For decades traditional fuels have enjoyed global dominance on the energy market virtually unchallenged, but that situation is changing. News out this week shows that global renewable energy deals surged last year by a massive 40%, triggered by the Japanese nuclear disaster and buoyed by an increase in billion dollar transactions.

The finding is contained in a PriceWaterHouse Cooper report published on Monday which reveals that renewable energy deals hit a record high of $53.5 billion in 2011 – compared to $38.2 billion in 2010.

“Deal-making in the renewables and energy efficiency sectors is intensifying as the sector evolves. Sustained high deal numbers and record total value reflect a maturing of the sector,” Paul Nillesen of PwC said. “The trend is all the more noteworthy given the uncertainty in the market and in government policies on renewables. We believe that deal flow will continue to be significant in the medium term,’ he added.

The entrance of pension and insurance funds in offshore wind farm in Denmark confirms the trend towards a maturing market and the creation of secondary markets, with assets sold for a second or third time, PwC said. The group predicted that as offshore wind projects increase in size, the need for a strong balance sheet to support the technology becomes more important. “This creates scope this year for a landmark wind power combination between players from one or more of Asia Pacific, Europe and North America,” Ronan O’Regan of PwC said.

But PwC’s report did not come without warnings. Continued Eurozone uncertainty could hamper heals in 2012 and US and European manufacturers are coming under cost pressures, it said. However, Nillesen said that waiting for things to improve is not necessarily the right strategy: “If a deal is highly strategic, and mission critical, then parties will still feel it is worth doing on the right terms.”

Source: www.evwind.es

In an interaction with the members of the Confederation of Indian Industry – Southern Region, Mr Girardi pointed out that Chile had 4,000-km-long coastline that afforded possibilities of developing tidal energy, and being a volcanic country, geo-thermal energy was also possible.

A member of the delegation led by Mr Girardi said at the interaction that while everybody knew Chile as a producer of copper, not many knew it was also rich in lithium. Lithium is a metal that is used in the manufacture of batteries for electric vehicles. Chile would welcome any kind of partnership in this area too, he said, noting that the Japanese had formed similar partnerships in the neighbouring Argentina.

Mr Girardi said that the mining sector in Chile would need investments of about $40-50 billion. Such huge mining operations would need energy. “We foresee a tremendous need for solar energy,” he said.

Mr T.T. Ashok, Chairman, CII-Southern Region, said India was set to emerge as a hub of wind, solar, biomass and bio-fuels related manufacturing and exports because of its very strong manufacturing and R&D orientation.

“The two countries need to expedite the proposed Comprehensive Economic Cooperation Agreement that can cover protection of bilateral investments, services, and education,” Mr Ashok said.

Source: www.thehindubusinessline.com

The latest Energy Statistics (PDF) from the Department of Energy and Climate Change (DECC) show that, over the first three quarters of 2011, Scotland delivered 94 per cent of last year’s totals and 83 per cent of the previous record year.

The Scottish government said that, if the trend continues over the fourth quarter, 2011 will be a record year for renewable electricity in Scotland.

It added that the country’s goal of 100 per cent green energy by 2020 is also on track, as the statistics reveal sufficient capacity in Scotland to meet its interim target of 31 per cent of electricity demand from renewables in 2011.

Installed capacity reached a record high of 4.3GW over the year, while Scotland continued to be a net exporter of electricity in 2010, exporting 21 per cent of electricity generated.

Scottish energy minister Fergus Ewing said that £750m worth of renewables projects were switched on in 2011, while another £46bn worth are in the pipeline.

“2011 has been an exceptional year for renewable energy in Scotland,” he said in a statement. “These figures show that it is on course to be truly the best year yet.”

DECC’s figures also show that the amount of electricity from renewable sources in the UK’s overall energy mix increased by almost 12 per cent on the previous year to 7.45 terawatt hours (TWh). The contribution of coal and gas fell by around four and six per cent respectively to 19TWh and 38TWh, while nuclear shot up 21 per cent to around 16TWh.

Renewables’ share of electricity generation increased from just over eight per cent in the third quarter of 2010 to nine per cent a year later, while overall renewable electricity capacity stood at 10.2GW.

