Monthly Clean Energy Investment Analysis & News … groups moving into project development. US...

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Major solar companies in China and the US continued their drive to diversify and vertically

integrate in August, building on the recent trend of solar manufacturers and engineering groups moving into project development.

US integrated solar group First Solar strengthened its long-term credentials as a project developer and technology leader with the acquisition of a 1.5 GW development-stage solar project portfolio in North America and General Electric’s cadmium telluride intellectual property (IP) portfolio.

First Solar bought the 1.5 GW pipeline from independent power producer Element Power in a deal that perfectly encapsulated what large integrated companies look for when acquiring development assets.

The portfolio is diversified in location, covering sites in California, Arizona, Texas, Georgia, North Carolina, Colorado, Louisiana, Illinois and the Mexican state of Sonora.

All projects in the deal have secured site options, adopted queue positions for interconnections and have entered the environmental screening and permitting stages, which removes a degree of risk. More importantly, it cuts down on cumbersome early-stage development activity for First Solar, while leaving the company plenty of room to add value to the assets.

First Solar can achieve this value by deploying its own thin-film modules or leveraging its expertise as the world’s largest solar engineering, procurement and

construction (EPC) contractor. US market researcher IHS forecast last month that First Solar will in 2013 become the first EPC provider to install more than 1.1 GW of solar capacity in a single year.

First Solar has already used major acquisitions to enhance its development pipeline this year, purchasing the 50 MW Macho Springs project in New Mexico from Element Power and a 1.5 GW Chilean development pipeline through its takeover of Solar Chile in January.

The company’s acquisition of GE’s cadmium telluride IP portfolio, and the associated module purchase commitment it secured from GE alongside the deal, shores up its position in the thin-film technology market, which could become more lucrative if measures that limit Chinese solar imports to Europe and the US drive prices of crystalline silicon upwards.

Another means of more effectively pursuing multiple streams of an energy sector is to hive off manufacturing and project

PACE OF VERTICAL INTEGRATION IN PV SECTOR ACCELERATES

CONTENTSIssue #18 September 2013

Editorial Review.................................1 { Pace of vertical integration in PV sector

accelerates

Data..................................................3

Interviews & Analysis.........................5 { Glennmont clean energy fund close indicates

light at end of private equity tunnel

{ PensionDanmark to prioritise direct renewable energy investments

{ Denham Capital targets emerging renewable energy markets

{ Armstrong Asset Management fund soon to make new asset investments

{ NADB zeroes in on renewable energy finance

{ RWE Innogy to divest biomass assets and exit non-core geographies

{ AMEC continues hunt for acquisition targets

{ End of PTC would open up US wind market to financial investors

{ PTC remains essential driver for US wind, options are available to widen tax equity base, says AWEA

{ Czech solar developer targets global markets in wake of retroactive domestic subsidy cuts

{ Acquisition talks for Bosch’s aleo solar reach due-diligence stage

{ Swiss solar thermal developer closes Series B, plans Eur15 million Brazil joint venture

{ Principal Solar to seek substantial funding in 2014, targets 2 GW portfolio

{ RES intends to bid in France’s second offshore wind tender

{ Gemini project in debt financing stage, says Northland CEO

{ Future German offshore wind farms can escape grid connection delays, says Vattenfall

{ Blade Dynamics to start second funding round in 2014

{ BWSC targets three plants in first stage of biomass joint venture

Headlines.......................................30

Events............................................33

Ronan Murphy

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Enfinity was also in economic difficulty at the time it was bought out by SunEdison, and reportedly needed to find a buyer to keep afloat. It was sold for a nominal sum of one euro.

The vast experience of European developers like Enfinity and Gehrlicher, combined with distressed conditions in their core markets such as Germany and Italy, make them highly attractive M&A targets at low prices for North American and Chinese solar groups aiming to increase their global exposure.

Ambitious government target bolsters Chinese solar project development

The development imperative is even stronger among solar manufacturers in China, where JinkoSolar this month became the first major PV manufacturer to record a profit since 2011 thanks to its solar project unit.

JinkoSolar recorded a net profit of $8 million for 2Q13 after seven straight quarterly losses, citing strong module sales in Japan and China and its own project development business as the drivers for its recovery.

JinkoSolar said in its results statement that the project pipeline, which consists entirely of Chinese solar assets, is approaching 700 MW, and that it expects to complete 200-300 MW of projects in 2013.

Other Chinese manufacturers to herald project development as a recent boost to business include Trina Solar and Canadian Solar, both of which recorded narrowed losses in the second quarter.

Trina completed construction of a 50 MW solar farm in Gansu Province during 2Q and expects to generate up to 20% of its third quarter from project sales.

Canadian Solar has built up a 378 MW project pipeline through its Canadian Solar Solutions unit, and closed the sale of projects valued at $269.6 million during 2Q.

Another leading cell manufacturer, China Goldpoly, was highly active this summer in acquiring development rights for Chinese solar project pipelines. In August it agreed to acquire 400 MW of assets from GD Solar Ltd. and a stake in a 24 MW project alongside rail operator Huabei Expressway.

The two deals followed an agreement signed by Goldpoly earlier in the month to buy a 300 MW solar generation portfolio from Zhongli Talesun. Goldpoly also acquired project developer China Merchants New Energy for $270 million in June.

Domestic project development in China was boosted by the government’s expansion of its 2015 capacity target in July, from 21 GW to 35 GW. Given that China’s solar capacity stood at about 7 GW at the end of 2012, there is immense scope for new projects in the country, which offers a way for its heavily indebted manufacturers to improve their margins.

These integrated Chinese solar groups will also seek to diversify globally, as reflected in LDK Solar’s recent decision to more closely align its US instalment subsidiary SPI Solar with its own operations.

Ronan Murphy Editor

development units into separate businesses to streamline operations.

Missouri-based SunEdison, formerly known as MEMC Electronic Materials Inc., announced in August that it will spin off its semiconductor unit into an independent business and list a stake in the new entity through an initial public offering in early 2014.

SunEdison said the move will allow both its increasingly prominent solar power development business and the semiconductor business to more effectively focus on their individual strategies and improve efficiency.

Like First Solar, SunEdison has increased its emphasis on project development as a means of mitigating the sharp decline in the cost of photovoltaic (PV) products in recent years.

SunEdison ended the second quarter of 2013 with a 2.9 GW global project pipeline, which it expanded in August after its private equity vehicle, EverStream, acquired Belgian clean energy developer Enfinity NV. Enfinity has more than 390 MW of installed capacity across Europe, North America and Asia Pacific.

The company further diversified its offering by acquiring California-based hybrid solar power and water heating provider EchoFirst in July.

Engineering groups are also keen to play a greater role in solar development as a means of ensuring a market for their core business. Earlier this month, the US unit of Germany-based EPC provider M+W bought Gehrlicher Solar America Corp., an affiliate of insolvent German developer Gehrlicher Solar.

M+W Americas Chief Executive Officer Rick Whitney said the deal allowed the group to offer a “one-stop shop” to customers for all phases of a solar project, from design to construction.

The Gehrlicher and Enfinity deals highlight the extent to which there is cheap PV expertise available for acquisition in Europe. Gehrlicher Solar Americas is in positive shape, recording revenues of $73 million in 2012 that are expected to rise to $150 million this year, though its German parent company was forced into insolvency in July. Gehrlicher Solar’s European developments were hit heavily by the impact of proposed anti-dumping tariffs on the price of Chinese PV equipment sold in Europe.

Editorial Review

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Data

DATAVC/PE, M&A, Project / Asset Finance and Public Markets transactions from Clean Energy Pipeline’s premium databases

Venture Capital & Private Equity90 transactions tracked totalling $1,346.2 million - top 20 transactions by value displayed here

Mergers & Acquisitions98 transactions tracked totalling $2.3 billion - top 20 transactions by value displayed here

Date Company Deal stageDeal value (USD MM)

Sector

09/08/2013 Renova Energia PIPE 621.0 Wind

23/08/2013 Uber Technologies Inc. PE - Development Capital 258.0 Green Transportation

14/08/2013 JA Solar Holdings Co. Ltd PIPE 96.0 Solar

08/08/2013 Amyris Inc. (f.k.a. Amyris Biotechnologies Inc.) PIPE 60.0 Biofuels

23/08/2013 Solexel Inc. VC - Early Growth (Series A to C) 39.9 Solar

06/08/2013 LP Amina Inc. VC - Early Growth (Series A to C) 20.0 Environmental Services & Remediation

01/08/2013 Rive Technology Inc. VC - Late Stage (Series D+) 20.0 Advanced Materials & Technologies

30/08/2013 Mytrah Energy Ltd. (f.k.a. Caparo Energy Ltd.) PIPE 17.5 Wind

12/08/2013 Everspin Technologies Inc. VC - Early Growth (Series A to C) 15.0 Advanced Materials & Technologies

21/08/2013 Greenwave Reality Inc. VC - Early Growth (Series A to C) 11.3 Energy Efficiency

15/08/2013 SG Biofuels Inc. VC - Early Growth (Series A to C) 11.0 Biofuels

20/08/2013 Ambiq Micro Inc. VC - Early Growth (Series A to C) 10.0 Energy Efficiency

03/08/2013 HelioVolt Corp. VC - Late Stage (Series D+) 9.5 Solar

07/08/2013 Biosynthetic Technologies Inc. PE - Development Capital 9.0 Advanced Materials & Technologies

05/08/2013 TVP Solar SA VC - Early Growth (Series A to C) 7.1 Solar

09/08/2013 Greenlight Biosciences VC - Early Growth (Series A to C) 7.0 Biofuels

28/08/2013 Local Motion VC - Early Growth (Series A to C) 6.0 Green Transportation

14/08/2013 Lucid Energy Technologies LLP VC - Early Growth (Series A to C) 5.7 Energy Efficiency

06/08/2013 MicroPower Technologies Inc. VC - Late Stage (Series D+) 5.7 Energy Efficiency

27/08/2013 Ascent Solar Technologies Inc. PIPE 5.0 Solar

Date Target AcquirerDeal value (USD MM)

Target Sector

23/08/2013 Rothsay Darling International Inc. 645.0 Recycling & Waste

09/08/2013 Novaled AG Samsung Group 420.8 Energy Efficiency

05/08/2013 Solar plants (49MW) - Chesterville, Pefferlaw, S... Concord Pacific Group Inc. 277.0 Solar

07/08/2013 Co-generation plant (560MW) - Gregory NRG Energy Inc. 244.0 Co-generation

05/08/2013 Mainstream Renewable Power Ltd. Marubeni Corp. 132.7 Wind

13/08/2013 Paramount Solar SolarCity Corp. 120.0 Solar

06/08/2013 Terra Renewal Services Inc. Darling International Inc. 120.0 Recycling & Waste

06/08/2013 Adamah Group SciEssence LLC 100.0 Other cleantech products & services

08/08/2013 Solar plant (10MW) - Suelte, Mecklenburg, Solar... Wattner AG 80.0 Solar

19/08/2013 Camden Resource Recovery Facility Covanta Holding Corp. 48.0 Biomass

21/08/2013 Solar plant (23.8MW) - Feng County, Xuzhou, J... Huabei Expressway Co. Ltd. 36.5 Solar

06/08/2013 Solar plant - southeastern England Bluefield Partners LLP 18.4 Solar

09/08/2013 Mercury Solar Systems Inc. Real Goods Solar Inc. 16.4 Solar

12/08/2013 Relume Technologies Inc. Revolution Lighting Technologies Inc. 15.0 Energy Efficiency

26/08/2013 Millennium Power Solutions Blue Earth Inc. 14.5 Energy Storage

16/08/2013 Dongguan Hengjian Environmental Technology Dongjiang Environmental Company Ltd. 12.5 Recycling & Waste

