RenewableS 2013 GlObal STaTUS RePORT - REN21

03 INVESTMENT FLOWS
■■Investment by Type
Global research and development (R&D) spending on renewable
energy inched 1% higher to USD 9.6 billion in 2012, marking the
eighth consecutive year rise. (See Reference Table R9.) Global
R&D investment has almost doubled since 2004 in absolute
terms (up 93%); however, R&D spending by OECD governments
as a proportion of GDP is scarcely a quarter of its level 30 years
ago. 8 Europe remained the largest centre for R&D in total, but
China moved ahead on government spending. The United
States was the only region to show positive, although modest,
trends in both corporate and government outlays during 2012.
On the whole, government R&D spending rose 3% to USD
4.8 billion, while corporate R&D fell 1% to just below USD 4.8
billion, making public and private spending broadly equal for
the third year in a row. Solar power continued to dominate at
USD 4.9 billion, claiming just over half (51%) of all research
dollars spent, despite a 1% fall relative to 2011. It was followed
by wind power (up 4% to USD 1.7 billion), and biofuels (up 2% to
USD 1.7 billion).
Venture capital and private equity investment (VC/PE) in
renewable energy fell by 30% to USD 3.6 billion, the lowest level
since 2005, as VC/PE investors faced a bleak economic outlook
in Europe, China, and the United States. Other factors driving
the decline were overcapacity, plunging product prices, subsidy
reductions, and continuing policy uncertainty. Three-quarters
of the decline was in private equity expansion capital, and most
of the remaining decrease was in early-stage venture capital.
By contrast, seed funding, the earliest stage of VC, rose 146%
over 2011. While solar remained the largest sector for VC/PE,
it suffered the steepest decline, down 40% to USD 1.5 billion,
followed by investment in biomass and waste-to-energy, which
halved to USD 500 million.
Amid the economic gloom, new public market investment (in
stock markets) in renewable energy slumped by more than
60% to just over USD 4 billion, scarcely a fifth of the peak level
established in 2007. The main reasons for under-performance
of renewables shares were distress in the wind and solar
supply chains due to overcapacity and unease about policy
developments in Europe and the United States. Wind suffered
the most, down 72% to USD 1.3 billion. This left solar power as
the biggest issuer of new stocks, at USD 2.3 billion, despite the
fact that it was down 50% relative to 2011. Biofuels took third
place with USD 400 million, but shrank 43%.
Asset finance of utility-scale projects again made up the lion’s
share (61%) of total new investment in renewable energy,
totalling USD 148.5 billion in 2012. This was down 18% from
the record USD 180.1 billion in 2011, but ahead of the USD
143.7 billion in 2010. The utility-scale share of all renewable
energy investment was down four percentage points from 2011,
reflecting the rising share of total investment going to small (