Global clean energy investment, which has been buffeted by government austerity and policy uncertainty, rebounded in a major way during the second quarter of 2012 – led, of course, by China.
New clean energy investments totaled $59.6 billion across Q2 2012, up 24 percent compared to Q1 2012, but still well below the near-record amount of $72.5 billion from Q2 2011, according to research published by Bloomberg New Energy Finance (BNEF).
China’s critical role
China surged ahead in investment during the April-June period, up 92 percent from Q1 2011 to $18.3 billion, led by several large solar photovoltaic and wind farm projects each representing hundreds of millions worth of financing. Europe and the United States also gained, but at a slower rate. Clean energy investment rose 11 percent in Europe to reach $20 billion, and 18 percent in the U.S. to reach $10.2 billion.
The central role China plays in the global renewables market is apparent in the Q2 results. “China has recently quadrupled its domestic goals for solar installations, and it has been by far the biggest market for wind turbines,” said Michael Liebreich, chief executive of BNEF. “Its torrent of supply-side investment was one of the main reasons renewable energy costs have been plummeting; we are now seeing China creating enough demand to start mopping up some of the resulting over-capacity.”
Solar leads the way, small-scale projects grow
Solar projects represented more than half of all new clean energy investment, securing $33.6 billion over the quarter to increase 19 percent compared to Q1. Wind projects accounted for nearly all the remaining investment, with $21.6 billion, up 47 percent from Q1 2012.
Several large projects in the United Kingdom, U.S., and China led the Q2 charge. The UK’s 270MW Lincs offshore wind farm received $1.6 billion in investment, while the 419MW Flat Ridge Wind Farm in Kansas secured $800 million. Two Chinese projects stood out, with the 250MW Guodian Shanxi Qinyuan Taiyue wind farm locking down $317 million and the Shanlu & Shengyu Bayannur Wuyuan PV plant scoring $316 million.
However, small-scale projects like rooftop PV installations were worth $21.5 billion – more than a third of all Q2 investments, up 13 percent compared to Q2 2012. “Small-scale projects are becoming an increasingly important part of the world’s energy mix,” said Liebreich. “Germany and Italy remain the largest markets, but small-scale PV is broadening its geographic base with installations in the US, Japan, and China all growing strongly.”
Funding sources continue to shift
While growing overall investment is a positive trend, shifting investment sources may underpin a seismic shift in future clean energy funding. Public market investment was just $1.2 billion in Q2 2012. While double the Q1 amount, it was 75 percent Q2 2011’s amount. The same trend showed up in venture capital and private equity investment, which totaled only $1.5 billion – down 28 percent from Q1 2012 and 39 percent from Q2 2011. Asset finance rebounded to pick up the slack, reaching $35.9 billion – up an impressive 50 percent on Q1 2012.
China clean energy image via Shutterstock
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