08/08/2013 Solar plants (2.98MW) - Apulia Perseide Energie 12.1 Solar

12/08/2013 Syndicated Solar Real Goods Solar Inc. 6.6 Solar

06/08/2013 Wind farm (5.6MW) - Wüllersleben SWE Stadtwerke Erfurt GmbH 6.6 Wind

20/08/2013 Osiris Subsea & Marine Engineering Services & ... James Fisher and Sons plc 5.1 Wind

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Data

Project / Asset Finance88 completed transactions tracked totalling $7.2 billion - top 50 transactions by value displayed here

Date Project Financing typeDeal value (USD MM)

Sector

27/08/2013 Wind farm (219MW) - Humber Gateway Construction debt, Equity finance 1143.0 Wind

20/08/2013 Wind farm (218MW) - Panhandle Pre construction debt, Equity finance 473.1 Wind

14/08/2013 Wind farm (630MW) - London Array, Phase 1 Project debt 402.0 Wind

01/08/2013 Wind farm (600MW) - Gemini (Buitengaats & ZeeEnergie) Mezzanine finance, Equity finance 400.0 Wind

15/08/2013 Biomass plant (40MW) - Brigg Renewable Energy Plant Equity finance 247.0 Biomass

09/08/2013 Wastewater treatment plant - Panama City Government guarantee / finance, Pre constru... 242.0 Water & Waste Water Treatment

13/08/2013 Solar plant (69.7MW) - Nikolayevka Construction debt, Equity finance 222.0 Solar

06/08/2013 Vivint Solar Tax equity finance 200.0 Solar

14/08/2013 Wind farm (99MW) - Taltal Pre construction debt, Equity finance 190.0 Wind

06/08/2013 Wind farm (84.6MW) - Markbygden sub phase Construction debt, Equity finance 183.5 Wind

09/08/2013 Ethonal plant (65MGY) - Dakota Spirit AgEnergy Government guarantee / finance, Pre constru... 155.0 Biofuels

24/08/2013 Wind farm (68MW) - Keadby Pre construction debt, Equity finance 147.6 Wind

29/08/2013 Wind farm (75MW) - Steele Flats Pre construction debt, Equity finance 138.0 Wind

16/08/2013 Wind farm (51MW) - Loma Blanca 4 Construction debt, Equity finance 126.0 Wind

01/08/2013 Hydro plant (28.8MW) - Nayarit Pre construction debt, Equity finance 116.0 Hydro

12/08/2013 Biomass plant (40MW) - Lanzhou Zhongpuzi Construction debt, Equity finance 111.8 Biomass

08/08/2013 Biomass plant - Hefei Recycling Economic Zone, Hefei Ci... Construction debt, Equity finance 108.6 Biomass

12/08/2013 Wind farm (70MW) - Yanting Construction debt, Equity finance 107.6 Wind

12/08/2013 Wind farm (42MW) - Minas Construction debt, Government guarantee / fi... 91.0 Wind

21/08/2013 Wind solar hybrid - Taiyang Mountain, Wuzhong City Construction debt, Equity finance 82.7 Solar/Wind

29/08/2013 Wind farm (48.5MW) - Xinhu Phase I Construction debt, Equity finance 81.1 Wind

29/08/2013 Wind farm (48.5MW) - Xinhu Phase II Construction debt, Equity finance 81.1 Wind

21/08/2013 Wind farm (49.5MW) - Haladaokouzhen Phase I Construction debt, Equity finance 81.1 Wind

14/08/2013 Wind farm (49.5MW) - Mengxi District, Shandu Province Construction debt, Equity finance 81.1 Wind

28/08/2013 Wind farm (49.8MW) - Guojiadian Phase I Construction debt, Equity finance 81.0 Wind

09/08/2013 Wind farm (48.3MW) - Wuzhong City, Ningxia Province P... Construction debt, Equity finance 77.3 Wind

13/08/2013 Wind farm (35MW) - Gok II Pre construction debt, Equity finance 76.0 Wind

28/08/2013 Wind farm (49.5MW) - Guangxi Guilin Tianhu Construction debt, Equity finance 75.4 Wind

06/08/2013 Wind farm (220MW) - Penonome Construction debt 71.0 Wind

21/08/2013 Solar plant (20MW) - Sol Orchard Imperial 1, El Centro Pre construction debt 67.6 Solar

13/08/2013 Biomass plant (30MW) - Haikou Phase II Construction debt, Equity finance 66.0 Biomass

12/08/2013 Wind farm (42MW) - Sanmenxia District, Shaanxi Provinc... Construction debt, Equity finance 64.8 Wind

30/08/2013 Solar plant (39MW) - North East of USA Construction debt 64.0 Solar

22/08/2013 Wind farms (170MW) - BW Guirapa I Equity finance 64.0 Wind

07/08/2013 Wind farm (24.6MW) - Viger-Denonville Community Construction debt 61.7 Wind

05/08/2013 Friedrich Boysen GmbH & Co. KG Government guarantee / finance 60.0 Environmental Services & Rem...

14/08/2013 Wind farm (49.5MW) - Dagele Phase I Construction debt, Equity finance 60.0 WInd

16/08/2013 Wind farm (49.5MW) - Huaneng Changtu Laocheng Construction debt, Equity finance 59.1 WInd

08/08/2013 Solar plant - Thailand Construction debt 56.4 Solar

06/08/2013 Hydro plant (21.3MW) - Jamie Creek Construction debt 55.3 Hydro

01/08/2013 Ethanol plant - Indian River BioEnergy Center Construction debt, Equity finance 55.0 Biofuels

05/08/2013 Solar plant (56MW) - Aussie Construction debt 53.0 Solar

06/08/2013 Wind farm (21.6MW) - Honkajoki Construction debt, Equity finance 47.7 Wind

16/08/2013 Solar plant (20MW) - Jinghe County, Bozhou District (Po... Construction debt, Equity finance 46.8 Solar

15/08/2013 Solar plant (20MW) - Bailingmiao district, Damaoqi (TBEA) Construction debt, Equity finance 46.8 Solar

23/08/2013 Wind farm (21MW) - Muukko Construction debt, Equity finance 45.6 Wind

14/08/2013 Solar module plant - Fenyang City, Shanxi Province, China Construction debt, Equity finance 43.8 Solar

16/08/2013 Solar plant (20MW) - Tianjin Great Wall Motors Construction debt, Equity finance 42.8 Solar

08/08/2013 Solar plant (10MW) - Negev desert Construction debt, Equity finance 42.0 Solar

21/08/2013 Wind farm (19.2MW) - Nyby-li Construction debt, Equity finance 41.7 Wind

Public Markets

Date Issuer Issue typeProceeds

(USD MM)Sector

22/08/2013 PowerSecure International Inc. Secondary 34.0 Energy Efficiency

12/08/2013 Renewable Energy Corp. ASA Convertible 110.0 Solar

02/08/2013 Control4 Corp. IPO 64.0 Energy Efficiency

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GLENNMONT CLEAN ENERGY FUND CLOSE INDICATES LIGHT AT END OF PRIVATE EQUITY TUNNEL

Jessica Mills-Davies

Glennmont Partners, a clean energy infrastructure fund manager spun-out from BNP Paribas , outstripped its own forecasts in August by raising Eur200 million in the first close of its second clean energy infrastructure fund, Technical Director Peter Dickson told Clean Energy Pipeline.

“We’ve exceeded our expectations,” Dickson said by phone. “We hadn’t set any particular targets, but to get to Eur200 million is an incredibly exciting sum and what it does for us is demonstrates there is still a very healthy appetite for well experienced and successful teams in what is a very exciting investment space.”

The fundraising indicates that, after a long and dark period of dwindling private equity investment in the sector, institutional investors could be returning to the clean energy space.

Policy uncertainty across core European markets over the past couple of years has diminished confidence in renewable energy returns and was one of the main factors behind caution on the part of private equity investors. Subsidy reductions further dented fund managers’ ability to raise capital, darkening the cloud left by the recession.

The Eur200 million at first close puts Glennmont well on its way towards reaching its Eur450 million target for the fund, which is more than the Eur437 million it closed for its first fund in 2010.

Glennmont’s first fund is now fully invested in projects valued at Eur1.1 billion, leveraging nearly Eur1 billion in debt. The firm closed financing for the fund in 2010 and finalised the last transaction from the vehicle in January 2013. The largest deal financed through the fund was the Sleaford 30 MW straw-fueled biomass power station in Lincolnshire.

“We don’t always use debt but we consider it at each individual project, purely at non-recourse level,” Dickson said.

always been able to do, and have created a reputation around, are still available.

“We see opportunities continuing in wind, UK wind, Irish wind, and potentially French wind. We can also see opportunities in biomass, which has been very successful for us.”

Italy remains a focus for Glennmont despite the expiry of solar feed-in tariffs (FiTs) under the Conto Energia V system in July. While it does not invest in Spain, which notably cut tariffs retroactively and overhauled its energy policy this summer to address a burgeoning tariff deficit, the firm may also consider investing in projects elsewhere that do not benefit from a feed-in tariff (FiT).

“If the market and price projections were secure enough, we would make that investment [but] at present it’s not our focus,” said Dickson.

The UK and Irish markets continue to be attractive despite uncertainty over the UK’s upcoming transition to a contracts for difference FiT regime in 2017.

“I think the ambition and headline intention of CfDs is valuable; if it works it will indeed give clarity and security to income streams for projects,” said Dickson. “The routes to market and counterparty, and how it’s funded, are still to be ascertained but the headline shape of CfDs does look like it will be an appropriate mechanism.” ■

Glennmont remains confident about expanding its clean energy platform beyond the first two funds to include additional vehicles in the future.

“It’s our intention to turn this into a large platform where we can look at a number of different products,” said Dickson. “Right now, our focus is on management of the portfolio for the first fund and raising the second fund.”

Contributors to the second fund included returning investors from Glennmont’s first clean energy fund, which attracted commitments from major European and Asian institutional investors such as Netherlands-based pensions investor PGGM Vermogensbeheer B.V. and the London Pension Fund Authority.

Glennmont expects to achieve final close on the fund, which will retain an investment focus on wind, solar and biomass, by mid-2014. It invests in newly constructed assets across Europe, steering clear of secondary markets and avoiding development risk.

“We’ll have subsequent closings to suit investors as it becomes available,” said Dickson. “We could have rolling closings for instance - it’s not a tightly scheduled series of activities.

“We still see opportunities in solar. It’s not as buoyant a market as it was two to three years ago but the niche deals we’ve

Interviews & Analysis

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PENSIONDANMARK TO PRIORITISE DIRECT RENEWABLE ENERGY INVESTMENTS

Rob Lavine

Danish pension fund PensionDanmark will bring more of its renewable energy investments in-house and will restrict its wind energy investments to a fund managed by Copenhagen Infrastructure Partners (CIP), Chief Executive Officer Torben Möger Pedersen told Clean Energy Pipeline.

PensionDanmark committed DKK 6 billion ($1.07 billion) to the Copenhagen Infrastructure I fund when it was established last year. The fund is one of seven infrastructure funds in which PensionDanmark is currently an investor and one of four that have a specific focus on energy.

Pedersen said that PensionDanmark would curtail its wind investments through other external funds, in favour of a second fund with CIP. In addition, it is withdrawing from new solar investments for the time being.

The first CIP fund is likely to be fully committed by the end of 2013, after which time the second one will be raised.

“[When] we started investing in infrastructure assets, we did that by making commitments to a number of infrastructure funds run by some big financial houses and that was a way to get some knowledge about the asset class, but as we have a very ambitious goal for our investments in infrastructure, it has been more effective to establish an internal team [for new renewable energy investments] including the Copenhagen Infrastructure Fund,” Pedersen said.


“This way we will be able to access investments with substantially lower costs than we have to pay to [other] funds. We have a larger degree of control over the investments and the investment process, which gives us an add-on to the return.

“It is similar to our investments in real estate. We also make most of our real estate investments directly via an internal team of real estate people and we have chosen the same way when we decided to increase our allocation to infrastructure assets.”

