The boom in PV installations made 2017 a record year for Chinese investment in clean energy, overshadowing changes elsewhere, including jumps in investment in Australia and Mexico and declines in Japan, the UK and Germany.
Annual figures from Bloomberg New Energy Finance (BNEF), based on its world-leading database of projects and deals, show that global investment in renewable energy and energy-smart technologies reached $333.5 billion last year, up 3 percent from a revised $324.6 billion in 2016, and only 7 percent short of the record figure of $360.3 billion, reached in 2015.
Global solar investment in 2017 amounted to $160.8 billion, up 18 percent on the previous year despite capital cost reductions. Just over half of that world total, or $86.5 billion, was spent in China. This was 58 percent higher than in 2016, with an estimated 53 GW of PV capacity installed – up from 30 GW in 2016.
“The 2017 total is all the more remarkable when you consider that capital costs for the leading technology – solar – continue to fall sharply” said chief executive of BNEF, Jon Moore. “Typical utility-scale PV systems were about 25 percent cheaper per megawatt last year than they were two years earlier.”
Justin Wu, head of Asia-Pacific for BNEF, added that China installed about 20 GW more solar capacity in 2017 than BNEF forecast. This happened for two main reasons: first, despite a growing subsidy burden and worsening power curtailment, China's regulators, under pressure from the industry, were slow to curb build of utility-scale projects outside allocated government quotas. Developers of these projects are assuming they will be allocated subsidy in future years. Second, the cost of solar continues to fall in China, and more projects are being deployed on rooftops, in industrial parks or at other distributed locales. These systems are not limited by the government quota. Large energy consumers in China are now installing solar panels to meet their own demand, with a minimal premium subsidy.
Overall, Chinese investment in all the clean energy technologies was $132.6 billion, up 24 percent, setting a new record. The next biggest investing country was the U.S., at $56.9 billion, up 1 percent on 2016 despite the less friendly tone towards renewables adopted by the Trump administration.
Large wind and solar project financings pushed Australia up 150 percent to a record $9 billion, and Mexico up 516 percent to $6.2 billion. On the downside, Japan saw investment decline by 16 percent in 2017, to $23.4 billion, while Germany slipped 26 percent to $14.6 billion and the U.K. 56 percent to $10.3 billion in the face of changes in policy support. Europe as a whole invested $57.4 billion, down 26 percent year-on-year.
Below are the 2017 totals for other countries investing $1 billion-plus in clean energy:
India $11 billion, down 20 percent compared to 2016
Brazil $6.2 billion, up 10 percent
France $5 billion, up 15 percent
Sweden $4 billion, up 109 percent
Netherlands $3.5 billion, up 30 percent
Canada $3.3 billion, up 45 percent
South Korea $2.9 billion, up 14 percent
Egypt $2.6 billion, up 495 percent
Italy $2.5 billion, up 15 percent
Turkey $2.3 billion, down 8 percent
United Arab Emirates $2.2 billion, up 23-fold
Norway $2 billion, down 12 percent
Argentina $1.8 billion, up 777 percent
Switzerland $1.7 billion, down 10 percent
Chile $1.5 billion, up 55 percent
Austria $1.2 billion, up 4 percent
Spain $1.1 billion, up 36 percent
Taiwan $1 billion, down 6 percent
Indonesia $1 billion, up 71 percent
With regards to investment by sector, solar led the way, attracting $160.8 billion – equivalent to 48 percent of the global total for all of clean energy investment. The two biggest solar projects of all to get the go-ahead last year were both in the United Arab Emirates: the 1.2 GW Marubeni JinkoSolar and Adwea Sweihan plant, at $899 million, and the 800 MW Sheikh Mohammed Bin Rashid Al Maktoum III installation, at an estimated $968 million.
Wind was the second-biggest sector for investment in 2017, at $107.2 billion. This was down 12 percent on 2016 levels, but there were record-breaking projects financed both onshore and offshore. Onshore, American Electric Power said it would back the 2 GW Oklahoma Wind Catcher project in the U.S., at $2.9 billion excluding transmission. Offshore, Ørsted said it had reached ‘final investment decision’ on the 1.4 GW Hornsea 2 project in the U.K. North Sea, at an estimated $4.8 billion. There were also 13 Chinese offshore wind projects financed last year, with total capacity of 3.7 GW, and estimated investment of $10.8 billion.
