Investment in offshore wind up more than 300% in 1H2020, says BNEF

Renewable energy capacity investment showed great resilience
in the first half of 2020, in the face of the unprecedented economic shock
caused by the coronavirus, according to the latest figures from research
company BloombergNEF (BNEF).

Offshore wind financings in 1H 2020 totaled $35 billion, up
319% year-on-year and in fact well above 2019’s record full-year figure (a
revised $31.9 billion). The first half of this year saw investment decisions
made on 28 sea-based wind farms, including the largest ever, the 1.5GW
Vattenfall Hollandse Zuid array off the coast of the Netherlands, costing an
estimated $3.9 billion.

Other major offshore deals included the 1.1GW SSE Seagreen
project off the U.K., at an estimated $3.8 billion; the 600MW CIP Changfang
Xidao array off Taiwan, at an estimated $3.6 billion; and the Fecamp and Saint-Brieuc
projects in French waters, together totaling 993MW and $5.4 billion. There were
no fewer than 17 Chinese installations financed, led by the Guangdong Yudean
Yangjiang Yangxi Shapaat 600MW and $1.8 billion.

Albert Cheung, head of analysis at BNEF, commented: “We
expected to see Covid-19 affecting renewable energy investment in the first
half, via delays in the financing process and to some auction programs. There
are signs of that in both solar and onshore wind, but the overall global figure
has proved amazingly resilient – thanks to offshore wind.”

Tom Harries, head of wind analysis, said: “Offshore wind is
benefitting from the 67% reduction in levelized costs achieved since 2012, and
to the performance of the latest, giant turbines. But the first half of this
year also owed a lot to a rush in China to finance and build, in order to take
advantage of a feed-in tariff before it expires at the end of 2021. I expect a
slowdown in offshore wind investment globally in the second half, with potentially
a new spike early next year.”

Total Renewable Energy Investment 1H2020

Overall investment in new renewable energy capacity
(excluding large hydro-electric dams of more than 50MW) was $132.4 billion in
the first half of 2020, up 5% from a revised $125.8 billion in the same period
of 2019. Onshore wind investment slipped 21% to $37.5 billion, while that for
solar fell 12% to $54.7 billion.

Investment in new biomass and waste-to-energy plants fell 34%
to $3.7 billion, while that in geothermal jumped 594% to $676 million. Small
hydro projects of less than 50MW attracted an estimated $576 million, down 14%,
and biofuel production plants $250 million, down 82%.

Looking at the figures by location, China was the largest
market yet again, investing $41.6 billion in 1H 2020, up 42% compared to the
same period in 2019 thanks to its offshore wind boom. Europe secured $36.5
billion, up 50%, while the U.S. slipped 30% to $17.8 billion. Japan saw
financings rise 14% to an estimated $10.8 billion, but India fell 49% to $2.7
billion and Brazil was down 26% at $2.5 billion. The Netherlands were up 231%
at $6.9 billion, France up 306% at $6.2 billion, the U.K. 265% higher at $5.7
billion, Spain down 11% at $3.7 billion, and Germany up 20% at $3.6 billion.

Angus McCrone, chief editor at BNEF, said that a clearer
picture of the impact of Covid-19 on green energy investment will come with the
full-year 2020 figures. “Renewables have been helped by vastly improved
competitiveness and by investor appetite for assets offering secure cash flows.
However, project developers face the challenge that key people, whether at the
permitting, financing or construction stages, can’t meet face-to-face. And
buyers of small-scale solar systems are sensitive to changes in consumer
confidence.”

BNEF’s data for corporate-level investment in renewables and energy-smart technologies such as battery storage show that equity raising by specialist companies on public markets was $2.4 billion in the first half of 2020, down 43%. Investment from venture capital and private equity funds was up 10% at $2.5 billion.

The biggest deals on public markets were initial public
offerings by two Chinese solar companies, Jinko Power Technology and Trina
Solar, raising $366 million and $359 million respectively. The top ones in
VC/PE were private equity expansion round for Altus Power America, a U.S. solar
project developer, totaling $850 million; and a PE round of $300 million for Scale
Microgrid Solutions, a U.S. company putting together energy systems involving
solar and batteries.

Overall clean energy investment, including renewables
capacity financing and corporate-level equity deals, came to $137 billion in
the first half of 2020, up 4% on 1H 2019’s $131.9 billion.