PensionDanmark’s renewable energy investments will in future be concentrated in North America and north-western Europe. The pension fund has invested in solar energy in southern Europe through the Eur100 million Green Power Partners fund, but is withdrawing from the region partly because of negative policies introduced by the Italian and Spanish governments over the past year, and partly because it is targeting larger investments, which often tend to preclude solar projects.

“We have restricted our geographic focus to north-western Europe and North America where we have identified a number of interesting wind and biomass projects,” Pedersen explained. “We are confident on that but are yet to have the capacity to look into solar as well.

“We are looking for relatively large investments, with a minimum ticket size of approximately Eur100 million in order to get sufficient scale, and many solar projects are thus too small for us.”

The pension fund’s biomass investments will be conducted through a new joint venture (JV) with Denmark-based power plant builder BWSC, which made its first investment in August when it acquired the 40 MW Brigg biomass plant, located in the UK.

PensionDanmark contributed £128 million of the capital for the deal, and Pedersen said that, although no firm investment targets have been set for the JV, it will seek further acquisitions, which will be made along similar lines to the Brigg deal.

PensionDanmark has been one of the first pension funds to enter the renewable energy market with substantial commitments but renewable energy projects are becoming increasingly attractive for institutional investors in general. Pedersen stated that the reason for this enhanced interest is that the rate of return from traditional bonds has decreased, leaving pension funds with no choice but to seek alternative assets which can provide them with reliable yields.

“PensionDanmark, like all pension funds, is challenged by the very low yields on traditional bonds,” he said. “Bond yields are very close to the inflation rate so investing in traditional government bonds, doesn’t [result in] yield. So, we have a fiduciary obligation to identify investments that can provide [returns that are] essentially higher than on government bonds, but without the risk and volatility associated with investments in listed equities.

“We have identified a number of infrastructure assets that provide us with these characteristics and the Briggs biomass plant is one example of this.” ■

The first Copenhagen Infrastructure Partners fund is likely to be fully committed by the end of 2013, after which time the second one will be raised.

Bond yields are very close to the inflation rate so investing in traditional government bonds, doesn’t [result in] yield. So, we have a fiduciary obligation to identify investments that can provide [returns that are] essentially higher than on government bonds.

The pension fund’s biomass investments will be conducted through a new joint venture (JV) with Denmark-based power plant builder BWSC, which made its first investment in August when it acquired the 40 MW Brigg biomass plant, located in the UK.

““

“” ”

”

Organizer

September 18-19, 2013Jumeirah Carlton Hotel, London, United Kingdom

+44 20 7779 7222www.reff-europe.com [email protected]

renewable energy fi nance forum

15th annual

Europe

Europe’s premier renewable energy fi nance event

2013 Highlights:

✓Debate Europe’s renewable energy future: Hear from over 50 high profi le speakers representing many decades of combined industry experience

✓ Secure the resources to drive your business forward: Network with 300 senior level industry players – over 50% coming from the fi nancial community

✓Decipher fact from fi ction: Discover the truth about the underlying performance of renewable assets

✓ Increase returns on your bottom line: With a rapidly changing market adapt your forward strategy and see positive results

7

Organizer




15th annual

Europe


2013 Highlights:





8

DENHAM CAPITAL TARGETS EMERGING RENEWABLE ENERGY MARKETS

Ronan Murphy

US private equity firm Denham Capital is targeting investments in development-stage renewable energy projects in emerging markets including South Africa, Mexico and Australia, its Managing Partner and Co-President Scott Mackin told Clean Energy Pipeline.

He explained that the private equity returns Denham seeks requires it to take on development risk to construct projects with steady cash flows that are inflation protected with minimal commodity risk and attractive to potential buyers once operational.

Declining installation in established renewables markets in Europe combined with rising power demand in emerging markets has caused Denham to focus its investment strategy on new opportunities.

“We are increasingly targeting the emerging and developing economies for both power and renewables investments, because that is where new build plants are needed to meet growing demand,” Mackin said.

Denham has partnered with development companies active in those clean energy

markets to build a strong foothold in its targeted geographies. Notable companies supported by Denham include South Africa-based BioTherm Energy, Spain-based global developer Fotowatio Renewable Ventures (FRV) and Australian wind farm operator OneWind Australia.

BioTherm won contracts for two 10 MW solar farms and one 27 MW wind project in the first round of South Africa’s Renewable Independent Power Producer Programme (REIPPP) last November. Denham intends to be even more active in the third tender round due to take place later this year, according to Makin.

“We believe South Africa’s renewable energy program is sustainable and has momentum,” he said. “We will bid in hundreds and hundreds of megawatts in round three and are bullish on the fact that it is a credible market.”

Makin believes that South Africa’s requirement that projects must be virtually ready to build even before winning a contract is practical, despite the expense it may incur for a developer in the event of a failed bid.

“South Africa has been quite prudent when it comes to wind and solar,” he said. “If you look at countries that went straight to auctions and took low prices

from non-qualified bidders, many of those projects never got done.

“South Africa looked at these examples and spent a lot of time ensuring that the people from whom they took bids had projects that were almost ready to go. We had to have term sheets with banks and EPC providers, and permitted projects. It took a lot of time and put a lot of onus on developers, but the whole process really sifted out the inexperienced developers that come in with low bids.”

Another emerging market targeted by Denham is Mexico, where power purchase agreements can be reached with industrial and commercial groups at prices competitive with fossil fuels.

“Mexico is attractive to us as we are able to do bilateral agreements directly with the consumers,” said Makin. “I have seen wind power purchase agreements (PPAs) in Mexico where the price is less than what they would be paying off the grid. There are also some buyers of electricity who are motivated by green elements so want to take a certain amount of their energy from renewables, even if it is slightly more expensive.”

Australia is not an emerging economy but it is a rising clean energy market where Denham Capital is confident that further opportunities will be available in the future, despite ongoing debate over climate change policies at the national level. The firm was encouraged by the country’s recommitment in March this year to its goal of generating 20% of its national power from renewable sources by 2020.

While OneWind Australia has been Denham Capital’s main partner in Australia to date, amassing a development portfolio of 1.3 GW including 400 MW of fully consented projects, it is now also considering investments in Australian solar projects through Fotowatio Renewable Ventures.

“FRV is currently looking heavily at Australia,” said Makin. “They have a PPA with the Australian Capital Territory and are developing a large project in New South Wales. They also have a variety of sites in other states at an earlier stage. With the solar irradiation in Australia and the reinforcement of the renewable targets by the government, we believe that now is the right time for solar in Australia.” ■


Global Venture Capital and Private Equity Investment 2Q09 to 2Q13


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ARMSTRONG ASSET MANAGEMENT FUND SOON TO MAKE NEW ASSET INVESTMENTS


South-East Asia fund manager Armstrong Asset Management expects to make up to four equity investments from its first $150 million renewable energy fund within the next six months, Investment Director Edward Douglas told Clean Energy Pipeline.

Its individual investments are capped at $22.5 million but it can co-invest greater amounts alongside development finance institutions that committed to the South-East Asia Clean Energy Fund, which closed this year.

“In our pipeline, there are four transactions that are mature enough to suggest a good chance of closing within the next six months,” Douglas said by phone. “If we close two; that would be an acceptable achievement, three would be better.”

Douglas expects the firm will easily deploy capital from the fund within the time contracted with investors due to the increasing number of opportunities emerging in the South-East Asia region.

“We have an investment period under contracts with investors that allows us four years, plus one if we request an extension,” he said. “Clean energy funds in Asia have historically had difficulties in deploying capital but I suggest [it will take] three years [to fully deploy the fund] because [both] the sector and number of investment opportunities are growing rapidly.”

Armstrong is evaluating a pipeline of more than 30 renewable energy assets in South-East Asia, most of which are solar projects, with a mix of wind, hydropower and energy efficiency projects also on the table.

Of these possible investments, about half are solar energy projects, some 50% of which are mature developments, Douglas said. Wind and hydropower projects comprise a further 40% of the prospects, while 10% are resource efficiency projects, including biogas.

Armstrong often takes a small equity stake in the project developer (of perhaps 10%) that provides a source of working capital to ensure development is done to a high standard, in addition to becoming a majority investor in the asset company.

“In the asset company, we would typically hold a high majority stake,” said Douglas. “Investing in the development company is one of the most effective ways we have of gaining access to project (asset) opportunities.”

Armstrong, unlike private equity investors that operate in Europe, is also prepared to take on development risk, the upside being the potential for higher returns.

“The model in Europe is different,” said Douglas. “Funds in Europe typically won’t invest until projects are permitted and ready for construction. For us it is important that we get involved earlier. There are greater financing risks but also there’s a greater opportunity for higher returns in the development company than the asset company.” ■


Of possible investments, about half are solar energy projects, some 50% of which are mature developments. Wind and hydropower projects comprise a further 40% of the prospects, while 10% are resource efficiency projects, including biogas.

“

”Global Renewable Energy Project Finance 1Q09 to 2Q13


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NADB ZEROES IN ON RENEWABLE ENERGY FINANCE


Renewable energy is expected to be an increasingly robust area of financing for North American Development Bank (NADB), particularly as the wind power market in Mexico matures, a spokesperson for the bank told Clean Energy Pipeline.

“In the near future [clean energy] will probably be [a bigger area] or remain a strong area of financing for the bank,” the source said. “It all depends on market demand.”

The state-controlled bank said in August that it agreed to provide a $67.6 million loan to Grupo T-Solar Global to support the construction of a 20 MW solar park in Imperial County, California.

NADB is also working on financing a landfill gas project among several other clean energy transactions in its pipeline, the spokesperson said. The bank already has about seven solar parks and four wind farms in its investment portfolio since it started financing renewable energy projects in 2011.

“We have already contracted loans and are financing other [projects that are] under development,” the source said.

Demand for NADB to provide renewable energy project finance remained strong in North America despite fluctuations in tax credit policy last year. The bank source said NADB received consistent requests for finance despite uncertainty over the renewal of the wind energy Production Tax Credit (PTC) towards the end of 2012.

“I don’t know if NADB saw a drop in wind over the PTC, we still have several [wind projects] in the pipeline,” the source said.

NADB also finances renewable energy projects on the US-Mexico border, which benefit from a separate domestic support structure, alongside its sister institution the Border Environment Cooperation Commission.


Mexico offers tax incentives for solar installations and operates a net metering system. Long-term power off-take contracts are also available with state-controlled utility Comisión Federal de Electricidad. The country wants 35% of its energy generation to be sourced from renewables by 2025.

NADB’s non-US investment remit is limited only to the US-Mexico border, and is unlikely to be extended to South America, the bank source said.

The US-Mexico border is receiving a flurry of interest from developers seeking opportunities for arbitrage between Mexico and US electricity costs. Californian energy service company Sempra Generation, for example, plans to build a 156 MW wind farm in Baja California, which will sell power to California customers via a pre-existing transmission line.

Sempra told Clean Energy Pipeline in a recent interview that the company is still in search of a joint development partner for the Energia Sierra Juarez project in Baja, which will take advantage of high electricity prices in California.

“[The wind market in] Mexico is beginning but [NADB has] already funded wind projects in development [there],” the source said.

NADB gives equal weight to renewable energy finance opportunities in US states and on the US-Mexico border, judging both by its rigorous legal and technical criteria.

“There is no preference [between the US and Mexico renewable energy investments] as long as [the project has] a strong credit quality,” the source said.

“We have a thorough review [based on] financial, legal and technical standards. An important factor is [whether a project] is constructed in an area with a strong renewable resource. We make sure the parties involved have experience and the technology has been proven. The source of payment and [other factors are subject to a] very thorough review, which follows industry standards. [It is also essential] that projects have off-take.” ■

PROJECT FINANCE

12


RWE INNOGY TO DIVEST BIOMASS ASSETS AND EXIT NON-CORE GEOGRAPHIES

Ronan Murphy

German clean energy producer RWE Innogy, a unit of utility RWE AG, is considering selling its entire biomass cogeneration portfolio and ending investment in non-core geographic markets, the company’s Chief Executive Officer Hans Bünting told Clean Energy Pipeline.

