Tesla meets Alibaba; SolarCity taps online debt

Sustainability became more accessible online over the past week as Tesla began accepting orders for its Model S Electric Car in China through Alibaba's Tmall.com and SolarCity offered $US200 million of green bonds directly to investors through its website.

Tesla began deliveries of its Model S car in the world's largest market in April. The automaker is seeking to cut down the time required to ramp up its sales by selling directly through the web rather than setting up a network of dealerships across the country.

“Tmall offers us an opportunity to reach out to general customers,” said Tesla China spokeswoman Peggy Yang.

Besides Tesla, Buick, Chevrolet, Geely Automobile Holdings and Shanghai Volkswagen also have official sites on Tmall.com.

In the case of SolarCity, investors can purchase bonds in increments of $US1000 with rates from 2 per cent, for debt that matures in one year, to 4 per cent for seven years. The rates are lower than SolarCity's earlier bond offerings that were sold through traditional debt markets. The company raised $US201.5 million ($A229 million) in July, with a 2022 maturity date and a 4.03 per cent interest rate. In April it sold $US70.2 million ($A80 million) of debt at 4.59 per cent. The offer thus gives the company a cheaper source of capital.

“People in 50 states can invest and make money in this sector,” chief executive officer Lyndon Rive said in an interview. 

Meanwhile, the green bond market is surging, with $US9.6 billion ($A10.9 billion) issued in the last quarter bring the year-to-date total to $32.6 billion ($A37.1 billion), which is already more than double the volume issued in 2013. Will the market hit $40 billlion in 2014? The Q4 2014 Green Bonds Market Outlook – the first quarterly green bonds outlook – provides some insights. Bloomberg New Energy Finance includes only self-labelled corporate green bonds, labelled sovereign/supranational and state/municipal bonds, in addition to project bonds and asset-backed securities backed by green projects. It excludes less-explicitly labelled debt issued by companies and associated with environmental opportunities.

Sticking to the world of bonds, the biggest issue for solar farms in Europe was downgraded last week because Italy changed its renewable energy policies. The class A2 notes of Andromeda Finance, a SunPower project company, were lowered to B, five levels below investment-grade, from BB and given a negative outlook, Fitch Ratings said in a statement.

“Lower wholesale market prices and a revised market price forecast further contribute to the downgrade,” it said. “The negative outlook continues to reflect further uncertainties with respect to the operating and regulatory environment of solar photovoltaic plants in Italy.”

The Italian parliament in August approved a measure that retroactively lowers the rates paid for power from solar farms. Andromeda owns two power plants in Montalto di Castro with a total capacity of 51.2MW.

In India, draft rules were announced to auction 1GW of solar capacity in the south Indian state of Andhra Pradesh. A quarter of the capacity will be required to use locally made panels and cells. By 2019, the central government expects to install 15,000MW, more the five times the current national capacity and about triple what it committed to in 2012. Companies will be able to bid for as much as 250MW of capacity, with each project capped at 50MW, according to the rules. State-run power trader NTPC Vidyut Vyapar Nigam, or NVVN, will run the auction and sign 25-year power purchase agreements with the winners.

Meanwhile, US solar company SunEdison announced that it was in talks with a Chinese company to invest as much as $2 billion to build a polysilicon plant in China. The plant will have “the lowest cost” in the industry if it goes ahead in China, SunEdison president Ahmad Chatila said in an interview with Bloomberg News. The cash cost for making the commodity used in solar panels will be less than $US6 a kilogram, about $2 below the next lowest competitor, he said. The company is also considering setting up a plant in Saudi Arabia.

SunEdison also signed an agreement with JIC Capital, the fund management unit of China Jianyin Investment, to set up a new energy fund with a total investment of $US220 million ($A251 million). The fund will invest to build about 1GW of solar power plants in China over three years.

Another exciting development of the week came on the technological front. An 8MW test machine of MHI Vestas – a joint venture of Mitsubishi Heavy and Vestas – set a record for power produced by a single wind turbine in a day. The prototype at Osterild, northern Denmark, generated 192,000kWh “during steady wind conditions” over a 24-hour period from October 6 to 7, the company said in an emailed statement. That is theoretically the maximum a turbine rated 8MW could generate in a day. The JV company is trying to make inroads into an offshore wind turbine market dominated by Siemens, which took 83 per cent of European sales last year.

On another front, Alstom and engineering company DCNS agreed to work together to develop and bring to market floating wind-turbine technology. The companies plan to produce an initial 6MW floating turbine by 2017 prior to installing pilot and then commercial facilities, they said in a joint statement.

The financing news of the week came from Philippines, where Energy Development Corporation secured a $US315 million ($359 million) loan facility for its 150MW Burgos wind project in north Luzon. Denmark's export credit agency guaranteed part of the loan's dollar component. The International Finance Corporation arranged $207.5 million ($A236 million) in project financing to fund many of Jordan's first solar parks in partnership with five lenders. 

Graph of the week: Cumulative total investment by development banks in clean energy dropped 11% on 2012 levels to $US85bn

Originally published by Bloomberg New Energy Finance. Reproduced with permission.