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
Wednesday, 22 June 2011
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.
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