We are heading for a global succeed-or-perish contest among the energy big hitters – but who will be the winners and losers?
Michael Klare for TomDispatch, part of the Guardian Comment Network
guardian.co.uk, Wednesday 29 June 2011 19.00 BST
A 30-year war for energy pre-eminence? You wouldn't wish it even on a desperate planet. But that's where we're headed, and there's no turning back.
From 1618 to 1648, Europe was engulfed in a series of intensely brutal conflicts known collectively as the Thirty Years' War. It was, in part, a struggle between an imperial system of governance and the emerging nation state. Indeed, many historians believe that the modern international system of nation states was crystallised in the Treaty of Westphalia of 1648, which finally ended the fighting.
Think of us today as embarking on a new Thirty Years' War. It may not result in as much bloodshed as that of the 1600s, though bloodshed there will be, but it will prove no less momentous for the future of the planet. Over the coming decades, we will be embroiled at a global level in a succeed-or-perish contest among the major forms of energy, the corporations which supply them and the countries that run on them. The question will be: which will dominate the world's energy supply in the second half of the 21st century? The winners will determine how – and how badly – we live, work, and play in those not-so-distant decades, and will profit enormously as a result. The losers will be cast aside and dismembered.
Why 30 years? Because that's how long it will take for experimental energy systems like hydrogen power, cellulosic ethanol, wave power, algae fuel, and advanced nuclear reactors to make it from the laboratory to fullscale industrial development. Some of these systems (as well, undoubtedly, as others not yet on our radar screens) will survive the winnowing process. Some will not. And there is little way to predict how it will go at this stage in the game. At the same time the use of existing fuels like oil and coal, which spew carbon dioxide into the atmosphere, is likely to plummet, thanks both to diminished supplies and rising concerns over the growing dangers of carbon emissions.
This will be a war because the future profitability, or even survival, of many of the world's most powerful and wealthy corporations will be at risk, and because every nation has a potentially life-or-death stake in the contest. For giant oil companies like BP, Chevron, ExxonMobil, and Royal Dutch Shell, an eventual shift away from petroleum will have massive economic consequences. They will be forced to adopt new economic models and attempt to corner new markets, based on the production of alternative energy products, or risk collapse or absorption by more powerful competitors. In these same decades new companies will arise, some undoubtedly coming to rival the oil giants in wealth and importance.
The fate of nations, too, will be at stake as they place their bets on competing technologies, cling to their existing energy patterns, or compete for global energy sources, markets, and reserves. Because the acquisition of adequate supplies of energy is as basic a matter of national security as can be imagined, struggles over vital resources – oil and natural gas now, perhaps lithium or nickel (for electric-powered vehicles) in the future – will trigger armed violence.
When these three decades are over, as with the Treaty of Westphalia, the planet is likely to have in place the foundations of a new system for organising itself – this time around energy needs. In the meantime, the struggle for energy resources is guaranteed to grow ever more intense for a simple reason: there is no way the existing energy system can satisfy the world's future requirements. It must be replaced or supplemented in a major way by a renewable alternative system or, forget Westphalia, the planet will be subject to environmental disaster of a sort hard to imagine today.
The existing energy lineup
To appreciate the nature of our predicament, begin with a quick look at the world's existing energy portfolio. According to BP, the world consumed 13.2bn tons of oil-equivalent from all sources in 2010: 33.6% from oil, 29.6% from coal, 23.8% from natural gas, 6.5% from hydroelectricity, 5.2% from nuclear energy, and a mere 1.3% from all renewable forms of energy. Together, fossil fuels – oil, coal, and gas – supplied 10.4bn tons, or 87% of the total.
Even attempting to preserve this level of energy output in 30 years' time, using the same proportion of fuels, would be a near-hopeless feat. Achieving a 40% increase in energy output, as most analysts believe will be needed to satisfy the existing requirements of older industrial powers and rising demand in China and other rapidly developing nations, is simply impossible.
Two barriers stand in the way of preserving the existing energy profile: eventual oil scarcity and global climate change. Most energy analysts expect conventional oil output – that is, liquid oil derived from fields on land and in shallow coastal waters – to reach a production peak in the next few years and then begin an irreversible decline. Some additional fuel will be provided in the form of "unconventional" oil – that is, liquids derived from the costly, hazardous, and ecologically unsafe extraction processes involved in producing tar sands, shale oil, and deep offshore oil – but this will only postpone the contraction in petroleum availability, not avert it. By 2041, oil will be far less abundant than it is today, and so incapable of meeting anywhere near 33.6% of the world's (much-expanded) energy needs.
Meanwhile, the accelerating pace of climate change will produce ever more damage – intense storm activity, rising sea levels, prolonged droughts, lethal heat waves, massive forest fires, and so on – finally forcing reluctant politicians to take remedial action. This will undoubtedly include an imposition of curbs on the release via fossil fuels of carbon dioxide and other greenhouse gases, whether in the form of carbon taxes, cap-and-trade plans, emissions limits, or other restrictive systems as yet not imagined. By 2041 these increasingly restrictive curbs will help ensure that fossil fuels will not be supplying anywhere near 87% of world energy.
The leading contenders
If oil and coal are destined to fall from their position as the world's paramount source of energy, what will replace them? Here are some of the leading contenders.
Natural gas: Many energy experts and political leaders view natural gas as a "transitional" fossil fuel because it releases less carbon dioxide and other greenhouse gases than oil and coal. In addition, global supplies of natural gas are far greater than previously believed, thanks to new technologies – notably horizontal drilling and the controversial procedure of hydraulic fracturing ("fracking") – that allow for the exploitation of shale gas reserves once considered inaccessible. For insstance, in 2011, the US Department of Energy (DoE) predicted that, by 2035, gas would far outpace coal as a source of American energy, though oil would still outpace them both. Some now speak of a "natural gas revolution" that will see it overtake oil as the world's number one fuel, at least for a time. But fracking poses a threat to the safety of drinking water and so may arouse widespread opposition, while the economics of shale gas may, in the end, prove less attractive than currently assumed. In fact, many experts now believe that the prospects for shale gas have been oversold, and that stepped-up investment will result in ever-diminishing returns.
Nuclear power: Prior to the 11 March earthquake/tsunami disaster and a series of core meltdowns at the Fukushima Daiichi nuclear power complex in Japan, many analysts were speaking of a nuclear "renaissance" which would see the construction of hundreds of new nuclear reactors over the next few decades. Although some of these plants in China and elsewhere are likely to be built, plans for others – in Italy and Switzerland, for instance – already appear to have been scrapped. Despite repeated assurances that US reactors are completely safe, evidence is regularly emerging of safety risks at many of these facilities. Given rising public concern over the risk of catastrophic accident, it is unlikely that nuclear power will be one of the big winners in 2041.
However, nuclear enthusiasts (including President Obama) are championing the manufacture of small "modular" reactors that, according to their boosters, could be built for far less than current ones and would produce significantly lower levels of radioactive waste. Although the technology for, and safety of, such "assembly-line" reactors has yet to be demonstrated, advocates claim that they would provide an attractive alternative to both large conventional reactors with their piles of nuclear waste and coal-fired power plants that emit so much carbon dioxide.
Wind and solar: Make no mistake, the world will rely on wind and solar power for a greater proportion of its energy 30 years from now. According to the International Energy Agency, those energy sources will go from approximately 1% of total world energy consumption in 2008 to a projected 4% in 2035. But given the crisis at hand and the hopes that exist for wind and solar, this would prove small potatoes indeed. For these two alternative energy sources to claim a significantly larger share of the energy pie, as so many climate-change activists desire, real breakthroughs will be necessary, including major improvements in the design of wind turbines and solar collectors, improved energy storage (so that power collected during sunny or windy periods can be better used at night or in calm weather), and a far more efficient and expansive electrical grid (so that energy from areas favored by sun and wind can be effectively distributed elsewhere). China, Germany, and Spain have been making the sorts of investments in wind and solar energy that might give them an advantage in the new Thirty Years' War – but only if the technological breakthroughs actually come.
Biofuels and algae: Many experts see a promising future for biofuels, especially as "first generation" ethanol, based largely on the fermentation of corn and sugar cane, is replaced by second- and third-generation fuels derived from plant cellulose ("cellulosic ethanol") and bio-engineered algae. Aside from the fact that the fermentation process requires heat (and so consumes energy even while releasing it), many policymakers object to the use of food crops to supply raw materials for a motor fuel at a time of rising food prices. However, several promising technologies to produce ethanol by chemical means from the cellulose in non-food crops are now being tested, and one or more of these techniques may well survive the transition to full-scale commercial production. At the same time, a number of companies, including ExxonMobil, are exploring the development of new breeds of algae that reproduce swiftly and can be converted into biofuels. (The US Department of Defense is also investing in some of these experimental methods with an eye toward transforming the American military, a great fossil-fuel guzzler, into a far "greener" outfit.) Again, however, it is too early to know which (if any) biofuel endeavors will pan out.
Hydrogen: A decade ago, many experts were talking about hydrogen's immense promise as a source of energy. Hydrogen is abundant in many natural substances (including water and natural gas) and produces no carbon emissions when consumed. However, it does not exist by itself in the natural world and so must be extracted from other substances – a process that requires significant amounts of energy in its own right, and so is not, as yet, particularly efficient. Methods for transporting, storing, and consuming hydrogen on a large scale have also proved harder to develop than once imagined. Considerable research is being devoted to each of these problems, and breakthroughs certainly could occur in the decades to come. At present, however, it appears unlikely that hydrogen will prove a major source of energy in 2041.
X the unknown: Many other sources of energy are being tested by scientists and engineers at universities and corporate laboratories worldwide. Some are even being evaluated on a larger scale in pilot projects of various sorts. Among the most promising of these are geothermal energy, wave energy, and tidal energy. Each taps into immense natural forces and so, if the necessary breakthroughs were to occur, would have the advantage of being infinitely exploitable, with little risk of producing greenhouse gases. However, with the exception of geothermal, the necessary technologies are still at an early stage of development. How long it may take to harvest them is anybody's guess. Geothermal energy does show considerable promise, but has run into problems, given the need to tap it by drilling deep into the earth, in some cases triggering small earthquakes.
From time to time, I hear of even less familiar prospects for energy production that possess at least some hint of promise. At present, none appears likely to play a significant role in 2041, but no one should underestimate humanity's technological and innovative powers. As with all history, surprise can play a major role in energy history, too.
Energy efficiency: Given the lack of an obvious winner among competing transitional or alternative energy sources, one crucial approach to energy consumption in 2041 will surely be efficiency at levels unimaginable today: the ability to achieve maximum economic output for minimum energy input. The lead players three decades from now may be the countries and corporations that have mastered the art of producing the most with the least. Innovations in transportation, building and product design, heating and cooling, and production techniques will all play a role in creating an energy-efficient world.
When the war is over
Thirty years from now, for better or worse, the world will be a far different place: hotter, stormier, and with less land (given the loss of shoreline and low-lying areas to rising sea levels). Strict limitations on carbon emissions will certainly be universally enforced and the consumption of fossil fuels, except under controlled circumstances, actively discouraged. Oil will still be available to those who can afford it, but will no longer be the world's paramount fuel. New powers, corporate and otherwise, in new combinations will have risen with a new energy universe. No one can know, of course, what our version of the Treaty of Westphalia will look like or who will be the winners and losers on this planet. In the intervening 30 years, however, that much violence and suffering will have ensued goes without question. Nor can anyone say today which of the contending forms of energy will prove dominant in 2041 and beyond.
Were I to wager a guess, I might place my bet on energy systems that were decentralised, easy to make and install, and required relatively modest levels of up-front investment. For an analogy, think of the laptop computer of 2011 versus the giant mainframes of the 1960s and 1970s. The closer that an energy supplier gets to the laptop model (or so I suspect), the more success will follow.
From this perspective giant nuclear reactors and coal-fired plants are, in the long run, less likely to thrive, except in places like China where authoritarian governments still call the shots. Far more promising, once the necessary breakthroughs come, will be renewable sources of energy and advanced biofuels that can be produced on a smaller scale with less up-front investment, and so possibly incorporated into daily life even at a community or neighborhood level.
Whichever countries move most swiftly to embrace these or similar energy possibilities will be the likeliest to emerge in 2041 with vibrant economies – and given the state of the planet, if luck holds, just in the nick of time.
Thursday, 30 June 2011
Force energy companies to insulate UK homes, climate advisers say
Committee on Climate Change says making energy companies to insulate empty lofts and walls would cut national emissions
Damian Carrington
The Guardian, Thursday 30 June 2011
Energy companies should be forced to insulate every empty loft and cavity wall in the UK within four years, say the government's climate change advisers.
The independent Committee on Climate Change (CCC) says the measure would boost efforts to cut national carbon emissions; in 2010 the number of loft insulations fell by 30% on the previous year.
"The government should state this ambition and energy companies should be on the hook to deliver these emissions reductions," said David Kennedy, the CCC's chief executive. The coalition's government's "green deal" proposals to overhaul ageing and leaky homes and reduce consumer energy bills could be a major part of the UK's action against global warming, says Kennedy, but must have firm targets to be effective. The committee's recommendations are often accepted by ministers.
In the UK, 10m (43%) of all lofts remain unlagged and 8m houses with cavity walls (42%) have yet to be insulated.
Kennedy made his call as the CCC launched its legally requiredannual report on progress in cutting greenhouse gases. It found that people were buying less-polluting cars, but the required improvements in environmentally friendly driving had not materialised. Furthermore, delays in building the first carbon capture and storage demonstration plants and boosting use of public transport were damaging efforts to meet the UK's legally binding carbon targets, the toughest in the world.
Christine McGourty, director of Energy UK, which represents the gas and electricity industry, said: "Energy companies have already made a substantial contribution to improving people's leaky homes. In the past few years, companies have insulated more than 1.5m cavity walls and more than 2m lofts, helping consumers save up to £260 a year on their bills."
According to the CCC report, the number of professional installations of loft and cavity wall insulation fell by 30% between 2009 and 2010. Kennedy blamed this on a "perverse incentive" in the existing scheme for energy companies to help their customers stop heat leaking from their homes, which meant activity stopped when a certain number had been treated. Electricity and gas providers are currently under fire from regulators and consumer groups, who criticise the scores of confusing price tariffs and recent large price rises.
Kennedy acknowledged the risk in asking the companies that sell energy to enable their customers to use less. But he said that risk could be overcome if the scheme was carefully designed. "It is very important that someone is on the hook," he said. "The experience over four decades is that the free market does not deliver home energy-efficiency measures."
Friends of the Earth campaigner Dave Timms agreed the government's policies "don't go far enough or fast enough" to meet carbon targets, adding: "For too long energy firms have made huge profits selling ever-increasing amounts of energy while some people freeze in poorly insulated homes. Forcing energy companies to carry out all the necessary energy efficiency improvements is an attractive idea."
A CCC spokesperson added: "Safeguards are needed to ensure energy companies do not pass through excessive costs. Also, compensatory measures may be needed for fuel-poor households."
The CCC report analyses the changes in the UK's carbon emissions and found that, when the effects of the recent cold winter and the recession were accounted for, the trend was flat. "We are below the level of the 2008-12 budget because of the very big emissions reduction in 2009 due to the recession, not because we had begun to do things fundamentally differently, and we should not be deceived by that," said Kennedy. A return to business as usual in the economy would mean the UK would exceed its future carbon targets, because they required a 3% cut every year.
Changes to car emissions were rated as "good" in the CCC report, with the average pollution by new vehicles down from 160g of CO2/km in 2008 to 144g in 2010. But counteracting that was a slight rise in speeding and the prospect of the speed limit being raised to 80mph, which the CCC said would result in 3.5m extra tonnes of CO2 being emitted each year.
Damian Carrington
The Guardian, Thursday 30 June 2011
Energy companies should be forced to insulate every empty loft and cavity wall in the UK within four years, say the government's climate change advisers.
The independent Committee on Climate Change (CCC) says the measure would boost efforts to cut national carbon emissions; in 2010 the number of loft insulations fell by 30% on the previous year.
"The government should state this ambition and energy companies should be on the hook to deliver these emissions reductions," said David Kennedy, the CCC's chief executive. The coalition's government's "green deal" proposals to overhaul ageing and leaky homes and reduce consumer energy bills could be a major part of the UK's action against global warming, says Kennedy, but must have firm targets to be effective. The committee's recommendations are often accepted by ministers.
In the UK, 10m (43%) of all lofts remain unlagged and 8m houses with cavity walls (42%) have yet to be insulated.
Kennedy made his call as the CCC launched its legally requiredannual report on progress in cutting greenhouse gases. It found that people were buying less-polluting cars, but the required improvements in environmentally friendly driving had not materialised. Furthermore, delays in building the first carbon capture and storage demonstration plants and boosting use of public transport were damaging efforts to meet the UK's legally binding carbon targets, the toughest in the world.
Christine McGourty, director of Energy UK, which represents the gas and electricity industry, said: "Energy companies have already made a substantial contribution to improving people's leaky homes. In the past few years, companies have insulated more than 1.5m cavity walls and more than 2m lofts, helping consumers save up to £260 a year on their bills."
According to the CCC report, the number of professional installations of loft and cavity wall insulation fell by 30% between 2009 and 2010. Kennedy blamed this on a "perverse incentive" in the existing scheme for energy companies to help their customers stop heat leaking from their homes, which meant activity stopped when a certain number had been treated. Electricity and gas providers are currently under fire from regulators and consumer groups, who criticise the scores of confusing price tariffs and recent large price rises.
