A strengthening dollar has been identified as one of the causes of the slump in investment

Green energy investment hits two-year low

Global investment in green energy was at its lowest for two years in the first quarter of 2015, according to new research.

A report from Bloomberg New Energy Finance (BNEF) said that investment in renewable energy such as wind and solar power and biomass fell to $50.5bn (£34.5) in January to March from $59.3bn in same quarter last year, the least since the first quarter of 2013 when spending totalled $43.1bn.

The first quarter of each year is normally the weakest as project developers asses any changes in renewable energy support mechanisms taking effect from 1 January and banks and equity investors pause after a busy year-end, but this year the affect has been amplified by a strengthening of the US dollar that has impacted financing of projects.

A number of large wind projects in the first quarter of last year has also likely skewed the comparison and without those two factors investment would have been “pretty much level-pegging with last year”, according to Michael Liebreich, chairman of the advisory board at BNEF.

Analysts have been waiting to see whether falling global oil and gas prices would hit investment in clean energy. “These figures indicate the answer is not so much,” said Liebreich. “ There’s a lot of ground still to cover this year. No one knows whether the oil price is going to bounce back or collapse further.

“There is good momentum towards some sort of climate deal in Paris in December. And there are certainly plenty of ground-breaking developments in the low-carbon sector, from solar at six US cents per kWh, to storage, energy efficiency, electric vehicles and smart grid.”

By sector, the report showed that solar is up 7 per cent from last year earlier at $31.8bn, wind is down 30 per cent at $15.1bn, biomass and waste-to-energy are up 94 per cent at $1.7bn and biofuels are down 64 per cent at $447m. Investment in energy smart grid technology companies slumped 91 per cent to $281m.

Geographically, clean energy investment in Brazil slumped by 62 per cent to $1.1bn compared with the first quarter of last year, while investment in Europe fell by 30 per cent to $9.7bn and Chinese investment was down 24 per cent to $11bn.

But clean energy investment in South Africa surged to $3.1bn from almost nothing in the first quarter last year, and investment in India rose by 59 per cent to $1.6bn.

BNEF Analyst Luke Mills said: “Since 2012, South Africa has emerged as one of the most important centres for clean energy investment, as it seeks to expand power capacity and take advantage of its sunshine and wind resources.

“The first quarter saw the financing of a series of large projects in solar thermal, wind and photovoltaic that won through in the latest round of the country’s auction programme.”

The largest asset finance deals for the quarter identified by the report included $1.3bn for Germany’s 322MW Nordsee One offshore wind project, $888m for the 100MW Xina Solar One solar thermal complex in South Africa, and $427m for the 300MW Apex Kay wind farm in Oklahoma, US.

The biggest public market deals of the quarter were a $460m convertible issue by US solar company SunEdison and a $405m secondary share issue by US renewable energy firm TerraForm Power.

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