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Clean Energy Stimulus to Peak at $67 Billion in 2011, WEF Say

Jan. 26 (Bloomberg) -- Government stimulus programs benefiting clean energy projects including solar and wind power may peak this year, then decline in 2012 and 2013, the World Economic Forum said in a report by Bloomberg New Energy Finance.

About $67 billion of funds will be channeled to low-carbon energy this year from $190 billion pledged to the industry by world governments since the start of 2009, the groups said today in a study released in Davos, Switzerland. Just over half that amount will follow next year, and about a fifth in 2013.

In 2010, about $59 billion was paid out, study showed. That helped spur a record $243 billion of investments in renewable power, said New Energy Finance Chief Executive Officer Michael Liebreich. The WilderHill New Energy Index of 100 companies developing low-carbon technologies slid 15 percent last year.

“It is scary to think what might have happened to clean energy equipment providers’ valuations had the stimulus funds not arrived,” Liebreich said in an e-mailed reply to questions. “The stimulus has played an important part in maintaining the momentum of the sector.”

Stimulus spending may total $34.3 billion next year and $13.3 billion in 2013, the report showed.

Liebreich said that while there is a “risk” of the clean energy going into a slump as stimulus spending diminishes next year and in 2013, “that is not our central assumption.”

Strengthening Industry

The economics of the industry are improving, reducing the need for subsidies and national policy around the world is ever more supportive of the sector, he said.

Today’s study is a preview of a wider report that is scheduled for publication in March, the Geneva-based World Economic Forum said.

Growing scale in the supply chain for renewables has driven down equipment costs, according to the study. Increased spending on research and development, which rose 24 percent to $35.5 billion last year, should help lower expenses further, it said.

“The fruits of this growing research pipeline will filter through into the market over the coming years,” the report’s authors wrote. As capital markets recover, the effective interest rates charged for infrastructure projects are also likely to come down, further boosting clean energy, they said.

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net.

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

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