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World clean energy investment slips in 1H19

Published by , Digital Editorial Assistant
Hydrocarbon Engineering,

Despite billion-dollar financings of solar in Dubai and offshore wind in Taiwan, clean energy investment is down, according to BloombergNEF (BNEF).

Hiatus in renewable energy project deals in mainland China has pulled down global investment in clean energy by 14% to US$117.6 billion in first half of 2019.

The first half of 2019 saw a 39% slowdown in renewable energy investment in the world’s biggest market, China, to US$28.8 billion, the lowest figure for any half-year period since 2013, according to the latest figures from BloombergNEF.

The plunge in activity in China, as the country shifts this year away from government-set tariffs to auctions for new wind and solar capacity, also depressed the 1H19 global investment figure.

Justin Wu, Head of Asia-Pacific for BNEF, commented: “The slowdown in investment in China is real, but the figures for first-half 2019 probably overstate its severity. We expect a nationwide solar auction happening now to lead to a rush of new PV project financings. We could also see several big deals in offshore wind in the second half.”

The other highlight of global clean energy investment in 1H19 was the financing of multibillion-dollar projects in two relatively new markets – a solar thermal and photovoltaic complex in Dubai, at 950MW and US$4.2 billion, and two offshore wind arrays in the sea off Taiwan, at 640MW and 900MW and an estimated combined cost of US$5.7 billion.

The Dubai deal in late March, for the Mohammed bin Rashid Al Maktoum IV project, is the biggest financing ever seen in the solar sector. It involves US$2.6 billion of debt from 10 Chinese, Gulf and Western banks, plus US$1.6 billion of equity from Dubai Electricity and Water Authority, Saudi-based developer ACWA Power and equity partner Silk Road Fund of China.

Jenny Chase, Head of Solar Analysis for BNEF, said: “Al Maktoum IV is an unusual one in combining three different types of solar – the thermal technologies of parabolic trough and tower, with conventional PV – but it is also a strong signal of the appetite for solar electricity on the part of both Middle Eastern countries and international financiers.”

The two Taiwanese offshore wind projects, Wpd Yunlin Yunneng and Ørsted Greater Changhua, involve European developers, investors and banks, as well as local players. Offshore wind activity is broadening its geographical focus, from Europe’s North Sea and China’s coastline, toward new markets such as Taiwan, the US East Coast, India and Vietnam.

BNEF’s figures for clean energy investment in the first half of 2019 show mixed fortunes for the world’s major markets. The ‘big three’ of China, the US and Europe all showed falls, but with the US down a modest 6% at US$23.6 billion and Europe down 4% at US$22.2 billion compared to 1H18, far less than China’s 39% setback.

Japan attracted US$8.7 billion of investment, up 3% on 1H18, and India US$5.9 billion, up 10%, as it continued its drive toward its ambitious target for 175GW of renewable energy by 2022. Brazil saw investment of US$1.4 billion, up 19%.

In Europe, Spain was the star performer at US$3.7 billion, up 235% on the same period a year earlier, while the Netherlands was 41% lower at US$2.2 billion, Germany down 42% at US$2.1 billion, the U.K. up 35% at US$2.5 billion and France down 75% at US$567 million. Sweden saw investment jump 212% to US$2.5 billion, and the Ukraine 60% to US$1.7 billion.

Breaking global clean energy investment down by type of transaction, asset finance of utility-scale generation projects such as wind farms and solar parks was down 24% at US$85.6 billion, due in large part to the China factor. Financing of small-scale solar systems of less than 1MW was up 32% at US$23.7 billion in the first half of this year.

Investment in specialist clean energy companies via public markets was 37% higher at US$5.6 billion, helped by two big equity raisings for electric vehicle makers – an US$863 million secondary issue for Tesla, and a US$650 million convertible issue for China-based NIO.

Venture capital and private equity funding of clean energy companies in 1H19 was down 2% at US$4.7 billion. However, there were three exceptionally large deals: US$1 billion each for Swedish battery company Northvolt and US electric vehicle battery charging specialist Lucid Motors, and US$700 million for another US EV player, Rivian Automotive.

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