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Solar Surge Drives Record Clean Energy Investment in 2011

January 24, 2012
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Global investment in clean energy reached a new record of $260 billion in 2011, up 5% on 2010 and almost five times the 2004 total of $53.6 billion. Investment in solar far outstripped that in wind, and perhaps of most note, U.S. clean energy investment moved back ahead of China for the first time since 2008, according to the latest data from Bloomberg New Energy Finance.

The record investment figures for 2011 are particularly striking because they were achieved during a turbulent year for the world economy in general, and for the clean energy sector in particular. The industry experienced severe pressure on the profit margins of manufacturers, a sharp fall in share prices, some notable bankruptcies, cuts in European government subsidy support, and a reduction in the availability of bank financing.

2011 highlights include a 36% surge in total investment in solar technology, to $136.6 billion. This was nearly double the $74.9 billion investment in wind power, which was down 17% on the previous year. This is not the first time that Bloomberg New Energy Finance has shown total investment in solar outpacing that in wind (on today’s revised figures for prior years, solar exceeded wind in 2004 and again in 2010), but this is the first time there has been such a huge gap.

“The performance of solar is even more remarkable when you consider that the price of photovoltaic modules fell by close to 50% during 2011, and now stands 75% lower than three years ago, in mid-2008,” said Michael Liebreich, chief executive of Bloomberg New Energy Finance. “The cost of PV technology has fallen, but the volume of PV sold has increased by a much greater factor as it approached competitiveness with other sources of power.”

A second highlight was the performance of the U.S. in 2011. In 2008, the U.S. was by far the largest single country worldwide in terms of total investment in clean energy, but it was overtaken by China in 2009. China increased its lead in 2010. However, in 2011, the U.S. leapt ahead once again, with total investment surging to $55.9 billion, up 33%; China saw investment rise just 1% to $47.4 billion.

“The news that the U.S. jumped back into the lead in clean energy investment last year will reassure those who worried that it was falling behind other countries,” Liebreich said. “However, before anyone in Washington celebrates too much, the U.S. figure was achieved thanks in large part to support initiatives, such as the federal loan guarantee program and a Treasury grant program, which have now expired. The country’s principal remaining support measure for renewable energy, the Production Tax Credit, is currently also scheduled to fall away at the end of 2012 unless it is extended. There may be a rush to get projects completed in 2012, followed by a slump in investment in 2013 if it expires.”

Europe as a whole saw clean energy investment rise 3% to $100.2 billion, with the strongest features being solar installations-both large-scale and distributed-in Germany and Italy, and offshore wind financings in the North Sea. India led the table in terms of growth in investment with a jump of 52% to $10.3 billion, while Brazil clocked up a respectable 15% increase to $8.2 billion.

The largest single type of investment was the asset finance of utility-scale renewable energy projects. This increased from a revised $138.3 billion in 2010 to $145.6 billion in 2011. Among the big projects financed in the last quarter of the year were the 288 MW Amrumbank West offshore wind farm off Germany for $1.3 billion, the 272 MW Seigneurie de Beaupre wind farm (phases one and two) in Canada for $756 million, and the 92.5 MW Hanas Ningxia Yanchi Gaoshawo solar thermal plant in China for $354 million.

The second-biggest category of investment last year was the finance of distributed renewable power technology, notably rooftop PV. This reached $73.8 billion in 2011, up from $60.4 billion in 2010-with Italy and Germany the two countries playing the biggest role as sharply falling solar panel prices increased the returns offered by feed-in tariffs.

For more information, visit www.bnef.com.

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