RWE Innogy operated biomass plants with a combined capacity of 118 MW at the end of the 2012 fiscal year, with a further 72 MW under construction in the UK and Italy. It aims to complete the facilities that are already underway, but will invest in no new biomass cogeneration plants thereafter and could sell its existing portfolio.

“We have already divested several [biomass cogeneration] assets and are considering various options for the remaining ones,” said Bünting. “We won’t pursue new investments in this area but will of course finish those projects that are currently under construction.”

RWE npower, the utility’s UK arm, confirmed in August that it would close the Tilbury biomass plant, formerly a coal-fired power station, after it was unable to secure government funding.

The company is also abandoning future investments where the outlook is weak for new clean energy development. It has no intention of pursuing new projects in Spain, where the government has instituted an energy tax and retroactive cuts to renewable energy subsidies. It is also wary of further development in Italy, where the new Conto Energia V energy framework provides little direct support to new clean energy assets. Instead, RWE Innogy will focus on stable core geographies like Germany and the UK.

“In terms of countries we will for the time being not further invest in Spain due to the current moratorium on supporting tariffs, which makes new builds impossible,” said Bünting.

“Of course, that might change when the regulatory system becomes more stable and reliable again. We are also looking at whether we should continue to invest in Italy as the system has recently changed, and we need to learn more about it. We divested our French wind portfolio two years ago as France is no longer a core growth region for us.”

RWE Innogy will divest assets and lower exposure to riskier technologies markets in order to strengthen its main onshore and offshore wind activities.

A decline in European wholesale power prices caused RWE to lower its investment in renewable energy to Eur2 billion over the next three years, rather than investing Eur1 billion annually over the same period as it previously planned. In this context, the group needs to prioritise its core competencies with the capital that remains.

“We intend to refocus after years of massive investment in diverse technologies and markets,” said Bünting. “So we took the decision to strengthen our on- and offshore wind portfolio as well as our hydro business. These technologies are in our view closest to the market and offer sustainable growth opportunities. For areas which we have identified as non-core, it makes sense to find other, better owners. This enables us to free up capital for investments in our core areas.”

Aside from divestments of non-core assets, RWE’s other strategy to generate capital for new projects is to divest stakes in its operating assets to financial investors. In March, its UK subsidiary RWE npower renewables sold a 41% stake its 59.8 MW Little Cheyne Court onshore wind farm and a 24.95% stake in the 90 MW Rhyl Flats offshore wind farm to the listed investment vehicle Greencoat UK Wind.

“We see ongoing interest from financial investors to invest in operating assets alongside a strategic partner such as a utility or an experienced operator,” said Bünting. “This gives us the opportunity to divest stakes in our assets. Furthermore, this creates for us the option to invest into renewables on a so called “capital light basis” – a typical win-win-situation for both the co-investors and RWE Innogy.

“As these investors shy away from the investment risks during the development and construction phase, they prefer to invest operating assets with some track record, which create for them a bond-like structure and generate stable cash returns for a further 15-20 years. I think M&A activities will increase as lots of new financial investors are coming to the market now. This is very much welcome as our funds are limited and we need to recycle our capital. These are ideal partners for us to do this with.” ■

M&A

Global M&A Activity 1Q09 to 2Q13


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AMEC CONTINUES HUNT FOR ACQUISITION TARGETS


UK energy engineering consultancy AMEC plc will continue to consider acquisition opportunities as part of its Vision 2015 M&A strategy after it failed with an initial bid for engineering play Kentz Corp. Ltd. in August, an undisclosed source familiar with the matter told Clean Energy Pipeline.

“The chief executive officer (Samir Brikho) is clear, the Vision 2015 M&A strategy is a core part of [AMEC’s] overall strategy,” the source said. “AMEC is looking at a number of deals at one time and is keen to grow in key business areas [and geographies].”

Kentz, a UK oil- and gas-focused engineering group, is just one of the potential acquisition opportunities that AMEC is considering, the source said.

While oil, gas and mining services form about 62% of AMEC’s business, it will look for opportunities in clean energy, environment and infrastructure, which make up a significant 38% share of its turnover. Renewables and bioprocess services alone generated 9% of its revenue in 2012.

“[Clean Energy is] certainly part of the business they are keen to grow,” the source said.

AMEC’s previous acquisitions include US engineering and environmental project management company MACTEC, which was bought in 2011 for $280 million in cash. MACTEC offered AMEC scale and greater access to the environmental and infrastructure engineering services market. The group further strengthened this section of its business this year with the acquisition

While oil, gas and mining services form about 62% of AMEC’s business, it will look for opportunities in clean energy, environment and infrastructure, which make up a significant 38% share of its turnover.

“”


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EC

of Australian engineering and technical service group Unidel.

Engineering companies in emerging markets could deliver the geographic reach that AMEC seeks from its strategy, through which it aims to upscale operations in Australasia, Latin America and the Middle East, and continue its expansion in Africa, Europe and North America. A move into these areas would enable AMEC to tap a broader range of customers through local units. Likewise, companies with tried-and-tested solutions in the energy engineering field will be tempting acquisition candidates.

AMEC’s overall strategy is targeted towards boosting its earnings to 100p per share by 2015, double the earnings per share it recorded in 2009.

The company is already on track to achieve the target by the end of this year, it said in a recent interim earnings release. This leaves it more than halfway through its 2015 plan, which identifies subsea engineering, underground mining, renewable energy and water as priorities for expansion.

“They’ve not put any particular criteria on [acquisitions under the 2015 plan],” the source said. “Vision 2015 identified several areas, where perhaps [the company

is] underweight, in growth regions and particular parts of the business.”

AMEC’s initial 565-580p per share takeover bid for London-listed Kentz was rejected at board level, as was a rival but lower bid from M+W Group GmbH, but may not yet be dead in the water. The source indicated that the AMEC bid was an early stage attempt, confirming that it was made pre-due diligence.

“[The] Kentz [bid was] a means of gaining critical mass in growth regions, such as the Middle East and Australia,” said the source. “The companies are also in similar end markets. Kentz is strong in oil and gas and mining.”

The appeal of Kentz is that it would afford AMEC control over a wider range of operations and expand its list of saleable service solutions. Kentz provides engineering, procurement and construction (EPC) services business directly to clients in the energy sector, a niche in which AMEC is also looking to strengthen its position. Until now AMEC has focused largely on project management services.

“[AMEC is] increasingly doing EPC work and Kentz would allow vertical integration,” the source said. ■

14


END OF PTC WOULD OPEN UP US WIND MARKET TO FINANCIAL INVESTORS

Ronan Murphy

Ending the US Production Tax Credit (PTC) for wind farms would be positive for the sector in the long run and allow financial investors to commit greater amounts of capital to projects, a top financial adviser told Clean Energy Pipeline.

Alyra Renewables President Mohammed Alam said: “It would be good for the country to see a closure of the programme and to move forward to a more sustainable programme in the future. There is a lot of debate about that now more than ever, especially because there are a lot of large financial players like First Reserve, Blackstone, BlackRock and Brookfield coming into the market who are investing in cash equity.”

These financial players are being blocked from investing to the fullest extent in wind projects due to the need for financing to be structured on a tax equity basis to take advantage of the PTC.

While the PTC offers adequate returns, tax equity financing is inherently complicated and not always attractive to financial investors. Additionally, the pool of active tax equity investors necessary to finance PTC-linked projects is small, at about 15-20 firms, with strict investment criteria reducing the

options financial players have to invest in renewable energy projects.

The other main issue with the PTC is that it propagates a continuing short-term, boom-and-bust model for the US wind industry. This was highlighted when concerns that the PTC would expire at the end of 2012 led to a rush of wind projects, with installations rising to a record 13.124 GW during the year, in which 8.380 GW was connected in the fourth quarter alone.

Despite the renewal of the PTC for another year in late December, the concern over its potential termination meant wind farm installations collapsed in the first half of 2013, during which just 1.6 MW of wind energy was connected with no installations taking place at all in the second quarter.

Alam argued that non-tax based incentives such as individual state renewable energy portfolio standards (RPS) can act as a more stable incentive for future wind power development, especially for smaller developers currently unable to manage large-scale tax equity financing.

“If we get rid of tax incentives and rely on state RPS’s and some Environmental Protection Agency (EPA)-based carbon system, we will see more small- and mid-sized developers coming back,” he said.

Utilities have increasingly driven the renewables agenda in the US through a desire to meet their RPS targets. Oregon-based utility Portland General Electric acquired development rights

in August for a 267 MW wind farm in Washington, in which it will directly invest $500 million rather than seek a power purchase agreement (PPA) with an external developer. The company said the wind farm will help it meet the state requirement to produce 15% of its power from renewables by 2015.

Alam highlighted that utilities also now see renewables as a viable investment, even outside the RPS context, simply because they represent a means of lowering customer costs and hedging against volatility in the natural gas market, particularly if the US moves forward with ambitions to become a net exporter of gas.

In July, power giant Xcel Energy cited this as a driving factor behind its drive to sign PPAs for 1.5 GW of wind farms across Minnesota, Oklahoma, New Mexico, Texas and North Dakota.

“One of the most important things going forward for renewables is that there is a lot of uncertainty in the market about fuel costs,” said Alam. “There is a lot we do not know about what will happen to natural gas prices. The volatility in the market will be greater if we’re using more of it and if one or two natural gas terminals get done, we will be exposed to international gas prices.

“Utilities are very concerned about volatility and some have been looking at renewable energy even when they are not required by an RPS. About 80% of renewable power purchased in 2013 so far has been acquired by utilities in states without an RPS.” ■

POLICY AND REGULATION

Europe’s only business and investment summit focused on advanced agricultural technologies

The World Agri-Tech Investment Summit will address the growing importance of advanced agricultural technologies in meeting global food demand and the opportunities this presents for international cleantech investors.

With a specific focus on agricultural biotechnology and software-driven precision farming, the summit will bring together global leaders in resource-efficient agriculture with the world’s most innovative technology developers and the international cleantech investment community.

Delivering Sustainable Growth

Supported by

Organised by

London, October 1-2, 2013

Register today: www.worldagritech.rethinkevents.com +44 1273 669914

15

Europe’s only business and investment summit focused on advanced agricultural technologies

The World Agri-Tech Investment Summit will address the growing importance of advanced agricultural technologies in meeting global food demand and the opportunities this presents for international cleantech investors.

With a specific focus on agricultural biotechnology and software-driven precision farming, the summit will bring together global leaders in resource-efficient agriculture with the world’s most innovative technology developers and the international cleantech investment community.

Delivering Sustainable Growth

Supported by

Organised by

London, October 1-2, 2013

Register today: www.worldagritech.rethinkevents.com +44 1273 669914

16


PTC REMAINS ESSENTIAL DRIVER FOR US WIND, OPTIONS ARE AVAILABLE TO WIDEN TAX EQUITY BASE, SAYS AWEA

Ronan Murphy

The US Production Tax Credit for wind energy remains an essential driver for the industry and should not be abandoned simply to make it easier for financial players to invest in projects, the American Wind Energy Association’s (AWEA) Finance Policy Manager Paul Holshouser told Clean Energy Pipeline.

Holshouser responded to comments made by advisory firm Alyra Renewables’ President Mohammed Alam in a Clean Energy Pipeline article.

Alam said an end to the US Wind Production Tax Credit (PTC) would ease financial investors’ access to the market by removing the current necessity to bring in tax equity investors.

He echoed concerns held by many other investors in US wind that the narrow pool of tax equity investors, which totals about

15-20 firms, restricts financing options for US wind projects that depend on the PTC and prevents private investors from deploying more capital.

Holshouser disputed Alam’s claim that a combination of Environmental Protection Agency carbon laws and state Renewable Portfolio Standards (RPS) could drive wind energy procurement in the future.

