Global Investments in Clean Energy Fell Less than Expected in 2009
February 17, 2010
Several studies point to a decrease in clean energy investments during 2009, a trend linked to the economic downturn. The reports indicate that booming investments in Asia, particularly in China's wind power, meant that global investments in clean energy remained stronger than expected. China's growth outstripped the United States, but in both countries, the wind power industry continued to be a significant investment sector.
New worldwide clean energy investment totaled $145 billion in 2009, down 6.5% from the record 2008 annual figure of $155 billion, according to Bloomberg New Energy Finance, an independent market research company. The largest global investment was the $92 billion spent on building assets such as wind farms, solar parks, and biofuel plants. The report credited a boom in China's wind energy development for a 25% spending increase in that region, compared to the overall 25% drop in the Americas. Bloomberg New Energy Finance notes that China spent $21.8 billion on new wind centers, a 27% increase over 2008, and nearly doubled its spending on solar projects, reaching $1.9 billion in 2009. Globally, such asset financing was down 5% from 2008, while public market investment in clean energy companies was also down 5%, at $13.1 billion. The biggest drop, however, was in venture capital (VC) and private equity funds, which fell by 44% in 2009, dropping to $6.6 billion. VC funds are particularly important for new startup companies, providing the financial backing they need as they strive to create a profitable product. See the Bloomberg press release (PDF 23 KB). Download Adobe Reader.
The findings on VC investments are backed up by the Cleantech Group, a market research firm, which said that the preliminary 2009 results for clean technology VC investments in North America, Europe, China, and India totaled $5.6 billion in 557 deals, down from the $8.4 billion in 567 deals recorded in 2008. Clean technology, or "cleantech," is a category that includes renewable energy as well as other green technologies. The report's authors expected the 2009 final tallies would grow 5-10% over the preliminary figures. Looking at just the United States, consulting firm Ernst & Young found a similar trend, with VC investments in 2009 falling 50% to $2.6 billion. Both companies noted a shift toward less capital-intensive energy efficiency technologies, which resulted in many deals but less total investment. But on the positive side, the Cleantech Group report also noted that four of the five largest funding rounds in 2009 were for U.S.-based companies: thin-film solar company Solyndra raised $198 million; advanced battery developer A123 Systems raised $100 million; Silver Spring Networks, a smart grid company, raised $100 million; and fuel-efficient automaker V-Vehicle raised $100 million. See the press releases from the CleanTech Group and Ernst & Young.
One measure of the financial importance of renewable and energy efficiency firms is the launch on February 10 of the DB NASDAQ OMX Clean Tech Index. Formed by DB Climate Change Advisors—the climate change investment and research business of Deutsche Bank's Asset Management business—and The NASDAQ OMX Group, Inc., the new index is made up of 119 companies that each derive at least a third of their revenues from clean technology. See the Deutsche Bank press release.