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Renewables 2012 Global Status Report | REN21

Renewables 2012 Global Status Report | REN21

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Published by Uğur Özkan
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03

Solar was the leading sector to secure venture capital and
private equity (VC/PE), with USD 2.4 billion. Biomass and
waste-to-power came next, with USD 1 billion of VC/PE

money secured, nearly three times the previous figure,

and biofuels with USD 804 million secured, up 9%. As a
relatively mature technology, wind power has tended to
lag behind in terms of VC/PE investment, and in 2011
it came in fourth with just USD 520 million committed,
down 66% relative to 2010.
With regard to investment in renewables via public

markets, wind and solar power took first and second

place in terms of the value of new equity-raisings, at USD
4.5 and USD 4.2 billion, respectively, down 2% and 23%
from their 2010 totals. Biofuels and geothermal obtained
USD 654 million and USD 406 million, respectively, up
37% and 360%.

In asset finance of utility-scale projects, wind power

retained its lead over solar power, with USD 82.4 billion
committed (down 11%), against solar power’s USD 62.1
billion (up 147%). The two technologies showed some
interesting technological trends, with offshore wind
looming large and contributing USD 12.5 billion to the
total value of wind assets financed, and CSP account-
ing for USD 20 billion of the total solar figure—in both
cases, the highest on record. These figures are only

approximations.

n dEvElOPMENT aNd NaTIONal baNk
FINaNCE

Multilateral and national development banks continued

to be important to renewable energy asset finance in

2011. Provisional data collected by Bloomberg New
Energy Finance from projects in its database suggest

that these institutions provided USD 17 billion of finance

for renewable energy during the year. This would be the
largest commitment yet, beating the previous record of
USD 15.2 billion in 2010 and—perhaps most strikingly—

amounting to four times the figure reached in 2007.
The two biggest providers of finance among the devel-
opment banks in 2011 were the European Investment
Bank with USD 4.8 billion, and Brazil’s BNDES, with USD
4.6 billion. Among the other development banks that
are particularly active in the sector are Germany’s KfW
Bankengruppe, the World Bank’s International Finance
Corporation, the European Bank for Reconstruction and
Development, and the China Development Bank. Several
countries, including the U.K. with its Green Investment
Bank and Australia with its Clean Energy Finance
Corporation, are planning to launch their own national
lenders to try to spur on renewable power and energy

efficiency deployment.

n ThREaTS TO INvESTMENT

Although the renewable energy sector has continued
to grow since 2008, global economic problems have
negatively affected the sector, and they remain a threat.
In late 2011, the euro-area sovereign debt crisis started
to affect the supply of debt for renewable energy projects
in Europe, as banks responded to sharp increases in their
cost of funding and upgraded their assessments of the

risks involved in lending to borrowers in Italy and Spain.

More generally, as consumers find themselves under
financial pressure, governments are more reluctant to

pass measures that would raise energy prices. In the
United States, congressional support for clean energy
and carbon pricing has ebbed in the face of low natural
gas prices, continuing economic challenges, and new
concerns about the cost of renewable energy support,
fuelled by the scandal over the bankruptcy of PV
technology manufacturer Solyndra, which received
USD 538 million of federal loan guarantees.
In Europe, governments struggled to adjust feed-in
tariffs, above all to prevent greater-than-intended
returns for PV project developers as prices fell. This
resulted in installation booms, especially in Italy and
Germany. Governments in Europe and elsewhere
responded by cutting support sharply.
(See Policy Landscape section.)

Investment in renewable energy was subdued in the

first three months of 2012 in the face of uncertainty

over future policy support in both Europe and the
United States. Although by May, there were a few

signs that governments were trying to clarify specific

issues for investors, there was no evidence that
investment levels would accelerate over the course
of the year.
Figures from the Bloomberg New Energy Finance
database of deals and projects show that asset

finance of utility-scale renewable energy projects
in the first quarter of 2012 was USD 23.3 billion,

down 36% from the fourth quarter of 2011 and 14%

below the first quarter. In fact, the first quarter of

2012 was the weakest quarter for renewable energy

asset finance since the first quarter of 2009, in the
depths of the financial crisis.

Venture capital and private equity investment in
renewable energy companies was resilient, at USD

1.4 billion worldwide in the first quarter of 2012, up

from USD 1.1 billion in the fourth quarter of 2011

and USD 1.2 billion in the first quarter of 2011. Solar

and biofuels were the two dominant sectors for VC/
PE equity-raisings.
Investment in public markets was just USD 473
million, down 46% from the fourth quarter of

2011 and 87% from the first quarter of 2011. This

was not surprising given the poor performance of
clean energy shares over the last few quarters. The
WilderHill New Energy Global Innovation Index
(NEX), which tracks the movements of 97 clean
energy shares worldwide, fell 40% in 2011 and

inched back just 7% in the first quarter of 2012 as

world stock markets rebounded.

64

The number of renewable energy policies

in place continued to increase in 2011 and early

2012, but at a slower rate of adoption.

POlICy
laNdSCaPE

04

65

RENEWABLES 2012 GLOBAL STATUS REPORT

The number of policies in place to support investments
in renewable energy continued to increase in 2011
and early 2012, but at a slower adoption rate relative
to previous years.1

(See Reference Tables R9–R14.)
Governments also continued to revise policy design and
implementation in response to advances in technologies,
decreasing costs and prices, and changing priorities.
Policymakers are increasingly aware of renewable

energy's wide range of benefits—including energy

security, reduced import dependency, reduction of
greenhouse gas (GHG) emissions, prevention of biodiver-
sity loss, improved health, job creation, rural develop-
ment, and energy access—leading to closer integration
in some countries of renewable energy with policies
in other economic sectors.2

Policy development and
implementation were stimulated in some countries by
the Fukushima nuclear catastrophe in Japan and by the
UN Secretary-General’s announced goal to double the
share of renewables in the energy mix by 2030.3

Some
countries are beginning to tap the synergies between

renewable and energy efficiency improvements.

(See Special Feature, Section 6.)
At the same time, several countries have undertaken

significant policy overhauls that have resulted in reduced

support. Some changes have been intended to improve
existing instruments and achieve more targeted results
as renewable energy technologies mature, but others
were introduced as a response to changing national and

international economic and fiscal situations.4

In addition,

some policies that provide substantial financing support

and/or restrict imports have raised concerns about
unfair trade impacts, creating pressure for potential
future revisions.
Successful policies depend on predictable, transparent,
and stable framework conditions and on appropriate
design. Although many policy developments have helped
to expand renewable energy markets, encourage invest-
ments, and stimulate industry developments, not all
policies have been equally effective or efficient at achiev-
ing these goals.5

This report does not evaluate or analyze
policies, but it aims to paint a picture of the changing
landscape of renewable energy promotion policies and to
provide an update of targets, programmes, and policies
at local, state/provincial, and national levels.6

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