Kennedy acknowledged the risk in asking the companies that sell energy to enable their customers to use less. But he said that risk could be overcome if the scheme was carefully designed. "It is very important that someone is on the hook," he said. "The experience over four decades is that the free market does not deliver home energy-efficiency measures."
Friends of the Earth campaigner Dave Timms agreed the government's policies "don't go far enough or fast enough" to meet carbon targets, adding: "For too long energy firms have made huge profits selling ever-increasing amounts of energy while some people freeze in poorly insulated homes. Forcing energy companies to carry out all the necessary energy efficiency improvements is an attractive idea."
A CCC spokesperson added: "Safeguards are needed to ensure energy companies do not pass through excessive costs. Also, compensatory measures may be needed for fuel-poor households."
The CCC report analyses the changes in the UK's carbon emissions and found that, when the effects of the recent cold winter and the recession were accounted for, the trend was flat. "We are below the level of the 2008-12 budget because of the very big emissions reduction in 2009 due to the recession, not because we had begun to do things fundamentally differently, and we should not be deceived by that," said Kennedy. A return to business as usual in the economy would mean the UK would exceed its future carbon targets, because they required a 3% cut every year.
Changes to car emissions were rated as "good" in the CCC report, with the average pollution by new vehicles down from 160g of CO2/km in 2008 to 144g in 2010. But counteracting that was a slight rise in speeding and the prospect of the speed limit being raised to 80mph, which the CCC said would result in 3.5m extra tonnes of CO2 being emitted each year.
UK must not support World Bank's 'dirty' power subsidies, say MPs
Britain contributes more than £2bn a year to the bank, which heavily funds fossil fuel power projects in the developing world
John Vidal, environment editor
guardian.co.uk, Wednesday 29 June 2011 11.19 BST
Britain should not channel aid through the World Bank until it stops lending money to developing countries to build "dirty" power stations, a powerful committee of MPs said on Wednesday.
As the world's second largest shareholder, Britain contributes more than £2bn a year – or nearly one-third of its total UK aid budget – to the bank, but according to the House of Commons environmental audit committee, the US-based institution heavily funds fossil fuel power projects which undermine global and local attempts to reduce carbon emissions and poverty.
The MPs said that Britain abstained last year from a vote to provide South Africa with $3.75bn (£2.33bn) for a massive coal-burning project but that it should be prepared to vote down such projects in future.
"The bank is not the most appropriate channel for future UK climate finance. It undermines our low-carbon objectives," said the report. "[Britain] should be prepared to vote against any new World Bank lending for coal powered stations. The Department for International Development (DfID) should monitor the World Bank's progress in controlling carbon emissions and report the results," the MPs said.
The MPs also questioned DfID's funding of other multilateral agencies. "The multilateral aid review, [published in March] classed five organisations as being weak on climate change and the environment." The MPs point that though that UK funding to one of them – Unicef – will almost double, and funding to another – the African Development Fund – will increase by one-third.
"Dfid must ensure that the multilateral agencies it funds manage their environmental impact effectively," the report said.
Joan Walley MP, who chairs the committee, said: "The World Bank should not assume continued support from the UK unless it changes its ways. DfID needs to get tough and use its position as a major shareholder to vote-down dirty coal-powered energy projects and ensure the World Bank's portfolio isn't making climate change worse."
The international development minister, Stephen O'Brien, said: "We will continue to pressure the World Bank to improve its environmental credentials, calling on it to invest more in clean energy and avoid lending to coal-fired power plants where there are viable alternatives. But our aid review showed the bank delivers good results for the poorest people. We must prevent the impact of climate change and environmental damage from driving the poorest even deeper into poverty."
Zac Goldsmith, one of the 16 MPs on the committee, said: "Britain needs to be much more robust in its dealings with the lending agencies like the World Bank, as it often funds projects that directly contradict this government's stated goals.
"There is an unavoidable link between poverty and environmental degradation, and I hope less DfID money will be delegated to the giant lending agencies, and more will be used to repair ecological systems with a view to alleviating the worst forms of poverty."
According to the MPs, Britain contributes little directly to environmental protection in its £8.4bn budget, only earmarking 4.5%, or £360m, for on environmental protection and climate change. It has no targets on increasing energy access for ordinary people or for increasing renewable energy in developing countries.
"There are fundamental links between the environment and development. Poverty exacerbates, and is exacerbated by, the impacts of environmental change," said the MPs.
The committee called for more money to be channelled through civil society, or grassroots groups, as opposed to governments. At present only £600,000, or 15% of its bilateral aid programme is spent this way.
"Bank lending to coal power stations hit a record high of $4.4bn in 2010 and is a recipe for disaster. It fuels climate change and locks poor countries into dirty power for decades to come – while doing little or nothing for people living in poverty", said Alison Doig, Christian Aid's climate change adviser.
"Poor families around the world need clean sources of energy to power their lights, cook their food and heat their water – not filthy power stations which often bypass their homes altogether," she said.
John Vidal, environment editor
guardian.co.uk, Wednesday 29 June 2011 11.19 BST
Britain should not channel aid through the World Bank until it stops lending money to developing countries to build "dirty" power stations, a powerful committee of MPs said on Wednesday.
As the world's second largest shareholder, Britain contributes more than £2bn a year – or nearly one-third of its total UK aid budget – to the bank, but according to the House of Commons environmental audit committee, the US-based institution heavily funds fossil fuel power projects which undermine global and local attempts to reduce carbon emissions and poverty.
The MPs said that Britain abstained last year from a vote to provide South Africa with $3.75bn (£2.33bn) for a massive coal-burning project but that it should be prepared to vote down such projects in future.
"The bank is not the most appropriate channel for future UK climate finance. It undermines our low-carbon objectives," said the report. "[Britain] should be prepared to vote against any new World Bank lending for coal powered stations. The Department for International Development (DfID) should monitor the World Bank's progress in controlling carbon emissions and report the results," the MPs said.
The MPs also questioned DfID's funding of other multilateral agencies. "The multilateral aid review, [published in March] classed five organisations as being weak on climate change and the environment." The MPs point that though that UK funding to one of them – Unicef – will almost double, and funding to another – the African Development Fund – will increase by one-third.
"Dfid must ensure that the multilateral agencies it funds manage their environmental impact effectively," the report said.
Joan Walley MP, who chairs the committee, said: "The World Bank should not assume continued support from the UK unless it changes its ways. DfID needs to get tough and use its position as a major shareholder to vote-down dirty coal-powered energy projects and ensure the World Bank's portfolio isn't making climate change worse."
The international development minister, Stephen O'Brien, said: "We will continue to pressure the World Bank to improve its environmental credentials, calling on it to invest more in clean energy and avoid lending to coal-fired power plants where there are viable alternatives. But our aid review showed the bank delivers good results for the poorest people. We must prevent the impact of climate change and environmental damage from driving the poorest even deeper into poverty."
Zac Goldsmith, one of the 16 MPs on the committee, said: "Britain needs to be much more robust in its dealings with the lending agencies like the World Bank, as it often funds projects that directly contradict this government's stated goals.
"There is an unavoidable link between poverty and environmental degradation, and I hope less DfID money will be delegated to the giant lending agencies, and more will be used to repair ecological systems with a view to alleviating the worst forms of poverty."
According to the MPs, Britain contributes little directly to environmental protection in its £8.4bn budget, only earmarking 4.5%, or £360m, for on environmental protection and climate change. It has no targets on increasing energy access for ordinary people or for increasing renewable energy in developing countries.
"There are fundamental links between the environment and development. Poverty exacerbates, and is exacerbated by, the impacts of environmental change," said the MPs.
The committee called for more money to be channelled through civil society, or grassroots groups, as opposed to governments. At present only £600,000, or 15% of its bilateral aid programme is spent this way.
"Bank lending to coal power stations hit a record high of $4.4bn in 2010 and is a recipe for disaster. It fuels climate change and locks poor countries into dirty power for decades to come – while doing little or nothing for people living in poverty", said Alison Doig, Christian Aid's climate change adviser.
"Poor families around the world need clean sources of energy to power their lights, cook their food and heat their water – not filthy power stations which often bypass their homes altogether," she said.
Wednesday, 29 June 2011
Solar startup raises $14m in pre-IPO finance
28 June 2011
Enphase Energy, a Californian solar startup, has boosted its coffers by $14 million ahead of a planned $100 million initial public offering (IPO).
Enphase, which manufactures solar microinverters, told the US regulator on Friday it had raised the money through a combination of debt and equity, and hopes to sell a further $37.5 million in equity.
The Nasdaq hopeful could net up to $151.5 million through its combined pre-IPO and IPO raisings.
Enphase manufactures microinverters, small electronic devices which attach to solar panels and monitor and adjust power generation capacity.
It posted a loss of nearly $22 million in 2010 on revenues of $61.6 million, while the first three months of this year saw it post a $9.2 million loss against $18 million in revenues.
The IPO is underwritten by Morgan Stanley, Bank of America Merrill Lynch, Jefferies, ThinkEquity and Lazard Capital Markets.
Charlotte Dudley
Enphase Energy, a Californian solar startup, has boosted its coffers by $14 million ahead of a planned $100 million initial public offering (IPO).
Enphase, which manufactures solar microinverters, told the US regulator on Friday it had raised the money through a combination of debt and equity, and hopes to sell a further $37.5 million in equity.
The Nasdaq hopeful could net up to $151.5 million through its combined pre-IPO and IPO raisings.
Enphase manufactures microinverters, small electronic devices which attach to solar panels and monitor and adjust power generation capacity.
It posted a loss of nearly $22 million in 2010 on revenues of $61.6 million, while the first three months of this year saw it post a $9.2 million loss against $18 million in revenues.
The IPO is underwritten by Morgan Stanley, Bank of America Merrill Lynch, Jefferies, ThinkEquity and Lazard Capital Markets.
Charlotte Dudley
US renewables ready for return to tax break – JP Morgan
27 June 2011
The renewable energy sector will not miss the US government’s cash grant programme as much as industry experts think, because of the growing attractiveness of the production tax credit (PTC) for wind projects, according to one top banker.
The Section 1603 Treasury cash grant programme, which allows developers to opt for a cash payment instead of a tax break, is set to expire at the end of 2011 and an extension is considered highly unlikely in the current political and economic environment.
“There’s a rush to get wind farms qualified for the grant to have that option available,” said Chicago-based John Eber, managing director of energy investments for JP Morgan. “There’s certainly not much activity going on beyond 2012 in wind, as people wait to hear about the extension of the tax benefits. We don’t expect to see the grant extended, but we do expect to see the PTC extended.”
Some wind farms turning down cash for tax break
But some US wind farms already see the PTC as the better option and market dynamics may encourage more projects to opt for the tax break over the grant, Eber told attendees of the Renewable Energy Finance Forum-Wall Street in New York last week.
The PTC’s attractiveness starts with the dramatic fall in turbine prices, which reduces the value of the grant, and the technology improvements leading to significantly higher capacity factors, which are driving projects toward the tax credits, he said. Additionally, power prices are stabilising and utilities are taking advantage by signing contracts at fairly attractive prices, leaving developers to seek the best economic deal they can get from the financing process, Eber said.
“All in all, we think the PTC is going to be a more attractive marketplace for a greater percentage of the wind developers than we’ve seen before,” he said. “With the growth in the tax equity market and the tax equity investors, I expect the capital will be there.”
JP Morgan estimates that the tax equity market will invest about $4.5 billion in wind and solar projects this year, a slight drop-off from the nearly $4.7 billion invested last year.
“I wouldn’t be a bit surprised if it ends up being greater than that with deals coming into the market before the end of the year,” Eber said.
By JP Morgan’s count, 18 investors are active on the equity side and five more investors are interested, but have not yet successfully completed deals. “We’re working with them to maybe bring more investors into the market,” he said.
Others fear end of cash grant
But Eber seems to have the minority opinion as other financiers and developers express grave concerns about the pending expiration of the cash grant programme.
If the cash grant is allowed to expire, there will be a $3 billion-6 billion gap between the amount of tax equity capacity and demand, said Kevin Walsh, managing director of GE Energy Financial Services. “We’re very concerned,” he added. “The tax equity market continues to be constrained and will be more so if the grant goes away.”
The tax equity market only has about 12-15 active investors, noted Los Angeles-based Lance Markowitz, senior vice-president and manager of leasing and asset finance for Union Bank, a unit of MUFG Group that is a major provider of debt and equity financing for renewable energy projects.
“I’m optimistic the market will cover good, solid projects,” he said. “The market will gravitate to the better ones. Post-grant really is late 2012 and I think you’re going to see by that time bigger appetites from investors.”
The net benefit to the US economy from the cash grant and PTC was about $100 million in 2010, according to GE. “There’s an initial drain on the Treasury from the grant and PTCs, but then these projects do pay taxes,” Walsh argued.
Gloria Gonzalez
The renewable energy sector will not miss the US government’s cash grant programme as much as industry experts think, because of the growing attractiveness of the production tax credit (PTC) for wind projects, according to one top banker.
The Section 1603 Treasury cash grant programme, which allows developers to opt for a cash payment instead of a tax break, is set to expire at the end of 2011 and an extension is considered highly unlikely in the current political and economic environment.
“There’s a rush to get wind farms qualified for the grant to have that option available,” said Chicago-based John Eber, managing director of energy investments for JP Morgan. “There’s certainly not much activity going on beyond 2012 in wind, as people wait to hear about the extension of the tax benefits. We don’t expect to see the grant extended, but we do expect to see the PTC extended.”
Some wind farms turning down cash for tax break
But some US wind farms already see the PTC as the better option and market dynamics may encourage more projects to opt for the tax break over the grant, Eber told attendees of the Renewable Energy Finance Forum-Wall Street in New York last week.
The PTC’s attractiveness starts with the dramatic fall in turbine prices, which reduces the value of the grant, and the technology improvements leading to significantly higher capacity factors, which are driving projects toward the tax credits, he said. Additionally, power prices are stabilising and utilities are taking advantage by signing contracts at fairly attractive prices, leaving developers to seek the best economic deal they can get from the financing process, Eber said.
“All in all, we think the PTC is going to be a more attractive marketplace for a greater percentage of the wind developers than we’ve seen before,” he said. “With the growth in the tax equity market and the tax equity investors, I expect the capital will be there.”
JP Morgan estimates that the tax equity market will invest about $4.5 billion in wind and solar projects this year, a slight drop-off from the nearly $4.7 billion invested last year.
“I wouldn’t be a bit surprised if it ends up being greater than that with deals coming into the market before the end of the year,” Eber said.
By JP Morgan’s count, 18 investors are active on the equity side and five more investors are interested, but have not yet successfully completed deals. “We’re working with them to maybe bring more investors into the market,” he said.
Others fear end of cash grant
But Eber seems to have the minority opinion as other financiers and developers express grave concerns about the pending expiration of the cash grant programme.
If the cash grant is allowed to expire, there will be a $3 billion-6 billion gap between the amount of tax equity capacity and demand, said Kevin Walsh, managing director of GE Energy Financial Services. “We’re very concerned,” he added. “The tax equity market continues to be constrained and will be more so if the grant goes away.”
The tax equity market only has about 12-15 active investors, noted Los Angeles-based Lance Markowitz, senior vice-president and manager of leasing and asset finance for Union Bank, a unit of MUFG Group that is a major provider of debt and equity financing for renewable energy projects.
“I’m optimistic the market will cover good, solid projects,” he said. “The market will gravitate to the better ones. Post-grant really is late 2012 and I think you’re going to see by that time bigger appetites from investors.”
The net benefit to the US economy from the cash grant and PTC was about $100 million in 2010, according to GE. “There’s an initial drain on the Treasury from the grant and PTCs, but then these projects do pay taxes,” Walsh argued.
Gloria Gonzalez
Millions of tonnes of wood being wasted every year
At least two million tonnes of unused woodfuel supplies a year could be used to heat rural schools, businesses and other buildings, the Forestry Commission has said.
5:36PM BST 28 Jun 2011
At least two million tonnes of unused woodfuel supplies a year could be used to heat rural schools, businesses and other buildings, the Forestry Commission has said.
Tapping into the extra wood supplies for fuel in England could help create green growth, improve woodlands and help reduce greenhouse gases, the Commission said.
Woodchip boilers in hundreds of mid-size buildings such as schools, blocks of flats or social housing, hospitals and smaller businesses could use fuel from local woodlands.
It could particularly benefit areas which are not on the gas grid and rely on oil for heating, reducing the costs of energy and their carbon emissions.
The Forestry Commission estimates that by 2020, an extra two million tonnes a year of woodfuel could be used for heating buildings in England.
Currently across the UK as a whole less than 1.5 million tonnes of home-grown wood is used as fuel.
Overall, the Forestry Commission estimates that the woodfuel industry could generate £1 billion and support more than 15,000 jobs in the UK.
It could also improve the management of English woodlands, around half of which are currently under-managed, as trees in dense woods are thinned to produce the fuel, opening up the forest which benefits wildlife.
Launching the Forestry Commission's woodfuel implementation plan at an event in Manchester, chairwoman Pam Warhurst, said: "Win, win, win is a phrase often wheeled out yet it is not always convincing. But for woodfuel it is absolutely true.
