Summary:
Overview of the "Global Trends in Sustainable Energy Investment 2008" report by New Energy Finance for UNEP's Sustainable Energy Finance Initiative. 2007 was a record year for investment in renewable energy and energy efficiency industries. Wind energy was most popular with investors, although the fastest growing sector is solar energy. Investment in energy efficiency technology also reached a record. Sustainable energy accounted for 23% of new power capacity added globally in 2007. The EU remained the leading region for investment, while in the US acceptance of sustainable energy is becoming more widespread. Mood slightly subdued in 2008, although in Q2 most areas of investment rebounded, despite the global turmoil in the financial markets. Also noted was that carbon trading is becoming more accepted, and that private interest in the post-Kyoto market is emerging. (Published: 03/07/08)
Notes:
- 2007:
- record-setting year of investment in the renewable energy and energy efficiency industries
- Total sustainable energy transaction volume: $204.9b
- $148.3b in new funding entered the sustainable energy sector globally
- $98.2b went into new renewable energy generation
- wind energy again attracted the most investment: $50.2b
- especially in the US, China and Spain
- installed capacity passed the 100 GW mark
- solar power: $28.6b
- grew most rapidly: at an average annual rate of 254% since 2004
- driven by the advent of larger project financings
- heavy investment to ease the silicon bottleneck and new thin-film technology beginning to reach scale
- $50.1b went into technology development and manufacturing scale-up
- Investment in energy efficiency technology reached a record $1.8 billion
- an increase of 78% from 2006.
- According to the International Energy Agency, each $1 invested in energy efficiency an average avoids more than $2 needed to create new supply.
- $56.6b changed hands through mergers and acquisitions.
- even as a credit crunch began to roil financial markets
- 31 gigawatts of new installed generation
- sustainable energy accounted for 23% of new power capacity added globally in 2007
- about 10 times that of nuclear.
- Sustainable energy companies accounted for 19% of all new capital raised by the energy sector on the global stock markets in 2007.
- EU: remained the leading region for investment
- European asset finance up to record level of $49.5 billion
- 62% of asset finance worldwide.
- particularly later-stage financing
- supportive policies, as well as an investor base that is comfortable with financing renewable energy projects and more intense competition for deals
- US: acceptance of sustainable energy becoming more widespread
- extending beyond its traditional heartland of California
- Texas leading the wind energy charge
- new administration in 2009 is expected to make renewable energy and energy efficiency a political priority
- recent uncertainty in the US (particularly over the possible introduction of a CO2 regulations) has put a significant number of coal-fired generation plants on hold
- China: "Beijing Olympic Games (2008) has sharpened the country's political resolve and strengthened programmes to promote cleaner generation and cut energy intensity."
- investment in non-hydro renewables capacity in China increased by more than four times, to $10.8 billion
- new wind capacity doubled to 6 gigawatts.
- surge of Chinese solar companies listing on US and European stock markets
- public market activity is also growing at home
- e.g. Chinese wind manufacturer Goldwind raised $243 million last year in the Shenzhen Stock Exchange's first IPO related solely to renewable energy.
- Brazil: world's largest renewable energy market
- thanks to its long established hydropower and bioethanol industries
- sustainable energy investment in Brazil continued to be dominated by ethanol
- investor interest shifted there from the beleaguered US ethanol market
- investment in sugar cane cogeneration, biodiesel production and wind generation are also picking up.
- India:
- asset financing grew significantly, to $2.5 billion
- mostly for 1.7GW of new wind projects
- these installations place India fourth in the world
- both in terms of new capacity added in 2007 and total installed capacity.
- funds raised on Indian stock exchanges reached $628 million
- although: companies increasingly looked to foreign markets for new capital,
- raised $1.4 billion overseas in 2007
- public market activity was marked by a series of Foreign Currency Convertible Bonds (FCCBs) from established Indian renewable energy companies
- e.g. Suzlon($500 million raised) and Moser Baer($150 million).
- 2007 also saw several aggressive cross-border deals involving Indian or Chinese acquirors
- e.g. Suzlon's $1.6 billion acquisition of Repower
- China National Building Material Group's purchase of German turbine blade manufacturer NOI Rotortechnik.
- $13 billion invested in carbon funds by the end of 2007
- important source of investment for "Clean Development Mechanism" (CDM) projects in developing countries
- most new investment was into private funds
- carbon trading becomes more established.
- 2008: picture somewhat subdued across the sector
- only mergers and acquisitions up
- several substantial wind developers sold their portfolios
- many realising that with the tightening up of the credit markets they could not finance the growth themselves
- US ethanol industry undergoing restructuring
- But: Q2 2008: most areas of investment rebounded
- even as global financial markets remained in turmoil
- sustainable energy venture capital and private equity in Q2 2008 was up 34% on Q2 2007
- new build asset finance was up 8%
- public market investment showing a strong recovery with the IPO of Portuguese utility EDP's renewable energy business, EDP Renovaveis
- Q1 2008: emergence of private interest in the post-Kyoto market
- investors beginning procuring post-2012 CDM credits eligible for trading in the EU Emissions Trading Scheme.
"Investment in the sustainable energy sectors must continue to grow strongly if targets for greenhouse gas reductions and renewables and efficiency increases are to be met"
"Investment between now and 2030 is expected to reach $450 billion a year by 2012, rising to more than $600 billion a year from 2020. The sector's overall performance during 2007 and into 2008 sets it on track to achieve these levels."
- "Carbon Capture and Storage(CCS) is the only sector where we did not see as much progress as we had expected, with the regulatory and funding environments for these projects remaining murky and timelines for the first commercial projects being extended."
- Source: "Global Trends in Sustainable Energy Investment 2008" by New Energy Finance (UK) for UNEP's Sustainable Energy Finance Initiative
- Achim Steiner, head of UNEP, UN Under-Secretary General
"Just as thousands were drawn to California and the Klondike in the late 1800s, the green energy gold rush is attracting legions of modern day prospectors in all parts of the globe. A century later, the key difference is that a higher proportion of those looking for riches today may find them. With world temperatures and fossil fuel prices climbing higher, it is increasingly obvious to the public and investors alike that the transition to a low-carbon society is both a global imperative and an inevitability. This is attracting an enormous inflow of capital, talent and technology. But it is only inevitable if creative market mechanisms and public policy continue to evolve to liberate rather than frustrate this clean energy dawn. What is unfolding is nothing less than a fundamental transformation of the world's energy infrastructure."
