Marching forward on a backloading boost

The week in clean energy saw low-carbon alternatives boosted from Brussels, via backloading, to Rhode Island and Honduras, via wind.

The European Parliament last week agreed to speed up the approval of a carbon-market rescue plan, enabling an intervention aimed at bolstering prices to begin as soon as this quarter. Carbon permits for December jumped 6.2 per cent to close at €6.54 ($11.83) a tonne, the highest in more than a year on the ICE Futures Europe exchange in London, after lawmakers in Strasbourg, France, endorsed the plan by 306 votes to 276, with 14 abstentions last Thursday.

The rescue proposal involves delaying the sale of 900 million permits in the European Union’s emissions-trading system to help prices rebound from levels the bloc’s regulator says fail to discourage burning fossil fuels.

Ending the scrutiny period still requires a final rubber-stamping from member state ministers. This is tentatively scheduled for February 24. Bloomberg New Energy Finance estimates that backloading could start on March 17, assuming the amended Auctioning Regulation is published in the week of 24-28 February and the announcement of new auction calendars on March 3, with a two-week notice period.

Separately, the bloc’s Parliament also called for a 40 per cent energy efficiency target and binding national renewable energy targets to bolster a higher regional one. This throws down the gauntlet to EU governments which will over the coming year try to agree on their approach amid wide disagreements. France and Germany support extending the EU’s renewable energy target, while the UK and Poland oppose this, and want instead to allow greater flexibility for decarbonisation.

In the world of clean technologies, Renewable Energy Generation, a British low-carbon asset developer backed by BlackRock, will build six waste-to-power plants with Caterpillar and Finning UK in an expansion of plans published last month.

REG is already building the first 18MW station after announcing the development January 27, according to chief executive officer Andrew Whalley. It has now agreed to build five more facilities as “mirror images” of the first, with a combined capacity of about 100MW, he said on February 120 by telephone. The plants will produce power from waste cooking oil.

Heading west, White Plains, New York-based Bunge is exporting US corn-based ethanol to Brazil, the world’s second-largest consumer of the biofuel, according to two people with direct knowledge of the deal.

Bunge is shipping about 12.5 million litres of the fuel to the Port of Itaqui in Brazil’s northeast. This is in line with Bloomberg New Energy Finance’s prediction in Q3 2013 that Brazil anhydrous prices may spike during the inter-harvest season as the country grapples with very tight ethanol inventories to hold the market over through March. With 2.5 billion litres of inventory on 15 January 2014, and a demand rate of 1 billion litres a month, there could be less than 0.5 billion litres by the time the sugarcane harvest starts in April. Should it be delayed, prices could push up significantly and invite more ethanol imports.

In solar, Mosaic, an operator of an online financing system that lets individuals invest in commercial solar systems, is expanding into residential projects.

Mosaic agreed to provide financing to Sungage Financial, a Boston-based developer that will loan the funds to Connecticut residents who want rooftop solar systems, according to a statement. Connecticut’s Clean Energy Finance and Investment Authority, the state’s green bank, is providing an initial $US5 million to fund originations.

The arrangement will provide one of the few opportunities for individuals to invest in renewable energy projects.

Meanwhile, India’s renewable ministry is seeking permission from the government to apply for a $US500 million World Bank loan to build its biggest proposed solar park.

The plan was submitted to the Finance Ministry’s Department of Economic Affairs, Farooq Abdullah, the minister of new and renewable energy, said in a written reply to parliament on February 7.

The loan would finance the first 750MW of a 4GW photovoltaic park in Sambhar in western Rajasthan state that is expected to cost about $US1 billion, Abdullah said.

However, not all is well in the world of Indian solar. The US filed a second complaint against the country’s solar policies at the World Trade Organization, reviving a year-old dispute between the two nations.

The action follows a case the US filed in February last year at the Geneva-based WTO, saying India’s requirements for locally-made components on solar-energy products violate global trade rules.

Finally, in wind, French maker of trains and power equipment Alstom agreed to supply turbines for a 30MW offshore wind project that Deepwater Wind is developing off the coast of Rhode Island.

Alstom will supply five of its 6MW Haliade 150 turbines and tower sections for the Block Island Wind Farm, Providence, Rhode Island-based Deepwater said in a statement.

This is an interesting development given that there are no offshore wind farms in the US as yet and the Block Island project may begin construction at sea next year. The company qualified for a federal tax credit that extended at the end of 2013 by making an initial “multi-million dollar payment” in December for Alstom to produce the turbines, Deepwater chief executive officer Jeff Grybowski said in the statement.

In Honduras, closely-held investment company Grupo Terra received $US127.5 million from five international lenders to build the nation’s second-biggest wind farm.

The 50MW San Marcos project under construction in southwest Honduras is expected to start producing power by early 2015, according to a statement on the website of Dutch development bank FMO, which provided part of the loans.

Globeleq Mesoamerica Energy owns Honduras’s biggest wind farm with 102MW of capacity, according to Bloomberg.

EU carbon

European carbon prices reached their highest price in a year last week after the bloc’s Parliament agreed to speed up approval of a plan to fix the region’s oversupplied emissions market.

European Union allowances (EUAs) for December 2014 finished the week 16.6 per cent up. EUAs for delivery in December ended last Friday’s session at €6.52/t on ICE Futures Europe exchange in London, compared with €5.59/t at the close of the previous week.

EUAs for December 2014 were trading as high as €6.74/t, the highest level since January 9 last year, after lawmakers in Strasbourg, France, voted to fast-track a measure to delay the sale of permits in the region’s emissions-trading market. The plan – aimed at boosting prices – may be formally approved by ministers on February 24, according to a Bloomberg News article attributing an EU official.

UN Certified Emission Reduction credits for December 2014 lost €0.02/t last week to finish at €0.41/t.

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

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