"Sustainably grown and locally used woodfuel is good for rural businesses, improves woodland health and wildlife and cuts climate change emissions.
"According to our figures about half of the woodland in England is under-managed. This means there is a great deal of wood, at least two million tonnes a year, that could be used for woodfuel and it is just sitting there as woodlands slowly suffer.
"This could supply enough energy to heat the equivalent of 800 hospitals or 3,000 schools and save 1.5 million tonnes of CO2 a year, roughly the emissions from three million barrels of crude oil.
"At today's prices the woodfuel alone could be worth around £120 million."
Woodfuel boilers will attract benefits from the Renewable Heat Incentive, which will pay people for the heat they generate from green sources, while the Forestry Commission said it will have a £10 million grant scheme which will support the sustainable production of woodfuel.
5:36PM BST 28 Jun 2011
At least two million tonnes of unused woodfuel supplies a year could be used to heat rural schools, businesses and other buildings, the Forestry Commission has said.
Tapping into the extra wood supplies for fuel in England could help create green growth, improve woodlands and help reduce greenhouse gases, the Commission said.
Woodchip boilers in hundreds of mid-size buildings such as schools, blocks of flats or social housing, hospitals and smaller businesses could use fuel from local woodlands.
It could particularly benefit areas which are not on the gas grid and rely on oil for heating, reducing the costs of energy and their carbon emissions.
The Forestry Commission estimates that by 2020, an extra two million tonnes a year of woodfuel could be used for heating buildings in England.
Currently across the UK as a whole less than 1.5 million tonnes of home-grown wood is used as fuel.
Overall, the Forestry Commission estimates that the woodfuel industry could generate £1 billion and support more than 15,000 jobs in the UK.
It could also improve the management of English woodlands, around half of which are currently under-managed, as trees in dense woods are thinned to produce the fuel, opening up the forest which benefits wildlife.
Launching the Forestry Commission's woodfuel implementation plan at an event in Manchester, chairwoman Pam Warhurst, said: "Win, win, win is a phrase often wheeled out yet it is not always convincing. But for woodfuel it is absolutely true.
"Sustainably grown and locally used woodfuel is good for rural businesses, improves woodland health and wildlife and cuts climate change emissions.
"According to our figures about half of the woodland in England is under-managed. This means there is a great deal of wood, at least two million tonnes a year, that could be used for woodfuel and it is just sitting there as woodlands slowly suffer.
"This could supply enough energy to heat the equivalent of 800 hospitals or 3,000 schools and save 1.5 million tonnes of CO2 a year, roughly the emissions from three million barrels of crude oil.
"At today's prices the woodfuel alone could be worth around £120 million."
Woodfuel boilers will attract benefits from the Renewable Heat Incentive, which will pay people for the heat they generate from green sources, while the Forestry Commission said it will have a £10 million grant scheme which will support the sustainable production of woodfuel.
David Cameron must speak out on climate change, says top scientist
Sir David King, a former chief scientific adviser, writes in the Guardian to urge prime minister to fill 'leadership vacuum'
Damian Carrington
The Guardian, Wednesday 29 June 2011
David Cameron must end his silence on climate change and "step up to the plate" to provide international leadership, the former government chief scientific adviser Prof Sir David King says on Wednesday.
Writing in the Guardian, King also reveals that after his declaration that global warming was a greater threat than global terrorism in 2004, then US president, George Bush, asked Tony Blair, then prime minster, for to have him gagged.
King's warning made headlines around the world at the time. "But I refused to be gagged, and that statement and others spurred the UK to develop a leadership role on climate change among the international community," King writes.
He argues that the UK's 2008 Climate Change Act – the most ambitious legally binding emissions targets in the world – along with actions such as its early engagement with China on global warming put the UK at the forefront of global negotiations on climate action in the runup to the UN summit in Copenhagen in 2009. This summit, attended by scores of world leaders, failed to reach a global deal, and subsequent summits have been far less prominent.
"There is, again, a leadership vacuum among heads of states on this issue, just as there was in the early 2000s. Will David Cameron step up to the plate, please? Prime minister, will you take your stated credentials as [wanting to lead] the 'greenest government ever' into the global arena?" writes King, who is now director of the Smith School of Enterprise and the Environment at Oxford University, where a world forum on "valuing ecosystem services" opens today.
Downing Street was unable to provide a comment, but a spokesperson at the dDepartment of Energy and Climate Change said: "From the top down, the coalition has no intention of letting up in its efforts to get a legally binding agreement. [Energy and climate change secretary] Chris Huhne, with the prime minister's full backing, played a crucial role at the UN climate conference in Cancún to get agreement on the overall goal of limiting climate change to two degrees, to establish a new climate 'green fund' and to take further action to reduce deforestation."
A Liberal Democrat source in government also pointed out that deputy prime minister Nick Clegg, the deputy prime minister, had emphasised climate change issues during recent visits by Barack Obama and China's premier, Wen Jiabao.
Green party MP Caroline Lucas said: "I share Sir David King's deep disappointment at the prime minister's lack of personal engagement in the international climate negotiations process. It is astonishing that Cameron has yet to make a single statement on his commitment to securing an international climate change agreement."
Cameron has had to intervene repeatedly to ensure his coalition's green commitments were not derailed, including in a fierce cabinet battle over the UK's target of a 50% cut in greenhouse gas emissions by 2025. He also had to face down Treasury objections to the government's green investment bank and, most recently, has contended with a mutiny among his MEPs over European emissions targets.
The prime minister has made high-profile speeches defending the UK's relatively high level of international aid spending, – one of very few areas ring-fenced from cuts – but he has yet to make any similar intervention on climate change.
Phil Bloomer at Oxfam, which praised the government's stance on international aid, said: "If David Cameron wants to lead the greenest government ever, he must urgently take on the international leadership needed to inject fresh life in the UN talks, so the empty climate fund is filled and poor communities can protect themselves from the impacts of climate change."
King praises the government's domestic action on climate change. "My cynicism about pre-election statements was squashed with the announcement that the UK will cut its CO2 emissions by 50% by 2025," he writes, noting that policies on the green investment bank, on improving home energy efficiency, and on reforming the electricity market to deliver low-carbon electricity provide "excellent opportunities for the radical transition to a low-carbon economy".
He says the UK is once again "setting the bar high for other countries", but adds: "There has been no statement at all from the government about the need for collective action on the critical issue [of climate change]."
Barry Gardiner MP, who is Ed Miliband's special envoy on climate change, said: "If Cameron had spent a quarter of a billion pounds tackling climate change instead of bombing Gaddafi, he could have transformed Britain's energy infrastructure to meet our 2025 targets, protected a million hectares of rainforest from deforestation, or fitted solar [panels] to 100,000 homes. It is clear that he thinks Libyan oil is a bigger priority."
Friends of the Earth's senior parliamentary campaigner Martyn Williams said: "The need for bold leadership on climate change is more urgent than ever but the prime minister and leader of the opposition rarely speak out on climate change, and this has created a dangerous vacuum. Urgent action is needed to avoid a climate disaster and reap the huge financial opportunities that would be created by building a low-carbon future."
Damian Carrington
The Guardian, Wednesday 29 June 2011
David Cameron must end his silence on climate change and "step up to the plate" to provide international leadership, the former government chief scientific adviser Prof Sir David King says on Wednesday.
Writing in the Guardian, King also reveals that after his declaration that global warming was a greater threat than global terrorism in 2004, then US president, George Bush, asked Tony Blair, then prime minster, for to have him gagged.
King's warning made headlines around the world at the time. "But I refused to be gagged, and that statement and others spurred the UK to develop a leadership role on climate change among the international community," King writes.
He argues that the UK's 2008 Climate Change Act – the most ambitious legally binding emissions targets in the world – along with actions such as its early engagement with China on global warming put the UK at the forefront of global negotiations on climate action in the runup to the UN summit in Copenhagen in 2009. This summit, attended by scores of world leaders, failed to reach a global deal, and subsequent summits have been far less prominent.
"There is, again, a leadership vacuum among heads of states on this issue, just as there was in the early 2000s. Will David Cameron step up to the plate, please? Prime minister, will you take your stated credentials as [wanting to lead] the 'greenest government ever' into the global arena?" writes King, who is now director of the Smith School of Enterprise and the Environment at Oxford University, where a world forum on "valuing ecosystem services" opens today.
Downing Street was unable to provide a comment, but a spokesperson at the dDepartment of Energy and Climate Change said: "From the top down, the coalition has no intention of letting up in its efforts to get a legally binding agreement. [Energy and climate change secretary] Chris Huhne, with the prime minister's full backing, played a crucial role at the UN climate conference in Cancún to get agreement on the overall goal of limiting climate change to two degrees, to establish a new climate 'green fund' and to take further action to reduce deforestation."
A Liberal Democrat source in government also pointed out that deputy prime minister Nick Clegg, the deputy prime minister, had emphasised climate change issues during recent visits by Barack Obama and China's premier, Wen Jiabao.
Green party MP Caroline Lucas said: "I share Sir David King's deep disappointment at the prime minister's lack of personal engagement in the international climate negotiations process. It is astonishing that Cameron has yet to make a single statement on his commitment to securing an international climate change agreement."
Cameron has had to intervene repeatedly to ensure his coalition's green commitments were not derailed, including in a fierce cabinet battle over the UK's target of a 50% cut in greenhouse gas emissions by 2025. He also had to face down Treasury objections to the government's green investment bank and, most recently, has contended with a mutiny among his MEPs over European emissions targets.
The prime minister has made high-profile speeches defending the UK's relatively high level of international aid spending, – one of very few areas ring-fenced from cuts – but he has yet to make any similar intervention on climate change.
Phil Bloomer at Oxfam, which praised the government's stance on international aid, said: "If David Cameron wants to lead the greenest government ever, he must urgently take on the international leadership needed to inject fresh life in the UN talks, so the empty climate fund is filled and poor communities can protect themselves from the impacts of climate change."
King praises the government's domestic action on climate change. "My cynicism about pre-election statements was squashed with the announcement that the UK will cut its CO2 emissions by 50% by 2025," he writes, noting that policies on the green investment bank, on improving home energy efficiency, and on reforming the electricity market to deliver low-carbon electricity provide "excellent opportunities for the radical transition to a low-carbon economy".
He says the UK is once again "setting the bar high for other countries", but adds: "There has been no statement at all from the government about the need for collective action on the critical issue [of climate change]."
Barry Gardiner MP, who is Ed Miliband's special envoy on climate change, said: "If Cameron had spent a quarter of a billion pounds tackling climate change instead of bombing Gaddafi, he could have transformed Britain's energy infrastructure to meet our 2025 targets, protected a million hectares of rainforest from deforestation, or fitted solar [panels] to 100,000 homes. It is clear that he thinks Libyan oil is a bigger priority."
Friends of the Earth's senior parliamentary campaigner Martyn Williams said: "The need for bold leadership on climate change is more urgent than ever but the prime minister and leader of the opposition rarely speak out on climate change, and this has created a dangerous vacuum. Urgent action is needed to avoid a climate disaster and reap the huge financial opportunities that would be created by building a low-carbon future."
Tuesday, 28 June 2011
Water shortages threaten renewable energy production, experts warn
Thinktank says technologies reliant on water could be hampered by droughts – and production is faltering already
Suzanne Goldenberg, US environment correspondent
guardian.co.uk, Monday 27 June 2011 18.38 BST
The development of new renewable energy technologies and other expanding sources of energy such as shale gas will be limited by the availability of water in some regions of the world, according to research by a US thinktank.
The study shows the reliance on large amounts of water to create biofuels and run solar thermal energy and hydraulic fracturing – a technique for extracting gas from unconventional geological formations underground – means droughts could hamper their deployment.
"Water consumption is going up dramatically. We are introducing all kinds of technology to reduce the carbon impact of energy, without doing anything to reduce its impact on water," Michele Wucker, co-author of the report, told a seminar at the New America Foundation, a thinktank in Washington.
The study, estimating the water consumption of conventional and renewable energy, found even so-called clean energy solutions use vast amounts of water.
Hydroelectricity far outstrips other forms of energy in its use of water, requiring 4,500 gallons to produce a single megawatt hour of electricity – or about the amount needed to run a flat-screen TV for a year. Geothermal energy uses 1,400 gallons per MW/h.
Corn-based ethanol uses a lot of water to irrigate crops, as do nuclear plants which rely on water for cooling systems. Even some renewable energy sources – such as solar farms – are water hogs because they rely on water for cooling.
Solar thermal farms use five times as much water as nuclear power plants, energy consultant Diana Glassman told the seminar. In contrast, photovoltaic solar cells, which convert energy from the sun into electricity, use minimal amounts of water.
Meanwhile, the US drought is forcing energy companies to scale back plans for deploying new techniques in hydraulic fracturing ("fracking") for oil and gas extraction. Not long ago, energy companies were hoping to increase production in Texas by 50% over the next five years.
Unlike in Pennsylvania, where the chemicals used in natural gas drilling have contaminated drinking supplies, the problems in Texas are a matter of water quantity, not water quality.
"The drought and declining water tables are going to have an increasing impact on oil and gas production in Texas," Glassman said.
It takes up to 13m gallons of water to open up a single well in the Eagle Ford shale region in south Texas, where water is in perennially short supply. Such demands are going to block development of areas in south and west Texas, which are suffering water shortages.
"As hydraulic fracking spreads into more arid environments, water availability will increasingly become a problem. Over time it's going to be a growth constraint on oil production in parts of West Texas," said Glassman.
Suzanne Goldenberg, US environment correspondent
guardian.co.uk, Monday 27 June 2011 18.38 BST
The development of new renewable energy technologies and other expanding sources of energy such as shale gas will be limited by the availability of water in some regions of the world, according to research by a US thinktank.
The study shows the reliance on large amounts of water to create biofuels and run solar thermal energy and hydraulic fracturing – a technique for extracting gas from unconventional geological formations underground – means droughts could hamper their deployment.
"Water consumption is going up dramatically. We are introducing all kinds of technology to reduce the carbon impact of energy, without doing anything to reduce its impact on water," Michele Wucker, co-author of the report, told a seminar at the New America Foundation, a thinktank in Washington.
The study, estimating the water consumption of conventional and renewable energy, found even so-called clean energy solutions use vast amounts of water.
Hydroelectricity far outstrips other forms of energy in its use of water, requiring 4,500 gallons to produce a single megawatt hour of electricity – or about the amount needed to run a flat-screen TV for a year. Geothermal energy uses 1,400 gallons per MW/h.
Corn-based ethanol uses a lot of water to irrigate crops, as do nuclear plants which rely on water for cooling systems. Even some renewable energy sources – such as solar farms – are water hogs because they rely on water for cooling.
Solar thermal farms use five times as much water as nuclear power plants, energy consultant Diana Glassman told the seminar. In contrast, photovoltaic solar cells, which convert energy from the sun into electricity, use minimal amounts of water.
Meanwhile, the US drought is forcing energy companies to scale back plans for deploying new techniques in hydraulic fracturing ("fracking") for oil and gas extraction. Not long ago, energy companies were hoping to increase production in Texas by 50% over the next five years.
Unlike in Pennsylvania, where the chemicals used in natural gas drilling have contaminated drinking supplies, the problems in Texas are a matter of water quantity, not water quality.
"The drought and declining water tables are going to have an increasing impact on oil and gas production in Texas," Glassman said.
It takes up to 13m gallons of water to open up a single well in the Eagle Ford shale region in south Texas, where water is in perennially short supply. Such demands are going to block development of areas in south and west Texas, which are suffering water shortages.
"As hydraulic fracking spreads into more arid environments, water availability will increasingly become a problem. Over time it's going to be a growth constraint on oil production in parts of West Texas," said Glassman.
Nicolas Sarkozy makes €1bn commitment to nuclear power
French president says post-Fukushima abandonment of nuclear 'makes no sense' as he announces push for new technology
Kim Willsher in Paris
guardian.co.uk, Monday 27 June 2011 13.53 BST
The French president, Nicolas Sarkozy, has bucked the anti-nuclear trend following Japan's Fukushima disaster by pledging €1bn of investment in atomic power.
Despite growing worldwide concern about the safety of nuclear plants, Sarkozy said the moratorium on new nuclear reactors adopted by certain countries since the Japanese nuclear crisis in March "makes no sense".
"There is no alternative to nuclear energy today," he told journalists on Monday.
"We are going to devote €1bn to the nuclear programme of the future, particularly fourth-generation technology," Sarkozy said.
Sarkozy also promised "substantial resources" to strengthen research into nuclear safety and a further €1.3bn (£1.2bn) investment in renewable energy.
The announcement confirming France's commitment to atomic power came as neighbouring Germany drew up plans to shut all its nuclear stations by 2022.
It also came 24 hours after thousands of anti-nuclear protesters formed a human chain outside France's oldest nuclear power station to demand its closure.
The plant at Fessenheim in Alsace, on France's border with Germany, has become the focus of a fierce debate over nuclear safety.
At the weekend, demonstrators from France, Germany and Switzerland surrounded the plant calling for its number one reactor, in operation since 1977, to be taken out of service, claiming it was vulnerable to flooding and earthquakes. The plant is operated by French power group EDF.
The German chancellor, Angela Merkel, announced in May that Germany would phase out its 17 nuclear reactors, which provide up to 40% of the country's energy, by 2022 at a cost of €40bn. She said Germany would concentrate on renewable energy sources.
