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Storage, electric vehicles and the power market linkages

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Bloomberg New Energy Finance

Batteries were the runaway winner last week as the UK published the results of its contest to provide power that can be dispatched quickly. Of the 37 bids National Grid received for so called enhanced frequency-response, 34 were for batteries. Nearly all of those were lithium-ion.

The 201MW awarded is the single largest procurement of storage ever seen in Europe, and featured some very low prices. “These awards show that we can work with industry to bring forward new technology,” Cordi O’Hara, director of the UK system operator at National Grid, said in a statement. “I believe storage has much to contribute to the flexible energy system of tomorrow. This is the beginning of an exciting new chapter for the industry.”

The storage battery in an electric car – usually based on lithium-ion chemistry – is the most expensive part of the vehicle, and is key to its performance. Electric vehicle sales were up 60% in Q2 2016, compared to the same period last year, driven mainly by growth in China and North America. The share of EVs in total new car sales in main markets jumped to 1.55% from 0.98% in Q1 2016. More details can be read in Bloomberg New Energy Finance’s latest Global Electrified Transport Market Outlook. 

The rise of EVs will have implications far beyond the car market. A VIP Comment article, published last week, “Electric Vehicles – It’s not just about the car” explores how the world’s energy and transport sectors will intersect in the next few years, and the implications this could have for everything from oil companies to electricity generators, auto parts makers to retailers, the wider transport sector to finance ministries.

Existing players in energy are positioning themselves for the changes: Innogy, the renewable-energy unit of RWE, boosted its storage and solar businesses by buying Bavaria’s Belectric Solar and Battery Holding earlier this week. The Belectric acquisition, “instantly makes Innogy an international player on the market for utility‐scale photovoltaic power plants and battery storage technologies,” RWE said.

In the US, Arizona’s top utility regulator proposed that the state double its target for power generation from renewable resources to 30% by 2030. Meanwhile California is poised to make the nation’s strictest carbon emission controls even tougher, with a bill to cut greenhouse-gas discharges to 40% less than 1990 levels by 2030.

There was more news from SunEdison, with China’s clean energy group Golden Concord Holdings reportedly keen to acquire assets of the bankrupt company.

Golden Concord is planning to bid for SunEdison’s controlling stake in TerraForm Power, which owns operating power plants. That would pit the company against a planned joint offer from Canada’s biggest alternative-asset manager, Brookfield Asset Management, and billionaire David Tepper’s Appaloosa Management. TerraForm Power has a market valuation of about $1.6bn, making it SunEdison’s most valuable standalone asset.

Golden Concord’s Hong Kong-traded power unit, GCL New Energy Holdings, is interested in acquiring other SunEdison assets including US solar farms.

Separately, Golden Concord is competing for control of K-Electric, the $2.4bn Pakistani utility that has also drawn interest from Shanghai Electric Power and Engie, people with knowledge of the matter said earlier this month.

China Three Gorges announced its decision to buy BCP Meerwind Luxembourg Sarl from Blackstone Group’s BCP Meerwind Cayman for EUR 645.4m ($731m) last week, to venture into offshore wind power in Germany. BCP Lux owns an 80% stake in project company WindMW, which operates a 288MW offshore wind farm in Germany, China Yangtze Power, a unit of the nation’s largest hydropower operator, said in a statement to the Shanghai stock exchange.

Once the deal is completed, Yangtze Power unit China Yangtze Power International (Hong Kong) will hold a 30% stake in BCP Lux, while the European unit of China Three Gorges will hold the remainder, according to the statement.

Earnings news came through from quite a few companies last week. Hanwha Q Cells confirmed it expects to ship 4.8-5GW of solar photovoltaic modules this year after second-quarter revenue almost doubled. GCL-Poly Energy Holdings, the world’s largest manufacturer of polysilicon for solar cells, said first- half profit doubled after it boosted production to meet growing demand. JinkoSolar Holding fell the most in more than six months after the Chinese panel maker reported lower second-quarter gross margin and an analyst said the number may slip even more.

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Source: Bloomberg New Energy Finance. Reproduced with permission.  

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