Private investments in renewables jump

Renewable energy is in a "transformative" period as 2012 begins, with booming private investments but lagging public policies, a U.N. conference was told. An extensive analysis of the renewables industry by DB Climate Change Advisors, part of the asset management arm of Deutsche Bank AG, titled "2011: The Good, the Bad and the Ugly," was released last week at the 2012 U.N. Conference on Sustainable Development in Geneva, Switzerland. Chief author Mark Fulton, head of the firm's investment research, concluded that while investments renewable energy technologies from private sources set records in 2011, share prices of publicly traded clean-tech companies plummeted and political wrangling over renewables in the United States and the European Union put the brakes on growth. "Taking these trends together, as we begin 2012 we continue to believe that the global energy matrix is in a 'transition' phase right now -- at the start of a long-term mega-shift toward an 'end-state' scenario of cleaner, domestic sources of electricity supply; presenting a huge range of investment opportunities," Fulton wrote. That was the "good" of 2011 for the renewable energy industry: The long-term shift from carbon dioxide-producing energy was evident. The "bad" and the "ugly," however, included "key short-term challenges" such as the lack of clear political direction in the United States and Europe due to continuing opposition of conservatives who regard renewable energy policies as misguided and ineffective, the report contended. Also continuing to weigh against the shift to renewable energy were the high (but rapidly declining) costs of clean energy, as well as the considerable expenses necessary rebuild electric grid infrastructures at a time of economic turmoil and government funding cutbacks. Perhaps the most troubling development in 2011 for renewable energy was lower levels of public investment and the lackluster performance of publicly traded clean-tech companies, Fulton said. The Deutsche Bank report found that as of December, government investment in renewable energy worldwide was down nearly 25 percent (some $6.5 billion) compared with the same period in 2010. Clean energy stocks also have underperformed significantly compared with the broader market, it said. The major clean energy stock indices, including the DB Nasdaq OMX Cleantech Index, fell 36 percent in 2011 while the broader MSCI World Index fell 11.5 percent. "Share-price declines have been particularly severe for upstream players in the clean energy value chain, amid a glut of production capacity and razor-thin margins," Fulton wrote. Valuations for wind turbine and solar module manufacturers, for instance, are down nearly 50 percent since with their peaks in 2008. But despite the volatile market and wavering political support in the EU and United States, there was a "huge boom" in private investment in sector last year, the Deutsche Bank report found. A record was reached in the third quarter when $23.7 billion was poured into renewable energy project, dwarfing investments made by governments and venture capitalists. The trend demonstrates that "clean energy projects continue to be financed and built, despite uncertainty in the public markets," the report said. That was especially true in the United States, where nearly $27 billion was funneled into clean energy infrastructure investments in the first three quarters of 2011. In the third quarter, U.S. investments represented 36 percent of the global total -- marking the first time the United States has exceeded China's investments in the sector since 2007.