CLEAN ENERGY MARKET REVIEW Q

Transcription

1 CLEAN ENERGY MARKET REVIEW Q

2 Q Clean Energy Market Review This Clean Energy Market Review, by Clean Energy Pipeline, analyses venture capital, private equity, project finance, mergers and acquisitions, public markets and green bonds activity during CONTACTS Subscription Sonja van Linden Tol Research Thomas Sturge Data Thai Tran Chenwu Qian Editorial Andrew Nguyen Jack Pike Production Lex Guerra Media Partnership Matthew Jakubiec Centaur Media PLC (0) All rights reserved. No parts of this publication may be reproduced, in English or other languages, stored in a retrieval system or transmitted, in any form or by any means, without prior permission of the publishers. This includes hosting all or part of this publication online. Global clean energy investments, defined as the sum of project finance, small scale project investment, venture capital & private equity and public markets deal values, totalled $299 billion in Overall, 2017 was fourth strongest year for clean energy investment since 2009, falling short of only 2015 ($341 billion), 2011 ($319 billion) 2014 ($302 billion). The figure highlighted strong signs of recovery across several international clean energy markets after a dour 2016, which itself saw $17 billion fewer investments from the previous year. Europe down, APAC on the up Not only was European clean energy investment down in 2017, it was down by the largest margin across all global markets. Europe s clean energy market contracted by 15% overall to $61.39 billion 2017, compared with the $72.7 billion poured into the sector in Total investment in Africa & the Middle East slight decreased to $20.3 billion, while Latin & Central America remained fairly static at $22.89 billion of investment. Investors in Asia Pacific widened the gap even further as the most active clean energy market. Clean Energy Pipeline recorded a staggering $115 billion transactions across various APAC geographies in 2017, with strong performances in Australia, South East Asia, and China s offshore wind market helping to boost the total. However, North America saw the biggest gains in 2017 as clean energy investment shot up by 27% to $78.9 billion from the previous year. Great year for wind One definitive positive for 2017 was the marked improvement of global wind power financing, with thanks going in particular to the offshore wind sector. Total wind power financing surged to $141 billion in 2017, an over $24 billion improvement on In contrast, investors did not look so favourably upon the solar power sector as global financing fell by $6 billion to $116 billion. Clean energy investments by region in 2017 NORTH AMERICA $76B EUROPE $61B ROW $47B ASIA PACIFIC $116B

3 GLOBAL CLEAN ENERGY TOTAL INVESTMENT BY SECTOR Wind Solar Biomass Other 400 GLOBAL CLEAN ENERGY TOTAL INVESTMENT BY REGION Asia Pacific Europe North America Latin & Central America Africa & Middle East Clean Energy Market Review

4 PROJECT FINANCE TOTALS $231 BILLION IN 2017 Global clean energy project finance investments recovered sharply in 2017 as overall financing in the sector rebounding by 30% from With over $230.9 billion of deals taking place, the more than robust performance put in by developers and investors resulted in 2017 emerging as the second strongest year ever for clean energy project financing. Clean Energy Pipeline s data team found that project financing records were broken across almost all regions, involving Asia Pacific, North America, Latin & Central America, and Africa & the Middle East. However, Europe was the only market where overall project financing decreased, continuing a two-year slide, despite the uptick in solar PV and onshore wind investment. Asia Pacific In 2017, APAC came out as the leading market for clean energy project investment, stacking up $89.2 billion greenfield transactions. On the solar side, APAC project financing in 2017 increased by a respectful 29% to $27.5 billion. However, it was APAC s wind power sector that deserves the lion s share of plaudits for project financing in the year. APAC onshore wind finance increased by close to $5 billion to take 2017 s total to $40.6 billion, while offshore wind project financing almost doubled to $6.2 billion thanks to several large deals in China. North America North America sector followed with $63.7 billion, which also incidentally recorded the largest year-on-year increase at over 78%. Solar sector project financing volumes spiked by a considerable 86% to $25.3 billion, matched only by its onshore wind sector where yearly investments topped $34.6 billion, breaching the $30 billion mark for the first time. GLOBAL CLEAN ENERGY PROJECT FINANCE BY SECTOR Wind Solar Biomass Other 4

