Clean Energy Investment Falls 22% as Subsidy Cuts Stall Projects

Photographer: Carla Gottgens/Bloomberg

A wind turbine manufactured by Vestas Wind Systems A/S stands at the Macarthur Wind Farm, a joint venture between AGL Energy Ltd. and Meridian Energy Ltd., near Macarthur, Victoria, Australia, on Friday, April 12, 2013. Close

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Photographer: Carla Gottgens/Bloomberg

A wind turbine manufactured by Vestas Wind Systems A/S stands at the Macarthur Wind Farm, a joint venture between AGL Energy Ltd. and Meridian Energy Ltd., near Macarthur, Victoria, Australia, on Friday, April 12, 2013.

Clean energy investment slid 22 percent to its lowest level in four years as nations pared subsidies for technologies from wind turbines to solar power and financing in China and Brazil stalled.

The $40.6 billion invested in the industry in the first three months of this year was lower than any quarter since 2009 and compares with $52 billion in the same period last year, according to data compiled by Bloomberg New Energy Finance.

“The last 18 months have seen a number of significant support programs launched in the aftermath of the financial crisis come to an end,” said Michael Liebreich, chief executive officer of the London-based research company.

The decline indicates the pressure on wind and solar power manufacturers from Yingli Green Energy Holding (YGE) Co. Ltd. to Vestas Wind Systems A/S (VWS), which are suffering from a plunge in prices due to increased competition and excess production capacity. Photovoltaic modules in March were 81 percent below the 2008 levels.

Investment in renewables, energy efficiency and energy- smart technologies fell 54 percent in the U.S. to $4.5 billion and by 15 percent in China to $8.8 billion in China. Europe saw a 25 percent drop to $13.4 billion with investment in Spain alone falling 96 percent compared to last year.

Japan Booms

Japan bucked the trend, rising to $8.2 billion, and other parts of Asia outside India and China increased 47 percent to a record $10.1 billion.

In the U.S., wind investment stalled as lawmakers delayed an extension of the Production Tax Credit, which is the nation’s main subsidy for the technology. Bulgaria and Romania outlined plans to cut subsidy support for existing projects, and Germany debated a similar move, unsettling investors, BNEF said.

Declines in investment are a setback for environmentalists working to wean the world off of fossil fuels and limit pollution blamed for global warming.

“For investment in clean energy to play its role in stemming the growth in world emissions, we would need to see investment levels at least double by 2020, rather than fall,” Liebreich said.

The largest decline was in asset finance, or equity, debt and balance sheet funds, for utility-scale projects such as wind and solar parks. It fell 34 percent to $19.3 billion, according to the London-based researcher.

Rooftop Solar

The figures showed the drop also extended to small ventures, as investment in projects with less than 1-megawatt such as solar roofs fell 8 percent to $18.5 billion driven by falling costs. Venture capital and private equity funds slumped to $1.3 billion, a 29 percent dip compared with last year.

Among the few bright spots were Japan, which is pushing for alternative energy sources following the Fukushima earthquake and tsunami. Small-scale solar investment there more than doubled to $6.7 billion.

In Britain, a $394 million initial public offering by Greencoat U.K. Wind Plc, a fund that aims to buy working wind power plants, pushed up public market investment in clean energy companies by 89 percent to $1.7 billion in the quarter.

Germany saw an 8 percent gain in investment buoyed by a $1.9 billion deal for its Butendiek offshore wind park, the largest in the quarter. Investment in the U.K. rose 1 percent compared to a year earlier. Italy fell 61 percent to $1.5 billion and France dropped 33 percent to $0.9 billion.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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