The greening of national security

The US Army outlined a $7 billion renewables investment plan, while several large deals in the clean energy sector helped drive 'green' stocks significantly higher last week – a rare occurrence in recent times.

The US Army plans to invest up to $US7 billion in solar, wind, geothermal and biomass installations, as it last week launched a request for proposals for clean energy power purchase agreements up to 30 years in duration. Meanwhile, the US Interior and Defense departments agreed to give wind and solar energy installations access to 16 million acres (6.5 million hectares) of federal land previously set aside for military testing and training.

Even as the US military was stepping up to tackle climate change as a matter of national security, concerns grew about a potential food security crisis due to the severe US drought and the country's national biofuels blending requirement. Last week, a bipartisan group of 25 US Senators repeated an earlier call from US House members for the US Environmental Protection Agency to relax the national ethanol blending mandate. The goal: to reduce pressure on corn prices, which spiked to an all-time high during the week. The Obama administration said it was reviewing the policy. The President then flew to Iowa this week where he offered government aid to farmers hurt by the drought.

In the US, A123 Systems signed a deal potentially worth $US450 million with Wanxiang Group that could see the Chinese auto-parts maker ultimately take an 80 per cent stake in the Massachusetts-based battery maker. A123 received a $US249 million federal grant to build a manufacturing plant in Michigan. Critics on Capitol Hill complained the Wanxiang deal would result in key US technologies and jobs being sent abroad. A123's CEO said the agreement would allow him to keep staff on board.

Despite the various concerns, the Wilderhill New Energy Global Innovation Index, or NEX, which tracks 96 clean energy stocks worldwide, posted its best performance in nearly eight months, beating broader indices and gaining 4.3 per cent.

EnerNOC was among the NEX leaders, rising almost 40 per cent, after its revenues exceeded market expectations. MEMC Electronic Materials' shares gained 35 per cent thanks to its second quarter sale of 144MW of solar projects. The company will bid for projects in Saudi Arabia and Turkey, according to Carlos Domenech who heads MEMC development arm SunEdison.

Also last week in the US, General Electric took a 51 per cent stake in the 200MW Prairie Rose wind project in southern Minnesota from Enel for around $US156 million. United Technologies sold its Clipper Windpower unit to Platinum Equity for an undisclosed sum. And the US Export-Import Bank agreed to provide up to $US2 billion to the Industrial Development Corporation of South Africa to support clean energy projects that use US equipment there.In the UK, Aviva acquired 23MW of residential solar installations on 7,000 homes for around 100 million pounds ($A145 million) from HomeSun. Ingenious Media, more used to backing blockbusters such as Avatar and X-Men, plans to establish a fund of as much as 250 million pounds ($A370 million) for clean energy investments.

In Europe, RWE bought the 30MW Taciewo onshore wind farm in Poland from Spain’s Gamesa, raising its wind portfolio in the country to 152MW. The utility, Germany’s second largest, aims to have around 300MW of wind in Poland by 2015. The region’s continued financial turmoil hit solar projects in Greece, as the country temporarily stopped issuing licenses for new solar projects and raised a special energy tax to cover feed-in tariff (FiT) liabilities.

Israel unveiled a potentially innovative way to manage FiT rates more effectively and efficiently. The country proposed reviewing FiT rates for solar every quarter by indexing the level of support for large projects to the Bloomberg New Energy Finance Solar Spot Price Index. The plans, currently under consultation, would take effect at the beginning of October, as the country looks to reach 10 per cent renewable electricity by 2020.

Slowly but surely, Brazil continues to roll out additional policy support for smart meter deployment. Last week, electricity regulator Agencia Nacional de Energia Eletrica mandated the devices for all new installations from 2014, creating a potential $US670 million per year local smart meter market , Bloomberg New Energy Finance estimated.

EU carbon price

European carbon allowances, or EUAs, for December 2012 delivery advanced 1.4 per cent last week, closing at €7.21/tonne, compared with €7.11/t the previous week. EUA volumes were about 40 per cent below their 15-day moving average during the first few days of trading. December EUAs reached a weekly high of €7.39/t when the market opened Wednesday but fell back to a weekly low of €7.01/t on Thursday as trading volumes increased. EUAs erased losses on Friday, rising with German power prices. German power for delivery next year jumped 1.5 per cent to finish at €49.50/MWh. United Nations Certified Emission Reductions, or CERs, for December 2012 fell 0.3 per cent last week to €2.89/t.

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