Venture capital (VC) funds are increasingly turning to clean energy for safe investments, with 2016 seeing record levels of cash funneled into rooftop solar and other low-carbon technologies, finds Bloomberg New Energy Finance (BNEF).
Last year, a total of $834 million went via VC funds into the clean energy industry. This is the highest figure recorded by BNEF since the analysts first started collecting data in 2004, and marked the third consecutive year that the figure invested increased.
This momentum suggests a returning confidence among VC and private equity (PE) investors in solar, wind and other green technologies, having been chased away from the sector by more mainstream investors over the past five years. In 2010, for example, solar and wind projects attracted more than $3.8 billion in VC and PE investment, albeit with the latter group accounting for the bulk of the capital.
Today, specialist investments that carry higher risks at smaller scale are commonplace in rooftop solar and waste-to-energy projects. These are less attractive to mainstream investors, and thus VC and PE cash is returning, says BNEF. “The future is not carpeting fields with solar panels,” Oxford Capital Partners LLP partner Oliver Hughes told Bloomberg. “It will be putting them on very large rooftops.”
This attitude of shifting away from industry-accepted norms was also evident at Terra Firma Capital Partners Ltd, an investor in wind and solar farms. The firm’s chairman of its solar unit, Ingmar Wilhelm, said that Western Europe is now a closed chapter in terms of large-scale clean energy investments.
“Additions in the West are coming down, which is more than compensated by opportunities in Africa, Asia and Latin America,” said Wilhelm.
However, opportunities for VC investment in storage technologies are increasing in a number of ‘Western' markets.
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