The article is titled: Surprising Green Energy Investment Trends Found World Wide, but I’m not sure why they are surprised…
Here’s a substantial section of the article:
Wind attracted the highest new investment ($51.8 billion, 1% growth on 2007), confirming its status as the most mature and best-established sustainable generation technology. Wind’s leading position continues to be driven by asset finance, as new generation capacity is added worldwide, particularly in China and the US.
Solar continues to be the fastest-growing sector for new investment ($33.5 billion, 49% growth on 2007), with compound annual growth of 70% between 2006 and 2008. Solar’s growth reflects the easing of the silicon bottleneck and falling costs, which are expected to decline 43% in 2009. Solar project financing underwent the most dramatic growth in 2008, rising 71% to $22.1 billion.
Investment in biofuels fell 9% in 2008 down to $16.9 billion. Although the technology is well established, particularly in Brazil, it has suffered for the past two years from over-investment in early 2007, followed by a fall from grace caused by a combination of high wheat prices, lower oil prices and an increasingly heated food-versus-fuel controversy. Biofuels technology investment is now focused on finding second-generation / non-food biofuels (such as algae, crop technologies and jatropha): the second half of 2008 saw next-generation technology investment exceed first-generation for the first time.
Geothermal was the highest growth sector for investment in 2008, with investment up 149% and 1.3 GW of new capacity installed. The competitive cost of electricity from geothermal sources and long output lifetimes have made this an attractive investment despite the high initial capital cost.
New private investment in energy efficiency was $1.8 billion – a fall of 33% on 2007 – although this figure doesn’t capture the investments made by corporates, governments and public financing institutions.
The energy efficiency sector recorded the second highest levels of venture capital and private equity investment (after solar), which will help companies develop the next generation of sustainable energy technologies for areas such as the smart grid. Energy efficiency also attracted more than 33% of the estimated $180 billion in green stimulus measures.
Global Trends in Sustainable Energy Investment 2009 — Regional Hi-lites
Europe continues to dominate sustainable energy new investment with $49.7 billion in 2008, an increase of 2% on 2007 (37% CAGR from 2006-2008).This investment is underpinned by government policies supporting new sustainable energy projects, particularly in countries such as Spain, which saw $17.4 billion of asset finance investment in 2008.
New investment in sustainable energy in North America was $30.1 billion in 2008, a fall of 8% compared to 2007 (15% CAGR from 2006-2008). The US saw a slow-down in asset financing following the glut of investment in corn based ethanol in 2007. Also, the number of tax equity providers fell for wind and solar projects due to the financial crisis.
South Africa — Feed-in Tariffs Kick Start Green Investment
On 31 March 2009, South Africa announced ‘feed-in’ tariffs that guarantee a stable rate-of-return for renewable energy projects. South Africa is hoping to spur the sort of investment spurred in Germany and Denmark through feed-in tariff schemes.
Sub-Saharan Africa — Geothermal Kenya & Sweet Sorghum Ethanol
Elsewhere in Sub-Saharan Africa, lack of finance is the principal barrier to sustainable energy roll-out. However, some notable progress was made in 2008.
In Kenya, a number of investments are underway; including the continents first privately financed geothermal plant and a 300MW wind farm planned for construction near Lake Turkana.
In Ethiopia, French wind turbine manufacturer Vergnet signed a EUR 210 million supply contract in October 2008 with the Ethiopian Electric Power Corporation for the supply and installation of 120 one MW turbines.
In Angola, Brazilian industrial conglomerate Odebrecht set up an Angolan sugar cane processing plant and plans to steer its production from ethanol to sugar when it comes online late next year. UK-based Cams Group announced plans for a 240 million liter per year sweet sorghum ethanol facility in Tanzania.
North Africa — Sun and Wind
Renewable energy in North Africa remains focused on Morroco, Tunisia and Egypt, particularly in solar and wind. Egypt recently announced its expectation that wind farms in the Saidi area will produce 20% of the country’s energy needs by 2020. Morocco’s government has also outlined plans to meet 10% of its power needs with renewable energy sources.
