Record offshore wind deal boosts global renewables investment

Global investment in renewables surged to $63.6 billion in the second quarter of 2014, up 33 per cent on quarter one according to the latest data from Bloomberg New Energy Finance, and delivering the strongest quarter for clean energy investment since 2o12.

BNEF says the quarter’s strong figures – which fell just $14.4 billion short of the quarterly record of $78 billion from Q2 2011 – were driven by a variety of big deals for wind and solar projects sized in the hundreds of megawatts, and busy activity in the installation of small-scale rooftop photovoltaics.

But the stand-out deal, says BNEF, was the $3.8 billion financing of the 600MW Gemini offshore wind farm in the North Sea, off the coast of the Netherlands – the largest investment decision ever in renewable energy, according to the market analysts (excluding large hydro-electric).

The deal, sealed in May, is headed up by Canada’s Northland Power, along with three other equity investor groups, 12 European, Canadian and Japanese commercial banks, the European Investment Bank, a Danish pension fund and three export-credit agencies.

Also among the quarter’s highlights were the $818 million 121MW Ashalim I Sun Negev solar thermal project in Israel, and the $647 million investment go-ahead for the 252MW Cemex Ventika wind farm in Mexico.

China, was the biggest national contributor to the quarter’s investments, committing $19.3 billion to renewable energy projects – more than double the Q1 figure and a 16 per cent increase on the same quarter a year ago, says BNEF.

Europe, meanwhile, invested $14 billion – a 26 per cent improvement on Q1 – while the US features high on the most improved list, investing 34 per cent more in Q2 than Q1, at $10.6 billion.

“The past two years have seen investment decline by over 20% from its 2011 peak, driven equally by the European fiscal crisis, policy uncertainty and plummeting costs for renewable energy equipment,” said Michael Liebreich, chairman of the BNEF advisory. “Now, what we are seeing is the new competitiveness of renewable energy winning through, driving a surge in demand.

“The new investment upswing is broad-based, with activity rising across wind and solar, large-scale and small-scale projects, and covering most of the big markets. Even venture capital and private equity, which have been depressed in prior quarters, have seen the green shoots of recovery in deal volume,” Liebreich said.

“We are expecting the full year figures for 2014 to show a clear rebound in global investment in clean energy. The debt-and-policy-fuelled bubble years of 2007-2010 were inevitably going to be followed by a period of consolidation; that period now definitely looks to be over and the industry is gathering momentum once again.”

But this new competitiveness, driving an investment rebound, seems to have bypassed Australia – which doesn’t rate a mention in the BNEF report – as the federal government resumes its campaign this week to repeal the nation’s carbon price and unwind its renewable energy investment and development schemes.

And despite Australia’s huge potential – highlighted most recently by global investment bank UBS – to be at the cutting edge of renewables development and growth, few of the key policy settings this would require look likely to be adopted any time soon in the current political environment.

Rather, the lack of bipartisan support for Australia’s renewable energy targets has left international renewables developers, like Danish wind giant Vestas, confused and concerned about financial risk, while others, like First Solar and Acciona have confirmed they will reconsider their investment in Australia if the RET is changed.

Elsewhere, the main countries for overall investment – excluding China and the US – included Japan, which saw a slight reduction in Q2 commitments, to $7.7bn, from $7.9bn in Q1, the UK ($2.1bn), and Germany ($2bn).

By asset class, finance of utility-scale projects such as wind farms, solar parks and small hydro dams totalled $38.2 billion in the second quarter of 2014, up from $22.8 billion in Q1, but down slightly from $38.5bn in Q2 2013.

Financing of rooftop solar and other small-scale PV capacity rose by 41 per cent on the same quarter a year earlier, to $21.2 billion.