Clean energy investments decline in 2013, but emerging markets highly promising

Global investment in clean energy declined by 11% year-on-year in 2013, as a slowing global economy, the eurozone sovereign debt crisis and flattening interest by investors in financing cleantech ventures took their toll. Nonetheless, Japan and China showed continued strong demand for cleantech investments, demonstrating the growing pull of Asia as the world’s energy efficiency hub. In an environment of declining cleantech financing and development among Western economies, business transfer agents are increasingly looking to Asian corporate financiers to deliver venture capital and provide viable exits for their clients. As advisor of the year within the new energy, renewable and cleantech industries, we at Acuity are conscious of keeping our finger on the pulse of the global cleantech landscape.

The world’s total investments in clean energy amounted to $254 billion in 2013, according to The Pew Charitable Trusts’ “Who’s Winning the Clean Energy Race?” report. Although this total was down on 2012, there remain plenty of positives for the segment. Cleantech has firmly established itself part of the global economy, and the total investment market is likely to hover around the $250 billion mark in the medium term. Technologies are becoming less niche and more mainstream, with competition driving price declines that are enabling more developing economies and small and medium-sized businesses to adopt clean solutions. Vitally, major clean energy stocks saw an expansion last year and public financing in the segment was up by 176% annually.

States increasingly require fewer input costs as many have already laid down the foundation for a cleaner energy future. The next period of 5 to 10 years will see more countries developing start-up cleantech incubators, hoping to both cash in on exporting expertise as well as develop locally applied solutions. The key trend in 2013 was the growing transfer of cleantech demand from the traditional markets of the developed world to emerging countries that see energy efficiency as a way of cutting down investments in expensive transmission systems. This was demonstrated by a decline in annual clean energy investments among the G20 economies of 16% while non-G20 markets saw a rise of 15%. Countries such as Chile and Uruguay have seen the development of emerging domestic cleantech segments. 2013 saw the addition of 87 gigawatts of new clean power, expanding global capacity to a total of 735 gigawatts.

The Asia Pacific region, including Australia, saw a total of $102 billion in renewable energy investments in 2013. China is both the regional and global leader, seeing over $50 billion in investments, which has led to a fourfold increase in solar capacity. Perhaps unsurprisingly, Japan saw the strongest investment growth globally, rising some 80% to $29 billion last year. Following the Fukushima nuclear disaster, the country has been desperate to apply alternative energy technologies, especially as there are no domestic fossil fuels and there are major doubts on continued nuclear reliance.

Asia is where investor interest is peaking, and the region is rapidly becoming the ultimate destination for practical application of cleantech on an industrial level. It would be wise for sell businesses to develop links on the continent, as the movement of innovative clean technologies from West to East is well underway.

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