Clean energy financing reaches $100bn in 2006

London, 21 December: Renewables and low-carbon technology attracted a record $100 billion in finance during 2006, according to New Energy Finance.

Michael Liebreich, chief executive of the UK-based analyst, said: "What looked like it would take a decade has been achieved in three years. 2007 will be a critical year for the clean energy industry. What we have clearly seen is that there is absolutely no shortage of capital, but now the industry has to deliver. We need to see clean, cost-effective power and fuels in large volume."

With around two weeks of the year to go, the consultancy said that $70.9 billion of new investment came into the market in 2006, up 43% on 2005. A further $29.5 billion came from mergers and acquisitions, leveraged buyouts and refinancing of assets.

Some of the most substantial deals were done on the stock markets, with $10.3 billion raised via initial public offerings (IPOs), up from $4.3 billion in 2005 and $0.7 billion in 2004.

Interest in public listings was spurred on in the first quarter of the year by President George Bush's state of the union address, in which he called for an end to the US addiction to foreign oil.

There was a second spurt after the publication of the UK government's Stern Review at the end of October, which warned of the financial consequences of failing to address climate change, and the US mid-term elections at the beginning of November, which saw control of Congress swing from the Republicans to the Democrats.

Solar and biofuels attracted the most investment on the public markets, with the technologies raising $4.4 billion and $2.5 billion respectively. Interest in solar nearly doubled, while the biofuels sectors raised 10 times as much in 2006 as in 2005.

Frankfurt saw the most IPO activity, registering 15 clean energy deals, between them raising $2.6 billion. NASDAQ came in second, with 21 deals worth $1.7 billion, followed by the London Stock Exchange's AIM, with 29 deals worth $1.2 billion.

The volume of venture capital and private equity investment activity grew 167% compared with 2005, to more than $7 billion. Most of this cash was invested in biofuels.

But not every segment of the market will be celebrating a prosperous year. Specialist carbon market service providers such as brokers and fund managers raised only $67 million from the public markets over the year, down from $465 million in 2005. New Energy Finance put this down to a combination of factors, including the crash of the price of carbon in the EU Emissions Trading Scheme in April.

"What we are seeing is the shape of an entire new section of the world's energy infrastructure coming into focus: what sectors it consists of, where it sits geographically, what industries it will draw on, and how it gets funded," said Liebreich.