5 Europe Latin & Central America, Africa & Middle East It was only due to the dip in European project financing that prevented 2017 from becoming the strongest year ever for renewable energy. Overall, European clean energy project financing dropped by close to 9%, taking the year s total to $42.6 billion. However, it was not all doom and gloom for Europe s renewable energy sector. Financing in both Europe s onshore wind and solar PV sectors actually increased rather significantly in 2017 to $19.6 billion (+17%) and $7.5 billion (+71%), respectively. Peak performances were also put across a number of emerging markets in Latin & Central America and Africa & Middle East, culminating in project financing totals of $18.9 billion and $16.3 billion, respectively. Latin & Central America s clean energy sector experienced a bumper year on the project side as investments increased by 129% to $8.8 billion for solar and 22% to $9.6 billion for wind. Last year was also the strongest ever period for Africa & the Middle solar projects financing, which almost doubled to $10.9 billion from However, wind power investments dipped slightly to $2.6 billion. The reason for the overall drop in European renewables investment was down to a near 50% drop in offshore investment, where project financing in the sector totalled just $8.4 billion compared to the $16.4 billion recorded in GLOBAL CLEAN ENERGY TOTAL PROJECT FINANCE BY REGION Asia Pacific Europe North America Latin & Central America Africa & Middle East Clean Energy Market Review

6 GREEN BOND MARKET BREAKS $100B MILESTONE The global green bond market expanded to over $128 billion in 2017, far exceeding the proceeds raised in every previous year since the first use of the financing instrument. As projected, green bond issuances breached the $100 million barrier for the first time, and by quite the margin, increasing 34% from the $95.9 billion raised in Corporates were responsible for a total $37 billion green bonds of green bond raises in 2017, more than doubling their use of the financing vehicle. Government- and municipality-type issuances again almost doubled from $17.2 billion to $33.8 billion in Consecutive raises Throughout the year, green financing in the bond market incrementally increased from $29.4 billion in the first quarter to $37 billion by the final quarter in In fact, Clean Energy Pipeline s data team noted that green bond issuances had now increased consecutively over the past 11 quarters. Europe, green bond haven Almost half of green bond issuances last year took place in Europe, with $62 billion of proceeds raised overall. As a result, the European green bond market grew by 88% from 2016 to Additionally, the green bond market in Latin & Central America skyrocketed in 2017 to $11.6 billion, a considerable hike on the $1.7 billion reported in the previous year. Conversely, issuances in the Asia Pacific region fell almost 20% from 2016 to $30.7 billion last year. The Government of France came in at first position on the 2017 top issuers list, securing $9.3 billion of debt investment, followed by the Mexican Ministry of Communication and Transportation in second place with $4 billion in green bond funding raised. Since 2012, the European Investment Bank (EIB) has raised debt finance of $18 billion in the green bond market, making it the top issuer of green bonds. German bank KfW Bankengruppe is in second place having issued a series of green bonds amounting to just over $14 billion. 140 GLOBAL GREEN BOND ISSUANCES BY DEAL TYPE 2008 TO Corporate Development bank Government/municipality Green asset-backed securitisation Investment/commercial bank Project bond 6

7 Top 10 issuing countries and notable deals in 2017 Top 10 green bond issuing countries in 2017 Top 10 green bond deals in 2017 Country 2017 ($m) Since 2008 ($m) Issuer Deal value ($m) Date USA 19,065 74,580 France 18,537 36,999 China 16,118 48,355 Germany 10,939 33,949 Mexico 8,000 10,958 Spain 6,245 12,756 UK 5,386 10,678 India 4,372 7,034 Netherlands 4,343 16,542 Government of France 7, Aeropuertos y Servicios Auxiliares (Mexico) 4, Industrial and Commercial Bank of China 2, KfW Bankengruppe 2, Bank of Beijing 2, New York MTA 2, Government of France 1, Walney Extension Offshore Wind Farm 1, ENGIE 1, GLOBAL GREEN BOND ISSUANCES BY REGION 2008 TO Europe Asia Pacific North America Latin & Central America Africa & Middle East Clean Energy Market Review

