RECORD $30BN YEAR FOR OFFSHORE WIND BUT OVERALL INVESTMENT DOWN
CHINESE SLOWDOWN AND FALLING COSTS OF SOLAR POWER WERE TWO OF THEREASONS GLOBAL CLEAN ENERGY INVESTMENT FELL 18% IN DOLLAR TERMS LAST YEAR .
January 13, 2017. By Moulin
New investment in clean
energy worldwide fell 18% last year to $287.5bn,[1] despite a record
year for offshore wind financings, according to the latest
authoritative figures from 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
$87.8bn, down 26% on the all-time high of $119.1bn reached in 2015,
while the equivalent figure for Japan was $22.8bn, 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 $29.9bn 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 $5.7bn - plus 14 other parks of more than 100MW,
worth anywhere between $391m and $3.9bn, 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 $25.8bn of offshore wind investment, but there
was also $4.1bn 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 $58.6bn, 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 $2.4bn.
Investment in the whole Asia-Pacific region including India and China
fell 26% to $135bn, some 47% of the world total. India was almost
level with 2015, at $9.6bn, with several giant solar photovoltaic
plants going ahead.
Europe was up 3% at $70.9bn, helped by offshore wind and also by the
biggest onshore wind project ever financed - the 1GW, $1.3bn Fosen
complex in Norway. The UK led the European field for the third
successive year, with investment of $25.9bn, up 2%, while Germany was
second at $15.2bn, down 16%. France got $3.6bn, down 5%, and Belgium
$3bn, up 179%, while Denmark was 102% higher at $2.7bn, Sweden up 85%
at $2bn and Italy up 11% at $2.3bn.
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
$914m, while that in Chile dropped 80% to $821m, Mexico fell 59% to
$1bn and Uruguay 74% to $429m. Brazil edged down 5% to $6.8bn.
One of the emerging markets to go the other way was Jordan, which
broke the $1bn barrier for the first time, its clean energy investment
increasing 147% to $1.2bn 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 $187.1bn 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 $810m), in solar thermal (the 110MW, $805m
Ashalim II Negev plant in Israel), solar PV (the 580MW, 31 Dominion
SBL Portfolio in the US, at an estimated $702m), biomass (the 299MW,
$841m Tees project in the UK) and geothermal (the ENDE Laguna Colorada
installation in Bolivia, at 100MW and $612m).
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 $39.8bn. 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 $12.1bn
in 2016, down 21%. Most cash was raised by Innogy, the renewable power
offshoot of German utility RWE, which secured just over $2.2bn of new
money in an initial public offering, and BYD, the Chinese electric
vehicle maker, which took just under $2.2bn via a secondary share
issue.
Venture capital and private equity investment in clean energy firms
rose 19% to $7.5bn, with the largest rounds coming from two Chinese
electric vehicle businesses, Le Holdings and WM Motor Technology,
raising $1.1bn and $1bn respectively. US solar developer Sunnova took
the third most, at $300m.
Corporate research and development spending on clean energy fell 21%
to $13.4bn, while government R&D moved up 8% to $14.4bn. Last but not
least, asset finance of energy smart technologies surged 68% last year
to $16bn, helped by a jump in global smart meter spending, from 8.8bn
in 2015, to $14.4bn.
Taking all categories of investment into account, solar was the
leading sector once again, at $116bn, but this was 32% down on 2015
levels, due in large part to lower costs per MW. Wind saw $110.3bn
invested, down 11%, while energy smart technologies attracted $41.6bn,
up 29%, biomass was more or less level on 2015 at $6.7bn, and biofuels
secured just $2.2bn, down 37%. Small hydro showed a 1% dip in
investment to $3.4bn, while low-carbon services attracted $4.3bn, up
5%, geothermal $2.7bn, up 17%, and marine energy $194m, 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
$117.5bn in 2016, up from $97bn in 2015 and the first time this has
broken the $100bn level. Behind the surge were a rise in renewable
energy project acquisitions to $72.7bn and, in particular, a leap in
corporate M&A to a record $33bn. The top takeovers included Tesla's
acquisition of SolarCity for $4.9bn and Enel's buy-back of the
minority holders in Enel Green Power for $3.5bn.
GLOBAL NEW INVESTMENT IN CLEAN ENERGY BY CATEGORY, 2004 TO 2016, $BN
_Source: Bloomberg New Energy Finance. Note: In this chart, asset
finance is adjusted for re-invested equity. AF (EST) stands for asset
finance of energy smart technologies projects, including smart grid,
smart meters and energy storage. VC/PE stands for venture capital and
private equity._
_The updated totals for clean energy investment in past years are:
$61.7bn in 2004, $88bn in 2005, $129.9bn in 2006, $182.5bn in 2007,
$205.2bn in 2008, $206.8bn in 2009, $276.1bn in 2010, $317.5bn in
2011, $290.7bn in 2012, $268.6bn in 2013, $315bn in 2014, $348.5bn in
2015 and $287.5bn in 2016.
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