Wind, solar farm finance at record in Q3, report says

LONDON Thu Oct 13, 2011 8:21am EDT

Workers install solar panels on the roof of the Palexpo Exhibition Center in Geneva October 12, 2011.   REUTERS/Denis Balibouse

Workers install solar panels on the roof of the Palexpo Exhibition Center in Geneva October 12, 2011.

Credit: Reuters/Denis Balibouse

LONDON (Reuters) - Wind farm and solar park financing surged to a record $41.8 billion in the third quarter, even though clean energy share prices and the European economy slumped, a report by research firm Bloomberg New Energy Finance said on Thursday.

Asset financing of utility-scale renewable energy projects was 27 percent lower in the third quarter last year at $33 billion.

The increase in financing was mainly driven by offshore wind investment. Three large offshore wind farms in the North Sea totaled more than 1 gigawatt in capacity and $6.3 billion in investment.

There were also large financings for photovoltaic (PV), solar thermal and biofuel projects in the United States, a geothermal plant in Indonesia and onshore wind projects in Brazil and China, the report said.

"Over the past three years we have seen extraordinary falls in the prices of clean energy equipment -- wind turbines and solar photovoltaic panels. As these figures show, this has driven up installation rates and asset investment levels," Michael Liebreich, chief executive of Bloomberg New Energy Finance, said in a statement.

"However, there is still not enough demand to soak up significant over-supply, so prices and margins have remained under pressure and manufacturers' share prices are being crushed," he added.

The average price of PV modules has fallen by a third since autumn 2010 and by 70 percent since mid-2008, while wind turbine prices have fallen by 20 percent since 2009, the report showed.

This has made renewable energy technologies more cost-competitive with fossil fuel power sources but have been painful for supply chains.

However, renewable energy stocks have lagged fossil fuel energy and wider global stocks over the past few months and the year to date, underperforming as world shares slid on concerns about slow global economic growth.

Wind power shares have fallen sharply as the risk of further fiscal tightening weighed on a sector which depends on government support.

Overall new investment in clean energy -- including asset finance, equity raisings on public markets and venture capital and private equity -- was $45.5 billion in the third quarter, up 16 percent on Q3 2010, the report said.

In the third quarter, merger and acquisition activity in the clean energy sector rose 59 percent to $25.9 billion from Q3 2010.

Large acquisition deals in the past three months included EDF's purchase of 50 percent of its renewable energy arm EDF Energies Nouvelles for $7.9 billion and Toshiba's takeover of Swiss electronic metering firm Landis+Gyr for $2.3 billion.

(Reporting by Nina Chestney)

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