Global investment in clean energy tumbles 43% y/y in Q3, says BNEF

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Following a summer lull in Europe and a significant slowdown in Asia, global clean energy investment in the third quarter of 2016 is down 43% compared to the same period last year, finds a new report by Bloomberg New Energy Finance (BNEF).

The Q3 data shows that $42.4 billion was invested globally in renewable energy and smart technologies during the period, but that figure was some way below last year’s Q3 and also down sequentially, tumbling 31% on Q2 2016.

This weakness, says BNEF, was concentrated on a handful of areas. Most notable was a 49% decrease in asset finance for utility-scale renewable energy projects, with investment slumping to $28.8 billion. Of that figure, spending in large-scale solar was down a massive 67% as policy changes in China and Japan served to suppress funding in these segments. Europe, too, also saw a sharp tail off in large-scale solar PV investment in Q3.

However, investment in small scale solar (projects less than 1 MW) was also down, falling 35% compared to Q3 2015 to just $9.3 billion. By country, China saw one of the largest slumps in renewables investment, registering $14.4 billion in Q3 – a 51% tumble in the space of a year – with Japan’s $3.5 billion figure some 56% below 2015’s Q3 investments.

According to BNEF chairman of the advisory board Michael Liebrich, these seemingly alarming figures can largely be explained by two converging trends: the record-low cost of solar PV components, and the comparison to last year’s investment rush, which have seemingly triggered this year’s pause for breath.

"A vital point to bear in mind is that there have been sharp reductions in the cost of PV systems, so that much more solar capacity can be added this year than last, per million dollars," said Liebrich. "However, it is also clear that, after last year’s record investment levels, some key markets such as China and Japan are pausing for a deep breath."

Liebrich added that electricity demand growth in many countries is also undershooting government forecasts, leading to Q3’s figures to look primed to settle somewhere in between "the new normal" and a "flash crash" blip.

The BNEF report also stated that Q3’s figure – $42.4 billion – was the weakest quarterly investment volume since Q1 2013 registered just $41.8 billion. By way of contrast, Q2 2015 saw the highest quarterly total ever invested in clean energy – a massive $90 billion globally.

The analysts stress that Q3’s figures could be revised upwards in due course if more transactions come to light, but warned that 2016’s Q1 and Q2 trends already point to a 23% year-on-year drop in global investments, making it increasingly likely that this year will see far less invested than 2015’s record amount of $348.5 billion.