New investment in the global clean energy sector rose 12% last year to $274.2 billion, the highest annual investment volume since 2011, reports Clean Energy Pipeline, the online financial news and data service dedicated to the clean energy sector in a report released on 21 January.
“Last year the clean energy industry really demonstrated its resilience,” commented Douglas Lloyd, CEO of Clean Energy Pipeline. “Despite a reduction in subsidies in Europe’s major renewable energy markets and very competitive natural gas prices in the US, investment in the global clean energy sector registered its first annual increase since 2011.”
Large offshore wind deals
In the fourth quarter of 2014, new investment in the global clean energy sector totalled $67.9 billion, a 4% increase on the corresponding quarter in 2013 ($65.2 billion). Clean energy project finance totalled $47.4 billion in Q4.14, equating to a 23% increase on the $38.5 billion invested during the corresponding period in 2013. This contributed to new investment reaching $175 billion in 2014, the highest annual investment volume recorded since 2011.
The large increase was a direct result of a 15% increase in investment in both Europe and Asia. In Europe, a large proportion of the increase was due to the financial close of the 300 MW Cestas project in France, which will be Europe’s largest solar PV plant when operational.
Investment in Q4.14 was also bolstered by a number of billion dollar utility balance sheet investments in European offshore wind farms. Iberdrola commenced construction of the 350 MW Wikinger offshore wind farm representing an investment of $1.7 billion; Vattenfall and Stadtwerke MĂĽnchen started work on the 288 MW Sandbank offshore wind farm representing a $1.5 billion investment; and DONG Energy started construction of the 258 MW extension of the existing 90 MW Burbo Bank offshore wind farm.
Other notable deals in Q4.14 included the $1 billion project financing of the Xina Solar One CSP plant located in South Africa and the $517 million project financing of the 180 MW Armow wind farm.
Public market listings plummet
Clean energy companies raised $1.6 billion on the global public markets in Q4.14 through a mixture of IPOs, secondaries and convertible note issuances, equating to a 73% decrease on the $6.0 billion secured during the corresponding period in 2013. Despite the annual decrease, public markets deal value posted a 13% annual increase to $16 billion in 2014, the highest volume recorded since 2010.
YieldCos were also less active in Q4.14 – six YieldCos raised a combined $768 million last quarter, a 17% decrease on the $930 million quarterly average secured by YieldCos since the beginning of 2013.
Two notable IPOs also priced in Q4.14 – wind tower producer CS Wind secured $232 million through an IPO on the Seoul Stock Exchange and Norwegian solar project developer Scatec Solar raised $123 million through an IPO on the Oslo Stock Exchange.
M&A deal value boosted by mega-deals
Clean energy M&A activity totalled $26.4 billion in Q4.14, more than double the $11.7 billion recorded in Q3.14 and an 80% increase on the $14.7 billion tracked during the corresponding period in 2013. The number of transactions was also high by historical standards – 292 M&A deals were announced in Q4.14, 5% more than the quarterly average number of announced deals (277) during the past three years.
Q4.14 was notable for a number of large acquisitions. The top 10 deals accounted for 47% ($12.3 billion) of total deal value in Q4.14. The most notable transaction was SunEdison and TerraForm Power’s acquisition of wind and solar power developer First Wind Holdings for $2.4 billion in November 2014. Other notable deals included the $2 billion merger of Hanwha SolarOne and Hanwha Q and CITIC and KKR’s $1.5 billion acquisition of water treatment and reclamation solutions provider United Envirotech.
Venture capital and private equity still languishing
Venture capital and private equity investment in clean energy (excluding buyouts) totalled $1.5 billion in Q4.14, a 16% decrease on the $1.8 billion invested in the corresponding period in 2013. Despite the yearly decline, annual investment in 2014 increased 3% to $7.1 billion. Solar was the largest sector for investment in Q4.14, accounting for 29% of total investment. Notable deals included the $250 million secured by residential solar company Sunnova Energy in November 2014 from Triangle Peak Partners, GSO Capital Partners and Franklin Square Capital Partners, and the $100 million secured by Taiwanese smart cities start-up Gogoro in October 2014.