Please activate JavaScript!
Please install Adobe Flash Player, click here for download

GSR 2015 - Renewable Energy Investment in Perspective

84 03 INVESTMENT FLOWS Corporate M&A—the buying and selling of companies—fell by 35% in 2014 to USD 9.8 billion. Asset acquisitions and refinancing rebounded from the only contraction in the past decade, rising 11% to establish a new record of USD 54.5 billion. Public market investor exits were almost unchanged at USD 1.9 billion, but private equity buy-outs were four times higher than in 2013, at USD 2.5 billion. Acquisition activity was, as usual, dominated by wind (almost USD 41 billion) and solar (just over USD 20 billion). Wind and solar power combined made up almost 89% of all activity, up from 83% in 2013. ■■ RENEWABLE ENERGY INVESTMENT IN PERSPECTIVE In 2014, gross investment in new renewable electric generating capacity (not including hydro >50 MW) amounted to USD 242.5 billioni , up 17% from 2013.4 Despite the increase, renewable energy investment was again below gross investment in fossil fuel capacity, which went up by 7% to USD 289 billion. However,muchoftheinvestmentinfossilfuelswenttoreplacing existing coal-, oil-, and gas-fired power stations, while only USD 132 billion went to establishing additional fossil fuel capacity. By contrast, almost all investment in renewable capacity is net, meaning that it adds to overall generating capacity. Considering only net investment in 2014, renewable power was ahead for the fifth consecutive year, with its USD 242.5 billion taking a wide lead over fossil fuels’ estimated USD 132 billion. Taking into account investment in hydropower projects >50 MW, global investment in renewable power capacity in 2014 was again well over twice the year’s net investment in fossil fuel power capacity. ■■ SOURCES OF INVESTMENT Clean energy funds saw declining sector share prices in 2014, influenced partly by the oil price decline. The value of assets managed by clean energy funds was down 13.5% relative to 2013. However, newer types of innovative yield-oriented financing vehicles continued to attract interest, with three US yield companies floated in 2014, raising a combined USD 1.6 billion. Listed project funds, the UK equivalent of US yield companies, saw their number grow to six in 2014, attracting investors with dividend yields of 6%, compared with the 2% offered by 10-year government bonds. Overall, US yieldcos, UK-quoted project funds, and one German equivalent raised USD 5 billion from stock market investors in 2014. Crowdfunding continued to become a more mainstream means of raising money in an increasing number of countries. Crowdfunding enables small companies and start-ups to raise capitalfrommanysmallinvestorsinexchangeforanequitystake, structured payments, and/or products. Possibly the largest renewables crowdfunding platform by US dollars invested is De WindCentrale based in the Netherlands. By September of 2014, it had amassed over USD 17 million of capital. Issuance of green bonds hit a new record of USD 39 billion in 2014, some 2.6 times the preceding year’s total. The record volume was driven by a doubling of issuance from development lenders, such as the World Bank, and from national government agencies, in addition to a fivefold increase in self-labelled corporate bonds from issuers. In contrast, clean energy project bondsii were not so successful, seeing an 82% drop to USD 630 million. This was due to the fact that there was no repeat of the very large issues for solar PV parks seen in 2013 because bank debt remained a compelling alternative in Europe. Nonetheless, 2014 saw the first clean energy project bond in Latin America, the first green bond from Asia’s private sector, and the world’s first project bond explicitly labelled as “green”. Institutional investors—including pension funds, insurance companies, and wealth managers—continued to play an increasing role. This has been reflected in the emergence of green bonds, as a fixed-interest product linked to clean energy, and of yieldcos and quoted project funds, as equity products exposed to the cash flows from renewable power projects. Another increasingly important conduit for the deployment of institutional money in clean energy is direct investment in projects, which hit a record USD 2.8 billion in 2014, up from USD 1.8 billion in 2013. Development banks remained crucial to clean energy investment in 2014.iii Brazil’s BNDES featured as the top player for utility-scale asset finance transactions with a credit of USD 2.7 billion, up from USD 1.5 billion in 2013. The European Investment Bank (EIB) dropped to second place with a credit of USD 1.5 billion, nearly 20% below its 2013 total. i - This number is for renewable power asset finance and small-scale projects. It differs from the overall total for renewable energy investment (USD 270.2 billion) provided elsewhere in this section because it excludes biofuels and types of non-capacity investment such as equity-raising on public markets, and development R&D. ii - Clean energy bonds are fixed-interest securities linked to clean energy. In contrast, green bonds are fixed-interest securities linked to clean energy as well as energy efficiency, and also other sustainability goals. iii - Note that investment data were not available for most development banks when the UNEP/BNEF Global Trends report was published.

Pages Overview