x Abu Dhabi, UAEFriday 19 January 2018

Green investments on the rise

Investment in green technologies may finally be rebounding after some of the toughest months on record, a top investment official at Masdar says.

Investment in green technologies may finally be rebounding after some of the toughest months on record, a top investment official at Masdar, the Abu Dhabi clean energy firm, said yesterday. More financing could be a lifeline for small renewable energy companies threatened with bankruptcy by last year's credit crunch, which throttled the flow of capital into environmentally friendly start-ups.

Masdar's outlook echoes expert findings that investment in the sector doubled in the second quarter, but will probably remain below "pre-crisis" levels in the near term. "Masdar is seeing some confidence returning to the market with more investments being proposed and executed," said Ziad Tassabehji, the director of utilities and asset management. "The market is still not as active as it was this time last year. There will be an extended period of time before levels of investment return to pre-crisis levels."

New investment in clean technology worldwide rose 82 per cent in the second quarter to US$24.3 billion (Dh89.25bn) from $13.3bn in the first quarter, according to estimates by New Energy Finance, a clearing house for data on renewables. The second-quarter figures were still down 32 per cent from the same period a year ago. Financing for renewables dried up during the credit crunch because it was often viewed as a sector with higher risk than conventional industries.

But analysts say a combination of improving sentiment in financial markets and new rounds of government stimulus focused on renewables could see investment increase to last year's levels. Mr Tassabehji said the extended downturn in investment "presents good investment opportunities as valuations of clean-tech companies are much more reasonable than last year". The company has taken direct stakes in firms overseas and funded smaller ones through its Clean Tech Fund.

Masdar's only major overseas investment this year was a 20 per cent stake in the ?2.2bn (Dh11.05bn) London Array, an offshore wind farm in the Thames estuary that is a major part of Britain's plan to develop green power and reduce greenhouse gas emissions. Masdar "will continue to selectively evaluate and pursue renewable energy investments throughout the remainder of 2009, both directly and through our funds business", Mr Tassabehji said.

New Energy Finance, the findings of which serve as a benchmark for the industry, found investment in the second quarter was highly concentrated in Europe, the Middle East and Africa. Only $1.6bn of new investment was recorded in the US, despite several large green stimulus programmes unveiled by the government. "The biggest problems for the sector remain the shortage of debt finance caused by the banking crisis," the firm said. "This may not be quite as acute as in the first quarter but is still delaying many renewable energy projects."

New Energy Finance estimates that governments across the world have committed $162.8bn to stimulate green development but most of the effects will not be felt until next year and 2011. cstanton@thenational.ae