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ePaper created 2014-06-03, 15:03:20 | version 1.30.01
73 03 RENEWABLES 2014 GLOBAL STATUS REPORT ■■ SOURCES OF INVESTMENT Clean energy funds had a strong year in 2013, with an asset- weighted average gain of 17.1% compared with the 1.5% increase in 2012. The best performer saw its share price more than double, due to its concentration in solar stocks. Much of the capital raising of 2013 involved project-oriented funds and took place in Europe. North America saw the emergence of innovative yield-oriented financing vehicles, which pass a high share of earnings to shareholders and provide stable, long-term cash flows. Two “yield companies”i came to the market, raising a total of USD 631 million in 2013 for solar, wind, and hydropower projects. Crowd funding continued to become a more mainstream means of raising money in an increasing number of countries. Crowd funding enables small companies and start-ups to raise capital from many small investors in exchange for an equity stake, structured payments, and/or products. Clean energy project bonds set a new record in 2013, with over USD 3.2 billion raised through 10 confirmed transactions; solar power projects dominated the top 10 bonds by size, accounting forjustunderhalfofthetotal.Aconsortiumofbanks,representing eight of the top 10 corporate bond underwriters, released its “Green Bond Principles” in January 2014, establishing voluntary guidelines on what constitutes a green bond, the potential types of bond, the issuance process, and the need for companies to detail their plans for the proceeds.4 Institutional investors, including pension funds, insurance companies, and wealth managers, continued to play an increasing role, particularly in Europe. A record volume of investment was seen, thanks to the appeal of project yields that are double those of government bonds, combined with a high level of predictability. However, the total volume of institutional finance deployed on projects remained small compared to the overall institutional asset allocation, due to political, regulatory, and other hurdles. Development banks were again an important source of clean energy investment in 2013.ii Germany’s KfW—the largest lender for clean energy projects in 2012—reduced its renewable energy commitments by 41% to USD 6.5 billioniii (EUR 4.7 billion). By contrast, the European Investment Bank (EIB) raised its lending to renewables by 98%, to USD 8.8 billion (EUR 6.4 billion), to set a record high. Also in 2013, several development banks—including the World Bank, EIB, and European Bank for Reconstruction and Development—curtailed their funding for coal-fired power, pledging to support it only if no other fuel is viable. They were joined by the overseas aid departments of the United States and several northern European countries.iv ■■ EARLY INVESTMENT TRENDS IN 2014 Hopes for the beginnings of a recovery in renewable energy investment in 2014 rose with the release of first quarter (Q1) numbers, which showed a 4% gain compared to the same period of 2013. Renewable energy investment worldwide in Q1 2014 was USD 44.4 billion. This was lower than the USD 57.3 billion recorded in the fourth quarter of 2013, but the first quarter usually sees the lowest activity level of the year, so the more meaningful comparison was with Q1 2013’s USD 42.6 billion. Among the highlights of Q1 2014 were small-scale solar power in Japan and the United States, and renewable power financings in emerging markets such as Kenya and Indonesia. Globally, small-scale project investment rose by 42% compared to Q1 2013, reaching USD 21.2 billion, while asset finance of utility- scale projects fell 13% to USD 22.8 billion. Total U.S. investment was up 32% compared to a very subdued figure in Q1 2013, at USD 4.8 billion, while China was up 18% at USD 9.9 billion, and Europe was down 29% at USD 10.9 billion. The leading region was Asia-Oceania excluding China and India, with a 27% rise to USD 12.1 billion. i - A yield company is a corporate entity created specifically to hold high-yielding investments in operating-stage projects. ii - Note that investment data were not available for most development banks when the UNEP/BNEF Global Trends report was published. iii - The USD number provided here differs from that in the Global Trends Report (USD 6.2 billion); it was converted to be comparable with other values throughout the GSR, using the date 31 December 2013 and the OANDA Currency Converter (http://www.oanda.com/currency/converter/). The same is true for the EIB number. iv - European countries include Denmark, Finland, Iceland, Norway, Sweden, and the United Kingdom.