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Clean energy investment fell 34% as incentives cut in Europe, BNEF says

New investment in renewable energy dropped to the lowest in two years in the first quarter, weighed down by low natural gas prices in the U.S. and subsidy cuts in Europe, Bloomberg New Energy Finance said.

Money flowing into the industry through asset finance, share sales, venture capital and private equity fell more than a third to $31.1 billion in the first three months of the year from a record $47.1 billion in the fourth quarter of 2010, the London-based researcher said today in a statement.

Countries including Germany and Spain have announced reductions in the guaranteed prices that they pay for electricity from renewable sources while in the U.K. the government is reviewing the rates. Gas in the U.S. in September fell to its lowest price since 2002 amid a glut in production.

“The first quarter saw a bit of a hangover from the hectic investment activity seen in the final months of last year as financiers rushed to close deals to meet their internal targets or to catch feed-in tariffs due to expire in countries such as Germany, Italy and the Czech Republic,” New Energy Finance Chief Executive Officer Michael Liebreich said.

The first quarter’s investment in wind farms, solar parks and other means of renewable power is the lowest amount since the $20.5 billion spent in the first quarter of 2009, according to New Energy Finance.

Asset finance dropped to $25.7 billion in the first quarter from $36.6 billion at the end of 2010, with the biggest falls in the U.S. wind and European solar power sectors, the analyst said. New investment in wind power in China rose by a fourth from the same three months of last year to $10 billion, and in Brazil, it doubled to $2.1 billion, BNEF said.

Sales of shares in alternative power companies fell to $3.6 billion from $8.1 billion at the end of last year, with transactions including a $1.4 billion listing by Sinovel Wind Group Co., the analyst said. Venture capital and private equity funding for renewables rose to $1.8 billion from $1.7 billion in the previous three months, according to the study.