Thursday, 16 February 2017

Colombian bank gears up for renewables with green bond issue, by Alexandre Spatuzza, Recharge News, Feb 16, 2017

 As Colombia’s energy regulator CREG finalises rules for renewable energy tenders, local finance house Bancolombia is ready to lend around $55m to clean-energy projects with money raised via Latin America’s first international green bond issue by a commercial bank.

“We have started disbursing the money and by May we will...announce the projects financed,” Bancolombia’s finance chief Jose Humberto Acosta told Recharge.

Bancolombia finalised the issue of 350bn Colombian pesos ($115m) in January. The bonds were all bought by the World Bank’s International Finance Corporation (IFC) as part of a programme to bolster green bond issues worldwide and help Colombia meet its greenhouse gas reduction target of 20% by 2020.

“About 50% of the issue will be directed to renewable energy,” said Acosta without giving details. The rest will go to other green industries in fields such as construction and sanitation, he added.

The green bond issue comes ahead of the implementation of Colombia’s revamped renewable energy policies, expected to be finalised this year. The country’s power agents, government officials and the energy regulator CREG have until the end of February to conclude a public consultation process to finalise tender rules to contract renewables under 15-year PPAs

Colombia’s Caribbean Sea region of La Guarija has huge wind and solar power potential, but the lack of clear regulations in the 2014 renewable energy bill and the absence of grid connection in the region have delayed the country’s entry onto the global renewable energy scene.

The country has 19MW of wind installed – out of a 16GW of total capacity – but has more than 2GW of wind projects in place, according to the newly-created Colombian Renewable Energy Association (SER). At the same time the government’s 2030 power expansion plan points to around 1GW of wind to be installed and some 300MW of solar.

For Bancolombia, the green bond issue and the partnership with IFC aim to get its clients ready for a growing green technology market.

“For our clients it’s a learning curve and the bank together with IFC will advise its clients on how meet compliance requirements for green projects,” said Acosta.

Another aim of the issue is to mitigate foreign exchange risks for renewable energy projects since the lending will be done in Colombian pesos. Although the government wants renewable energy tenders to be in pesos, energy market players prefer US dollar-denominated auctions.

Even so, Acosta said that the finance will not be significantly cheaper than other loans in Colombia.

For the IFC, Bancolombia’s green bond issue is part of the institution’s programme to support renewable energy and green technology financing in Latin America. Since 2010, the IFC has issued $5.6bn in green bonds worldwide.

The IFC’s manager for the Andean region, Carlos Leiria Pinto, said at the time of the issue that “by investing in the first green bond issued by Bancolombia, we hope to pave the way for other issuers and investors and contribute to the development of the green bond market in Colombia”.

Acosta agreed: “Other banks will follow our footsteps and we ourselves could hold another issue in three years.

Wednesday, 1 February 2017

Renewables a must-have as shadows lengthen over Big Oil: ONES TO WATCH 2017 | The world's oil giants are all too aware that the tide is turning so expect more activity in wind and solar this year, writes Darius Snieckus, Recharge News, Jan. 10, 2017

Expectations that Big Oil will increasingly move into renewables have been growing as crude prices continue to stagnate and 2017 will see more “old” energy developers begin to detail their play books for wind, solar and storage.

Many eyes will be on Shell this year. The Dutch-Anglo petroleum giant has been angling to bring its offshore oil and gas project nous – and capital (in the ‘crisis’ of 2015, it still had revenues of $265bn) – to bear on offshore wind. After failing at the first attempt it now has a chance to wet its head on a lead-off project: the 680MW Borssele 3&4 zone off the Netherlands, which it won with a low bid of €54.50/MWh ($57.85/MWh).

Chief executive Ben van Beurden last year admitted regret at having pulled out from its earlier position in offshore wind – apart from a share in the 108MW Egmond aan Zeewind farm commissioned in 2006 in the Dutch North Sea – and Shell’s chief energy advisor Wim Thomas told Recharge “the penny has now dropped that this is the new business space [to be committed to]”.

So anticipate more forward strides from Shell in offshore wind in 2017 – and not just on conventional projects. Shell also has stakes in WindFloat, the floating wind power unit now edging towards a first array off Portugal, and even a high-altitude wind energy outfit called KPS, which has a technology development timeline that will see its kite-driven concept flying offshore by the end of the decade.

