Jostling for solar position

Big contracts are still up for grabs in the crowded polysilion market, but in the broader solar sector some players are showing signs of strain.

In the crowded polysilion sector, Centrotherm Photovoltaics announced last week that it has won a contract from Idea International Investment to help develop a $US1.1 billion polysilicon project in Saudi. The German company will provide the technical knowhow and basic engineering for the facility which will have a capacity to make 10,000 tonnes of the material. Production is to start by mid-2013. Idea may later expand upstream and make ingots, wafers and modules, it said on its website.

The market for polysilion is currently oversupplied. Spot prices fell by about 60 per cent last year. The average spot price in the first week of February was at $US28.79 per kilogram, down from $US28.96 in the preceding week, according to Bloomberg New Energy Finance. The capacity of just the top 10 global manufacturers at the end of 2011 is expected to be enough to meet demand in 2012. Significant capacity expansions have already been announced by China's GCL-Poly and Korean OCI, among others. Idea's project is early stage, and may face big challenges ahead.

In South Africa, Soitec – a manufacturer of semiconductors and solar products – announced that it has obtained funding from Investec for a 50MW plant using concentrated photovoltaic technology, to be built in Touwsrivier in the Western Cape region. These systems use lenses and mirrors to focus sunlight on solar panels and thus multiply the power generated. That this unusual technology can get financing in an emerging market is a very positive signal.

Staying on solar, the biggest maker of thin-film panels – First Solar – plans to cut output at its factory in Germany as declining subsidies reduce European demand. Most of the prominent European countries are reviewing their incentives for clean energy. Germany is mulling a move to monthly adjustments of feed-in-tariffs while the UK is planning to cut preferential tariffs every six months to reflect the declining costs and to limit its tariff subsidy burden.

The wind sector also continued to show signs of strain, with Vestas – the world's biggest turbine maker – reporting a €166 million loss for 2011. This was four times bigger than that forecast by analysts, and sales were below the guidance given by the company in January. Though analysts are predicting a bleak 2012 for the company, chief executive Ditlev Engel said he expects it to be a "very very busy year", with a 40 per cent higher activity level than 2011. Vestas has projected revenues of €6.5 billion to €8 billion in 2012 and shipments of about 7GW compared to 5GW in 2011.

Meanwhile, Suzlon – India's biggest maker of wind turbines – also reported a wider-than-estimated loss in its third quarter (October-December), as interest costs and provision for taxes increased.

The tussle between China and the US continued with the International Trade Commission saying last week that cheaper imports from China and Vietnam were harming makers of wind towers in the US. The preliminary ruling was in response to a petition from the Wind Tower Trade Coalition asking the Obama administration to impose anti-dumping and countervailing duties. A full-investigation will now follow.

In 2010, the US imported towers valued at $US103.6 million from China and $US51.9 million from Vietnam, according to Commerce department. The US price on imported towers was 64 per cent less than the domestic price in China while the gap was 59 per cent in the case of Vietnam, according to the petition.

In the biofuels sector, Bloomberg New Energy Finance predicts that jet fuel made from non-food vegetable oils like jatropha may be the first to become competitive with aviation fuel. This could happen as early as 2018, if the cost of carbon is added to jet fuel.

Elsewhere, Germany’s Eon, which aims to spend €7 billion over the next five years to expand its renewables business, announced a partnership with Hydrocop Concessions, a power distributor in eight French regions, to bid for tenders to operate hydro power plants in France, Bloomberg News reported. Meanwhile, France’s Alstom announced more hydro contracts: EUR 18m with its partner Hydrochina Huadong to provide equipment for the Song Bung 4 project in Vietnam; and €30 million to build a substation for the Nurek hydro power project in Tajikistan, financed by the Asian Development Bank. In the US, the National Hydropower Association joined the wind, solar, biomass and geothermal industries in saying jobs will be lost if Congress does not extend the Production Tax Credit, due to expire at the end of next year, according to Bloomberg News. The US Department of the Interior announced $US50 million for six water infrastructure projects in the West, it said in a press release. In the Middle East, Lebanon agreed a $US200 million loan with the World Bank for a project to divert water to Beirut from a river in the south of the country, the National News Agency reported.

And in nuclear, the US Nuclear Regulatory Commission approved Southern Co’s application to build two new nuclear reactors at the Vogtle plant in Georgia, the country’s first in more than 30 years, despite chairman Gregory Jaczko’s dissenting vote, the Financial Times reported. Canada reached an agreement with China over uranium exports that could be worth as much as $US3 billion, the International Business Times said.

In Europe, President Nicolas Sarkozy refused to shut down the Fassenheim nuclear plant, France’s oldest, and will instead extend the lifetimes of the country’s aging reactors beyond 40 years, Bloomberg News reported. Areva and EDF agreed on a long-term uranium supply deal this week, the companies announced in a statement, which may see EDF help finance a new mining project. The two companies also agreed to work with China Guangdong to develop a 1GW nuclear reactor, which Areva hopes will be based on the Atmea model it developed with Mitsubishi and is bidding to sell to Jordan in a $US4.5 billion contract, Bloomberg News reported.

Nearby, Belgium’s Walloon region is considering introducing a nuclear tax, l’Echo said. Czech industry and trade minister Martin Kuba has abandoned his predecessor’s plans for a new generation of nuclear power plants and will instead focus on ‘realistic’ existing plans to expand the Temelin plant, Hospodarske Noviny reported.

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