Investment in technology and projects in renewable energy and energy efficiency grew even more spectacularly last year than was revealed in initial estimates made at the end of December, according to research from
New Energy Finance is a provider of research to global investors in renewable energy, low-carbon technologies and the carbon markets. The company’s latest statistics for investment in the sector include not just deals, investments and projects announced during the course of 2007 but also transactions disclosed by participants since 1 January but made before the end of the year.
Last year saw much stronger growth in investment in clean energy than expected at the start of the year, and there was a very busy end to the year – despite background concerns about the credit squeeze.
Total new investment in clean energy reached $148.4bn in 2007, up 60% compared to 2006. This represents a significant upward revision compared to the provisional figure, which showed an increase of 41%.
Overall new investment in clean energy – excluding mergers, acquisitions and buyouts – has surged from $33.4bn in 2004, to $58.7bn in 2005, $92.6bn in 2006 and $148.4bn in 2007.
This expansion has occurred across all the main categories of investment. Venture capital and private equity investment in clean energy companies jumped 34% last year to $9.8bn; equity finance provided by public market investors more than doubled (up 123%) to $23.4bn, thanks in part to the record breaking IPO of Iberdrola Renovables; and the financing of assets such as wind farms and biofuel plants climbed 68% to $84.5bn.
Among the key factors pushing these numbers sharply upwards in 2007 were government policies around the world to promote renewable power and cleaner fuels, oil prices approaching $100-a-barrel and rising corporate and investor awareness of the opportunities in clean energy.
One of the themes of 2007 was geographic diversification. Western Europe and North America continued to enjoy sharp increases in venture, private equity, public market and project investment – but the momentum spread out to include other developed economic regions such as Eastern Europe and Australia. Even more significant was the pick-up in activity in emerging economies, with China moving strongly ahead with projects in wind, biomass and energy efficiency, Brazil seeing huge investment interest in its sugar based ethanol sector, and Africa starting to see renewable energy and efficiency as partial answers to its power shortages.
Michael Liebreich, chairman and CEO of New Energy Finance, said: “2007 was a very strong year, and the fundamentals continue to look supportive for 2008. However the amount invested in clean energy technology and projects needs to grow much more – on our estimates a further, fivefold increase is required for major countries to meet their own ambitious targets for reductions in greenhouse gas emissions.”