Policy Uncertainties Dampen Clean Energy Investment In First Quarter

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New financial investment in clean energy suffered its weakest quarter in the first three months of this year since the depths of the financial crisis two years earlier, according to the latest figures from Bloomberg New Energy Finance.

New financial investment worldwide in the first quarter of this year (Q1 2011) totaled $31.1 billion, down by a third from the record $47.1 billion figure recorded in the fourth quarter of last year. The Q1 2011 number was also down 10% on the equivalent figure for the first quarter of 2010 of $34.5 billion, but it is up over 50% from the low of $20.5 billion recorded in the first quarter of 2009.

The subdued investment level in the most recent three months reflected, in large part, the influence of policy uncertainties in Europe, including in Italy, Spain, France and the U.K.

Low natural-gas prices in the U.S. have played a role, because cheap gas-fired electricity makes it harder for developers of wind and solar projects to secure power purchase agreements. Investors may also have had a ‘pause for breath’ after their rush to close deals in the closing months of 2010 – in some cases, to catch attractive subsidies before they expired.

The brightest spots of January-March 2011 were Chinese wind investment, up 25% on the same quarter of 2010 at $10 billion, and the Brazilian wind market, which saw investment double to $2.1 billion from a year earlier.

Although the European wind market was down around 10% at $4.4 billion, this figure was bolstered by several large offshore wind infrastructure commitments.

Venture capital and private equity investment were up slightly, at $1.8 billion, in Q1 2011, from $1.7 billion in the fourth quarter of last year. However, the latest figure was down 38% from the equivalent total for the first quarter of 2010.

SOURCE: Bloomberg New Energy Finance

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