quiet Q2, its total of US$1.3bn being down 48% from a relatively strong first quarter and also 20% lower than in the second quarter of 2012. The largest VC/PE transactions of April-to-June were a US$130 m expansion capital round by US fuel cell company Bloom Energy Corporation and an US$84 m bridge-funding round by Irish wind specialist Gaelectric Developments.

Asset finance of energy smart technologies amounted to US$14.2 bn in 2012, taking the research company’s overall figure for investment in clean energy last year to US$281.1 bn, compared to 2011’srecord US$317.2 bn. Of the US$148.5 bn invested in asset finance of renewable power and fuels in 2012, over two thirds – or US$102.7 bn – came from local sources in the country concerned, while US$40.3 bn was deployed across borders. The proportion of cross border investment from developed to developing countries reached a new peak in 2012, at 27%, with US$10.8 bn deployed  – compared to 17% in 2011 with a revised 'North-South' figure of US$9.8 bn. In 2013 so far, asset finance is continuing to show an approximate 70:30 split between domestic and cross-border investment.

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Energy efficiency  •  Policy, investment and markets  •  Solar electricity  •  Wave and tidal energy  •  Wind power