Gemini Deal Helps Boost Q2 Clean Energy Investments

Global clean energy investment surged to $63.6bn in the second quarter of 2014, up 33% compared to the first quarter and 9% compared to Q2 2013, according to the latest authoritative figures from research company Bloomberg New Energy Finance.

Q2 2014 was the strongest quarter for investment since Q2 2012 which reached $69.6bn, and was down only $14.4bn from the quarterly record of $78bn in Q2 2011. Last quarter’s strong figures were driven a combination of big financings for wind and solar projects sized in the hundreds of megawatts, and busy activity in the installation of small-scale rooftop photovoltaics.

The stand-out deal of the quarter was the $3.8bn 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 (excluding large hydro-electric). Signed in May, the transaction involved the developer ‒ Canada’s Northland Power ‒ plus 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.

However, Gemini was only one of the highlights. Also looming large were the $818m financing of the 121MW Ashalim I Sun Negev solar thermal project in Israel, and the $647m investment go-ahead for the 252MW Cemex Ventika wind farm in Mexico.

Geographically, the biggest contributions to the bounce in clean energy investment in Q2 came from China, which committed $19.3bn, more than double the Q1 figure and up 16% on the same quarter a year ago; the US, which invested $10.6bn, up 34% from Q1 and 2% above another strong figure in Q2 2013; and Europe, which invested $14bn, up 26% on Q1 and 47% on a weak Q2 last year.

Michael Liebreich, chairman of the advisory board at Bloomberg New Energy Finance, said: “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. 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.

“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.”

Looking at investment by asset class, asset finance of utility-scale projects such as wind farms, solar parks and small hydro dams totalled $38.2bn in the second quarter of 2014, up from $22.8bn in Q1, but down slightly from $38.5bn in Q2 2013. Financing of rooftop and other small-scale solar capacity was $21.2bn, up 41% on the same quarter a year earlier.

Public market investment in the equity of quoted, specialist clean energy companies was $3.8bn in Q2, up 6% on Q1 but 8% below the second quarter of 2013. Among the main transactions in this category were a $600m convertible issue by US solar manufacturer and project developer SunEdison, and a $467m initial public offering by US wind asset owner NextEra Energy Partners.

Venture capital and private equity investment in clean energy companies totalled $1.6bn in the second quarter of this year, up 42% from Q1 and 36% from Q2 2013, and also the highest figure for any quarter since Q2 2012. Leading the pack were a $250m expansion round for US lithium-ion battery maker Boston-Power, and a $150m late-stage VC round for US residential solar company Sunrun.

Among the main countries for overall investment, excluding China and the US, Japan saw a slight reduction in Q2 commitments, to $7.7bn, from $7.9bn in Q1, but this was still up on $7.2bn in Q2 2013; the UK saw investment slip to $2.1bn, from $3.2bn in Q1 2014 and $2.2bn in Q2 2013; and Germany provided finance of $2bn, down from $2.3bn in Q1 this year but up from $1.3bn in Q2 last year.

In its Q3 2014 investment figures, to be published in early October, Bloomberg New Energy Finance plans to make some revisions to its historical figures for clean energy investment in 2000-13, following a root-and-branch checking of financing statistics against those for installed capacity.