Investors Like Clean Energy, Growth Dips: Survey
Date: 05-Mar-09
Country: UK
Author: Gerard Wynn
Investors Like Clean Energy, Growth Dips: Survey Photo: Pascal Rossignol
Power-generating windmill turbines on a wind farm in Fruges, near Saint
Omer, northern France January 9, 2009. The wind farm, which has 70
power-generating 2 megawatt windmill turbines, is capable of producing 140
megawatts of green energy.
Photo: Pascal Rossignol
LONDON - Half of institutional investors plan to increase their funding of
clean energy compared with 12 months ago, but that will not be enough to
drive global growth in the sector this year, a survey published on Wednesday
said.
Shares in clean energy companies under performed other stocks in 2008
because of their dependence on growth, technology advances and high oil
prices. More expensive debt has curbed installation of clean energy
projects, for example in wind and solar power.
But investors told a London conference, where the survey was published, they
expected measures to fight climate change and secure energy supplies would
help lift the low-carbon sector out of recession before others.
"Despite the economic downturn I believe the growth prospects for clean
energy remain as strong or stronger than 12 months ago," said John Browne,
managing director at U.S.-based private equity firm Riverstone and former
chief executive of oil firm BP.
"We can say with some confidence that when project finance comes back it
will come back first for low-carbon energy projects," he told the conference
hosted by research group New Energy Finance (NEF).
Some 49 percent of a survey of 106 institutional investors including
pension, banking and insurance funds with $1 trillion assets under
management planned to increase their exposure to the sector now.
Global investment in clean energy fell in the second half of 2008 and is on
track to fall in the first three months of 2009 compared with the same
period last year, NEF said, after hitting a plateau last year at about $150
billion.
Worldwide economic stimulus packages have allocated about $200 billion to
clean energy in an effort to create jobs and diversify energy supplies,
analysts say. Those funds would not become widely available until 2010, said
Michael Liebreich, the head of NEF.
One additional hope for the industry is a step-change in political action to
fight climate change, for example at U.N.-led climate change talks meant to
agree on a successor to the Kyoto Protocol in Copenhagen in December.
TRENDS
Clean energy is more expensive than conventional fossil fuels. Deployment in
the medium-term would also be aided by falling costs, now exacerbated by a
glut for example in solar panels as a result of slowing growth.
"We have a massive over-supply," said Jenny Chase, NEF solar power analyst,
estimating a possible glut in photovoltaic (PV) solar panels through 2011,
which could lead to mothballed plant, and retail prices to fall more than 40
percent before a supply-demand balance was restored.
In a separate study, New Energy Finance estimated the clean energy sector
required $500 billion investment annually by 2020 to avert more dangerous
climate change, versus an expected $350 billion under current trends.
That compared with about $1,500 billion annual energy investment now, the
group said.
Extra investment depended on more political support.
"It's some combination of concerted policy intervention at a scale we
haven't seen yet or a bombshell out of Copenhagen ... commitments above
what's expected from China, India, the United States," Liebreich said,
referring to three of the world's top carbon emitters, none of which are
bound by the Kyoto Protocol which expires in 2012.
Recession would have a negligible impact on global carbon emissions, which
would continue to rise at amounts about 3 percent below levels otherwise
expected, NEF said on Wednesday.
(Editing by Sue Thomas)
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