 |  | | Investment in clean energy weakest since 2013 as Asia slows Stagnating demand for new renewable energy sources in China, Japan and Europe was behind the lowest quarterly investment in clean energy globally in more than three years, Bloomberg New Energy Finance reported on 10 October. Some $42.4bn was invested in clean energy from July to August – a decrease of 41% from the same period last year – and the lowest since the $41.8bn recorded in Q1 2013, the London-based research company said. A reduction in state-backed incentives to build large wind and solar projects in many countries and the falling costs of such projects contributed to the downturn, said Michael Liebreich, founder and chairman of the advisory board of BNEF. Another factor was the lull in demand for offshore wind build in Europe after record spending in the first half of the year, according to Abraham Louw, a BNEF analyst who worked to compile the figures. Investors poured as much as $20.1bn into European offshore wind farms in the first half of this year, versus just $2.4bn in the third quarter. On a brighter note, European investment in clean energy rose 2% to $41.2bn in the first nine months of the year, compared with the same period in 2015 – with more of that sum financed by large utilities, showing a decreased reliance on bank funding. Companies financed almost 60% of the total, with banks extending project finance for the remainder. The results highlight the growing competition for wind and solar assets, which come with predictable yields, and also the financial clout of utilities including Dong Energy and Vattenfall that are opting to finance renewable energy projects alone. Utilities are embracing renewable energy and complementary technologies like energy storage to maintain earnings in the face of slumping power prices and a declining demand for electricity, said Francesco Starace, the chief executive of Enel in an interview with Bloomberg News. The industry must move quickly to embrace change – transitioning away from large conventional power plants and towards digital grid applications to help manage the growing amount of intermittent renewable energy, Starace said. Meanwhile, Argentina's most recent power auction saw an exceptional level of applications from renewable energy developers, which won contracts to sell 1,109MW of renewable electricity – 708MW of which from wind power companies and 400MW from solar power companies. The auction will drive as much as $1.8bn in investment, according to Sebastian Kind, the country's renewable energy undersecretary.
More than 60% of Argentina's power capacity currently comes from fossil fuels, but the country's recently-elected President Mauricio Macri aims to reverse that trend – with a new law requiring industrial consumer to source 8% of their power from renewables in 2017 and 20% by 2025. | |  | | Prices in Latin American auctions keep getting lower |  | | | Recent Latin American wind and solar auction results by source, generation and average price. In Mexico's second power auction, solar was the lowest-priced source averaging $31.9/MWh. Wind developers secured around 40% of contracts at an average price of $35.8/MWh, to be supplied by 1.2GW of capacity | |  | | Q&A of the week Record solar, wind prices chill future investors, says OPIC Record low prices for solar and wind energy brokered in auctions from Mexico to the UAE pose a threat to the clean energy industry, said Elizabeth Littlefield, CEO of the Overseas Private Investment Corp (OPIC). Prices are dropping so sharply that "countries are looking to re-negotiate the tariffs they have agreed with developers, [which is] extremely dangerous because… it has a chilling effect on future investors," Littlefield told Clean Energy and Carbon Brief in an interview. In some cases, tariffs are too low to justify investment, meaning that a project can only be realised with concessional financing, she added. OPIC, the development finance arm of the US government, has committed around $1bn annually to renewable energy projects over the past five years. From providing a loan and political risk insurance to a 158MW wind project in Senegal, to funding off-grid energy companies like SunFunder and Greenlight Planet, the agency is strongly in favour of clean energy where possible, said Littlefield. In addition to its climate and health benefits, it can also pose a significant economic advantage, she said. The Taiba N'Diaye wind farm in Senegal "will provide power at 11 US cents/kWh, which is less than half the 30 cents/kWh that Senegalese families are paying now." So the project will increase Senegal's generation capacity by almost a quarter and "also cut the price of power by more than half," she added. Low oil prices spell good news for renewables in developing nations, according to Littlefield. Countries including Senegal and Egypt have "taken advantage of low fuel prices to either remove or significantly reduce their fossil fuel subsidies, [which] has been a huge boon to the government budget." Once oil prices come back up, it will make renewable energy all that more attractive, she said. Littlefield also discussed the opportunities for off-grid power and microfinance in Africa and OPIC's investment strategy in the following Q&A, which was first published in this week's Clean Energy and Carbon Brief. Q: 2015 marked the fifth straight year that OPIC committed more than $1bn to renewable energy projects. Is this a growing area of focus for the organisation? A: We established renewable energy resources as a priority for the agency back in 2010 when I joined. Within three years we grew our annual renewables commitments to $1bn and we've averaged about that level ever since. As long as our overall portfolio is only $20bn, I don't see it growing much more per annum due to our need to manage a balanced portfolio of sectors and risks. Targeting between half a billion and $1.5bn every year is probably where we'll end up. Q: What do you find most exciting about the clean energy industry? A: A range of developing countries have taken advantage of low fuel prices to either remove or significantly reduce their fossil fuel subsidies and this has been a huge boon to government budgets in many cases, like in Egypt — sometimes as much as ten times what they are getting in aid. Now these subsidies are gone, when oil prices go back up again it will make renewable energy even more attractive. It will be interesting to watch how that changes the attractiveness of fossil fuels versus renewables in the next 10 years... | |  | | | | | | BNEF clients: download the BNEF mobile app for access on the go.
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