Green energy gold rush: but not in Africa

Posted by Laura Grant on August 14, 2008
Posted in Business

Sustainable energy is attracting a rush of investment, says the UN Environment Programme. Last year, $148-billion in new funding entered the market, up 60 percent from 2006, according to a UNEP-commissioned report, “Global Trends in Sustainable Energy Investment 2008”. But Africa is lagging behind the rest of the world in green energy finance.

Sub-Saharan Africa, “arguably the region that has the most to gain from renewable energy,” remains largely unexploited, says the report. Though it did mention that South Africa’s renewable energy targets and the commissioning of the first wind farm were signs of change.

On the continent as a whole, asset finance rose to $1.3-billion in 2007, which is five times as much as in 2006 and reverses a gradual decline since 2004, the report said. Investment was mainly in biofuels and geothermal, and large-scale solar developments were initiated in North Africa.

Globally, wind energy attracted the most investment ($50.2-billion in 2007), but solar power grew most rapidly: attracting some $28.6-billion of new capital and growing at an average annual rate of 254% since 2004, the report said.

Achim Steiner, the head of UNEP, compares the increase in funding to a gold rush. “Just as thousands were drawn to California and the Klondike in the late 1800s, the green energy gold rush is attracting legions of modern day prospectors in all parts of the globe,” he said.

Europe attracted the most investment, followed by the USA. But investor interest is growing in China, India and Brazil, whose share of new investment has grown from 12 percent in 2004 to 22 percent in 2007 – from $1.8 billion to $26 billion, according to the report.

Sustainable energy accounted for 23% of new power capacity added globally in 2007 (31 gigawatts) – 10 times that of nuclear.

Michael Liebreich, CEO of New Energy Finance and co-author of the report, said: “2007 was a banner year for the clean energy industry. Wind continued its strong progress, with installed capacity passing the 100 gigawatt mark [in March 2008]. Solar is maturing rapidly, with heavy investment to ease the silicon bottleneck and new thin-film technology beginning to reach scale. And there are plenty of other technologies lining up to be the next ones to begin a real march to scale – including biomass and geothermal.

“Carbon Capture and Storage (CCS) is the only sector where we did not see as much progress as we had expected, with the regulatory and funding environments for these projects remaining murky and timelines for the first commercial projects being extended.”

According to the report:
– solar attracted by far the most venture capital and private equity investment ($3.7-billion). During 2007 Chinese solar companies raised $2.5 billion on the US and Europe equity capital markets.

– Biomass and waste to energy saw the fastest (432%) growth.

– Venture capital and private equity investment in biofuels fell by almost one-third in 2007, to $2.1-billion and has shifted to Brazil, India and China.

– Investment in energy efficiency technology reached a record $1.8-billion, an increase of 78% from 2006. North America attracted most energy efficiency investment during 2007, followed by Europe. The sector with the most potential for energy savings is buildings, followed by industry and transport efficiency.

According to the International Energy Agency, each $1 invested in energy efficiency an average avoids more than $2 needed to create new supply.

Pic by Chandar Marsono, www.flickr.com, creative commons licence

Comments

2 Responses to “Green energy gold rush: but not in Africa”

  1. Wessel Roux
    August 18th, 2008 @ 11:32 am

    Where can projects in Africa access funds to develop?
    We developed a method to extract ethanol from green waste and built bench-top plant to prove the process.
    Our approach to finance institutions for funding of a larger scale plant has been declined due to the fact that the process is not “proven technology”.
    That raises the question “How do you prove it in a large scale plant if you can’t raise the finance for it”

    Wessel Roux
    Morangaphanda Technologies
    http://www.moratech.co.za

  2. laura
    August 18th, 2008 @ 1:38 pm

    It’s a real shame when local people can’t get their ideas off the ground because of a lack of funding.

    Has anyone out there compiled a list of finance institutions/venture capitalists etc that are interested in investing in SA green technologies? There must be some somewhere.

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