Auctions spur wind and solar in Africa; China looks offshore

The week in clean energy saw notable auctions in Uganda and South Africa while China unveiled plans to develop 10.5GW of offshore wind in three years.

Africa has seen several energy-related announcements in the last week: on 10 December, Access Power said it had won a contract to build two 5MW PV projects for $US17m as part of Uganda’s first solar auction. The Dubai-based developer expects to close financing next June. This is the East African country’s first tender awarding feed-in tariffs for solar power as part of the ‘GET FiT’ policy. Some 20MW of projects won support.

The program has granted support to 14 renewable energy projects in Uganda and the third non-solar tender opened in November. This was one of the policies that elevated Uganda to 10th place out of the 55 emerging markets covered by the Climatescope 2014 project, which was the subject of a recent Bloomberg New Energy Finance webinar. Climatescope enables users to assess the investment climate and policies for clean energy investment in 55 countries in Africa, Asia and Latin America & the Caribbean.

In other auction news, South Africa’s third renewable energy bidding round reached financial close on 11 December. A total of 17 projects amounting to 1.5GW were accepted in Round 3, of which a little of half was wind capacity. The government has also announced the winners of Round 3b, with 200MW of solar thermal on the table.

As we discussed in our report, South Africa is seeking to add 30GW of capacity by 2030 but the national utility Eskom is facing significant cash-flow issues, which are beginning to affect the country’s renewables tenders: the government was due to announce financial close for the third round in July, with the delay being due to grid connection issues and the costs involved. The next round has also been pushed back: the government said last Thursday that it would unveil the Round 4 winners on 15 December but a communication was released that day saying that this announcement would not be until early 2015.

Nonetheless, development of winning projects from earlier rounds continues: also on 11 December, Spain’s Acciona began operating its 74MW PV plant in the Northern Cape province – its first renewable power facility in South Africa and the biggest PV plant the company has built in the world. The project won support in 2012 in the second round of renewable energy tenders. In addition, Acciona has a 138MW wind farm under construction in South Africa.

Meanwhile, Abengoa said on 15 December that it had signed a power-purchase agreement for its third solar thermal plant in South Africa. The 100MW project – a Round 3 winner – will need nearly $US1bn in investment, with support from development banks including the African Development Bank and the International Finance Corporation; together with local private banks such as RMB, Nedbank and ABSA.

In wind, China issued plans on 12 December to develop 10.5GW of offshore projects in the three years through 2016. Jiangsu – home to the majority of China’s offshore wind projects – together with Guangdong and Fujian will have most of the new capacity. Jiangsu and Guangdong ranked fifth and sixth of the 15 Chinese provinces analysed by Climatescope 2014 in terms of overall support for renewables.

Hanergy said on 12 December that it intends to open a thin-film solar panel factory in Hunan province by 2016. On the same day, another maker of solar panels, JinkoSolar, announced plans for an initial public offering outside mainland China for its project-development unit and it is considering the addition of 800-1,000MW of new capacity in 2015.

In the gas sector, Canada’s ambition to become a top exporter of liquefied natural gas (LNG) is on track even though oil prices have plummeted, British Columbia premier Christy Clark said on 11 December. Indeed, investment decisions on two mega-projects in Canada are set to come next year from Malaysia’s Petroliam Nasional and Indonesian billionaire Sukanto Tanoto’s RGE Group.

Earlier this month Petronas pushed back a decision on LNG plans in British Columbia as oil is trading at five-year lows. Overall, delays in Canada contrast with US projects that are already under construction. This is because US projects are further along the development and permitting process, are being built on brownfield sites, have access to existing transmission pipelines, and are being developed by companies with other LNG projects in their portfolios, according to a recent Bloomberg New Energy Finance report.

The 2014 UN climate talks in Lima came to an end in the early hours of Sunday morning, but parties failed to achieve the goal of the conference: to draft a negotiating text for the new post-2020 global climate deal, which is due to be finalised in Paris at end-2015.

As we discussed in yesterday’s Carbon Weekly report, countries have made little progress towards reaching consensus on how to split the burden of emission cuts between the developed and developing world. Parties know that they need to submit an ‘intended nationally determined contribution’ but not the content or the deadline. Although a number of new pledges have been made to the Green Climate Fund, the issue of finance also remains as divisive as ever. Lima has provided no further clarity on where the developed world will find the promised $US100bn a year of financial support for climate change mitigation in developing countries from 2020.

December brings the appraisal of the 10 predictions for 2014 made in January by Michael Liebreich, chairman of the advisory board at the Bloomberg New Energy Finance. Read this month’s ‘VIP Comment’ to find out why our predictions were more or less on the money for clean energy investment and solar but a little off the mark for electric vehicles and smart grid.

Graph of the week: Nigeria aims to reach 728MW of renewable plants by next year, and an overall power capacity of 315GW by 2030

Originally published by Bloomberg New Energy Finance. Reproduced with permission.