8 M&A HITS RECORD HIGH FOR FIFTH CONSECTUIVE YEAR Clean energy investors once again broke the yearly record for M&A financing after $107.5 billion was invested into the market in The ongoing maturation of the renewable energy market meant that overall M&A investments have increased for the fifth consecutive year, also breaking the $100 billion marker for the first time. construction capacity, and 416 MW (+732%) of pre-construction capacity. In contrast, the total amount of wind power capacity being acquired actually fell by 18%. Regardless, the technology was still highly sought after among European investors as a staggering 11.1 GW of wind project capacity was purchased in Robust institutional interest in clean energy as a stable investment resulted in over $34.4 billion being spent on solar assets in 2017, increasing over 50% year-on-year, while wind sector M&A transactions again increased to a record $38.4 billion. The energy storage sector also began to come into its own as the technology attracted $2.6 billion of M&A deals over Europe leads global M&A market Europe s long-standing history in renewable energy meant that it continued to be the dominant M&A market. North America was the other market where investors increased their overall M&A project spend. The amount of North American solar project capacity acquired more than doubled to 15.6 GW in 2017, while wind project capacity increased by a similar margin to 21.3 GW. Investors also increased their project activity in Africa & Middle East, where 2.1 GW (354%) of projects were purchased, and Latin & Central America, where just over 2 GW (335%) of assets were acquired. The gap between Europe and the other markets widened even further after a whopping $43.9 billion of M&A transactions were reported in 2017, with investors increasing their spending power by 24%. Asia Pacific s place as a global force in renewables was further reflected in Clean Energy Pipeline s M&A figures last year, where the market was grounds for over $17 billion of transaction. In fact, Europe, APAC, Latin & Central America ($9.1 billion), and Africa & Middle East ($2.6 billion) all experienced record years for the amount spent on renewable energy assets. Only North America experienced a marginal dip in investments as M&A deal volume totalled $34.7 billion. Over 70 GW of global wind and solar acquired European solar projects acquisitions were largely responsible for why the market experienced such a strong year. Clean Energy Pipeline s data team tracked over 4.2 GW (+62%) of solar assets changing owners in 2017, split between: 2.2 GW (+14%) of operational capacity, 1 GW (+71%) of under 8

9 90 RENEWABLE ENERGY EFFECTIVE CAPACITY ACQUIRED Effective capacity (GW) In operation Under construction Pre-construction 120 GLOBAL CLEAN ENERGY M&A DEAL ACTIVITY Europe North America Asia Pacific Latin & Central America Africa & Middle East Clean Energy Market Review

10 VC/PE INVESTMENT DROPS TO LOWEST SINCE 2010 Venture Capital and Private Equity (VC/PE) financing tapered off in 2017 after total investment in the sector fell by 37% - a drop of over $3.6 billion. Overall, VC/PE investments in clean energy companies managed to surpass $6 billion. The relatively poor showing meant that clean tech VC/PE financing fell to its lowest point since The highest figure recorded came in 2011 when sector financing totalled $15.9 billion. VC/PE financing in 2017 was also responsible for the weakest quarterly performance on record, coming in Q3.17 at just $617 million. Compared with the $2.1 billion raised last year, solar investment dropped by over 50% to $963 million. In contrast, VC/PE investment in wind grew by over 121% to $2 billion in 2017, making it the only clean technology not to experience a downturn. This was also the largest VC/PE yearly investment figure documented in the wind sector since Declines across the board Geographically, VC/PE investments contracted across every market in Notably, Asia Pacific clean tech investment also decreased by 57% from $3.7 billion recorded in 2016 to $1.6 billion in Thankfully, Clean Energy Pipeline s statistics show that global VC/PE investment spiked to $2.2 billion in the next quarter. In Europe, VC/PE financing halved from $1.5 billion in 2016 to the $709 million recorded last year. Solar worst affected The solar industry has much to answer for the decline in Solar companies failed to raise more than $1 billion of VC/PE financing for the first time in four years. While North America remained the largest VC/PE market for clean technology, investment in the sector still fell by 12% to $3.6 billion. GLOBAL CLEAN ENERGY VENTURE CAPITAL & PRIVATE EQUITY North America Asia Pacific Europe ROW 10

