Kate Mackenzie Positive news for renewables: financing begins to improve

A couple more good reports for the renewable sector were published today, both suggesting that credit conditions are beginning to improve.

Barcap, in its global demand forecast for European renewables, is raising its view of the solar sector to positive, and maintained a positive on the wind sector. Energy efficiency, however – which includes fuel cells, tidal power and sustainable buildings – remains at neutral.

Barcap says credit conditions are improving, and:

As the expectation for the availability of credit has begun to return, companies in the renewables segment appear to be some of the first to benefit.

Here is Barcap’s ‘Renewables health chart’ (they note that ‘An indicator above or below 20% indicates
a period of significant demand expansion or contraction.’):

Meanwhile, New Energy Finance has its forecast for the full 2009 year. In line with earlier forecasts, they expect new investment to finish 2009 between $95bn and $115bn, a drop of 26 per cent to 39 per cent on last year’s total of $155bn.

While total investment in clean energy will be lower for 2009, Q1 of this year may have been the bottom of the cycle as investment so far in Q2 has already a third higher, NEF said.

Most of that $185bn worth of green stimulus money, however, won’t benefit the renewables sector until 2010/2011; NEF estimates only 15 per cent will be spent this year.

The analysts also point to improving credit conditions and say bankers in the sector are “optimistic about a gradual improvement in the availability of project debt during the remainder of this year”.

Whether this good news is enough to meet climate change targets is another question; New Energy Finance restated its report earlier in the year that annual investment levels would need to triple to $500bn by 2020 to ensure that carbon emissions peak that year, which is the target set by the IPCC to avoid the most catastrophic effects of climate change.