Later stage startups may have raked in cleantech venture capital in the first quarter, but big renewable energy projects struggled. Global clean energy investment fell to $31.1 billion in the first three months of this year, its lowest quarterly total in two years, Bloomberg New Energy Finance reported Friday.
That’s down more than a third from a record $47.1 billion in the fourth quarter of 2010, according to the research firm’s count of asset finance, share sales, venture capital and private equity going into clean energy. While part of the big drop was due to a “hangover” from the record-high investments made in the last three months of 2010, it’s also based on some serious headwinds facing the industry, New Energy Finance CEO Michael Liebreich said.
Solar power, for one, is being squeezed by an anticipated slowdown in feed-in tariffs and other government subsidies in big European markets such as Germany, Italy and the Czech Republic, Liebreich said. Germany’s lucrative feed-in tariffs are set to be reduced further in July, while Italy is now considering capping payouts to the flood of solar projects announced last year under its own subsidy program.
Also, U.S. wind power projects have been hit hard by falling prices for natural gas, which hit lows not seen since 2002, the report stated. Natural gas turbines are direct competitors with wind power projects, and new shale gas extraction projects, (which could have some environmental issues) have also promised to add huge new stores to the U.S.’s stocks of the fossil fuel.
These market hurdles are reflected in the fall in asset finance in the first quarter, which slid to $25.7 billion from $36.6 billion in the previous quarter.
What were the bright spots? The report identified Brazilian and Chinese wind power projects, with China spending $10 billion, or 25 percent more than the first quarter of 2010, and Brazil doubling its wind investment to $2.1 billion compared to the same quarter last year.
China remains the leader in clean energy investment, with a 39-percent increase to hit a record $54.4 billion last year. That was enough to give China the lead over the U.S. in installed renewable energy capacity, as well as retain its spot as the top manufacturer of wind turbines and solar panels.
China also hosted the biggest green energy IPO of the first quarter, when Sinovel Wind Group raised 9.46 billion yuan ($1.4 billion) in a March public offering on the Shanghai Stock Exchange.
Big new investments in European offshore wind transmission also helped offset a general decline in European wind power investment, which fell 10 percent to $4.4 billion in the first quarter.
Also, while Bloomberg NEF’s report specifically did not include investment into distributed power generation, it noted that this investment grew 91 percent last year compared to 2009.
The overall big drop in asset finance marks a contrast with a big jump (in terms of dollars) in venture capital investment for the first quarter — up to $2.57 billion, bringing in the second highest quarterly total ever, as reported by the Cleantech Group last week. But that high figure largely consisted in several very large follow-on rounds for companies that might otherwise be seeking IPOs if not for the unfavorable economic climate, and that, as Neal Dikeman covered for us last week, could underscore some problems for green investment in the months to come.
Bloomberg NEF, for its part, reported a slight increase in green energy venture capital investment in the first quarter, up to $1.8 billion from $1.7 billion in the previous quarter. Those figures differ from those recorded by the Cleantech Group, largely due to differences in how the two groups define clean technology.
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