Total, the French oil company, has shown a commitment to industrial-scale renewables since buying a majority stake in SunPower in 2011. But it was its fell-swoop takeover of battery maker Saft as its “spearhead in electricity storage” that has nailed its solar-plus-storage colours to the mast.

Total chief executive Patrick Pouyanné has made no secret of its renewables ambitions: a top-three solar player within 20 years.

Total is paying the price for its faith. On top of the $1bn deal for Saft, it has had to ride to the rescue of SunPower – after a doubling of the solar giant’s 2016 net loss guidance – with a first aid package that included a cash up-front order for 150MW of PV panels, and “discussions” to buy stakes in SunPower projects in Japan, South Africa, and France.

Total has also developed a venture capital-fuelled technology scouting programme, under the banner of Total Energy Ventures. Look to see more investment in start-ups in 2017, such as US wind leasing specialist United wind, and AutoGrid, a California-based digital grid management solution developer.

The Petroleum Age is ending and Big Oil knows it: investment in renewables has eclipsed that going into oil and gas for the second year running, fuelled by the latest $310bn spend.

Some oil and gas majors are already on their way. Danish state oil and gas company Dong has begun divesting petro-assets in favour of wind and now has a pace-setting 4.4GW under construction off Europe, and virgin acreage off the US – and no interest in the tail-end of North Sea’s black gold bonanza.

Its Norwegian counterpart Statoil will witness a watershed year for its renewable energy business as its second conventional offshore North Sea wind farm, the 402MW Dudgeon, comes online as does its 30MW Buchan Deep project – the world’s first floating array. It will also start work on its recently won 1GW zone off New York state.

Statoil's' own venture capital arm will in the meantime get to grips with its flagship solar power investment, part of an $8m package backing commercialisation of Oxford Photovoltaics ultrahighefficiency perovskite-based PV technology.

Even Italy's Eni – a company that until now had shown little interest in renewables, bar a partnership in a floating wind scheme designed to pump more oil and gas out of offshore fields – has wheels turning on plans to jointly develop large-scale renewables with US industrial giant GE under a framework agreement that encompasses onshore and offshore wind, as well as solar.

The shadow of stranded assets may be growing ever-longer, but for Big Oil investment prospects are also getting darker by the day. Fitch Ratings pointedly warned last year that failing to diversify into renewables could damage access to capital as global demand for petroleum slows.

Renewables are no longer a "nice to have", they are a existential need.

Friday, 27 January 2017

BP ups renewable growth forecast as cost reductions 'surprise' by Anamaria Deduleasa, Recharge News, Jan 27, 2017

Renewables will grow faster than expected as wind and solar "continue to surprise" with their costreduction trajectory, according to oil and gas supermajor BP.

The fossil giant’s latest Energy Outlook – which makes projections on energy supply and demand over the next two decades – admits its previous forecasts on renewables were too low.

According to BP’s 2035 Outlook, renewables will grow by 7.1% per year, more than “quadrupling” over the period, with their share of primary energy increasing to 10% by 2035, up from 3% in 2015.

This compares to predictions from BP last year suggesting renewables will grow by around 6.6% annually, with their share of the energy mix reaching 9% by 2035.

The revision was by far the biggest jump made by any energy source in the latest outlook from BP “as the prospective path for costs continue to surprise”, admitted the group. “As a result, the use of both coal and gas in the power sector has been revised down,” said BP.

Over the outlook period, renewables continue to grow rapidly with the weight of growth shifting towards Asia.

“The EU continues to lead the way in terms of the penetration of renewables, with the share of renewables within the EU power sector doubling over the outlook to reach almost 40% by 2035,” said BP.

“China is the largest source of growth over the next 20 years, adding more renewable power than the EU and US combined,” it added.

The strong growth in renewable energy is underpinned by the view that the competitiveness of both wind and solar power improves significantly in the period up to 2035.

“The cost of solar is expected to continue to fall, although the pace of that reduction slows, as the rapidly-declining PV modules costs account for a decreasing share of the total installed costs,” said BP.

In contrast, wind power costs are assumed to fall “materially” throughout the outlook, reflecting the view that there is considerable scope to improve the performance of wind turbines.

BP’s analysis suggests that onshore wind will remain more competitive that solar in both the US and China.

"The global energy landscape is changing. Traditional centres of demand are being overtaken by fast-growing emerging markets. The energy mix is shifting, driven by technological improvements and environmental concerns. More than ever, our industry needs to adapt to meet those changing energy needs," said BP’s chief executive Bob Dudley.

