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GSR 2015 - Investment by Type

83 03 RENEWABLES 2015 GLOBAL STATUS REPORT ■■ INVESTMENT BY TYPE Global research and development i (R&D) increased by a modest 2% in 2014 to USD 11.7 billion, with government R&D steady at USD 5.1 billion, and corporate R&D at USD 6.6 billion. Europe remains the biggest investor in renewable energy R&D by far, spending 36% of the total (USD 4.3 billion)—almost equal to the combined outlay of the United States and China. Total R&D spending on solar power rose 2% to USD 6.1 billion. Solar power attracted more than all other sectors combined for the fourth year running. R&D investment in wind power decreased slightly, to USD 2 billion, while R&D spending for biofuels, biomass, and ocean energy technologies increased in 2014. Asset finance of utility-scale projects accounted for the vast majority of total investment in renewable energy. It totalled USD 170.7 billion during the year, an increase of 10% relative to 2013. Small-scale distributed capacity investment, largely rooftop solar PV, was USD 73.5 billion. This represented an increase of 34% compared to 2013. Public market investment in renewable energy companies and funds increased 42%, to USD 15.1 billion. In its second year of strong recovery, public market investment was almost four times greater than it was in 2012. Funds raised by initial public offerings (IPOs) fell by 20% relative to 2013, to USD 3.1 billion. However, secondary issues and private investment in public equity rose by two-thirds to a record USD 6.2 billion, and convertible bond issues more than doubled to a record USD 5.8 billion. Investment via public markets in “yield companies”ii continued to increase, with investors seeing this model as providing steady dividend income at relatively low risk, at a time of record-low interest rates. Solar power investment increased by 73% to USD 8.3 billion, while wind power grew 120% to USD 5.4 billion. Small-scale hydropower and ocean energy saw their public market equity raising increase in 2014 from a tiny base; however, biofuels and biomass declined, and geothermal fell to zero after a major privatisation in 2013. The WilderHill New Energy Global Innovation Index (NEX), which tracked 106 clean energy companies in 2014, fell 3% over the course of the year. The decline was due mainly to investor reaction to falling oil prices and to policy uncertainties facing the wind and solar power sectors. Venture capital and private equity investment (VC/PE) in renewable energy increased by more than one-fourth to USD 2.8 billion in 2014; even so, it remained at less than a third of the peak reached in 2008. Investors continued to be hesitant about early-stage opportunities and were only marginally more interested in financing later-stage ventures. The United States remained the global centre for venture capital investment in renewable energy, while there was a significant decline in the volume of equity-raising in Europe. Private equity expansion capital grew 20% due to a number of substantial deals involving US residential solar firms. A number of next-generation biofuel manufacturers attracted investment, as the first wave of these technologies approached commercialisation. Acquisition activity—which is not counted as part of the USD 270.2 billion in new investment—also rose in 2014. It was up by USD 2 billion to USD 68.8 billion in 2014, a 3% increase over 2013. These figures include corporate mergers and acquisitions (M&A); power infrastructure acquisitions and debt refinancing; private equity buy-outs; and the purchase of stakes in specialist companies by trade buyers. i - See Sidebar 5 in GSR 2013, “Investment Types and Terminology,” for an explanation of investment terms used in this section. ii - A yield company (or yieldco) is a corporate entity created specifically to hold high-yielding investments in operating-stage projects. (p See Glossary.) Source: BNEF. Figure 27. Global New Investment in Renewable Energy by Technology, Developed and Developing Countries, 2014 Developed Countries Developing Countries 87.0 + 25% – 10% – 8% – 17% + 110% + 23% + 11% 63.0 41.0 58.0 6.0 3.0 1.0 4.0 0.3 2.0 0.4 0.04 3.0 2.0 Solar Power Wind Biomass & Waste-to- Energy Biofuels Small Hydro <50 MW Geothermal Power Ocean Energy 0 20 40 60 80 Figure ??. Global New Investement in Renewable Energy by Technology, Developed and Developing Countries, 2014 Billion USD Change relative to 2013 Figure includes new investment in renewable power and fuels. 020406080

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