Investment in clean energy hit $37.9 billion in the third quarter, as a flood of cash into offshore wind infrastructure in the North Sea helped drive a record $32.8 billion in asset financing.
The headline figure from information provider Bloomberg New Energy Finance (BNEF) was up 11.5% year-on-year and 12% on last quarter’s $33.9 billion. But it masked a slump in venture capital and private equity investment in the sector, which fell 39.6% to $1.4 billion in the third quarter.
Michael Liebreich, BNEF chief executive said clean energy investment in 2010 revealed “hot spots and cold spots”.
“The latest hot spot is infrastructure spending for North Sea offshore wind. It is reassuring to see billions being committed, although this is only a start – to make the most of this huge resource, countries such as the UK, Germany, Denmark, Netherlands, Belgium and France will have to commit many tens of billions of dollars to offshore wind transmission.
Among the $1.9 billion in North Sea wind infrastructure investment for the quarter, Bloomberg pointed to the HelWin 1 and DolWin 1 cabling projects off the German coast, developed by Transpower and expected to come online in 2013.
China's saw an all-time high of $13.5 billion in asset financing was an all-time high, but the US market remained relatively subdued, with just $4.4 billion of clean energy project financing, down from $5.1 billion in the second quarter. BNEF cited low natural gas prices, which make it hard for renewable energy developers to negotiate attractive power purchase agreements.
“One of the cold spots is venture capital and private equity investment. Funds have found it difficult to raise new money in the last two years. Many are heavily committed to existing portfolio companies and being cautious about extending equity to new opportunities. This problem could ease if we see more exits as a result of a pick?up in the IPO [initial public offering] market, or a big rise in corporate [mergers and acquisitions],” Leibreich said.
Public market investments rose to $3.7 billion, up from $2.6 billion in the second quarter, with BNEF forecasting a more robust fourth quarter. Italian utility Enel is expected to launch a €3 billion IPO later this month.
Total investment in 2010 – which will also include clean energy research and development, corporate investments and small-scale projects – is expected to come in at the high end of BNEF’s $175 billion-$200 billion forecast. This compares with $162 billion last year and $173 billion in 2008.
By. Mark Nicholls
Source: Environmental Finance