Clean energy investment in the second quarter (Q2) totaled $61.5 billion – approximately 12% above the Q1 2016 figure but 32% below a very strong outturn of $90 billion in the equivalent period of 2015, according to new data from Bloomberg New Energy Finance (BNEF).
Looking at the 2016 trend so far, and taking the first quarter and second quarter figures together, BNEF has found that global investment in the first half of this year reached $116.4 billion, approximately 23% lower than in the opening six months of 2015.
Europe’s figure for the first half of the year was up 4% at $33.5 billion, and Brazil was up 36% at $3.7 billion. On the flip side, all of the other regions were down: China by 34% to $33.7 billion, India down 1% at $3.8 billion, the rest of Asia-Pacific down 47% at $12.1 billion, Middle East and Africa down 46% at $4.2 billion, the U.S. down 5% at $23.1 billion, and the Americas excluding the U.S. and Brazil down 63% at $2.3 billion.
“It is now looking almost certain that the global investment total for this year will fail to match 2015’s runaway record,” says Michael Liebreich, chairman of the advisory board at BNEF. “China’s financing of wind and solar projects was even higher last year than previously estimated, and the hangover this year caused by weak electricity demand and policy changes in that country will, therefore, be all the greater.”
According to BNEF, changes in the solar market are another of the main reasons for the lower trajectory for global investment so far this year. Photovoltaic panels and project construction have become cheaper in many countries, and there has also been a shift from small-scale projects (relatively expensive in terms of dollars per megawatt) to utility-scale projects.
Although the figures for 2016 so far have been on the low side, BNEF also revealed that global clean energy investment was even stronger last year than previously thought. Revised figures show that new investment in 2015 reached $348.5 billion, nearly $20 billion above the previous estimate of $328.9 billion published in January.
According to BNEF, the revision reflects information on investment transactions not disclosed at the time. The company states that the two big changes to the 2015 total are an upward revision of $29 billion to asset finance of utility-scale wind and solar projects – mainly in China and the U.S. – and a downward revision of $10 billion to spending on small distributed capacity, such as rooftop solar, particularly in Japan.
Abraham Louw, BNEF’s associate for energy economics, says, “One shouldn’t look at these latest Q2 figures too negatively. Last year’s investment of $348.5 billion was really quite groundbreaking – up 11 percent over 2014 and 30 percent over 2013.”
H1 2016 Details
BNEF’s data found that the biggest category of investment in the first half (H1) of 2016 was, as usual, asset finance of renewable energy projects – at $92 billion worldwide, which is down 19% on H1 2015. The biggest asset finance deals of the second quarter were in offshore wind in Europe, led by the $3.9 billion final investment decision on the 588 MW Beatrice project in U.K. waters by SDIC Power Holdings, SSE Renewables and Copenhagen Infrastructure Partners.
Big-ticket projects getting the go-ahead in other renewable power technologies included the 100 MW Engie Kathu solar thermal plant in South Africa, which is worth an estimated $756 million; the 400 MW Enel Cimarron Bend onshore wind installation in the U.S., which is priced at $610 million; and the 300 MW AZTE Quaid-e-Azam PV plant in Pakistan, which is at an estimated $363 million.
Small-scale solar projects attracted $19.5 billion in H1 2016 – down 32% on the same period of last year. BNEF says much of this was due to lower costs, but there was also a marked slowdown in the largest market for these systems – Japan, where deployment amounted to $4.6 billion in H1, which is down 66% on the same period of 2015.
Public markets investment in specialist clean energy companies was $3.8 billion in H1 2016 – approximately 56% below that in the first six months of 2015, although there was a sharp pickup between Q1 and Q2 this year. The top public market fundings of the second quarter were a $1.7 billion secondary share issue by U.S. electric carmaker Tesla Motors and two secondary issues by Chinese digital energy companies, Ningbo Sanxing Electric and Genimous Investment, worth $457 million and $432 million, respectively.
BNEF continues that venture capital and private equity (VC/PE) investment in clean energy firms totaled $2.8 billion in H1 2016 – up 2% on H1 2015. The biggest VC/PE deals were $230 million of expansion capital for India-based wind project developer Greenko Energy Holdings and $120 million of early-stage money for Chehejia, a Chinese electric vehicle maker.
BNEF states the annual figures include all of the categories of investment calculated quarterly (asset finance, reinvested equity, small-scale projects, venture capital, and private equity and public markets), but also two other categories – corporate and government research and development and digital energy asset finance.