"We want to end the use of nuclear energy and reach the age of renewable energy as fast as possible," Merkel said.
Switzerland has also decided not to replace its five existing nuclear reactors, which supply around 40% of its energy, when they reach the end of their working life. The last of the nuclear stations is expected to end production by 2034, leaving time for Switzerland to develop alternative power sources.
Italy's prime minister, Silvio Berlusconi, sought to restart his country's nuclear programme, abandoned in the 1980s. But 94% of Italian voters rejected the idea in a referendum earlier this month.
France has 58 nuclear reactors, which supply 74% of its electricity, and is the world's largest net exporter of electricity from nuclear sources.
Sarkozy said France was known to be "considerably ahead" of other countries in terms of atomic power technology and safety.
"Our power stations are more expensive because they are safer," he said.
Following the Fukushima nuclear accidents, caused by a combination of earthquake and tsunami, the French prime minister, François Fillon, asked the nuclear safety authority to carry out an "open and transparent" audit of the country's nuclear installations, examining the risks of flood and earthquake damage, loss of power and cooling, and emergency accident procedure, to examine if any improvements could be made. Its conclusions are expected in September.
All 143 working nuclear power plants in the EU's 27 member states are facing new safety tests in the wake of the Fukushima disaster.
French ecology minister Nathalie Kosciusko-Morizet said no decision on the future of Fessenheim would be made before the nuclear safety watchdog submitted its report.
Kim Willsher in Paris
guardian.co.uk, Monday 27 June 2011 13.53 BST
The French president, Nicolas Sarkozy, has bucked the anti-nuclear trend following Japan's Fukushima disaster by pledging €1bn of investment in atomic power.
Despite growing worldwide concern about the safety of nuclear plants, Sarkozy said the moratorium on new nuclear reactors adopted by certain countries since the Japanese nuclear crisis in March "makes no sense".
"There is no alternative to nuclear energy today," he told journalists on Monday.
"We are going to devote €1bn to the nuclear programme of the future, particularly fourth-generation technology," Sarkozy said.
Sarkozy also promised "substantial resources" to strengthen research into nuclear safety and a further €1.3bn (£1.2bn) investment in renewable energy.
The announcement confirming France's commitment to atomic power came as neighbouring Germany drew up plans to shut all its nuclear stations by 2022.
It also came 24 hours after thousands of anti-nuclear protesters formed a human chain outside France's oldest nuclear power station to demand its closure.
The plant at Fessenheim in Alsace, on France's border with Germany, has become the focus of a fierce debate over nuclear safety.
At the weekend, demonstrators from France, Germany and Switzerland surrounded the plant calling for its number one reactor, in operation since 1977, to be taken out of service, claiming it was vulnerable to flooding and earthquakes. The plant is operated by French power group EDF.
The German chancellor, Angela Merkel, announced in May that Germany would phase out its 17 nuclear reactors, which provide up to 40% of the country's energy, by 2022 at a cost of €40bn. She said Germany would concentrate on renewable energy sources.
"We want to end the use of nuclear energy and reach the age of renewable energy as fast as possible," Merkel said.
Switzerland has also decided not to replace its five existing nuclear reactors, which supply around 40% of its energy, when they reach the end of their working life. The last of the nuclear stations is expected to end production by 2034, leaving time for Switzerland to develop alternative power sources.
Italy's prime minister, Silvio Berlusconi, sought to restart his country's nuclear programme, abandoned in the 1980s. But 94% of Italian voters rejected the idea in a referendum earlier this month.
France has 58 nuclear reactors, which supply 74% of its electricity, and is the world's largest net exporter of electricity from nuclear sources.
Sarkozy said France was known to be "considerably ahead" of other countries in terms of atomic power technology and safety.
"Our power stations are more expensive because they are safer," he said.
Following the Fukushima nuclear accidents, caused by a combination of earthquake and tsunami, the French prime minister, François Fillon, asked the nuclear safety authority to carry out an "open and transparent" audit of the country's nuclear installations, examining the risks of flood and earthquake damage, loss of power and cooling, and emergency accident procedure, to examine if any improvements could be made. Its conclusions are expected in September.
All 143 working nuclear power plants in the EU's 27 member states are facing new safety tests in the wake of the Fukushima disaster.
French ecology minister Nathalie Kosciusko-Morizet said no decision on the future of Fessenheim would be made before the nuclear safety watchdog submitted its report.
Monday, 27 June 2011
GE announces $63m in clean-tech investment
23 June 2011
General Electric and its venture capital partners will invest $63 million across ten home energy companies in areas such as solar and LED lighting, as part of the second phase of the technology giant’s sustainable business strategy.
The investment builds on $71 million of sustainability investments by GE in the past 12 months as part of the its $200 million Ecomagination strategy, bringing the strategy's total funding to $134 million across 22 commercial partnerships.
The Ecomagination strategy uses the environmental agenda to create new business lines. Its second phase is focused on home energy.
Clean-tech firms cash up
GE’s funding partners are: Emerald Technology Ventures, Foundation Capital, Kleiner Perkins Caufield & Byers and RockPort Capital.
GE declined to break down the amount invested by the company and its venture capital partners.
The ten companies receiving financing are: communication and software firms Hara, Ember, On-Ramp Wireless, Viridity Energy and Witricity; solar energy companies SunRun and GMZ Energy; and building efficiency firms Nuventix, Project Frog and VPhase.
The corporation also awarded development grants of $100,000 to five “innovation projects” and will next month complete the acquisition of smart grid company FMC-Tech, discovered through its Ecomagination challenge.
GE plans to expand its sustainability strategy into China later this year and will launch a $5 million seed fund with UK-based Carbon Trust to support early-stage innovations.
Mark Vachon, vice president of GE Ecomagination, said the company will “continue to look beyond our four walls” to find innovative solutions to environmental challenges.
Charlotte Dudley
General Electric and its venture capital partners will invest $63 million across ten home energy companies in areas such as solar and LED lighting, as part of the second phase of the technology giant’s sustainable business strategy.
The investment builds on $71 million of sustainability investments by GE in the past 12 months as part of the its $200 million Ecomagination strategy, bringing the strategy's total funding to $134 million across 22 commercial partnerships.
The Ecomagination strategy uses the environmental agenda to create new business lines. Its second phase is focused on home energy.
Clean-tech firms cash up
GE’s funding partners are: Emerald Technology Ventures, Foundation Capital, Kleiner Perkins Caufield & Byers and RockPort Capital.
GE declined to break down the amount invested by the company and its venture capital partners.
The ten companies receiving financing are: communication and software firms Hara, Ember, On-Ramp Wireless, Viridity Energy and Witricity; solar energy companies SunRun and GMZ Energy; and building efficiency firms Nuventix, Project Frog and VPhase.
The corporation also awarded development grants of $100,000 to five “innovation projects” and will next month complete the acquisition of smart grid company FMC-Tech, discovered through its Ecomagination challenge.
GE plans to expand its sustainability strategy into China later this year and will launch a $5 million seed fund with UK-based Carbon Trust to support early-stage innovations.
Mark Vachon, vice president of GE Ecomagination, said the company will “continue to look beyond our four walls” to find innovative solutions to environmental challenges.
Charlotte Dudley
Wealthy US families pool resources in $1.4bn clean-tech fund
23 June 2011
Eleven wealthy US families have formed the Cleantech Syndicate, to invest $1.4 billion in clean technology companies over the next five years.
The families, which have not been named, have collectively invested $1.2 billion in privately-held clean-tech firms already.
The syndicate was founded by McNally Capital and Black Coral Capital, who specialise in investing the fortunes of wealthy families. They said the syndicate is the largest dedicated pool of capital in the clean-tech space.
“Families have been investing in the clean-tech space for many years,” said Christian Zabbal, managing director of family office Black Coral, which specialises in clean-tech and renewables investments.
“The Cleantech Syndicate is a natural evolution for us – a way to pool our experience and networks with those of other like-minded family offices and create partnerships that will support better, stronger clean-tech and green energy companies,” he added.
It will draw on the experiences – and capital – of multiple families for the first time, added Walter McNally, managing partner of McNally Capital, which operates a network of family offices.
The partners plan to launch a European Cleantech Syndicate this year and a US co-investment vehicle to allow other investors to put their money in alongside the syndicate.
More partners are also being sought to support the syndicate, including corporations and sovereign wealth funds.
Jess McCabe
Eleven wealthy US families have formed the Cleantech Syndicate, to invest $1.4 billion in clean technology companies over the next five years.
The families, which have not been named, have collectively invested $1.2 billion in privately-held clean-tech firms already.
The syndicate was founded by McNally Capital and Black Coral Capital, who specialise in investing the fortunes of wealthy families. They said the syndicate is the largest dedicated pool of capital in the clean-tech space.
“Families have been investing in the clean-tech space for many years,” said Christian Zabbal, managing director of family office Black Coral, which specialises in clean-tech and renewables investments.
“The Cleantech Syndicate is a natural evolution for us – a way to pool our experience and networks with those of other like-minded family offices and create partnerships that will support better, stronger clean-tech and green energy companies,” he added.
It will draw on the experiences – and capital – of multiple families for the first time, added Walter McNally, managing partner of McNally Capital, which operates a network of family offices.
The partners plan to launch a European Cleantech Syndicate this year and a US co-investment vehicle to allow other investors to put their money in alongside the syndicate.
More partners are also being sought to support the syndicate, including corporations and sovereign wealth funds.
Jess McCabe
A nuclear-free future for America
The US's ageing stock of nuclear reactors only grows more unsafe as it gets older. Renewables offer clean, green energy
Amy Goodman
guardian.co.uk, Wednesday 22 June 2011 14.30 BST
New details are emerging that indicate the Fukushima nuclear disaster in Japan is far worse than previously known, with three of the four affected reactors experiencing full meltdowns. Meanwhile, in the US, massive flooding along the Missouri River has put Nebraska's two nuclear plants, both near Omaha, on alert.
The Cooper nuclear station declared a low-level emergency and will have to close down if the river rises another 3in. The Fort Calhoun nuclear power plant has been shut down since 9 April, in part due to flooding. At Prairie Island, Minnesota, extreme heat caused the nuclear plant's two emergency diesel generators to fail. Emergency generator failure was one of the key problems that led to the meltdowns at Fukushima.
In May, in reaction to the Fukushima disaster, Nikolaus Berlakovich, Austria's federal minister of agriculture, forestry, environment and water management, convened a meeting of Europe's 11 nuclear-free countries. Those gathered resolved to push for a nuclear-free Europe, even as Germany announced it will phase out nuclear power in 10 years and push ahead on renewable-energy research. Then, in last week's national elections in Italy, more than 90% of voters resoundingly rejected Prime Minister Silvio Berlusconi's plans to restart the country's nuclear-power-generation plans.
Leaders of national nuclear-energy programs are gathering this week in Vienna for the International Atomic Energy Agency's ministerial conference on nuclear safety. The meeting was called in response to Fukushima. Ironically, the ministers, including US Nuclear Regulatory Commission (NRC) Chairman Gregory Jaczko, held their meeting safely in a country with no nuclear power plants: Austria is at the forefront of Europe's new anti-nuclear alliance.
The IAEA meeting was preceded by the release of an Associated Press report stating that consistently, and for decades, US nuclear regulators lowered the bar on safety regulations in order to allow operators to keep the nuclear plants running. Nuclear power plants were constructed in the US in the decades leading up to the Three Mile Island disaster in 1979. These 104 plants are all getting on in years. The original licences were granted for 40 years. The AP's Jeff Donn wrote:
"When the first ones were being built in the 1960s and 1970s, it was expected that they would be replaced with improved models long before those licenses expired."
Enormous upfront construction costs, safety concerns and the problem of storing radioactive nuclear waste for thousands of years drove away private investors. Instead of developing and building new nuclear plants, the owners – typically for-profit companies like Exelon Corp, a major donor to the Obama campaigns through the years – simply try to run the old reactors longer, applying to the NRC for 20-year extensions.
Europe, already ahead of the US in development and deployment of renewable-energy technology, is now poised to accelerate in the field. In the US, the NRC has provided preliminary approval of the Southern Company's planned expansion of the Vogtle power plant in Georgia, which would allow the first construction of new nuclear power plants in the US since Three Mile Island. The project got a boost from President Barack Obama, who pledged an $8.3bn federal loan guarantee. Southern plans on using Westinghouse's new AP1000 reactor. But a coalition of environmental groups has filed to block the permit, noting that the new reactor design is inherently unsafe.
Obama established what he called his "blue ribbon commission on America's nuclear future". One of its 15 members is John Rowe, the chairman and chief executive officer of Exelon Corp (the same nuclear energy company that has lavished campaign contributions on Obama). The commission made a fact-finding trip to Japan to see how that country was thriving with nuclear power – one month before the Fukushima disaster. In May, the commission reiterated its position, which is the same as Obama's, that nuclear ought to be part of the US energy mix.
The US energy mix, instead, should include a national jobs programme to make existing buildings energy efficient, and to install solar and wind-power technology where appropriate. These jobs could not be outsourced and would immediately reduce our energy use and, thus, our reliance on foreign oil and domestic coal and nuclear. Such a programme could favour US manufacturers, to keep the money in the US economy. That would be a simple, effective and sane reaction to Fukushima.
• Denis Moynihan contributed research to this column
© 2011 Amy Goodman; distributed by King Features Syndicate
Amy Goodman
guardian.co.uk, Wednesday 22 June 2011 14.30 BST
New details are emerging that indicate the Fukushima nuclear disaster in Japan is far worse than previously known, with three of the four affected reactors experiencing full meltdowns. Meanwhile, in the US, massive flooding along the Missouri River has put Nebraska's two nuclear plants, both near Omaha, on alert.
The Cooper nuclear station declared a low-level emergency and will have to close down if the river rises another 3in. The Fort Calhoun nuclear power plant has been shut down since 9 April, in part due to flooding. At Prairie Island, Minnesota, extreme heat caused the nuclear plant's two emergency diesel generators to fail. Emergency generator failure was one of the key problems that led to the meltdowns at Fukushima.
In May, in reaction to the Fukushima disaster, Nikolaus Berlakovich, Austria's federal minister of agriculture, forestry, environment and water management, convened a meeting of Europe's 11 nuclear-free countries. Those gathered resolved to push for a nuclear-free Europe, even as Germany announced it will phase out nuclear power in 10 years and push ahead on renewable-energy research. Then, in last week's national elections in Italy, more than 90% of voters resoundingly rejected Prime Minister Silvio Berlusconi's plans to restart the country's nuclear-power-generation plans.
Leaders of national nuclear-energy programs are gathering this week in Vienna for the International Atomic Energy Agency's ministerial conference on nuclear safety. The meeting was called in response to Fukushima. Ironically, the ministers, including US Nuclear Regulatory Commission (NRC) Chairman Gregory Jaczko, held their meeting safely in a country with no nuclear power plants: Austria is at the forefront of Europe's new anti-nuclear alliance.
The IAEA meeting was preceded by the release of an Associated Press report stating that consistently, and for decades, US nuclear regulators lowered the bar on safety regulations in order to allow operators to keep the nuclear plants running. Nuclear power plants were constructed in the US in the decades leading up to the Three Mile Island disaster in 1979. These 104 plants are all getting on in years. The original licences were granted for 40 years. The AP's Jeff Donn wrote:
"When the first ones were being built in the 1960s and 1970s, it was expected that they would be replaced with improved models long before those licenses expired."
Enormous upfront construction costs, safety concerns and the problem of storing radioactive nuclear waste for thousands of years drove away private investors. Instead of developing and building new nuclear plants, the owners – typically for-profit companies like Exelon Corp, a major donor to the Obama campaigns through the years – simply try to run the old reactors longer, applying to the NRC for 20-year extensions.
Europe, already ahead of the US in development and deployment of renewable-energy technology, is now poised to accelerate in the field. In the US, the NRC has provided preliminary approval of the Southern Company's planned expansion of the Vogtle power plant in Georgia, which would allow the first construction of new nuclear power plants in the US since Three Mile Island. The project got a boost from President Barack Obama, who pledged an $8.3bn federal loan guarantee. Southern plans on using Westinghouse's new AP1000 reactor. But a coalition of environmental groups has filed to block the permit, noting that the new reactor design is inherently unsafe.
Obama established what he called his "blue ribbon commission on America's nuclear future". One of its 15 members is John Rowe, the chairman and chief executive officer of Exelon Corp (the same nuclear energy company that has lavished campaign contributions on Obama). The commission made a fact-finding trip to Japan to see how that country was thriving with nuclear power – one month before the Fukushima disaster. In May, the commission reiterated its position, which is the same as Obama's, that nuclear ought to be part of the US energy mix.
The US energy mix, instead, should include a national jobs programme to make existing buildings energy efficient, and to install solar and wind-power technology where appropriate. These jobs could not be outsourced and would immediately reduce our energy use and, thus, our reliance on foreign oil and domestic coal and nuclear. Such a programme could favour US manufacturers, to keep the money in the US economy. That would be a simple, effective and sane reaction to Fukushima.
