2012 is second highest year on record for global clean energy investment

Courtesy of Bloomberg New Energy Finance

Courtesy of Bloomberg New Energy Finance

A total of $269 billion was invested in clean energy globally in 2012, an 11% decline from the record $302 billion that was invested globally in 2011, according to Bloomberg New Energy Finance. Nevertheless, the 2012 investment total was the second highest ever and five times that of 2004.

Factors exerting downward pressure in 2012 included regulatory uncertainty and policy changes in major markets, the European fiscal crisis, and dramatically lower technology prices. Not all of these trends are negative: The fall of technology prices has a clear upside in that it has enabled higher installation levels per dollar of funding.

Country Ups and Downs*

Clean energy investment increased in China to a record $67.7 billion (+20%), in Japan to $16.3 billion (+75%), and in Australia to $6.2 billion (+40%). South Africa saw $5.5 billion in investment, up from only tens of millions in 2011, and clean energy investment in Mexico increased five fold to $2 billion.

Clean energy investment decreased in the US to $44.2 billion (-32%), in Germany to $22.8 billion (-27%), in Italy to $14.7 billion (-51%), in the UK to $8.3 billion (-17%), in Brazil to $5.3 billion (-32%), in France to $4.3 billion (-35%), and in Spain to $3 billion (-68%). In India, investment fell 44%.

Commenting on the data, Michael Liebreich, chief executive of Bloomberg New Energy Finance, remarked that “the most striking aspect of these figures is that the decline was not bigger – given the fierce headwinds the clean energy sector faced in 2012.” Another message Liebreich sees in the 2012 data is that investment is broadening rapidly, from established markets such as Europe, the US, and China, to new ones in Africa, the Middle East, Latin America and Asia-Oceania.

Sector Ups and Downs*

Solar was the dominant sector in terms of overall clean energy investment in 2012. It accounted for $142.5 billion in global investment (-9%) even as Solar PV module prices fell 24% during the year.

Wind, which saw global investment of $78.3bn (-13%), boasted a record year in the US in terms of installation. The sector accounted for more than 45% of total 2012 new power capacity in the U.S. and exceeded capacity additions from any other fuel source, including natural gas, according to the U.S. Energy Information Administration. (This surge in wind capacity was highlighted in President Obama’s State of the Union Address.) Approximately 40% of the total 2012 wind capacity additions (12,620 MW) came online in December, just before the scheduled expiration of the wind production tax credit (PTC). Congress extended the PTC on January 1, 2013 as part of the ‘fiscal cliff’ package, but the fact that the extension is only for one year suggests there is another roller coaster ride ahead for the wind industry.

Investment in the third-largest sector, energy-smart technologies, such as smart grid, energy efficiency and electric vehicles, was $18.8 billion (-7%). Investment in biomass and waste-to-energy—the fourth largest sector—was $9.7 billion (-27%). Investment in small hydro (projects less than 50MW) was $7.6 billion (+17%). Biofuels investment was $4.5 billion (-38%), and geothermal investment was $1.8 billion (-39%).

Global Venture Capital Investment in Cleantech

Global venture capital (VC) investment in cleantech in 2012 was $6.46 billion across 704 deals, reflecting declines of 33% and 15%, respectively, compared to 2011, according to research and advisory firm Cleantech Group. In terms of investment amounts and deal numbers, 2012 was comparable to 2009.

VC investment trends highlighted by Cleantech Group include a preference for “capital light” and later stage deals. Average deal size was $10.9 million, and there were 282 early stage deals versus 422 Series B+ deals.

The top three sectors by percentage of VC dollars invested were biofuels, transportation, and energy efficiency. The top three sectors by deal count were energy efficiency, solar, and transportation.

Two of the largest venture capital and private equity deals of the year involved Bay Area-based companies: a $200m round for solar installer SolarCity and a $150m round for Bloom Energy, a fuel cell technology company.

 

* Percentages compare 2012 to 2011 figures.