Solar funding is down as part of overall clean energy investment lull in Q1

Share

Global solar funding fell slightly year-over-year to join an overall decline in clean energy investment, according to the latest report by Bloomberg New Energy Finance (BNEF). However, BNEF’s Q1 2016 Global Trends in Clean Energy Investment also found that funding for solar projects under 1 MW grew 3% year-over-year to US$17.4 billion.

Global Trends looks at solar, wind, biomass/biofuels, geothermal and variety of other resources and services, including electric vehicles, however solar makes up around half of all clean energy funding, and has for the past five years.

Solar’s decline mirrored a 12% year-over-year decrease in clean energy funding to US$53 billion. And while Q1 is typically the slowest of the year, this is the lowest level of global clean energy investment in three years.

Bloomberg notes that clean energy investment in China fell 37% year-over-year, as the market slowed down following a Q4 rush to complete projects in advance of the nation’s feed-in tariff deadline. However, this seems to have primarily impacted the nation’s wind sector, as solar remained relatively steady.

However, BNEF notes that investor confidence has been dampened by the fall in a few individual solar stocks, naming SunEdison, Vivint and SolarCity. The first two can be attributed to SunEdison’s failed attempt to acquire Vivint, and the subsequent collapse of the world’s largest renewable energy developer.??

Accompanying its Q1 2016 Solar Funding and M&A report, Mercom Capital also stated that the crash of SunEdison has impacted the overall public market environment for solar.

Analysts continually note that the fall of SunEdison had nothing to do with market fundamentals, which remain strong for both solar and wind. “The fundamentals behind global clean energy investment remain strong, with our latest research showing solar PV and wind again reducing their costs and competing strongly despite lower coal, oil and gas prices," notes BNEF Founder Michael Liebreich.

And despite these headwinds, some aspects of clean energy funding improved. During the quarter venture capital and private equity investments in clean energy rose to US$1.4 billion, due in part to a $300 million funding round for residential solar installer Sunnova.

However, this may be slightly misleading; Sunnova has an unusual business model for a residential U.S. solar installer of its size in that it finances projects directly off its balance sheet, blurring the line between corporate finance and project finance.

Regional trends were also counter-cyclical. While strong Asia-Pacific clean energy investment fell in Q1 due to a slowdown in Chinese wind investments and funding in the Americas was below last year’s level, EMEA clean energy investment saw its strongest Q1 in four years.

This may not be entirely due to Europe. Among the details revealed in the report BNEF notes that a 300 MW project in Djibouti has received funding, as the largest project in Africa to do so to date.