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Global investment in renewable energy hits 1H record in 2021
Growing amounts of capital are chasing clean energy projects, but the pace of investment needs to accelerate

$174 billion was invested in renewable energy globally in the first-half of 2021, up 1.8% on first-half 2020 and a record for the first six months of any year, despite the world still struggling to recover from the coronavirus pandemic.

Even more impressive are the figures recorded for fund raising by the BNEF renewable energy investment tracker: Renewable energy and related companies raised $28.2 billion on public markets, a leap of 509% from 1H last year. Venture capital and private equity funds raised $5.7 billion, up 111%, Both figures represent all-time highs.

Direct investment slows

Within the figures, however, direct investment in new renewable energy projects overall fell 12%; solar investment rose to a record breaking $78.9 billion, but wind asset finance declined to $58 billion.

While 30.5% down year on year, this latter figure compares with a bumper six months for wind in first-half 2020 as wind investment surged in China and the US.

However, wind in 1H 2021 was not without its highlights. RWE Renewables 1.4 GW Sofia offshore wind farm reached financial close. At $2.9 million per MW of capacity, the project is one of the cheapest in the UK, noted BNEF. The report also cited falling capital costs in the offshore wind sector as a factor behind the lower overall spend, a positive trend for developers and consumers alike.

Europe had a strong first half, with Finland emerging as the largest onshore wind market, doubling total investment from last year. Europe, the Middle East and Africa accounted for 36% of global wind investment, while the Chinese market remained robust, seeing $21 billion invested despite the end of feed-in premiums, a further indication of the competitiveness of wind as an energy source.

The solar market continued to shine brightly with total Chinese investment hitting $7.7bn and US large-scale investment reaching $11.7 billion in the first half of the year. Data visibility on small-scale solar, much of which is in Europe, is weaker, but the report cited pricing and customs data as indicating that it continues at a healthy rate “nearly everywhere”.

Capital flows

Fund raising is a good indicator of future investment. Funds are raised by renewable energy companies via a variety of methods such as share issuances and bond sales, providing finance to invest in new projects.

Merger and acquisition (M&A) activity is another indicator of future trends. Although this does not provide new money, it allows early stage investors to exit maturing companies and redeploy capital in new ventures. The BNEF report records $22.4 billion in corporate M&As and private equity buyouts in first-half 2021, up 25% on first-half 2020.

Overall, however, despite a record first-half and an increasing amount of capital chasing clean energy investments, BNEF analysts warn that an immediate acceleration in investment is needed to get on track for net zero emissions.

Photo credit: RWE AG

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