A mixed picture is emerging for global clean energy investment in 2018, with dollar investment in solar under pressure while commitments to wind power and energy smart technologies such as electric vehicles and batteries are running above last year’s levels.

 

The latest authoritative figures from research company Bloomberg NEF (BNEF) show world investment in clean energy in the first six months of 2018 at US$138.2bn – down just one per cent from the same period in 2017. The second quarter (from April to June) actually saw a rise year-on-year – of 8 per cent, to reach US$76.7bn.

 

A slippage in solar funding

 

A sectoral split for the first half of 2018 shows solar investment at US$71.6bn – down a hefty 19 per cent compared to the same period last year, with wind up 33 per cent to US$57.2 billion. The slippage in solar reflects two main developments – significantly lower capital costs for photovoltaic projects, and therefore fewer dollars spent per megawatt installed; and a cooling-off in China’s solar boom. These trends are set to gather pace in the second half.

 

“On June 1, the Chinese government released a policy document restricting new solar installations that require a national subsidy, with immediate effect,” reported Justin Wu, head of Asia-Pacific at BNEF. “We expect this to lead to a sharp drop in installations in China this year, compared to 2017’s spectacular record of 53GW.”

 

Pietro Radoia, senior solar analyst at BNEF, commented that it would also mean overcapacity in solar manufacturing globally, and yet steeper price falls. “Before the Chinese announcement, our team was already expecting a 27 per cent fall in PV module prices this year,” he told us. “Now we have revised that to a 34 per cent drop, to an end-2018 global average of 24.4 US cents per watt.”

 

In the first half of 2018, China invested US$35.1bn in solar – down 29 per cent from H1 2017. However, BNEF expects the full extent of the government-ordered cutback to become clear only from the second half of the year onwards. Its analysts see a possibility that world solar installations in 2018 could fall for the first time on record. In 2017, they totalled 98GW – far more than for any other technology, renewable or non-renewable.

 

Wind power sweeps up investments

 

The jump in wind power investment in the first half of 2018 came thanks to a stream of large project financings from the US to Taiwan and from India to the Netherlands and Norway. The headline deals included US$1.5bn for the 731.5MW Borssele 3 and 4 offshore wind farm in Dutch waters, US$1bn for the 478MW Hale County onshore wind project in Texas, and US$627m for the 120MW Formosa 1 Miaoli project (the first offshore wind array to be financed in the sea off Taiwan).

 

US wind investment stood out in H1 2018, reaching US$17.5bn – up by an impressive 121 per cent on its figure in the same period of last year. Elsewhere, Chinese wind investment remained resilient, rising four per cent to US$17.6bn in the first half of the year.

 

“We see US wind investment increasing in 2018-2019 as developers rush to finish projects in time to qualify for federal tax credits,” said Amy Grace, BNEF head of North American research.

 

Investment in smart tech powers up

 

However, wind was not the only strong sector in clean energy in H1 2018. Equity-raising by specialist companies in energy smart technologies saw a 64-per-cent increase year-on-year, to US$5.2bn. The top deals in the second quarter were a US$852.5m initial public offering by Chinese lithium-ion battery maker Contemporary Amperex Technology (CATL), and a US$795 million Series B venture capital round by Chinese electric vehicle company Youxia Motors. Another Chinese EV specialist, Future Mobility Corporation, raised US$500 million in a Series B round of its own.

 

The smaller sectors of clean energy – biomass and waste, small hydro, geothermal and biofuels – each saw investment in the US$0.7–1.2bn range in H1 2018. Yet all apart from biofuels were down compared to the same period of 2017.

 

Clean energy spending at country level

 

The overall investment figure for clean energy globally of US$138.2 billion in the first half of 2018 featured the following country-level performances:

 

• China – investment of US$58.1bn, down 15 per cent compared to H1 2017

• US  – investment of US$28.8bn, up 31 per cent

• Europe – US$16bn, up eight per cent

• India – US$7.4bn, up 22 per cent 

• Australia – US$4.1bn, down one per cent

• Morocco – US$2.5bn, up 12-fold

• Netherlands – US$2.3bn, up 209 per cent

• Japan – US$2.2bn, down 67 per cent

• Vietnam – US$2bn, up 136-fold

• Mexico – US$1.9bn, down 20 per cent

• South Africa – US$1.7bn, up 35-fold

• Spain – US$1.5bn, up 652 per cent

• Ukraine  – US$1.4bn, up 12-fold 

• Germany  – US$1.3bn, down 77 per cent

• France  – US$1.3bn, down 13 per cent

• Norway  – US$1.1bn, up 231 per cent

• Canada – US$862m, up four per cent

• The UK – US$664m, down 51 per cent

• Brazil – US$597m, down 81 per cent

 

More information on the first-half 2018 investment figures can be found at https://about.bnef.com/clean-energy-investment/