• Denis Moynihan contributed research to this column
© 2011 Amy Goodman; distributed by King Features Syndicate
Electric cars: kiss petrol stations goodbye
EDF, British Gas and npower are vying to offer home charging services for electric cars, while TfL plans to have more charging points than petrol stations in the capital
Miles Brignall
guardian.co.uk, Friday 24 June 2011 23.02 BST
What would make you consider buying an electric car? They offer a green way to get around, with the chance to bypass petrol stations. The AA calculates they can be run for about 2p per mile, against around 14p per mile for a similar-sized petrol or diesel car. And they are exempt from road tax and London's congestion charge.
Energy company npower this week revealed that 33% of UK drivers would think about buying an electric vehicle (EV) in the next five years, rising to 41% when the benefits were explained.
But despite the introduction in January of a generous £5,000 government purchase grant to encourage more people to take the plunge, it's fair to say that sales of electrically powered cars in the UK are yet to really take off. Just over 500 people took the government up on its offer in the first quarter of this year. Their high prices – typically about £25,000 after the grant – plus a lack of models by major carmakers and a shortage of charging points, have held back sales. However, the last two points are about to change.
Potential buyers now have a choice of seven models in the UK, with 13 more on the way, while EDF Energy, British Gas and npower have recently announced plans to start offering to install faster and cheaper charging points in customers' homes, in a move they hope will help kick-start sales.
The companies are banking on the fact that buyers of the latest, more consumer-friendly electric cars, such as the Nissan Leaf, are going to boost demand for electricity.
The take-up of EVs – which run entirely on electricity stored in rechargeable batteries – is seen as central to the plan to cut the transport sector's carbon emissions, both here and across the European Union.
It is predicted that we will be running a total of 800,000 EVs in Britain by 2020, and as a result the race to install a recharging infrastructure is well under way.
Transport for London (TfL) recently announced it will have 1,300 EV charging points in London by 2013 – more than the current number of petrol stations in the capital. The London mayor, Boris Johnson, is on the record as saying he wants to make the city the electric car capital of Europe.
Plans are also under way to increase the number of charging points at a variety of locations across the UK – and soon it will be possible for homeowners to upgrade their garages to allow faster, safer home charging. Until recently, most owners of plug-in-to-recharge electric cars have had to rely on the traditional three-point household plug, and wait about eight hours to fully recharge their vehicle at home.
However, the power companies, sensing a good business opportunity, are now vying to sign up electric car-owning households with the offer of cheaper and faster off-peak home charging that will cut the time it takes to recharge the vehicle – freeing it to make more journeys, and making them more attractive to buyers.
So far, EDF, British Gas, and most recently npower have said they will be targeting EV users with special home services as well as cheaper tariffs for recharging vehicles.
Speaking in Berlin last week, npower's head of e-mobility, Phil Evans, told Guardian Money that the company sees EVs as a major opportunity, and as a result it is working on building an "upgradable" charging infrastructure that will develop as the cars' power systems become more sophisticated.
In August, npower will be launching the most sophisticated home-charging product yet: a new "juice-e" tariff specifically aimed at EV users anywhere in the country.
For about £1,000, npower will carry out a survey of the EV buyer's home, upgrade the electrics and provide a proper charging point on the premises that will deliver a faster recharge – bringing the time down from eight to about four hours.
Crucially, the homeowner will be able to take advantage of significantly cheaper off-peak power – similar to the old Economy 7 tariff that would charge up storage heaters at night. The company says it will charge its juice-e customers around 6p/kWh to recharge their vehicles – about half the standard electricity price, typically saving about £150 a year in lower recharge costs. It will also supply 100% green energy on the tariff by matching the electricity used by car owners with that produced by its offshore North Hoyle wind farm.
RWE, npower's parent company, has led the development of charging points in its native Germany, and is about to install 150 of them in Amsterdam, another city about to embrace EVs.
Last month EDF said it would offer a similar service for £799, although it is charging a bit more for the off-peak power. It has a tie-up with Citroën and Peugeot to be the preferred supplier to those buying an EV from either carmaker. Those signing up for its home-charging deal will be put on EDF's eco20:20 energy tariff, which provides 20% cheaper electricity during evenings and weekends.
British Gas has done a similar deal with Nissan and Renault. It is conducting a trial with the first 150 EV buyers to sign up, and says it will have its EV tariff up and running next year.
In the meantime, the race is on to provide charging points at workplaces, supermarkets and so on. In London the 150 charging points recently installed by TfL have been branded under the Source London logo. Users pay £100 a year for free unlimited recharging, and log on to the system by waving an Oyster-style card over the terminal.
It is hoped the Source scheme will be rolled out nationwide, with EV users able to tap into a network of charging points across the country.
In north-east England, npower is about to install 55 charging sites; in Milton Keynes there are plans to install 250 public EV charge points over the next three years; and further schemes are planned at other locations.
In the long run, npower says all electric car owners will be able to pull into a supermarket or town centre, attach their car to the charging point, get an 80% recharge in about half an hour, and pay for it with a credit card or Oyster-style card.
Unbelievably, there is still a VHS/Betamax-style dispute going on among car manufacturers over which charging plug should predominate – although it should be resolved in the next few months, say insiders.
Pros and cons of the electric switch
If you think electric cars are nothing more than updated milkfloats, you should take a spin in the Tesla Roadster. Last week Guardian Money drove the 100% electrically powered sports car that is capable of more than 125mph, and found it to be one of the fastest accelerating cars we have ever been in. RWE, npower's German parent company, uses a Tesla to show just what electric cars are capable of, and we were lucky enough to be let loose on the car at Berlin's famous Tempelhof airport.
The Tesla will to go from 0 to 60mph in around 3.9 seconds, making it faster than many supercars that cost significantly more than its £86,000 price tag. It will cover about 200 miles on a single charge, and the handling was excellent.
Perhaps a little more practical was the Mitsubishi i-MiEV that we also tested. Driving it was very similar to any other automatic city car, except there was no exhaust system and no emissions.
Potential buyers of an electric car have a choice of seven models in the UK, with more on the way. According to those in the know, the Nissan Leaf, launched earlier this year, took EVs to a whole new level. The Leaf has won plaudits for the fact it is very like other conventional cars of a similar size – a far cry from the G-Wiz, the vehicle most people probably think of when electric vehicles come to mind.
Despite what you may have read about electric cars costing pennies to recharge, each recharge will actually set you back £1 to £3, depending on your electricity tariff. Each one should deliver about 90 miles' driving. This means the "typical" driver (9,000 miles a year) will pay £250 to £300 a year in electricity – less if you use a Source London charging point. Compare that to your current petrol bill, and an EV soon starts to look attractive.
Opt for the new Renault Zoe, out next year, and you'll pay about £70 a month or £840 a year to lease the batteries. This might sound like a lot, but if there is a problem with them, the lease firm will have to pick up the tab. On other EVs, you own the batteries as part of the car.
Electric cars enjoy free car tax each year – but so do some low-emission diesel cars and a few petrol models, so you won't save much there unless you are abandoning a gas-guzzler.
Servicing should be a little cheaper for electric – there is no oil or filter to change. However, it looks as though it will cost more to insure. The cost of depreciation – the biggest cost of new car ownership – is, at this point, unknown.
Money has concluded that drivers switching to an EV certainly won't lose money, and you could well make some financial gains.
If you typically drive a series of shorter runs, you can make a strong financial case for going electric. When the asking prices come down – as they surely will – there will be a strong financial incentive for urban dwellers to drive an EV.
Miles Brignall
guardian.co.uk, Friday 24 June 2011 23.02 BST
What would make you consider buying an electric car? They offer a green way to get around, with the chance to bypass petrol stations. The AA calculates they can be run for about 2p per mile, against around 14p per mile for a similar-sized petrol or diesel car. And they are exempt from road tax and London's congestion charge.
Energy company npower this week revealed that 33% of UK drivers would think about buying an electric vehicle (EV) in the next five years, rising to 41% when the benefits were explained.
But despite the introduction in January of a generous £5,000 government purchase grant to encourage more people to take the plunge, it's fair to say that sales of electrically powered cars in the UK are yet to really take off. Just over 500 people took the government up on its offer in the first quarter of this year. Their high prices – typically about £25,000 after the grant – plus a lack of models by major carmakers and a shortage of charging points, have held back sales. However, the last two points are about to change.
Potential buyers now have a choice of seven models in the UK, with 13 more on the way, while EDF Energy, British Gas and npower have recently announced plans to start offering to install faster and cheaper charging points in customers' homes, in a move they hope will help kick-start sales.
The companies are banking on the fact that buyers of the latest, more consumer-friendly electric cars, such as the Nissan Leaf, are going to boost demand for electricity.
The take-up of EVs – which run entirely on electricity stored in rechargeable batteries – is seen as central to the plan to cut the transport sector's carbon emissions, both here and across the European Union.
It is predicted that we will be running a total of 800,000 EVs in Britain by 2020, and as a result the race to install a recharging infrastructure is well under way.
Transport for London (TfL) recently announced it will have 1,300 EV charging points in London by 2013 – more than the current number of petrol stations in the capital. The London mayor, Boris Johnson, is on the record as saying he wants to make the city the electric car capital of Europe.
Plans are also under way to increase the number of charging points at a variety of locations across the UK – and soon it will be possible for homeowners to upgrade their garages to allow faster, safer home charging. Until recently, most owners of plug-in-to-recharge electric cars have had to rely on the traditional three-point household plug, and wait about eight hours to fully recharge their vehicle at home.
However, the power companies, sensing a good business opportunity, are now vying to sign up electric car-owning households with the offer of cheaper and faster off-peak home charging that will cut the time it takes to recharge the vehicle – freeing it to make more journeys, and making them more attractive to buyers.
So far, EDF, British Gas, and most recently npower have said they will be targeting EV users with special home services as well as cheaper tariffs for recharging vehicles.
Speaking in Berlin last week, npower's head of e-mobility, Phil Evans, told Guardian Money that the company sees EVs as a major opportunity, and as a result it is working on building an "upgradable" charging infrastructure that will develop as the cars' power systems become more sophisticated.
In August, npower will be launching the most sophisticated home-charging product yet: a new "juice-e" tariff specifically aimed at EV users anywhere in the country.
For about £1,000, npower will carry out a survey of the EV buyer's home, upgrade the electrics and provide a proper charging point on the premises that will deliver a faster recharge – bringing the time down from eight to about four hours.
Crucially, the homeowner will be able to take advantage of significantly cheaper off-peak power – similar to the old Economy 7 tariff that would charge up storage heaters at night. The company says it will charge its juice-e customers around 6p/kWh to recharge their vehicles – about half the standard electricity price, typically saving about £150 a year in lower recharge costs. It will also supply 100% green energy on the tariff by matching the electricity used by car owners with that produced by its offshore North Hoyle wind farm.
RWE, npower's parent company, has led the development of charging points in its native Germany, and is about to install 150 of them in Amsterdam, another city about to embrace EVs.
Last month EDF said it would offer a similar service for £799, although it is charging a bit more for the off-peak power. It has a tie-up with Citroën and Peugeot to be the preferred supplier to those buying an EV from either carmaker. Those signing up for its home-charging deal will be put on EDF's eco20:20 energy tariff, which provides 20% cheaper electricity during evenings and weekends.
British Gas has done a similar deal with Nissan and Renault. It is conducting a trial with the first 150 EV buyers to sign up, and says it will have its EV tariff up and running next year.
In the meantime, the race is on to provide charging points at workplaces, supermarkets and so on. In London the 150 charging points recently installed by TfL have been branded under the Source London logo. Users pay £100 a year for free unlimited recharging, and log on to the system by waving an Oyster-style card over the terminal.
It is hoped the Source scheme will be rolled out nationwide, with EV users able to tap into a network of charging points across the country.
In north-east England, npower is about to install 55 charging sites; in Milton Keynes there are plans to install 250 public EV charge points over the next three years; and further schemes are planned at other locations.
In the long run, npower says all electric car owners will be able to pull into a supermarket or town centre, attach their car to the charging point, get an 80% recharge in about half an hour, and pay for it with a credit card or Oyster-style card.
Unbelievably, there is still a VHS/Betamax-style dispute going on among car manufacturers over which charging plug should predominate – although it should be resolved in the next few months, say insiders.
Pros and cons of the electric switch
If you think electric cars are nothing more than updated milkfloats, you should take a spin in the Tesla Roadster. Last week Guardian Money drove the 100% electrically powered sports car that is capable of more than 125mph, and found it to be one of the fastest accelerating cars we have ever been in. RWE, npower's German parent company, uses a Tesla to show just what electric cars are capable of, and we were lucky enough to be let loose on the car at Berlin's famous Tempelhof airport.
The Tesla will to go from 0 to 60mph in around 3.9 seconds, making it faster than many supercars that cost significantly more than its £86,000 price tag. It will cover about 200 miles on a single charge, and the handling was excellent.
Perhaps a little more practical was the Mitsubishi i-MiEV that we also tested. Driving it was very similar to any other automatic city car, except there was no exhaust system and no emissions.
Potential buyers of an electric car have a choice of seven models in the UK, with more on the way. According to those in the know, the Nissan Leaf, launched earlier this year, took EVs to a whole new level. The Leaf has won plaudits for the fact it is very like other conventional cars of a similar size – a far cry from the G-Wiz, the vehicle most people probably think of when electric vehicles come to mind.
Despite what you may have read about electric cars costing pennies to recharge, each recharge will actually set you back £1 to £3, depending on your electricity tariff. Each one should deliver about 90 miles' driving. This means the "typical" driver (9,000 miles a year) will pay £250 to £300 a year in electricity – less if you use a Source London charging point. Compare that to your current petrol bill, and an EV soon starts to look attractive.
Opt for the new Renault Zoe, out next year, and you'll pay about £70 a month or £840 a year to lease the batteries. This might sound like a lot, but if there is a problem with them, the lease firm will have to pick up the tab. On other EVs, you own the batteries as part of the car.
Electric cars enjoy free car tax each year – but so do some low-emission diesel cars and a few petrol models, so you won't save much there unless you are abandoning a gas-guzzler.
Servicing should be a little cheaper for electric – there is no oil or filter to change. However, it looks as though it will cost more to insure. The cost of depreciation – the biggest cost of new car ownership – is, at this point, unknown.
Money has concluded that drivers switching to an EV certainly won't lose money, and you could well make some financial gains.
If you typically drive a series of shorter runs, you can make a strong financial case for going electric. When the asking prices come down – as they surely will – there will be a strong financial incentive for urban dwellers to drive an EV.
UK's biggest solar energy farm connects to national grid
Solar panels at Howbery business park in Oxfordshire to generate up to 682MWh a year
Alok Jha, science correspondent
The Guardian, Monday 27 June 2011
Britain's biggest array of solar panels has begun generating in Oxfordshire. The first large ground system to feed into the national grid will benefit from the tariff scheme paying a premium for supplying clean electricity.
Howbery business park's companies specialise in engineering, environmental and water research and development and its 3,000-panel array generates up to 682 MWh a year, a quarter of its needs, and thereby save 350 tonnes of CO2 a year.
Derry Newman, chief executive of Solarcentury, the company that supplied the solar photovoltaic modules, said that the UK's famously overcast weather did not make it an unsuitable place for solar power.
"Solar works on daylight, not necessarily [direct] sunlight and it gets light every day in Britain," he said. "Of course it generates more on a very bright day than a dull day. If you average over the year, the amount of cumulative daylight, energy per square metre, is very well known and is very predictable. Over the life of the system, the amount of energy produced is very predictable."
Though the biggest in Britain, Howbery is dwarfed by those in Spain or Italy, up to 10 times bigger. Solarcentury, the panel maker, has similar projects due online next month, but these could be the UK's last big solar farms for some time. In February, the government announced a review of feed-in tariffs for anyone generating more than 50k of power and cut the rates payable for large ground-mounted solar installations by more than 70%.
"This means that virtually all investors have withdrawn from financing such developments," said Newman. "There were probably many hundreds lined up for development across the country. they're pretty much all cancelled now because of the fast track review. This type of installation will be a relative rarity for a few years."
But Newman is optimistic about the solar industry in the UK, however.
"They will come back because tariffs and subsidies for solar are a necessary device to create the industry right now but the rate of change of price of solar is on a strong downward trend," he said.
"Within a few years, the amount of subsidy needed will go down significantly. When that happens, more of these can happen with less cost and become more attractive to investors."
John Ormston, chief executive of HR Wallingford, which is based at the business park, said that Howbery Business Park was proud of its green credentials. "A centre of excellence with two highly sustainable, BREEAM Excellent rated office buildings and an operational Green Travel Plan, we are committed to leading the way in renewable energy and are proud to be showcasing the UK's first solar business park.
Howbery Business Park will be one of only a few business parks in the UK where occupiers are able to secure a direct electrical supply from a solar array."
Alok Jha, science correspondent
The Guardian, Monday 27 June 2011
Britain's biggest array of solar panels has begun generating in Oxfordshire. The first large ground system to feed into the national grid will benefit from the tariff scheme paying a premium for supplying clean electricity.
Howbery business park's companies specialise in engineering, environmental and water research and development and its 3,000-panel array generates up to 682 MWh a year, a quarter of its needs, and thereby save 350 tonnes of CO2 a year.
Derry Newman, chief executive of Solarcentury, the company that supplied the solar photovoltaic modules, said that the UK's famously overcast weather did not make it an unsuitable place for solar power.
