Renewable Energy Projects Suffer in First-Quarter 2011

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GALWAY, IRELAND--April 20, 2011 --Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Renewable energy might be the shining star of future electricity generation in Europe, but investments in renewable projects have just suffered the weakest quarter since the worst period of the global recession.

In Europe, changes to renewable feed-in tariffs and policy changes in a number of major countries have helped frighten off investors. For the first quarter of 2011, new financial investment figures hit $31.1 billion globally, down one-third on the $47.1 billion recorded in the fourth quarter of 2010, according to the latest figures from Bloomberg New Energy Finance. Compared with Q1 last year, the 2011 investment total is down 10% and is the lowest recorded since the worst period of the recession in 1Q09, when renewable energy investments plummeted to $20.5 billion.

The lower investment level in Europe has been blamed on policy uncertainties in countries like Italy, Spain, France and the U.K. The figures also suggest that investors may have used Q1 to 'pause for breath,' following a busy period of investment in Q4 last year, when investors tried to make sure their projects qualified for subsidies before they expired. The worst-hit sector in Europe during the first quarter was solar.

Just this week Industrial Info reported that Italy is planning to slash solar power subsidies, while last month saw the U.K. drastically reduce its solar feed-in tariff structure. For additional information see April 19, 2011, article - Italy to Slash Solar Subsidies and March 25, 2011, article - U.K. Solar Industry 'Strangled At Birth. The one bright spot in Europe during the first quarter was investment in offshore wind, which although down 10% from the previous quarter, was helped by some large offshore wind infrastructure projects.

Industrial Info is tracking almost 1,000 active renewable energy projects in Europe with a combined value of more than $300 billion. Follow them in our Renewables Tracker database.

"Predictably, the first quarter saw a bit of a hangover from the hectic investment activity seen in the final months of last year as financiers rushed to close deals to meet their internal targets or to catch feed-in tariffs due to expire in countries such as Germany, Italy and the Czech Republic," commented Michael Liebreich, chief executive of Bloomberg New Energy Finance.

"However the high level of investment in emerging economies, particularly China and Brazil, is encouraging, he continued. "Whether 2011 turns into another record year for clean energy investment will depend in part on whether the improving cost-competitiveness of renewable power, particularly solar photovoltaics, can outweigh policy uncertainties that continue to dog several important developed economy markets. Neither the upheavals in the Middle East nor the Japanese nuclear crisis will have any short-term impact on clean energy, although in the long term, it may be a different story."

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