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1H20 saw a rise in global renewables investment

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Renewable energy capacity investment showed great resilience in the first half of 2020, in the face of the unprecedented economic shock caused by the coronavirus, according to the latest figures from research company BloombergNEF (BNEF).

The data, drawn from BNEF’s database of deals and projects, show that one sub-sector of renewables – offshore wind – had by far its busiest half year ever for final investment decisions, and this more than offset declines in investment in solar, onshore wind and biomass.

Offshore wind financings in 1H20 totalled US$35 billion, up 319% y/y and in fact well above 2019’s record full-year figure (a revised US$31.9 billion). The first half of this year saw investment decisions made on 28 sea-based wind farms, including the largest ever, the 1.5 GW Vattenfall Hollandse Zuid array off the coast of the Netherlands, costing an estimated US$3.9 billion.

Other major offshore deals included the 1.1 GW SSE Seagreen project off the UK, at an estimated US$3.8 billion; the 600 MW CIP Changfang Xidao array off Taiwan, at an estimated US$3.6 billion; and the Fecamp and Saint-Brieuc projects in French waters, together totalling 993 MW and US$5.4 billion. There were no fewer than 17 Chinese installations financed, led by the Guangdong Yudean Yangjiang Yangxi Shapaat 600 MW and US$1.8 billion.

Albert Cheung, Head of analysis at BNEF, commented: “We expected to see Covid-19 affecting renewable energy investment in the first half, via delays in the financing process and to some auction programs. There are signs of that in both solar and onshore wind, but the overall global figure has proved amazingly resilient – thanks to offshore wind.”

Tom Harries, head of wind analysis, said: “Offshore wind is benefitting from the 67% reduction in levelised costs achieved since 2012, and to the performance of the latest, giant turbines. But the first half of this year also owed a lot to a rush in China to finance and build, in order to take advantage of a feed-in tariff before it expires at the end of 2021. I expect a slowdown in offshore wind investment globally in the second half, with potentially a new spike early next year.”

Overall investment in new renewable energy capacity (excluding large hydro-electric dams of more than 50 MW) was US$132.4 billion in the 1H20, up 5% from a revised US$125.8 billion in the same period of 2019. Onshore wind investment slipped 21% to US$37.5 billion, while that for solar fell 12% to US$54.7 billion.

Investment in new biomass and waste-to-energy plants fell 34% to US$3.7 billion, while that in geothermal jumped 594% to US$676 million. Small hydro projects of less than 50 MW attracted an estimated US$576 million, down 14%, and biofuel production plants US$250 million, down 82%.

Looking at the figures by location, China was the largest market yet again, investing US$41.6 billion in 1H20, up 42% compared to the same period in 2019 thanks to its offshore wind boom. Europe secured US$36.5 billion, up 50%, while the US slipped 30% to US$17.8 billion. Japan saw financings rise 14% to an estimated US$10.8 billion, but India fell 49% to US$2.7 billion and Brazil was down 26% at US$2.5 billion. The Netherlands were up 231% at US$6.9 billion, France up 306% at US$6.2 billion, the UK 265% higher at US$5.7 billion, Spain down 11% at US$3.7 billion, and Germany up 20% at US$3.6 billion.

Angus McCrone, Chief Editor at BNEF, said that a clearer picture of the impact of Covid-19 on green energy investment will come with the full-year 2020 figures. “Renewables have been helped by vastly improved competitiveness and by investor appetite for assets offering secure cash flows. However, project developers face the challenge that key people, whether at the permitting, financing or construction stages, can’t meet face-to-face. And buyers of small-scale solar systems are sensitive to changes in consumer confidence.”

BNEF’s data for corporate-level investment in renewables and energy-smart technologies such as battery storage show that equity raising by specialist companies on public markets was US$2.4 billion in the 1H20, down 43%. Investment from venture capital and private equity funds was up 10% at US$2.5 billion.

The biggest deals on public markets were initial public offerings by two Chinese solar companies, Jinko Power Technology and Trina Solar, raising US$366 million and US$359 million respectively. The top ones in VC/PE were private equity expansion round for Altus Power America, a US solar project developer, totalling US$850 million; and a PE round of US$300 million for Scale Microgrid Solutions, a US company putting together energy systems involving solar and batteries.

Overall clean energy investment, including renewables capacity financing and corporate-level equity deals, came to US$137 billion in the 1H20, up 4% on 1H19’s US$131.9 billion.

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