"Solar works on daylight, not necessarily [direct] sunlight and it gets light every day in Britain," he said. "Of course it generates more on a very bright day than a dull day. If you average over the year, the amount of cumulative daylight, energy per square metre, is very well known and is very predictable. Over the life of the system, the amount of energy produced is very predictable."
Though the biggest in Britain, Howbery is dwarfed by those in Spain or Italy, up to 10 times bigger. Solarcentury, the panel maker, has similar projects due online next month, but these could be the UK's last big solar farms for some time. In February, the government announced a review of feed-in tariffs for anyone generating more than 50k of power and cut the rates payable for large ground-mounted solar installations by more than 70%.
"This means that virtually all investors have withdrawn from financing such developments," said Newman. "There were probably many hundreds lined up for development across the country. they're pretty much all cancelled now because of the fast track review. This type of installation will be a relative rarity for a few years."
But Newman is optimistic about the solar industry in the UK, however.
"They will come back because tariffs and subsidies for solar are a necessary device to create the industry right now but the rate of change of price of solar is on a strong downward trend," he said.
"Within a few years, the amount of subsidy needed will go down significantly. When that happens, more of these can happen with less cost and become more attractive to investors."
John Ormston, chief executive of HR Wallingford, which is based at the business park, said that Howbery Business Park was proud of its green credentials. "A centre of excellence with two highly sustainable, BREEAM Excellent rated office buildings and an operational Green Travel Plan, we are committed to leading the way in renewable energy and are proud to be showcasing the UK's first solar business park.
Howbery Business Park will be one of only a few business parks in the UK where occupiers are able to secure a direct electrical supply from a solar array."
Wednesday, 22 June 2011
SEB bolsters green bonds team
17 June 2011
Swedish bank SEB, one of the pioneers of the environmental bonds market, has bulked up and formalised its sustainable products department in what its head describes as a vote of confidence in the sector.
Christopher Flensborg, the Stockholm-based head of sustainable products at the bank, said that business manager Samantha Sutcliffe has joined the team.
It has also established a network within the bank, with co-ordinators in four business units appointed on a part-time basis to support the sustainable products department. Flensborg declined to disclose within which business units they sit.
“This is a signal that we believe in this market,” Flensborg told Environmental Finance.
SEB has arranged around $2 billion of the total $12 billion of green bonds issued over the last few years, on behalf of the World Bank and the International Finance Corporation (IFC).
Flensborg declined to go into details on the department’s plans, but said that “without expanding across the credit range, and without expanding across the market, it will be difficult for [an environmental bonds market] to get off the ground.”
SEB is understood to be working with at least one corporate issuer on a forthcoming green bond, but Flensborg declined to comment.
Mark Nicholls
Swedish bank SEB, one of the pioneers of the environmental bonds market, has bulked up and formalised its sustainable products department in what its head describes as a vote of confidence in the sector.
Christopher Flensborg, the Stockholm-based head of sustainable products at the bank, said that business manager Samantha Sutcliffe has joined the team.
It has also established a network within the bank, with co-ordinators in four business units appointed on a part-time basis to support the sustainable products department. Flensborg declined to disclose within which business units they sit.
“This is a signal that we believe in this market,” Flensborg told Environmental Finance.
SEB has arranged around $2 billion of the total $12 billion of green bonds issued over the last few years, on behalf of the World Bank and the International Finance Corporation (IFC).
Flensborg declined to go into details on the department’s plans, but said that “without expanding across the credit range, and without expanding across the market, it will be difficult for [an environmental bonds market] to get off the ground.”
SEB is understood to be working with at least one corporate issuer on a forthcoming green bond, but Flensborg declined to comment.
Mark Nicholls
US solar PV installations soar as European markets stall
20 June 2011
US solar photovoltaic (PV) installations soared in the first quarter of 2011, stoking hopes the country could regain a larger share of the global market.
In the first three months of 2011, the US installed 252MW of grid-connected PV, a 66% increase from the first quarter of 2010, according to a report released by the Solar Energy Industries Association (SEIA) and analysis firm GTM Research. This was due to falling solar energy equipment costs and a rush to take advantage of the Section 1603 Treasury cash grant programme.
“The 1603 programme has effectively filled the void that has existed in the tax equity market over the last two years,” said Tom Kimbis, SEIA’s vice-president of strategy and external affairs.
The cash grant programme was expected to expire in 2010, but was extended until the end of 2011. SEIA believes the programme should be extended to 2016, the expiry date for the solar investment tax credit, Kimbis said.
“The extension is one of the linchpins of continuing the growth of the solar market at the rate it’s growing today,” he added. “We’re pushing very hard on it. We’re optimistic we’ll get something extended by the end of this year. [But] we’re facing a tough environment in extending anything with a cost.”
No concentrating solar projects came online in the US in the first quarter of 2011, but several major projects have received conditional or final loan guarantees from the Department of Energy (DOE) this year, including the 484MW Blythe Phase I ($2.1 billion) and the 370MW Ivanpah project ($1.6 billion), both in California.
In 2010, the US installed 887MW of grid-connected PV, representing 104% growth over the 435MW installed in 2009. But the US market share still shrunk to 5% from 6% in 2009 due to even faster growth in the rest of the world.
US share to grow at Europe's expense
But that trend is expected to reverse this year as some European countries reduce their solar subsidies or feed-in tariffs by double-digit percentages, which will slow their growth rates significantly this year, according to the report.
The US share of the global solar market will likely reach 9% by the end of 2011, up from 5% at the end of 2010, SEIA said. In comparison, the two largest solar markets, Germany and Italy, will have a 32% and 28% share of the market, respectively, compared to 42% and 23% in 2010.
German installations, for example, will likely be flat year on year, as opposed to the 100% growth rate expected in the US in 2011, said Shayle Kann, managing director of solar at GTM Research.
“The US is likely to surpass major European markets in the next four to five years,” he said.
But this projection should be “taken with a grain of salt because the European market shifts much quicker than the US market”, Kann added.
China’s market share is expected to double to 4.5% from 2.2% in 2010 while India’s will also grow to 0.7% from 0.3%, according to the report.
US solar electric installations totalled 956MW in 2010 to reach a cumulative installed capacity of 2.6GW while their total value grew 67% to $6 billion in 2010 from $3.6 billion in 2009.
The US market is the most attractive country for solar investment, according to the latest index compiled by analysis firm Enrst & Young, which attributed the strong growth partly to the DOE’s loan guarantee programme. India retained the second spot while China moved up two spots to third in the rankings. Spain and Italy round out the top five.
Gloria Gonzalez
US solar photovoltaic (PV) installations soared in the first quarter of 2011, stoking hopes the country could regain a larger share of the global market.
In the first three months of 2011, the US installed 252MW of grid-connected PV, a 66% increase from the first quarter of 2010, according to a report released by the Solar Energy Industries Association (SEIA) and analysis firm GTM Research. This was due to falling solar energy equipment costs and a rush to take advantage of the Section 1603 Treasury cash grant programme.
“The 1603 programme has effectively filled the void that has existed in the tax equity market over the last two years,” said Tom Kimbis, SEIA’s vice-president of strategy and external affairs.
The cash grant programme was expected to expire in 2010, but was extended until the end of 2011. SEIA believes the programme should be extended to 2016, the expiry date for the solar investment tax credit, Kimbis said.
“The extension is one of the linchpins of continuing the growth of the solar market at the rate it’s growing today,” he added. “We’re pushing very hard on it. We’re optimistic we’ll get something extended by the end of this year. [But] we’re facing a tough environment in extending anything with a cost.”
No concentrating solar projects came online in the US in the first quarter of 2011, but several major projects have received conditional or final loan guarantees from the Department of Energy (DOE) this year, including the 484MW Blythe Phase I ($2.1 billion) and the 370MW Ivanpah project ($1.6 billion), both in California.
In 2010, the US installed 887MW of grid-connected PV, representing 104% growth over the 435MW installed in 2009. But the US market share still shrunk to 5% from 6% in 2009 due to even faster growth in the rest of the world.
US share to grow at Europe's expense
But that trend is expected to reverse this year as some European countries reduce their solar subsidies or feed-in tariffs by double-digit percentages, which will slow their growth rates significantly this year, according to the report.
The US share of the global solar market will likely reach 9% by the end of 2011, up from 5% at the end of 2010, SEIA said. In comparison, the two largest solar markets, Germany and Italy, will have a 32% and 28% share of the market, respectively, compared to 42% and 23% in 2010.
German installations, for example, will likely be flat year on year, as opposed to the 100% growth rate expected in the US in 2011, said Shayle Kann, managing director of solar at GTM Research.
“The US is likely to surpass major European markets in the next four to five years,” he said.
But this projection should be “taken with a grain of salt because the European market shifts much quicker than the US market”, Kann added.
China’s market share is expected to double to 4.5% from 2.2% in 2010 while India’s will also grow to 0.7% from 0.3%, according to the report.
US solar electric installations totalled 956MW in 2010 to reach a cumulative installed capacity of 2.6GW while their total value grew 67% to $6 billion in 2010 from $3.6 billion in 2009.
The US market is the most attractive country for solar investment, according to the latest index compiled by analysis firm Enrst & Young, which attributed the strong growth partly to the DOE’s loan guarantee programme. India retained the second spot while China moved up two spots to third in the rankings. Spain and Italy round out the top five.
Gloria Gonzalez
Sustainability principles boost private equity returns - IFC
20 June 2011
The International Finance Corporation (IFC) has found applying sustainability criteria improves the financial returns of private equity investments.
“In our experience, it actually helps returns,” said Gavin Wilson, CEO of IFC Asset Management Company, a wholly owned subsidiary of the IFC.
Speaking at the Financial Times/IFC Sustainable Finance conference in London on 16 June, Wilson noted that this conclusion was based on a large amount of empirical data – around 2,000 investments spread over 20 years.
Furthermore, he added, as the IFC strengthened its sustainability criteria over the past decade, the financial performance of investee companies had improved. “Our returns have got better and outperformance with respect to the benchmark has got better,” he said.
“Sustainability is not just a ‘nice-to-have’ but a ‘must-have’,” he concluded.
Both private equity and sustainability concerns are becoming more mainstream in the financial markets, and the former can have a ‘catalytic’ effect on the latter, Wilson suggested. Private equity investors typically undertake more thorough research and have a better understanding of the companies they invest in than investors who only buy shares in listed companies.
Private equity investors generally remain much more closely involved in investee companies and are therefore well placed to influence their behaviour and performance, including on environmental, social and governance (ESG) issues. Sometimes, he said, private equity investors are even brought into a company specifically to help with ESG issues. When things go wrong with equity investments, it is commonly as a result of ESG failings, he added.
And it is not just the $4 billion IFC Asset Management Company that believes in the beneficial effect of sustainability screening on private equity returns, he noted, pointing to the success of Kohlberg Kravis Roberts’ Green Portfolio programme and Carlyle Group’s EcoValuScreen
Graham Cooper
The International Finance Corporation (IFC) has found applying sustainability criteria improves the financial returns of private equity investments.
“In our experience, it actually helps returns,” said Gavin Wilson, CEO of IFC Asset Management Company, a wholly owned subsidiary of the IFC.
Speaking at the Financial Times/IFC Sustainable Finance conference in London on 16 June, Wilson noted that this conclusion was based on a large amount of empirical data – around 2,000 investments spread over 20 years.
Furthermore, he added, as the IFC strengthened its sustainability criteria over the past decade, the financial performance of investee companies had improved. “Our returns have got better and outperformance with respect to the benchmark has got better,” he said.
“Sustainability is not just a ‘nice-to-have’ but a ‘must-have’,” he concluded.
Both private equity and sustainability concerns are becoming more mainstream in the financial markets, and the former can have a ‘catalytic’ effect on the latter, Wilson suggested. Private equity investors typically undertake more thorough research and have a better understanding of the companies they invest in than investors who only buy shares in listed companies.
Private equity investors generally remain much more closely involved in investee companies and are therefore well placed to influence their behaviour and performance, including on environmental, social and governance (ESG) issues. Sometimes, he said, private equity investors are even brought into a company specifically to help with ESG issues. When things go wrong with equity investments, it is commonly as a result of ESG failings, he added.
And it is not just the $4 billion IFC Asset Management Company that believes in the beneficial effect of sustainability screening on private equity returns, he noted, pointing to the success of Kohlberg Kravis Roberts’ Green Portfolio programme and Carlyle Group’s EcoValuScreen
Graham Cooper
Zouk raises €230m clean-tech fund, prepares infrastructure fund
20 June 2011
One of Europe’s biggest clean technology funds reached a final close today, with €230 million ($300 million) committed.
Private equity fund manager Zouk Capital said the original fundraising target for the Cleantech Europe II fund was €200 million, indicating strong investor demand. According to Zouk, Cleantech Europe II is the largest dedicated clean-tech growth equity fund in the region.
Launched in 2006, London-based Zouk already manages two other clean-tech funds, its €88 million earlier private equity fund, Cleantech Europe I, and a €52 million solar project finance fund, zSOL. The close of Cleantech Europe II brings the fund manager’s total assets under management to €370 million.
Zouk is planning to announce a second infrastructure fund “probably within weeks”, Samer Salty, chief executive of Zouk, told Environmental Finance. Whereas zSOL invests only in solar projects, such as seven Italian solar farms, the new fund will invest more widely, across renewables and environmental infrastructure, he said.
Salty called the fundraising a “milestone” for the fund manager and for the sector in Europe. “The scale of this fund creates a game-changing opportunity to support companies and to let our investors benefit from the impressive growth in clean-tech,” he added.
Cleantech Europe II will invest in expansion-stage companies in renewable energy, energy efficiency, water and waste technologies, Zouk said. It will target the UK, German-speaking countries, the Nordic countries, France, Belgium, the Netherlands and Luxembourg.
Zouk noted that five of the 10 investment professionals on its technology team, which will manage the fund, are native German speakers, giving it an edge because of the region’s “leadership in clean-tech innovation and commercialisation”.
Salty told Environmental Finance that the fund will seek to invest €10 million- 20 million per company, over the life of the company. It will focus on companies that already have a good revenue stream, with tested technologies.
The fund has already made its first investment to set up an energy efficiency and microgeneration firm that caters to the UK market. Zouk put an undisclosed amount into Anesco, alongside the other lead investor, the British utility Scottish & Southern Energy. Anesco effectively builds on a business unit of SSE, inheriting its team, customers and revenue stream, Salty said.
In August last year, Zouk made a partial exit from one of its portfolio companies, when Nordic Capital bought a 70% stake in silicon slurry recycler SiC Processing. At the time, Zouk said the sale produced a “return multiple which strongly validates its European growth capital investment strategy”.
Jess McCabe
One of Europe’s biggest clean technology funds reached a final close today, with €230 million ($300 million) committed.
Private equity fund manager Zouk Capital said the original fundraising target for the Cleantech Europe II fund was €200 million, indicating strong investor demand. According to Zouk, Cleantech Europe II is the largest dedicated clean-tech growth equity fund in the region.
Launched in 2006, London-based Zouk already manages two other clean-tech funds, its €88 million earlier private equity fund, Cleantech Europe I, and a €52 million solar project finance fund, zSOL. The close of Cleantech Europe II brings the fund manager’s total assets under management to €370 million.
Zouk is planning to announce a second infrastructure fund “probably within weeks”, Samer Salty, chief executive of Zouk, told Environmental Finance. Whereas zSOL invests only in solar projects, such as seven Italian solar farms, the new fund will invest more widely, across renewables and environmental infrastructure, he said.
Salty called the fundraising a “milestone” for the fund manager and for the sector in Europe. “The scale of this fund creates a game-changing opportunity to support companies and to let our investors benefit from the impressive growth in clean-tech,” he added.
Cleantech Europe II will invest in expansion-stage companies in renewable energy, energy efficiency, water and waste technologies, Zouk said. It will target the UK, German-speaking countries, the Nordic countries, France, Belgium, the Netherlands and Luxembourg.
Zouk noted that five of the 10 investment professionals on its technology team, which will manage the fund, are native German speakers, giving it an edge because of the region’s “leadership in clean-tech innovation and commercialisation”.
Salty told Environmental Finance that the fund will seek to invest €10 million- 20 million per company, over the life of the company. It will focus on companies that already have a good revenue stream, with tested technologies.
The fund has already made its first investment to set up an energy efficiency and microgeneration firm that caters to the UK market. Zouk put an undisclosed amount into Anesco, alongside the other lead investor, the British utility Scottish & Southern Energy. Anesco effectively builds on a business unit of SSE, inheriting its team, customers and revenue stream, Salty said.
In August last year, Zouk made a partial exit from one of its portfolio companies, when Nordic Capital bought a 70% stake in silicon slurry recycler SiC Processing. At the time, Zouk said the sale produced a “return multiple which strongly validates its European growth capital investment strategy”.
Jess McCabe
Conservative MEPs to revolt against the coalition’s environment policies
Conservative MEPs are planning to revolt against the coalition’s environment policies in an attempt to sabotage the proposed strengthening of Europe’s climate targets.
The revolt would be an embarrassment for David Cameron, who has committed Britain to some of the most ambitious greenhouse gas targets in the world.
Tomorrow the European parliament will vote on whether to toughen the EU’s emissions-cutting target from 20 per cent reductions by 2020, compared with 1990 levels, to a 30 per cent cut. The commitment to a 30 per cent cut has been agreed by the coalition, and has won support from other member states in the EU bloc.
