That, of course, is a vicious circle: with smaller subsidies on offer, investors in the sector – whether debt or equity – find it harder to make the sums add up.
Both the UK and Germany have cut back on solar subsidies, for example, throwing their respective industries into similar levels of chaos. And as big an issue as governments offering fewer financial incentives for clean energy is the fact that they’re changing the rules. What investors crave above all, particularly for long-term projects, is certainty.
"Renewables have many virtues, and some areas – wind, for example – are attracting new investors," says John Balsdon, a partner in the energy practice at Herbert Smith. "But you’ve still got huge technology risk and the regulatory regime for clean energy is far from clear."
Several governments are trying to rectify that issue as they battle to keep the promises they have made on renewables. The pledge across the European Union is for 20% of power generation to come from renewable sources by 2020 and in some cases the figure is even higher. Right now the figure is just 13%.
Yet the evidence from the funding markets suggests that there is much more work to be done. Over the six months to the end of March, project finance for clean energy in Europe totalled $54 billion according to a study from investment analysts VB/Research. In the previous six months, the figure was €77 billion.
Martin Bichgreitz, a senior vice-partner at Denmark’s Dong Energy Wind Power, says the only hope for companies like his is to look farther afield – his recent pitches have been made to large corporations, a range of institutional investors and banks in Japan. "There is a lot of interest out there if you can offer projects with the right characteristics and transparency – but bank financing and project financing is only going to get tougher."