Solar's sunny spell

Positive news is flowing freely for large-scale solar developments around the world, with Africa and Asia leading the way. The biggest clouds come in the form of disputes between the US and EU vs China.

It was solar, solar everywhere last week, with a series of news stories radiating from both the solar thermal and photovoltaic sectors. Much of it came from new and emerging markets in Africa and Asia.

The biggest project news of the week came in North Africa, as Morocco selected a group led by Saudi Arabia’s ACWA Power International to develop a $US1 billion solar thermal plant, the country’s first. The consortium, made up of ACWA and Spanish firms Aries Ingenieria & Sistemas and TSK Electronica & Electricidad, will develop and operate the 160MW plant in Ouarzazate for Morocco’s Solar Energy Agency. Spain’s Acciona and Sener Grupo de Ingenieria will help design and build the project. The country is targeting 2GW of solar by 2020, alongside other technologies, to give renewables a 20 per cent share in total electricity consumption by then.

There was still more of a stir in Africa. Deutsche Investitions und Entwicklungsgesellschaft, or DEG, a subsidiary of Germany’s state-owned development bank KfW, revealed plans to increase investments in wind, hydro power and mining in East Africa to as much as €60 million ($A75 million) next year.

Meanwhile, UK energy and climate change minister Greg Barker is this week leading a trade delegation to Ethiopia, Kenya and Tanzania as the UK looks to marry climate financing with exports.

“There’s a huge opportunity here to use the climate change agenda to drive investment and growth,” Barker said. “I’m looking to identify projects where a small investment of money from the international climate funds can trigger much larger flows of private sector capital into these new markets.”

While the UK and Germany hatch their plans, Chinese companies get on and do it. JinkoSolar said it will help China Jiangxi Corporation for International Economic & Technical Cooperation, or CJIC, develop a 50MW solar park in Kenya. Sub-Saharan Africa only has projects of that scale permitted in South Africa and Namibia so far, but others are planned in Nigeria, Liberia and Mali.

It emerged last week that the China Development Bank is planning to renew support for 12 solar companies, a move that could precipitate consolidation in the crowded market. The CDB has extended $US43.2 billion in credit lines to 12 Chinese solar companies since 2010. LDK Solar, JinkoSolar and JA Solar, all of which are among the top 10 manufacturers, were not included, though six of those in line for the priority funding have not yet been disclosed. Meanwhile, JA Solar bought back $US89.2 million of its own debt as it tries to strengthen its balance sheet and boost its stock price on Nasdaq, to avoid a delisting.

The way things are shaping up, the CDB’s further support may come under closer scrutiny in the US and EU further down the line. Indeed, European solar manufacturers launched a second complaint against Chinese competitors last week. The EU ProSun group, led by SolarWorld, which initiated the first anti-dumping complaint against Chinese imports in Europe as well as those in the US, followed the high-level rhetoric about the case by filing a second petition, this time against Chinese subsidies. The European Commission has 45 days to decide whether to open an investigation, as it recently did into the dumping of solar panels.

The solar case is bound to stay in the headlines for the time being. The World Trade Organization last week said it would investigate the legality of US anti-dumping duties against Chinese solar panels, among other products, following a retaliatory complaint from China.

Another legal battle looms for the US and China after President Barack Obama last week blocked a Chinese-owned company from building a wind farm near a US Navy installation in Oregon. It was the first time in 22 years that a US president had taken such a step on the basis of national security. Ralls, the US company owned by two executives of China’s Sany Group, promptly added the President to a lawsuit against the decision.

Trade tensions aside, the solar sector’s sunny spell continued in the US as well, mainly thanks to Southern, the country’s second-largest power company. In a venture with Turner Renewable Energy, it bought the 30MW Spectrum Solar project, its third, from MEMC for an undisclosed amount. Meanwhile, Southern’s Georgia Power unit submitted plans to regulators to procure 210MW of solar capacity by 2017. That would be a very significant development based on the economics of solar, as Georgia does not have a renewable portfolio standard.

There were also solar developments in Asia. A 44MW project in Thailand – owned by Bangchak Petroleum, built by Solartron and using Suntech modules – was connected to the grid. Kyocera said it will provide 30MW of solar panels for a plant in northern Japan being developed by Eurus Energy, a joint venture between Toyota Tsusho and Tepco, the utility hit by the Fukushima crisis last year. India's Andhra Pradesh, a state of 85 million people, introduced its first solar incentives, offering tax benefits and fee exemptions to projects. And branching out into the nascent tidal power sector, South Korea revealed plans to build a 200MW tidal plant by 2016, with seven Korean companies collaborating on the project.

Europe was not to be left behind completely. Portuguese renewable project developer Martifer completed two solar parks in the Algarve for BNP Paribas Clean Energy Partners. Norwegian titan Statkraft said it would build two wind farms amounting to 369MW in Sweden by 2015. In France, developer JMB Energie Group took a controlling stake in its rival Aerowatt. Another acquisition was in the marine energy sector, as Alstom agreed to buy Tidal Generation from Rolls-Royce. Smart technologies had their moment too, as Florida-based LED maker Lighting Science Group added $US49 million from London-based Zouk Capital and an unnamed Middle Eastern sovereign wealth fund to close a $US168 million equity funding round.

EU carbon

European carbon allowances, or EUAs, for December 2012 delivery bounced back 6.7 per cent last week, closing at €7.96/tonne, compared with €7.46/t at the end of the previous week. The contract hit a weekly low of €7.16/t on Tuesday but recovered after Jos Delbeke, director general for climate at the European Commission, told a conference in Brussels on Wednesday that the Commission is aiming for a vote on a backloading provision by the end of 2012. On Thursday, EUAs were boosted by strong Brent crude oil prices and Spain’s announcement of its fifth austerity package amid speculation the nation would seek an EU bailout.

United Nations Certified Emission Reductions, or CERs, for December 2012 shot up 15.4 per cent last week to €2.17/tonne. The UN’s Clean Development Mechanism Executive Board issued 14.5Mt of CERs in September, down 31 per cent from 21Mt in August. That was the lowest volume since February 2011.

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