Solar And China Dominate Clean Energy Investment In First Quarter

&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-508336438&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/508336438/960×0.jpg?fit=scale&q; data-height=&q;637&q; data-width=&q;960&q;&g; An aerial view of the solar mirrors at the Noor 1 Concentrated Solar Power plant in Morocco. The North African country has approved a new $2.4bn 800MW scheme. (FADEL SENNA/AFP/Getty Images)

Emerging markets dominated investment in clean energy in the first quarter of 2018, with more than 40% of funding going to projects in China, while there were notable developments in Mexico, Morocco, Indonesia and Vietnam.

Total investment for the first three months of the year was $61.1 billion, 10% lower than the same period in 2017, according to Bloomberg New Energy Finance (BNEF). Using slightly different criteria, Clean Energy Pipeline said that the figure was $62.1 billion.

One reason for the fall in investment was a 19% drop in solar funding, partly as a result of a 7% fall in the price of photovoltaic equipment over the past year, and partly because of weaker activity in some markets.

Despite the sector&a;rsquo;s first quarter weakness, BNEF expects solar to have a strong year overall. &a;ldquo;We expect the world to install even more solar this year than last year&a;rsquo;s record of 98GW ,&a;rdquo; said Jenny Chase, head of solar for BNEF. &a;nbsp;&a;ldquo;Two of the main drivers are the ongoing boom in China for both utility-scale and smaller, local PV systems, and the financing of very large solar parks in other developing countries as cost-competitiveness continues to improve.&a;rdquo;

The largest project to be approved was the $2.4 billion 800MW Noor Midelt scheme in Morocco, which combines PV panels with a solar thermal facility that can store the energy generated. There were also large PV facilities approved in India and Mexico.

By contrast, there was a 10% increase in investment in wind to $18.9 billion while investment in geothermal rose 39% to break the $1 billion barrier. There was also a startling 519% increase in investment in biofuels from the same period a year before as two ethanol plants were approved in the US, but the fact that this took investment to just $748 million highlights just how far out of favour the sector has fallen in recent years.

Biomass and energy-smart technologies (smart meters, energy storage and electric vehicles) fell 29% and 8% respectively, with small hydro-electric schemes also falling, by 32%.

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Despite China&a;rsquo;s dominance, the $26 billion invested in clean energy from January to March was 27% less than the first three months last year. The US took second place in the rankings, with a 16% increase in funding at $10.6 billion, while a lack of offshore wind deals in the UK and Germany saw European investment fall 17% to $6 billion. India was 9% up at $3.6 billion but in Japan, the amount of money committed dropped by more than half to $1.4 billion.

&a;ldquo;The global first quarter figures are the lowest for any quarter since 3Q 2016, but it&a;rsquo;s too early to predict a fall in annual investment this year,&a;rdquo; said Abraham Louw, clean energy investment analyst at BNEF. &a;ldquo;For instance, we expect to see the financing of a number of big-ticket offshore wind projects in UK, Belgian, Dutch and Danish waters during the months ahead.&a;rdquo;

Clean Energy Pipeline said that clean energy investment was higher in most clean energy markets, with Africa &a;amp; Middle East funding 34% higher than the previous year, Asia Pacific 18% up, Latin &a;amp; Central America seeing a 26% improvement, and North America 47% higher thanks mainly to higher investments in Mexico. Europe was the only region to see a fall, in part because of a hiatus in offshore wind financing and partly because of changes to government support policies.

&a;ldquo;If 2017 was a year of recovery, then 2018 looks to be the year where clean energy financing reaches the heights set from a few years prior,&a;rdquo; said Chenwu Qian, senior data analyst at Clean Energy Pipeline.

One reason for this is the strength of project financing, which according to Clean Energy Pipeline saw a record quarter, with &a;ldquo;$60 billion of renewables deals taking place in Q1 2018, almost double the amount invested in the previous year&a;rsquo;s opening quarter&a;rdquo;.

Another was a record level of M&a;amp;A activity at $39.8 billion, breaking a seven-year record stretching back to Q2 2011. However, the sector was dominated by one deal, the $25.6 billion acquisition of Innogy by E.ON.

By contrast, Clean Energy Pipeline recorded just $485 million raised on public markets, the slowest quarter for public market financing since its records began in in 2009.&l;/p&g;