Global Clean Energy Investments Fall Again

Maritime Activity Reports, Inc.

January 16, 2014

  • New global clean energy investment decreases 20% in 2013 to $212 billion
  • Project finance posts 22% quarterly increase to $34.3 billion - wind dominates
  • Public market issuances reach ten-quarter high of $4.5 billion

Clean Energy Pipeline, the online daily financial news and data service dedicated to the clean energy sector, released its preliminary analysis of venture capital, private equity, project finance, mergers and acquisitions and public markets activity during 4Q13 and 2013.

New investment in the global clean energy sector totalled $58.2 billion in 4Q13, a 15% increase on the $50.7 billion invested in 3Q13 but a 21% decrease on the $74.1 billion recorded in the corresponding period in 2012. Despite the quarterly increase, total investment throughout 2013 decreased 20% year-on-year to $212 billion. Total investment in the global clean energy sector has now fallen for two consecutive years.

“We expected investment levels in 2013 to be disappointing” commented Douglas Lloyd, CEO of Clean Energy Pipeline. “With low gas prices in the US and ongoing policy uncertainty globally, it is no surprise that investment declined in 2013.”

Project finance posts 22% quarterly increase due to large European wind deals

Project finance totalled $34.3 billion in 4Q13, a 22% increase on the $28.2 billion recorded in the previous quarter but a 27% decrease on the $47.3 billion invested in 4Q12. Despite the quarterly increase, project finance throughout 2013 declined 25% year-on-year to $119 billion, the lowest annual investment volume since 2009.

The quarterly increase was underpinned by a 26% surge in European wind project finance to $5.2 billion. This was due to $1.3 billion debt financing allocated to four large offshore wind transmission assets (Greater Gabbard, HelWin1, SylWin1 and DolWin1), $697 million debt finance being invested in two offshore wind farms (London Array and Gemini), and the refinancing of some large onshore wind farm portfolios, including the $525 million loan secured by Infinis Ltd for its 274 MW portfolio of operational UK assets.

In the US, wind energy project finance posted a 6% quarterly increase to $2.7 billion as a series of utility-scale wind farms raised finance to ensure they could commence construction by the end of 2013, thereby qualifying for the Production Tax Credit. Notable deals included the debt and tax equity financing of Invenergy’s 288.6 MW Miami Wind Energy Centre in December 2013 and its 200.6 MW Prairie Breeze wind farm in October 2013 (value undisclosed). This contributed to project finance across the US increasing 22% quarter-on-quarter to $5.5 billion.

Public markets activity reaches ten-quarter high

Clean energy companies secured $4.5 billion on the public markets in 4Q13 through a mixture of IPOs, secondaries and convertible notes. This is the largest quarterly volume raised since 3Q11. This contributed to public markets activity trebling year-on-year to $13.0 billion in 2013.

Notable companies to execute deals included: Meridian Energy, which raised $1.6 billion through its IPO on the New Zealand Stock Exchange in October 2013; Darling International, which secured $760 million through a secondary offering on the New York Stock Exchange in December 2013; and China Everbright International, which netted $473 million through a secondary offering on the Hong Kong Stock Exchange in December 2013.

M&A deal values increase as wind activity surges

Clean energy M&A activity totalled $12.6 billion in 4Q13, a 6% increase on the $11.9 billion recorded in 3Q13 but a 39% decrease on $20.6 billion compared with the corresponding period in 2012. The number of transactions was high by historical standards - some 249 M&A deals were announced in 4Q13, an 11% increase on the quarterly average number of announced deals (225) recorded since the beginning of 2009.

Significantly, the value of wind M&A activity more than doubled to $3.4 billion in 4Q13 due to a series of acquisitions of large portfolios of operating wind farms in Europe. Notable deals include PensionDanmark’s acquisition of a 49% stake in a 273 MW portfolio of six operating UK-based wind farms for $251 million and Crédit Agricole Assurances’ acquisition of a 50% stake in a 440 MW wind farm portfolio (value undisclosed).

Venture capital and private equity still struggling

Venture capital and private equity investment in clean energy (excluding buyouts) totalled $1.5 billion in 4Q13, a 29% quarterly increase. However, investment levels are still 38% below the quarterly average value during the past five years ($2.4 billion). This contributed to investment decreasing 24% year-on-year to $6.1 billion in 2013. Annual investment has now fallen for two consecutive years from a peak of $15.6 billion in 2011.

The dramatic fall in activity is principally due to the absence of capital intensive investments in solar manufacturing companies. Only $106 million was invested in solar companies in 4Q13, substantially below the $633 million average quarterly investment volume tracked between 2009 and 2011.

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