Clean Energy Pipeline 4Q12 and 2012 Investment Review

Clean Energy Pipeline 4Q12 and 2012 Investment Review

• Global clean energy investment posts first ever down year despite fourth quarter rally
• Project & asset finance increases 37% in 4Q12 as first South African projects close financing
• Wind M&A activity reaches record levels as Asian acquirers take centre stage
• Venture capital and private equity investment falls for fifth consecutive quarter

Category: Investment, Renewable Energy

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London and New York - January 10, 2013 (Investorideas.com renewable energy newswire) Clean Energy Pipeline, the online daily financial news and data service dedicated to the clean energy sector, today releases its preliminary analysis of venture capital, private equity, project finance, public markets and mergers and acquisitions activity during 4Q12 and 2012.

Total investment in the global clean energy sector recovered strongly to $67.6 billion in 4Q12, a 19% increase on the prior quarter. However, the end of year flurry could not avert an annual decline in investment volumes $256 billion was invested in the global clean energy sector in 2012, a 14% decrease on the $293 billion recorded in 2011. This is the first time that total investment has ever fallen year-on-year.

"Annual volumes couldn't keep increasing inexorably given low gas prices in the US , ongoing policy uncertainty and weak global capital markets." commented Douglas Lloyd, CEO of Clean Energy Pipeline. "However, the decline should be put in perspective. The $68 billion invested in 4Q12 was more than double the $33 billion invested throughout 2004."

Flurry of project finance in 4Q12

Global clean energy project & asset finance rebounded in 4Q12 surpassing $42 billion. This represented a substantial 39% increase on the $30.4 billion invested during the prior quarter and a 19% rise on the $35.5 billion recorded in the corresponding period last year. Despite this surge, project finance for the whole of 2012 actually declined 17% annually to $150 billion. This is the first time that global project finance has failed to grow year-on-year.

The resurgence in 4Q12 was underpinned by a series of large US wind construction financing and tax equity refinancing deals that were completed in anticipation of the expiry of the production tax credit at the end of 2012. Some 27 US wind farms secured financing totalling $5.5 billion in 4Q12, compared with only 8 projects ($2.1 billion) in the previous quarter.

Quarterly project finance activity was also boosted by all 28 projects in window one of South Africa's renewable energy procurement programme closing financing following the finalisation of PPAs with the state utility Eskom in early November. Some $5.7 billion debt and equity was invested in these projects, accounting for 7% of total project finance globally in 4Q12.

Investment in sub-1MW clean energy projects posted a modest 3% quarterly uptick to $24.2 billion in 4Q12 globally.

Wind M&A hits record levels

Global clean energy M&A activity totalled $18.3 billion in 4Q12, a 16% increase on the $15.4 billion transacted in 3Q12 and a 38% increase on the $11.4 billion recorded in the corresponding period last year. Despite high activity levels in 4Q12, M&A volumes posted a modest year-on year decrease in 2012 - 943 announced deals totalling $64.6 billion were recorded, down from 1,042 deals totalling $92 billion in 2011.

The quarterly increase was in part caused by a swathe of acquisitions in the wind sector. Wind M&A activity was boosted by GDF Suez, which announced the sale of a 60% stake in 363 MW of operational Canadian wind capacity to Mitsui and Fiera Axium in December 2012, and the $1.2 billion sale of a majority stake in Italy-based wind farm operator IP Maestrale to ERG Renew.

Asian companies were particularly notable for their international acquisition activity in 4Q12, announcing 12 transactions of non-Asian clean energy assets totalling $2.4 billion, significantly more than the $711 million announced in 4Q11.

Venture capital & private equity falls for fifth consecutive quarter

Global venture capital and private equity investment in clean energy (excluding buyouts) fell for the fifth consecutive quarter to $1.6 billion in 4Q12, a 9% decrease on the $1.8 billion secured in 3Q12 and a 36% decrease on the $2.5 billion recorded in the corresponding period last year. Venture capital and private equity investment (excluding buyouts) is now at its lowest quarterly level since the first quarter of 2009. Investment in the full year 2012 totalled $7.4 billion, under half the $15.3 billion invested in 2011.

Only investment in energy efficiency and energy storage companies bucked the trend, growing 19% and 25% respectively quarter-on-quarter to $390 million and $121 million in 4Q12.

SolarCity IPO the only bright spot amid dismal quarter for public markets

Clean energy companies only secured $162 million on the public markets in 4Q12, through a mixture of IPOs, secondaries and convertible notes. This is the lowest volume raised since the 1Q09. The only clean energy IPO in 4Q12 was US solar installation company SolarCity Corp, which secured $94.6 million through listing on the NASDAQ in December. This was only the fourth US clean energy company to complete a successful IPO in 2012.

Following a familiar pattern, a number of clean energy companies aborted IPOs last year. These included concentrated solar power (CSP) developer BrightSource Energy, Smith Electric Vehicles, CPFL Renovaveis and Elevance Renewable Sciences.

For further information on this press release and to receive a copy of the data on which this press release is based, please contact:

Douglas Lloyd
Founder & CEO
+44 (0) 207 251 8000
douglas.lloyd@vbresearch.com

About Clean Energy Pipeline

Clean Energy Pipeline, the online daily financial news and data service, is the leading independent source of information about the clean energy sector. Our premium suite of desktop and mobile services provides access to subscription-based business news, transaction data (VC/PE, M&A, project/asset finance and public markets) and a global directory of professionals active in the sector. Clean Energy pipeline also offers customised research and senior-level networking events.

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