Renewables Q3 Investment Down on Q2

Latest figures from analysis firm New Energy Finance (NEF) show that total worldwide new financial investment in clean energy totaled $25.9 billion in the third quarter of 2009, down 9% from a revised Q2 total of $28.6 billion, but still markedly ahead of the dramatic low of $13.3 billion reached in Q1.

Although investment in Q3 was aided by a strong recovery in public markets and the first real installment of the billions of ‘green stimulus’ dollars promised by major economies, the figures remain 22% below the total for the same quarter last year, and 36% below the peak figure of $40.3 billion recorded in Q4 2007 as investment activity has not returned to the levels seen in 2007 and 2008.

Narrowing its forecast range for full-year 2009 total new investment to $105-$115 billion, in the upper band of the previous forecast range of $95-$115 billion, New Energy Finance still expects that total new investment in clean energy is likely to exceed $300 billion per year by 2020, but this is well below the $500 billion per year that would be required to limit the rise in global temperatures to two degrees Centigrade or less, the company argues.

Fundraisings by quoted clean energy companies totaled $4.5 billion during Q3, up from $3.1bn in Q2 and a far cry from the negligible $0.4 billion of Q1. The Q3 total was boosted by a few major share issues, including a $724 million rights issue by Norwegian solar company Renewable Energy Corporation and a closely-watched $371 million initial public offering by US battery maker A123 Systems, the first major IPO in the post-crisis period.

Meanwhile, venture capital and private equity investors pumped $2.2 billion into clean energy companies in Q3, up from $1.4 billion in Q2, but little more than half of the peak figure of $4.1 billion attained in Q3 2008. Among the big VC/PE deals in the latest quarter were the $198 million of equity raised by US solar firm Solyndra and the $82.5 million raised by US electric vehicle specialist Tesla Motors. Technology venture capital investment in the quarter totalled $813 million, up from $551 million in Q2, the NEF analysis says.

Asset finance, which always constitutes the largest portion of overall clean energy investment, hit $19.2 billion in the third quarter of 2009 for new-build projects, down from a revised $24.1 billion in Q2 but far above Q1’s total of $11.4 billion, which was the lowest since the beginning of 2006.

Michael Liebreich, chairman and chief executive of New Energy Finance, commented: “It is heartening to see that the collapse in investment seen in the first quarter of this year is firmly receding in the rear-view mirror. However, the financing environment remains difficult, with undue reliance on stimulus funds, development banks and state-backed capital providers of various sorts. Most significantly, the levels of investment required to bring global carbon emissions to a peak during the coming decade are as far out of reach as ever – particularly significant given the rapidly-approaching Copenhagen deadline.”

Nonetheless, Liebreich added: “The shortage of debt finance caused by the banking crisis remains an impediment to project finance for wind farms and solar parks. However, there are signs that the situation is beginning to ease. We are seeing governments – particularly the US – starting to spend the estimated $163 billion they have earmarked for ‘green stimulus’ programmes. That should boost asset finance in the fourth quarter.”

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