Stepping out of China’s shadow

The geographical balance of power in the clean energy sector is tilting gradually toward new emerging markets, with the likes of Brazil and Sotuh Africa showing real intent for renewables expansion.

The geographical balance of power in the clean energy sector tilted a little last week with deals worth hundreds of millions of dollars in Brazil and South Africa, new plans in Russia and Uruguay, and a fresh EU trade case against China, this time over subsidies for solar glass manufacturers.

Outside of China – which accounted for 25 per cent of global new investment in clean energy last year – Brazil has flown the flag for the emerging markets. The country has held a series of auctions, especially for wind power, and Bloomberg New Energy Finance anticipates the country having almost 6.7GW of onshore wind capacity in 2015.

As it tries to get there, Brazilian project developer Bioenergy Geradora de Energia last week said it ordered 1.8 billion reals worth ($A885 million) of turbines from General Electric. Bioenergy bid the lowest wind power prices in the world in an auction in December, and will buy 207 turbines for 13 projects, plus 170 more for future wind farms.

GE will invest in a supply chain in Brazil to satisfy local content requirements that would make its turbines eligible for cheap debt from Brazil’s development bank BNDES. The Connecticut-based company also won an 86-turbine order for Invenergy’s Goldthwaite project in Texas, three of which will incorporate battery storage systems to help smooth intermittency.

Also in Brazil, power distributor Electropaulo announced that it will spend 72 million reals ($A35 million) on the country’s largest smart grid project, to help curb electricity theft. The company, which loses 3.8 per cent of its power to theft, said it expects the 60,000 meters to pay for themselves within eight years.

Last year, South Africa came from next to no clean energy investment, to trump Brazil with $US5.46 billion of outlays, as it launched its own auction series. There was an exciting development in the country on the financing side last week, as French company Soitec placed a 1 billion rand ($A109 million) bond to fund a 44MW concentrated photovoltaic plant. The bond, which was arranged by Standard Bank, is the first for a solar project in the country, and the third so far worldwide, the company said.

Russia has been a renewable energy laggard. That may be about to change, as the country has adopted a target of around 6GW of solar, wind and small hydro capacity by 2020, and is set to launch new incentives later this year. They are likely to include feed-in tariffs and, for larger projects, tenders. The Russian authorities aim to publish details of those support schemes this summer and launch the first tender in September. Meanwhile, they also clarified last week that tax exemptions would apply to energy-efficient business assets.

Another emerging market, Uruguay, is also ratcheting up its clean energy ambitions. The government issued a decree on Friday targeting 206MW of solar capacity. The national power utility will launch a tender by September for solar plants of up to 50MW. The initial ceiling price of $US91.5 per megawatt hour would make successful projects among the cheapest in the world.

In the Old World, the European Union launched an anti-subsidy investigation into imports of solar glass from China. That followed a complaint by a group of European manufacturers called EU ProSun Glass in March. The deadline for definitive duties is May 2014, though provisional duties in a related anti-dumping case could be levied by November this year. A separate group, EU ProSun, made up of European panel makers, complained about Chinese support for solar equipment last year, and provisional duties are due this summer.

The WilderHill New Energy Global Innovation Index, or NEX, rose 2.7 per cent last-week to a 52-week high of 140.70, as it rode buoyant global equity markets. The NEX is up 17.2 per cent in the year to date, and up 38.5 per cent from its eight-year low of 102.20 reached on 25 July 2012.

EU carbon

European carbon permits shot up last week after German Chancellor Angela Merkel urged action on a plan to delay sales of some allowances. European Union allowances (EUAs) for December 2013 gained 21.5 per cent over the week to close at €3.78/tonne, compared with €3.11/t previously. EUAs were trading as low as €2.86/t on Wednesday, as the market struggled to find stability after the European Parliament’s vote on April 16 against the backloading plan to curb oversupply by delaying permit auctions.

The December 2013 contract advanced on Thursday to close at €3.09/t after the European Commission released data showing factories and power stations surrendered 501Mt of United Nations offsets in 2012, less than expected. EUAs jumped to as high as €3.80/t on Friday after Merkel said that “something has to be done on backloading, otherwise we have a development that goes in the wrong direction”.

UN Certified Emission Reduction credits (CERs) for December 2013 added €0.04/t to finish the week at €0.30/t.

This article was originally published by Bloomberg New Energy Finance.

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