Solar Led Clean Energy Investment Rebound In Q2
The financing of two huge solar photovoltaic projects in the United Arab Emirates (U.A.E.) helped to drive a recovery in global clean energy investment to $64.8 billion in the second quarter of this year (Q2’17), the highest for any quarter since Q2’16, according to Bloomberg New Energy Finance (BNEF).
In a new report, BNEF says the Sheikh Mohammed Bin Rashid Al-Maktoum III plant in Dubai and the Marubeni, JinkoSolar and Adwea Sweihan project in Abu Dhabi, at 800 MW and 1.2 GW, respectively, contributed $1.9 billion between them to the global investment total in Q2’17.
Other highlights of the data include bounce-backs in investment in the April-to-June quarter in China and the U.S., as well as sharply increased funding for projects in Mexico, Australia and Sweden. In addition, the report says Egypt and Argentina, two new markets for renewables, saw record quarterly figures. The weakest feature was the U.K., where investment slumped more than 90% compared to Q2’16.
Victoria Cuming, head of policy for Europe, Middle East and Africa at BNEF, says, “The U.A.E. deals are the largest in that country to date by far and show that its auction programs are leading to the commitment of hard cash by banks and equity providers. They also signal that oil-producing countries are warming to renewables as part of moves to diversify their economies.”
Overall, the report says solar was the star sector in Q2’17, notching up investment of $35.6 billion, up 19% year-on-year and 20% quarter-on-quarter. Wind power had a weaker three months, seeing investment slip 29% year-on-year to $26.2 billion, although it was 43% higher than in the first quarter of this year.
The report notes commitments made to both solar and wind were less in dollar terms per megawatt in Q2’17 than they would have been in previous years because of sharp reductions in costs. BNEF estimates that global capital costs for PV and onshore wind have dropped by 15% and 14%, respectively, in the last 12 months, in response to fierce competition in manufacturing and technology improvements.
Abraham Louw, analyst of clean energy economics at BNEF, says, “The $64.8 billion investment total in Q2 was quite firm, given that backdrop of falling costs. There was also a good spread of big projects financed in different countries and less reliance on European offshore wind than in some recent quarters.”
According to the report, there were only two large offshore wind arrays financed in Europe in Q2’17 – the 200 MW Borkum West II and 112 MW Albatros projects in German waters, at $918 million and $532 million. Other top project deals of the quarter were two Chinese 300 MW offshore wind arrays, Three Gorges Dafeng and Three Gorges Zhuanghe, costing an estimated $1.8 billion in total; the 396 MW Juchitan de Zaragoza onshore wind farm in Mexico, at $721 million; and the Avangrid La Joya onshore wind park in the U.S., at 400 MW and an estimated $620 million.
Outside solar and wind, other clean energy sectors saw modest flows in Q2’17. The report says biomass and waste-to-energy had investment of $387 million, down 76% year-on-year; small hydro had $595 million, down 20%; geothermal had $423 million, down 24%; and investment in energy smart technology companies (in areas such as smart grid, energy storage and electric vehicles) was $1.5 billion, down 50% year-on-year.
Overall asset finance of utility-scale renewable energy projects was $51.7 billion in Q2’17, down 13% year-on-year but up 32% from Q1’17. Small-scale solar projects of less than 1 MW attracted $10.8 billion in Q2’17, up 8% year-on-year.
Public markets investment in specialist clean energy companies totaled $1.2 billion in Q2’17, down 65% year-on-year and 47% quarter-on-quarter. The report says the largest equity raisings on stock markets were for two Chinese companies, project developer Huaneng Renewables ($281 million) and solar glass maker Xinyi Solar ($194 million).
Venture capital and private equity investment in clean energy continued a recent upswing, with $1.9 billion raised in Q2’17, up 50% year-on-year and 15% from Q1’17. The report says the top VC/PE deals were $400 million for Microvast Power System, a Chinese maker of batteries for electric and hybrid-electric vehicles; $113 million for French solar developer EREN Renewable Energy; and $100 million for U.S. energy-efficient window company View Inc.
