Thursday, 12 January 2017

Record 126.5GW of solar and wind installed in 2016: BNEF, by Karl-Eric Stromsta, Recharge News, January 11, 2017

The world installed a record 70GW of solar and a near-record 56.5GW of wind in 2016, with acquisition activity also hitting a new high amid surging corporate M&A, says Bloomberg New Energy Finance.

Offshore wind represented “the brightest spot” for new investment, BNEF says, with capital spending commitments for offshore wind farms soaring 40% to $29.9bn thanks to a vibrant European market.

The record figure includes Dong Energy’s $5.7bn final investment decision on the 1.2GW Hornsea 1 array in UK waters, in addition to 14 other offshore projects larger than 100MW that received the go ahead last year off the coast of the UK, Germany, Belgium, Denmark and China.

 The offshore investment boom comes as developers are taking advantage of rapidly improving economics in the sector, as turbines get larger and construction operators get smarter, BNEF notes. The seven largest clean-energy financing deals globally last year all went to offshore wind projects in Europe.

“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,” says BNEF chief executive Jon Moore.

“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.”

Another bright spot in 2016 was acquisition activity, with BNEF clocking clean-energy deals worth $117.5bn, up from $97bn in 2015, representing the first time this has surpassed $100bn. While the majority of that is tied to project acquisitions, corporate M&A leapt to $33bn, with stand-out deals including Tesla’s purchase of SolarCity for $4.9bn and Enel’s buy-back of the minority holders in Enel Green Power.

Total new investment into clean energy fell 18% last year, to $287.5bn. BNEF says the drop reflects some gloomy factors, including a “marked cooling” in the Chinese and Japanese renewables markets, but also positive ones like “further sharp” drops in equipment prices.

Justin Wu, head of Asia for BNEF, says: “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.

"China is facing slowing power demand and growing wind and solar curtailment,” Wu says. “The government is now focused on investing in grids and reforming the power market so that the renewables in place can generate to their full potential.”

Meanwhile, future growth in Japan “will come not from utility-scale projects but from rooftop solar systems installed by consumers attracted by the increasingly favorable economics of self consumption”, he says.

Solar was once again the leading sector for clean-energy investment in 2016, at $116bn, but this was down 32%, due in “large part” to lower installed costs, BNEF says. Wind investment fell 11% to $110.3bn.

Some $41.6bn was invested in smart-energy technologies, followed by biomass ($6.7bn); low-carbon services ($4.3bn); small hydro ($3.4bn); geothermal ($2.7bn); biofuels ($2.2bn); and marine energy ($194m).

While public-market investment into quoted clean-energy companies fell 21% last year, to $12.1bn, several companies raised substantial amounts of money, including Innogy, the renewables offshoot of German utility RWE, and Chinese electric-vehicle maker BYD.

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