Europe's winds of change

The list of investors keen to expand or initiate investments in Europe's offshore wind sector is getting longer after Japanese trading company Marubeni signalled its intent.

"The pace of developing offshore wind projects in Europe has gotten so fast that companies need to divest and seek partners for new large projects. This is where we want to come in," Masumi Kakinoki, an executive officer at Marubeni's power projects and infrastructure division, said in an interview last week.

The company already has a 49.9 per cent stake in the 172MW Gunfleet Sands offshore wind farm in the UK owned by Dong Energy, the world's largest developer of offshore projects. Dong has also sold stakes in projects to pension funds. Corporates and insurance funds are likely to be the next set of investors in this sector, which has so far been heavily reliant on balance sheet financing.

Though there was a 69 per cent dip in capacity commissioned in 2011 to 415MW, Bloomberg New Energy Finance expects the offshore wind industry to rebound and commission almost 15GW between 2012 and 2015 to reach a cumulative capacity of over 18GW by year's end, with growth concentrated in Germany, the UK and China. Linking these projects to the transmission grid however, continues to be a challenge.

Meanwhile China's second biggest wind-turbine maker Xinjiang Goldwind said last week it is diversifying into the production of inverters for use with PV systems in the face of slackening wind equipment demand. There was a sharp fall in prices for older turbine models and new turbine models did not achieve pricing expectations in the second half of 2011, according to recently released Bloomberg New Energy Finance data.

The troubled solar sector received a dose of good news from Suntech Power. The world's biggest maker of silicon-based PV modules last week announced better than forecast shipments in the fourth quarter of 2011. Sales of 2.09GW are now expected during the year against an earlier forecast of 2GW. The final numbers will be announced on March 8.

Prices for the raw material used to make the panels – polysilicon – have firmed up in the last few weeks. The average spot price in the second week of February was $US28.80 per kilogram, according to Bloomberg New Energy Finance estimates. China has idled about 30 per cent of production to stem the decline in prices.

In the US, a congressional committee investigating solar company Solyndra is now looking at the partial loan guarantee given to Prologis to install panels on some 750 buildings under its Project Amp. According to the committee, Solyndra was to be the only supplier in the first phase of the project for which a loan of $US1.4 billion was secured.

In a letter released last week, lawmakers asked Energy Secretary Steven Chu to provide a range of documents to get a better understanding of the "Project Amp loan guarantee, as well as the relationship between Solyndra and Project Amp."

Staying on the US, Novozymes, the Denmark-headquartered company, which is the world's biggest maker of enzymes for biofuels, said it is not pursuing new projects in the country because of the lack of political support.

"The US is losing momentum now compared to the rest of the world. The momentum is no longer here. It's in China and Brazil," Steen Riisgaard, the company's chief executive officer, said in an interview.

Back to Europe, and European carbon allowances, or EUAs, climbed last week to their highest in almost three months on speculation that the region may restrict supply to boost prices. EUAs for December 2012 delivery rose 17 per cent last week, the most since May 2006, to close at €9.27/tonne, compared with €7.92/tonne at the end of the previous week. Prices surged as much as 9 per cent on Thursday after the European Parliament's industry committee agreed a text, ahead of a vote later this month, which could encourage the European Commission to withhold allowances in a phase three set-aside in 2013. The volume of 2012 EUAs traded also leaped 64 per cent to a record 30.9 million metric tonnes on Thursday. United Nations Certified Emission Reduction credits, or CERs, for December 2012 gained over 28 per cent last week to close at €4.92/tonne, up from €3.83/tonne at the end of the previous week.

Reproduced with the permission of Bloomberg New Energy Finance. For further information, see www.newenergyfinance.com.