UK slips down global 'green' projects league
31 Mar 2011
Philadelphia – UK-based investment in ’green’ energy projects slumped to $3.3 billion (around £2 billion) in 2010, compared to $11 billion (around £7 billion) the previous year, according to Pew Charitable Trusts – a Philadelphia-based research and analysis group set up to inform US government policy.
Almost every other G20 nation recorded spending rises, to generate 30% growth in the sector globally to $243 billion, said the Pew study, which is based on data from Bloomberg New Energy Finance.
The CAPEX decline pushed the UK down to 13th, just behind Mexico, in the global ’green’ spending league, from fifth place in 2009.
The UK experienced the largest decline among the G-20, noted the report, suggesting that uncertainty surrounding clean energy policies in the UK had caused investors to look elsewhere for opportunities.
“With a new government in the UK, investors appear to have taken to the sidelines until there is more certainty in the marketplace,’ said Phyllis Cuttino, director of Pew’s Clean Energy Program.
In 2010, around 60% of UK investments were directed at wind energy, followed by: ’Other renewables’ 16%; ’Efficiency & low carbon tech/services’ 11%; Biofuels 10%; and Solar 3%.
The UK’s installed clean energy base in 2010, meanwhile, had a total renewable energy capacity of 7.5GW. This comprised mainly of wind power facilities (5,200MW) and biomass plants (2,000MW).
In contrast, clean energy investments in Germany increased by 100% in 2010, to $41.2 billion – reflecting a sharp increase in deployment of small-scale solar projects, which increased 132% to enable an estimated 8-9GW of new solar capacity to be installed.
Around 88% of clean energy investment in Germany was directed to the solar sector, some $36.1 billion, with another $4.7 billion invested to increase the country’s extensive wind assets. Renewable energy capacity, there, reached 49GW, comprising: Wind 27,340MW; Solar 17,790MW; and Biomass 2,320MW.
Germany was second in the G-20, up from third last year, swapping places with the US ($34bn). World leader China’s $54.4 billion of investments in 2010 represented a 39% increase from 2009.
“Countries like China, Germany and India were attractive to financers because they have national policies that support renewable energy standards, carbon reduction targets and/or incentives for investment and production and that create long-term certainty for investors,” said Cuttino.
Italy attracted $13.9 billion in clean energy financing last year, improving its global standing to fourth, from eighth in 2009. Italy is the first country to achieve grid parity, or cost-competitiveness, for solar energy. For the first time, India joined the top 10 ranking, attracting $4 billion, a 25% increase.
Both Germany and Italy have used feed-in tariffs (FITs) to attract significant new investment in solar power projects, said Pew, which linked FITs to 75% of solar photovoltaic deployments and 45% of wind projects globally.
By providing investors with clear returns, FITs provide renewable energy projects with long-term power purchase agreements at an agreed price, the report noted.
However, the explosive growth in investment has led Germany and other nations to moderate the extent of the incentive in order to avoid a bubble market and sharp increases in consumer electricity bills.
Nevertheless, Germany’s FIT policy is set to encourage deployment of as much as 8GW of solar power, while Italian policymakers recently indicated that the nation’s FIT program will continue unchanged in 2011.
Globally, wind power continued to be the favoured technology for investors at $95 billion. However, the solar sector experienced significant growth in 2010, with investments growing 53% to a record $79 billion and more than 17GW of new generating capacity globally. Germany accounted for 45% of global solar investments.
“Looking at global trends, the solar sector experienced the strongest growth among the various technologies, led by small-scale residential projects,” said Michael Liebreich, CEO of Bloomberg New Energy Finance.
“Declining prices and important government support helped the solar sector achieve 40% of total clean energy investment in 2010,” Liebreich added.
Other findings from the Pew Charitable Trusts report:
- Regionally, Europe remained the leading recipient, attracting $94.4bn, led by Germany ($41.2bn) and Italy ($13.9bn).
- The Asia/Oceania region, led by China, continued its sharp rise, attracting $82.8bn, a 33% increase over the previous year.
- The Americas also saw investment grow 35%, but as a region it remains a distant third, attracting $65.8bn.
- Investments in small-scale, residential solar grew by 100% to $56.4 billion in the G-20. Germany accounts for nearly half the total, followed by Japan, France, Italy and the US.
- Installed generating capacity increased to 388 GW from wind, small-hydro, biomass, solar, geothermal and marine, with - China accounting for more than 25% of the global total.
- Excluding R&D funding ($35bn), investment totalled $198 billion.
- Increasing 15% to $118bn, asset financing accounted for the majority of private investment in G-20 countries.
- Public market financing grew 27% to $15.9 bn, as companies launched public stock offerings to raise capital for expansion.
= Venture capital/private equity investments in clean energy increased 26% to $8.1bn. The US led with $6bn, three-quarters of the G-20 total.
