A new report from the United Nations Environment Programme (UNEP) indicates that the global credit crunch has done little to halt the flow of investments into the sustainable energy sector.
Driven by a combination of climate change worries, growing government support, rising oil prices and energy security concerns, funding in the clean energy sector rose by 60 per cent in 2007. Wind energy attracted the most investment, although solar power grew most rapidly.
The report, “Global Trends in Sustainable Energy Investment 2008”, shows that over $148 billion in new funding entered the sustainable energy sector in 2007. While the market was more subdued in early 2008, most areas of investment rebounded in the second quarter in spite of continuing turmoil in the global financial markets.
According to New Energy Finance, which prepared the report on behalf of UNEP, wind energy attracted $50.2 billion of investment in 2007. The solar sector attracted $28.6 billion of new capital and has been growing at an annual average rate of 254 per cent since 2004.
“The clean energy industry is maturing and its backers remain bullish,” said Achim Steiner, the head of UNEP. “Just as thousands were drawn to California and the Klondike in the late 1800s, the green energy gold rush is attracting legions of modern day prospectors in all parts of the globe.”
The analysis shows that in Q2 2008, sustainable energy venture capital and private equity was up 34 per cent on Q2 2007, new build asset finance was up eight per cent and public market investment showed a strong recovery with the IPO of Portuguese utility EDP’s renewable energy business, EDP Renovaveis.
“What is unfolding is nothing less than a fundamental transformation of the world’s energy infrastructure,” said Steiner.
Most of the new money flowed into Europe, followed by the USA. However, China, India and Brazil are attracting growing investor interest, with their share of new investment increasing from 12 per cent in 2004 to 22 per cent in 2007, an increase in absolute terms of 14 times, from $1.8 billion to $26 billion.
Total 2007 sustainable energy transaction volume was $204.9 billion, of which $98.2 billion went into new renewable energy generation, $50.1 billion went into technology development and manufacturing scale-up, and $56.6 billion changed hands through mergers and acquisitions.
With 31 GW of new installed generation, sustainable energy accounted for 23 per cent of new power capacity added globally in 2007, about ten times that of nuclear.
Sustainable energy companies accounted for 19 per cent of all new capital raised by the energy sector on the global stock markets in 2007.
“Investment in the sustainable energy sectors must continue to grow strongly if targets for greenhouse gas reductions and renewables and efficiency increases are to be met,” says the report.
“Investment is expected to reach $450 billion a year by 2012, rising to more than $600 billion a year from 2020. The sector’s overall performance during 2007 and into 2008 sets it on track to achieve these levels.”
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