Tuesday, January 15, 2008

Investment in Clean Energy Tops $100 billion in 2007

New investment in clean energy companies and assets hit $117 billion last year - up 35% on 2006's $86.5 billion, according to analysts New Energy Finance (NEF).

The figure was $20 billion ahead of the company's prediction, despite tighter conditions in the credit markets - and NEF is predicting strong growth for 2008.

NEF attributes the strong growth to the continuing strength of 'non-financial drivers' - such as regulation, political will and concerns over energy security. It also notes a shift in focus from more mature wind and biofuels markets in Western Europe and the US, towards Asia, Brazil and other developing countries.

Michael Liebreich, chief executive of NEF, said that the sector has still to increase the volume of clean and cost-effective energy it is producing to justify investors' enthusiasm. However, he added - "progress is being made on scaling-up a number of sectors - particularly wind, solar, biomass and energy efficiency. The wave of liquidity washing through the sector shows no signs of abating and, despite the dark clouds still massed over the world's credit markets, 2008 looks set to be another banner year."

Of the $117 billion, $54.5 billion went to financing renewable energy assets - up 40% on 2006. However, investments in public markets was 80% higher, at $18.9 billion, although this figure was skewed by the $6.6 billion flotation of Iberdrola Renovables in December. Excluding this outlier gives a figure of 17% growth.

Venture capital and private equity new investment grew by 27% to $8.5 billion, with a shift from later-stage investments to early-stage deals, as the pipeline of commercialisation-ready opportunities dried up, NEF said.

Wind energy accounted for almost half of new investment in projects, at $24.8 billion, compared with $18.5 billion in 2006. Of this, $8.4 billion was in Asia and Oceania - outstripping investment in the Americas at $6.6 billion - but trailing the $9.8 billion invested in Europe, the Middle East and Africa.

The dramatic growth in biofuels financing slowed, to $14.5 billion, up 30% on 2006. Between 2005 and 2006, biofuels investment leapt 171%. 

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