Clean energy investment interest persists even as returns lag. State-led efforts have driven growth of solar energy in China, while wind power has been the focus in the U.S. and Europe. U.S.-based investment has been tempered by the shale oil boom and the removal in 2012 of tax credits that had led to a surge of investment. Crude oil remains the primary foil to the continued growth of clean energy investment, with coal’s influence fading.
Growth slows: Investment in clean energy topped $300 billion annually from 2015 to 2017, but likely won’t in 2018. China’s share of global investment has grown since 2011.
Going clean: Investment in clean energy private equity out- paced that of non-renewable in 2018 for the first time since 2012. Performance has been mixed; the non-renewable internal rate of return has averaged about 8% vs. 4.1% for clean energy since 2008.
Public funds up: Managers held $67 billion in public equity clean energy strategies in 2018, the majority of which was in globally focused equities. Sept. 30 AUM was unchanged from the start of 2018, but up 15% since the end of 2016.
Mixed returns: Risk-adjusted returns of public equity strategies have mostly lagged the markets over the five-year period.** Only 2% of strategies outperformed the S&P 500, with 20% outperforming the MSCI ACWI.
*Through Sept. 30. **Through Nov. 30. Sources: Bloomberg New Energy Finance, Preqin LLC, Bloomberg LP