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Global Clean Energy Investment Slumps In Q1’15, But South Africa Shines

Global clean energy investment slumped in the first quarter of 2015 to its lowest level in two years, down 15% from Q1’2014, according to Bloomberg New Energy Finance, which released its latest tracking statistics for the January to March period.

Investment dropped to $50.5 billion in the first quarter, and Bloomberg New Energy Finance (BNEF) is laying the blame at the feet of big markets such as China, Europe, and Brazil see a slowdown in deal-making. Fewer “large-ticket transactions” took place over the first quarter than a year earlier, with financing for wind projects and public market equity raisings by clean energy companies “particularly subdued” over the quarter.

However, as BNEF note, “there were some bright spots,” including the rise of small-scale solar worldwide, and overall renewable energy project investment in South Africa.

Investment surged to $3.1 billion in the first quarter in South Africa, up “from almost nothing in the same quarter a year earlier.”

“Since 2012, South Africa has emerged as one of the most important centres for clean energy investment, as it seeks to expand power capacity and take advantage of its sunshine and wind resources,” said Luke Mills, a clean energy economics analyst at BNEF. “The first quarter saw the financing of a series of large projects in solar thermal, wind and PV that won through in the latest round of the country’s auction programme.”

India also saw an increase in clean energy investment, rising 59% to $1.6 billion in the first quarter. This is well in line with Bloomberg’s predictions made earlier this year that India clean investment is set to pass $10 billion in 2015, the first time this has happened since 2011. However, the same could not be said for its regional neighbors, with investment in China falling 24% to $11 billion, and the rest of Asia-Oceania slipping 15% to $11.2 billion. Even Japan, which has seen relatively secure figures over the last few quarters and a strong boom in its national small-scale solar industry, dropped 3%, with only $8.8 billion for the quarter.

The US edged up 2% to $9.6 billion, but Brazil slipped a whopping 62% and Europe dropped 30%. The rest of the Americas dropped 17% to $2 billion.

For Michael Liebreich, chairman of the advisory board at Bloomberg New Energy Finance, the big question for global clean energy investment in 2015 was “whether and how hard clean energy investment would be hit by the slump in oil and gas prices. These figures indicate the answer is not so much.”

“We said in January that we thought 2015 would struggle to match last year’s dollar investment total, because of exchange rate moves,” said Liebreich. “The US currency has strengthened 15% against a basket of currencies in the past year, and 29% against the euro. There were also a few more lumpy offshore wind investments in Q1 2014 than in Q1 2015. Without those factors, investment in Q1 this year would have been pretty much level-pegging with last year.”

“But there’s a lot of ground still to cover this year,” Liebreich continued.

“No one knows whether the oil price is going to bounce back or collapse further. There is good momentum towards some sort of climate deal in Paris in December. And there are certainly plenty of ground-breaking developments in the low-carbon sector, from solar at six US cents per kWh, to storage, energy efficiency, electric vehicles and smart grid. The question of whether clean energy investment is on the way up or down is sure to be a topic of debate at the Bloomberg New Energy Summit in New York next week.”

With experts already expecting a quieter year for 2015, and the first quarter always tending towards less investments, all hope is not lost for a strong year for global clean energy investment. India continues to be a powerhouse for clean energy investment, as seen by the numerous stories covered here each week at CleanTechnica. And as can be seen by the Q1’15’s inability to reach previous years records, there are many quarters’ worth of healthy clean investment to fall back on.

One specific example can be found in the UK. A recent report published by the country’s Department of Energy & Climate Change in March showed that the country had invested approximately £37 billion in renewable energy since 2010, and that there is more to come over the rest of this decade. In line with such record investment, the UK’s renewable energy generating capacity increased by 165% since 2010, and now accounts for 18% of the country’s electricity needs.

South Africa is also well on its way to reaching its full potential, as can be seen by tracing back through our archive of stories covering the southern African country’s renewable energy development. Most importantly, Bloomberg’s landmark Climatescope 2014 ranked South Africa third in its list of countries with healthy investment opportunities and policies, following behind China and Brazil, who we have already seen are beginning to suffer in this first quarter.

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