One of the problems with green energy finance is the nature of the asset. Unlike fossil fuel developments, which spread the capital cost of development and production across the lifespan of the asset, most renewable projects have to be entirely capital funded up front. According to Citi’s Anthony Yuen and Ed Morse, that means the cost of financing is the key determinant in making these projects competitive and viable — an increasingly pressing objective in the context of falling fossil fuel prices, which reduce the competitive position of renewables in the energy complex.
In two weeks time, 195 delegations at COP21 will gather in Paris in an attempt to tackle climate change. The goal of the 2015 UN climate change talks? A deal to keep global warming below 2 degrees Celsius. But it’s unclear exactly what will come out of Paris. Beyond any overarching agreement or policy, attendees would do well to remember the actual people who would be working in the changing energy landscape. With the difficulties of transitioning from a high carbon to low carbon environment, plus the potential disruption of automation and robots, going green is filled with many potential landmines for the workforce. Just last week, BoE chief economist Andy Haldane sounded the alarm about the threat of robot labour to the tune of 15m UK jobs. And the most at-risk occupations from automation — involving administrative, clerical and production tasks — typically are the lowest paid. Plus, moving toward a low carbon economy will likely require trillions of dollars in investments just over the next 15 years. What will happen to employment as the energy sector and governments make moves to go green?
Eon warns on profits and energy security || Industrial production drops in eurozone || big write offs at GS4 as it trys to repair relationship with UK government || Monte dei Paschi posts 7th quarterly loss || Cathy Pacific profits soar || Poundand jumps while Pets languishes || Stocks down
FT markets round-up:“Efforts by global central bankers to reassure markets that there would be no rush away from accommodative policies helped fuel fresh gains for equities and a rally in US government bonds, although gold sank to its lowest level in nearly three years. Indeed, the gold price tumbled $53, or 4.3 per cent, to $1,224 an ounce, while silver fell 5.5 per cent to $18.56 amid further fretting over Fed chairman Ben Bernanke’s comments last week about “tapering” the central bank’s quantitative easing programme. The dollar, meanwhile, maintained its firmer tone, rising 0.4 per cent against a basket of currencies, with the euro below the $1.30 mark for most of the day after Mario Draghi, ECB president, said the eurozone economic outlook still warranted accommodative settings. His remarks echoed similar comments from David Miles and Sir Mervyn King of the Bank of England.” (Financial Times) Sluggish growth data give Fed cause for caution on tapering: “The US economy grew at an annualised pace of 1.8 per cent in the first quarter, significantly slower than previously thought, which could give the Federal Reserve some reason for pause as it weighs slowing its support for the recovery. The surprisingly sharp downward revision – from an earlier projection of 2.4 per cent first-quarter gross domestic product growth – offers evidence that US growth remained quite sluggish even as the Federal Reserve began contemplating tapering the tempo of $85bn in monthly bond buys.” (Financial Times)
Today should have been the day when ex-BP chief Tony Hayward and a raft of other energy and security luminaries got to their feet at a conference hosted by the UK’s biggest green power trade body. But the Renewable Energy Association’s “Symposium 2013” at the historic Mayfair headquarters of the Royal Institution has been cancelled due to lack of interest. The programme’s here if you can be bothered to click.
The US overtook China to regain top position as the world’s leading investor in “clean” energy last year, according to Bloomberg New Energy Finance, the FT reports. It was the first year since 2008 that the US has been ahead of China as the world’s largest market for investment in renewable energy, biofuels and energy efficiency. However, it may drop back again this year after the end of two key subsidy programmes introduced as part of the 2009 economic stimulus package: grants for renewable energy projects and government loan guarantees to encourage private sector investment.
