Clean energy investment fell 17% to about $54 billion in the first quarter of the year partly because of slower financial flows to wind and solar parks in the two biggest markets – the U.S. and China – according to the latest quarterly investment update from Bloomberg New Energy Finance, published last week. Also, the spurt in offshore wind financing seen in the first quarter of 2016 was not replicated in January to March this year. The first-quarter decline in investment reflects partly the falling cost of capital for renewables, allowing investors to install the same power generation capacity for less cash. Clean energy investment in 2016 fell to $289 billion from a record $349 billion the year before, but it is too early to assume that there will be a second successive year-on-year decline in 2017. The strong points in 1Q included $1.4 billion of public market share issues by electric vehicle pioneer Tesla, and the estimated $650 million financing by Enel of its Villanueva solar PV complex in Mexico.
Last week, there was a public offer announcement from another part of the world: China Everbright Greentech, a waste manager and alternative energy producer, set the terms for a Hong Kong initial public offering that could raise as much as HK$3.3 billion ($425 million). At $425 million, the offering would be the biggest alternative energy IPO in Hong Kong since China Longyuan Power Group’s $2.6 billion share sale in 2009, according to data compiled by Bloomberg. Everbright Greentech plans to offer 560 million new shares at HK$5.18 to HK$5.90 apiece. The share sale would give Everbright Greentech a market value of HK$10.4 billion to HK$11.8 billion. Proceeds from the offering would help the company fund projects that use agricultural and forest byproducts to generate electricity and heat, a preliminary prospectus showed. The filing didn’t say when Everbright Greentech would start taking orders from institutional investors. CEB International Investment and China International Capital are joint sponsors of the offering.
There was also news of auctions in Turkey and Spain. Turkey’s energy ministry will collect bids from investors by July 27 to build 1GW of wind farms. Bidders will cut prices from a starting ceiling of $0.07 a kilowatt-hour in the contest, and participants must provide a one-year bid bond of $10 million. The deals will grant 15-year power purchase guarantees from the government. Spain will hold its first renewable power auction in almost a year and a half next month, awarding contracts to deliver as much as 3GW of power generation capacity. The move is another step to rehabilitate Spain’s renewable energy industry, which was put on ice starting in 2008 after runaway subsidy payments prompted the government to impose retroactive cuts in support.
In the U.S., Tesla’s Elon Musk sketched out a timeline for the arrival of a semi-truck, pickup and sports car. After the final unveiling of the Model 3 sedan in July, Tesla will show an electric semi-truck in September and a pickup in 18 to 24 months, the chief executive officer wrote in a series of tweets last week. The California-based company will also bring back the Roadster, its very first model, as a convertible. Our note – “When will EVs be cheaper than conventional vehicles?” – provides further insights into how the electric vehicle market is likely to evolve over the next few years. Meanwhile, Energy Secretary Rick Perry ordered a study of the electric grid in the country, with an eye to examining whether policies that favor wind and solar energy are accelerating the retirement of coal and nuclear plants critical to ensuring steady, reliable power supplies. In an April 14 memo obtained by Bloomberg News, Perry highlighted concerns about the “erosion” of resources providing “baseload power”.
India was in the news again for another record low bid for solar power at 3.15 rupees (5 U.S. cents) a kilowatt-hour in a competitive tender where French firm Engie’s local arm won rights to develop 250MW.Attempting to Revive Coal or Nuclear Power is Like “Defibrillating a Corpse”: Lovins
By Vandana Gombar, Bloomberg New Energy Finance Revival of coal or nuclear power would be extremely challenging given the competitiveness of renewable energy, and the reduction in demand possible through efficiency initiatives, according to Amory Lovins, founder, chief scientist and chairman emeritus of the Rocky Mountain Institute. “Attempting to revive coal or nuclear is like defibrillating a corpse: it will jump but it won’t revive. The economic fundamentals are bleak,” said Lovins. Based in Colorado, RMI is an independent non-profit “think-and-do tank” committed to securing a low-carbon future. It merged with Carbon War Room, a non-profit cofounded by Richard Branson of the Virgin group, in 2014.
Referring to coal plants in the pipeline as “pre-stranded assets,” he said that it was possible to increase the renewable energy share all the way up to 100% for a country without adding storage assets: “A portfolio of variable renewables, properly designed and run, probably requires less storage and backup than utilities have already bought and installed to manage the intermittency of their big thermal units.” Lovins is currently helping the Indian government hone its strategy for 100% vehicle electrification by 2030. India may opt for a batteryswap model for two-wheelers, three-wheelers and four-wheeled vehicles so the “price of the battery is not built into the price of your electric vehicle upfront but you pay it by the kilometer,” he said. Earlier attempts at battery-swap models, such as by Better Place in Israel, have not been successful.
This is an extract from an interview published in BNEF’s new monthly deals publication: New Energy Deals.
BNEF: You are working with the Indian government on “transformative mobility solutions”. Can you give some details about that?
Lovins: Almost a year ago, Minister Piyush Goyal floated the idea that India might be able to move very quickly towards 100% electric vehicles. Since then, the government has explored not just electrification pathways but an integrated transformation of mobility services. It encompasses everything from urban planning through manufacturing of electric vehicles— two-, three-, and four-wheelers—to the smart grid integration of electric vehicle charging and the accompanying regulatory and business model changes. It will also take advantage of India’s mastery of the infotech sector.
Integrating these innovations is a high priority for India’s government under Prime Minster Narendra Modi. Our role has been to support NITI Aayog, the strategic-planning agency chaired by the Prime Minister. We think India has the opportunity to decouple from the personal vehicle ownership model. At the roughly 90-person Delhi workshop we organized with NITI Aayog at the end of February, five cabinet ministers appeared and thoughtfully engaged—a strong signal of the intent of the government of India…