Clean energy investment drops to lowest level since 2009

>> Oct 16, 2012


This year's downwards trend in global clean energy investment continued into the third quarter as project finance, venture capital, private equity, and public market activity all fell to their lowest quarterly levels since the beginning of 2009.

That was the stark conclusion of the latest quarterly report by analyst firmClean Energy Pipeline, which warned that an ongoing crisis of confidence in the financial markets, policy uncertainty, and subsidy cuts were undermining green investments.  According to the report, project finance dropped 28 per cent from the previous quarter to just over $27bn, representing a 52 per cent slide from the $56.7bn invested in the same period last year. The US was particularly badly hit, with its wind energy sector recording a massive 62 per cent drop quarter-on-quarter due mainly to the impending expiration of the industry's Production Tax Credit (PTC).

Global venture capital and private equity investment also fell to $1.7bn, its fourth successive quarterly drop and a 60 per cent decrease on the $4.2bn tracked in the third quarter of 2011. An absence of the large solar deals that propped up figures last year was particularly evident: only $108m was invested in solar companies globally in the third quarter of this year, representing just a 10th of the $1.1bn recorded during the same quarter last year.

In addition, public markets activity took a hit, with clean energy companies securing just $1.1bn, around half the $2.1bn that was raised through IPOs, secondaries, and convertible notes during the previous quarter and barely 25 per cent of the $4.8bn tracked during the corresponding period in 2011.

However, the report also revealed a few bright spots. Merger and acquisition activity totalled $16.3bn, almost 70 per cent up on the second quarter of the year, although still well below the $23.2bn racked up in the third quarter of last year. Meanwhile, the waste and recycling sector enjoyed a bumper quarter as 16 companies were acquired for a combined $4.5bn, the highest quarterly level ever recorded.

Venture capital investment in advanced materials and green transportation companies also grew 45 per cent and 98 per cent respectively quarter-on-quarter to $199m and $307m, while project investment in sub-1MW clean energy projects increased to $23.6bn, a 26 per cent rise on the corresponding period last year.

Douglas Lloyd, chief executive of Clean Energy Pipeline, said overall investment activity was "disappointing but not unexpected".

"It's a brutal environment to raise capital when you factor in major policy uncertainty and low natural gas prices in the US, feed-in tariff cuts in Europe and an overall crisis of confidence in the global financial markets," he added.

"A 30 per cent drop in project finance in Asia last quarter, which had been propping up global investment volumes in recent quarters, didn't help."

Source: Business Green

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