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Global renewables investment fell in 2012 on weak economy
Published in The Saudi Gazette on 13 - 06 - 2013

JEDDAH — Global investment in renewable energy fell last year for the first time since 2009 due to the effects of economic slowdown on US and European markets and a drop in solar technology costs, research showed Wednesday.
Renewables investment fell 12 percent to $244 billion last year, having hit a new high every year since 2004 - except in 2009 when the global financial crisis hit, said reports by the United Nations' Environment Program (UNEP) and Paris-based renewables policy organization REN21.
"The main reason for the decline in 2012 was investor concern over policies to support renewable energy in its longest-established markets, Europe and the US," UNEP said.
Last year, project developers, lenders and equity providers were unsure whether renewables subsidies would continue in countries such as the United States, Britain and Germany.
Several governments in Europe cut support for solar and wind projects as they implemented austerity measures in an economic slowdown.
Large-scale solar photovoltaic (PV) system costs also fell by around 40 percent, as excess capacity in the manufacturing chain squeezed selling prices and margins.
Last year's investment total, however, was still the second highest ever, six times the amount invested in 2004.
The total includes investments by venture capital and private equity funds, public markets, and through asset finance and mergers and acquisitions.
Investments in smart energy technologies such as smart grids, electric vehicles and power storage were not included.
Developing countries' investment, representing 46 percent of the world total, increased to a record $112 billion, while developed countries' investment fell 29 percent to $132 billion.
The geographical shift was fuelled by increasing demand for power in emerging markets and more favorable conditions and natural resources for wind, solar and geothermal technologies than in developed economies.
Total renewable power capacity rose 8.5 percent in 2012 to 1,470 gigawatts (GW). Wind power accounted for 39 percent of new renewable power capacity, followed by hydropower and solar PV, each accounting for around 26 percent.
Solar PV installations reached a record 30.5 GW last year, even though overall investment was down due to a fall in costs.
Installed wind capacity also hit a record 48.4 GW, up from 42.1 GW in 2011, but investment fell 10 percent due to the number of projects financed in 2011 and completed in 2012.
Meanwhile, Chevron Phillips Chemical Co., the petrochemical venture of US oil producers Chevron Corp. (CVX) and ConocoPhillips (COP), is exploring ways to expand in the Middle East, including building a new plant.
The US partnership would consider setting up a site on its own or in a joint venture, and the “entire” region is under consideration, Benny Mermans, head of Europe and Africa at Chevron Phillips Chemical's international operations, said in an interview at a petrochemical conference in Frankfurt.
The chemical company's owners are “very supportive” of growth plans, Mermans said. Woodlands, Texas-based Chevron Phillips, also known as CPChem, is already spending about $5 billion on a new ethylene plant, or cracker, and two factories making polyethylene in Baytown, Texas, to take advantage of cheap natural gas, which is used as a raw material as well as an energy source.
“Look at our ownership structure,” Mermans said. “We represent a fair share of their net income. By having that support, by creating margins, that provides us with a lot of legroom” for gaining resources for growth.
Chevron Phillips's operations in the Middle East include a venture in Saudi Arabia with Saudi Industrial Investment Group. – SG


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