China, developing countries
are now biggest investors in large-scale
renewables while Germany surges ahead on
rooftop solar;
Positive trend in government
research and development in renewables spotlighted-up
over 120 per cent to well over US$5 billion;
UNEP and Frankfurt School launch Collaborating
Centre for Climate and Sustainable Energy
Finance
Wind farms in China
and small-scale solar panels on rooftops
in Europe were largely responsible for last
year's 32% rise in green energy investments
worldwide according to the latest annual
report on renewable energy investment trends
issued by the UN Environment Programme (UNEP).
Last year, investors
pumped a record US$211 billion into renewables
- about one-third more than the US$160 billion
invested in 2009, and a 540% rise since
2004.
For the first time,
developing economies overtook developed
ones in terms of "financial new investment"-spending
on utility-scale renewable energy projects
and provision of equity capital for renewable
energy companies.
On this measure, US$72
billion was invested in developing countries
vs. US$70 billion in developed economies,
which contrasts with 2004, when financial
new investments in developing countries
were about one quarter of those in developed
countries.
The report, Global Trends
in Renewable Energy Investment 2011, has
been prepared for UNEP by London-based Bloomberg
New Energy Finance.
It was launched today
by UN Under-Secretary-General and UNEP Executive
Director Achim Steiner and Udo Steffens,
President and CEO of the Frankfurt School
of Finance & Management as it was also
announced that a new UNEP Collaborating
Centre for Climate & Sustainable Energy
Finance is being inaugurated at the Frankfurt
School.
China, with US$48.9
billion in financial new investment in renewables
(up 28%), was the world leader in 2010.
However, other parts of the emerging world
also showed strong growth:
South and Central America:
up 39% to US$13.1 billion;
Middle East and Africa:
up 104% to US$5 billion;
India: up 25% to US$3.8
billion, and
Asian developing countries
excluding China and India: up 31% to US$4
billion.
Another positive development,
highlighted in the report with implications
for long-term clean energy developments,
was government research and development.
That category of investment climbed over
120 per cent to well over US$5 billion.
Mr. Steiner said: "The
continuing growth in this core segment of
the Green Economy is not happening by chance.
The combination of government target-setting,
policy support and stimulus funds is underpinning
the renewable industry's rise and bringing
the much needed transformation of our global
energy system within reach.''
"The UN climate
convention meeting in Durban later in the
year, followed by the Rio+20 summit in Brazil
in 2012, offer key opportunities to accelerate
and scale-up this positive transition to
a low carbon, resource efficient Green Economy
in the context of sustainable development
and poverty eradication," he added.
"The finance industry
is still recovering from the recent financial
crisis," adds Udo Steffens, President
of the Frankfurt School of Finance and Management.
"The fact that the industry remains
heavily committed to renewables demonstrates
its strong belief in the prospects of sustainable
energy investments. "
"The investment
activity in the developing world is not
only leading to innovations in renewable
energy technologies. Further more, it will
open up new markets as first mover investors
are facilitating a range of new business
models and support entrepreneurship in the
developing world", explains Udo Steffens.
The report points out
that not all areas enjoyed positive growth
in 2010: there was a decline of 22% to US$35.2
billion in new financial investment in large-scale
renewable energy in Europe in 2010. But
this was more than made up for by a surge
in small-scale project installation, predominantly
rooftop solar.
Michael Liebreich, chief
executive of Bloomberg New Energy Finance,
said: "Europe's small-scale solar energy
boom owed much to feed-in tariffs, particularly
in Germany, combined with a sharp fall in
the cost of photovoltaic (PV) modules."
Investments in Germany
in "small distributed capacity"
rose 132% to US$34 billion, in Italy they
rose 59% to US$5.5 billion, France up 150%
to US$2.7 billion, and the Czech Republic
up 163% to US$2.3 billion.
The price of PV modules
per megawatt has fallen 60% since mid-2008,
making solar power far more competitive
in a number of sunny countries.