British Conservative MEPs, however, have said they would vote to oppose the 30% cut, according to reports.
A survey found that only one out of the 23 replied to say they would vote in favour of the 30 per cent figure.
The leader of Britain’s Conservative delegation, Martin Callanan, said: “Conservative MEPs have always been sceptical of the EU unilaterally increasing its target to 30 per cent without a worldwide agreement … European companies will be unable to compete if the reduction targets are set too high.
“Many high energy consuming companies are already being forced to relocate to countries outside the EU, which have little or no environmental legislation, putting many Europeans out of work, and an increased target will exacerbate this trend.
“We are also concerned that the higher carbon costs from an increased target will feed through into energy price increases for domestic consumers, who are already facing steep rises.”
Last month the Prime Minister said the coalition wanted to be the “greenest government ever” as he committed Britain to halve UK carbon emissions by 2025.
He said: “When the coalition came together last year, we said we wanted this to be the greenest government ever. This is the right approach for Britain if we are to combat climate change, secure our energy supplies for the long-term and seize the economic opportunities that green industries hold … the UK can prove that there need not be a tension between green and growth.”
However it appears that Tory MEPs are set to scupper that commitment. Only Marina Yannakoudakis said she would vote in favour of 30 per cent while Julie Girling said she planned to vote for 20 per cent but might compromise on 25 per cent if it became an option that was offered.
The revolt would be an embarrassment for David Cameron, who has committed Britain to some of the most ambitious greenhouse gas targets in the world.
Tomorrow the European parliament will vote on whether to toughen the EU’s emissions-cutting target from 20 per cent reductions by 2020, compared with 1990 levels, to a 30 per cent cut. The commitment to a 30 per cent cut has been agreed by the coalition, and has won support from other member states in the EU bloc.
British Conservative MEPs, however, have said they would vote to oppose the 30% cut, according to reports.
A survey found that only one out of the 23 replied to say they would vote in favour of the 30 per cent figure.
The leader of Britain’s Conservative delegation, Martin Callanan, said: “Conservative MEPs have always been sceptical of the EU unilaterally increasing its target to 30 per cent without a worldwide agreement … European companies will be unable to compete if the reduction targets are set too high.
“Many high energy consuming companies are already being forced to relocate to countries outside the EU, which have little or no environmental legislation, putting many Europeans out of work, and an increased target will exacerbate this trend.
“We are also concerned that the higher carbon costs from an increased target will feed through into energy price increases for domestic consumers, who are already facing steep rises.”
Last month the Prime Minister said the coalition wanted to be the “greenest government ever” as he committed Britain to halve UK carbon emissions by 2025.
He said: “When the coalition came together last year, we said we wanted this to be the greenest government ever. This is the right approach for Britain if we are to combat climate change, secure our energy supplies for the long-term and seize the economic opportunities that green industries hold … the UK can prove that there need not be a tension between green and growth.”
However it appears that Tory MEPs are set to scupper that commitment. Only Marina Yannakoudakis said she would vote in favour of 30 per cent while Julie Girling said she planned to vote for 20 per cent but might compromise on 25 per cent if it became an option that was offered.
The timebomb of ageing US nuclear reactors revealed
An investigation by AP reveals how the industry has found a simple solution to ageing: weaken safety standards until creaking plants meet them
• Unsure about nuclear power? Here's the five questions you must answer to decide
Getting old isn't pleasant: things start to creak or stop working all together. The good news, you would think, in the case of nuclear power plants is that you can replace worn, corroded or cracked parts with new ones.
But an impressive year-long investigation into the US nuclear power industry by Associated Press reveals how the regulators and the industry have repeatedly found a much simpler solution to ageing: weaken the safety standards until the creaking plants meet them.
On yesterday's post, some commenters argued the engineering safety issue is not unique to nuclear power, meaning it is unfair to criticise the nuclear industry for failings that pass unnoticed elsewhere. I disagree for the simple reason that the stakes are so vastly higher for nuclear reactors: safety standards have to be far more stringent because the consequences of serious accidents have such huge economic and social costs. Remember, the pact you sign when you build a reactor is to control that atomic inferno for decades and then look after the waste for thousands of years.
That leads to the point that underlies the AP investigation. The incentive to maintain costly safety regimes runs entirely counter to the primary incentive of the nuclear power plant operators, which, perfectly reasonably, is to make money. The problem comes when, as years roll by without serious incidents, that heavy, expensive regulation starts to look like an unnecessary burden.
And that's exactly what AP's reporters found:
Federal regulators have been working closely with the US nuclear power industry to keep the nation's ageing reactors operating within safety standards by repeatedly weakening those standards, or simply failing to enforce them. Time after time, officials at the US Nuclear Regulatory Commission (NRC) have decided that original regulations were too strict, arguing that safety margins could be eased without peril, according to records and interviews.
Examples abound. When valves leaked, more leakage was allowed — up to 20 times the original limit. When rampant cracking caused radioactive leaks from steam generator tubing, an easier test of the tubes was devised, so plants could meet standards.
Failed cables. Busted seals. Broken nozzles, clogged screens, cracked concrete, dented containers, corroded metals and rusty underground pipes — all of these and thousands of other problems linked to ageing were uncovered. And all of them could escalate dangers in the event of an accident.
Yet despite the many problems linked to ageing, not a single official body in government or industry has studied the overall frequency and potential impact on safety of such breakdowns in recent years, even as the NRC has extended the licenses of dozens of reactors.
The problem of ageing is another where the incentive to close old reactors down in favour of newer, safer reactors is easily overwhelmed by the incentive to keep it running. The plant exists and the capital costs are paid off, so as long you can sell the electricity for more than the maintenance costs, you have a money-printing machine.
At the time, the 30 to 40 year licences granted to nuclear power plants were seen as the absolute maximum period for which they would run: the period matched their design lifetimes. Now, AP found, 66 of the 104 operating units in the US have been relicenced for 20 extra years, with applications being considered for 16 more.
Globally, the oldest operational nuclear power plant is in the UK: the 44-year-old Oldbury reactors, 15 miles north of Bristol on the bank of the river Severn. Of the 440 reactors in the world, 22 are older than 40 years, and 163 are older than 30 years.
AP quote NRC chief spokesman Eliot Brenner defending the licence extensions: "When a plant gets to be 40 years old, about the only thing that's 40 years old is the ink on the license. Most, if not all of the major components, will have been changed out."
But a former NRC head, Ivan Selin, has a different view. "It's as if we were all driving Model T's today and trying to bring them up to current mileage standards."
So here's the choice. You can back nuclear, an industry far more inherently dangerous than its rivals, with a history of capturing its safety regulators and dumping its costs on taxpayers. Or you can do all you can to back energy efficiency, renewable energy and energy storage plans.
• Unsure about nuclear power? Here's the five questions you must answer to decide
Getting old isn't pleasant: things start to creak or stop working all together. The good news, you would think, in the case of nuclear power plants is that you can replace worn, corroded or cracked parts with new ones.
But an impressive year-long investigation into the US nuclear power industry by Associated Press reveals how the regulators and the industry have repeatedly found a much simpler solution to ageing: weaken the safety standards until the creaking plants meet them.
On yesterday's post, some commenters argued the engineering safety issue is not unique to nuclear power, meaning it is unfair to criticise the nuclear industry for failings that pass unnoticed elsewhere. I disagree for the simple reason that the stakes are so vastly higher for nuclear reactors: safety standards have to be far more stringent because the consequences of serious accidents have such huge economic and social costs. Remember, the pact you sign when you build a reactor is to control that atomic inferno for decades and then look after the waste for thousands of years.
That leads to the point that underlies the AP investigation. The incentive to maintain costly safety regimes runs entirely counter to the primary incentive of the nuclear power plant operators, which, perfectly reasonably, is to make money. The problem comes when, as years roll by without serious incidents, that heavy, expensive regulation starts to look like an unnecessary burden.
And that's exactly what AP's reporters found:
Federal regulators have been working closely with the US nuclear power industry to keep the nation's ageing reactors operating within safety standards by repeatedly weakening those standards, or simply failing to enforce them. Time after time, officials at the US Nuclear Regulatory Commission (NRC) have decided that original regulations were too strict, arguing that safety margins could be eased without peril, according to records and interviews.
Examples abound. When valves leaked, more leakage was allowed — up to 20 times the original limit. When rampant cracking caused radioactive leaks from steam generator tubing, an easier test of the tubes was devised, so plants could meet standards.
Failed cables. Busted seals. Broken nozzles, clogged screens, cracked concrete, dented containers, corroded metals and rusty underground pipes — all of these and thousands of other problems linked to ageing were uncovered. And all of them could escalate dangers in the event of an accident.
Yet despite the many problems linked to ageing, not a single official body in government or industry has studied the overall frequency and potential impact on safety of such breakdowns in recent years, even as the NRC has extended the licenses of dozens of reactors.
The problem of ageing is another where the incentive to close old reactors down in favour of newer, safer reactors is easily overwhelmed by the incentive to keep it running. The plant exists and the capital costs are paid off, so as long you can sell the electricity for more than the maintenance costs, you have a money-printing machine.
At the time, the 30 to 40 year licences granted to nuclear power plants were seen as the absolute maximum period for which they would run: the period matched their design lifetimes. Now, AP found, 66 of the 104 operating units in the US have been relicenced for 20 extra years, with applications being considered for 16 more.
Globally, the oldest operational nuclear power plant is in the UK: the 44-year-old Oldbury reactors, 15 miles north of Bristol on the bank of the river Severn. Of the 440 reactors in the world, 22 are older than 40 years, and 163 are older than 30 years.
AP quote NRC chief spokesman Eliot Brenner defending the licence extensions: "When a plant gets to be 40 years old, about the only thing that's 40 years old is the ink on the license. Most, if not all of the major components, will have been changed out."
But a former NRC head, Ivan Selin, has a different view. "It's as if we were all driving Model T's today and trying to bring them up to current mileage standards."
So here's the choice. You can back nuclear, an industry far more inherently dangerous than its rivals, with a history of capturing its safety regulators and dumping its costs on taxpayers. Or you can do all you can to back energy efficiency, renewable energy and energy storage plans.
Tuesday, 21 June 2011
Thinking globally, investing locally
16 June 2011
M&A in the renewables sector is hotting up – but investors are cautious, crave policy certainty and, to a large degree, are staying close to home, says KPMG’s Andy Cox
Mergers and acquisitions (M&A) activity in the renewable energy sector is on the rise. After tentative signs of a rise in renewable M&A in our report a year ago, 446 transactions were completed in 2010; a 70% increase by volume on 2009, which strongly indicates a global desire to invest in the sector.
A lack of large deals, however, meant the total value actually fell 41%, to $25.6 billion in 2010 from $43.7 billion in 2009. Only biomass – a relatively small proportion of total M&A activity – bucked this trend, with total M&A values more than doubling to $2.2 billion.
Nonetheless, the global jump in activity levels looks set to continue based on the first quarter of 2011, which has begun strongly, in terms of both volume and value, with a record deal tally of 141 totalling $11.2 billion, more than double the quarterly average value of $5.5 billion in 2010, and compared with an average of 96 deals per quarter.
In 2011 our survey – of 500 senior executives in the renewable energy industry globally – indicates higher competition for acquisition targets is expected to push up global valuations, driven by better financing conditions, a post-Fukushima reinvigoration of sentiment and soaring oil prices, as well as some new acquirers, including Asian manufacturers and, potentially, pension funds.
Regulation and incentives
The availability of incentives from governments around the world is cited as a key reason for the increased appetite for renewable deals. Indeed, those planning to invest in Italy (41%), the UK (38%) and Germany (29%) cited government incentives as their primary motivation.
Now, certainty and commitment are sought by the investors we surveyed, sending a clear message that those regimes with clear and stable incentives and regulations will outperform the market in attracting new capital in the forthcoming year.
That said, investors and lenders are still cautious. The returns and risk profile must measure up against each investor’s criteria and appetite for risk in order to attract and secure investment, which is undermined by uncertainty and volatility.
For example, three quarters of respondents said they would have invested more in the UK over the last three years, if regulation and legislation had been clearer and more consistent.
M&A will continue to be impacted by the cuts to renewable feed-in tariffs that were made in some of Europe’s leading renewable energy markets during 2010. Though these decrease the attractiveness of assets to buyers, growing competition for existing projects, with attractive guaranteed feed-in tariffs at higher historic levels, is providing a temporary boost to deal activity and acquisition multiples across some Western European markets. Meanwhile in Spain, harsh incentive cuts are triggering disposals as investors re-adjust their portfolios in light of reduced returns.
A brightening outlook for renewables M&A?
This has had a negative impact on valuations; the total value of solar transactions decreased 16% year-on-year in 2010. Without further stimulus, the level of M&A activity in solar photovoltaic assets can be expected to significantly decline once operational projects with attractive feed-in tariffs have found long-term owners.
Global context
The US retained its status as the most attractive market for acquisitions, targeted by 53% of respondents, followed by China (38%), India (35%), Germany (34%) and the UK (33% – the second most attractive European country).
One of the reasons for the popularity of the US for renewable energy investment is its perceived stability and the Obama administration’s determination that renewable energy plays a vital role in accelerating the country’s economic recovery. The stated aim for 80% of US energy to be derived from clean sources by 2035 is supported by a variety of incentive schemes, including the loan guarantee programme, investment tax credits, production tax credits and state-level renewable energy targets.
China’s jump up the renewable M&A country league table, from fifth to the second most targeted country for acquisitions in 2010, comes after a year of extensive renewable project development.
And China is expected to grow in influence, with nearly four in five respondents (78%) predicting the global renewable energy market will be driven by new investors from the country (while 59% expect new acquirers from North America to develop the market).
China has ambitious plans in the solar sector and has recently announced its intention to bring an additional 5 GW of solar power capacity online by 2015 as part of its latest Five Year Plan.
The third-placed Indian market has become increasingly dynamic as a result of strong natural resources, greater accommodation to international investment compared with China and a variety of government incentives. Stimuli include renewable energy generating standards for utilities, a structure for trading renewable energy certificates and attractive tax incentives for project developers.
However, the global impact of activity in this top three may be limited as our survey found the global renewable energy market is intrinsically local.
Investors intend to focus on their own markets. North American investors, for example, expect to invest domestically by a ratio of at least 2:1. And in Asia too, a strong preference for ‘local’ investment is indicated. This would build on existing activity, which saw domestic acquisitions account for almost two thirds of total M&A values in China, for example.
This heavy bias towards local investment is a potential concern for many countries that are hoping inbound investment from China and the US will plug domestic energy funding gaps. It adds to dependence on their incumbent regional investor base and to the importance of incentivising them in what will be an increasingly competitive market.
Sector Specifics
Biomass was found to be the most popular renewable energy sector again, with 46% of respondents intending to invest (compared with 37% last year). Biomass M&A values more than doubled year-on-year in 2010 and, proportionally, the sector is now gaining ground on renewable energy bulwarks solar and wind. During the course of last year, M&A in the biomass sector accounted for 9% of all renewable energy M&A, compared with only 3% in 2009.
Despite the cuts to incentive regimes in Europe, solar remains the second most popular sector, with 39% of respondents intending to invest, up from 37% in 2010.
Wind lost some ground, with onshore dropping to 30% (2009: 35%) while appetite remained limited but broadly stable for offshore at 10% (2009: 11%)
However, wind assets remain attractive to financial investors, and banks are starting to allocate substantial capital to offshore projects. Indeed the sector has seen investment by pension funds (for example in Anholt, Denmark’s largest offshore wind farm) sparking speculation about whether this is the beginning of sustained investment activity by the pension fund industry or merely represents opportunistic investing.
Conversely, limited targets and the oligopolistic nature of the turbine supply market constrains scope for offshore acquisitions, explaining why only 13% of surveyed corporates and investors intend to acquire offshore wind equipment manufacturers and project developers during the next 18 months.
Wind is set to be the main source of renewable capacity growth in eastern and southern European markets where the conventional model of acquiring late-stage pre-construction wind farms is likely to increase in 2011 thanks to critical emissions targets, growing power demands and generous incentives compared to declining subsidies in the more saturated western European markets.
Looking ahead
It will take time to fully understand the investment implications of the nuclear accident at the Fukushima plant in Japan in March. But the impact on existing and new nuclear plants is sure to present an opportunity for the renewable sector, due to the relatively higher attractiveness of its assets in the current global marketplace.
Indeed, the re-evaluation by many nations of their position on nuclear power has already increased investors’ appetite for renewable energy assets, reflected in a dramatic rise in global renewable energy stock prices post-Fukushima. Following Germany’s decision to take seven of its oldest nuclear plants offline, China’s reduction in its 2020 nuclear capacity target (and doubling of solar) and potential delays to programmes in other countries, investors will no doubt be reassessing the additional opportunities created for the renewable sector.
More than 70% of North American, Asian and European respondents predict increased competition for acquisition targets in the next 18 months and correspondingly more than 40% of corporate and investor respondents intend to pay three to five times earnings before interest, tax and depreciation (EBITDA) for renewable energy companies over this timescale, up from at or below three times EBITDA (39%) last year.
During the next year, the sector is expected to be positively impacted by growing investment appetite and the continued drive towards low carbon in major territories. Concerns over rising oil prices and energy security will also fuel investment appetite towards low-carbon technologies.
