London and New York — Clean energy investment in the second quarter totaled $61.5 billion, 12 percent above the first-quarter 2016 figure but 32 percent below a very strong outturn of $90 billion in the equivalent period of 2015. Looking at the 2016 trend so far, and taking the Q1 and Q2 2016 figures together (H1), global investment in the first half of this year was $116.4 billion, 23 percent lower than in the opening six months of 2015, according to the latest data from Bloomberg New Energy Finance.
Europe's figure for H1 2016 was up 4 percent at $33.5 billion, and Brazil was up 36 percent at $3.7 billion. But all the other regions were down – China by 34 percent to $33.7 billion, India down 1 percent at $3.8 billion, the rest of Asia Pacific down 47 percent at $12.1 billion, Middle East and Africa down 46 percent at $4.2 billion, the U.S. down 5 percent at $23.1 billion, and the Americas excluding the U.S. and Brazil down 63 percent at $2.3 billion.
Michael Liebreich, chairman of the advisory board at Bloomberg New Energy Finance, said: "It is now looking almost certain that the global investment total for this year will fail to match 2015's runaway record. China's financing of wind and solar projects was even higher last year than previously estimated, and the hangover this year caused by weak electricity demand and policy changes in that country will therefore be all the greater."
Changes in the solar market are another of the main reasons for the lower trajectory for global investment so far this year. Photovoltaic panels and project construction have become cheaper in many countries, and there has also been a shift from small-scale projects (relatively expensive in terms of dollars per MW) to utility-scale projects, which are cheaper in capex terms.
While the figures for 2016 so far have been on the low side, BNEF also revealed that global clean energy investment was even stronger last year than thought. Revised figures show that new investment in 2015 was $348.5 billion, nearly $20 billion above the previous estimate of $328.9 billion published in January.
The revision reflects information on investment transactions not disclosed at the time. The two big changes to the 2015 total are an upward revision of $29 billion to asset finance of utility-scale wind and solar projects – mainly in China and the U.S. – and a downward revision of $10 billion to spending on small distributed capacity, such as rooftop solar, particularly in Japan.
Abraham Louw, associate for energy economics at Bloomberg New Energy Finance, said: "One shouldn't look at these latest Q2 figures too negatively. Last year's investment of $348.5 billion was really quite groundbreaking — up 11 percent over 2014 and 30 percent over 2013."
H1 2016 details
The biggest category of investment in the first half of 2016 was, as usual, asset finance of renewable energy projects, at $92 billion worldwide, down 19 percent on H1 2015. The biggest asset finance deals of the second quarter were in offshore wind in Europe, led by the $3.9 billion final investment decision on the 588-MW Beatrice project in UK waters by SDIC Power Holdings, SSE Renewables and Copenhagen Infrastructure Partners. Other offshore wind arrays financed in Q2 included the 450-MW Borkum Riffgrund and 385-MW Arkona, both off Germany, and the 400-MW Horns Rev 3 in Danish waters.
Big-ticket projects getting the go-ahead in other renewable power technologies included the 100-MW Engie Kathu solar thermal plant in South Africa, worth an estimated $756 million; the 400-MW Enel Cimarron Bend onshore wind installation in the U.S., at $610 million; and the 300-MW AZTE Quaid-e-Azam PV plant in Pakistan, at an estimated $363 million.
Small-scale solar projects attracted $19.5 billion in the first half of 2016, down 32 percent on the same period of last year. Much of this was down to lower costs, but there was also a marked slowdown in the largest market for these systems, Japan, where deployment amounted to $4.6 billion in H1, down 66 percent on the same period of 2015.
Public markets investment in specialist clean energy companies was $3.8 billion in the first half of 2016, some 56 percent below that in the first six months of 2015, although there was a sharp pick-up between Q1 and Q2 this year. The top public market fundings of the second quarter were a $1.7 billion secondary share issue by U.S. electric car maker Tesla Motors, and two secondary issues by Chinese digital energy companies, Ningbo Sanxing Electric and Genimous Investment, worth $457 million and $432 million, respectively.
Venture capital and private equity investment in clean energy firms totaled $2.8 billion in the first half of the year, up 2 percent on H1 2015. The biggest VC/PE deals were $230 million of expansion capital for India-based wind project developer Greenko Energy Holdings, and $120 million of early-stage money for Chehejia, a Chinese electric vehicle maker.