Project finance increases 12% to $44 billion ----YieldCo activity robust despite weak quarter for public markets deal activity ----Venture capital and private equity slips to five-year low
London and New York, April 21, 2015. Clean Energy Pipeline, the online financial news and data service dedicated to the clean energy sector, today releases its preliminary analysis of venture capital, private equity, project finance, mergers and acquisitions, and public markets activity during Q1 15.
New investment in the global clean energy sector totalled $61.0 billion in Q1 15, a 14% decrease on Q4 14 ($71.3 billion) and a 5% decrease on the corresponding quarter in 2014 ($64.4 billion).
"The first quarter of 2015 provided mixed messages," commented Douglas Lloyd, CEO of Clean Energy Pipeline. "Project finance performed well, registering a 10% increase over the same period last year. However, public market activity and venture capital and private equity investment underperformed significantly."
Project finance up 12% on South African and Asian deal activity
This brightest news from Q1 15 was a 12% annual increase in clean energy project finance to $44 billion. This was underpinned by a surge in deal activity in Asia - approximately $13 billion was raised for renewable energy projects in Asia in Q1 15, almost double the $6.9 billion invested in Q1 14.
Project finance was also boosted by the financial close of ten of the seventeen wind, solar and biomass projects in Round 3 of South Africa's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). Some $2.8 billion was secured for these projects, the most notable of which are the $880 million 100 MW Xina Solar One CSP plant backed by Spain-based Abengoa Solar and the $812 million 360 MW Khobab, Loeriesfontein 2 & Nouport wind portfolio developed by Irish project developer Mainstream Renewable Power.
There were also two notable offshore wind project finance deals in Q1 15. The 322 MW Nordsee 1 offshore wind farm in Germany secured $889 million debt financing from a group of ten lenders while the 30 MW Block Island offshore wind farm, which will be the first utility-scale project in US waters, also reached financial close.
YieldCos active despite weak quarter for public markets
Clean energy companies raised $2.9 billion on the public markets in Q1 15 through a mixture of IPOs, secondaries and convertible note issuances, a 42% decrease on the $5.0 billion secured during the corresponding period in 2014.
YieldCos continued to tap the public markets in Q1 15. Seven YieldCos raised a combined $1.4 billion, accounting for nearly half of the total volume secured. This is also a 47% increase on the $950 million quarterly average secured by YieldCos since the beginning of 2013. Notable public market deals by YieldCos in Q1 15 included the secondary offerings by TerraForm Power ($352 million), Pattern Energy Group ($351 million) and Abengoa Yield ($328 million).
Two notable IPOs also priced in Q1 15 - Chinese energy efficient lighting solutions provider MLS secured $155 million through an IPO on the Shenzhen Stock Exchange, and Israel-based solar optimisation firm SolarEdge Technologies raised $126 million through an IPO on NASDAQ.
M&A activity boosted by energy efficiency, wind and solar deals
Clean energy M&A activity totalled $12.5 billion in Q1 15, a 15% decrease on the $14.8 billion recorded during the corresponding quarter in 2014. The number of announced deals decreased 9% to 257 during the same period.
M&A activity in Q1 15 was driven by acquisitions in the energy efficiency, wind and solar sectors. Acquisitions of projects and companies in these sectors accounted for 80% ($10 billion) of total deal value in Q1 15. The most notable deals included GSR Ventures and Oak Investment Partners' acquisition of an 80% stake in LED components producer Philips Lumileds Lighting Company for $2.6 billion, Centerbridge Partners' buyout of wind turbine maker Senvion from Suzlon for $1.2 billion, and the Groupama's disposal of a 5% stake in Veolia Environment for $543 million.
Venture capital and private equity sinks to five-year low
Venture capital and private equity investment in clean energy (excluding buyouts) totalled just $1 billion in Q1 15, a 46% decrease on the $1.9 billion invested in Q1 14, making it the weakest quarter for investment since Q1 10. Venture capital and private equity investment in clean energy has now fallen for a fourth consecutive quarter.
The sharp decrease in Q1 15 was the direct result of investment collapsing in solar and energy efficiency companies. Only $214 million was invested in the energy efficiency sector, less than half of the quarterly average during the past two years ($433 million). Similarly, solar companies only raised $190 million, a 46% decrease on the quarterly average during the past two years ($352 million).