BP claims to have the largest renewable energy business of any of the global oil majors, thanks to its bioenergy interests and US onshore wind operations, where it owns a net 1.56GW. However, it left the solar sector in 2012 and has shown no inclination to follow fellow European oil major Shell into the offshore wind market.

BP's latest Energy Outlook said that while technological improvements and environmental concerns will change the mix of primary energy demand, oil and gas, together with coal, are still predicted to remain the main source of energy in the period up to 2035.

BP said fossil fuels are set to account for more than 75% of total energy supply in 2035, compared with 86% in 2015.

This forecast prompted environmental groups to call BP’s outlook a “fantasy”.

Charlie Kronick, senior climate advisor for Greenpeace UK, said: "BP forecasts a fantasy future where the world fails to act on climate change, their desire to make money from accelerating history’s greatest disaster remains sacrosanct and growing supplies of low cost oil guarantee their blue chip status, forever. Nobody should be fooled."

Trump team's infrastructure short list is long on renewables, Karl-Erik Stromsta, Recharge News, Jan. 26, 2017

A list of near-term infrastructure priorities for the Trump administration that emerged this week includes several massive renewables-related projects, suggesting Trump’s team may be more open to the job-creating power of renewables than previously realised. 

Throughout the presidential campaign and his first days in the White House, Trump has emphatically promised to make heavy investments into the country’s crumbling infrastructure without seeming to appreciate the potential for renewables to aid that vision and create jobs. 

But this week the McClatchy news group published a list of near-term infrastructure priorities reportedly compiled by Trump’s transition team after receiving input from governors around the country. In what may come as a surprise to many in the industry, the list is long on projects that would help the country add huge amounts of renewables, particularly wind, in addition to more predictable projects involving bridges, highways and airports. 

Also notable is the list’s use of positive language to describe renewable energy, using phrases like “cheap, clean wind power”. Trump himself has mainly said negative—and often untrue—things about wind and solar power. 

The White House was quick to state that the list is not an official document, and congressional sources describe it as a work in progress. The list was drawn up in late 2016, after Trump's election.

Still, it offers a first glimpse into the specific infrastructure projects Trump's team is considering backing. And it suggests that renewables may not be left on the sidelines after all as the Trump administration begins its massive infrastructure push, a push many political observers expect Democrats to get behind. 

Among the 50 projects on the list are:

The Anschutz Corp.’s $5bn Chokecherry and Sierra Madre (CCSM) wind project in Wyoming and the associated $3bn TransWest Express Transmission line. Just last week the 3GW CCSM, which would be the largest onshore wind farm in the world, received several key approvals from the government for its first 1.5GW phase. 
Clean Line Energy Partners’ $2.5bn Plains and Eastern Transmission line, which would flow 4GW of wind from the Oklahoma panhandle to utilities in the mid-South region, including Tennessee and Arkansas. 
The $2.2bn Champlain Hudson Power Express transmission project, being developed by Blackstone-owned Transmission Developers Inc., which will deliver 1GW of mainly hydro power from Canada to the New York City metro region. 

In a statement sent to Recharge, Michael Skelly, president of Texas-based Clean Line Energy, said: "Clean Line is pleased to be part of the discussion around high priority infrastructure projects ... and excited that building next-generation infrastructure and a modern electric grid are a key part of the Trump Administration’s agenda to create local jobs and give Americans access to more American energy resources." 

A spokesperson for CCSM and TransWest said: "We are very confident that these projects can advance under this Administration, which recognizes the value of large infrastructure development, and we anticipate learning more about this infrastructure program as it may move forward." 

While it's not entirely clear what sort of support the government would lend the clean-energy projects, the fact that they are being carefully studied by Trump's team is a positive sign. The list notes that all of the above projects intend to use private funding, although the government could offer help in other ways. 

Many of the other projects on the list would be funded entirely or primarily by public money. All of the projects on the list are deemed “shovel ready” and critical to national security, and all are expected to contribute to US manufacturing. "

Work is already underway at factories in Arkansas and Oklahoma where the glass insulators and steel poles required for the project will be manufactured," Skelly says. 

Also included on the list is a sweeping effort to build energy storage and modern grid infrastructure in California to help bring more renewables into the system, and an initiative to modernise the huge fleet of US Army Corps-operated hydroelectric plants, with the aim of lifting their operational efficiency from 80% today to the industry average of around 99%. 

