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Chinese energy policy change drags on global 1H renewables spend

Big drop in market-leader's wind and solar investment pulls down worldwide figures 14%, says BNEF

Global investment in renewable energy slipped 14% in the opening six months of 2019, as the world’s biggest market, China, moved away from government-set tariffs to auctions for new wind and solar power capacity, according to the latest figures from BloombergNEF (BNEF).

The 39% drop in spending in the Asian clean-energy powerhouse, at $28.8bn the lowest figure for any first half-year (1H) period since 2013, pulled down worldwide capital investment to $117.6bn, 14% lower than in 1H 2018.

But BNEF’s head of Asia-Pacific unit Justin Wu said though the slowdown in investment in China is “real”, the 1H 2019 numbers “probably overstate its severity”.

“We expect a nationwide solar auction happening now to lead to a rush of new PV project financings,” he stated. “We could also see several big deals in offshore wind in the second half.”

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BNEF’s figures for clean energy investment in 1H 2019 show “mixed fortunes” for the world’s major markets, Wu noted, with the “big three” – China, the US and Europe – all showing falls, but with the US down a modest 6% at $23.6bn and Europe down 4% at $22.2bn compared to the same period 2018, far less than China’s 39% fall-back.

In Asia, spending rose in Japan, which attracted $8.7bn in new capital, up 3% on 1H 2018, and in India, where investment came in at $5.9bn, up 10%, as the country continued its drive to build 175GW of renewable energy capacity by 2022.

In Europe, Spain reeled in $3.7bn, up 235% on the same period a year earlier, and the UK was up 35%, at $2.5bn. But in the Netherlands investment was 41% lower that in 1H 2018, at $2.2bn, Germany was down 42% at $2.1bn, and France lower by 75% at $567m. Sweden saw investment jump 212% to $2.5bn, and the Ukraine was up 60% to $1.7bn.

Among other renewable energy investments in 1H 2019 highlighted by BNEF was the financing of a utility-scale project in Dubai – Saudi-based ACWA Power’s 950MW Mohammed bin Rashid Al Maktoum IV solar thermal and PV complex outside the megalopolis, which brought in $4.2bn in capital – and two offshore wind arrays in the sea off Taiwan – Wpd’s 640MW Yunlin Yunneng and Ørsted’s 900MW Greater Changhua, which together are expected to represent a $5.7bn spend.

Overall, 1H 2019 asset finance of utility-scale generation projects such as wind and solar farms was down 24% at $85.6bn, BNEF noted, “due in large part to the China factor”, while financing of small-scale solar systems of less than 1MW was up 32% at $23.7bn.

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Investment in specialist clean energy companies via public markets was 37% higher at $5.6bn – a figure boosted by two equity rounds for electric vehicle makers, an $863m secondary issue for Tesla, and a $650m convertible issue for China-based NIO.

Venture capital and private equity funding of clean energy companies in 1H 2019 was down 2% at $4.7bn, but BNEF spotlighted three “exceptionally large” deals that bucked the trend, the $1bn each for Swedish battery company Northvolt and US electric vehicle battery charging specialist Lucid Motors, and the $700m raised for another American EV player, Rivian Automotive.

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