Sino-London solar smiles

The week in clean energy saw solar progress in China and the City of London, while the EU struggled with a 2030 renewables consensus.

China will have something to celebrate at this Friday's New Year as it was deemed the solar winner of last year, installing a record 12GW, according to Bloomberg New Energy Finance analysis. The nation saw a last-minute rush from developers to complete projects before the end of the year, when the CNY 1/kWh ($US0.17/kWh) expired. Thus, as many as 2GW of late-year additions may not have been included in the 2013 total, which China expects to surpass this year. 

Meanwhile, NextEnergy Capital is seeking to raise ₤150 million ($US249 million) for a solar fund in the UK's third Initial Public Offering for the technology. The fund would be the sixth specialist vehicle owning operating-stage renewable energy projects to join the UK stock market in the space of 12 months, if this IPO succeeds. The good news here is that the City of London is providing part of the answer to the challenge of attracting long-term institutional investor money into clean energy. However, at least for ground-mounted solar – this fund's chosen area – the government may have second thoughts about the desirability of heavy deployment in the crowded and relatively unsunny UK. The NextEnergy IPO statement said that it expects "approximately half of the company's revenues will be derived from green benefits through the sale of Renewable Obligation Certificates and Levy Exemption Certificates". The IPO opens next month, with shares to start trading in London in March. 

It is not all sunny times in the solar sector, as Sharp has said it will cease panel production at its factory in Tennessee as it reviews its PV panel business. The Japanese electronics maker is reconsidering its production capacity for solar products, Miyuki Nakayama, a company spokesperson, said. Sharp announced last month it will stop producing solar panels at its UK plant in Wales by the end of February, with up to 250 job losses. The two plants in the UK and Tennessee are quite old by global standards and are unlikely to be cost-competitive. It is likely to be cheaper to outsource module assembly to manufacturers with newer, more automated lines in China, Southeast Asia, Mexico and Poland. 

Outside solar, the European Commission last Wednesday released its proposed climate and energy strategy, which aims to extend the current framework of greenhouse-gas and renewables goals beyond 2020. At the core of the package is a 2030 emission-reduction target of 40 per cent below 1990 levels together with a plan to strengthen the EU ETS through a flexible reserve mechanism. The regulator also suggests the EU should take on a “binding” 27 per cent renewable energy goal although it is not clear how the target will be achieved, adding some uncertainty on this front. Such an approach could accelerate the negotiation process, as some countries have already voiced their opposition to mandatory member-state targets for renewables. It would not prevent other nations such as Germany and Denmark from legislating their own binding goals. 

An EU-wide binding 27 per cent renewable energy objective would translate to at least a 45 per cent share in the bloc’s final power consumption for those technologies, according to Bloomberg New Energy Finance. Without binding national goals, a stronger role in driving renewable build-out may fall on the carbon price. 

The package initiates what will likely be a lively political discussion and now needs to be endorsed by the European parliament and council. The commission is likely to seek consensus before its official term ends in October but we will have to wait until next year for a formal legislative proposal.

EU carbon

European carbon advanced last week as the EU parliament’s environment committee chair said he will seek faster approval of a carbon market rescue plan. 

European Union Allowances for December 2014 finished the week 4.1 per cent up. EUAs for delivery in December ended last Friday’s session at €5.36/t on ICE Futures Europe exchange in London, compared with €5.15/t at the close of the previous week.

Carbon allowances for December 2014 recovered after falling Thursday to a low of €5.03/t. The EU parliament’s industry committee that day objected to an EU measure to delay auctioning of 900Mt carbon allowances through 2016. Traders saw the vote as a sign that the market fix, known as backloading, will not start before the end of March.

Prices jumped on Friday after Matthias Groote, head of the European Parliament’s environment committee, said he will seek a faster approval of the backloading plan in a plenary decision that may be taken in the second half of next month.

UN Certified Emission Reduction credits for December 2014 lost €0.01/t last week to finish at €0.38/t.

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