Solar surge drives record clean energy investment in 2011

Total new investment in clean energy increased 5% to $260bn in 2011,
despite the sluggish global economy and a painful squeeze on manufacturers

London and New York, 12 January 2012 – Global investment in clean energy
reached a new record of $260bn in 2011, up 5% on 2010 and almost five times
the total of $53.6bn in 2004. Investment in solar far outstripped that in
wind, and perhaps of most note, US clean energy investment moved back ahead
of China for the first time since 2008, according to the latest
authoritative data from analysis company Bloomberg New Energy Finance. Last
year also saw the one trillionth dollar invested in clean energy globally
since the company started compiling data in 2004.

The record investment figures for 2011 are particularly striking because
they were achieved during a turbulent year for the world economy in general
and for the clean energy sector in particular. The industry has suffered
severe pressure on the profit margins of manufacturers, a sharp fall in
share prices, some notable bankruptcies, cuts in European government
subsidy support, and a reduction in the availability of bank finance.

2011 highlights include a 36% surge in total investment in solar
technology, to $136.6bn. This was nearly double the $74.9bn investment in
wind power, which was down 17% on the previous year. This is not the first
time that Bloomberg New Energy Finance has shown total investment in solar
out-pacing that in wind (on today’s revised figures for prior years,
solar exceeded wind in 2004 and again in 2010), but this is the first time
there has been such a huge gap.

Michael Liebreich, chief executive of Bloomberg New Energy Finance, said:
“The performance of solar is even more remarkable when you consider that
the price of photovoltaic modules fell by close to 50% during 2011, and now
stands 75% lower than three years ago, in mid-2008. The cost of PV
technology has fallen, but the volume of PV sold has increased by a much
greater factor as it approached competitiveness with other sources of
power.”

A second highlight was the performance of the US in 2011. In 2008, the US
was by far the largest single country worldwide in terms of total
investment in clean energy, but it was overtaken by China in 2009. China
increased its lead in 2010. However in 2011, the US roared ahead once
again, with total investment surging to $55.9bn, up 33%; China saw
investment rise just 1% to $47.4bn.

Liebreich commented: “The news that the US jumped back into the lead in
clean energy investment last year will reassure those who worried that it
was falling behind other countries. However before anyone in Washington
celebrates too much, the US figure was achieved thanks in large part to
support initiatives such as the federal loan guarantee programme and a
Treasury grant programme which have now expired. The country’s principal
remaining support measure for renewable energy, the Production Tax Credit,
is currently also scheduled to fall away at the end of 2012 unless it is
extended. There may be a rush to get projects completed in 2012, followed
by a slump in investment in 2013 if it expires.”

Europe as a whole saw clean energy investment rise 3% to $100.2bn, with the
strongest features being solar installations – both large-scale and
distributed – in Germany and Italy, and offshore wind financings in the
North Sea. India led the table in terms of growth in investment with a jump
of 52% to $10.3bn, while Brazil clocked up a respectable 15% increase to
$8.2bn.

The largest single type of investment was the asset finance of
utility-scale renewable energy projects. This increased from a revised
$138.3bn in 2010, to $145.6bn in 2011. Among the big projects financed in
the last quarter of the year were the 288MW Amrumbank West offshore wind
farm off Germany for $1.3bn, the 272MW Seigneurie de Beaupre wind farm
phases one and two in Canada for $756m, and the 92.5MW Hanas Ningxia Yanchi
Gaoshawo solar thermal plant in China, for $354m.

The second-biggest category of investment last year was the finance of
distributed renewable power technology, notably rooftop PV. This reached
$73.8bn in 2011, up from $60.4bn in 2010 – with Italy and Germany the two
countries playing the biggest role as sharply falling solar panel prices
increased the returns offered by feed-in tariffs.

Several other categories of investment actually fell slightly during 2011.
Corporate research and development in clean energy slipped to $13.2bn last
year, from $15.3bn, and government research and development fell to $12.7bn
from $16.2bn – due in large part to the fading effect of the “green
stimulus” programmes announced by major economies after the 2008
financial crisis.

Public markets fund-raising fell from $14.2bn in 2010 to $11.9bn in 2011 in
the face of a dismal performance by sector share prices. The WilderHill New
Energy Global Innovation Index, or NEX, which tracks the performance of 97
clean energy shares worldwide, fell 40% in 2011, touching in early October
its lowest level since 2003. The main reason for this share price retreat
was severe pressure on wind and solar manufacturers, caused by falling
prices, over-capacity, and competition from Asia. One of the biggest public
markets equity raisings in the fourth quarter was a $215m initial public
offering by Chinese solar company Sungrow Power. The market also displayed
an enduring appetite for next-generation biofuel companies.

Venture capital and private equity investment saw a modest increase of 4%
in 2011 to $8.9bn. Two of the largest deals of the fourth quarter were a
$133m equity raising for US high-end plug-in hybrid vehicle manufacturer
Fisker Automotive and a $130m round for US thin-film photovoltaic module
maker Stion Corporation.

2011 was characterized by significant volatility in levels of activity,
with big variations in the amount of investment in each quarter. The most
buoyant period by far was the third quarter, when asset finance alone
reached $47.8bn, helped by a rush of projects taking advantage of the US
federal loan guarantee programme that expired at the end of September. In
the following quarter, asset finance worldwide fell 28% to $34.3bn. This
reflected a combination of the fact that the US loan guarantee was no
longer available, and the impact of the euro area sovereign debt crisis on
bank lending to renewable energy projects.

Liebreich commented: “Overall, 2011 was a far better year for the clean
energy industry than the press coverage would lead one to believe. Remember
that for every equipment company operating at thin or negative margins,
there is an installer who is getting a good deal. 2012 looks like being
another challenging year, with the European financial crisis continuing to
fester, and the supply chain working its way out of some fearsome
over-capacity. But rumours of the death of clean energy have been greatly
exaggerated. We will be seeing a new generation of technology starting to
hit the market, and we are expecting important announcements by some of the
biggest energy and engineering companies in the world as they take
advantage of current market conditions to establish themselves in the
sector.”

The third-largest sector for investment in 2011 after solar and wind was
energy-smart technologies, including smart grid, power storage, efficiency
and advanced transport. This area saw total investment of $19.2bn, the bulk
of it in corporate R&D and venture capital and private equity raisings.
This was however down 17% on 2010 levels.

Among the smaller renewable energy sectors in 2011, biofuels saw total
investment edge up from $8.6bn to $9bn, biomass and waste-to-energy
suffered an 18% setback to $10.8bn, geothermal slipped from $3.2bn to
$2.8bn, marine marked time at $0.3bn, and small hydro fell 25% to $3bn.

For further information:
Angus McCrone
Bloomberg New Energy Finance
+44 203 216 4795
amccrone1@bloomberg.net



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