Finance policy
Global trends in sustainable energy investment 2007: analysis of trends and issues in the financing of renewable energy and energy efficiency in OECD and developing countries
Current status of sustainable energy development
Authors:
C. Greenwood; A. Hohler; M. Liebreich
Publisher:
United Nations [UN] Environment Programme , 2007
This report presents the current status of sustainable energy development, including the renewable energy and energy efficiency sectors. The information is intended to provide financiers and policy makers with an overview of the status of the sustainable energy market to help them weigh their commitments to the sector. Key findings that emerge from the report include:
- sustainable energy investment was $70.9 billion in 2006, up 43% since 2005
- during the first quarter of 2007, the overall upward trend continued
- sustainable energy accounts for a significantly larger share of generation investment than of installed capacity
- investment in sustainable energy is still primarily policy driven
- venture capital and private equity have increased from $2.7 billion in 2005 to $7.1 billion in 2006, and are expected to continue growing in 2007
- public market activity surged in 2006, with $10.3 billion raised, more than double the $4.3 billion in 2005
- new asset financing in renewable energy generating plants in 2006 was $27.9 billion, an increase of 23% over 2005
- mergers and acquisitions activity was up 34% in 2006, with deals valued at $16.9 billion
- currently, $18 billion is under management in approximately 180 investment funds that are focused on sustainable energy
- carbon funds total $11.8 billion, with the private sector providing most of the new money coming into the market
- energy efficiency is a significant, but largely invisible market, which is attracting increasing attention as investors realise its role in addressing growing global energy demand
- capital has shifted to developing countries, which saw higher private investment in 2006.
The authors conclude that sustainable energy markets are becoming more liquid and more global. The various forms of capital deployed across the value chain signal the sector’s shift into the mainstream. Given the maturing sector fundamentals, the recent capital build-up does not appear to be a sign of short-term volatility, but part of a longer-term trend. With individual sectors there is considerable volatility, however, risk and uncertainty can be diversified across technologies and geographies.