The amount of electricity from onshore wind fell 2.4 per cent to 1.9TWh, but growing offshore wind capacity sparked a 30.5 per cent increase and high rainfall saw hydro generation rise 41.3 per cent.

The figures come as the government gave its consent today for a 53MW biomass station in Yorkshire, the eighth GW and 15th power station approved this year, which marks a new record for capacity consented since the Electricity Act came into force in 1989.

Developer Dalkia’s plant at the former RAF airfield at Pollington will be fuelled by 360,000 tonnes of waste wood per year, set to be delivered to the site via the Aire and Calder Navigation Canal.

“It has been a priority for this administration to remove the backlog in planning applications [and] to demonstrate our commitment to economic growth,” said energy minister Charles Hendry. “A record number of decisions shows that we have delivered on this, helping ensure our long-term energy security and creating jobs.”

Source: www.guardian.co.uk

Günther Oettinger, the EU energy commissioner, said new targets were needed for 2030 to enable businesses to plan ahead, as the current targets to produce 20% of Europe’s energy from renewable sources run out in 2020. Oettinger was introducing a new EU energy roadmap to 2050, which showed that opting for a very high renewables component to the energy mix would be no more expensive than opting for alternative scenarios that placed more emphasis on nuclear power or coal and gas with carbon capture and storage.

He said that he expected binding renewable energy targets for 2030 to be in place by 2014: “With our roadmap we want to ensure that, for all participants, there should be an interesting discussion on binding targets for renewables by 2030. This should begin now and lead to a decision in two years’ time.”

It is the first time Oettinger has set out a clear timetrable for new targets. It follows an agreement reached at UN climate talks in Durban on Sunday by which all developed and developing countries agreed to negotiate an international agreement on emissions reductions “with legal force” that would be written and signed by the end of 2015 and would come into force from 2020.

By ensuring that Europe has its own post-2020 emissions and renewable targets decided in 2014, the EU will be in a better place to negotiate as a bloc and to meet the timetable set out in Durban. But the wrangling among member states over what the targets should be is likely to be fierce.

The UK is ahead of the rest in having set a “fourth carbon budget” for emissions reductions in the 2020s, under which plan emissions would be roughly halved by 2025 compared with 1990 levels. Even that has become less certain, however, as the chancellor, George Osborne, wants a review of the targets in 2014.

There is no agreement among other member states on what future targets should be, and several, such as Poland and other east European countries, want weaker targets while some Scandinavian countries want to be tough. Negotiating on targets was hard enough three years ago when the EU’s 2020 targets were set. Reopening the discussions in the midst of the worst financial crisis and recession since the war, and with the eurozone looking precarious, will be triply difficult.

Oettinger has also supported weaker targets for 2020 than the climate commissioner, Connie Hedegaard.

Launching the 2050 energy roadmap, Oettinger said: “Only a new energy model will make our system secure, competitive and sustainable in the long-run. We now have a European framework for the necessary policy measures to be taken in order to secure the right investments.”

The roadmap puts the share of renewables in total energy use by 2050 at between 55% (in the lowest scenario) and 75% (in the highest scenario) – up to 97% in the share of electricity consumption.

Christian Kjaer, chief executive officer of the European Wind Energy Association (EWEA) in Brussels said: “The commission’s communication could have been clearer in its commitment to binding renewable energy targets for 2030. However, with his strong statement today, Oettinger has provided European industry and citizens with that clarity. The European parliament and council must now give the commission a clear mandate to come forward with ambitious binding 2030 targets for renewable energy.”

Greenpeace’s EU energy policy director, Frauke Thies, said: “The roadmap shows that getting clean energy from renewables will cost taxpayers no more than getting dirty and dangerous energy from coal or nuclear power. The commission will be tempted to overplay the role of coal and nuclear energy to appease the likes of Poland and France, but the numbers in the roadmap are unequivocal. It proves that a modern energy system can’t do without renewables and efficiency, but can easily consign coal and nuclear power to the past.”

