Clean energy investment drops 17% as China and U.S. scale back

Clean-energy investment fell 17 percent in the first quarter, keeping pace with last year’s decline, as the U.S. and China both scaled back support for wind and solar farms.

The $53.6 billion funneled into projects such as renewable energy, efficiency and electric cars during the first three months of the year marked the lowest investment for the quarter since 2013, according to Bloomberg New Energy Finance. A surge in financing for large offshore wind projects at the start of last year wasn’t repeated in 2017.

Governments in the biggest markets for renewables are slashing subsidies for new projects, reflecting a plunge in the cost of photovoltaics and wind turbines. At the same time, bright spots for the industry were marked by a $1.4 billion share sale by Tesla Inc. and $650 million for an Enel SpA solar project in Mexico that may be the biggest plant of its kind. Germany and France also boosted investment. Brazil and India declined.

“It was a relatively quiet first quarter for global investment, but it’s too early to assume that 2017 as a whole will be lower than last year,” said Abraham Louw, analyst at BNEF.

Tesla had both a secondary share sale and convertible debt issue in the first quarter, the London-based research arm of Bloomberg LP said in a statement on Tuesday. That boosted investment by 215 percent in the industry from public markets to $2.1 billion.

“Tesla continues to plow ahead with its ambitious plans for ramping up manufacturing of the Model 3,” said Colin McKerracher, an analyst at BNEF. “If they achieve anywhere near their 2017-18 production targets, the impacts on the auto sector would be profound. Tesla are rolling some big dice here.”

The broader decline in investment reflects the falling cost of capital for renewables, which allows investors install the same power generation capacity for less cash. Renewables were the biggest new source of electricity last year even as investment fell to $287.5 billion during the whole of 2016 from a record $348.5 billion the year before, BNEF said Tuesday.

China, the world’s biggest clean energy market, saw investment fall by 11 percent to $17.2 billion in the first quarter, reflecting a drop in feed-in tariff subsidies and issues with grid curtailment. In the U.S., funding fell 24 percent to $9.4 billion, which may have been partly driven by further uncertainty about future tax liabilities, Louw said.

Worldwide offshore wind financing fell by 60 percent to $4.6 billion from $11.5 billion a year ago. The U.K., the world’s biggest offshore wind farm installer, had no new financing in the first three months of the year.

“With support fizzling out for onshore wind and solar, in recent years offshore wind has propped up clean energy investment in the U.K.,” said Tom Harries, BNEF analyst.

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