Clean-energy projects struggle to secure funds

The Times
December 19, 2008
Robin Pagnamenta, Energy and Environment Editor

Global investment in clean energy technology, including solar power and wind power, has collapsed in the past three months after hitting record levels this year.
Venture capital investment in the industry reached a record $4.6 billion (£3 billion) in the first nine months of the year, despite a steep slowdown in the wider economy. This was 82 per cent higher than in the same period last year, according to a study published today by Ernst & Young.
However, Gil Forer, the accounting firm's global director of clean technology, acknowledged that conditions had deteriorated sharply. Enhanced regulation in Europe had, he said, contributed to the brisk growth in the first three months of this year, driving fresh investment into low-carbon energy sources, but venture capitalists were scaling back their investments as the global financial crisis dragged on.
John Dunlop, the head of energy for HSH Nordbank, the world's largest financier of renewable energy projects, said that the outlook appeared increasingly tough. “There is a long queue of wind and solar projects in Europe and the US that are looking for debt finance that are not getting it,” he said. “Debt is what drives the market, so 2009 will be a very difficult year.”

The warning of a steep downturn in activity comes as Ed Miliband, the Energy Secretary, is on Friday set to appeal for greater investment in low-carbon sources of energy at a meeting of oil-producing and oil-consuming countries in London.
The UK passed legislation this year to cut greenhouse-gas emissions by 80 per cent by 2050, becoming the first country to impose a legally binding national emissions-reduction target. European Union leaders also reaffirmed their commitment to cutting EU carbon emissions by 20 per cent by 2020, and to obtaining at least 20 per cent of energy from renewable sources and to achieving an overall 20 per cent reduction in energy use.
The British Government views a huge expansion of offshore wind and tidal energy schemes as a key priority. However, the problems in the industry could leave governments struggling to hit these ambitious goals.
On Thursday, the price of a barrel of US crude oil slipped to $38 a barrel, its lowest since July 2004, after a record output cut from Opec of 2.2 million barrels on Wednesday failed to bolster prices, which have plunged more than $100 from a peak of $147 in July.