Desert solar dreaming

The Middle East is not short of sunlight and now the investments in solar are coming quickly and in the billions. Meanwhile, Statoil makes a splash in wind and the UK's junior energy minister has an interesting take on wind farms.

The Middle East is stock full of sunlight: both above ground and stored beneath it in oil. The region’s economy may be dominated by the latter for now, but a steady trickle of plans suggests that fresher sunlight will have a more important role to play.

Qatar became the latest Gulf state to adopt a solar target: it is planning to install 1.8GW of photovoltaic capacity by 2014, according to Qatar Solar Technologies, a new government-backed manufacturer looking to feed the expansion. That is quite an ambition in little more than a year, but Bloomberg New Energy Finance analysts think it is doable if Qatari authorities are efficient and begin issuing a series of tenders in early 2013. QSTec obtained financing for a $US1 billion polysilicon plant in Ras Laffan City from Islamic lender Masraf Al Rayan in May.

Next door, Saudi Arabia wants to be 100 per cent powered by renewable energy, Prince Turki Al Faisal Al Saud told a symposium in Brazil last week. Earlier this year, Saudi Arabia adopted a target of 71GW of clean energy capacity by 2032, predominantly through an expansion of solar.

Also last week, Dubai took the first steps in a $US3.3 billion United Arab Emirates solar plan. The $US33.8 million contract for a 13MW PV plant was awarded to First Solar. Dubai aims to source 5 per cent of its power supply from solar by 2030. First Solar last week also said it had agreed to build 100MW of PV power in Indonesia with a unit of state utility company PT Perusahaan Listrik Negara.

There was more solar news elsewhere in Asia. According to reports last week, China is planning to expand domestic solar demand and to push both consolidation and innovation as its manufacturers struggle with a supply glut. China also launched a new subsidy scheme for technology innovation in new energy vehicles, including electric, hybrid and fuel cell cars.

South Korea published a new emissions target equivalent to a 3 per cent reduction in 2013, which is double this year’s level. That is for 377 companies – the country will start up a nationwide emissions trading system in 2015. The government is preparing a long-term plan on energy and climate change, due at the end of this month. It said last week this may link energy taxation to emissions and open a wholesale power market to boost its smart grid network project.

There have been some surprising signs of bolstered support for solar in Europe in recent weeks. France increased its feed-in tariff for small-scale PV at the beginning of the month. It was Poland’s turn last week, as it published a new draft of its renewable energy bill that held some pleasant surprises for solar too. However, the bill is unlikely to be enacted by January 1, 2013 as proposed, since the Treasury and finance ministry are still trying to amend it, and it has yet to go to parliament. A delay would suit power plants that are co-firing biomass, as the draft proposes cutting support for it in a move that could put Poland’s target for 15 per cent renewable energy by 2020 at risk. Poland did, last week, increase its renewables obligation on suppliers in a move to boost green certificate prices.

Next door, Germany’s grid operators kicked up the surcharge that consumers will pay for renewables support next year by 47 per cent. The next day, German chancellor Angela Merkel announced that the government will review exemptions given to some companies, in a bid to reduce the burden for other consumers. Merkel’s cabinet also agreed last week to back a plan to prevent utilities from closing unprofitable gas plants in order to ensure security of supply. The bill will be discussed in parliament next month.

Other European governments are also struggling to deal with the integration of renewable energy and rising electricity prices. In a unique piece of re-regulation of electricity markets, France’s Socialist government is embarking on new legislation that would set consumer gas and electricity prices based on income, age and climate, with consumers rewarded or penalised for their final consumption. The lower house passed a bill earlier this month that will be debated in the Senate in coming weeks.

In the UK, Prime Minister David Cameron caused a flurry in his government over energy policy last week by announcing, apparently off the cuff, that he would table new legislation to force utilities to give their customers the lowest tariff. New junior energy minister John Hayes put on a verbose performance in parliament the following day to remain vague on the subject, and also gave Bloomberg News an erudite explanation of his plans for wind-farm aesthetics to be factored into planning: “I see all of life through an aesthetic prism, because beauty is what matters.” Peel Group’s 57MW wind farm in northwest England must be a stunner, as it received permission last week.

The UK’s Green Investment Bank won European state aid approval for the next four years, though that may be withdrawn if commercial lending options improve for low-carbon projects. An official at the government-backed institution said it will fund offshore wind projects that are already operating rather than those facing a risky construction phase, which surprised many. There was better news for the UK’s offshore wind sector as Norwegian companies Statoil and Statkraft, which recently completed the Sheringham Shoal project together, bought the Dudgeon project from Warwick Energy for an undisclosed amount. The project has consent for up to 560MW of turbines off the Norfolk coast.

In another wind deal, Siemens won a contract to supply turbines to a 50MW wind farm in Turkey. However, the German engineering company, Europe’s largest, said it will pull the plug on its solar business and is in talks with potential buyers of its PV and solar thermal units.

The biggest clean energy news in the US last week was electric car battery maker A123 Systems filing for bankruptcy. The company received a $US249 million federal grant in 2009, making it prime presidential election fodder. However, it wasn’t all bad news for advanced automobiles: Toyota’s Prius hybrid, it emerged, is the best-selling vehicle line in California so far this year. Perhaps not surprising, then, that General Motors said it will begin producing a plug-in hybrid Cadillac next year.

EU carbon

European carbon allowances, or EUAs, advanced 1.8 per cent last week as traders bet that the European Commission will succeed in curbing oversupply. EUAs for December 2012 closed on London’s ICE Futures Europe exchange at €7.97/tonne, compared with €7.83/t at the end of the previous week. Allowances rallied on Tuesday after the European Commission revealed that it will present a detailed plan on 14 November, which will include backloading a specified number of permits for auction at a later date. Benchmark EUAs reached a weekly intraday high of €8.32/t on Wednesday morning. EUAs fell back on Friday following news that the EU plans to ban certain non-EU carbon offsets, or Emission Reduction Units, issued after 2012, prompting ERU prices to fall. This may have encouraged traders to sell EUAs and buy cheaper ERUs.

United Nations Certified Emission Reductions, or CERs, kept plummeting last week, diving 34 per cent to €1.10/t. The contract fell to an all-time low of €1.05/t on Friday afternoon.

This article was originally published by Bloomberg New Energy Finance. Republished with permission.

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