A mixed picture for global clean energy investment in 2018 is emerging, with dollar investment in solar under pressure while commitments to wind power and energy smart technologies such as electric vehicles and batteries are running above last year’s levels.
The latest authoritative figures from research company Bloomberg NEF (BNEF), show world investment in clean energy in the first six months of 2018 at $138.2 billion, down just 1% from the same period in 2017. The second quarter, from April to June, actually saw a rise year-on-year – of 8% to $76.7 billion.
A sectoral split for the first half of 2018 shows solar investment down 19% compared to the same period last year at $71.6 billion, with wind up 33% at $57.2 billion. The slippage in solar reflects two main developments – significantly lower capital costs for photovoltaic projects, and therefore fewer dollars spent per megawatt installed; and a cooling-off in China’s solar boom. These trends are set to gather pace in the second half.
On June 1, the Chinese government released a policy document restricting new solar installations that require a national subsidy, with immediate effect. BNEF expects this to lead to sharp drop in installations in China this year, compared to 2017’s spectacular record of 53 GW.
It will also mean overcapacity in solar manufacturing globally, and yet steeper price falls. Before the Chinese announcement BNEF’s team was already expecting a 27% fall in PV module prices this year. Now they have revised that to a 34% drop, to an end-2018 global average of 24.4 U.S. cents per watt.
In the first half of 2018, China invested $35.1 billion in solar, down 29% from 1H 2017. However, BNEF expects the full extent of the government-ordered cutback to become clear only from the second half of the year onwards. Its analysts see a possibility that that world solar installations in 2018 could fall for the first time on record. In 2017, they totaled 98GW, far more than for any other technology, renewable or non-renewable.
The jump in wind power investment in the first half of 2018 came thanks to a stream of large project financings from the U.S. to Taiwan and from India to the Netherlands and Norway. The headline deals included $1.5 billion for the 731.5MW Borssele 3 and 4 offshore wind farm in Dutch waters, $1 billion for the 478MW Hale County onshore wind project in Texas, and $627 million for the 120MW Formosa 1 Miaoli project (the first offshore wind array to be financed in the sea off Taiwan).
U.S. wind investment stood out in the first half of 2018, reaching $17.5 billion, up by 121% on its figure in the same period of last year. Chinese wind investment was resilient, rising 4% to $17.6 billion in 1H. BNEF sees U.S. wind investment increasing in 2018-2019 as developers rush to finish projects in time to qualify for federal tax credits.
Wind was not the only strong sector in clean energy in the first half of 2018. Equity-raising by specialist companies in energy smart technologies saw a 64% increase year-on-year, to $5.2 billion. The top deals in the second quarter were a $852.5 million initial public offering by Chinese lithium-ion battery maker Contemporary Amperex Technology, or CATL, and a $795 million Series B venture capital round by Chinese electric vehicle company Youxia Motors. Another Chinese EV specialist, Future Mobility Corporation, raised $500 million in a Series B round of its own.
The smaller sectors of clean energy – biomass and waste, small hydro, geothermal and biofuels – each saw investment in the $0.7-1.2 billion range in 1H 2018. All apart from biofuels were down compared to the same period of 2017.
The overall investment figure for clean energy globally of $138.2 billion in the first half of 2018 featured the following country-level performances:
• China investment of $58.1 billion, down 15% compared to 1H 2017
• U.S. investment of $28.8 billion, up 31%
• Europe at $16 billion, up 8%
• India at $7.4 billion, up 22%
• Australia at $4.1 billion, down 1%
• Morocco at $2.5 billion, up 12-fold
• Netherlands at $2.3 billion, up 209%
• Japan at $2.2 billion, down 67%
• Vietnam at $2 billion, up 136-fold
• Mexico at $1.9 billion, down 20%
• South Africa at $1.7 billion, up 35-fold
• Spain at $1.5 billion, up 652%
• Ukraine at $1.4 billion, up 12-fold
• Germany at $1.3 billion, down 77%
• France at $1.3 billion, down 13%
• Norway at $1.1 billion, up 231%
• Canada at $862 million, up 4%
• The U.K. at $664 million, down 51%
• Brazil at $597 million, down 81%
Source: Bloomberg NEF