SolarWorld Americas Cuts Jobs, Announces Cash Infusion
In mid-July, SolarWorld Americas, which operates a PV manufacturing plant in Hillsboro, Ore., verified it was cutting its workforce in half but also announced it expects a double-digit-million-dollar infusion of cash to enable the company to stabilize and optimize operations through 2017 and beyond.
Ever since its parent company, Germany-based SolarWorld AG, entered insolvency in local court, the U.S. subsidiary consistently said it would work to maintain operations despite the parent’s financial woes. However, SolarWorld Americas issued a warning of an impending mass layoff to its approximately 800 employees in late May. Ben Santarris, the company’s head of corporate communications, later verified the company initiated the layoffs in July, explaining, “We expect to level out at 300 employees after about 360 layoffs, as well as release of temporary workers and attrition.”
In addition to the significant workforce reduction, SolarWorld Americas announced its lenders have agreed immediately to forward $6 million in cash to the U.S. company. Juergen Stein, president of SolarWorld Americas, said the lenders also will permit the company to sell assets not required for operations and put the proceeds to use in funding operations. In the near term, the company expects such a sale to result in a total, combined cash infusion in the double-digit-million-dollar range, Stein added.
“This financial reinforcement is good for our customers and suppliers alike,” said Stein. “It means quite simply that we can reassure our business partners that we will remain a reliable force not only in supplying leading solar technology, but also in continuing to fight for fair trade in the U.S. market and improving market conditions there.”
As mentioned, SolarWorld AG and several sibling subsidiaries have been operating under insolvency proceedings in Europe. However, as of press time, SolarWorld Americas said it continues to operate outside any similar proceedings. Like its parent, the U.S. company has argued cheap module imports, especially from Chinese manufacturers, have hurt domestic manufacturing and made it difficult to compete. In late May, SolarWorld Americas joined bankrupt Suniva as a co-petitioner in a Section 201 trade case that seeks global import tariffs on cells and modules entering the U.S. market.
“We are re-investing in our business to continue serving our loyal customers, as always,” said Stein. “With that, we will continue to fight for the U.S. solar industry’s future, just as we have done through the industry’s ups and downs over these four past decades.”
DOE Awards $46.2M For SunShot Projects
The U.S. Department of Energy (DOE) has announced $46.2 million for 48 solar projects as part of its SunShot Initiative.
According to the DOE, these projects are intended to develop innovative, early-stage solar power technologies, which are aimed at lowering costs and improving reliability and efficiency.
“The SunShot Initiative is a proven driver of solar energy innovation,” says SunShot Initiative Director Charlie Gay. “These projects ensure there’s a pipeline of knowledge, human resources, transformative technology solutions and research to support the industry.”
The DOE notes that the projects span two SunShot programs: Photovoltaics Research and Development 2: Modules and Systems (PVRD2), which will advance research in solar photovoltaic technology; and Technology to Market 3 (T2M3), which supports early-stage solar technology research.
In addition, cost share requirements will leverage additional private-sector funding, yielding a total public and private investment of nearly $65 million. The department says funds provided are cooperative agreements that involve substantial federal oversight and consist of go/no go technical benchmarks, which reinforce attentive project stewardship.
100 Global Corporations Now Committed To 100% Renewables
With the new additions of AkzoNobel N.V., AXA, Burberry and the Carlsberg Group, The Climate Group’s RE100 initiative – representing large businesses transitioning to 100% renewable energy globally – has reached a 100-member milestone.
According to The Climate Group, RE100 members, including 30 Fortune Global 500 companies, have a total revenue of $2.5 trillion. Together, they are creating around 146 TWh in demand for renewable electricity annually – about as much as it takes to power Poland, the group says.
Consuming roughly 16 TWh annually, AkzoNobel has become the second-biggest electricity user to join RE100, after Walmart. The Dutch paints and coatings company aims to be carbon-neutral and use 100% renewable energy by 2050.
In addition, French insurance company AXA is targeting 100% renewable electricity by 2025, and luxury fashion brand Burberry is aiming to procure 100% of electricity from renewable resources by 2022. The Carlsberg Group, one of the world’s biggest brewers, is switching to 100% renewable electricity at its breweries by 2022 as a step toward its target to become carbon-neutral in 2030.
