Clean energy investment set to fall for first time in eight years

Bloomberg New Energy Finance says 20% drop in Q3 makes prospect of beating last year's record $280bn very unlikely

Global clean energy investment looks to be heading for a dip this year following a weak performance over the third quarter of 2012.

A total of $56.6bn was invested from July to September, a five per cent drop on the previous quarter and 20 per cent lower than the same period last year, figures from analyst Bloomberg New Energy Finance (BNEF) revealed today.

BNEF forecasts the full year 2012 figure is therefore likely to fall short of last year's record $280bn, marking the first down-year for world investment in the sector for at least eight years.

The findings chime with research published by Clean Energy Pipeline last week that suggested clean energy investment had dropped to its lowest level since the beginning of 2009.

Echoing the Pipeline report, BNEF blames falling equipment prices, policy uncertainty in key markets such as the US, the UK and Italy, and the dampening effect of low share prices on venture capital investment.

"The fact that 2012 looks like being a down-year is disappointing, but not surprising," said Michael Liebreich, chief executive of BNEF.

"The decline should not be exaggerated either. The third quarter figure was still well over $50bn – roughly equivalent to investment in the whole of 2004."

He added that a geographic shift is taking place in clean energy, with established markets such as the US, Europe and China "losing momentum" and emerging South American, Asian and African markets "picking up steam".

Investment in the US fell 28 per cent on the previous quarter to $7.3bn, down 62 per cent on Q3 2011, while Europe saw a slight quarter-on-quarter drop to $18.2bn, although this represents an almost 30 per cent fall on the same time last year. China saw investment slip 17 per cent on the quarter to $14.8bn, although this was up six per cent on the same three months last year.

However, Brazil showed a 94 per cent increase from the previous quarter to $1.9bn, a rise of 24 per cent on the year.

In addition, of the top three projects getting the financial go-ahead between July and September, two were in Morocco – the 160MW Masen Ouarzazate solar thermal plant at $1.2bn and the 300MW Tarfaya wind farm at $563m – while the third was the 258MW Verace wind portfolio in Brazil, which raised $497m.

Even so, asset finance of utility-scale projects such as wind farms, solar parks and biofuel plants fell 10 per cent to just over $32.3bn, a substantial reduction on the $49.5bn reached in the same period last year due to the final throes of the US federal loan guarantee programme.

Venture capital and private equity investment dropped 20 per cent on the previous quarter to $1.3bn, some 34 per cent lower than last year, although public markets investment saw a 47 per cent rise on Q2 to $1.8bn.

Solar investments continue to lead the way with $33.8bn, a marginal quarter-on-quarter increase but a 22 per cent slide from 2011, followed by wind at $15.5bn, a fall of 26 per cent on the quarter and 23 per cent on the year

Meanwhile, small hydro is a distant third with $3.5bn, biomass and waste is fourth at $2bn, energy-smart technologies fifth at $800m, and biofuels sixth at just $700m.

A separate report published today by consultants Mercom indicates venture capital funding for the solar power industry fell 81 per cent to $72m in the third quarter of this year, the first sub-$100m quarter since 2008. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds