Furthermore, the authors report evidence that institutional finance is increasingly moving into clean energy, with 2013 seeing record volumes and with development banks also seen as a “robust source of investment.” An example comes from U.K. asset manager Glennmont Partners, which secured a EUR 50 million equity investment from the European Investment Bank for its Clean Energy Fund Europe II, which targets onshore wind, solar, biomass and small hydropower projects, the report says.
Conversely, asset finance of utility-scale renewable energy projects declined 13.5% in 2013, largely because of falling equipment costs, uncertainty over future energy support policies and reduced investment by utilities, the authors note.
Meanwhile, public stock market investment in renewable energy companies and funds recovered to average levels for the previous five years in 2013, at $11.1 billion, after a slump the previous year.
However, venture capital and private equity investment in renewable energy collapsed by almost half in 2013, its third consecutive annual decline, the report says. European private and VC investment was down $100 million to $500 million in 2013.
Nonetheless, one area that has attracted considerable interest over the last year is the growing use of bonds to finance renewable energy projects. This is a point picked up on by EY in the latest edition of its Country Attractiveness Index.
According to EY, the issuance of ‘green bonds’ soared to almost US$14 billion in 2013. EY suggests this indicates a “deep pool of capital for the clean energy sector to tap.” The group adds that bond funding is a common ?nancing mechanism for infrastructure assets with an established rate of return and the maturing renewable energy industry, with proven technology and a well understood resource risk is now much more suited to access these types of capital resources.
And, preliminary figures from Clean Energy Pipeline suggest a promising start to 2014, with new investment in the global clean energy sector totaling some $61 billion in the first quarter, a 14 percent increase on the corresponding period of 2013. In particular it highlights the strong performance of European offshore wind and note this is expected to continue in this quarter.
Clean Energy Pipeline’s numbers also indicate that the first quarter was notable for a number of clean energy equipment manufacturers completing secondary offerings, such as Danish wind turbine manufacturer Vestas, which raised $598 million.
Driving Renewable Energy Development
Placing this in an overarching policy context, late March gave a boost to the renewable energy sector when EU leaders — sitting in the European Council spring meeting — held a first policy debate on a framework for climate and energy policies for 2020-2030. They agreed that a final decision on the future framework should be reached by October 2014 at the latest. Significantly the Council also agreed that any agreement must be based on principles including the development of “a supportive EU framework for advancing renewable energies and ensure international competitiveness,” as well as “provide flexibility for the Member States as to how they deliver their commitments in order to reflect national circumstances and respect their freedom to determine their energy mix.”
It is no surprise that energy policy remains central to the European renewable energy business case. Nor is it surprising that any uncertainty in this regard tends to stifle investment. But it is also evident that many sources of finance remain available for European renewable energy developers - even where, in some cases, subsidies do not.
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