“Procuring 100 percent of our energy from renewable resources by 2022 is a principal goal of Burberry’s five-year responsibility agenda,” notes Leanne Wood, chief people, strategy and corporate affairs officer at Burberry. “We are proud that over half of our offices, stores, warehouses and internal manufacturing sites globally are powered by either on-site renewable resources or through renewable tariffs. However, access to renewable resources is still limited in some places. By joining RE100, we aim to drive wider demand for low-carbon power and encourage all providers to introduce renewable energy options.”
Reflecting on the growth of RE100 since it launched in 2014, Helen Clarkson, CEO of The Climate Group, says, “We are really pleased at the success of our campaign; by championing the compelling case for business action, we have reached 100 members three years earlier than expected. Changes in the market such as the falling cost of renewables have also worked in our favor.”
UPS Drives Toward Sustainability With New Goals
Global package delivery company UPS has announced aggressive new sustainability goals to add more alternative fuel and advanced technology vehicles to its fleet while increasing its reliance on renewable energy sources. The goals, available in the company’s 2016 Corporate Sustainability Report, support UPS’ commitment to reduce its absolute greenhouse-gas emissions from global ground operations 12% by 2025, a goal developed using a methodology approved by the Science Based Targets initiative.
“Because of our size and scale, we know our commitments can shape markets, advance technologies and be a catalyst for infrastructure investments,” explains David Abney, chairman and CEO of UPS.
UPS has set a goal that 25% of the electricity it consumes will come from renewable energy sources by 2025, a dramatic increase from the 0.2% in 2016. In addition, by 2020, UPS plans that one in four new vehicles purchased annually will be an alternative fuel or advanced technology vehicle, up from 16% in 2016. The company also set a new goal that by 2025, 40% of all ground fuel will be from sources other than conventional gasoline and diesel, an increase from 19.6% in 2016.
The UPS vision entails a future smart logistics network of advanced technology vehicles and facilities powered by more diverse and sustainable energy sources, including on-site solar, off-site wind, renewable natural gas, renewable hydrogen, and renewable diesel delivered via advanced energy system infrastructure. UPS already deploys many of these technologies in its ground fleet and facilities and plans to significantly increase their use in its worldwide fleet.
Since 2009, UPS has invested more than $750 million in alternative fuel and advanced technology vehicles and fueling stations globally. The company used more than 97 million gallons of alternative and lower-carbon fuels in its ground fleet in 2016 and recently made an $18 million investment in on-site solar energy systems across eight facilities.
Energy Storage Company Younicos Gets Acquired
Younicos, a German-American developer and provider of energy storage solutions, has been acquired by Aggreko, a Glasgow-based power generation equipment company, for approximately $52 million.
According to Aggreko, the acquisition strengthens Aggreko’s position as global energy markets continue to evolve and is in line with the company’s strategy to invest in technology in order to reduce the cost of energy for customers. Younicos delivers smart energy solutions integrating battery storage, and its batteries and proprietary control systems enable the integration and management of various forms of power, including thermal, renewable and battery energy resources, Aggreko adds.
Founded in 2005, Younicos is based in Berlin and Austin, Texas, and has over 200 MW of installed storage systems, with a pipeline across both developed and emerging markets. Under the acquisition deal, Younicos CEO Stephen Prince will report directly to Chris Weston, chief executive of Aggreko.
“As energy markets continue to decarbonize, decentralize and become more digital, the integration and control of multiple energy sources, including thermal and renewable, will be essential to ensure the provision of reliable power,” says Weston. “As a pioneer of smart energy solutions based on battery storage, Younicos is at the forefront of this trend. Together, we are a powerful combination; our scale, fleet and global presence, coupled with a smart energy capability, will allow us to open up new markets and provide our customers around the world with a reliable, cheaper and cleaner source of energy.”
“We are delighted to be joining with a market-leading power provider in Aggreko,” comments Prince. “Batteries are an economically attractive and reliable asset which will play an increasing role as we transition from today’s energy market to the energy market of the future. Integration and management of multiple distributed energy sources will be necessary to optimize energy systems and deliver customers with greater stability at a lower economic and environmental cost.”
