Global Investments in Clean Energy Fell Less than Expected in 2009

The economic downturn caused a decrease in clean energy investments during 2009, according to several studies. However, booming investments in Asia, particularly in China's wind power, meant that global investments in clean energy remained stronger than expected.

New worldwide clean energy investment totaled US$145 billion in 2009, down 6.5% from the record 2008 annual figure of US$155 billion, according to Bloomberg New Energy Finance, an independent market research company. The largest global investment was the $92 billion spent on building assets such as wind farms, solar parks, and biofuel plants.

The report credited a boom in China's wind energy development for a 25% spending increase in that region, compared to the overall 25% drop in the Americas. The Bloomberg report notes that China spent $21.8 billion on new wind centers, a 27% increase over 2008, and nearly doubled its spending on solar projects, reaching $1.9 billion in 2009.

Globally, asset financing was down 5% from 2008, while public market investment in clean energy companies was also down 5%, at $13.1 billion. The biggest drop, however, was in venture capital (VC) and private equity funds, which fell by 44% in 2009, dropping to $6.6 billion. VC funds are particularly important for new startup companies, providing the financial backing they need as they strive to create profitable products.

The findings on VC investments are backed up by the Cleantech Group, a market research firm, which said that the preliminary 2009 results for clean technology VC investments in North America, Europe, China, and India totaled $5.6 billion in 557 deals, down from the $8.4 billion in 567 deals recorded in 2008.  And, 2009 venture investment was down 33% from $8.5 billion in 2008, paralleling the global economic decline of the same period. However, investment in cleantech declined less than other sectors.

“Record levels of activity from investors, governments and corporations in 2009 demonstrated that the market for clean technologies continues to strengthen regardless of any non binding global climate change agreement,” said Nicholas Parker, Executive Chairman, Cleantech Group. “In parallel to trying to reach carbon agreements, governments spent the year earmarking hundreds of billions of dollars for clean technology in pursuit of economic growth. And in the private sector, about a quarter of all global venture investment capital was invested in cleantech in 2009—more than software, biotech or any other category.”

The Cleantech Group report showed that the top cleantech sector for venture investment in 2009 was Solar, which accounted for 21% of total clean technology investment, closely followed by Transportation (20%) and Energy Efficiency (18%). Transportation and Energy Efficiency reached record levels in 2009, and both now rival Solar for amounts invested.

The Cleantech Group report also noted that four of the five largest funding rounds in 2009 were for U.S.-based companies: thin-film solar company Solyndra raised $198 million; advanced battery developer A123 Systems raised $100 million; Silver Spring Networks, a smart grid company, raised $100 million; and fuel-efficient automaker V-Vehicle raised $100 million.

One measure of the financial importance of renewable and energy efficiency firms is the recent launch of the DB NASDAQ OMX Clean Tech Index. Formed by DB Climate Change Advisors—the climate change investment and research business of Deutsche Bank's Asset Management business—and the NASDAQ OMX Group, Inc., the new index is made up of 119 companies that each derive at least a third of their revenues from clean technology.