However, attracting sufficient capital to meet renewable energy targets looks set to remain a real challenge. The stability and clarity of regulatory regimes in individual countries will undoubtedly be a significant factor in determining where investments are ultimately made. Innovative financing structures will be important to reduce some of the key risks for investors and lenders as utilities look to recycle capital. The next 12 months are shaping up to be an exciting chapter in the development of the renewables sector across the globe.
Andy Cox is KPMG’s London-based global head of energy and natural resources for transactions and restructuring
M&A in the renewables sector is hotting up – but investors are cautious, crave policy certainty and, to a large degree, are staying close to home, says KPMG’s Andy Cox
Mergers and acquisitions (M&A) activity in the renewable energy sector is on the rise. After tentative signs of a rise in renewable M&A in our report a year ago, 446 transactions were completed in 2010; a 70% increase by volume on 2009, which strongly indicates a global desire to invest in the sector.
A lack of large deals, however, meant the total value actually fell 41%, to $25.6 billion in 2010 from $43.7 billion in 2009. Only biomass – a relatively small proportion of total M&A activity – bucked this trend, with total M&A values more than doubling to $2.2 billion.
Nonetheless, the global jump in activity levels looks set to continue based on the first quarter of 2011, which has begun strongly, in terms of both volume and value, with a record deal tally of 141 totalling $11.2 billion, more than double the quarterly average value of $5.5 billion in 2010, and compared with an average of 96 deals per quarter.
In 2011 our survey – of 500 senior executives in the renewable energy industry globally – indicates higher competition for acquisition targets is expected to push up global valuations, driven by better financing conditions, a post-Fukushima reinvigoration of sentiment and soaring oil prices, as well as some new acquirers, including Asian manufacturers and, potentially, pension funds.
Regulation and incentives
The availability of incentives from governments around the world is cited as a key reason for the increased appetite for renewable deals. Indeed, those planning to invest in Italy (41%), the UK (38%) and Germany (29%) cited government incentives as their primary motivation.
Now, certainty and commitment are sought by the investors we surveyed, sending a clear message that those regimes with clear and stable incentives and regulations will outperform the market in attracting new capital in the forthcoming year.
That said, investors and lenders are still cautious. The returns and risk profile must measure up against each investor’s criteria and appetite for risk in order to attract and secure investment, which is undermined by uncertainty and volatility.
For example, three quarters of respondents said they would have invested more in the UK over the last three years, if regulation and legislation had been clearer and more consistent.
M&A will continue to be impacted by the cuts to renewable feed-in tariffs that were made in some of Europe’s leading renewable energy markets during 2010. Though these decrease the attractiveness of assets to buyers, growing competition for existing projects, with attractive guaranteed feed-in tariffs at higher historic levels, is providing a temporary boost to deal activity and acquisition multiples across some Western European markets. Meanwhile in Spain, harsh incentive cuts are triggering disposals as investors re-adjust their portfolios in light of reduced returns.
A brightening outlook for renewables M&A?
This has had a negative impact on valuations; the total value of solar transactions decreased 16% year-on-year in 2010. Without further stimulus, the level of M&A activity in solar photovoltaic assets can be expected to significantly decline once operational projects with attractive feed-in tariffs have found long-term owners.
Global context
The US retained its status as the most attractive market for acquisitions, targeted by 53% of respondents, followed by China (38%), India (35%), Germany (34%) and the UK (33% – the second most attractive European country).
One of the reasons for the popularity of the US for renewable energy investment is its perceived stability and the Obama administration’s determination that renewable energy plays a vital role in accelerating the country’s economic recovery. The stated aim for 80% of US energy to be derived from clean sources by 2035 is supported by a variety of incentive schemes, including the loan guarantee programme, investment tax credits, production tax credits and state-level renewable energy targets.
China’s jump up the renewable M&A country league table, from fifth to the second most targeted country for acquisitions in 2010, comes after a year of extensive renewable project development.
And China is expected to grow in influence, with nearly four in five respondents (78%) predicting the global renewable energy market will be driven by new investors from the country (while 59% expect new acquirers from North America to develop the market).
China has ambitious plans in the solar sector and has recently announced its intention to bring an additional 5 GW of solar power capacity online by 2015 as part of its latest Five Year Plan.
The third-placed Indian market has become increasingly dynamic as a result of strong natural resources, greater accommodation to international investment compared with China and a variety of government incentives. Stimuli include renewable energy generating standards for utilities, a structure for trading renewable energy certificates and attractive tax incentives for project developers.
However, the global impact of activity in this top three may be limited as our survey found the global renewable energy market is intrinsically local.
Investors intend to focus on their own markets. North American investors, for example, expect to invest domestically by a ratio of at least 2:1. And in Asia too, a strong preference for ‘local’ investment is indicated. This would build on existing activity, which saw domestic acquisitions account for almost two thirds of total M&A values in China, for example.
This heavy bias towards local investment is a potential concern for many countries that are hoping inbound investment from China and the US will plug domestic energy funding gaps. It adds to dependence on their incumbent regional investor base and to the importance of incentivising them in what will be an increasingly competitive market.
Sector Specifics
Biomass was found to be the most popular renewable energy sector again, with 46% of respondents intending to invest (compared with 37% last year). Biomass M&A values more than doubled year-on-year in 2010 and, proportionally, the sector is now gaining ground on renewable energy bulwarks solar and wind. During the course of last year, M&A in the biomass sector accounted for 9% of all renewable energy M&A, compared with only 3% in 2009.
Despite the cuts to incentive regimes in Europe, solar remains the second most popular sector, with 39% of respondents intending to invest, up from 37% in 2010.
Wind lost some ground, with onshore dropping to 30% (2009: 35%) while appetite remained limited but broadly stable for offshore at 10% (2009: 11%)
However, wind assets remain attractive to financial investors, and banks are starting to allocate substantial capital to offshore projects. Indeed the sector has seen investment by pension funds (for example in Anholt, Denmark’s largest offshore wind farm) sparking speculation about whether this is the beginning of sustained investment activity by the pension fund industry or merely represents opportunistic investing.
Conversely, limited targets and the oligopolistic nature of the turbine supply market constrains scope for offshore acquisitions, explaining why only 13% of surveyed corporates and investors intend to acquire offshore wind equipment manufacturers and project developers during the next 18 months.
Wind is set to be the main source of renewable capacity growth in eastern and southern European markets where the conventional model of acquiring late-stage pre-construction wind farms is likely to increase in 2011 thanks to critical emissions targets, growing power demands and generous incentives compared to declining subsidies in the more saturated western European markets.
Looking ahead
It will take time to fully understand the investment implications of the nuclear accident at the Fukushima plant in Japan in March. But the impact on existing and new nuclear plants is sure to present an opportunity for the renewable sector, due to the relatively higher attractiveness of its assets in the current global marketplace.
Indeed, the re-evaluation by many nations of their position on nuclear power has already increased investors’ appetite for renewable energy assets, reflected in a dramatic rise in global renewable energy stock prices post-Fukushima. Following Germany’s decision to take seven of its oldest nuclear plants offline, China’s reduction in its 2020 nuclear capacity target (and doubling of solar) and potential delays to programmes in other countries, investors will no doubt be reassessing the additional opportunities created for the renewable sector.
More than 70% of North American, Asian and European respondents predict increased competition for acquisition targets in the next 18 months and correspondingly more than 40% of corporate and investor respondents intend to pay three to five times earnings before interest, tax and depreciation (EBITDA) for renewable energy companies over this timescale, up from at or below three times EBITDA (39%) last year.
During the next year, the sector is expected to be positively impacted by growing investment appetite and the continued drive towards low carbon in major territories. Concerns over rising oil prices and energy security will also fuel investment appetite towards low-carbon technologies.
However, attracting sufficient capital to meet renewable energy targets looks set to remain a real challenge. The stability and clarity of regulatory regimes in individual countries will undoubtedly be a significant factor in determining where investments are ultimately made. Innovative financing structures will be important to reduce some of the key risks for investors and lenders as utilities look to recycle capital. The next 12 months are shaping up to be an exciting chapter in the development of the renewables sector across the globe.
Andy Cox is KPMG’s London-based global head of energy and natural resources for transactions and restructuring
Solar industry takes tariff fight to Lords
By Sarah Arnott
Tuesday, 21 June 2011
Solar industry campaigners have their last chance to save much-needed subsidies today as MPs meet to decide if the Government's controversial cuts warrant a debate in the House of Commons.
The Merits Committee, chaired by Lord Goodlad, is to consider a letter co-signed by some 58 organisations and businesses – including the Solar Trade Association, the Co-operative, and the Town and Country Planning Association – calling for a rethink of Government plans to slash the "feed-in tariff" (FiT) scheme barely more than year after it was introduced.
The committee could trigger a parliamentary debate and vote on the Government's proposals to cut the subsidy rates available to solar power projects of more than 50 kilowatts (kW) – roughly the size of a hospital or housing association scheme – by between 38 and 70 per cent. If the changes go ahead the industry argues it is unlikely any projects of more than 50kW will be built.
Much of debate centres on the comparative cost of solar power. A report from the Climate Change Committee last month backed new nuclear as the cheapest option for the green power Britain needs to hit its carbon-reduction targets. But the solar industry disputes the point, claiming that solar costs should be compared with retail prices, because of the scale of the technology.
A report from Ernst & Young yesterday suggests that solar will compete with retail grid prices as soon as mid-2012, if current subsidy levels are maintained, rather than the mid-2016 "parity" point with wholesale costs. Plans to rejig the FiT will hike solar energy prices still further by pushing investment back down to smaller, less efficient installations, says E&Y.
Tuesday, 21 June 2011
Solar industry campaigners have their last chance to save much-needed subsidies today as MPs meet to decide if the Government's controversial cuts warrant a debate in the House of Commons.
The Merits Committee, chaired by Lord Goodlad, is to consider a letter co-signed by some 58 organisations and businesses – including the Solar Trade Association, the Co-operative, and the Town and Country Planning Association – calling for a rethink of Government plans to slash the "feed-in tariff" (FiT) scheme barely more than year after it was introduced.
The committee could trigger a parliamentary debate and vote on the Government's proposals to cut the subsidy rates available to solar power projects of more than 50 kilowatts (kW) – roughly the size of a hospital or housing association scheme – by between 38 and 70 per cent. If the changes go ahead the industry argues it is unlikely any projects of more than 50kW will be built.
Much of debate centres on the comparative cost of solar power. A report from the Climate Change Committee last month backed new nuclear as the cheapest option for the green power Britain needs to hit its carbon-reduction targets. But the solar industry disputes the point, claiming that solar costs should be compared with retail prices, because of the scale of the technology.
A report from Ernst & Young yesterday suggests that solar will compete with retail grid prices as soon as mid-2012, if current subsidy levels are maintained, rather than the mid-2016 "parity" point with wholesale costs. Plans to rejig the FiT will hike solar energy prices still further by pushing investment back down to smaller, less efficient installations, says E&Y.
Price of solar panels to drop to $1 by 2013, report forecasts
Ernst & Young analysis suggests that falling solar and rising fossil fuel prices could make large-scale installations cost-competitive without government support within a decade
Duncan Clark
guardian.co.uk, Monday 20 June 2011 12.14 BST
Prices of solar panels are falling so fast that by 2013 they will be half of what they cost in 2009, according to a report from Ernst & Young that argues solar electricity could play "an important role" in meeting the UK's renewable energy targets.
The average one-off installation cost of solar photovoltaic (PV) panels has already dropped from more than $2 (£1.23) per unit of generating capacity in 2009 to about $1.50 in 2011. Based on broker reports and industry analysis, the report forecasts that those rates of decline will continue, with prices falling close to the $1 mark in 2013.
At present, solar PV is economically viable in the UK for homeowners, businesses and investors only because of government subsidies given out via feed-in tariffs (Fits). But the new analysis suggests that falling PV panel prices and rising fossil fuel prices could together make large-scale solar installations cost-competitive without government support within a decade – sooner than is usually assumed.
The report was commissioned by the Solar Trade Association (STA) from Ernst & Young's energy and environmental infrastructure advisory unit in response to the recent shake-up of Fits, which saw government support for large solar systems significantly reduced. This was a result of the government's decision to cap the total that could be spent via Fits and weight the limited budget in favour of domestic and other small-scale installations.
The chairman of the STA, Howard Johns, said the new analysis backed up the industry line that government support for all types of solar systems in the next few years made good economic sense as it would build capacity and enable unsubsidised solar to be as widely deployed as possible as prices come down. "This reinforces the case we have laid out in our Solar Revolution strategy," he said, "and it comes from an independent consultancy."
The report coincides with new data from Bloomberg New Energy Finance that show a drastic 28% month-on-month drop in the spot price of high-grade silicon, the raw material used in most PV panels.
The conclusions of the Ernst and Young report contrast with the view of the government's advisers, the Committee on Climate Change (CCC), which recently argued that solar remained too expensive to warrant serious consideration in the short term and that Britain should instead "buy in from overseas later".
The lead author of the Ernst & Young report, Ben Warren, said the CCC's view failed to consider the wider economic benefits of solar. "Being a laggard has never been very successful in terms of capturing the greater share of the value added for the economy … if you create a sustainable market, you will achieve cost savings and drive economic benefits in terms of tax income and job creation."
To compare the relative cost of solar – usually described in terms of the dollar price of each watt of peak capacity – and other energy sources, analysts consider factors such as upfront expenditure, fuel prices, maintenance and discount rates to calculate the "levelised" cost of each unit of energy. The report predicts that, with continued support in the short term, the levellised cost of large-scale solar will be no higher than retail energy prices by 2016-19. This suggests that within 10 years companies with large electricity demands will find it cheaper to install unsubsidised solar than to buy energy via the grid in the traditional way.
In the meantime, a full assessment of the costs and benefits of supporting solar should recognise that generous subsidies help unlock new sources of capital that can speed up decarbonisation of the energy supply, according to Warren.
"The energy market is starved of capital – and it won't all come from utilities and banks," Warren said. "There's a desperate need to engage with institutional investors."
In the runup to the announcement of the Fits cuts, climate minister Greg Barker told the Guardian that Britain had underestimated the potential of solar energy and in light of falling prices he hoped to find "new pathways" for supporting large-scale solar developments.
Duncan Clark
guardian.co.uk, Monday 20 June 2011 12.14 BST
Prices of solar panels are falling so fast that by 2013 they will be half of what they cost in 2009, according to a report from Ernst & Young that argues solar electricity could play "an important role" in meeting the UK's renewable energy targets.
The average one-off installation cost of solar photovoltaic (PV) panels has already dropped from more than $2 (£1.23) per unit of generating capacity in 2009 to about $1.50 in 2011. Based on broker reports and industry analysis, the report forecasts that those rates of decline will continue, with prices falling close to the $1 mark in 2013.
At present, solar PV is economically viable in the UK for homeowners, businesses and investors only because of government subsidies given out via feed-in tariffs (Fits). But the new analysis suggests that falling PV panel prices and rising fossil fuel prices could together make large-scale solar installations cost-competitive without government support within a decade – sooner than is usually assumed.
The report was commissioned by the Solar Trade Association (STA) from Ernst & Young's energy and environmental infrastructure advisory unit in response to the recent shake-up of Fits, which saw government support for large solar systems significantly reduced. This was a result of the government's decision to cap the total that could be spent via Fits and weight the limited budget in favour of domestic and other small-scale installations.
The chairman of the STA, Howard Johns, said the new analysis backed up the industry line that government support for all types of solar systems in the next few years made good economic sense as it would build capacity and enable unsubsidised solar to be as widely deployed as possible as prices come down. "This reinforces the case we have laid out in our Solar Revolution strategy," he said, "and it comes from an independent consultancy."
The report coincides with new data from Bloomberg New Energy Finance that show a drastic 28% month-on-month drop in the spot price of high-grade silicon, the raw material used in most PV panels.
The conclusions of the Ernst and Young report contrast with the view of the government's advisers, the Committee on Climate Change (CCC), which recently argued that solar remained too expensive to warrant serious consideration in the short term and that Britain should instead "buy in from overseas later".
The lead author of the Ernst & Young report, Ben Warren, said the CCC's view failed to consider the wider economic benefits of solar. "Being a laggard has never been very successful in terms of capturing the greater share of the value added for the economy … if you create a sustainable market, you will achieve cost savings and drive economic benefits in terms of tax income and job creation."
To compare the relative cost of solar – usually described in terms of the dollar price of each watt of peak capacity – and other energy sources, analysts consider factors such as upfront expenditure, fuel prices, maintenance and discount rates to calculate the "levelised" cost of each unit of energy. The report predicts that, with continued support in the short term, the levellised cost of large-scale solar will be no higher than retail energy prices by 2016-19. This suggests that within 10 years companies with large electricity demands will find it cheaper to install unsubsidised solar than to buy energy via the grid in the traditional way.
In the meantime, a full assessment of the costs and benefits of supporting solar should recognise that generous subsidies help unlock new sources of capital that can speed up decarbonisation of the energy supply, according to Warren.
"The energy market is starved of capital – and it won't all come from utilities and banks," Warren said. "There's a desperate need to engage with institutional investors."
In the runup to the announcement of the Fits cuts, climate minister Greg Barker told the Guardian that Britain had underestimated the potential of solar energy and in light of falling prices he hoped to find "new pathways" for supporting large-scale solar developments.
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