Mixed picture for global clean energy investment

Investment in solar power has dropped this year compared to 2017, while the level of cash injected into windpower, electric vehicles and batteries has risen.

The mixed picture for global clean energy investment is highlighted in latest figures from research company Bloomberg New Energy Finance (BNEF).Investment in solar power has dropped this year compared to 2017, while the level of cash injected into windpower, electric vehicles and batteries has risen.

They show world investment in clean energy in the first six months of 2018 at $138.2 bn, down just 1 per cent from the same period last year. The second quarter, from April to June, saw a rise year-on-year of 8 per cent to $76.7 bn.

But a sectoral split for the first half of 2018 shows solar investment down 19 per cent compared to the same period last year at $71.6 billion, with wind up 33 per cent at $57.2 bn.

BNEF says the fall in solar reflects two main developments ” significantly lower capital costs for photovoltaic projects, and therefore fewer dollars spent per megawatt installed; and a cooling-off in China’s solar boom. These trends are set to gather pace in the second half.

Justin Wu, head of Asia-Pacific at BNEF, said: “On June 1, the Chinese government released a policy document restricting new solar installations that require a national subsidy, with immediate effect. We expect this to lead to sharp drop in installations in China this year, compared to 2017’s spectacular record of 53GW.”

Pietro Radoia, senior solar analyst at BNEF, added: “It will also mean overcapacity in solar manufacturing globally, and yet steeper price falls. Before the Chinese announcement our team was already expecting a 27 per cent fall in PV module prices this year. Now we have revised that to a 34 per cent drop, to an end-2018 global average of 24.4 US cents per watt.”

In the country rankings for clean energy investment, China remained top despite its 15 per cent drop, while the US was second with investment of $28.8bn, up 31 per cent.

Europe was third at $16bn, up 8 per cent, with India fourth at $7.4bn, up 22 per cent, and Australia fifth at $4.1bn, down just 1 per cent.

Morocco saw 12-fold growth to hit $2.5bn, while the Netherlands was at $2.3bn, up a huge 209 per cent.

In the first half of 2018, China invested $35.1 bn in solar, down 29 per cent from 2017. However, BNEF expects the full extent of the government-ordered cutback to become clear only from the second half of the year onwards. Its analysts see a possibility that that world solar installations in 2018 could fall for the first time on record. In 2017, they totalled 98 GW, far more than for any other technology, renewable or non-renewable.

The jump in windpower investment in the first half of 2018 came thanks to a stream of large project financings from the US to Taiwan and from India to the Netherlands and Norway. The headline deals included $1.5bn for the 731.5 MW Borssele 3 and 4 offshore windfarm in Dutch waters; $1bn for the 478 MW Hale County onshore wind project in Texas, and $627m for the 120 MW Formosa 1 Miaoli project ” the first offshore wind array to be financed in the sea off Taiwan.

US wind investment stood out in the first half of 2018, reaching $17.5 bn, up by 121 per cent on its figure in the same period of last year. Chinese wind investment was resilient, rising 4 per cent to $17.6bn.

“We see US wind investment increasing in 2018-2019 as developers rush to finish projects in time to qualify for federal tax credits,” said Amy Grace, BNEF head of North American research.

Wind was not the only strong sector in clean energy in the first half of 2018. Equity-raising by specialist companies in energy smart technologies saw a 64 per cent increase year-on-year, to $5.2bn. The top deals in the second quarter were a $852.5m initial public offering by Chinese lithium-ion battery maker Contemporary Amperex Technology, or CATL, and a $795m Series B venture capital round by Chinese electric vehicle company Youxia Motors. Another Chinese EV specialist, Future Mobility Corporation, raised $500m in a Series B round of its own.

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