The wind record that has everyone talking

Developers in Brazil offer to build wind farms at the cheapest rates ever, while China delivers its battling solar manufacturers a Christmas present and the US gives offshore wind a shot in the arm.

China gave some solar companies an early Christmas present last week, as it selected the second batch of projects – some 2.9GW – under its Golden Sun subsidy program. Yingli was a big winner, boosting its share value 31.5 per cent last week. Separately, JinkoSolar won $US1 billion backing from the China Development Bank, propelling it to a six-month high.

There was also news flying around that China may increase its 2011-15 solar target from 21GW to 30-40GW. The country will introduce a new feed-in tariff early next year, offering production-based remuneration, as opposed to the capital grants awarded under Golden Sun.

Solar stocks surged 9.8 per cent on the WilderHill New Energy Global Innovation Index, or NEX. The week’s biggest gainer was not actually a Chinese firm, but Norwegian solar manufacturer Renewable Energy Corporation, adding 56.5 per cent as it earned a ‘buy’ rating from Swedbank. Chinese solar companies Trina and Yingli were the next best performers, climbing 33.5 per cent and 31.5 per cent respectively.

The NEX rose 3 per cent overall last week. It has picked up 11.6 per cent since mid-November, cutting its loss this year to 7.3 per cent. This contrasts with a 42 per cent deficit in the same period in 2011.

There were more orders for Chinese solar manufacturers. Suntech will ship 100MW to South Africa for two projects being built by a Mainstream Renewable Power-led group. The China-based solar unit of South Korea’s Hanwha also signed an agreement to supply 155MW of panels to two other projects in South Africa. The Letsatsi and Lesedi projects will be built by Spain’s Grupo Gransolar and Cobra Instalaciones y Servicios along with a local company.

New clean energy markets have emerged in the Middle East this year, and last week Iraq said it plans to award 150MW of capacity for wind and solar projects in 2013. The country will seek to add 450MW over the next five years.

In another emerging market, developers offered to build wind farms at the cheapest rates ever. Brazil awarded contracts to Enerfin, Renova Energia, EGP and Bioenergy Geradora de Energia for 281.9MW of wind capacity at an average price of BRL 87.94 ($A39.98) per megawatt hour. The latter company, Bioenergy , secured over two thirds of that at the lowest price of BRL 87.77 ($A39.88) per megawatt hour. The very low prices have prompted concerns from some analysts that not all of the planned capacity will get built. Higher local content requirements from Brazil’s development bank BNDES will add to the challenge.

The United States is heading towards the end of the year – and its so-called fiscal cliff – with the wind industry on tenterhooks over the expiry or extension of a tax credit that has boosted development. Last week, the American Wind Energy Association asked Congress to extend and phase out the Production Tax Credit over six years rather than letting it lapse now. Bipartisan support remains for a shorter extension but it is a much lower priority consideration than fixing the fiscal cliff. That points to increasing chances that the PTC will expire on December 31, only to be renewed retroactively some time in 2013.

There was better news for offshore wind in the US, as the Department of Energy awarded $US169 million to seven projects. The US currently has no offshore wind farms in operation but is aiming for 10GW by 2020. Elsewhere in the US, SolarCity raised $US92 million in its initial public offering, which was 39 per cent less than originally sought after shares were sold at a discount. However, investors quickly traded them higher, and SolarCity stock finished 47 per cent up the next day.

A US federal appellate court dismissed a challenge to a proposed emissions performance standard that would stop the building of new unabated coal plants. The Environmental Protection Agency’s limit for new plants would be 1,000 pounds per megawatt hour, about the same as the UK’s new standard of 450g per kilowatt hour.

There was encouragement for shale gas fracking in Europe, as the UK said it would allow exploration to resume and Germany’s parliament voted against a moratorium. While fracking has pushed down gas prices in the US, Europe has barely sampled the technology amid concerns over its environmental impact and the economics of extraction in its different geologies.

EU carbon

European carbon fell last week after the European Energy Exchange released its provisional auction calendar for 2013, confirming yet more supply is on its way in the new year. Benchmark European Union Allowances (EUAs) for December 2012 lost 3.1 per cent to end Friday’s session on London’s ICE Futures Europe at €6.57/tonne, compared with €6.78/t at the previous week’s close. The EUAs were trading as high as €7.13/t on Tuesday morning but the EEX’s auction calendar release that night helped push them below €6.70/t the next day. Meanwhile, the European Commission said consensus is growing over a backloading plan to delay supply – but there is not yet consensus within the German government and Poland remains bellicose.

United Nations Certified Emission Reduction credits (CERs) for December 2012 plummeted 50 per cent last week to end at €0.31/t. CERs tracked UN Emission Reduction Units (ERUs) for December 2012, which crumbled 65.7 per cent on continued oversupply to close at €0.12/t last week. Meanwhile, five Deutsche Bank staff were arrested as German prosecutors investigate tax evasion related to carbon trading.

The Bloomberg Week in Review will be back next year. Until then, warmest seasonal greetings from Bloomberg New Energy Finance.

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

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