By the end of 2010,
many countries were rushing to make their
PV tariffs less generous. Indeed, Spain
and the Czech Republic both moving to make
retroactive cuts in feed-in tariff levels
for already-operating projects "damaged
investor confidence," the report says.
"Other governments, such as those of
Germany and Italy, announced reductions
in tariffs for new projects - logical steps
to reflect sharp falls in technology costs."
Nevertheless the small-scale
solar market is likely to stay strong in
2011, the report suggests.
Further drops in costs
for solar, wind and other technologies lie
ahead, the report says, posing a growing
threat to the dominance of fossil-fuel generation
sources in the next few years.
Throughout the last
decade, wind was the most mature renewable
energy technology and enjoyed an apparently
unassailable lead over its rival power sources.
Wind turbine prices
have fallen 18% per megawatt in the last
two years, reflecting, as with solar, fierce
competition in the supply chain.
In 2010, wind continued
to dominate in terms of financial new investment
in large scale renewables, with US$94.7
billion (up 30% from 2009). However, when
investments in small scale projects are
added in solar is catching up, with US$86
billion in 2010, up 52% on the previous
year. With US$11 billion invested, biomass
and waste-to-energy come in third in front
of biofuels, which boomed at US$20.4 billion
in 2006, but fell off dramatically - to
US$5.5 billion last year.
The sharpest percentage
jumps in overall investment were seen in
small-scale projects - up 91% year-on-year
at US$60 billion, and in government-funded
research and development, up 121% at US$5.3
billion, as more of the "green stimulus"
funds promised after the financial crisis
arrived in the sector.
Two areas of investment
showed a fall in 2010 compared to 2009:
corporate research, development and deployment
(down 12% at US$3.3 billion, as companies
retrenched in the face of economic hard
times) and provision of expansion capital
for renewable energy companies by private
equity funds (down 1% to US$3.1 billion).
Clean energy share prices
fell in 2010, with the WilderHill New Energy
Global Innovation Index (NEX) down 14.6%,
under-performing wider stock market indices
by more than 20%. This showing reflected
investor concerns about industry over-capacity,
cutbacks in subsidy programs and competition
from power stations burning cheap natural
gas.
Acquisition activity
in renewable energy, representing money
changing hands rather than new investment,
fell from US$66 billion in 2009 to US$58
billion in 2010. The two largest categories
of M&A - corporate takeovers and acquisitions
of wind farms and other assets - both fell
by around 10%.
The low price of natural
gas-which was between US$3 and US$5 per
million BTU for almost all of 2010- hurt
the growth of renewables, the report says.
The price of natural gas was far less than
it was in much of the mid-2000s, before
it peaked at US$13 in 2008.
"This gave generators
in the US, but also in Europe and elsewhere,
an incentive to build more gas-fired power
stations and depressed the terms of power
purchasing agreements available to renewable
energy projects," says the report.
Frankfurt School of
Finance & Management and UNEP launch
new Collaborating Centre
The report launch marks
the beginning of the new UNEP Collaborating
Centre for Climate & Sustainable Energy
Finance at the Frankfurt School of Finance
& Management. Its goal is to develop
cost-effective ways to reduce energy-related
carbon emissions by mobilizing sustainable
energy investments and strengthening their
associated markets.
This is achieved by
working with financial institutions to develop
technical know-how, innovative financing
approaches and new forms of entrepreneurial
and end-user finance.
The Centre's approach
combines project implementation on the ground
with research, think tank activities, training
and education.
One of Europe's leading
business schools, the Frankfurt School also
builds and strengthens financial sector
capacities in emerging markets and developing
countries through consulting and training
projects. Through its "Sustainable
Energy Finance" centre, the Frankfurt
School has implemented energy efficiency
and renewable energy projects worldwide.
"At the Frankfurt
School we look back on profound experience
with international advisory in all fields
of development finance," says the school's
President and CEO Udo Steffens. "The
UNEP Collaborating Centre allows us to apply
this expertise and knowledge to climate
and sustainable energy finance, covering
research, advisory and education."