Source: www.guardian.co.uk

Groundhog Day may be the more apt analogy as this scenario repeats every year or two, unfolding in a ritual where green energy executives and their respective trade groups warn that the expiration of the incentive tax credit – used primarily by solar – and the production tax credit for wind will cost tens of thousands of jobs and slow the nation’s transition to carbon-free power. At the 11th hour or later, Congress invariably extends the tax incentives once again.

Except this year, renewable energy industry leaders may not be so much drama queens as Cassandra’s. In the midst of a presidential election year with Republicans riding the bankruptcy of solar panel maker Solyndra to slam the Obama administration’s green energy policies, Congress may well let the tax breaks die.

For the solar industry the issue is the inelegantly named 1603 Treasury Program. During the depths of the recession in 2009 the Obama administration gave renewable energy developers the option of taking a 30% tax credit in the form of cold hard cash as there weren’t many project financiers left with profits they needed to offset with tax credits. Wall Street’s collapse also dried up the pool of so-called tax equity investors. Congress at the end of 2010 extended the cash grant program for another year and now time’s up. (The investment tax credit itself doesn’t expire until the end of 2016.)

“The problem remains,” says Joe Desmond, senior vice president of communications and government affairs for BrightSource Energy, a California solar power plant builder. “There are tax equity investors out there. But it remains insufficient to serve the anticipated demand moving forward until the economy recovers.”

In other word, there are too many projects, like the multibillion-dollar solar thermal power stations BrightSource builds or the residential rooftop photovoltaic systems SolarCity leases, and too few investors able or willing to do tax equity deals. On the other hand, Desmond says, being able to dispense that tax credit in the form of cash allows developers to tap a larger pool of potential financiers.

The cash grant program “is a very effective tool and helped more deals get done in 2011, and the loss of 1603 would slow the pace of growth in the renewable energy space,” Jonathan Plowe, Bank of America’s Merrill Lynch’s head of new energy and infrastructure solutions, said in an e-mail. Plowe has worked with SolarCity to finance the Silicon Valley’s company’s initiative to install 120,000 solar arrays on military housing in 28 states.

The Solar Energy Industries Association commissioned a study that found that some 37,000 jobs would not be created in 2012 if the cash grant program expires at the stroke of midnight on New Year’s Eve.

“More than 100,000 Americans work in the solar industry, double the number in 2009,” Rhone Resch, the chief executive of the solar trade group, said in a statement. “Solar is a proven job creator at a time when the unemployment rate for the country remains stubbornly high. The 1603 Treasury Program has been the single most effective policy driving renewable energy growth during the past two years.”

Desmond notes that two of BrightSource’s planned solar power plants will create $800 million in wages over their operating life with each employing more than a thousand workers at the peak of construction.

But won’t the solar industry just be back next year at this time, hat in hand, if the cash grant program is extended for another 12 months?

No, according to Desmond, as such an extension should bridge the gap between an improving economy and efforts to put in a place a permanent financing program for renewable energy projects.

“As soon as the economy recovers, it takes the burden off of having to request an extension,” he says.

Desmond wouldn’t comment on how the expiration of the cash grant program might affect the financing of BrightSource’s next two power plants, citing the Oakland, Calif. startup’s upcoming $250 million initial public offering. But he did allow that tax equity financing raises the cost of a project.

The American Wind Energy Association, meanwhile, on Monday released a study by Navigant Consulting that predicted that an extension of the production tax credit, or PTC, would create 54,000 jobs over the next four years.

If it expires, 37,000 jobs will be lost, the study found. Congress has typically authorized the credit, which pays wind energy producers 2.2 cents per kilowatt-hour of electricity generated, for two-year periods, creating something of a boom-and-bust cycle in the wind industry. (Wind developers also have been able to participate in the cash grant program in lieu of taking the production tax credit.)

Last week, I was in the Tehachapi Mountains, where a wind-farm building boom has been under way for the past two years, to do some reporting for a forthcoming Forbes magazine story. On the site of one planned wind farm, a veteran wind executive took the long view of the industry’s ups and downs.

“Even though the economics of wind are a bit uncertain due to the uncertainty of the PTC and the unstable policy environment that creates, we’re still betting that policy stability will return,” the executive said.

The question is, does Congress have the will to extend the tax credit and make that stability last more than two years?

Source: www.forbes.com