Worldwide clean energy investments reached an all time high in the third quarter.
Financing for wind and solar farms, and mergers and acquisitions surged, despite the unfolding European financial crisis and a slump in clean energy share prices on the world’s stock markets.
Led by utility-scale wind and solar projects, investors poured $45.5 billion into clean energy projects, 16% more than Q3 2010, according to Bloomberg New Energy Finance.
The total includes project financing, equity raises on public markets, venture capital and private equity fund investments.
Project finance dominated Q3 – venture capital (VC) and private equity (PE) was slow at $2.2 billion – down 27% from Q2, but 55% higher, however, than Q3 2010.
The biggest VC/ PE deals were in the US – $175 million for biofuel company Sundrop Fuels and $150 million for fuel cell developer Bloom Energy.
Utility-Scale Projects Lead
Indeed, wind and solar projects accounted for $41.8 billion of the total. Investments in offshore wind in the Europe’s North Sea alone reached $6.3 billion for three large projects totalling 1 GW of power.
There were also big financings for solar PV, solar thermal and biofuel projects in the US, for a geothermal installation in Indonesia, and for onshore wind projects in Brazil and China.
The largest solar financing was $1.6 billion for the High Plains Ranch in the US.
Public Markets Horrendous
In contrast, clean energy stocks on the public markets have nosedived down, falling 35% in Q3.
Just $1.4 billion entered public stocks, down 62% from Q2 and 71% from Q3 2010. Companies found it very difficult to launch IPOs or secondary issues in these conditions. Chinese solar company Beijing Jingyuntong Technology (SHA:601908), was among the few IPOs, raising $394.8 million on Shanghai’s market.
"Over the past three years we have seen extraordinary falls in the prices of clean energy equipment – wind turbines and solar photovoltaic panels. This has driven up installation rates and asset investment levels, but there is still not enough demand to soak up significant over-supply, so prices and margins have remain under pressure and manufacturers’ share prices are being crushed.
The industry has swung between being a buyer’s market and a seller’s market several times in recent years: right now, you would love to be a developer with access to funding, but not a supplier. Eventually things will come back into balance. Of course the furor in the US over the failure of Solyndra hasn’t helped clean energy share prices," explains Michael Liebreich, Bloomberg New Energy Finance CEO.
Solar PV modules have fallen in price by a third since autumn 2010, and by 70% since the middle of 2008, while wind turbine prices have fallen 20% since 2009. These moves make renewable energy technologies much more cost-competitive with fossil-fuels, but it’s painful for supply chains.
M&A
Q3 also set a record in merger and acquisitions in clean energy. M&A, including corporate and project acquisitions and refinancings, reached $25.9 billion, up 31% from Q2 and 59% from Q3 2010.
Among the big acquisition deals: EDF bought the remaining 50% of its renewable energy arm, EDF Energies Nouvelles, for $7.9 billion and Toshiba acquired Swiss electronic-metering company Landis+Gyr for $2.3 billion.
The acquisitions are partially driven by consolidation and partially because of utilities and industrial groups taking advantage of low valuations for clean energy companies that will grow rapidly over the medium and long term, says
Liebreich.
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