The authoritative Bloomberg New Energy Finance time series shows total investment growing from $51.7 billion in 2004, to $76.3 billion in 2005, $112.9 billion in 2006, $150.8 billion in 2007, $180.1 billion in 2008 and $186.5 billion in 2009. 2010 was easily the strongest year so far for investment in clean energy – double the figure recorded in 2006 and nearly five times that from 2004.
"This is a spectacular result, beating previous record investment levels by a clear margin of more than $50 billion. It flies in the face of scepticism about the clean energy sector among public market investors, who have been concerned about the sustainability of subsidy programmes in Europe, the failure of the Obama administration to deliver a climate or an energy deal, and the crescendo of ill‐informed doubts about climate change,” explains Michael Liebreich, Chief Executive of Bloomberg New Energy Finance.
The main drivers of the rapid growth in investment in 2010 were China, European offshore wind, European roof-top solar and research and development. Investment in small‐scale, distributed generation projects surged by 91% last year to $59.6 billion, with the dominant element roof-top and other small‐scale solar projects, notably in Germany but also in the US, the Czech Republic, Italy and elsewhere.
China consolidates
Investment in China was up 30% to $51.1 billion in 2010, by far the largest figure for any country. In 2009 Asia and Oceania overtook the Americas, and in 2010 it narrowed the gap further on Europe, Middle East and Africa as the leading region of the world for clean energy investment.
Offshore wind finance had another good year in 2010, led by a $1.7 billion package to fund the next, 295MW phases of the Thornton Bank offshore wind farm off the coast of Belgium, and a $1 billion deal to finance the Borkum West II project in German waters.
Research and development spending on clean energy technologies by companies and governments grew to a record level in 2010, which is 30% up on the 2009 figure, according to Bloomberg New Energy Finance data.
Within this, the main constituent was government R&D, which reached $21 billion, up from $15.8 billion in 2009, while corporate R&D recovered from 2009's recession‐hit figure of $12.8 billion, to reach $14.4 billion, giving a total for global clean energy R&D of $35.5 billion.
Venture capital and private equity investment had a strong year, up 28% from the 2009 total to reach $8.8 billion, though failing to match 2008's record figure of $11.8 billion. Among the private equity deals of 2010 were a $400m financing for US wind project developer Pattern Energy Group, and $350m for Better Place, the US‐based electric vehicle charging network specialist.
Public market investment bounced back from its recession‐driven lows in 2008 and 2009, up 18% to $17.4 billion in 2010. This was not a record figure ‐ it fell short of the $24.6 billion clean energy companies raised on stock markets in 2007. Among the biggest deals in this category in 2010 were the $3.5 billion initial public offering in November by Enel Green Power of Italy, and the $1.1 billion flotation by Chinese wind turbine maker Xinjiang Goldwind Science & Technology in Hong Kong in October. It is notable that this transaction level took place despite the lacklustre performance of clean energy shares during 2010, with the NEX index dropping 14.6% and underperforming the S&P 500 by more than 20% over the year.
The largest investment asset class in 2010 was, as usual, asset finance of utility‐scale projects such as wind farms, solar parks and biofuel plants. This rose 19% to $127.8 billion last year.
Solar strong
In terms of sector, the most notable feature of 2010 was the 49% growth in investment in solar power to $89.3 billion, driven largely by distributed generation projects in Europe, where investment grew 91% last year to $59.6 billion as already noted. Bloomberg New Energy Finance estimates that 86% of investment in small‐scale solar took place in markets where feed‐In tariffs have been introduced.
Overall investment in wind gained 31% to reach $96 billion. It is notable that 38% of this total was accounted for either by China or by large European offshore wind farms.
Energy‐smart technologies such as smart grid, energy management, electric vehicles and power storage also had a strong year, with financing of companies in this sector reaching a record $23.9 billion, up 27% on 2009.
In the other sectors, biofuels had almost a flat year, with overall investment down slightly to $7.9 billion from $8.1 billion in 2009 and far below the record of $20.9 billion set in 2006 during the US’s corn‐based ethanol bubble. Biomass and waste‐to‐energy was also flat, at $11.6 billion, compared with $12 billion in 2009.
“We have been saying for some time that the world needs to reach a figure of $500 billion per annum investment in clean energy if we are to see carbon emissions peak by 2020. What we are seeing in these figures for the first time is that we are half‐way there, and it is very good news,” comments Liebreich. "The figures do contain an important caveat. More than in most years, growth has been in fairly direct response to government intervention, whether in the form of cheap debt in China, sweet off‐take deals for European offshore wind, feed‐in tariffs for solar or a regulatory push for smart grids. The industry needs to continue to drive down its costs and reduce its reliance on this sort of support.”
Liebreich stresses that 2011 will have to be a very strong year to beat 2010 and that current signs are encouraging, with further cost improvements likely in both solar panels and wind turbines, and the supply of private sector debt and equity finance improving from its low point during and after the banking crisis.
“We are watching what happens to distributed generation particularly keenly – the extraordinary growth surprised us last year, and we will have to wait and see what happens as Germany reduces its solar tariffs," he says.
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