In contrast to the strong showing by renewables-related projects on the list, there are relatively few projects directly related to fossil fuels. 

Thursday, 12 January 2017

Record 126.5GW of solar and wind installed in 2016: BNEF, by Karl-Eric Stromsta, Recharge News, January 11, 2017

The world installed a record 70GW of solar and a near-record 56.5GW of wind in 2016, with acquisition activity also hitting a new high amid surging corporate M&A, says Bloomberg New Energy Finance.

Offshore wind represented “the brightest spot” for new investment, BNEF says, with capital spending commitments for offshore wind farms soaring 40% to $29.9bn thanks to a vibrant European market.

The record figure includes Dong Energy’s $5.7bn final investment decision on the 1.2GW Hornsea 1 array in UK waters, in addition to 14 other offshore projects larger than 100MW that received the go ahead last year off the coast of the UK, Germany, Belgium, Denmark and China.

 The offshore investment boom comes as developers are taking advantage of rapidly improving economics in the sector, as turbines get larger and construction operators get smarter, BNEF notes. The seven largest clean-energy financing deals globally last year all went to offshore wind projects in Europe.

“The offshore wind record last year shows that this technology has made huge strides in terms of cost-effectiveness, and in proving its reliability and performance,” says BNEF chief executive Jon Moore.

“Europe saw $25.8bn of offshore wind investment, but there was also $4.1bn in China, and new markets are set to open up in North America and Taiwan.”

Another bright spot in 2016 was acquisition activity, with BNEF clocking clean-energy deals worth $117.5bn, up from $97bn in 2015, representing the first time this has surpassed $100bn. While the majority of that is tied to project acquisitions, corporate M&A leapt to $33bn, with stand-out deals including Tesla’s purchase of SolarCity for $4.9bn and Enel’s buy-back of the minority holders in Enel Green Power.

Total new investment into clean energy fell 18% last year, to $287.5bn. BNEF says the drop reflects some gloomy factors, including a “marked cooling” in the Chinese and Japanese renewables markets, but also positive ones like “further sharp” drops in equipment prices.

Justin Wu, head of Asia for BNEF, says: “After years of record-breaking investment driven by some of the world's most generous feed-in tariffs, China and Japan are cutting back on building new large-scale projects and shifting towards digesting the capacity they have already put in place.

"China is facing slowing power demand and growing wind and solar curtailment,” Wu says. “The government is now focused on investing in grids and reforming the power market so that the renewables in place can generate to their full potential.”

Meanwhile, future growth in Japan “will come not from utility-scale projects but from rooftop solar systems installed by consumers attracted by the increasingly favorable economics of self consumption”, he says.

Solar was once again the leading sector for clean-energy investment in 2016, at $116bn, but this was down 32%, due in “large part” to lower installed costs, BNEF says. Wind investment fell 11% to $110.3bn.

Some $41.6bn was invested in smart-energy technologies, followed by biomass ($6.7bn); low-carbon services ($4.3bn); small hydro ($3.4bn); geothermal ($2.7bn); biofuels ($2.2bn); and marine energy ($194m).

While public-market investment into quoted clean-energy companies fell 21% last year, to $12.1bn, several companies raised substantial amounts of money, including Innogy, the renewables offshoot of German utility RWE, and Chinese electric-vehicle maker BYD.

Monday, 9 January 2017

Trump's pick as energy chief offers some hope for wind and solar, by Richard Kessler, Recharge News, Updated January 6, 2016

US President-elect Donald Trump has turned to former Texas governor and political rival Rick Perry to head the Department of Energy (DOE), raising cautious hopes that wind and solar energy may have a voice in his incoming administration.

During Perry's 14 years in office, Texas became a wind energy powerhouse and it now has more installed generation capacity than all but six countries. His “all-of-the-above” approach for energy technologies also encouraged development of large-scale solar there, which is now evolving into an important sector for investment and job creation.

Perry’s familiarity with solar and wind energy could prove helpful for both industries with Trump in the White House, although how much he would advocate for both remains to be seen. As governor, he was also is a firm supporter of natural gas and petroleum, not surprisingly as Texas is the leading producer of both.

Thus far, fossil fuels are emerging as big winners as Trump fills key cabinet and senior executive level positions. Trump himself has made no secret that he believes fossil fuels are the key to the US become energy independent.