He said: “[Alam] wants to end something that has enormous positive impact to gain access to something that has a smaller positive impact (more financial investment). He mistakes the concepts of an RPS and the PTC as a trade-off against each other. They have worked together and worked together very well. The RPS forms a baseline level of demand while the PTC keeps the cost of wind energy low for ratepayers.”

While Holshouser acknowledged that the PTC makes it more difficult for financial investors to commit funds to US wind energy projects, he said it is a small price to pay for the mechanism’s role in lowering project costs, without which utilities could not realistically sign power purchase agreements (PPAs) for wind farms.

“A lot of wind PPAs are being signed right now,” said Holshouser. “The PTC is helping drive these PPAs because a big factor of these agreements is based on the cost of electricity.”

AWEA is working on solutions to make tax credits more user-friendly for existing and potential equity investors in US wind energy.

One solution is to make greater use of the 30% Investment Tax Credit (ITC) that was extended at the end of last year to wind energy projects that began construction in 2013. Wind projects can use the ITC in lieu of the PTC, which Holshouser claimed can be a viable option for smaller projects and, in the future, large offshore wind farms.

The ITC could incentivise leasing finance of the kind seen in the residential solar sector, in addition to other new deal structures.

“We believe the ITC structure is investor-friendly,” said Holshouser. “It is much shorter term and it is premised upon a cost basis as opposed to operating risk. We hope it will expand to some investors who do not want to take on operating risk.”

AWEA is also investigating ways to modify banking regulations to open up renewable energy tax credit-based financing to tax equity syndicators operating in the low-income housing market.

That market is underpinned by the Low-Income Housing Tax Credit (LIHTC), which is used to incentivise investment in affordable housing. LIHTC investors could be attracted to ITC or PTC projects given the right conditions.

“We have a lot of parallels with that market and that has 45-55 investors, quite a bit more than the 15-20 investors active in the PTC market,” said Holshouser.

The new tax equity players would be more likely to focus on smaller wind farms of up to 30 MW in size, a capacity range that struggles to secure debt financing from major banks due to their preference for larger projects.

If additional LIHTC tax equity players entered the sector, small- and mid-sized US commercial banks would be more inclined to finance smaller wind installations and in turn make them more attractive for conventional equity investors. ■

17


CZECH SOLAR DEVELOPER TARGETS GLOBAL MARKETS IN WAKE OF RETROACTIVE DOMESTIC SUBSIDY CUTS

Ronan Murphy

Solar power solutions provider Photon Energy Inc. is targeting Australia, North America and Turkey as its main new markets in a bid to expand and diversify in the aftermath of subsidy cuts in its home nation the Czech Republic, company spokesman Jan Krcmar told Clean Energy Pipeline.

Photon is intent on pursuing off-grid solar installations that can compete at grid parity and are not dependent on subsidies. The company is already active in Australia, where it has set up an office and already installed two plants.

“We are focusing mainly on off-grid projects in Australia for large mining companies, telecommunications operations and remote communities,” said Krcmar.

The company is currently competing for projects in a reverse auction held by Australia’s Capital Territory, which is home to the nation’s capital city Canberra. Under this competitive process, the developer proposes a feed-in tariff (FiT) and the state government selects the projects that can be delivered most feasibly at the cheapest prices.

Photon has already taken a step towards its North American expansion by forming a joint venture with Canadian investment bank Jacob Securities. Headquartered in Toronto, the JV will target remaining project opportunities linked to Ontario’s FiT in addition to off-grid installations in both Canada and the US.

In Turkey, Photon hopes to take advantage of solar power’s increasing attractiveness in a country with high energy prices, an unpredictable grid system and industries that are hungry for power during the daylight hours when solar is viable.

“There are Turkish regions with a less stable grid and high energy demand from the tourist industry,” said Krcmar. “Restaurants and supermarkets are running air conditioning all day in regions with less

strong grid infrastructure and there have been power outages.

“Solar has peak production at noon, when the usage of air conditioning is also at its peak. We will target direct end solutions for customers where we install panels on their buildings ideally without having a grid connection.”

Depending on the needs of its customers in all three new geographies, Photon will pursue projects of between 2 MW and 50 MW.

Photon’s need to expand internationally has been accelerated by the retroactive cuts to solar subsidies enacted by the Czech Republic in recent years. In August the Czech Parliament’s lower house voted to end subsidies for new renewable energy projects from January 1, 2014.

At the same time, it voted to extend a retroactive levy on solar photovoltaic (PV) assets in the country. The 1.4 GW of PV plants connected under the Czech FiT in 2010 will now be subject to a levy representing 10% of their revenue for the remainder of their FiT contract.

This extension follows on from a 26% levy on revenues for FIT-linked PV plants that was enforced from 2011 to 2013.

Based on the bill passing through Parliament, Photon will have to write down the value of a 14.2 MW solar portfolio it owns in the Czech Republic by about Eur5.25 million.

The company’s Chief Executive Officer Georg Hotar said in a press release following the vote: “The driver behind

this decision is robbing investors and trying to get away with it and not – as politicians claim – adjusting returns.

“After stealing some EUR 650 million from investors over the past three years, for additional revenues of some EUR 70 million annually the Czech Republic has again chosen to remain among the world’s banana republics, as equally confirmed by numerous international transparency and corruption rankings.”

Photon is now awaiting the results of an arbitration claimed launched against the Czech government by the International Photovoltaic Investors Club (IPVIC), a group of eight international investors seeking damages for the initial 26% retroactive levy.

Krcmar said: “What is happening in the Czech Republic is basically a joke. Policy is not decided by sense or even political ideals, but sometimes just on the interests of other energy producers.”

He said that concerns over similar political instability caused Photon to abandon plans to enter Romania earlier this year.

However, the company has a diversified portfolio with assets in Slovakia, Germany and Italy, which means the Czech levy does not threaten its plans to launch an initial public offering (IPO) on the Warsaw Stock Exchange by the end of 1Q 2014.

Krcmar said the main purpose of the IPO is to generate a new source of capital for use in project finance deals. ■

SOLAR

18


ACQUISITION TALKS FOR BOSCH’S ALEO SOLAR REACH DUE-DILIGENCE STAGE


Germany-based crystalline solar manufacturer aleo solar AG is in late-stage negotiations with several potential buyers that could acquire the company from majority shareholder Robert Bosch by as early as the end of September, a company spokesperson told Clean Energy Pipeline.

Conversations have moved past the initial stage of meetings and facility visits to the due diligence stage with several solar manufacturers interested in acquiring the company, said spokesman Hermann Iding.

The potential acquirers are based all over the world, according to Iding, who declined to comment on whether any of the candidates are located in Asia.

“We hope we can announce someone during the second half of the year, possibly even in the end of the third quarter,” he said. “We are in conversations with multiple investors…now we are in the second stage with some of them, which goes deeply into the financial figures. [The discussions are] really advanced.”

The German solar manufacturer’s future business strategy will ultimately be dependent on what firm ends up acquiring the company.

Although aleo attributed declines in its revenue and earnings in the first half of this year to a difficult operating environment in Europe, for instance, it may or may not continue to focus on European markets or expand into new markets in the future, depending on the acquirer.

The group posted a consolidated loss of Eur33.1 million in 1H13 as its revenue fell 58.9% year on year to Eur68.3 million. Its core markets Italy and Germany saw newly installed photovoltaic capacity plummet by about 66% to 676 MW and 58% to 1.8 GW respectively in the first half of this year on an annual basis. The only core market in which aleo operates that actually saw an increase in newly installed photovoltaic capacity was the US.

“[Our financial outlook and strategy] really depends on the new company and the structure and business model of the new investor,” said Iding. “We have really different players we are talking to; it can go in ‘this-or-that’ direction. Until then, we will carry on operating in the US and European markets.”

It is possible that, depending on the eventual acquirer, aleo may be able to enter growth photovoltaic markets in Asia that could enable it to regain a market share in a region that still has the potential to expand.

“There is a lot of growth from Japan, China and India,” said Iding. “We are not in

these markets [so] there is no participation [there].”

For now, the company has suspended growth plans and is unable to provide a financial outlook for the full fiscal year due to the as-yet unknown direction its new owner may take.

Robert Bosch, which is still a majority stakeholder in aleo with a 90.7% shareholding, seeks to find a “sustainable solution” for the company by choosing a single solvent buyer that it is confident will continue to operate in the long term.

“The [sell] process is led by Bosch,” said Iding. “They want to give the whole package to a new investor. They are looking for one in the end. It is too early to talk about a price [but Bosch wants to] find a sustainable solution, not somebody who is closing down in the next year.”

Bosch chose to exit the crystalline solar business in March after determining that overcapacity and margins in the sector were not sustainable long term. The electronics and engineering conglomerate retained its thin-film solar business and has also made moves to grow its solar inverter operations.

“Due to the fact of overcapacities worldwide and the ongoing price decline in the end Bosch decided it’s not possible to stay in the crystalline business,” said Iding. “They will only have a small company for thin-film photovoltaics and also [will] have in the future a company that is producing inverters. They bought the part of Conergy last year that produced inverters, now it is called Bosch Power Tec.”

Iding said the German solar market was badly hit by the termination of the higher feed-in tariff for greenfield solar installations last year, which moved the market away from large-scale solar installations to smaller rooftop applications.

Crystalline technology is particularly advantageous for small-scale solutions because it typically has higher efficiencies than thin-film solar. As costs come down, crystalline solar is also becoming even cheaper to install in large-scale solar projects, where it can be used to boost output.

“Today, crystalline survived due to price declines over the past two years,” said Iding. ■P

hoto

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SWISS SOLAR THERMAL DEVELOPER CLOSES SERIES B, PLANS EUR15 MILLION BRAZIL JOINT VENTURE

Ronan Murphy

Switzerland-based solar thermal panel producer TVP Solar plans to form a joint venture (JV) in Brazil that will invest Eur15 million in a production plant to supply Central and South America, Clean Energy Pipeline has learnt.

TVP Solar is currently building its first production plant in Italy. It secured a CHF 6.6 million ($7.1 million) extension to a Series B fundraising in July 2013, increasing the total sum raised through the round to CHF 12.6 million ($13.6 million).

The bulk of the proceeds from the extension will go towards completing the Italian plant, which has a nominal capacity of 150,000 square metres per year of TVP Solar’s proprietary high-vacuum solar thermal panels. TVP Solar’s Manager of Marketing and Technical Pre-Sales Jonathan Koifman said in a phone interview that the company aims to start production at the plant in summer 2014 and ramp up to full capacity by the end of 2014 at the earliest.

TVP Solar will initially focus on Europe, the Middle East, Brazil, India and China. Koifman said the company will pursue a joint venture in Brazil once its first plant is operational before forming a similar vehicle in China at a later date.

The Swiss company will be a majority shareholder in the planned Brazilian joint venture, while it intends for a minority partner to invest Eur3-5 million. Operations at the Brazilian plant under the prospective joint venture are expected to begin in December 2015. It will be financed through a combination of TVP Solar’s own funds and contributions from local investors.

The company’s recent Series B round means it is fully funded for the Italian production plant. Koifman said it will look to raise a further extension to its Series B round of up to Eur5 million in the next 18 months to bring in one or two new investors that can add value. It wants to attract investors similar to the three that joined the extension in July, which were based in Brazil, Italy and Kuwait.

“The point of the additional money is first and foremost for working capital and financing the expansion and [to finance] the JVs we are looking at in China and Brazil, with a secondary purpose of replacement capital for early stage investors,” he said.

The solar thermal technology utilised by TVP Solar differs from conventional concentrated solar power systems in that it does not utilise mirrors. Instead, it uses a high vacuum seal combined with a flat panel design to produce a panel capable of heating water to extremely high temperatures in excess of 100 degrees Centigrade, reaching up to 250 degrees.

TVP Solar aims to use this capability to address the vast global appetite for more efficient air conditioning and to target industrial and commercial markets where its system can lower heating costs.

It claims its system can offer uninterrupted 24-7 air cooling when combined with natural gas, providing utilities with relief from peak air conditioning usage during daylight hours in hot countries.

