Solar bulls make a charge

In a great news week for solar, China quadrupled its solar target for 2015, a buyer was found for the world’s largest solar farm and Germany reduced its solar subsidies by less than expected. And the wind sector had plenty to cheer as well.

It was a bullish week for solar and wind, amid a series of policy developments and project financings. China quadrupled its solar target for 2015, while Germany gave its withdrawal from nuclear power a boost by sorting out subsidy changes for PV and liability rules for offshore wind grid connection.

China will ratchet up its 2015 solar target four-fold to 21GW, Shi Lishan, deputy director of the administration’s renewable energy division, told Bloomberg News. The country had planned 5GW up to 2015, and 20GW by 2020. An expansion of this target has been under consideration since last year, as a supply glut from Chinese manufacturers contends with subsidy cuts in Europe.

Germany is cutting its solar subsidies less than planned, however, it determined last week. Chancellor Angela Merkel’s government finally got an agreement on solar feed-in tariff cuts after negotiations with federal state representatives in a Bundesrat mediation committee. A new category of higher-than-expected subsidies for mid-size rooftop systems of 10-40kW will be on offer. An overall cap was also set – after reaching 52GW of installed capacity, solar subsidies will dry up. The country has a “growth corridor” of 2.5-3.5GW per year up to 2020, on top of current installed capacity of around 28GW.

The German government also proposed new rules to reduce the liability risk for developers and grid operators in connecting up offshore wind turbines. The proposal sets a limit on the grid operator’s liability at EUR 100m (USD 126m), whereupon the government will step in.

In nearby Belgium, Northwind, a joint venture between the Colruyt Group and Aspiravi Offshore, announced the close on a €850 million ($1.05bn) financing plan for its 216MW offshore wind farm near Ostend. The project is geared with around 70 per cent debt, comprising a €333 million loan from the European Investment Bank, with BNP Paribas and Green Giraffe among the other financial partners.

There were some positive developments for project financing in Latin America. Chinese group Sky Solar signed a $US900 million deal with Chilean industrial group Sigdo Koppers to develop 300MW of PV projects in the country. Australian developer Pacific Hydro announced plans to build 500MW of wind farms in Brazil. Notably, the company will sell the power to Vale, the world’s largest iron ore producer, and other industrial clients, rather than to the grid. Pacific Hydro is already developing two wind farms with 140MW capacity for Vale, which agreed to take a 50 per cent stake in them and buy all their output.

In the US, election year debate over renewable energy policy looks set to intensify. As the chair of the House Energy Committee’s oversight panel, Cliff Stearns, said the Republican-led investigation into the collapse of Solyndra was nearing completion, another government loan guarantee-backed panel maker, Abound Solar, closed its doors too. The Colorado-based company was awarded a $US400 million loan guarantee, and borrowed about $US70 million against it.

“Aggressive pricing actions from Chinese solar-panel companies have made it very difficult for an early stage start-up company like Abound to scale in current market conditions,” the company said in a statement. An Energy Department spokesperson said that less than 4 per cent of the government’s $US35 billion in loans, loan guarantees and conditional commitments had gone to solar manufacturers, compared to 35 per cent to solar projects that benefit from falling panel prices.

NextEra snapped up the world’s largest solar farm, the unbuilt 1GW Blythe project in California, in an auction for the assets of bankrupt Solar Trust of America. The company aims to switch the project to PV from the initially planned solar thermal. Meanwhile, units of Banco Santander and Prudential closed $US444m financing for Invenergy’s 200MW wind farm being built in Illinois.

The WilderHill New Energy Global Innovation Index, or NEX, finished the first half of the year on a mildly positive note, rising 1.2 per cent last week. But the global basket of clean energy stocks still ended the first half down 11.5 per cent versus a 4.7 per cent decline in the same period a year ago.

EU carbon markets

European carbon allowances, or EUAs, for December 2012 delivery advanced for a fourth week, making them the world’s fastest-rising commodity in June. EUAs gained 1.4 per cent last week, closing at €8.28/tonne, compared with €8.17/t the week before. United Nations Certified Emission Reduction credits, or CERs, for December 2012 climbed 1.2 per cent last week to close at €4.18/t, making them the second fastest-rising commodity in June. CERs gained 20 per cent overall in June, and EUAs 27 per cent. EUAs have been buoyed in recent weeks by speculation that the European Commission will intervene in the region’s currently oversupplied emissions market. Regulators in Brussels are considering a proposal drafted by the Commission’s climate department to delay sales of as many as 1.2 billion carbon allowances from 2013. EUAs surged on Friday after EU leaders approved a €120 billion regional growth plan, and agreed to ease terms on emergency loans to Spanish banks and relax conditions on potential aid to Italy – a move aimed at stemming the region’s debt crisis.

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