WWF’s EU climate tracker, on which I blogged earlier today, highlighted the inconsistencies in European approaches to supporting the green energy sector.
Now another report (apologies for the third of the day), shows the effect on the companies themselves.
The report comes from law firm Taylor Wessing and VB Research, which have conducted a survey of 200 industry executives and financiers to find out how difficult it is for green energy companies to find financing.
Worryingly for the sector, the survey found:
The early stage funding arena has been deserted by most venture capital funds and the private equity community en masse.
The survey highlights an acute early-stage funding gap for European corporates. This has been created by a funding drought that has seen average quarterly early-stage venture capital investment since 4Q08 drop 40% below total quarterly investment levels registered in 3Q08.
It appears the main reason for this is unclear or inconsistent government policy, especially when it comes to subsidies. The survey found:
During the next 18 months, surveyed debt providers are specifically targeting countries that have long-term financial incentives in place, such as feed-in tariffs – more than two thirds expect to provide debt financing in France, Germany, Ireland, Italy, Spain and the UK. In contrast they are waiting on the sidelines in eastern Europe (specifically not investing in Hungary, Romania and Bulgaria).
It is interesting that the financiers should mention Spain as a country to be targeted, since many in the industry blame it for spooking potential green energy backers by slashing its subsidies for wind and solar power plants earlier this year. But I guess an unstable subsidy is still better than none at all.
It is remarkable that at a time when Europe claims to be leading the way on promoting green energy that investment should actually be falling. Are governments talking up their green credentials without backing up such talk with policy action that could stimulate economic growth? It will be one point to raise Ditlev Engel, CEO of Vestas, the world’s biggest maker of wind turbines, when he answers your questions next Friday.