The Impact of the Economic Downturn on the Renewables Sector

Table of Contents

DATAMONITOR VIEW

• CATALYST
• SUMMARY

ANALYSIS

• There was considerable warning of a global economic recession (1/2)
  • There was considerable warning of a global economic recession (2/2)The timeline that led up to what we now refer to as a global recession was firmly rooted in toxic mortgage-related debt traded on global capital markets by the major investment banks.
  • The ' greatest' recession is currently affecting the advanced economies
  • Datamonitor recognizes the speed and depth of the downturn in the UK
  • With the downturn come the market opportunities for innovators
  • Output has fallen globally and is set continue this trend for the foreseeable future
  • Equity markets around the world reflect the crisis in investor confidence
  • The business cycle has seen six recessions since 1970
  • Securitization has been at the root of the credit problem
  • The circular flow of income illustrates the capital funding dilemma
  • The paradox and failure of expanding credit has hurt renewablesAlthough securitization expanded credit, this ultimately led to a process that defined the 2007 08 credit crunch.
  • The idea of renewables as ' distressed' assets will not help green growth
• The price and opportunity cost of commodities will play an important role in renewables investments
  • Oil and gas prices will influence the uptake of green energy and the EU Emission Trading Scheme
  • Current generation spreads favor fossil fuel-fired plants
  • However, the power curve shows positive price signals to generate
  • UK coal will be the input fuel of choice at future EU ETS prices
  • Economics and environmental obligations do not mix well
  • On average, prices have been in favor of alternative sources of generation
  • Price signals have to remain over a longer period to be effective
• According to the Stern Review, global growth rests on renewables
  • The use of fiscal force to assist a ' winner' is a dangerous strategy
  • A purely government-led recovery should be side-stepped through 2009
  • The economy should be decoupled from ' decarbonization
  • A simple SWOT analysis highlights the concerns and complexities surrounding renewables
  • The results show that, all other things being equal, renewable growth is uncertain in today' s recession
  • Datamonitor' s Financial Deals Database shows that the economic downturn offers a silver lining
  • The European wind market attracts the biggest deals by value1
  • Deals by regions illustrate Europe as a target destination
  • Wind and solar energy are the chosen technologies in Europe
  • By deal value, the EU is a highly attractive region for investors (2006-2009)
  • Two out of five deals globally are made in the EU region (2006-2009)
  • Adopting the Green New Deal will be important for the understanding of global renewable investment
  • The Keynesian Green New Deal ticks the boxes, but may fail to convince
  • Future forecasts predict light at the end of the tunnel
  • Government action and regulation will be the best signal to invest
  • The threat of nuclear remains a barrier to renewable success
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FIGURES

• Figure: There was considerable warning of a global economic recession (1/2)
• Figure: The ' greatest' recession is currently affecting the advanced economies
• Figure: Output has fallen globally and is set continue this trend for the foreseeable future
• Figure: TypeFigTitleHere
• Figure: The business cycle has seen six recessions since 1970
• Figure: Securitization has been at the root of the credit problem
• Figure: The circular flow of income illustrates the capital funding dilemma
• Figure: TypeFigTitleHere
• Figure: Current generation spreads favor fossil fuel-fired plants
• Figure: However, the power curve shows positive price signals to generate
• Figure: UK coal will be the input fuel of choice at future EU ETS prices
• Figure: Economics and environmental obligations do not mix well
• Figure: According to the Stern Review, global growth rests on renewables
• Figure: A simple SWOT analysis highlights the concerns and complexities surrounding renewables
• Figure: The European wind market attracts the biggest deals by value1
• Figure: The European wind market attracts the biggest deals by value1
• Figure: Deals by regions illustrate Europe as a target destination
• Figure: Wind and solar energy are the chosen technologies in Europe
• Figure: Wind and solar energy are the chosen technologies in Europe
• Figure: By deal value, the EU is a highly attractive region for investors (2006-2009)
• Figure: Two out of five deals globally are made in the EU region (2006-2009)
• Figure: Future forecasts predict light at the end of the tunnel