China eyes 9GW half; Scotland's 'yes' threat

The week in clean energy saw Beijing set the framework for a stellar solar half, and worries a Scottish 'yes' vote could halt work on $US23bn in renewables projects.

Bloomberg New Energy Finance

Graph for China eyes 9GW half; Scotland's 'yes' threat

China announced a set of incentives for photovoltaic projects connected to the local distribution grid last week, paving the way for a much more robust growth in the second half of this year, and beyond.
The National Energy Administration called on local authorities to identify projects in regions where electricity can be distributed to customers living nearby, according to a statement on the agency’s website. The subsidy scheme was expanded from a premium subsidy to include a feed-in tariff option, removing the risk of relying on an off-take contract. 

The scope of projects included in the scheme was expanded beyond rooftop installations to projects built on abandoned and barren land, agricultural greenhouses, intertidal zones and fishponds, as long as they are connected to the distribution grid. The government also said financial institutions should offer discounts on loans for distributed projects.

Bloomberg New Energy Finance responded by revising its 2014 solar installations forecast for China to 13-14GW from 12-14GW. It said: "China commissioned just 3.3GW of PV capacity in H1 2014, including 1GW of distribution-grid connected PV. With the policy updates now official, we are confident that Q4 2014 will see much stronger demand." The fine print of the changes, and the implications, can be read in the Analyst Reaction China readies runway for distributed solar generation.

Chinese companies are also expanding globally. Hong Kong-based Shunfeng Photovoltaic International last week agreed to buy the operations and assets of insolvent German developer SAG Solarstrom, to expand in Europe. The Chinese company’s Suntech unit will pay $US85m for the business. And the deal is expected to close within six to eight weeks.

"The SAG Solarstrom group is a perfect fit for our downstream portfolio and will strengthen our European presence in the photovoltaic market," Suntech chief executive officer Eric Luo said in the statement.

Shunfeng’s plan to become a global clean energy major has led to a spate of deals, including its $US480m acquisition of Wuxi Suntech Power, once the world’s largest panel maker, and the purchase of units from Germany’s Sunways. It is now also expanding into other technologies such as storage.

Moving on from solar, contract electronics manufacturer Foxconn Technology group said it would invest at least $US814m in its factories in northern China’s Shanxi province as it pushes into the electric vehicles market. Chairman Terry Gou expects the company’s Shanxi workforce to reach 100,000 this year, with annual output surpassing $US9.8bn, Taipei-based Foxconn said in a statement, citing a speech delivered by Gou in Shanxi’s Taiyuan city. The company did not provide further details on the investment.

Foxconn joins companies such as Tesla Motors and China United Network Communications Corporation that are tapping into China’s drive to boost production and usage of new-energy cars including electric, hybrid and fuel-cell vehicles. 

The world's most populous country and the world's biggest carbon emitter is also on track to establish a national carbon market by 2016, and has rolled out trading in seven regions as a first step. Last week, Shanghai allowed an institutional investor to trade emission permits for the first time, in a bid to boost liquidity on its exchange. An unidentified investor traded allowances to emit 5000 metric tonnes of greenhouse gases at CNY 29 ($US4.70) each on the Shanghai Environment Energy Exchange on September 4, the bourse said in a statement on its website. More than 10 such parties have applied to the exchange to participate in emissions trading, it said.

South Korea also reiterated last week that it would start carbon trading as originally planned in 2015, but scaled back targets. The government will aim to reduce emissions by 10 per cent in all industries, a statement from the Finance Ministry said. South Korea had originally planned to cut greenhouse gas emissions to 30 per cent below business-as-usual levels by 2020. 

In Europe, Siemens and Associated British Ports gained approval to start building part of their $US510m turbine production and installation plant in the north of England. The companies won consent from Hull City Council for construction, assembly and service facilities at Green Port Hull, Siemens said in a statement on its website. The operations are part of plans including a rotor-blade plant. 

There is nervousness in the clean power sector ahead of the referendum on Scottish independence, due on September 18. A vote for independence could halt work on renewable energy projects that support $US23bn of investment, according to a Bloomberg News story. "Projects in the pipeline that are planned in Scotland could get cancelled because who is going to pay?” Doug Stewart, chief executive officer of Green Energy, said in an interview in London. “At the moment, we have the Department of Energy and Climate Change and Ofgem who rule over subsidies, and they are UK bodies. If they didn’t have any jurisdiction in Scotland, how do those subsidies get paid for?”

The main fundraising news of the week came from Glennmont Partners, the clean-energy investor spun off from BNP Paribas. It closed its second renewables fund after raising $US657m. The 10-year fund has exceeded its $US580m (€450m) target with support from existing and new investors such as the European Investment Bank, the London-based fund manager said in an e-mailed statement. “The oversubscribed nature of our second fundraising, and the breadth and calibre of our investors, is a clear signal that the market's appetite for yield and long-term capital appreciation remains healthy,” chief executive officer Joost Bergsma said. Its first fund is now fully invested, he said. 

Graph of the week: China passenger EV sales, by manufacturer, show significant uptake since the start of 2014

Graph for China eyes 9GW half; Scotland's 'yes' threat

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

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