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On Monday, Bloomberg New Energy Finance (BNEF) released a report indicating that global clean energy investment dropped by 43% as the demand for new renewable energy resources dropped in China, Japan and Europe.

The report noted that “third-quarter spending was $42.4 billion, down 43% from the same period last year and the lowest since the $41.8 billion reported in the first quarter of 2013.”

Clean energy investment take a hit

Michael Liebreich, chairman of the advisory board at Bloomberg New Energy Finance, said: “These numbers for Q3 are worryingly low even compared to the subdued trend we saw in Q1 and Q2. A vital point to bear in mind is that there have been sharp reductions in the cost of PV systems, so that much more solar capacity can be added this year than last, per million dollars.

“However, it is also clear that, after last year’s record investment levels, some key markets such as China and Japan are pausing for a deep breath. Also, in many countries, electricity demand growth is undershooting government forecasts.

“My view is that the Q3 figures are somewhere between a ‘flash crash’ blip, and a ‘new normal’.”

Finances enter dry patch

Abraham Louw, analyst for energy economics at BNEF, commented: “There is one special factor here, in the timing of offshore wind financings in Europe – these totalled $20.1 billion in the first six months of 2016, a runaway record. But there was then a summer lull, with just $2.4 billion in July to September.”

The BNEF report added: “The global Q3 investment figures could be revised upwards in due course, if more transactions come to light. However, with the Q1 and Q2 data an average of 23% down on the equivalent quarters of 2015, it looks certain that clean energy investment in 2016 will end up well below last year’s record of $348.5 billion.

“The third-quarter investment total of $42.4 billion was the weakest in any quarter since the $41.8 billion of Q1 2013. The highest quarterly total ever was $90 billion, in Q2 2015.”

Q3 2016 investment by country

To quote BNEF: “China was, as usual, the largest investing country in clean energy in Q3. However, its total of $14.4 billion was no less than 51% lower than it was in the same quarter of 2015 – reflecting a hiatus after last year’s rush to take advantage of incentives that were about to expire. The US was the second biggest market, with investment of $9.5 billion, down 40% on Q3 last year.

“Europe saw clean energy investment of $7.7 billion in Q3, down 5% on a year earlier, with the two main contributors being the UK at $2.7 billion, down 12%, and Germany at $2.6 billion, up 31%. Japan had investment of $3.5 billion, down 56%, while Brazil was down 40% at $1.3 billion and India down 26% at $2 billion.”