Investment in Australia’s clean energy sector is starting to show signs of a recovery, as global investment has slipped for the first time since 2013, according to the latest Clean Energy Investment report released by Bloomberg New Energy Finance.
Australia added $3.44 billion in new clean energy investment in 2016, with the largest share from large-scale projects driven by the ACT’s successful reverse auction policy and the large-scale Renewable Energy Target.
While a long way from the boom experienced in 2011, where investment exceeded $6.32 billion, there are signs that the sector may be inching towards a recovery. Australian investment grew by 49 per cent over the last 12 months, its highest level since the election of the Abbott Government.
— Seb Henbest (@SebHenbest) January 13, 2017
Globally, clean energy investment fell by 18 per cent, recording $287.5 billion of investment, down from 2015’s record year of $329 billion.
While the strongest region for clean energy investment for the fourth consecutive year, Bloomberg New Energy Finance cited consolidation in key Asian markets as reasons for the fall.
“After years of record-breaking investment driven by some of the world’s most generous feed-in tariffs, China and Japan are cutting back on building new large-scale projects and shifting towards digesting the capacity they have already put in place.” Justin Wu, head of Asia for Bloomberg New Energy Finance, said.
While overall investment fell, crucially falling technology costs have allowed generation capacity to continue to grow by almost record levels. Project developers have been able to do more with less; installing more generation capacity while requiring less funds, as solar and wind technologies continue to fall in cost.
2016 saw a record amount of new solar generation capacity installed, with an additional 70 Gigawatts added, while wind projects added the second-highest amount of new wind generation capacity with an additional 56.5 Gigawatts, according to Bloomberg.
Off-shore wind projects received record levels of investment as technology improvements and better understanding of the construction processes provided greater confidence to developers.
“The offshore wind record last year shows that this technology has made huge strides in terms of cost-effectiveness, and in proving its reliability and performance. Europe saw $25.8bn of offshore wind investment, but there was also $4.1bn in China, and new markets are set to open up in North America and Taiwan.” Jon Moore, chief executive of Bloomberg New Energy Finance said.
The Asia Pacific region continued to dominate new investment, receiving 47 per cent of funding ($135 billion), beating out the Americas ($73 billion) and Europe, Middle East and Africa (combined $80 billion).
In Europe, investment grew by 3 per cent, reaching $70.9 billion, with large gains in Belgium, Denmark and Sweden, as offshore wind projects recorded its strongest ever year for new investment.
In addition to new project investment, acquisitions reached record levels as both projects and corporate takeovers saw transactions of established enterprises soar past $100 billion for the first time.
The largest single acquisition being Tesla’s entry into the solar installation market, with a $4.9 billion purchase of SolarCity, as the automaker works to align itself as a purveyor of a wider suite of clean energy products, in addition to electric vehicles.