Investment into clean energy projects and companies swelled to $174bn in the first half of 2021, with record levels of public market financing offsetting a decline in renewable project investments.
That is the headline figure of new research from BloombergNEF, which found that the $174bn is the highest total ever recorded for the first half of a year. The financing levels are a 1.8% increase on the same time last year, although the second half of 2020 does dwarf this figure by 7% as nations ramped up clean energy investments as lockdowns began to ease temporarily.
The first half of the year did see a decline in investment into new renewables projects, however. Investment into wind projects totalled $58bn, matching levels recorded in 2018 and 2019, but well below the $85bn invested in the first half of 2020 ahead of subsidies closing or lapsing in nations such as China and the US.
Investment in solar projects grew 9% year-on-year though. Solar projects in China delivered $4.9bn, largely driven by gigawatt-scale ‘subsidy-free’ projects developed by state-owned enterprises like China Energy Investment Corp. and Huanghe Hydropower.
The decline in project investments was offset by a huge rise in equity offerings of clean energy firms. Renewable energy companies raised a total of $28.2bn on public markets for the first half of the year – up by more than 500%. Additionally, venture capital and private equity commitments for these firms totalled $5.7bn.
Other financial flows included “funds in circulation”, covering the refinancing of renewable energy projects and corporate mergers, acquisitions and buyouts. Collectively, these totalled $68.3bn, up 18% compared to the same period last year.
BloombergNEF’s head of analysis Albert Cheung said: “Renewable energy investment has withstood the effects of the global pandemic, in contrast to other sectors of the energy economy where we have seen unprecedented volatility.
“However, a 1.8% year-on-year increase is nothing to write home about. An immediate acceleration in funding is needed if we are to get on track for global net-zero.”
BloombergNEF’s analysis arrives two months after the 2021 edition of the International Energy Agency’s (IEA) World Energy Investment report. The report forecasts a 10% year-on-year increase in global energy investments, bringing levels to almost pre-pandemic proportions.
Of the energy-related sectors, power generation will attract the largest sum, accounting for half of investment growth, after investment levels plateaued between 2019 and 2020.
Promisingly, the IEA believes that 70% of the total amount that will go towards generation this year will go towards renewablesclean energy. Solar and onshore wind are likely to be the most attractive options in most geographies, with average installation costs down by 10% and 5% respectively.
However, while $150bn was invested in clean energy in developing economies last year, the Agency believes this figure must hit $1trn by 2030 to deliver a net-zero world.