The bad, the good and the great

Renewable energy-related trade disputes stretching from China to Canada grabbed headlines last week, while General Electric and Warren Buffett’s MidAmerican sounded bullish on the US wind market. Meanwhile, Bloomberg New Energy Finance can report that intriguing things have been going on with clean energy share prices in the last few days.

Solar project developers in the European Union took note of news last week that the bloc is planning to impose tariffs of as much as 67.9 per cent on photovoltaic (PV) panels from China to counter unfair pricing. A Bloomberg News article quoted a commerce official on condition of anonymity.

The European Commission expects to introduce the levies by June 6 to penalise Chinese solar manufacturers for selling panels in the EU below cost, a practice known as dumping, the official said.

The duties, which will affect more than 100 Chinese companies and average 47.6 per cent, will be the preliminary outcome of a dumping inquiry that the commission opened in September, the official told Bloomberg News.

The EU is studying anti-dumping and anti-subsidy tariffs on Chinese panels, and cells and wafers used in them, after US duties came into force last year.

The European Union, meanwhile, has trade concerns elsewhere. The World Trade Organization last week upheld a complaint filed by the European Union and Japan against local-content requirements in the Canadian province of Ontario's green energy program.

The WTO's Appellate Body issued a ruling backing an earlier WTO panel decision that found that provisions in Ontario's feed-in tariff program requiring a minimum of local content in renewable power projects violate WTO's “national treatment” rules, Bloomberg BNA reported.

Under these rules, countries must not treat imported goods differently from locally produced goods in the application of national laws, regulations, and requirements.

In US politics, the wind power industry is expecting a tough battle in Congress as it seeks another extension of a federal tax credit that received a one-year renewal at the last minute in January. The weight of uncertainty about the extension of the Production Tax Credit meant wind developers had front-loaded their projects into calendar years 2011 and 2012, leaving the pipeline for 2013 almost empty.

“Keeping the production tax credit is our top priority,” Tom Kiernan, incoming chief executive officer of the American Wind Energy Association, said at the trade group’s annual conference in Chicago. “The political climate in Washington is getting tougher.”

No US wind financings were recorded in the first quarter of 2013, yet in the equivalent period last year there were 14 such deals valued at just over $US3.8 billion. The industry may slump as much as 78 per cent this year, according to data compiled by Bloomberg.

General Electric has an optimistic view on the future. The biggest US supplier of wind turbines expects domestic installations to double next year after the renewal of a tax credit boosts demand.

Wind-farm developers including NextEra Energy and Invenergy may install 3,000MW to 4,000MW of turbines in the US this year and as much as 7,000MW next year, Anne McEntee, GE’s vice president of renewable energy, told Bloomberg News last week in an interview.

One big name buyer will certainly be in the market for turbines. Warren Buffett’s MidAmerican Energy Holdings announced last week plans to invest $1.9 billion in additional wind generation capacity.

MidAmerican expects to add up to 1,050MW of wind generation, consisting of up to 656 new wind turbines, in Iowa by the end of 2015, the company said on its website.

MidAmerican, which began building wind projects in 2004, has installed 1,267 wind turbines in Iowa, representing a total investment of approximately $4 billion.

“In light of the recent federal Production Tax Credit extension, the company is asking to expand its wind generation capacity to enhance its renewables portfolio,” MidAmerican said on its website. “MidAmerican Energy estimates that by January 2016, when all new wind generation is expected to be operating, it may be capable of generating approximately 39 per cent of its retail generation output through wind generation during that month.”

Finally, intriguing things have been going on with clean energy share prices in the last few days. The WilderHill New Energy Global Innovation Index, or NEX, which tracks the performance of 96 clean energy stocks worldwide, reached 148.62 at the close in New York on Monday.

This took the NEX's rally since its eight-year low on 25 July last year to 46 per cent. Perhaps even more strikingly, it has climbed 16.5 per cent in the four weeks since 18 April.

The advance by clean energy stocks has been enjoyed by all the main sectors within this category, including solar, the one worst hit by last year's rout. Since November 28 last year, the NYSE Bloomberg Global Solar Energy Index has recovered 48 per cent. The NYSE Bloomberg Global Wind Index has rebounded 39 per cent from its low on 26 July 2012, while the NYSE Bloomberg Global Energy Smart Technologies Index is up 36 per cent from its nadir reached on November 16.

The EST index has performed particularly well in the last few days, rising from 1299.90 at the close on May 1 to 1413.98 by the end of trading on Monday this week.

EU carbon

European carbon permits slipped last week, reversing a surge in prices that followed German Chancellor Angela Merkel’s call for action on a plan to fix an oversupply in the market.

European Union allowances (EUAs) for December 2013 ended the week 10.6 per cent down at €3.38/tonne, compared with €3.78/t at the previous week’s close. Front-year EUAs were trading as high as €3.98/t on Monday afternoon, extending gains from the end of the previous week, when Merkel said that “something has to be done on backloading”. EUAs received further supportive news on Tuesday when it was revealed that the European Parliament will hold a second plenary vote in early July on the backloading plan. The market has been struggling to recover since a vote against it on April 16.

EUAs tumbled below €3.50/t on Wednesday and continued to shed value Friday. The sharp gains earlier in the week may have incentivised profit taking, as traders digested the realisation that a firm verdict on the backloading plan is still months away.

UN Certified Emission Reduction credits (CERs) for December 2013 gained 40 per cent to finish the week at €0.42/t, on speculative buying.