Clean energy investment tops $145bn in 2009

Bloomberg New Energy Finance, a consultancy, expects new investment in clean energy to reach $200bn in 2010.

Despite a global recession and a difficult financing environment, new investment in the global clean energy sector topped $145 billion in 2009 and could reach $200 billion in 2010, according to new research published by Bloomberg New Energy Finance, a consulting firm.

The $145 billion total indicates that new investment in clean energy slipped just 6.5 percent from its 2008 peak of $155 billion.

Ethan Zindler, head of North American Research for Bloomberg, said the down-turn in investment was cushioned by government incentives, such as tax breaks and subsidies for clean energy production, which “helped tide the industry over” in 2009.

Bloomberg New Energy Finance largely excludes direct government spending in its $145 billion total new spending for the sector, or investment being undertaken for the first time. Aside from $11 billion of direct government funding for research and development, such as direct grants for new lab facilities, the figure is a tabulation of private equity, venture capital, public equity offerings, project finance and other forms of private sector investment in the sector.

The largest chunk for 2009 was project finance, or the direct financing of clean energy assets such as wind farms and solar parks, which stood at $91.9 billion in 2009, Bloomberg found. This figure was down only 5 percent on 2008 levels, indicating a rebound in investor interest in project financing.

“The story of 2009 has been about getting those guys who have been doing project finance . . . getting back into the game,” Zindler said. He listed JPMorgan and GE Capital as two major players who stepped back into the sector in 2009, along with investment bank Morgan Stanley and commercial bank Wells Fargo.

Private equity and venture capital firms saw a much bigger decrease, with only $6.6 billion invested in the sector in 2009, or 44 percent less than in 2008.

Public equity markets fared better. Approximately $13.1 billion of equity capital dedicated to clean energy was floated on the markets in 2009, down 5 percent from 2008. Of that , $2.6 billion was the initial public offering of wind project developer China Longyuan Power in December 2009, which Bloomberg cites as the largest clean energy IPO anywhere in the last two years.

Buyant investment in China helped Asia overtake the Americas for the first time in clean energy investment. Bloomberg counted $37.3 billion of new investment in the sector in Asia and Oceania in 2009, versus $32 billion for the Americas. Europe, Middle East and Africa continued to lead the world, though, at $42.2 billion.

Turning to 2010, Zindler said regulatory policies will continue to drive more demand for clean energy investment, which he expects to top $200 billion globally. Many European countries, as well as the European Union, have now implemented rules requiring utilities to purchase a portion of their electric supply from clean energy sources. In the US, 30 states, including Washington DC, also have such rules.

“While there no national requirement for renewables, there’s state-level policies that have and will continue to play a key role in driving demand,” Zindler said, adding that, sooner or later, such policies will begin to be tested for their feasibility.

“It’s very easy to set a clean energy goal. It’s a lot tougher to meet it,” he said.