Clean energy attracts $100B in 2006
As of mid-December, $70.9 billion of new investment had come into the clean energy market, up 43% since 2005. Nearly $30 billion more came from mergers, acquisitions, leveraged buyouts and refinancing of assets.
The year also saw some substantial activity on the stock markets, with $10.3 billion raised via initial public offerings (IPOs), up from $4.3 billion in 2005 and $0.7 billion in 2004.
In terms of individual sectors, solar energy was the most active, raising $4.4 billion on the public markets, nearly double the previous year. Wind power raised $1.2 billion, compared to $1.1 billion in 2005, driven by government policies such as the production tax credit in the United States.
Biofuels was an area of tremendous growth, raising $2.5 billion, 10 times as much as in 2005. Brazil continued strong growth in this area, while China financed its first large Jatropha-based biodiesel project, and countries such as Canada and France announced plants to meet renewable fuel targets by 2010. The United States was the sector-leader however, as political support grew from the President on down, and the phase-out of the fuel additive MTBE in favour of ethanol led to an investment boom.
The one area which saw a decline in public market funding were specialist carbon market service providers such as brokers and carbon fund managers, which raised only $67 million, compared to $465 million in 2005. Even so, private investment spurred the sector, as the volume of money in specialist carbon funds reached more than $7bn by year end.
According the New Energy Finance, two key events which spurred clean energy investment were US President George Bush’s State of the Union address in which he said the country was “addicted to oil”, and the release of the UK’s Stern Review, which warned of huge economic costs of not dealing with climate change.
Michael Liebreich, CEO of New Energy Finance, said that as 2006 comes to a close, “What we are seeing is the shape of an entire new section of the world’s energy infrastructure coming into focus: what sectors it consists of, where it sits geographically, what industries it will draw on, and how it gets funded. What looked like it would take a decade has been achieved in three years. 2007 will be a critical year for the clean energy industry.” She added that there is no shortage of capital, and the industry must now deliver large volumes of clean, cost-effective power and fuels.
Activity in the Canadian clean energy sector mirrored global trends, with biofuels and wind power experiencing strong growth.
Production started at several major ethanol facilities and a number of other projects were commissioned. The government’s recent announcement of planned regulations to meet a 5 percent renewable fuels standard for gasoline by 2010 should further boost the sector in 2007.
Canada also nearly doubled its installed wind power capacity in 2006, surpassing the 1000 MW mark. The Ontario Power Authority reports that current or planned contracts will result in 1,390 MW of on-line wind capacity in that province alone by 2010.