Additionally, Koifman highlighted the technology’s application in oil recovery and hydraulic fracturing, where it can cut the expenditure of pre-heating steam by 50-100%.

The TVP Solar system can also provide a source of heat in mountainous areas where cheese factories are located, which would otherwise require costly transportation of combustible fuel for heat generation. The cheese industry requires steam to be heated to 160 degrees for sterilisation and 120 degrees for pasteurisation. ■

20

14th Forum Solarpraxis Berlin, Germany, 21 – 22 November 2013

Politics and Markets: power generation for private use, effects on power trading Financing and Marketing: Direct marketing, development of new customer segments System integration: Network stability, energy, storage, grid network development and integration

Contact: Tina Barroso, [email protected]

www.solarpraxis.de

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21


PRINCIPAL SOLAR TO SEEK SUBSTANTIAL FUNDING IN 2014, TARGETS 2 GW PORTFOLIO

Rob Lavine

Texas-based start-up power producer Principal Solar plans to grow its portfolio to 2 GW, the size of a large-scale distributed solar energy utility, and is gearing up for a large fundraise next year, Chairman and Chief Executive Michael Gorton told Clean Energy Pipeline.

“We are just beginning [the fundraising] process right now,” Gorton said. “In the short term, we’re doing a little $2 million angel round right now. As we go into 2014, we will be raising a fairly significant amount of money.

“We’ll raise about $20 million of shareholder equity and then more than $100 million worth of asset acquisition equity. On top of that, whatever we manage to raise in terms of equity for financing assets, we’ll raise another 40% on top for debt.”

Principal announced in August that it secured a $5 million long-term loan from Bridge Bank that will be used to acquire a 3 MW solar plant in Tennessee. The company described the purchase as the first part of a roll-up development strategy. Gorton said the company will use a combination of debt and equity in future acquisitions.

“We are doing our acquisitions with a combination of debt and equity,” he said. “This one’s a little bit unusual because the debt side of it was a little more than 50% of the total acquisition. As we go forward, the projects will be 40% debt and 60% equity.”

The company aims to grow its portfolio to 2 GW in the next five years and plans to develop its own solar capacity alongside

the acquisition of existing solar assets. To this end, it is assessing the possibility of building a mega-scale installation with an undisclosed partner that would be built out gradually in phases, though the project is still at an early stage.

“We’ve got the very beginnings of a development project underway right now, and we expect that one to grow above 1 GW,” Gorton said. “We’ve already got parcels of land picked out in the desert south-west and we’re looking at transmission and power purchase agreements right now. The goal is to begin construction in late 2014 [or] early 2015. The first phase would be about 100 MW, the next phase would be 250 MW, and we’ll just ramp up from there.”

In the longer term, Gorton expects Principal to either launch an initial public offering or be acquired by a larger company as consolidation begins to take hold in the distributed solar market. Citing his experience as founder of Internet Global in the early nineties, the Chief Executive outlined the similarities between the last 20 years of internet development and the relatively nascent solar sector.

Gorton said: “In the internet era, we built one of the first digital subscriber line networks in the world and one of the first voice-over-internet-protocol networks, and both of those things that we built back as

an internet company are now owned by a major phone company.

“My wild guess is in three to five years the mainstream power companies will begin to own most or all the solar assets,” he added. ”We believe in the traditional energy folk, and we work very hard to make them our friends and to develop things in a way that they would approve of when they ultimately get into this business.”

Principal is looking to make use of existing US solar assets and infrastructure, including the utilisation of renewable power transmission lines in the south-west that were originally built out for wind capacity. It could exploit the existing infrastructure by acquiring operational assets or situating plants close to pre-existing networks, or by building substations to link the existing transmission lines.

“There are a lot of projects that are cashflow positive right now that are opportunities for us to acquire and grow our portfolio, so acquisitions are more opportunistic at this time before we can build large-scale generation that competes with traditional oil and gas, coal and nuclear,” Gorton said.

“The reality of our business plan is that we believe grid parity [for solar] is coming. It’s not here in most cases right now and therefore what we want to do is take advantage of the opportunities that exist.” ■

Global Clean Energy Investment 1Q08 to 2Q13


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22


RES INTENDS TO BID IN FRANCE’S SECOND OFFSHORE WIND TENDER


UK-based renewable energy project developer Renewable Energy Systems (RES) Group intends to participate in France’s ongoing second offshore wind tender by the November submission date and will also consider future bids, RES Offshore’s Chief Executive Officer Chris Morgan told Clean Energy Pipeline.

“Our business is about participating in the offshore wind sector wherever the sector has the potential to grow and become a viable long-term business,” Morgan said in an interview. “To that end, we’re going to bid in Round 2 in France and beyond that in Round 3 while those opportunities are there.”

RES previously won a concession to develop the 500 MW Saint-Brieuc wind farm off the north Brittany coast in the first French offshore wind tender in 2012 as part of a consortium led by Spanish infrastructure developer Iberdrola.

Morgan said the first French tender successfully boosted the number of major players involved in the country’s offshore wind sector and future rounds are also expected to be fruitful.

“We’ll see how [the second tender] turns out,” he added. “The two projects that are both available will both be taken up.”

It is as yet too early to say how RES will participate in the second French tender, though it is in conversations with several

undisclosed companies about various collaboration options.

“We’re still looking at the opportunities,” said Morgan. “Discussions are still going on within the sector generally and it’s too early for us to say what’s going to be happening there, but obviously that process for everyone is moving forward to conclusion because the submission date is in November.”

RES Offshore could participate in the second French round as a pure-play developer or as a service provider, according to Morgan.

Offshore services form a growing part of the company’s business. It has provided services for several projects under the UK Crown Estate’s leasing rounds, for example, including operations support on Centrica’s Lynn and Inner Dowsing project off the coast of Lincolnshire.

“The way we work means there is potentially the opportunity to participate in a range of different ways,” said Morgan. “Within the offshore business, we are a developer in our own right, as in France and Ireland. We’re working with partners and we are also a provider of services; we have a whole range of development and engineering capabilities.”

RES Offshore is looking for opportunities in development support, construction management, and operations and maintenance support for both offshore wind projects and tidal stream projects.

“The plan for RES’s offshore business is to carry on expanding wherever the market provides us with opportunities,” Morgan said.

RES Offshore is collaborating with its France-based onshore affiliate Eole-RES on the Saint-Brieuc project won under the first French tender, which Morgan said is in the consultation stage.

“France was a good opportunity for us,” he said. “The scale of the projects, the capabilities we had and expertise in France meant we could team with a utility like Iberdrola and secure a project.”

Morgan confirmed that the Saint-Brieuc wind farm, which is 70:30 owned by Iberdrola and Eole-RES and includes participation from AREVA and Technip, is on schedule for a timely planning submission. The deadline for the planning application on the concession is in 2015 and Morgan said it is too early to determine whether the project will require debt finance.

“[Saint-Brieuc] is going very well,” Morgan said. “We are in the process of completing the public consultation exercise that takes place in the French system. We take account of that in our final planning for the project as part of the process of getting consent.

“We are in the process of finalising the project definition stage and coming up to the milestone 18 months after the award of the site where we state we are satisfied the project will meet our objectives in terms of financial viability and technical feasibility. If all goes well and we hit all the milestones we need to hit, that would be operating by 2020.”

RES Offshore is also active in the emerging US offshore market and pre-qualified in its own right for the Maryland tender led by the Bureau of Ocean Energy Management (BOEM). Morgan said it will look to provide support for companies under ongoing and future BOEM tenders rather than by bidding directly.

“We’ve been looking at the opportunities for offshore in the US,” he said. “We’re…constantly looking at and talking to people already in the sector to find opportunities to support them or work together in development.” ■

OFFSHORE WIND

RES Offshore is looking for opportunities in development support, construction management, and operations and maintenance support for both offshore wind projects and tidal stream projects.

“”

23


GEMINI PROJECT IN DEBT FINANCING STAGE, SAYS NORTHLAND CEO

Rob Lavine

The 600 MW Gemini Netherlands offshore wind project has moved to an advanced stage of development and is in the process of raising debt financing, John Brace, Chief Executive Officer of Canada-based independent power producer Northland Power, told Clean Energy Pipeline.

“There’s still debt financing left to raise,” Brace said shortly after Northland revealed that it entered into agreements to acquire a majority stake in the Gemini project. “The discussions with the potential sources of debt have been underway for quite some time so it’s not like it’s a blank piece of paper but there’s definitely some way to go yet.

“In generic terms, there’s going to be a multilateral involved, [and also] export credit agencies and some commercial banks.”

Northland announced in August that it was in talks to acquire a 55% equity stake in Gemini for about C$400 million ($384.9 million). The project is being built out off the coast of the Netherlands in the North Sea by a Dutch-German consortium.

“Globally, it would appear to us that offshore wind is a burgeoning marketplace and an opportunity for us over the long run to do big and wonderful things,” Brace explained. “We’ve looked at a couple of other projects and then became aware of, and involved with analysing, the Gemini project and it appears to meet our criteria and our interest, so it becomes a great opportunity for us to become active in offshore wind.”

Northland’s criteria, Brace said, was that the 15-year contracts for difference offered by the Netherlands for offshore wind satisfied the firm’s need for long-term, predictable cash flows from its assets. The company has not yet looked closely at the UK, where a similar subsidy structure is set to soon be introduced, but Brace said the country was on Northland’s ‘to-do list’.

Northland’s power generation portfolio is chiefly located in its home country of Canada, though it did acquire two operational onshore wind farms in Germany in 2006. Brace did not disclose whether Northland is in talks to develop or acquire any other European assets, but stated that the company is open to expanding its operations there.

“We already have some [onshore wind assets in Europe] and if there were good

projects, we would consider solar, gas-fired, biomass, co-generation and district heating,” said Brace. “We would hope that this is the start of a bigger profile in Europe for us but we have to make sure Gemini is executed well first.

“It’s not like Europe is a completely strange entity to us. It’s more the culmination of an ongoing interest in Europe.”

The majority of Northland’s future development will continue to focus on Canada, as it is the market the company knows best, though it also has a substantial amount of projects in the US that are past the conceptual stage but have not yet progressed to actual development. It will continue to build out or acquire wind, solar and hydro projects, but will also work on what Brace called “the intelligent use of natural gas”.

“We generally describe our pipeline as about 2,000 MW of what we call development projects,” said Brace. “As we stand right now, about three-quarters of our capacity is natural gas; certainly Gemini will raise the other side of the coin a fair bit but we are continually pursuing natural gas projects as well as wind, water and solar projects.” ■

600 MW GEMINI NETHERLANDS WIND PROJECTS

24

The UK Shale Gas SummitTowards a Commercially Viable and Sustainable UK Industry

Wednesday 9th October 2013, Central London

The Chancellor recently pledged to introduce “the world’s most generous tax regime for shale gas”.

He proposes to cut the tax on shale production to 30 per cent compared with the 62 per cent paid by most of the oil and gas industry in a move that will be warmly greeted by operators.

Mr Osborne said that shale gas has “huge potential” to broaden Britain’s energy mix, create thousands of jobs and keep energy bills low.

“Shale gas is a resource with huge potential to broaden the UK’s energy mix,” he said. “We want to create the right conditions for industry to explore and unlock that potential in a way that allows communities to share in the benefits.” The latter refers to the recent announcement by the Treasury that energy companies must provide at least £100,000 of community benefits for each well drilled by the industry.

The proposed new tax regime follows hard on the heels of the announcement by the Government that it is going to improve the planning and permitting process for shale and ensure that the regulatory regime is well coordinated by the new Office of Unconventional Gas and Oil at the Department of Energy and Climate Change.

