Solar battles rise to the fore

The EU-China solar fight continues as PV demand in Europe begins to slide, while the good news was seen in the US, with the clean energy sector cheering an Obama victory.

The re-election of President Barack Obama in the United States last week generated relief for the clean energy industry, as he was seen as the more likely of the two candidates to extend support for renewables and bring in measures to address climate change.

The American Wind Energy Association said that the Production Tax Credit for wind would probably be extended beyond December 31.

There is speculation that Obama may opt for a carbon tax to plug the US deficit. A tax starting at $US20 per metric tonne of carbon dioxide equivalent and rising at about 6 per cent a year could raise $US154 billion by 2021, according to Nick Robins, an analyst at HSBC Holdings.

“Applied to the Congressional Budget Office’s 2012 baseline, this would halve the fiscal deficit by 2022,” he said, while conceding that the continued Republican majority in the House of Representatives would limit the President's scope for action.

The election relief for stock market investors in clean energy was only fleeting. After rising in the early hours of Wednesday November 7, the WilderHill New Energy Global Innovation Index (NEX) then slipped back sharply, from 114.50 to 109.30 over succeeding days, in response to wider concerns about the US’ looming ‘fiscal cliff’.

The mood across the Atlantic, meanwhile, was sombre as China took to the World Trade Organization the issue of European incentives for local content use. The European Union expanded the scope of its dumping investigations, to probe alleged trade-distorting subsidies given by the Beijing government to Chinese manufacturers.

The two EU cases cover €21 billion of EU imports last year of crystalline silicon PV modules and the cells and wafers used in them. Both probes stem from complaints by EU ProSun, an industry group led by Germany's SolarWorld. The new investigation will determine whether solar panels from China are being subsidised and whether these subsidised imports have caused injury to the EU industry, the European Commission said. It has nine months to decide whether to impose provisional anti-subsidy duties and EU governments have 13 months to decide whether to apply “definitive” levies for five years.

European PV demand is expected to decline in 2013 by up to 50 per cent from the 2012 level of installation, according to Bloomberg New Energy Finance. The outcome of the dispute is not likely to reverse the slide.

China has alleged discriminatory measures in green energy programs of some EU members. These refer to feed-in tariff schemes that have incentives linked to the use of domestic components. “China considers that the subsidies above violated relevant provisions of the WTO Agreement in respect of national treatment and most-favoured-nation treatment, and also constituted prohibited subsidies under the WTO Agreement as contingent upon the use of domestic over imported goods,” a statement from the Chinese Ministry of Commerce said. The two sides have 60 days to discuss the complaint. If no settlement is reached, China will be free to request the establishment of a WTO dispute panel to rule on its claims.

The disputes notwithstanding, the sharp fall in the price of solar panels continues to impact energy strategies. Denmark is considering a plan to increase its solar generating capacity to 800MW by the end of the decade from about 200MW currently, after deeming the industry to be of strategic interest. Ghana said it is seeking investment of as much as $US1 billion to develop renewable energy resources over the next eight years.

There was a burst of project activity too: General Electric announced that it would be supplying turbines for wind parks in Turkey totalling 97MW in capacity being developed by Fina Enerji Holding. Activ Solar completed a 43.1MW plant in Ukraine. Spanish developer Gestamp Renewables secured funding for 30MW of solar plants in South Africa from Johannesburg-based Nedbank and state-owned agency Industrial Development Corporation of South Africa. Spanish developers Solarpack and Gestamp Solar started operating a 20MW PV plant in Peru, and Abengoa started building South Africa's first solar thermal plants after obtaining project finance and signing power purchase agreements.

Conergy won an order to build two PV plants in Thailand with a combined capacity of 21MW. The European Bank for Reconstruction and Development provided about half the financing for a $US170 million wind farm in northern Poland being developed by RP Global, with the other half coming from the country's biggest bank – PKO Bank Polski. China Sunergy said it would complete two solar farms in the UK totalling 10MW, by April 2013.

A backward step for the industry this week came from Greece, which is planning to approve a tax on existing solar power plants. This could amount to 25-35 per cent of revenue.

EU carbon

European carbon allowances, or EUAs, advanced 2.5 per cent last week in response to low auction volumes and speculation about an imminent proposal to curb supply. EUAs for December 2012 closed at €8.31/tonne, compared with €8.11/t at the end of the previous Friday. Last week, member states auctioned just 4.65Mt of permits, and this may have helped to drive prices higher. EUAs rose to their highest for nearly two months, €8.46/t, at the opening of the market last Tuesday. Market participants were also anticipating, and then reacting to, the release of the European Commission’s backloading proposal. This was released on Monday evening this week, and suggested that the sale of up to 900 million carbon permits might be delayed. The Commission will suggest a potential number of allowances to be held back from Phase III auctions starting next year.

United Nations Certified Emission Reduction credits, or CERs, were unchanged from the previous week, closing at €1/t.

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

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles