44% plunge in investment as crisis catches up with clean energy13 April 2009 The latest figures from research firm New Energy Finance show that new investment in clean energy has collapsed to just US$13.3bn in the first quarter of 2009, down by no less than 44% on the fourth quarter of last year and 53% below the level achieved in the first quarter of 2008.According to sources at New Energy Finance, it took until the first quarter of 2009 for the credit crunch and the recession to finally catch up fully with investment in renewable energy, low-carbon technologies and energy efficiency. Despite the sector’s medium-term and long-term growth prospects, it suffered in Q1 2009 from a severe shortage of bank finance for projects and the parlous state of overall stock market confidence. Over US$150bn of stimulus spending around the world has been earmarked for clean energy, but these figures show it has not started to flow fast enough to fill the current funding gap. The unprecedented fall in recorded investment in Q1 2009 reflects two influences. The first, and more significant, is a sharp drop in underlying activity. The second is the fact that many deals are taking longer than usual to complete because of the state of financial markets, and had therefore not been closed by the last day of the quarter.
Michael Liebreich, chairman and CEO of New Energy Finance, commented, “green stimulus plans may represent the light at the end of the tunnel for clean energy companies, but meanwhile the sector has been hit by an oncoming train. These figures highlight the need for policy-makers and administrators in the US and elsewhere to ensure that stimulus funds start flowing immediately, not in a year or so. There is also a strong case for further measures, such as requiring state-supported banks to raise lending to the sector, providing capital gains tax exemptions on investments in clean technology, creating a framework for Green Bonds and so on, all targeted at getting investment flowing. Many of the policies to achieve growth over the medium term are already in place, including feed-in tariff regimes, mandatory renewable energy targets and tax incentives. There is far too much emphasis among policy-makers on support mechanisms, and not enough on the urgent needs of investors right now.” Looking at the detailed geographical data, asset finance of new-build renewable energy projects in the US totalled just US$500m, compared to US$2bn in Q4 2008 and just over US$5bn in Q1 2008. The Obama stimulus funds have not yet started to flow. These figures show just how much they are needed. In Brazil, new-build asset finance was down sharply in Q1 2009 at US$900m, compared to US$3.3bn in Q4 2008. But refinancing shot up to US$1.4bn, more than half of the world total, from virtually nothing in Q4 – showing how state-owned banks are moving to fill the financing gap left by private sector banks, particularly in the ethanol sector. This may provide a pointer to the rest of the world on what can be achieved by the public sector if there is political will. Overall global investment in clean energy reached US$155bn in 2008, up
slightly from US$148bn in 2007, according to New Energy Finance data. Given
the slowness of the first quarter of 2009, it will take a very sharp
acceleration in investment in the remaining three quarters for this year to
match 2008 levels.
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