The third-biggest sector was energy-smart technologies, where asset finance of smart meters and battery storage, and equity-raising by specialist companies in smart grid, efficiency, storage and electric vehicles, reached $48.8 billion in 2017, up 7 percent on the previous year and the highest ever.
The remaining sectors lagged far behind, with biomass and waste-to-energy down 36 percent at $4.7 billion, biofuels down 3 percent at $2 billion, small hydro 14 percent lower at $3.4 billion, low-carbon services 4 percent down at $4.8 billion, geothermal down 34 percent at $1.6 billion, and marine energy down 14 percent at just $156 million.
The clean energy investment total excludes hydro-electric projects of more than 50 MW. However, for comparison, final investment decisions in large hydro are likely to have been worth $40-50 billion in 2017.
BNEF’s preliminary estimates are that a record 160 GW of clean energy generating capacity (excluding large hydro) were commissioned in 2017, with solar providing 98 GW of that, wind 56 GW, biomass and waste-to-energy 3 GW, small hydro 2.7 GW, geothermal 700 MW and marine less than 10 MW.
Breaking the investment total down by type of deal, the dominant category – as always – was asset finance of utility-scale renewable energy projects of more than 1 MW. This was $216.1 billion in 2017, up fractionally on the previous year. Small-scale projects of less than 1 MW (effectively small solar systems) attracted $49.4 billion, up 15 percent – thanks in large part to the installation rush in China.
Equity-raising by specialist clean energy companies on public markets totalled $8.7 billion in 2017, down 26 percent. The biggest transactions in this category were a $978 million convertible issue by electric car maker Tesla, and a $545 million placement by Guodian Nanjing Automation, a Chinese technology supplier to generating and transmission plants.
Venture capital and private equity investment in clean energy came to $4.1 billion in 2017, down 38 percent on the previous year and the lowest figure since 2005. The biggest deals were a $400 million Series A round for Microvast Power System, a Chinese maker of electric vehicle technology, and a $155 million expansion capital round for Greenko Energy Holdings, an Indian wind project developer.
Asset finance of energy-smart technologies was $21.6 billion, up 36 percent thanks to increased installation of smart meters and lithium-ion batteries for energy storage. Corporate research and development into clean energy rose 11 percent to $22.1 billion, and government R&D was almost level at $14.5 billion.
Global new investment in clean energy by sector, $ billion
Source: Bloomberg New Energy Finance. Note: Clean energy covers renewable energy excluding large hydro, plus energy smart technologies such as efficiency, demand response, storage and electric vehicles.
BNEF’s annual figures for past years, revised in this round, are $61.7 billion in 2004, $88 billion in 2005, $129.8 billion in 2006, $182.2 billion in 2007, $205.2 billion in 2008, $206.8 billion in 2009, $276.1 billion in 2010, $324 billion in 2011, $290.7 billion in 2012, $268.6 billion in 2013, $321.3 billion in 2014, $360.3 billion in 2015, $324.6 billion in 2016 and $333.5 billion in 2017.
The 2016 figures reflect a significant revision, due to the arrival of new data on Chinese solar and wind and on global corporate R&D.
The above figures above all concern new investment coming into the clean energy sector. BNEF also measures money changing hands, as organisations purchase and sell clean energy projects and companies, and refinance existing project debt.
This acquisition activity totalled $127.9 billion in 2017, up 4 percent on the previous year and the highest ever.
Acquisitions and refinancing of renewable energy projects rose 14 percent to a record $87.2 billion, while corporate M&A involving specialist clean energy companies fell 51 percent to $17.5 billion. Public market investor exits came to $7.4 billion, down 8 percent, and private equity buy-outs reached an all-time high of $15.8 billion, up six fold on the previous year. The largest acquisition transaction of the year was the purchase of a 51 percent stake in U.S. ‘yieldco’ TerraForm Power by Brookfield Asset Management for $4.7 billion.
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