China – Asia’s Green Energy Giant
By 2008, China was the world’s second largest wind market by newly installed capacity and the fourth largest by overall installed capacity. Between 5GW and 6.5GW of new capacity was installed and commissioned in 2008, bringing total capacity to 11GW to 12.5GW.
China became the world’s largest PV manufacturer in 2008, with 95% of its production for the export market.
Some 800MW of biomass power was added in 2008, bringing the total installed capacity for agriculture waste-fired power plants up to 2.88GW. Development of biofuels has all but ground to a halt, mostly due to high feedstock costs.
India – Pressing Need for Grid Improvements and Clean Power Generation
In 2008 the largest portion of new investment in India went to the wind sector, growing 17% — from $2.2 billion to $2.6. Thanks to a supportive policy environment, solar investment grew from $18 million in 2007 to $347 million in 2008, most of which went to setting up module and cell manufacturing facilities.
Small hydro investment in India grew nearly fourfold to $543 million in 2008, while biofuels investment stalled and fell from $251 million in 2007 to only $49 million in 2008.
Japan – A New Push for Sustainable Energy
In December 2008, Japan unveiled a new $9 billion subsidy package for solar roofs, granting JPY 70,000 ($785)/kW for rooftop PV installation. For the first time in three years, domestic shipments of solar cells rose between April to September (up 6%), indicating a fundamental change in domestic solar demand.
Geothermal also seems to be reawakening in Japan, after a twenty-year lull. In January 2009, plans for a 60MW geothermal plant were announced.
Australia – Geothermal and Wind Gaining Support
The Australian government has set up a A$500m ($436 million) Renewable Energy Fund to accelerate the roll-out of sustainable energy in the country. A$50 million has already been committed to helping geothermal developers meet the high up-front costs of exploration and drilling.
Geothermal is expected to provide about 7% of the country’s baseload power by 2030.
Wind will also benefit from Australia’s new push for sustainable energy, and is expected to provide most of the 20% renewable energy by 2020 target.
Other Asian Countries — Philippines, Thailand, Malaysia
In late 2008, the Philippine government signed a new Renewable Energy Law, offering specific incentives (mainly tax breaks) for renewable generation — a first for Southeast Asia and perhaps a model for other countries. Thailand and Malaysia have been talking about introducing renewable energy legislation for some time; and other countries are planning biofuel blending mandates, similar to those introduced by the Philippines in 2007 and subsequently by Thailand.
Brazil – World’s Largest Renewable Energy Market
About 46% of Brazil’s energy comes from renewable sources, and 85% of its power generation capacity thanks to its enormous hydropower resources and long-established bioethanol industry.
Some 90% of Brazil’s new cars run on both ethanol and petrol (all of which is blended with around 25% ethanol). By the end of 2008, ethanol accounted for more than 52% of fuel consumption by light vehicles.
Brazil is now moving into wind. The government has announced a wind-specific auction to take place in mid-2009, for the sale of approximately 1GW of wind energy per year.
Brazil also has a global leader in renewable energy financing. In 2008 the Brazilian Development Bank (BNDES) was the largest provider globally of project finance to renewable energy projects.
Chile, Peru, Mexico and the rest of Latin America
Brazil accounted for more than 90% of new investment in Latin American, but several other countries are looking to implement regulatory frameworks supportive of renewable energy.
Chile’s recently approved Renewable Energy Legislation is responsible for regulating the country’s renewable energy sector, where small hydro, wind and geothermal projects have become increasingly attractive for investors. It requires electricity generators of more than 200MW to source 10% of their energy mix from renewables.
In 2008 Peru introduced legislation that requires 5% of electricity produced in the country to be derived from renewable sources over the next five years, including financial incentives such as preferential feed-in-tariffs and 20-year PPAs for project developers.
Mexico has a non-mandatory target to source 8% of its energy consumption from renewable sources by 2012. However a new national energy plan expected at the end of June 2009 is expected to double that target.