Global Clean Energy Investment Slumps In Third Quarter Of 2016

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Global clean energy investment in the third quarter of 2016 slumped to its weakest quarter since 2013, according to new analysis from Bloomberg New Energy Finance.

A Northern Hemisphere summer lull impacting offshore wind financing in Europe, and a further stage in the slowdown seen this year in project funding in China and Japan are behind the lackluster clean energy investment figures for the third quarter, published this week by Bloomberg New Energy Finance (BNEF). Specifically, investment in renewable energy and energy smart technologies only totaled $42.4 billion globally in the third quarter of 2016, down 31% from the second quarter, and down a whopping 43% on the third quarter in 2015.

This was the weakest quarter since the first quarter of 2013, which brought in only $41.8 billion.

Clean Energy Investment, Q1’2004 to Q3’2016


According to BNEF, weaknesses in clean energy investment in the third quarter were to be found in asset financing of utility-scale renewable energy projects, which was down 49% year-over-year to only $28.8 billion, with wind down 32% and solar down 67%. On top of that, investment in small-scale solar PV projects was 35% lower at only $9.3 billion.

“There is one special factor here, in the timing of offshore wind financings in Europe — these totaled $20.1bn in the first six months of 2016, a runaway record,” explained Abraham Louw, analyst for energy economics at BNEF. “But there was then a summer lull, with just $2.4bn in July to September.”

Geographically, clean energy investment in China was down a significant 51% compared to a year earlier, down to only $14.4 billion, while Japan was down 56% over the same period, down to only $3.5 billion, together continuing the expected slowdown in clean energy investment in the two countries we have been witnessing all year.

The nature of these analyses mean that these figures could be revised upwards if more information is brought to light, however, clean energy investment in the first and second quarter was down an average of 23%, year-over-year, which suggests Q3 figures are unlikely to fluctuate much, resulting in much lower annual clean energy investment figures than 2015’s $348.5 billion.

“These numbers for Q3 are worryingly low even compared to the subdued trend we saw in Q1 and Q2,” warned Michael Liebreich, chairman of the advisory board at Bloomberg New Energy Finance. “A vital point to bear in mind is that there have been sharp reductions in the cost of PV systems, so that much more solar capacity can be added this year than last, per million dollars.

“However it is also clear that, after last year’s record investment levels, some key markets such as China and Japan are pausing for a deep breath. Also, in many countries, electricity demand growth is undershooting government forecasts. My view is that the Q3 figures are somewhere between a ‘flash crash’ blip, and a ‘new normal’.”

Despite it posting a significantly reduced figure, China was still the global clean energy investment leader, with $14.4 billion. The United States followed with $9.5 billion, down 40% on the same quarter a year earlier. Europe’s clean energy investment was $7.7 billion, down 5% on a year earlier — with the UK posting $2.7 billion, down 12%, and Germany $2.6 billion, down 31%. Japan followed with investment of $3.5 billion, down 56%, while Brazil was also down, $1.3 billion, down 40%, and India at $2 billion, down 26%.

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Joshua S Hill

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