Monday Study – The Growth Of New Energy In Numbers

Renewable Energy Investment Tracker, 1H 2021

August 3, 2021 (BloombergNEF)

Executive Summary

$174.3 billion Global new investment in renewable energy in 1H 2021 509% Increase in renewable public market offerings compared to 1H 2020 -30.5% Decrease in overall wind investment compared to 1H 2020 Global new investment in renewable energy This report summarizes BloombergNEF’s tracking of global investment in renewable energy up to and including 1H 2021. Globally, there was $174 billion of new investment in renewable energy in 1H 2021, an all-time high for a first half. A decline in renewable energy project investment was offset by a huge increase in public market offerings of renewable energy companies.

● This report covers new investment in renewable energy capacity, and equity raising by specialist companies in renewables and related areas such as energy storage. This total investment figure was $174.3 billion, up 1.8% from 1H 2020, but down 7% relative to a very strong second half of 2020.

● Renewable energy and related companies raised a total of $28.2 billion on public markets in 1H 2021, up 509% from last year. VC/PE expansion investment totaled $5.7 billion, up 111% on the previous year. Both figures represent all-time highs.

● In contrast, investments in new renewable energy projects were down 12% from the same period in 2020, at $145.8 billion in 1H 2021. Investment in large and small-scale solar projects rose to a record-breaking $78.9 billion, up 9.5% from 1H 2020. However, wind financing was down 30.5% from 1H 2020, at $58 billion.

● China was the largest market yet again, investing $45.5 billion in the six months to June 30, but down 20% compared to the same period in 2020. Europe drew $35.21 billion, while the U.S secured $32bn.

● This pack also shows trends in ‘funds in circulation’, which includes the refinancing of projects, mergers, acquisitions and buyouts. These deals totalled $68.3 billion in 1H 2021, up 17.6% year-on-year.

● BNEF also publishes an annual report called Energy Transition Investment Trends (web | terminal). That report covers more sectors of the energy transition, but is mainly focused on project investment and product sales. In contrast, this report is focused on renewable energy and covers both asset finance and corporate finance.

New investment in renewable energy held steady in 1H 2021

● Global new investment in renewable energy totaled $174 billion in the first half of 2021, a result that is just 2% more than the same period last year. However, investment has dropped 7% relative to a very strong second half of 2020.

● The first-half totals in 2020 and 2021 compare favorably to those of 2018 and 2019, when total investment was only $139 billion and $137 billion, respectively.

● New equity raised on the public markets hit record highs in 1H 2021, as did venture capital and private equity commitments to renewable energy companies. These were major contributors to the strong overall first-half figure.

● Investment in solar projects was up 9% year-on-year in the first half. In contrast, wind asset finance fell year-on-year, as 1H 2020 was a bumper period for financings of major offshore wind farms.

Investment in solar projects rose to a record $78.9 billion for the first half

● Investment in new solar projects in 1H 2021 was higher than in previous years, albeit lower than 2H 2020. Solar project investment often accelerates in the second half of the year to meet end-ofyear deadlines.

● Investment in solar projects in China rose to $4.9 billion in 2Q 2021. This is up from $2.8 billion in 1Q 2021 but down from $8.6 billion in 4Q 2020. The 2Q 2021 investment was largely driven by major financings of gigawatt-scale ‘subsidy-free’ projects developed by state-owned enterprises like China Energy Investment Corp. and Huanghe Hydropower, which must be commissioned this year.

● U.S. large-scale project investment rose to $6.4 billion in 2Q 2021, from $5.3 billion in 1Q 2021 and $10.9 billion in 4Q 2021. This was driven by a number of large projects closing.

● We have less visibility on small-scale solar investment (much of which is in Europe) due to lagging data availability. Nonetheless, pricing and customs data indicators suggests it is continuing at a healthy rate nearly everywhere.

Wind investment held strong in Europe, lapsing subsidies cool China

● Wind investment in 1H 2021 topped $58 billion, matching levels seen in 2018 and 2019, but was a notable reduction from the $85 billion invested in 1H 2020. Last year, installations surged in China and the U.S. ahead of subsidies lapsing.

● Investment in China, the world’s largest wind market, was robust at $21 billion in 1H 2021, showcasing that developers are continuing to build projects without feed-in premiums.

● EMEA accounted for 36% of all investments in 1H 2021.Europe had a strong first half, with Finland emerging as the top onshore market and already doubling total investment from 2020.

● Investments in offshore wind are blocky, and financing can fall either side of a year’s end. New-build finance in 1H 2021 was one-third of 1H 2020. Cheaper capex is also driving down investment. RWE’s Sofia Offshore Wind Farm reached financial close as one of the cheapest projects in the U.K., at $2.9 million/MW.

Public market issuances for renewable energy hit a record in 1H 2021

● Public stock markets provide the financing environment for most of the large and established players in renewable energy, including manufacturers, developers and some funds.

● 1H 2021 recorded the highest ever total for equity raised on public markets by clean energy companies, outpacing the volumes raised in any previous year. A bull run for clean energy shares enabled many companies to issue new shares to finance growth – though valuations are now down from their highs at the start of the year.

● Renewable energy and related companies raised a total of $28.2 billion on public markets in 1H 2021, up 509% from last year.

● Among the largest share offerings, Chinese renewable energy generator China Three Gorges Renewables raised $3.5 billion, PV manufacturer Longi Green Energy Technology raised $2.4 billion, and U.S. fuel cell company Plug Power pulled in $2 billion

A record period for venture capital and private equity investment

● Venture capital and private equity expansion capital have been key elements in the growth of renewable energy and storage since these technologies emerged. Young companies have tapped specialist early-stage funds for capital, well ahead of seeking public market flotations or trade sales.

● In 1H 2021, VC/PE expansion investment in renewable energy and storage companies totaled $5.7 billion, up 111% on the previous year. This was an all-time record in this space.

● The largest deals included $2.7 billion for NorthVolt AB, a Sweden-based battery manufacturer, and $374 million for Amp Solar Group Inc., a Canada-based renewable energy generator.

Global M&A activity boosted by a surge of deals in India

● Merger and acquisition activity is an important part of the renewable energy financing picture. These deals do not provide new money for technologies and developers but they enable early investors to make exits and redeploy capital on fresh opportunities.

● In 1H 2021, corporate M&A and private equity buyouts totaled $22.4 billion, up 25% on the previous year’s $17.9 billion.

● India outpaced the U.S. and China, which were the leading markets of 2020. The U.S. secured second position while China dropped to fourth behind Brazil.

● Among the biggest deals in this category were Adani Enterprises Ltd.’s sale of a minority stake in Adani Green Energy Ltd. to TotalEnergies SE for $2.5 billion.

● This was followed by Raizen Energia SA’s acquisition of Biosev SA to increase its footprint in South America’s energy market. SK Holdings Co.’s minority purchase in U.S. hydrogen fuel cell firm Plug Power Inc. for $1.5 billion was the third-largest deal.

● It is increasingly common for corporate entities to acquire the shares of developers with sought-after development and land rights for renewable projects rather than the assets themselves. This approach allows investors to secure these pipeline projects while managing risk exposure.

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