The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

Cleantech's Investment Cycle: Don't Worry, Think Bigger

Several reports this week agree that cleantech investments fell in 2013, but that's not a bad thing. And the big question is what happens next: how much more is needed?

Three new reports out this past week -- Bloomberg New Energy Finance (BNEF), Cleantech Group, and Clean Energy Pipeline -- all indicate that cleantech investments were down for a second straight decline in 2013, though their numbers differ slightly. Bloomberg New Energy Finance pegs total 2013 investments in renewable energy and "energy smart" technologies at $254 billion, down 12 percent from 2012. The Cleantech Group said worldwide venture capital investments dropped 15 percent in 2013 to $6.8 billion. And Clean Energy Pipeline pegs a 20 percent dropoff in 2013 new cleantech investments (to $212 billion).

Comparing those summaries reveals some patterns and trends:

  • The two biggest cleantech-investing countries, China and the U.S., both reigned in their cleantech investments, according to BNEF -- -4 percent for China to $61 billion, its first reduction in a decade, and -8 percent for the U.S. to $48 billion -- while cleantech investment in Europe "crashed" 41 percent to $58 billion, largely attributed to subsidy restrictions. Japan's appetite for cleantech investing, though, boomed +55 percent to $35 billion.
  • Project financing overall rose 22 percent globally, mostly because of large European offshore wind deals, according to Clean Energy Pipeline. Venture capital (VC) and private equity (PE) were their weakest since 2005, falling by a third in 2013 to $4.3 billion. Asset financing, the biggest area of investment, slid 13 percent to $149 billion. And small-scale distributed energy investments (basically rooftop solar) fell for the first time since 2006 (-25 percent to $60 billion) mostly because of falling prices, BNEF pointed out. M&A transactions for VC/PE-backed cleantech companies in clean technology sectors totaled 83 transactions in 2013 (up 15 percent), though only a small percentage of those were disclosed, totaling $604 billion (down 37 percent). "Investors continue to shift away from capital intensive deals and move towards distributed generation, resource sharing, agriculture, and the digital oilfield theme," indicated Cleantech Group CEO Sheeraz Haji.
  • By technology, energy efficiency was the big winner with $1.3 billion invested across 188 deals, a dollar total 23 percent higher than 2012, notes the Cleantech Group. BNEF tracked solar investments falling about 20 percent to almost $115 billion, wind investments declining only slightly to $80 billion, biomass/waste-to-energy sinking 42 percent to $8 billion, and biofuels dropping about 26 percent to $4.9 billion, less than a fifth of their peak in 2006-2007.

But cleantech investing isn't dying off, despite some would have us believe. Investments compounded quarterly were up nearly 15 percent following five quarters of decline, the Cleantech Group says. Investment dollars, particularly in Europe, were down not because of flagging interest but because of reduced subsidies and the overall falling cost of solar installations, suggested BNEF CEO Michael Liebreich. (The flip side of that coin: cheaper solar energy means more bang for the investment buck.)

After two years of decline, this is just more evidence and confirmation that clean energy is a maturing market. "We've seen this movie before," explained Dallas Kachan, managing partner at Kachan & Co., and former managing director of the Cleantech Group. In various tech booms, waves of innovation and periods of "frothiness" have had a plateau and correction period -- including a dropoff in venture capital activity -- but then new sources of capital came in and drove an upswing in the sector lifecycle. This is "more recognition that this class of technology is here to stay," he said. If you want to worry about what's happening in cleantech, worry about how the entrenched energy industries are lobbying to undermine pricing for renewables, and not where sources of capital will come from, he suggested.

And that broader participation will be sorely needed. Another report this week from nonprofit sustainability group Ceres suggests annual cleantech investments should be doubled to $500 billion annually to 2020, and boosted to a trillion dollars by 2030, to meet all the goals of limiting global warming (to 2°C) and avoiding the most severe effects of climate change, reducing electricity demand while increasing use of renewables, and improving energy efficiency. (The BNEF and Ceres projections came out of a climate/investment conference this week, hosted by Ceres at the United Nations.) And BNEF's Liebreich suggested maybe that's too conservative -- it might have to be more like $2 billion annually.

