Clean Energy Pipeline, the online financial news and data service dedicated to the clean energy sector, on Friday released its preliminary analysis of venture capital, private equity, project finance, mergers and acquisitions, and public markets activity during Q3 15.
New investment in the global clean energy sector totalled $75.4 billion in Q3 15, a 7% increase on the $70.4 billion invested in Q3 14. It now looks highly likely that investment during 2015 will surpass the $286 billion recorded in 2014. This would represent the second year running that global clean energy investment has increased following down years in 2012 and 2013.
Project finance surges 21% as European investment falters
Clean energy project finance totalled $53.4 billion in Q3 15, a 21% increase on the $44.3 billion invested in Q3 14. Project finance in Q3 15 was in fact at its second highest level in the past three years.
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The increase in project finance was caused by a 51% surge in investment in Asia-Pacific to $24.1 billion, a record volume of investment in the region. This was underpinned by the financial close of four large offshore wind farms in China: Rudong H12 ($882 million), Jiangjiasha ($759 million), Dongtai Concession ($571 million) and Jiangsu Rudong ($460 million).
In contrast, project finance in Europe fell 38% annually to $9.1 billion, a three-year low. This was caused by a slump in the number of projects financed. Only 93 renewable energy projects in Europe secured financing in Q3 15, the lowest number since Q3 09.
“The most striking feature of last quarter’s investment figures was the sharp decrease in European project finance,” said Thomas Sturge, Head of Research at Clean Energy Pipeline. “This should not come as a surprise. There is still plenty of appetite to invest in renewables, but swingeing subsidy cuts in some of Europe’s major markets during the last three years have significantly reduced deal flow.”
A record 23 GW of renewables capacity transacted
Some 23.4 GW of effective renewable energy capacity (the capacity of the project multiplied by the stake acquired) was acquired in Q3 15, a record high. This includes operational, construction-stage and development-stage projects.
M&A activity increased due to a surge in acquisitions of operating assets. Some 8.7 GW of operating assets were acquired in Q3 15, also a record high. Notable deals included Axpo’s acquisition of 31 operating wind farms totalling 154 MW and a 2.5 GW development pipeline in France and Germany, SunPower’s acquisition of a 1.5 GW portfolio of US solar assets at various stages of development and JP Morgan and Hannon Armstrong Sustainable Capital’s acquisition of a tax equity stake in a 1.2 GW portfolio of eight operating wind farms in the US.
M&A activity in the wider clean energy sector, including acquisitions of projects, companies in the supply chain and cleantech businesses, totalled $28.5 billion in Q3 15, a significant increase on the $11.1 billion transacted in Q3 14.
Public markets listings steady at $3.8 billion
Clean energy companies secured $3.8 billion on the public markets in Q3 15, a 3% annual increase. Listing activity was stable despite a downturn in clean energy stocks. The Ardour Solar Energy Index, for example, is currently trading 40% below its level one year ago.
The most notable deal was SunEdison’s emerging markets yieldco TerraForm Global’s $675 million IPO on the NASDAQ in July.
Other notable IPOs include US residential solar installer SunRun, which secured $251 million through an IPO on the NASDAQ in August, and Chinese air cleaning equipment manufacturer Zhejiang Tengy Environmental Technology, which secured $70 million through an IPO on the Hong Kong Stock Exchange in September.
Number of venture capital and private equity deals hits six year low
Clean energy companies secured $2.2 billion of venture capital and private equity funding in Q3 15, in line with the $2.1 billion invested in Q3 14. Despite the small annual increase in deal value, only 93 investments were executed in Q3 15, the lowest number since Q1 09.
The volume of investment was robust due to a small number of large deals. These include the $500 million secured by Chinese electric vehicle manufacturer NextEV, the $150 million investment in US smart glass maker View and the $115 million secured by Canadian biofuels company Enerkem Technologies.