UN: Global biofuel energy investment declines
Global venture capital and private equity investment in biofuels fell by almost one-third in 2007, to $2.1 billion. However, renewable fuels investment has not dried up altogether, shifting to Brazil, India, and China, as well as towards second-generation technologies, according to the United Nations Sustainable Energy Environment Program Report 2008. Solar attracted by far the most investment ($3.7 billion), both for new technologies and for manufacturing capacity expansion, although biomass and waste to energy saw the fastest (432 percent) growth.
New investment in sustainable energy reached record levels in 2007, 60 percent higher than in 2006. Sustainable energy accounted for 31 gigawatts (23 percent) of new power generation capacity added worldwide in 2007, and 5.4 percent of installed generation capacity. Early-stage venture capital investment surged 112 percent to $2 billion in 2007.
There is a continuing shift in sustainable energy investment from developed to developing countries. China, India, and Brazil are attracting an increasing share of new investment, growing from 12 percent ($1.8 billion) in 2004 to 22 percent ($26 billion) in 2007, a market expansion of 14 times. In China, asset finance reached a record $10.8 billion, most of it for new wind capacity, which more than doubled to 6GW. Asset finance in India also grew (to $2.5 billion), but the country’s most notable trend was Indian companies raising money overseas in a series of foreign currency convertible bonds, which no Indian renewable energy company had issued prior to 2007.
Investment in Brazil continues to be dominated by ethanol, which drove private equity investment, asset finance and M&A, “as investor interest shifted from the beleaguered U.S. ethanol market to Brazil,” the report says. Wind investment is picking up slowly in Brazil. Africa continues to lag other regions in terms of sustainable energy investment; however, there is promising large-scale solar development in North Africa and signs of change in South Africa, where targets for renewable energy have been set and the country’s first wind farm commissioned.
According to New Energy Finance (Global Futures 2008), investment between now and 2030 is expected to reach $450 billion a year by 2012, rising to more than $600 billion a year from 2020.
Investment flows in sustainable energy have not only continued to grow, but have broadened and diversified. There has been greater activity in next-generation technologies, such as cellulosic ethanol, thin-film solar collectors and energy efficiency.
The portfolio of available technologies has widened, partly in response to changing supply/demand patterns (e.g. continuing silicon shortages, or the controversial competition between food and fuel from food-based ethanol feedstocks), the report says.
The year 2007 also saw a geographic broadening, with renewable capacity rollout continuing to shift away from Europe and towards China and the United States. During 2007, investment in non-hydro renewable capacity in China increased by more than four times, to $10.8 billion.
Acceptance of sustainable energy also became more widespread in the United States, extending beyond its traditional heartland of California. A new administration in 2008 is expected to make renewable energy and energy efficiency a political priority, the report states.
