]A busy first week of 2016 for deal-making in clean energy saw new milestones established in Irish wind, German solar costs, African off-grid solar financing, and the US automotive sector.
Among the deals of note, Ireland saw its largest-ever financing for a single wind farm, led by SSE and Irish forestry manager Coillte, with EUR 176m ($190m) committed by lead-arranger banks Banco Bilbao Vizcaya Argentaria, Cooperatieve Rabobank and Norddeutsche Landesbank Girozentrale.
Each bank provided 33% of the debt, which has a long tenor of 16.5 years, emphasizing the fact that commercial banks are back in the business of providing long-term debt after a period, in 2010-13, when Basel III looked likely to limit their loans to eight- or nine-year mini-perms.
In Northern Ireland, power producer AES completed the construction of a 10MW energy storage system at its Kilroot power station near Carrickfergus. The Kilroot Advancion array consists of some 53,000 batteries, and is the first step in the US company’s plan to diversify its supply by building as much as 100MW of energy storage at the same location.
Elsewhere in Europe, Germany’s third test auction for solar power proved fruitful — producing a bid 5.8% lower than the previous round. Energy regulator Bnetza awarded 200MW of utility-scale power at 8 euro cents per kWh (8.6 US cents) for the auction opened in December — a drop of 0.49 euro cents from the lowest offer in the second sale last year. From 2017, auctions for wind and solar power will replace the current feed-in tariff system in Germany, in a government move to encourage competition between developers and therefore to lower prices.
Also in Germany, growing interest in energy efficiency and renewables led Wermuth Asset Management to open its second private equity fund, which aims to raise EUR 250m ($272m) from institutional investors for projects including electric-mobility and power storage.
In emerging markets, Banco Santander and two Canadian pension funds solidified their position in Latin America through an acquisition worth BRL 2bn ($494m) for 392MW of wind parks in Brazil, from wind developer Casa dos Ventos Energias Renovaveis. The deal was made through Cubico Sustainable Investment – a joint venture formed last year by Santander, the Ontario Teachers’ Pension Plan Board and Canada’s Public Sector Pension Investment Board. The acquisition takes Cubico’s total installed capacity of wind generation in Brazil to 615MW.
On the subject of financial innovation in emerging economies, Africa’s off-grid solar systems have for the first time been aggregated and sold on the bond market. Dutch investor Oikocredit International and Persistent Energy Capital, a New-York based merchant bank have transported the model of securitizing residential solar, made popular by SolarCity in the US, to the expansive Africa plains, where as many as 635m people are without access to electricity, according to the International Energy Agency.
London-based developer BBOXX is working with Oikocredit and Persistent in Kenya and Rwanda, with future plans to expand to Pakistan and Nigeria. The venture’s first issue bundled 2,500 contracts for solar energy in rural Kenya and raised 52m Kenyan shillings ($500,000). The companies aim to raise a total of $16m this year through similar bond issues.
In US-based residential solar, the merger of companies Clean Power Finance and Kilowatt Financial last week will expand the financing options available to homeowners wishing to engage in solar power and energy efficiency. The merged company, Spruce Finance, has a presence in 18 states with more than 50,000 customers, and some $2bn in backing from investors including Duke Energy and Dominion International.
Things were less bright in Nevada last week following the legislation change in December to increase the fixed monthly fee for solar customer by about 40% and to reduce the amount solar customers are paid to provide excess power to the grid. Both SolarCity and Sunrun have announced significant job cuts in the state as a consequence of the regulation. The solar industry seeks to force the Nevada Public Utilities Commission to reconsider its decision at a hearing this Wednesday.
The potential implications of the US Clean Power Plan are explored in a recent Analyst Reaction. Calculations made by BNEF for CPP compliance suggest that carbon prices induced by the regulation would support those regions where wind and solar growth are already most economical: “By 2030, the CPP would only drive 18GW of new renewable build beyond what would occur under a business-as-usual case,” the note says. This amounts to 2.3GW per year across both wind and solar spread over 2022-30.
In Las Vegas last week, the Consumer Electronics Show led to the unveiling of several new electric and hybrid vehicles. General Motors unveiled its new Chevrolet Bolt, boasting a range of 200 miles (320km) on a single charge, on the heels of investing some $500m in ride-sharing service Lyft. The investment marks the largest commitment by an auto manufacturer in an on-demand transport service company.
“The move is part of the execution of GM’s road map to autonomy, in which the company prepares for a post-car-ownership future with transportation-as-service at centre stage,” said advanced transport analysts at BNEF, in the Analyst Reaction: Access over ownership: GM’s bet on ride-hailing. “In addition to developing a network of on-demand autonomous vehicles, the two companies will work together to create a rental hub to provide Lyft drivers with short-term use of GM’s vehicles,” the note said.
Volkswagen also unveiled an emissions-free car in Las Vegas last week. The VW Budd-e offers a maximum range of 233 miles (375 km), a top speed of 122mph and acceleration from 0 to 60mph in 6.9 seconds. The battery powering the two electric motors of the retro-style microbus can be recharged to about 80% of capacity in 30 minutes.
VW’s efforts to develop new fuel-efficient models to keep in step with tightening emission regulations come as it faces rising costs from the diesel emissions scandal that emerged last September. Last Monday the US Justice Department filed a lawsuit suing the German car manufacturer for installing illegal cheat devices on nearly 600,000 vehicles, and seeking penalties as high as $80bn. VW is considering the repurchase of tens of thousands of US vehicles as a result of its discussions with the US Environmental Protection Agency, according to people familiar with the matter.
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