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2013 Clean Energy Investments Down On Previous Years

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We spend a lot of time focusing on the more tangible aspects of clean energy these days, the number of megawatts or gigawatts a country is generating, the number of projects a company has started, the date and time a project is connected to the grid. One of the less appealing aspects of the clean energy industry, however, is one of the most important — the investment figures that allow for everything that comes after.

Without the investment, the megawatts and gigawatts are fewer, the projects are fewer, and fewer projects are connected to the grid. So when new figures from Bloomberg New Energy Finance (BNEF) show that clean energy investment for 2013 is down again on 2012 figures, which were themselves down on record 2011 numbers, one might start to worry.

According to BNEF, global clean energy investment came in at $254 billion for 2013. That number is down from 2012’s $288.9 billion, which was down on 2011’s record $317.9 billion. The two primary global clean energy investors — the US and China — both saw stark drops in their investment, and Europe saw a massive drop off.

BNEF noted in their press release that “the reduced volume of investment in 2013 reflected two main influences – a continued sharp reduction in the cost of photovoltaic systems, and the impact on investor confidence of shifts in policy towards renewable power in Europe and the US.” Which paints two pictures, one good, one bad.

The Bad

China and the US both saw drops in their investments in 2013. China saw a modest drop of 3.8%, investing $61.3 billion, down from $63.8 billion in 2012, while the US dropped 8.4%, from $53 billion down to $48.4 billion.

Europe’s drop was much more precipitous, and together with the US, represent the bad picture from BNEF’s summary. Europe’s investment dollars dropped 41% in 2013, dropping from $97.8 billion in 2012 down to a meager $57.8 billion. Bloomberg note that the reason for this slump is placed squarely at the feet of big economies such as Germany, Italy, and France, each of which either began restricting subsidy payments for new projects, or simply failed to clear the air of uncertainty over the possibility of future support.

Similar uncertainties have been cropping up throughout the US, as well as other western countries such as Australia, where political opponents of clean energy are continuing to make life difficult for the industry.

However, ‘The Bad’ isn’t the whole story, as Michael Liebreich, founder and chairman of the advisory board for Bloomberg New Energy Finance commented:

“A second successive year of decline in investment will come as unwelcome news to the clean energy sector, but the top-line figures don’t tell the whole story. Investment in Europe crashed, in large part because of the falling cost of solar installations, whose volume worldwide actually grew by around 20% to a new record. Outside Europe, the picture was mixed, with some countries increasing and others reducing investment, and Japan the clear leader in terms of growth.”

The Good

Part of the complexity that is the opening years of a new industry such as the clean energy industry — which admittedly has been extant for decades, but has recently seen the boom of an industry in sudden hot demand — is the falling production prices which end up propelling the industry further. No longer do high production prices restrict the spread of the technology, instead, falling prices as a result of industry and technological stability allow the technology to be taken up in wider and more varied areas.

We are seeing this most obviously as poorer parts of the world start to make their mark on the clean energy stage. Regions like South America, Africa, and the Middle East are each starting to make forays into clean energy projects; such as South Africa’s first utility-scale power plant and the Ashegoda wind farm in Ethiopia; South America’s first solar thermal plant in Chile; and the recent funding for the Middle East’s first utility-scale wind project.

There are some countries still set aside as leaders in clean energy investment, however. Japan saw investment skyrocket by 55% to $35.4 billion in 2013, up from $22.7 billion in 2012, thanks in part to the electrical hole left in the wake of the disastrous Fukushima earthquake and subsequent nuclear disaster. Japan are desperately seeking to replace nuclear — their primary power source — as such, small-scale solar installations have received a lot of support, both publicly and financially.

The Rest

Clean energy investment by sector also saw some bright spots. Wind saw only a small decline, dropping from $80.9 billion in 2012 to $80.3 billion in 2013, while solar’s drop was more pronounced, falling from $142.9 billion to $114.7 billion. Energy smart technologies such as smart grid, storage, electric vehicles and efficiency saw an increase to $34.6 billion from 2012’s $32.7 billion.

The full rundown of clean energy investments, encompassing the remainder of the clean energies, as well as wider investments, can be found in the Bloomberg New Energy Finance press release. And though it appears that there are a number of drops, the bright spots and an understanding of what is really behind the drop in investments allows us to see a continually bright future for the clean energy industry.

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