Exporters and technology shares led gains after European Union countries agreed on tougher fiscal rules at a summit in Brussels late last week. In Tokyo, Toshiba rose 2.4 per cent, Fujitsu advanced 2.2 per cent and Sony added 1.8 per cent. Chipmaker Elpida Memory rallied 3.2 per cent while TDK Corp, an electronics parts maker, gained 2.8 per cent. In Seoul, Samsung Electronics rose 1.2 per cent and LG Electronics was ahead by 1.7 per cent. Japanese shippers were also notable gainers after cargo rates for large vessels rose to a high for the year. Mitsui O.S.K., Japan’s second-largest shipper by sales, jumped 3.9 per cent after Credit Suisse kept its “overweight” investment rating on Japanese shippers. Market leader Nippon Yusen K.K. gained 3.7 per cent while Kawasaki Kisen Kaisha added 2.2 per cent.
China has announced its first nationwide feed-in tariff for solar projects in a step that underscores the determination of the world’s biggest energy user to move toward renewable energy, reports the FT. Beijing has made renewable energy a keystone of its energy policy and aims to raise solar power capacity tenfold in the next five years. The long-awaited feed-in tariff guarantees solar developers a payment of Rmb1 per kilowatt-hour that their projects feed into the grid, or Rmb1.15 per kh in some cases depending on the timing and location of the project.
Renewable energy industries in the US face falling off a “cliff”, with the loss of tens of thousands of jobs, if investment grants for projects such as wind farms are not extended by Congress, companies warned. The tax deal agreed between President Barack Obama and congressional Republicans excluded an extension to the tax credits that have supported investment in wind, solar and other forms of renewable power, which are due to expire at the end of the year, the FT reports. As negotiations on the plan continued on Wednesday, industry sources said the only tax break for renewable energy that had been agreed was an extension of the credit for blending ethanol into petrol, which is strongly supported in corn-producing states. The agreement caused alarm in the renewable energy sector, touted as one of the growth industries that is creating employment to replace jobs lost elsewhere.
Chris Cook, the former director of London’s International Petroleum Exchange (and frequent contributor to FT Alphaville’s Long Room) is upping his campaign to initiate a new monetary system that could link monetary units to energy. As Cook explained to FT Alphaville this week:
General Electric will on Monday announce plans to double its investments in renewable energies to $6bn by 2010 in the latest sign of the push by big companies to capitalise on concerns over global warming and pollution. The financial arm of the US conglomerate believes that within two years alternative sources such as wind and solar power will account for almost a quarter of its total investments in energy and water, up from 10% in 2006. GE has already invested more than $3bn buying stakes in renewable energy plants across the world. But senior executives, led by chairman and chief executive Jeffrey Immelt, believe the sector is poised for strong growth in the near future.
Nitol Solar, a Russian-based company that makes high-purity silicon for the solar industry, is planning a listing on the London Stock Exchange – a move expected to value the company at about $1bn. The plan, due to be announced on Monday, illustrates the extent of global investor interest in renewable energy. This is one of the few sectors to remain attractive in relation to new public listings in the aftermath of recent stock market turbulence.
Infinis, one of the UK’s biggest renewable energy companies, has pulled its IPO planned for this autum after Terra Firma, the buyout group of dealmaker Guy Hands, which acquired Infinis in 2003, decided to put its five-year plan on hold, the FT reports on Thursday. The flotation had been estimated to value the company at £700m-£1bn, one of the biggest public offerings yet seen in the renewable energy sector.
Energias de Portugal, the country’s dominant electricity group, is to pay Goldman Sachs $2.9bn in cash for 100 per cent of Horizon Wind Energy, a leading US utility, in the world’s biggest renewable energy deal to date, the FT reports. António Mexia, EdP’s chief executive, said the acquisition would transform EdP into the world’s third largest wind power producer and a global leader in renewable energy with a 9 per cent share of the fast-growing US wind generation market.
A new index product from ABN Amro could help investors turn climate change into a windfall, reports FinanceAsia.com. The bank has developed an index comprising companies whose businesses are connected to global warming or the environment – or more precisely, to reversing or mitigating the damaging effects of climate change.