World's largest wind farm at ... Fukushima?

Japan has announced plans for the world's largest wind farm, just 16 kilometres of the coast of Fukushima. Elsewhere, Google makes another wind investment and EU carbon hits a new low.

Offshore wind was the centre of attention in the clean energy sector last week, with an investment by a Japanese corporation in the North Sea, plans for a giant project in Japan’s own waters, and the participation of Google in a US interconnection venture.

German grid operator TenneT breathed a sigh of relief last week, announcing that Mitsubishi Corporation, Japan’s largest trading house by market value, would invest €576 million ($US769 million) to help connect sea-based wind farms to the power grid. The operator is under pressure to catch up with deferred grid connections in the German North Sea and seeks to prevent additional delays. Utilities including RWE and E.ON threatened to halt investment there because of interruptions.

Mitsubishi will pay €240 million for a 49 per cent stake in the BorWin1 and BorWin2 grid connection projects, and €336 million for a 49 per cent stake in HelWin2 and DolWin2, TenneT said January 16 in a statement. Total investment in all four projects will be €2.9 billion ($US3.9 billion), with an equity share of about 40 per cent, TenneT said.

Germany wants to add 25GW of sea-based wind turbines by 2030. Europe’s biggest economy is investing in clean energy as it phases out nuclear power. It decided to close all of its atomic power facilities by 2022 in the wake of the Fukushima nuclear disaster in Japan nearly two years ago.

Japan shut down its 54 nuclear reactors after a tsunami triggered a meltdown at the Daiichi plant in March 2011. Only two reactors have come back online since.

The loss of nuclear capacity has created an opening for more renewable sources in Japan. Indeed, the New Scientist reported last week that Japan is preparing to build the world’s largest offshore wind farm, starting this July. The plan, as the magazine reported, would see 143 wind turbines built on platforms 16km off the coast of – out of all places – Fukushima by 2020. The farm would generate 1GW of power once completed. No information has yet emerged on financing of the project – an omission that puts a question mark over its supposed schedule.

If built, the Fukushima farm would overpower the first phase of the London Array in the Thames Estuary, where 175 turbines will generate 630MW of electricity when fully operational later this year. The London Array is due, eventually, to have a second phase – of 370MW – taking its overall capacity also to 1GW.

Over in the US, where there are currently no offshore wind farms, news emerged on a planned undersea power line to connect offshore wind farms to the US east coast.

The partners behind the Atlantic Wind Connection project, including Google, Bregal Energy, Marubeni Corporation and Elia, announced the first construction phase will begin off the New Jersey coast in 2016. The first segment will span the length of New Jersey and carry 3GW of electricity, according to a statement from the Princeton, New Jersey-based project. The offshore cable is expected to be operational in 2019.

Meanwhile, it was offshore wind financing that pushed the European Investment Bank to the top of Bloomberg New Energy Finance’s 2012 league tables. The tables, published last week, reveal the leading investors and service providers in clean energy and the energy smart technologies sectors.

Europe’s development bank arranged the most loans for clean-energy projects last year, as it financed some of the world’s biggest offshore wind farms. The European Investment Bank loaned $US2.16 billion in 2012 with 18 deals covered by the league tables. The largest was the sole provision of $US654 million to EnBW to finance the 288MW Baltic II Offshore Wind Farm. It also contributed $US415.5 million to the 216MW Northwind Offshore Wind Farm financing.

Goldman Sachs topped public market transactions in 2012, acting as the lead manager on three deals, for $US405.6 million credit. Its largest credit comes from managing the offer of shares in Tesla Motors, which raised $US225 million via a secondary share placement. It also receives $US105.8 million credit as manager in the IPO of SolarCity, a California-based solar system design and installation services provider, on the Nasdaq GM Stock Exchange.

Following the announcement that it earned the title of top arranger for renewable-energy stock offerings last year, Goldman may have given investors in the sector some more reasons to think positively. The bank told Bloomberg News last week it is accelerating its clean energy funding efforts, as it anticipates a rebound in the industry, which has seen its sector share prices slump every year since 2009.

Goldman crystallised one of the largest ever profits from a renewables investment in 2007, when it sold Horizon Wind Energy to EDP for a $US900 million gain.

Stuart Bernstein, the Goldman partner overseeing its renewables unit, says the global shift toward renewable energy is inevitable and short-term volatility will be trumped by long-term gains. His comments came after Bloomberg New Energy Finance announced that overall new investment in clean energy dropped 11 per cent last year to $US268.7 billion, the second highest figure ever.

“It feels like the worst is behind us,” Bernstein said in an interview with Bloomberg News. “I’m a contrarian, so when everyone else is capitulating, I think it’s time to invest.”

EU and UN carbon hit record lows

European carbon prices slumped to a new record low last week, after a German auction was cancelled due to the clearing price dipping below the reserve price. European Union allowances (EUAs) for December 2013 lost 13.7 per cent to end Friday’s session on London’s ICE Futures Europe at €5.11/tonne, compared with €5.92/t at the close of the previous week. EUAs were trading as high as €6.20/t on Tuesday afternoon, after EU lawmakers set 24 January as the date to debate a law to delay permit auction sales, a move designed to curb an oversupply in the market.

Benchmark EUAs plummeted to an all-time low of €5.05/t on Friday afternoon. The drop was in response to the European Energy Exchange’s (EEX's) cancellation of its permit auction on behalf of Germany. The EEX failed to generate bids higher than the sale’s minimum price, even after extending the auction by 15 minutes.

United Nations Certified Emission Reduction credits (CERs) for December 2013 also touched new record lows last week, losing 25.6 per cent to close at €0.32/t.

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