Overall annual clean energy investment 2010-2050, in U.S. $B, for a 2°C global warming scenario. Credit: IEA, Ceres

Institutional investors manage nearly $76 trillion of total assets, but just a fraction of a percent has gone toward clean energy infrastructure projects, points out Ceres. The group's recommendations: raise that commitment to five percent portfolio-wide for clean energy investments, broaden access to capital markets with bonds and asset-backed securities (we're already seeing this happen and more is likely coming in 2014); and support policies for pricing carbon pollution while scrutinizing fossil fuel companies' risk exposures.

The floodgates are only now starting to open to access capital, from deep-pocketed corporations putting their balance sheets to work to buy their way into the world of cleantech, to tapping into throngs of individual and institutional investors. "There's big money still on the sidelines looking for a way to participate," Kachan urged.

Lead image: Magnetic get more money, via Shutterstock

Untitled Document

RELATED ARTICLES

Sunrise in Pakistan as the Country Delves into Solar PV

Robert Harker Pakistan has joined the list of countries that are exploring solar power as a means to bridge critical energy generat...

Global Renewable Energy Roundup: China, Kenya, Turkey, India Seeking More Renewables

Bloomberg News Editors China is being encouraged by three industry groups to double the nation’s solar-power goal for 2020 to make up for sh...

Why Smarter Grids Demand Smarter Communications Networks

Mark Madden

Historically, utility networks and communications networks have had little in common.

The Importance of “Switching Costs” to the US Residential Solar Industry

Paula Mints The DoE and numerous organizations and governments globally are focused on driving down the cost of solar convinced t...

PRESS RELEASES

Array Technologies’ DuraTrack HZ v3 Continues to (R)evolutionize at SPI

Array Technologies, Inc. (ATI) prepares to showcase its recently launched tracking syst...

Appalachian's Energy Center assists counties with landfill gas to energy projects

The Appalachian Energy Center at Appalachian State University recently completed a proj...

Early Bird Registration Deadline for GRC Annual Meeting is This Week

The deadline for early-bird rates for registration for the biggest annual geothermal ev...

Redesigned HydroWorld.com Video Gallery

Hydropower news and information, and interesting promotional announcements are now avai...

FEATURED BLOGS

Transitioning to Net-Zero Living

Judith and Jeffrey adore living in Belfast, Maine – a quaint harbor town of Belfast, Maine. They previously res...

The True Cost of Electric Vehicles in Australia

In order to avoid increased congestion, further greenhouse warming and lessen Australia’s reliance on imported ...

The Coming Multi-trillion Dollar Energy Investment Drive

In coming years, a multi-trillion dollar low-emission energy investment drive will get underway. Three catalysts wil...

The Perfect Elevator Pitch

The elevator pitch is a concise statement that grabs attention and communicates value, ideally leading to a next step...

FINANCIAL NEWS

Jim is Contributing Editor for RenewableEnergyWorld.com, covering the solar and wind beats. He previously was associate editor for Solid State Technology and Photovoltaics World, and has covered semiconductor manufacturing and related industries, ...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 4
1507REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in South Africa – in partnership with GWEC, the Glob...

Wind Energy in South Africa has been expanding dramatically, growing fro...

Intersolar North America 2016

Exhibition: July 12 - 14, 2016; Conference: July 11 - 13, 2016 Intersola...

Intersolar Europe 2016

Exhibition: June 22-24, 2016; Conference: June 21-22, 2016 Intersolar Eu...

COMPANY BLOGS

Less Is More

When you’re giving a presentation, one of the easiest things to do...

Captivology

One of the biggest challenges we face as efficiency sales professionals ...

How To Optimize Your Meeting Schedule

Do you spend more time in meetings than you do actually working? While m...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS