Clean Energy Investment Falls 17% In Q1’17, Continues Investment Slump, Says BNEF

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New figures from Bloomberg New Energy Finance show that clean energy investment in the first quarter of this year only reached $53.6 billion globally, continuing a slump that has been in effect ever since the second quarter of 2015.

New Investment in Clean Energy by Region, Q1 2014 – Q1 2017 ($BN)

Bloomberg New Energy Finance (BNEF) published its highly-anticipated quarterly clean energy investment figures this week, revealing a 17% decline on the same time a year earlier, and a 7% decline on the fourth quarter of 2016. As can be seen in the graph above, while there have been a few bright quarters, there has been a noticeable slump since the high point of Q2’15. The low first quarter figures are at least partly due to China and the United States scaling back their investments in wind and solar.

In fact, the clean energy investment figures were the lowest first quarter figures since 2013. Bloomberg points to numerous governments slashing subsidies for projects in the face of declining solar and wind costs — so it’s definitely a good news/bad news equation. In the one hand, investment figures are down, which at first looks bad. But the good news is that investors are able to generate much more with their investments than they were able to even a year ago, due to massive price declines in photovoltaics and wind turbines.

In the end, despite investment for renewable energy falling to only $287.5 billion during the whole of 2016, renewable energy was nevertheless still the biggest new source of electricity. This was confirmed by a United Nations Environment Programme report published earlier this month, which identified a total of 138.5 gigawatts of new renewable energy deployed in 2016, despite investment figures falling by 23%.

“It was a relatively quiet first quarter for global investment, but it’s too early to assume that 2017 as a whole will be lower than last year,” said Abraham Louw, analyst at BNEF.

Bloomberg pointed out two impressive bright spots in the quarter — $1.4 billion raised by Tesla, and $650 million raised for an Enel SpA solar project in Mexico that could be the biggest of its kind. Tesla had two important transactions in the first quarter — a $978 million convertible debt issue and a $403 million secondary share sale, helping to boost investment in the Electrified Transport sector from public markets by 215%, up to $2.1 billion.

“Tesla continues to plow ahead with its ambitious plans for ramping up manufacturing of the Model 3,” said Colin McKerracher, an analyst at BNEF. “If they achieve anywhere near their 2017-18 production targets, the impacts on the auto sector would be profound. Tesla are rolling some big dice here.”

On a global scale, China’s investment figures fell by 11% down to $17.2 billion in the first quarter, due in part to a drop in feed-in tariff subsidies and continued issues with grid curtailment. US clean energy investment fell by 24% down to $9.4 billion, which Louw suggests may have been due to further uncertainty about future tax liabilities.

New Investment in Clean Energy by Region

Offshore wind financing fell by a surprising 60% in Q1’17, down to only $4.6 billion from $11.5 billion a year ago — however, BNEF points out that a surge in financing was partly responsible for the Q1’16 figure which wasn’t repeated this time around. The United Kingdom, which is the undisputed world leader for offshore wind installs, had no new financing in the first quarter.

“With support fizzling out for onshore wind and solar, in recent years offshore wind has propped up clean energy investment in the U.K.,” said Tom Harries, BNEF analyst.

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Joshua S Hill

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