New Energy Finance, a London-headquartered provider of analysis to investors in renewable energy, reports that clean energy investment in the third quarter of this year was held back due to market weakness.
Investment in clean energy companies and capacity has increased spectacularly in recent years, but it is now running into the depressing influence of the wider economic and financial downturn. In the third quarter of the year, private equity and public market investment in clean energy fell compared to the previous three months, while asset finance of wind farms, solar parks and other renewable energy projects did its best to hold steady.
The latest authoritative figures from New Energy Finance show that venture capital and private equity investment totaled $4.4 billion in the third quarter – a hefty figure but down 24% from the record $5.8 billion number in the second quarter. Private equity expansion capital failed to maintain the impressive momentum of April to June, although there were $1.6 billion worth of investments in the latest quarter.
Public market investment in clean energy is being hit by three things – asset managers' fleeing high-tech and growth companies for the ‘safety’ of defensive stocks and treasuries, the perception that even the more mature clean energy companies are capital-hungry because of the industry's growth and the recent collapse in oil and gas prices.
The biggest slice of overall investment in clean energy is the financing of new capacity, such as wind farms, solar parks, biofuel plants and mini-hydro generation schemes. This continued at a high level in the third quarter, totaling $18 billion, modestly below the figure for the second quarter.
‘The reassuring message of these latest figures is that investment in clean energy is continuing at a high level, with early-stage venture funding one of the highlights,’ says Michael Liebreich, chairman and CEO of New Energy Finance. ‘However, it is clear that that the sector, despite its exciting medium- and long-term growth fundamentals, cannot be immune to the problems in the wider economic world.’
New Energy Finance expects merger and acquisition activity in clean energy to accelerate in coming quarters, as opportunistic buyers from both inside and outside the sector take advantage of lower valuations and because some target firms may run short of capital to develop their technologies.
SOURCE: New Energy Finance