This conference will take a hard look at how the Government, shale operators and local communities can work together to develop a commercially viable and sustainable UK shale industry.The expert speaker panel will address the key issues through roundtable panel discussions and presentations. The programme is divided into five sections:

1. Shale in the context of the Government’s energy policies2. Potential scale and economics of the UK shale industry3. Taking advantage of the opportunity – technological and

practical considerations4. Winning the argument I – environmental and safety concerns5. Winning the argument II – bringing the local community on

board

Attendance at this highly topical event will be invaluable for senior executives in the oil & gas industry, the supply chain and both central and local government, as well as representatives from the technical, advisory and financial communities.

Speakers include:Duarte Figueira, Head – Office of Unconventional Gas and Oil,

Department of Energy & Climate ChangeTim Yeo MP, Chair, Energy and Climate Change CommitteeDan Byles MP, Chair,All Party Parliamentary Group for

Unconventional Oil & GasNico Heslop, Head of Energy and Climate Change Taxes, HM

TreasuryJohn Arnott, Deputy Director, Licensing Strategy, Department of

Energy & Climate ChangeAnthony Lobo, Partner and Head of Oil & Gas, KPMG LLPAndrew Austin, CEO, IgasNick Butler, Visiting Professor and Chair of the King’s Policy

Institute at King’s College LondonTony Grayling, Head of Climate Change and Communities,

Environment AgencyDr Christopher Green, GFRACPaul Kelly, Director, PPS GroupDavid Lusher, Executive Director, Veolia Environmental ServicesCorin Taylor, Senior Economic Adviser, Institute of DirectorsEmma Wild, Head of Upstream Advisory Practice, KPMG LLP

To find out more and gain a 20% discount please visit www.cityandfinancial.com/uksg1mpor call +44 (0)1483 720707

City & FinancialConferences

25

FUTURE GERMAN OFFSHORE WIND FARMS CAN ESCAPE GRID CONNECTION DELAYS, SAYS VATTENFALL

Ronan Murphy

Swedish energy giant Vattenfall anticipates that future German offshore wind farms will not suffer the costly grid connection delays that have blighted projects in the region over the past 18 months, the company’s Director of Offshore Wind Projects Claus Wattendrup told Clean Energy Pipeline.

Operators of German offshore wind farms have incurred losses running into the millions of euros due to delays to the construction of grid connection platforms by transmission operator TenneT. In a recent poll of 200 senior industry executives by Freshfields and Clean Energy Pipeline, 94% of respondents said the delays dented their appetite to invest in German offshore wind projects.

Wattendrup argued that the main driving factor behind the delays was the enhanced size and complexity of German offshore grid connections compared to equivalent systems in the UK, where transmission has never been an issue.

“The main reason is the more complex direct current (DC) technology that was chosen for environmental reasons,” he said. “Germany has large natural protection areas offshore, so it is not possible to construct just off the coast like in Denmark or the UK. DC technology is needed for these long connections.

“This has never been done before, and the engineering companies involved really underestimated the time and complexity [needed] to build these grid connections offshore. This has caused the delays. I expect better planning and no such delays in the future.”

TenneT hopes to head off future delays partially by bolstering its own financial resources with commitments from external investors. In January 2013, it closed the sale of 49% stakes in the Borwin 1 and 2, HelWin 2 and DolWin 2 German offshore wind transmission assets to Japanese industrial group Mitsubishi Corp. for Eur576 million.

Vattenfall began construction of the 288 MW Dan Tysk wind farm in the

German North Sea with its utility partner Stadtwerke Muenchen in February. The project is expected to be commissioned in 2014.

Wattendrup said the offshore wind industry was granted additional confidence by the German government’s introduction in March of new legislation to grant offshore wind operators assured compensation in the event of grid connection delays.

Under the new rules, the transmission system operator (which in all cases to date is TenneT) is directly liable for damages related to offshore wind grid delays, but is permitted to transfer a portion of those costs onto consumers through increased energy bills.

“Establishing the compensation rules in 2013 has been very helpful for the industry,” said Wattendrup. “It was implemented very quickly by the government and is a big help. The delays still cause additional costs, but these negative effects are now partly covered.”

Vattenfall has already commissioned the 150 MW Ormonde offshore wind farm in the UK and is well placed to evaluate the differing strengths of the German and UK grid connection regimes. While TenneT builds the grid connections for German offshore projects, the transmission links in

UK wind farms are built by the developers themselves before being sold on post-construction to an offshore transmission operator (OFTO).

“The main advantage of the German system is that developers are not responsible for the grid connection, which is obviously beneficial from financial perspective,” said Wattendrup. “But at the same time the German system has some risks, as developers are not in control of when the grid connection will be ready. Developers are essentially dependent on a third party with no contractual relationship.

“The positive side of the UK structure is that developers have control of the construction of the grid connection. However, the downside is of course that developers have to finance these grid connections.”

Vattenfall has abandoned efforts to enter the bidding for French offshore wind projects and is focused on its core markets, the UK, Germany, Scandinavia and the Netherlands, according to Wattendrup.

“Our projects in Denmark and the northern part of the German North Sea form a nice cluster with many operational synergies,” he said. “It is important not to put all of your eggs in one basket.” ■


The UK Shale Gas SummitTowards a Commercially Viable and Sustainable UK Industry

Wednesday 9th October 2013, Central London

The Chancellor recently pledged to introduce “the world’s most generous tax regime for shale gas”.

He proposes to cut the tax on shale production to 30 per cent compared with the 62 per cent paid by most of the oil and gas industry in a move that will be warmly greeted by operators.

Mr Osborne said that shale gas has “huge potential” to broaden Britain’s energy mix, create thousands of jobs and keep energy bills low.

“Shale gas is a resource with huge potential to broaden the UK’s energy mix,” he said. “We want to create the right conditions for industry to explore and unlock that potential in a way that allows communities to share in the benefits.” The latter refers to the recent announcement by the Treasury that energy companies must provide at least £100,000 of community benefits for each well drilled by the industry.

The proposed new tax regime follows hard on the heels of the announcement by the Government that it is going to improve the planning and permitting process for shale and ensure that the regulatory regime is well coordinated by the new Office of Unconventional Gas and Oil at the Department of Energy and Climate Change.

This conference will take a hard look at how the Government, shale operators and local communities can work together to develop a commercially viable and sustainable UK shale industry.The expert speaker panel will address the key issues through roundtable panel discussions and presentations. The programme is divided into five sections:

1. Shale in the context of the Government’s energy policies2. Potential scale and economics of the UK shale industry3. Taking advantage of the opportunity – technological and

practical considerations4. Winning the argument I – environmental and safety concerns5. Winning the argument II – bringing the local community on

board

Attendance at this highly topical event will be invaluable for senior executives in the oil & gas industry, the supply chain and both central and local government, as well as representatives from the technical, advisory and financial communities.

Speakers include:Duarte Figueira, Head – Office of Unconventional Gas and Oil,

Department of Energy & Climate ChangeTim Yeo MP, Chair, Energy and Climate Change CommitteeDan Byles MP, Chair,All Party Parliamentary Group for

Unconventional Oil & GasNico Heslop, Head of Energy and Climate Change Taxes, HM

TreasuryJohn Arnott, Deputy Director, Licensing Strategy, Department of

Energy & Climate ChangeAnthony Lobo, Partner and Head of Oil & Gas, KPMG LLPAndrew Austin, CEO, IgasNick Butler, Visiting Professor and Chair of the King’s Policy

Institute at King’s College LondonTony Grayling, Head of Climate Change and Communities,

Environment AgencyDr Christopher Green, GFRACPaul Kelly, Director, PPS GroupDavid Lusher, Executive Director, Veolia Environmental ServicesCorin Taylor, Senior Economic Adviser, Institute of DirectorsEmma Wild, Head of Upstream Advisory Practice, KPMG LLP

To find out more and gain a 20% discount please visit www.cityandfinancial.com/uksg1mpor call +44 (0)1483 720707

City & FinancialConferences

27


BLADE DYNAMICS TO START SECOND FUNDING ROUND IN 2014

Ronan Murphy

Blade Dynamics, a UK-based developer of advanced wind turbine blades, will aim to begin talks with investors next year over a new growth funding round, Theo Botha, company Co-founder and Head of Sales told Clean Energy Pipeline.

Founded in 2007, Blade Dynamics designs and builds wind blades using modular technology, which it claims improves quality, performance and transportability. The company signed a licensing agreement with SABIC, the corporate venture capital arm of petrochemical company Saudi Basic Industries Corporation, in June, and

Botha said that Blade Dynamics is seeking investment from strategic investors that will follow a Series A round supported by Dow and AMSC in 2010.

“We are preparing for a second round of funding,” Botha confirmed. “We are likely going to start talking with potential investors as of the first quarter of 2014. The funding will be employed to enable our growth.”

The SABIC agreement will see Blade Dynamics license its D49 blade technology to the company for use in Middle Eastern wind projects, and it aims to use the partnership as a platform for further expansion in the region.

The manufacturing process for the D49 involves the assembly of smaller pieces rather than creation of a full-length moulding, thus enabling it to be transported in two pieces which are fixed

together at the site. Botha stated that Blade Dynamics’s BladeShield protection technology is also useful in resisting the desert’s extreme temperatures and the erosion caused by sand and airborne particles.

“The starting point is the D49, but the Middle East in general is an emerging market and we are very interested in participating there,” he said. “We will see to some extent what the future holds there – our line up with SABIC is a strong move towards working more in the challenging environments of the desert and in opening up the marketplaces of the Middle East.”

In addition, Blade Dynamics is also working on a research programme focused on developing blades that will be the longest ever deployed – between 80 and 100 metres in length, rather than the 60-75 metre blades currently used in offshore wind farms. The UK government-backed Energy Technologies Institute has provided £15.5 million in funding for the project, and Botha confirmed that Blade Dynamics had secured an undisclosed major wind energy company as partner for the initiative.

In the future however, the company is seeking to develop blades for both onshore and offshore use, and sell to as wide a customer base as possible. A long-term funding and technology licensing agreement with a major player in the wind turbine production space or the turbine supply chain could be one way of doing that but, at present, Blade Dynamics is keeping its options open.

“The genesis of wind energy [took place] onshore for small and medium-scale and as the technology has improved, developed and reached an industrial scale, the opportunity to go into shallow and deep offshore, as well as in the development of very large, transportable onshore rotors has presented itself,” Botha explained. “Blade Dynamics as an organisation is interested in the more technically challenging parts of the wind turbine blade space.

“Our strategic focus is very much to align with the major OEMs (original equipment manufacturers),” he continued. “What we have is a revolution in wind turbine blade technology and the manufacturing process enables quality, reliability and performance you simply can’t otherwise reach at any sensible price. It’s our intent to sell this to everybody.” ■

ONSHORE WIND

28


BWSC TARGETS THREE PLANTS IN FIRST STAGE OF BIOMASS JOINT VENTURE

Rob Lavine

Denmark-based turnkey power plant developer and operator BWSC expects to invest in three biomass projects in the first tranche of its partnership with pension fund PensionDanmark but is unlikely to make its second investment within the next two years, BWSC Chief Executive Officer Anders Heine Jensen told Clean Energy Pipeline.

BWSC builds biomass plants alongside co-generation and diesel and gas plants, and recently partnered with Danish pension fund PensionDanmark to acquire the 40 MW Brigg biomass plant, located in Lincolnshire, UK, in a deal of up to £160 million, of which BWSC invested £32 million.

“The ideal is that we should invest in a number of projects, the Brigg project being the first,” Jensen explained. “This [plant] is 40 MW, and the plan was to invest over a couple of years in an unspecified number of power stations. I would imagine that we are talking about three projects in the first tranche.

“The duration [of the agreement] is something I cannot really comment on at the moment, but…it will be a couple of years before we go on to the next investment.”

BWSC’s agreement with PensionDanmark is not strictly an exclusive arrangement, which means it is free to invest in biomass outside of the partnership if the two companies’ interests happen not to align in a particular project. However, it plans to make the majority of its biomass investments through the joint venture, though those are likely to involve it taking on a lower proportion of the equity than in the Briggs deal.

