Investment by Type
Global research and developmentii declined 2% in 2013, to USD 9.3 billion, a modest reduction given that most "green stimulus" programmes expired duringthe 2011-2012 period. Nearly every region held steady or saw growth, with the exception of Asia-Oceania (excluding China and India), where R&D investment fell by 12%. Globally, the private sector invested more than the public sector for the third consecutive year, although the difference was marginal, with private investment falling by USD 300 million to USD 4.7 billion, and public investment rising USD 100 million to USD 4.6 billion.
Total R&D spending on solar power declined 2% in 2013, to USD 4.7 billion, but the sector still received more funding than did all other technologies combined for the fourth consecutive year. R&D investment in wind and ocean power declined slightly, while it was up slightly for bio-power, geothermal, and small-scale hydropower, and stable for biofuels.
Asset finance of utility-scale projects accounted for the vast majority (62%) of total investment in renewable energy, totalling USD 133.4 billion. However, it declined (13.5%) for the second consecutive year, to the lowest level since 2009. The decline is attributed largely to falling equipment costs, uncertainty over future energy support policies, and reduced investments by utilities.
Project funding declined in Brazil, India, Europe, and the United States, but it increased modestly in other regions. China sawthe largest amount of asset finance investment, accounting for 40% of the global total, thus consolidating its position as the world leader in deployment as well as manufacturing.
Wind power (USD 75.4 billion) accounted for more than half of global asset finance, even though it declined for the third consecutive year; solar power (USD 44.4 billion) followed, but it was down for the second year running, with the decline reflecting lower costs per MW installed.
Small-scale distributed capacity accounted for 28% of total investment, but it was down 25% to USD 59.9 billion in 2013, ending a six-year period of uninterrupted growth. This was a result of continued downward revisions of subsidies in Europe, as well as reductions in average system costs. Most of the major markets saw large declines in new investment: China, Germany, Italy, France, and the United Kingdom all recorded falls of between 50% and 80%. These were partially offset by a 76% increase in Japan, to USD 23 billion, driven by a generous solar feed-in tariff; and an 11% increase in the United States, to nearly USD 8 billion.
Public market equity raised by renewable energy companies and funds was the bright spot in 2013, rising sharply after its 2012 slump and recovering to the average level of the previous five years. Spurred by renewed interest in clean energy stock offerings, investment in public markets increased by more than 200% to USD 11.1 billion. All technologies experienced growth, with the exception of small hydropower and ocean energy, which saw declines of 81% and 71%, respectively. Solar power (up 111%) was far ahead of others, with USD 4.8 billion, followed by wind (USD 2.6 billion), geothermal power (USD 1.6 billion), and biofuels (USD 1.5 billion). The WilderHill New Energy Global Innovation Index (NEX), which tracked 96 clean energy companies, rose 53.9%, making 2013 its best year since 2007.
ii - See Sidebar 5 in GSR 2013, "Investment Types and Terminology," for an explanation of investment terms used in this section.
Venture capital and private equity investment (VC/PE) in renewable energy fell sharply in 2013, down 46% to USD 2.2 billion. This was the third consecutive year of decline, and investment reached the lowest level since 2005. The decline reflected the shortage of successful exits by VC/PE-backed companies in recent years, and by the depleted cash holdings of many clean energy venture funds. Although the United States saw VC/PE capital raisings fall from USD 2.8 billion to USD 1 billion, it remained the largest venture capital and private equity market, with twice the VC/PE investments of Europe.
Solar power was the biggest loser, with venture capital and private equity investment down more than two-thirds from its 2012 level, to USD 549 million. This was an indication that investors remained scarred by the insolvencies resulting from chronic global overcapacity since 2008. For the first time in a decade, VC/PE investment in wind exceeded that in solar power. Wind power was the only technology to see an increase in 2013—it rose by 70% to USD 1 billion.
Mergers and acquisition (M&A) activity—which is not counted as part of the USD 214.4 billion in new investment—continued the decline that began in 2012, to its lowest volume since 2006. Total acquisition funding in 2013 stood at USD 53.7 billion, down 11% since 2012, and nearly USD 20 billion belowthe peak level reached in 2011. The nominal value of renewable power assets acquired or refinanced declined by 18% to USD 39.9 billion. In contrast, the corporate buying and selling of companies increased by 45% to USD 11.5 billion, reversing the dynamic seen in 2012. Trade in renewable power projects still accounted for the largest share of overall activity—some 75% of the total— but this was down from 81% in 2012.