Global Clean Energy Investment Dropped In Q1’16 Due To Chinese Slowdown

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Global clean energy investment dropped in the first quarter of 2016 due to an investment slowdown in China, despite mega-financings in the UK and Norway.

This is the primary conclusion from Bloomberg New Energy Finance’s (BNEF) data team, which found that global clean energy investment in the first quarter of 2016 had dropped 22% on the previous quarter, down to $53.1 billion from Q4’15’s $68.1 billion, and 12% below Q1’15’s $60.4 billion.

According to BNEF’s data team, the primary factor behind the sluggish quarter is due to a slowdown in activity in China, which saw only $11.8 billion invested in the first quarter, down 50% on Q4’15 and down 37% on Q1’15. However, it must be mentioned that part of the downturn is due to the massive increase in investments as wind and solar developers rushed to qualify for soon-to-expire electricity tariffs in the last few months of 2015. In the end, the first quarter is always the weaker of the four for investment, and some deals are hidden from view at the moment, and will only impact the total when they come to light later down the track.

“The fundamentals behind global clean energy investment remain strong, with our latest research showing solar PV and wind again reducing their costs and competing strongly despite lower coal, oil and gas prices,” said Michael Liebreich, chairman of the advisory board at Bloomberg New Energy Finance. “But China accounted for more than one third of all new financings last year, so what happens there in 2016 will be crucial to the world outturn.”

“A strong pipeline of projects remains in China, and the government is providing a torrent of cheap debt to support the economy,” added Justin Wu, head of Asia-Pacific at Bloomberg New Energy Finance. “But slowing power markets and uncertainty over changes to its feed-in tariff regime mean the country looks unlikely to match the $110.5 billion investment it saw in clean energy in 2015.”

China was not the only country to see a downturn in investment during the first quarter, with both Brazil and South Africa showing markedly decreased investment compared to a year ago, and Japan, Chile, Mexico, and Uruguay also had a quiet start to the year. India did better than most, increasing its investment up by 6% to $1.9 billion, and the US also increased 7% on the first quarter of 2015, reaching an investment of $9.7 billion in Q1’16.

Given a number of huge deals, however, it was Europe which saw the biggest turnaround, with three separate billion-dollar wind project financings boosting investment in the region to $17 billion, up 22% on Q4’15 and up 70% on Q1’15.

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Joshua S Hill

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