Global green-energy investment drops

Global investment in green energy fell sharply in the first three months of 2012 as European financial woes, upcoming U.S. elections and fears of declining federal support fed a “destabilizing uncertainty,” a report unveiled Thursday finds.

New financial investment fell 28 percent from the prior quarter to $27 billion, according to Bloomberg New Energy Finance, which called the first quarter 2012 tally “the weakest since the depths of the financial crisis” in early 2009.

ADVERTISEMENT
The $27 billion total is also 22 percent below the first quarter of 2011. The tally includes venture capital, private equity, public markets and asset finance, but not small-scale projects and corporate and federal research and development.

Michael Liebreich, chief executive of Bloomberg New Energy Finance, said the quarterly total is not a “disaster,” but it’s not so hot, either, after a record 2011.

“The weak Q1 2012 number reflects the destabilising uncertainty over future clean energy support in both the European Union — driven by the financial crisis — and the US — driven by the expiry of stimulus programmes and the electoral cycle,” he said in a statement.

U.S. production tax credits for wind-power projects are slated to expire at the end of the year, and their renewal is uncertain. A stimulus program that provided developers grants in lieu of traditional tax credit financing lapsed at the end of 2011.

Bloomberg New Energy Finance also notes that European nations including Spain, Italy, Germany, Poland and the United Kingdom have announced cuts in incentives for renewable-power projects.

The findings are part of a series of recent mixed signals for green electricity, which faces competition from cheap natural gas in the United States.

Energy Secretary Steven Chu said Wednesday that falling natural-gas prices won’t be a death knell because “the clean tech industry is making great strides” in moving closer to cost-competitiveness with other sources. “It is amazing what is happening to the technology, particularly in solar,” he said at an energy conference in New York City.

“Many people don’t realize the cost of the module dropped more than fourfold in three years,” he said, adding that “everybody expects” the costs to drop by at least by another factor of two by 2020.

But in the nearer term, Liebreich noted that political factors and the dismal European economy will continue to be a drag, stating, “The outlook for investment in the remainder of the year remains difficult.”

“The rapidly improving cost-competitiveness of renewable energy technologies is stimulating activity, particularly in developing countries. However, he said it is becoming harder to see the sector worldwide beating last year’s record, unless the storm-clouds lift in Europe and the U.S. Congress stops bickering and sends some clear signals about the importance of new energy technologies,” he said.

The bulk of the 2012 investment thus far, $24.2 billion, financed utility-scale projects like wind farms and solar power plants, and also included $1.9 billion of venture capital and private-equity investment in specialized companies.

“Just $601 [million] was raised on the public markets by quoted companies during the period,” the Bloomberg New Energy Finance report finds.

The hurdles may continue.

The California-based solar power company BrightSource Energy Inc. on Wednesday scuttled a planned initial public offering, citing “adverse market conditions.”

“While we received significant interest from potential investors, the continued market and economic volatility are not optimal conditions for an IPO,” CEO John Woolard said in a statement, but added that the company is in a “strong financial position" and has the "support of world-class investors and partners.”

While there are storm clouds on the horizon, 2011 saw very positive trends for the United States and globally, according to a report Wednesday from the Pew Charitable Trusts.

The report, which uses Bloomberg New Energy Finance data, finds that in 2011, global clean-energy investment grew to a record $263 billion. The figure includes R&D spending.

The United States last year attracted $48 billion in investment, reclaiming the top spot in clean energy finance, which it had ceded to China since 2009 (the United States was also behind Germany in 2010).

“With investors taking advantage of key policies that were about to expire, the United States led all nations in financing for solar, energy efficiency, and biofuel technologies. In addition, the United States led in venture capital/private equity and research and development investments,” the Pew report states.

Pew warned that the top spot in the podium is hardly safe.

“America will be hard-pressed to sustain last year’s success in the wake of now-expired Treasury grants and the Department of Energy’s loan guarantee programs. Also, the production tax credit concludes at the end of this year,” Pew states.