Clean Energy Investment Tumbles 44% in Q1 2009

The recession and the banking crisis have hit clean energy hard in the first three months of 2009, knocking new global investment in the sector back by 44% compared to the final quarter of 2008.

The latest data, released by New Energy Finance, show that new investment in clean energy collapsed to just $13.3 billion in the first quarter of 2009, down 53% on the level achieved in the first quarter of 2008.

The biggest single element in clean energy investment is asset finance of new-build projects such as wind farms, solar parks and biofuel plants. This amounted to just under $11.5 billion in the first three months of 2009, down 44% from Q4 2008 and half the figure for Q1 last year.

Venture capital and private equity finance for clean energy companies held up well last year, as funds put equity into expanding technology companies, some of which might have floated in a healthier year for the stock market. However in the first quarter of 2009, VC/PE fell 22% compared with Q4 2008 to $1.8 billion, its lowest in any quarter for more than two years.

The weakest segment of all was public market investment. Stock market investors contributed less than $100 million to pure-play clean energy companies in Q1 2009, although a number of other firms with a mixture of activities, some in clean energy and some not, did succeed in raising equity finance. Even in 2008's bear market, no quarter was as bleak as this for public market investment – Q4 2008 saw $1.1 billion raised for instance, and Q1 2008 saw $2.1 billion raised.

Michael Liebreich, chairman and CEO of New Energy Finance, commented: 'Green stimulus plans may represent the light at the end of the tunnel for clean energy companies, but meanwhile the sector has been hit by an oncoming train. These figures highlight the need for policy-makers and administrators in the US and elsewhere to ensure that stimulus funds start flowing immediately, not in a year or so.

"There is also a strong case for further measures, such as requiring state-supported banks to raise lending to the sector, providing capital gains tax exemptions on investments in clean technology, creating a framework for green bonds and so on, all targeted at getting investment flowing. Many of the policies to achieve growth over the medium term are already in place, including feed-in tariff regimes, mandatory renewable energy targets and tax incentives. There is far too much emphasis among policy-makers on support mechanisms, and not enough on the urgent needs of investors right now.

Source: New Energy Finance

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