11 PUBLIC MARKETS SHRINKS TO $8 BILLION Public market activity took a hiatus in 2017 as just $8 billion of proceeds were raised in company share offerings. Clean Energy Pipeline s data team placed 2017 as the lowest year for public offerings since 2012, marking a considerable downturn on the total $14.7 billion and $16.1 billion raised across global markets in 2016 and 2015, respectively. Renewable energy companies initiating initial public offerings over the course of 2017 totalled $5.6 billion, accounting for the 70% of the public market activity. Secondary offerings totalling $1.3 billion made up 16% of the clean energy public market deals, while the remainder consists of $1.1 billion of convertible note offerings. Core European & North American markets flounder In Europe, proceeds raised at the public offering level dropped 79% from 2016 to $1.5 billion in 2017, meaning $4.7 billion fewer proceeds raised. Moreover, capital raises in the North American public market almost halved from $3.3 billion in 2016 to $1.8 billion in On a more positive note, the Asia Pacific public market grew last year by roughly $600 million, aided in particular by Shanghai Environment Group Co. Ltd. s $1 billion IPO. Wind levels drops Public market activity in the wind sector shrunk from $7.2 billion in 2016 to $1 billion last year, while the solar industry offerings reduced by over 50% to $880 million in 2017 the weakest public market year for the technology. European and North American public market activity notably cooled in GLOBAL CLEAN ENERGY PUBLIC MARKETS BY REGION Asia Pacific Europe North America ROW Clean Energy Market Review

12 RENEWABLE ENERGY DISCOUNT RATE SURVEY RESULTS Grant Thornton and Clean Energy Pipeline s market leading cost of capital survey is now available for download here, providing valuable insight and data points to help investors determine the fair value for renewable energy projects. Spearheaded by Tomas Freyman, Valuations Partner at Grant Thornton UK LLP, the Renewable Energy Discount Rate Survey 2017 report drew on the responses of over 100 investors, representing billions of pounds of capital under management, across ten strong renewable energy markets. Respondents to the survey gave their views on levered and unlevered cost of capital across hydro, solar, onshore wind and offshore wind projects. Key findings in the market leading survey include: - Unlevered discount rates across Europe and North America average 6%, 6.5% and 7.5% for solar, onshore wind and offshore wind respectively; - Unlevered discount rates in the Nordics average 5% for hydro; and - Unlevered discount rates in Australia average 6.75% and 7.5% for solar and onshore wind respectively. Investors have to rely on their own experience and advisory teams when evaluating cost of capital for their investments, Freyman explained. Given the substantial amount of capital being poured into the sector, it is crucial to have the most accurate data-led insight across the spectrum of renewable energy technologies. The results of the survey only serve to enhance the picture when valuing projects in this multi-billion pound market. 12

13 LATEST CLEAN ENERGY MARKET REPORTS Get your free copy of our latest market reports at: Renewable Energy Discount Rate Survey Results European Wind Investment 2017 Solar Infrastructure Investment in South East Asia US Renewable Energy Brief - Tax Equity Landscape Clean Energy Pipeline understands the global renewable energy investment landscape and delivers real-time news, transaction data and analytics on this increasingly complex sector. Our in-house team identifies the latest investment, M&A, project finance, fund and regulatory announcements. In addition, we deliver proprietary content including interviews, analysis, insight reports and events. Find out how we can support delivering on your business objectives by contacting: Sonja van Linden Tol on +44 (0) or sonja. vanlindentol@cleanenergypipeline.com Clean Energy Pipeline 79 Wells Street London W1T 3QN Tel: +44 (0) For more information about Clean Energy Pipeline: Clean Energy Market Review

14 DRIVING GREEN INVESTMENT Clean Energy Pipeline understands the global renewable energy investment landscape and delivers real-time news, transaction data and analytics on this increasingly complex sector. Our in-house team identifies the latest investment, M&A, project finance, fund and regulatory announcements. In addition, we deliver proprietary content including interviews, analysis, insight reports and events. Find out how we can support delivering on your business objectives. Sonja van Linden Tol on +44 (0) or Discount Code: Q