In 2010, wind continued to dominate in terms of financial new investment in large scale renewables, with US $ 94.7 billion (up 30% from 2009). However, when investments in small scale projects are added in solar is catching up, with US $ 86 billion in 2010, up 52% on the previous year. With US $ 11 billion invested, biomass and waste-to-energy come in third in front of biofuels, which boomed at US $ 20.4 billion in 2006, but fell off dramatically – to US $ 5.5 billion last year.
The sharpest percentage jumps in overall investment were seen in small-scale projects – up 91% year-on-year at US $ 60 billion, and in government-funded research and development, up 121% at US $ 5.3 billion, as more of the “green stimulus” funds promised after the financial crisis arrived in the sector.
Two areas of investment showed a fall in 2010 compared to 2009: corporate research, development and deployment (down 12% at US $ 3.3 billion, as companies retrenched in the face of economic hard times) and provision of expansion capital for renewable energy companies by private equity funds (down 1% to US $ 3.1 billion).
Clean energy share prices fell in 2010, with the WilderHill New Energy Global Innovation Index (NEX) down 14.6%, under-performing wider stock market indices by more than 20%. This showing reflected investor concerns about industry over-capacity, cutbacks in subsidy programs and competition from power stations burning cheap natural gas.
Acquisition activity in renewable energy, representing money changing hands rather than new investment, fell from US $ 66 billion in 2009 to US $ 58 billion in 2010. The two largest categories of M&A – corporate takeovers and acquisitions of wind farms and other assets – both fell by around 10%.
The low price of natural gas – which was between US $ 3 and US $ 5 per million BTU for almost all of 2010 – hurt the growth of renewables, the report says. The price of natural gas was far less than it was in much of the mid-2000s, before it peaked at US $ 13 in 2008.
“This gave generators in the US, but also in Europe and elsewhere, an incentive to build more gas-fired power stations and depressed the terms of power purchasing agreements available to renewable energy projects,” says the report.
Frankfurt School of Finance & Management and UNEP Launch New Collaborating Centre
The report launch marks the beginning of the new UNEP Collaborating Centre for Climate & Sustainable Energy Finance at the Frankfurt School of Finance & Management. Its goal is to develop cost-effective ways to reduce energy-related carbon emissions by mobilizing sustainable energy investments and strengthening their associated markets.
This is achieved by working with financial institutions to develop technical know-how, innovative financing approaches, and new forms of entrepreneurial and end-user finance.
The Centre’s approach combines project implementation on the ground with research, think-tank activities, training and education.
One of Europe’s leading business schools, the Frankfurt School also builds and strengthens financial sector capacities in emerging markets and developing countries through consulting and training projects. Through its “Sustainable Energy Finance” centre, the Frankfurt School has implemented energy efficiency and renewable energy projects worldwide.
“At the Frankfurt School, we look back on profound experience with international advisory in all fields of development finance,” says the school’s President and CEO Udo Steffens. “The UNEP Collaborating Centre allows us to apply this expertise and knowledge to climate and sustainable energy finance, covering research, advisory and education.”
Source: UNEP.
