Clean Energy Investment Jumps 16%, Shaking Off Oil’s Drop

(Corrects company name to PricewaterhouseCoopers LLP in
12th paragraph )

(Bloomberg) — Clean energy investment rose for the first
time in three years in 2014, overcoming a slump in oil prices
that unsettled the outlook for the industry.

New funds for wind, solar, biofuels and other low-carbon
energy technologies gained 16 percent to $310 billion last year,
according to Bloomberg New Energy Finance. It was the first
growth since 2011, erasing the impact of lower solar-panel
prices and falling subsides in the U.S. and Europe that hurt the
industry in previous years.

The industry benefited from a number of trends that will be
challenging to replicate this year. Funding surged because of a
32 percent expansion in China’s commitment to renewables, as
well as a record $19.4 billion committed to offshore wind
projects that were years in the making. Money also flowed into
electric cars, especially for Tesla Motors Inc., just before
cheaper gasoline prices reduced forecasts for that segment.

“Healthy investment in clean energy may surprise some
commentators, who have been predicting trouble for renewables as
a result of the oil price collapse,” said Michael Liebreich,
chairman of the advisory board of the London-based researcher.
“Our answer is that 2014 was too early to see any noticeable
effect on investment. The impact of cheaper crude will be felt
much more in road transport than in electricity generation.”

Offshore Wind

While there may be hiccups ahead for electric cars and
offshore wind, the biggest bits of the renewable energy industry
are still expanding. BNEF expects installations for solar and
wind power to grow about 10 percent this year.

The findings ease concerns that the oil price rout that
began in the middle of last year would lead to a sharp reduction
in funds for low-carbon energy, which is more costly than fossil
fuels. The WilderHill New Energy Global Innovation Index, which
tracks 105 clean-energy equities, has tumbled almost 19 percent
since March.

“This increase in renewable energy investment demonstrates
the resilience of the sector in the face of tumbling oil
prices,” said Ben Warren, head of environmental finance at the
consulting firm EY. “This trend is set to continue as
technology around renewables becomes more affordable. The
increasing role that renewable energy plays in emerging markets
will also help ensure sustainable growth for the sector.”

Offshore Wind

Seven offshore wind projects worth more than $1 billion
each obtained financing in 2014, driving funding for the wind
energy industry up 11 percent to a record $99.5 billion. The
outlook for further developments has dimmed in recent months
because the technology remains among the most costly for power.

“It may be difficult in 2015 to match” the overall
investment if only because of the scale of the cash that came
forward for offshore wind last year, said Angus McCrone, a
senior analyst at BNEF in London.

A surge in solar everywhere had the biggest impact on the
total result for 2014. Investment in projects that generate
electricity from the sun rose 25 percent to $149.6 billion in
2014, its highest share of the total ever.

Driving solar was China’s support both for photovoltaic
installations and its panel manufacturers, which dominate the
industry. Also, the rise of rooftop panel installers such as
SolarCity Corp. and “yieldcos,” companies that channel
dividends to investors from operating solar projects, broadened
the paths for money to flow into the industry.

Unshaken by Oil

“Technologies such as solar are much more cost competitive
now so you might not see as much pressure from low oil prices,”
said Lit Ping Low, assistant director for sustainability and
climate change at PricewaterhouseCoopers LLP. “Investment in
clean energy will at least hold its own, if not continue to rise
this year.”

Sales of electric vehicles probably will be first to feel
the impact of cheaper oil, which has reduced the cost of
gasoline and made conventional cars more economical.

Investment in biofuels, which are blended with gasoline to
help cut emissions, was one of the few clean-energy segments to
suffer a decline, dropping 7 percent to $5.1 billion.

What BNEF calls energy smart technologies, including power
storage, efficiency products and electric cars, rose 10 percent
to $37 billion last year.

China’s Role

China was the biggest single contributor among the major
markets for renewable energy, increasing its investment to $89.5
billion, the BNEF report showed. The nation has become the top
market for solar power and one of the largest for wind after
ladling out support for the industries to diversify its energy
supplies.

The U.S. boosted its investment 8 percent to $51.8 billion,
the most since 2012. Japan, which has become the second-biggest
market for solar power, lifted funding for renewables 12 percent
to $41.3 billion. In Europe, which led the industry in
installations in the first decade of this century, investment
grew 1 percent to $66 billion despite funding for offshore wind.

Reflecting a shift away from large, centralized power
stations to smaller, local facilities, investment in so-called
distributed power swelled 34 percent to $73.5 billion. That will
weigh on utilities that are under pressure to replace fossil-fuel or nuclear power stations with more intermittent and
smaller low-carbon facilities.

New equity raised for clean energy companies on the public
markets grew 52 percent to $18.7 billion driven by a succession
of U.S. and U.K.-listed yieldcos and project funds.

To contact the reporter on this story:
Louise Downing in London at
ldowning4@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net

About Bloomberg New Energy Finance

Bloomberg New Energy Finance (BNEF) is an industry research firm focused on helping energy professionals generate opportunities. With a team of 200 experts spread across six continents, BNEF provides independent analysis and insight, enabling decision-makers to navigate change in an evolving energy economy.
 
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