Renewables shrug off credit crunch

The global credit crunch had little discernable impact on the booming clean energy market, according to a report last week that found that alternative energy investments in 2007 were $20bn ahead of expectations.

The study from London-based research firm New Energy Finance found that global clean tech investments were up 41 per cent in 2007 to $117.2bn, despite the financial turmoil stirred up by the US credit crunch and fears over an economic downturn.

The firm said that non-financial investment drivers such as increased green regulation, growing political support for clean technologies and concerns over energy supplies, meant that the clean tech sector "weathered last summer's credit crunch well".

The report also noted that a shift in investors' focus from mature markets in the US and Europe towards clean tech companies and projects in emerging markets such as Brazil, India and China helped further insulate the sector against US credit problems.

Michael Liebreich, chairman and chief executive of New Energy Finance, said that he expected the clean tech sector to continue to prosper through 2008 despite ongoing concerns over the global economy.

"The wave of liquidity washing through the sector shows no signs of abating and, despite the dark clouds still massed over the world’s credit markets, 2008 looks set to be another banner year," he added.

However, he also warned that while progress was being made to scale up capacity in sectors such as wind, solar and biomass, many clean tech companies were still yet to deliver significant returns on investment.

"At the start of 2007 we said that the clean energy industry had to deliver clean, cost-effective power and fuels in large volume in order to justify investors’ enthusiasm [and] that remains just as true today: investors' enthusiasm still outstrips the industry's current contribution to solving the world's environmental and energy security problems," he said.

Wind power led 2007's investment boom, accounting for nearly half of all new project investment, while solar, biomass and energy efficiency projects also enjoyed strong growth. Only biofuel had a more muted year with soaring feedstock costs blamed for an investment growth rate of 30 per cent which compared unfavourably with 2006 growth rates well in excess of 100 per cent.