New investment in clean energy rose 16 percent in the third quarter to $45.4 billion, aided by a surge in wind and solar plant financing as low equipment costs drive installations, Bloomberg New Energy Finance said.
Asset financing of utility-scale renewable-energy projects jumped to a record $41.8 billion in the quarter, the London-based research company said today in a statement. Mergers and acquisitions also surged 59 percent year-on-year to new high, even as the European financial crisis unfolded and clean energy share prices slid, the data show.
M&A was spurred by a slump in valuations in the quarter as the Bloomberg Industries Large Solar Energy index slumped 60 percent and the Bloomberg Wind Energy Index declined 23 percent. Investment was driven by a drop in solar panel and wind turbine costs combined with sustained support from governments looking to reduce carbon emissions.
“Over the past three years we have seen extraordinary falls in the prices of clean energy equipment,” Michael Liebreich, BNEF’s chief executive officer, said in the statement. “This has driven up installation rates and asset investment levels. However, there is still not enough demand to soak up significant oversupply, so prices and margins have remained under pressure and manufacturers’ share prices are being crushed.”
The prices for solar modules have fallen by a third since a year ago and wind turbine prices have tumbled 20 percent since 2009, BNEF data show.
Asset financing was dominated by large deals for solar thermal, photovoltaic and biofuels in the U.S., as well as $6.3 billion for three offshore wind projects in Europe. Investment in onshore wind plants in China and Brazil was also strong, it said.
Rise in Acquisitions
Large acquisitions in the three months included Electricite de France SA’s purchase of the 50 percent it didn’t own in its renewable energy unit EDF Energies Nouvelles SA and Toshiba Corp’s takeover of Swiss electronic-metering company Landis+Gyr.
“The acquisitions we are seeing are only partially driven by consolidation,” Liebreich said in the note. “The low valuations for clean energy companies are giving industrial groups and utilities the opportunity to move in on a sector that they know will enjoy growth over the medium to long term.”
In contrast, the quarter was relatively quiet for capital commitments from venture capital, private equity and public market players, BNEF said. Venture capital and private equity in specialist clean energy companies dropped 27 percent from the second quarter to $2.2 billion, while public market investment dropped to $1.4 billion, down 62 percent from the previous quarter, due to the turbulence in the financial markets, it said.