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.
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.
Will Self-Driving Cars Be Better for the Environment?
Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?
But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?
The Big Picture
The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.
That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.
One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.
There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.
As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.
Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.
Make and Model of Car
Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.
On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.
The Bottom Line
Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?
Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.
New Zealand to Switch to Fully Renewable Energy by 2035
New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.
New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.
Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.
Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”
The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.
Zero net emissions by 2050
Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.
Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.
She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.
Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”
A worldwide shift to renewable energy
Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.
Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.
Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.
Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.