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Clean energy attracts record investments in 2015

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Hydrocarbon Engineering,

Clean energy investment surged in China, Africa, the US, Latin America and India in 2015, driving the world total to its highest ever figure, of US$329 billion, up 4% from 2014's revised US$315.9 billion and beating the previous record, set in 2011 by 3%.

The latest figures from Bloomberg New Energy Finance show dollar investment globally growing in 2015 to nearly six times its 2004 total, and a new record of one third of a trillion dollars, despite four influences that might have been expected to restrain it. These were: further declines in the cost of solar photovoltaics, meaning that more capacity could be installed for the same price; the strength of the US currency, reducing the dollar value of non-dollar investment; the continued weakness of the European economy, formerly the powerhouse of renewable energy investment; and perhaps most significantly, the plunge in fossil fuel commodity prices.

Over the 18 months to the end of 2015, the price of Brent crude plunged 67% from US$112.36 - US$37.28/bbl, international steam coal delivered to the north west Europe hub dropped 35% from US$73.70 to US$47.60/t. Natural gas in the US fell 48% on the Henry Hub index from US$4.42 - US$2.31/million Btu.

Michael Liebreich, Chairman of the Advisory Board at Bloomberg New Energy Finance, said, "These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices. They highlight the improving cost competitiveness of solar and wind power, driven in part by the move by many countries to reverse auction new capacity rather than providing advantageous tariffs, a shift that has put producers under continuing price pressure.

"Wind and solar power are now being adopted in many developing countries as a natural and substantial part of the generation mix: they can be produced more cheaply than often high wholesale power prices; they reduce a country's exposure to expected future fossil fuel prices; and above all they can be built very quickly to meet unfulfilled demand for electricity. And it is very hard to see these trends going backwards, in the light of December's Paris Climate Agreement."

Looking at the figures in detail, the biggest piece of the US$329.3 billion invested in clean energy in 2015 was asset finance of utility scale projects such as wind farms, solar parks, biomass and waste to energy plants and small hydro-electric schemes. This totalled US$199 billionn in 2015, up 6% on the previous year.

Public market investment in clean energy companies was US$14.4 billion last year, down 27% from 2014 but in line with the 10 year average. Top deals included a US$750 million secondary share issue by electric car maker Tesla Motors, and a US$688 million initial public offering by TerraForm Global, a US based 'yieldco' owning renewable energy projects in emerging markets.

Venture capital and private equity investors pumped US$5.6 billion into specialist clean energy firms in 2015, up a healthy 27% on the 2014 total but still far below the US$12.2 billion peak of 2008. The biggest VC/PE deal of last year was US$500 million for Chinese electric vehicle company NextEV.

There was US$20 billion of asset finance in clean energy technologies such as smart grid and utility scale battery storage, representing an 11% rise on 2014, the latest in an unbroken series of annual increases over the past nine years. The final category of clean energy investment, government and corporate research and development spending, totaled US$28.3 billion in 2015, up just 1%. This figure provides a benchmark for any surge in spending in the wake of announcements at COP21 in Paris by consortia of governments and private investors, led by Bill Gates and Mark Zuckerberg.

Adapted from press release by Francesca Brindle

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