Renewable energy investment ticked up strongly last quarter

For the April-June period, new capital invested into the sector rose 22 per cent over the year earlier period to reach a robust $US41.7 billion. Investment in large scale concentrated solar thermal electricity generating concentrated solar energy plants such as BrightSource Energy’s 392 MW Ivanpah project in California played a crucial role in bolstering the figures.

Other Concentrating Solar Power projects which managed the financial go-ahead during the quarter included the 100 MW Eskom Uppington solar project in South Africa and a similar Concentrated Solar Power project of FPL Termosol in Spain.

In terms of geography, China continued to dominate new investment during the period, accounting for $US12bn, or a little less than a third of total new capital into the sector during the quarter. The US came a close second at $US10.5bn while investment in Europe totalled $US8.9bn.

India saw a record investment of $US2.5 billion during the quarter driven by wind energy and solar power projects under the government’s National Solar Mission and some state government solar programmes. An investment of about $US3.2 billion is required for over 1GW of solar photovoltaic projects slated to come online by January.

Into this quarter, solar projects elsewhere in the world have cleared important hurdles. Last week, the US Department of Interior approved construction of Abengoa’s 250MW Mojave concentrated solar power project and CSolar Development’s 200 MW Imperial Solar Energy Centre.

In Europe, Italy’s renewable energy regulator approved 947 projects to receive the benefit of the country’s feed-in-tariff under a modified programme introduced in May. Last year, Italy was second only to Germany in new PV capacity installed and regulators there have sought to cool things down just a bit.

Looking further ahead, the solar sector stands to benefit from broader clean energy goals being finalised by countries and companies. The Israeli cabinet has approved a target of generating 10 per cent of the country’s electricity from renewables by 2010. In Asia, the Singapore government has committed funding of $S500 million ($US411 million) over five years to support the development of solar, fuel cells and other forms of clean energy. Google has also announced its intention to ramp up its $US750 million investment in clean energy projects.

The move to expedite the flow of funds from developed to developing countries to mitigate climate change could also be a big positive for renewable energy investment. As per the agreement at Cancun in Mexico, developed countries committed $US100 billion in climate aid annually to poorer nations by 2020. A fund to channel part of this investment may be operational as early as next year, the United Nations claims.

Despite some positive policy news, PV equipment prices continue to fall. The Bloomberg New Energy Finance Solar price Index for July shows further slippage across the value chain of silicon, wafers, cells and modules. This presents both potential challenges and opportunities to the sector. Some pure-play wafer and cell makers may be pushed out of the market by vertically-integrated players who are in a better position to withstand, and profit, from the price declines, according to Bloomberg New Energy Finance analysts.

Amidst all this, the performance of the WilderHill New Energy Global Innovation Index continues to be subdued. For the week ended 15 July, the 99-share index was down 5 per cent compared to falls of 2 per cent in the S&P 500 Index and 2.4 per cent in the Nasdaq Composite Index. Year-to-date the index is down 9 per cent, reflecting investor worries about future policy support and pressure on manufacturer margin.