Top stocks and choking pollies

Major renewable stocks impressed this week but global investment in clean energy is suffering under weakening political will.

Clean energy investors had plenty to celebrate last week as share prices of renewable companies rose, big project financing deals were sealed and bullish projections were made on solar growth.

It was a good week, but was it enough to make clean energy stakeholders forget that last quarter, which was a comparatively bleak period for investment in the industry around the world? A grim reminder of that came on Monday when Bloomberg New Energy Finance released its latest quarterly figures.

Global investment in clean energy was $US45.9 billion in the third quarter of 2013, down 14 per cent on the second quarter of this year and 20 per cent below the number for Q3 2012. This now makes it almost certain that investment in renewable energy and energy-smart technologies such as smart grid, efficiency, storage and electric vehicles will end this year below 2012′s $US281 billion – a total that was itself 11 per cent down from the record established in 2011.

The main crumb of comfort in the figures is that installation of solar photovoltaic power capacity worldwide is set to hit a new record in 2013 – at some 36.7GW. Still, the dollars invested in that new capacity will almost certainly be below the equivalent for last year with the costs per megawatt for solar being so low.

Michael Liebreich, chief executive of Bloomberg New Energy Finance, attributed the disappointing figures to policy uncertainty in Europe, the lure of cheap gas in the US, a levelling-off in wind and solar investment in China, and a general weakening of political will in major economies.

There continues to be a contrast between overall investment data – which has faltered – and the recent performance of clean energy shares on stock markets around the world. The WilderHill New Energy Global Innovation Index, or NEX, which tracks 96 quoted companies worldwide, shows clean energy shares are up nearly 50 per cent on the year so far.

Last week, the NEX rose 1.5 per cent to a 52-week high of 180.55, outperforming broader market indexes. One standout performer was US rooftop PV installer SolarCity, which added 25 per cent in the week.

Solar

SolarCity, which has risen fivefold since its initial public offering in December, said on October 11 that it expects to boost annual installed capacity almost 90 per cent next year.

SolarCity plans to deploy 475MW to 525MW of photovoltaic projects in 2014, up from an estimated 278MW this year, the San Mateo, California-based company said in a statement.

Based on SolarCity's guidance, the rooftop installer would claim about 20 per cent of US's new solar installations in 2014, which Bloomberg New Energy Finance expects to be around 2.1-2.6GW. The company's outlook is supported by the largest pool of capital in distributed solar; it raised $US500 million of tax equity from Goldman Sachs last May and has raised more than $US3 billion to date.

Wind

One stock clean energy investors are constantly keeping an eye on is wind turbine producer Vestas Wind Systems, which ended the trading week on Friday only 0.07 per cent up. Vestas announced last week that it had sold six turbine factories to VTC Partners for €1 ($US1.35) to complete a program of asset disposals under the unprofitable Danish manufacturer’s two-year turnaround plan.

The company will book a write-down of about €50 million on the sale when it reports Q3 earnings, Aarhus-based Vestas said on 9 October in an e-mailed statement. Vestas is trying to stem two years of losses by lowering fixed costs by €400 million and cutting staff by 30 per cent to 16,000 in a turnaround due to continue through to the end of this year.

Finally, one of the most exciting announcements from the wind sector last week came from Masdar Energy UK. The unit of Abu Dhabi’s state renewable energy developer said it had secured £266m ($US424 million) in loans to finance its share of London Array, the world’s largest offshore wind farm.

Bank of Tokyo-Mitsubishi UFJ, KFW-IPEX Bank, Siemens Bank, and Sumitomo Mitsui Banking Corp contributed to the refinancing, Masdar said in a statement. The UK Green Investment Bank also provided a £58.6m loan.

British industry stakeholders can only hope the deal will boost their country’s efforts to lure investors to its offshore wind industry, as the UK seeks to attract £110 billion to replace ageing power plants and upgrade the grid. 

EU carbon

European Union carbon permits fell last week as a relatively large volume of permits were sold at auctions and German power prices slipped.

European Union Allowances for December 2013 fell 9.6 per cent to end €4.62 per tonne on Friday, compared with €5.11/t at the close of the previous week.

The European Union and member states sold 22.2Mt last week, matching the second-largest weekly volume of allowances this year. German power for delivery in 2014 ended Friday’s session at €37.30/MWh, an almost 2 per cent decrease on the previous week’s €38.05/MWh close. UN Certified Emission Reduction credits (CERs) for December 2013 lost €0.07/t last week to close at €0.53/t.

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