Bloomberg New Energy Finance has published its latest clean energy investment figures for the first six months of 2018 which reached $138.2 billion, down only 1% on the same six months a year earlier in 2017, while investment in the second quarter actually increased compared to a year earlier.
However, the real takeaway from these latest figures is not so much the overall picture, but the mixture of highs and lows, because while the overall picture is healthy, investment in the solar industry fell while wind power and energy smart technologies increased.
In the overall, clean energy investment rebounded in the second quarter as compared to the first quarter of 2018. Figures published in April by Bloomberg New Energy Finance (BNEF) showed that the first quarter investment figures only hit $61.1 billion, down 10% on the previous quarter. The second quarter did much better, however, increasing year-over-year to $76.7 billion, thus helping bring the total for the first half of the year up to a respectable $138.2 billion, down only 1% on the same period a year earlier.
It was the sectoral picture, however, that is most important to look at. Solar investment was down 19% to $71.6 billion over the first half of 2018 as compared to the same half a year earlier. Meanwhile, wind investment was up 33% to $57.2 billion thanks to several mammoth large-scale project financing which were recorded in the first half of the year. These included the $1.5 billion taken in for the 731.5 megawatt (MW) Borssele 3 and 4 offshore wind farm in Dutch waters, $1 billion raised for the 478 MW Hale County onshore wind project in Texas, and $627 million for the 120 MW Formosa 1 project — which we have covered before and expands upon the first offshore wind farm in Taiwanese waters.
For the solar industry, however, BNEF analysts highlighted two main developments which caused the slippage in first-half investment figures — a drop in capital costs for solar PV projects, which therefore means fewer dollars are needed to build even more; and a drop-off in China’s solar installation boom, heralded by the country’s decision to cap solar installations.
“On June 1, the Chinese government released a policy document restricting new solar installations that require a national subsidy, with immediate effect,” explained Justin Wu, head of Asia-Pacific at BNEF. “We expect this to lead to sharp drop in installations in China this year, compared to 2017’s spectacular record of 53 [gigawatts (GW)].”
“It will also mean overcapacity in solar manufacturing globally, and yet steeper price falls,” added Pietro Radoia, senior solar analyst at BNEF. “Before the Chinese announcement, our team was already expecting a 27% fall in PV module prices this year. Now we have revised that to a 34% drop, to an end-2018 global average of 24.4 US cents per watt.”
Thus, while China invested $35.1 billion in solar in the first half of 2018, itself down 29%, that figure is expected to only fall further in the second half of the year.
However, looking back at the overall picture, it is not necessarily expected that the downturn in the solar industry’s investment figures will necessarily cause a similar downturn across the board. Beyond the growth in the wind energy sector, both offshore and onshore, smart technology industries such as electric vehicles and batteries are already running above levels seen in 2017, increasing by 64% to $5.2 billion.
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