Earlier today, he nominated ExxonMobil chief executive Rex Tillerson to be his secretary of state and earlier picked Oklahoma Attorney General Scott Pruitt and climate skeptic as administrator of the US Environmental Protection Agency (EPA).

He reportedly will choose US Representative Cathy McMorris Rodgers, the highest ranking Republican woman in the House of Representatives, to head the Department of the Interior. She is an advocate for increased oil and gas drilling on public lands and opposes EPA efforts to regulate carbon.

The nomination of Perry, which is also subject to confirmation by the US Senate, is ironic in that he wanted to eliminate the agency when he ran for president in 2011.

During a primary debate, he declared he would abolish three federal agencies including the commerce and education departments, but couldn’t remember DOE. “The third one, I can’t. Sorry. Oops.” The gaffe effectively ended his first presidential bid.

He tried again earlier this year but couldn’t compete for the Republican Party’s nomination with outsider Trump. Perry likened Trump to cancer, calling the real estate mogul’s campaign a “toxic mix of demagoguery, mean-spiritedness and nonsense that will lead the Republican Party to perdition if pursued.”

Trump returned the favor by deriding Perry’s campaign as a “barking carnival act.” Nonetheless, last May, Trump won Perry’s endorsement. “He wasn’t my first choice, wasn’t my second choice, but he is the people’s choice.”

DOE’s main responsibilities include the nation’s nuclear weapons program, nuclear reaction production for the US Navy and radioactive waste disposal, including clean up of multiple sites contaminated by military weapons programs in the 1940s through the 1960s. About two-thirds of its $29.6bn went for those activities.

It also sponsors more research in the physical sciences than any other federal agency, the majority of which is conducted through its network of national laboratories.

Under President Barack Obama, DOE has played a major role in his climate agenda and the controversial nuclear deal with Iran that he orchestrated. Trump opposes both. Over the last eight years, DOE issued billions of dollars in loans and loan guarantees for clean energy projects and later took credit for launch of the utility-scale solar industry in the US.

The agency also has been heavily involved in funding research and development of alternative fuels, materials and technologies, and initiatives that aim to improve energy efficiency and storage, and reduce carbon pollution.

It has gone as far as partnering with privately-owned Clean Line Energy Partners to develop a high voltage direct-current transmission line that will carry 3.5GW of wind energy from western Oklahoma to south-central and southeastern states.

Trump has not spelled out his plans for DOE, but conservatives are calling on him to end its role in “picking winners” among energy technologies and to return the agency to focusing on its core, traditional mission. Perry would bring strong executive experience to the job. Texas became the second largest economy during his tenure among the 50 states after California.

Environmentalists slammed the nomination of Perry as inappropriate given his prior low regard for the agency and cited his skepticism over climate change. They also criticized Perry’s record on environmental issues during his tenure and resistance to federal efforts to curb power plant CO2 emissions

Friday, 21 October 2016

Oil companies should branch into renewables: Fitch Ratings .By Karl-Erik Stromstam, Recharge News, October 19 2016

The world's largest solar plant, the 576MW Solar Stars, built by Total-owned SunPower

The world's largest solar plant, the 576MW Solar Stars, built by Total-owned SunPower




The ability of EVs to compete head-to-head with the internal combustion engine would be “resoundingly credit-negative for the oil sector”, says Fitch, one of the world's "big three" credit ratings agencies.
It would take several decades of strong growth for EVs to come close to rivaling regular automobiles on the world’s roads, Fitch acknowledges in a research note. But, it adds,reduced demand for oil due to EVs “could tip oil markets from growth to contraction earlier than anticipated”.
“The narrative of oil’s decline is well rehearsed, and if it starts to play out there is a risk that capital will act long before any transition occurs. This could reduce oil companies’ access to equity and debt capital, increasing funding costs during a crucial period."
Transportation accounts for 55% of oil consumption globally.
The financial implications of improving battery technology will resonate far beyond the oil industry, Fitch warns. Batteries could cause “disruption” across a range of industries that account for nearly one-quarter of all outstanding corporate bonds.
"We believe it will be important for oil companies to react early," Fitch says, noting that many oil companies are taking “initial steps” today to hedge against the profound changes coming to energy markets, with some diversifying into storage or renewables or focusing more on natural gas.
France’s Total, for one, is the majority owner of US-based solar group SunPower and French battery maker Saft. Royal Dutch Shell has signaled its intention to become a major player in offshore wind.
“If nothing else, this diversification will help guard against the risk that the markets turn against them,” Fitch says.