Intelligent Energy

Clean energy investment takes a dive

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Global investment in clean energy hit a record in 2011. My how times have changed. So far, 2012 is off to a dismal start thanks to several developments that continue to ripple through the industry.

Global investment in clean energy dropped sharply to $27 billion in the first quarter of the year, the weakest posting since the depths of the financial crisis in early 2009, according to a recent analysis by research firm Bloomberg New Energy Finance.

New financial investment, which includes venture capital, private equity, public markets and asset finance, was down 28 percent from the fourth quarter of 2011; and was 22 percent lower than the same period last year.  The figures did not include small-scale projects and corporate and government research and development spending.

Bloomberg New Energy Finance CEO Michael Liebrach says the quarterly figure is not a disaster. Still, he noted, it is the weakest since the dismal $20 billion total seen in the first quarter of 2009, when the financial crisis was at its worst.

The weak first quarter figure reflects uncertainty over future support for clean energy in the European Union -- driven by the financial crisis -- and the United States -- due to the expiration of stimulus programs and the electoral cycle, said Liebrach.  And he doesn't expect a rapid turnaround in either region over the next 12 months.

Which is unfortunate when you consider that prices in solar photovoltaics and onshore wind continue to fall and approach competitiveness with fossil fuel power. Liebrach sees this as a missed opportunity and noted in the analysis that "politicians in many countries appear to be ducking the decisions that would ensure that the sector maintains its growth trajectory."

Renewable power stands to suffer even more as key incentives expire this year. In the United States, the production tax credit, a major support mechanism for wind power, is scheduled to expire at the end of the year unless Congress agrees to extend it. Meanwhile, governments in Spain, Italy, Germany, Poland and the UK have announced cuts in incentives for renewable power, the analysis noted.

Here's a breakdown of the investment categories:

  • Asset finance of $24.2 billion was down 30 percent from the fourth quarter and 13 percent below the same period last year;
  • Venture capital and private equity maintained their ground at $1.9 billion, just 2 percent below the fourth quarter figure and six percent higher than the first quarter in 2011. The biggest deals were $103 million raised by U.S. electric car company Fisker Automotive; $102.6 million invested in biomass-to-power firm Tamar Energy; and $81 million injected into PV installer SolarCity.
  • Public market investment hit $601 million, a 12 percent drop from the fourth quarter and a whooping 87 percent down from the first quarter in 2011.

By the numbers,  global investment in clean energy

  • $54 million in 2004;
  • $247 billion in 2010;
  • $263 billion in 2011

Photo: Flickr user Brooks Elliott, CC 2.0

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Kirsten Korosec

Contributing Editor

Kirsten Korosec has written for Technology Review, Marketing News, The Hill, BNET and Bloomberg News. She holds a degree from Northwestern University's Medill School of Journalism. She is based in Tucson, Arizona. Follow her on Twitter. Disclosure