“Usually, we invest about 20% of the equity and here we have 20% of the whole project [financing], which is a lot higher than we usually do – five times higher,” said Jensen. “I think that in future ones maybe our portion will be a little bit less, but it depends on the project.”

Jensen said that he expects the joint venture to attract other external investors willing to commit funds to BWSC, though PensionDanmark will remain the only pension fund with which it will partner. The joint venture is attractive, not only because PensionDanmark is willing to provide significant levels of finance, but also because it leverages

BWSC’s engineering, construction and procurement (EPC) business.

“The business model is that we build the plant, we get the turnkey EPC contract and also the operations and maintenance contract,” Jensen said. “So that is actually part of our assessment of the project. We will not only make investments – that’s not our business model.”

Although the company has not placed any kind of geographical limits on its investment, the UK, along with Eastern Europe, was cited as a region where BWSC maintains an interest in biomass, though it is eyeing whether the contracts for difference support scheme due to be introduced from 2017 will allow biomass to remain economically feasible.

Jensen ruled out the possibility of expanding BWSC’s EPC activities into the wind and solar sectors, but stated that co-generation biomass projects are one area where it will consider pursuing further opportunities.

“We are also looking at some biogas projects elsewhere,” he said. “Maybe we will consider waste-to-energy but that is something we are reviewing at the moment. It’s something we should look into more but at the moment it’s at the review stage. We are not planning any specific projects at the moment.” ■

BIOMASS

30

CLEAN ENERGY PIPELINE DELIVERS REAL TIME BUSINESS NEWS.

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Headlines

Policy & Regulation

› India Reinstates Generation-Based Incentive for Wind Power

› Czech Lower House Votes to Terminate Renewable Energy Subsidies

› Brazil Allocates 1.5 GW in Wind Energy Auction

› Norway Issues Licenses for 1.3 GW of Wind Capacity

› Québec Publishes Draft Regulations for 450 MW of Wind Power

› DOI Approves New 3.45 GW Solar and Geothermal Evaluation Area

› US Pledges To Source 20% of Federal Government Electricity from Renewables by 2020

› DECC Names Preferred Bidders for Smart Meter Rollout

› Germany to End Grid Fee Exemptions for Power-Intensive Companies

› Chinese Solar Panel Price Floor Comes into Force in Europe

Corporate & Industrial News

› Vestas Replaces CEO as Losses Widen

› Jinko Solar Returns to Profitability after Seven Quarters of Losses

› SolarWorld Seals Restructuring Deal

› Bankrupt Wuxi Suntech in Talks with Five Potential Investors

› LDK Solar Posts $143 Million Net Loss for 2Q, Year-On-Year Sales Collapse

› Germany Installed 1.14 GW of Wind in First Half of 2013

› US Department of Defense Issues $7 Billion in Solar PPAs

› Bard Cuts 120 Jobs, Focuses on Offshore Services

› Yingli Green Energy 2Q Losses Narrow to $53.8 Million

› REC to Book $215 Million Charge on Spin-Out of Solar Division

› Huaneng Renewables First Half Revenues Rise 58%

› REC to Book $215 Million Charge on Spin-Out of Solar Division

› DONG to Divert Renewables Spending to Offshore Wind and Biomass Conversion

› Deepwater Wind Wins Both US Offshore Area Leases, Plans 1 GW Wind Farm

› Centrotherm Photovoltaics Escapes Insolvency, 80% of Company Now Owned by Creditors

› Tesla Posts $30.5 Million 2Q Net Loss, Plans $150 Million of Investments

› Trina Solar Eases 2Q Loss as Revenues Improve

› RWE Closes Tilbury after DECC Rules It Ineligible For Subsidy Support

› Chinese PV Exports To EU Fell 58% in First Half of 2013

Fund Intelligence

› Silver Lake Kraftwerk Ups Cleantech Fund Size to $653 Million

› Terra Firma to Raise $3 Billion Clean Energy Fund, Divest Infinis for $1.5 Billion

› Riverstone Targets £500 Million in Energy Fund Flotation

› Union Investment Closes Second Equity Round for Renewables Infrastructure Fund

› Sequoia Capital Raises $1.17 Billion across Three Funds

Venture Capital & Private Equity

› SK Group Invests $19 Million in HelioVolt

› Everspin Technologies Completes $15 Million Series B Round

› IFC Leads Investment in Organica Water Series B

› Rive Technology Raises $20 Million in Series D Round

› NextFuels Targets $10 Million Series A to Ramp up Biomass Pilot Facility

› Optimum Energy Secures Edison Funding

Project & Asset Finance

› Vivint Solar Raises $200 Million in Tax Equity Funding

› Pattern Energy Finances 218 MW Panhandle Wind Farm

› Juwi Group Closes Eur252 Million Syndicated Loan

› Sojitz to Invest $362 Million in 106 MW of Japanese Solar

› Enel Green Power Gets $100 Million Loan for Chilean Pipeline

› Australia's CEFC Finances $500 Million of Clean Energy Projects

› Cool Planet Energy to Invest $168 Million in Biomass-to-Gasoline Refineries

› MidAmerican Approved to Invest $1.9 Billion in Iowa Wind Farms

› Mitsubishi, EDF EN JV Secures Eur 100 Million Debt for French Wind Portfolio

Mergers & Acquisitions

› Marubeni Takes 25% Stake in Mainstream for Eur 100 Million

› First Solar Buys 1.5 GW Solar Project Pipeline From Element Power

› GE Sells Solar Production Business to First Solar

› Northland Power Acquires 55% Stake in 600 MW Gemini Wind Project

› M+W Acquires Gehrlicher Solar America Corp

› SolarCity Buys Paramount Solar in $120 Million Acquisition

› Greenbriar Capital Acquires 80 MW Wind Farm from Champlin

› Eco2 Sells UK Biomass Plant to Danish JV in £160 Million Deal

› Darling International Acquires Food Waste Recycler Terra Renewal for $120 Million

› SunEdison Private Equity Vehicle Acquires Belgian Solar Developer Enfinity

› Samsung Buys OLED Manufacturer Novaled for Eur 260 Million

› Starwood Energy Acquires 377 MW Texas Wind Project from Mesa and Wind Tex

› Mainstream to Sell Off North American Projects

› Santander Acquires 40% Stake in 170 MW Brazil Wind Portfolio

› PGE Acquires Rights to 267 MW Washington Wind Project

Public Markets

› Transalta Renewables IPO Closes at $210 Million

› Canadian Solar Launches $50 Million Equity Offering

› Pattern Energy Plans to Spin-Off Wind Assets through $345 Million IPO

› SolarCity Targets $223.5 Million from Offering Shares, Notes

› REC to Launch $110 Million Convertible Bond Issue

› PowerSecure Closes Offering on $34.42 Million

› SunEdison to Spin Off Semiconductor Business through IPO

AUGUST 2013 IN BRIEF Top headlines this month selected from Clean Energy Pipeline’s news archive

33

October 2013

› World Agri-Tech Investment Summit 1st October - 2nd October 2013 London, UK

› Renewable Energy World Asia 2nd October - 4th October 2013 Bangkok, Thailand

› Power Nigeria 2nd October - 4th October 2013 Lagos, Nigeria

› Power Investors Summit Nigeria 2nd October - 4th October 2013 Lagos, Nigeria

› Renewable Energy Storage Summit 7th October 2013 Toronto, ON, Canada

› CanSIA Solar West 3rd October - 4th October 2013 Calgary, AB, Canada

› CanWEA 2013 7th October - 10th October 2013 Toronto, Canada

› Solar Energy UK 8th October - 10th October 2013 Birmingham, UK

› UK Shale Gas Summit 9 October 2013 London, UK

› 22nd World Energy Congress 2013 13th October - 17th October 2013 Daegu, Korea

› European Utility Week 2013 15th October - 17th October 2013 Amsterdam, Netherlands

› BVCA Summit 2013 17th October 2013 London, UK

› Asia Bio Markets* 21st October - 23rd October 2013 Johor Bahru, Malaysia

› Financial Times Global Renewable Energy Summit 22nd October 2013 London, UK

› AWEA Offshore Wind Power 2013 22nd October - 23rd October 2013 Providence, RI, USA

› World Bio Markets USA* 29th October - 30th October 2013 San Francisco, CA, USA

November 2013

› Green Building China 2013 21st November - 22nd November 2013 Shanghai, China

Events

January 2014

› World Future Energy Summit 2014 20th January - 21st January 2014 Abu Dhabi, UAE

February 2014

› Corporate Venturing & Innovation Partnering Conference (16th Annual) 10th February - 12th February 2014 Newport Beach, CA, USA

› Middle East Electricity 11th February - 13th February 2014 Dubai, UAE

March 2014

› CleanEquity Monaco 2014 27th March - 28th March 2014 Monaco

April 2014

› The 8th China International Wind Energy Exhibition and Conference 8th April - 10th April 2014 Shanghai, China

EVENTS

PROMOTE YOUR EVENT WITH CLEAN ENERGY PIPELINE•Print advertisements•Online advertisements•Email advertisements•Event listings

Contact us to discuss sponsorships, media partnerships and advertising

Paul Canessa, Manager - Head of MarketingE: [email protected]: +44 207 970 4544

* events where Clean Energy Pipeline is speaking, moderating a panel or is the official Research Partner

34

AboutOur mission is to cultivate a clean

energy ecosystem in Massachusetts

by creating jobs, driving innovation,

and building a clean energy future.

www.masscec.com @MassCEC

Leading theCharge

Join us in Boston for the 2013 Global Cleantech Meetup.www.globalcleantechmeetup.com

November 12-14, 2013

35

AboutOur mission is to cultivate a clean

energy ecosystem in Massachusetts

by creating jobs, driving innovation,

and building a clean energy future.

www.masscec.com @MassCEC

Leading theCharge

Join us in Boston for the 2013 Global Cleantech Meetup.www.globalcleantechmeetup.com

November 12-14, 2013

An analysis of investment opportunities in Ontario's renewable energy sector Regulation & Policy, Market trends, Canada, Wind

An analysis of investment opportunities in Québec’s wind energy sectorRegulation & Policy, Market trends, Canada, Wind

European Offshore Wind Project Debt Finance Update – June 2013 Project finance, Denmark, UK, Germany, Wind, Wind Fa...

German wind financing and investment survey analysis Project finance, Regulation & Policy, Market trends, Germany, Wind

Swiss Funds and the Clean Energy and Sustainability Investment OpportunityMarket trends, Switzerland

UK Biomass Project Finance and Pipeline Analysis – 2012 Project finance, Biomass, UK

Global Clean Energy Project Finance – 4Q12 Review Project finance, Global

South Africa Window One Project Finance Update – December 2012 Project finance, South Africa, Solar, Wind

Chinese Expansion into Europe’s Clean Energy Sector – Key Drivers and Opportunities Market trends, China

Venture Capital and Private Equity Investment in Energy Efficiency – 3Q12 ReviewVC/PE, Energy Efficiency, Green Building, Green IT & C...

Scotland Clean Energy Finance and Investment – 2012 ReviewVC/PE, M&A, Project finance, UK, Biomass, Hydro, Wind

Solar Project Finance – 3Q12 Quarterly Review Project finance, Solar

UK Wind Projects – Current Pipeline Analysis (3Q12)Market trends, UK, Wind

Venture Capital Investment in Energy Efficiency – 3Q12 Quarterly ReviewVC/PE, Energy Efficiency

Venture Capital Investment in Green Transportation – 3Q12 Quarterly ReviewVC/PE, Green Transportation

UK Solar Projects – Current Pipeline Analysis (3Q12) Market trends, UK, Solar

Top Corporate Venture Capital Investors – (2000-2012)VC/PE

UK Biomass Projects – Current Pipeline Analysis (3Q12) Market trends, UK, Biomass

UK Clean Energy Project Finance – 1H12 Review Project finance, UK, Biomass, Marine, Solar, Wind

DATA INSIGHT REPORTSA selection of our latest reports available to premium subscribers

Data Insight Reports

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15th annual

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2013 Highlights:





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