Clean Energy Investment Drops in the First Quarter of 2015


April 23, 2015

Clean energy hasn’t been able to attract the same sort of investment during the first quarter of 2015 as it did in the previous year. Recent figures released by Clean Energy Pipeline show the total amount of investment in the sector declined by 5%. Could the investment pick up in the later quarters of the year?


Clear Energy Pipeline’s Findings
Clean Energy Pipeline, the news and data service dedicated to the clean energy sector, included data from venture capital, private equity, project finance, public markets, and mergers and acquisition sectors to their report published on Tuesday.


The analysis shows that the first quarter investment stood at $61 billion, which is 5% less than during the first quarter of 2014. It also dropped by a hefty 14% from the $71.3 billion worth of investments in the final quarter of 2014.


Douglas Lloyd, CEO of Clean Energy Pipeline, was quoted in a Clean Technica article saying, “Project finance performed well, registering a 10% increase over the same period last year. However, public market activity and venture capital and private equity investment underperformed significantly.”


Emerging Sectors
But there is also a lot of positivity in the clean energy sector, especially when it comes to two specific markets. China’s clean energy sector looks very promising. The country more than doubled its solar power energy input during the first quarter of 2015, so there is plenty going on in the country and investment opportunities are available. The problem in Chinese clean energy is often the lack of maturity in the private equity sector, which is still developing.


The other exciting sector to analysts is South Africa. The country has focused greatly on clean energy investment, providing plenty of opportunities for investors. According to a recent report by Bloomberg New Energy Finance, investment in South Africa increased to $3.1 billion during the first quarter of the year.


Private Equity Investment at a Five-Year Low
If you look at venture capital and private equity investment in clean energy more closely, the picture isn’t much better. In fact, investment dropped to a five-year low. If you exclude the buyouts, the data shows venture capital and private equity investment just stood at $1 billion. This is a 46% drop on investments from the $1.9 billion invested in the final quarter of 2014. Furthermore, it is the fourth consecutive quarter for private equity investment to fall.


According to Clean Energy Pipeline’s analysis, this is a “direct result of investment collapsing in solar and energy efficiency companies”. The first quarter saw $214 million invested in this sector. Fundraising was also weaker, as solar companies managed to raise only $190 million. This is a 46% decrease from the quarterly average of $352 million.


Clean energy sector is still maturing and there is plenty of work to be done. It is uncertain how long private equity investment will continue to fall. It could be that, if energy investment increases continue to take place in the emerging economies, more PE investment could start flowing to the sector and give the sector a boost in the final quarters.

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