Global Clean Energy Investment Is In The Spotlight Due To Policy Uncertainties: "
Clean energy is getting cheaper to generate every day. And as worldwide demand for energy continues to grow, governments are concerned about the security of their supply and the potential impact that burning more fossil fuels will have on global warming. As a result, investment in clean energy is running at record levels.
Nevertheless, clean energy still isn't economical on its own, meaning that government support--through subsidies and regulations--remains essential. Standard & Poor's Ratings Services sees a number of credit risks facing issuers in clean energy-related industries. These risks relate to the sustainability of renewable energy incentives and government policies on low carbon generation, along with transmission capacity constraints and the reliability of some newer technologies. In addition, there are geopolitical concerns arising from political unrest and/or an overreliance on fossil-fuel-producing economies, especially in the Middle East and North Africa.
The global economy will need to figure out a way to meet rising energy demand and constrain greenhouse gas (GHG) emissions so that global temperature rises do not exceed two degrees Celsius by 2050. The International Energy Agency (IEA) estimates that, to reach those goals, we'll need to invest more than $30 trillion in energy infrastructure over the next 25 years. According to the Pew Charitable Trusts, investment in clean power assets alone could reach $2.3 trillion over 2010-2020. However, that milestone may be difficult to achieve as governments try to cut spending.
In 2010, global investments in clean energy reached a record level of $243 billion--up by 30% compared with 2009. Collectively, the EU was the leading recipient of this finance, attracting a total of $94.4 billion. Investments in small-scale solar installations in Germany and Italy, for example, were about double their 2009 level, at $41.2 billion and $13.9 billion, respectively.
In Asia, clean energy investment rose 33% to $82.8 billion. China recorded a similar increase, up 39% to $54.4 billion, at the same time surpassing the U.S. as the country with the most installed clean energy capacity in megawatts.
It appears that , investor interest will remain high while considerable incentives remain for global clean energy development. However, the policies and regulations appear to be in a state of flux, due to the sometimes conflicting objectives of encouraging renewable energy investment and reducing the burden of subsidies on the taxpayer. Power generation companies and developers often bear the brunt of these policies, requiring substantial capital expenditures (capex) to build out capacity. Without adequate compensation, this capex could weaken their creditworthiness. And while government support mechanisms such as rate-based feed-in tariffs may underpin sector credit quality to some extent, we believe the sustainability of such mechanisms will continue to face intense scrutiny as governments focus on fiscal austerity. This, combined with the need to conform to climate policies, could force a deceleration of the record growth of investment in clean energy.
"
Clean energy is getting cheaper to generate every day. And as worldwide demand for energy continues to grow, governments are concerned about the security of their supply and the potential impact that burning more fossil fuels will have on global warming. As a result, investment in clean energy is running at record levels.
Nevertheless, clean energy still isn't economical on its own, meaning that government support--through subsidies and regulations--remains essential. Standard & Poor's Ratings Services sees a number of credit risks facing issuers in clean energy-related industries. These risks relate to the sustainability of renewable energy incentives and government policies on low carbon generation, along with transmission capacity constraints and the reliability of some newer technologies. In addition, there are geopolitical concerns arising from political unrest and/or an overreliance on fossil-fuel-producing economies, especially in the Middle East and North Africa.
Overview
- Market expansion in the growing and increasingly competitive global clean energy sector is occurring amidst a host of economic, geopolitical, and policy challenges facing the industry, especially related to public sector support of renewable energy and nuclear power generation.
- Policies and regulations appear to be in a state of flux. Recent moves by Spain and the Czech Republic to cut the subsidies applicable to existing operational renewable energy projects demonstrate to us that regulatory risk is assuming greater importance.
- We expect investor interest will remain high as long as incentives remain for global clean energy development. However, we believe governments may not be able to sustain these incentives.
The global economy will need to figure out a way to meet rising energy demand and constrain greenhouse gas (GHG) emissions so that global temperature rises do not exceed two degrees Celsius by 2050. The International Energy Agency (IEA) estimates that, to reach those goals, we'll need to invest more than $30 trillion in energy infrastructure over the next 25 years. According to the Pew Charitable Trusts, investment in clean power assets alone could reach $2.3 trillion over 2010-2020. However, that milestone may be difficult to achieve as governments try to cut spending.
Worldwide Investment In Clean Energy Hits A High
In 2010, global investments in clean energy reached a record level of $243 billion--up by 30% compared with 2009. Collectively, the EU was the leading recipient of this finance, attracting a total of $94.4 billion. Investments in small-scale solar installations in Germany and Italy, for example, were about double their 2009 level, at $41.2 billion and $13.9 billion, respectively.
In Asia, clean energy investment rose 33% to $82.8 billion. China recorded a similar increase, up 39% to $54.4 billion, at the same time surpassing the U.S. as the country with the most installed clean energy capacity in megawatts.
Changing Regulations Could Dampen Investor Interest In Low-Carbon Assets
It appears that , investor interest will remain high while considerable incentives remain for global clean energy development. However, the policies and regulations appear to be in a state of flux, due to the sometimes conflicting objectives of encouraging renewable energy investment and reducing the burden of subsidies on the taxpayer. Power generation companies and developers often bear the brunt of these policies, requiring substantial capital expenditures (capex) to build out capacity. Without adequate compensation, this capex could weaken their creditworthiness. And while government support mechanisms such as rate-based feed-in tariffs may underpin sector credit quality to some extent, we believe the sustainability of such mechanisms will continue to face intense scrutiny as governments focus on fiscal austerity. This, combined with the need to conform to climate policies, could force a deceleration of the record growth of investment in clean energy.
"
No comments:
Post a Comment