Jim Lane

We were suitably intrigued by the headline, “Renewable Energy Program Could Make Fracking and Biofuels Obsolete.” And so the press release began:

“Project Volt Gas Volt, a new green program, shows the potential of storing renewable energy in surplus, which could make nuclear energy, natural gas, fracking, and biofuels seem like energy sources from the past.”

If that’s starting to sound like a pitch to fringe interests, read on.

“Surplus electricity that is generated by wind farms and solar parks and converted into methane can be stored for months in the existing natural gas grid. The surplus of energy makes it the battery for renewable energy while simultaneously making hydraulic fracturing (“fracking”) obsolete. The methane would be used to produce electricity, and district heating, or as a motor fuel.  We will use the surplus energy from nuclear, now largely wasted at night, to help pay for the exit from nuclear. And we will use the CO2 generated from burning waste, biomass and from steel mills and cement plants to generate the methane.”

Later in the underlying documents, the process is outlined. Use electricity to split water into hydrogen and oxygen, blowing off the oxygen. “Mixing hydrogen with CO2″ to make methane (note: it’s not exactly explained how, technically, this is achieved, though there are paths to make this happen.). Storing methane and burning eventually to generate power.

Then this.

“The first small scale industrial installation (6.3 MW) for the conversion of electricity into gas is currently being built in northern Germany by Audi, in collaboration with SolarFuel and EWE (a biogas user). Current production costs are high – around 25 euro cents per kWh of gas produced. The aim is to reduce this to around 8 cents per kWh by 2018…compared with the price of imported Russian gas, including transport costs, which is around 4 to 5 cents per kWh (2 euro cents not counting transport).”

So, let’s see if we get this. It costs 5X of the incumbent now. 3X after unspecified improvement that is five years away.

So here are the whoppers.

1. Not a substitute in real-world terms. If biofuels and other technologies simply had to reach 5X of the fuel price today and 3X by 2018 – why, all of them would be competitive with $500 per barrel oil today and $300 per barrel oil by 2018.

2. Not really replacing, er, biofuels. Note that the process is dependent on waste CO2 from…oops, burning biomass. Also, elsewhere in the project outline, it mentions crude biogas as a source of waste CO2 as well.

3. Transporting gas or power. We also might point out the dependency on aggregated sources of CO2, which is going to require transporting large amounts of a) power or b) gas. Sources of the kind of pure CO2 that’s needed, and wind/solar generation projects are unlikely to be co-located. You might also note how the transport cost is not included here, but is included for the comparative (Russian gas). Stripping out all transport costs, the cost premium is 12.5X.

4. The water sourcing problem. Watch out for the water usage. And, if the reaction uses salt-water, better prepare to have a use for the residual chlorine that may be produced as a byproduct of the reaction.

5. The CO2 sourcing problem. Good luck getting the CO2, anyway. Ethanol plants, cement plants and steel mills are going the liquid route, in search of higher values – rather than selling CO2 as  gas feedstock for the lower-value power market. Think Waste Management (invested in Fulcrum Bioenergy, Enerkem), BaoSteel (LanzaTech), St. Mary’s (Pond Biofuels).

Jim Lane is editor and publisher  of Biofuels Digest where this article was originally published. Biofuels Digest is the most widely read  Biofuels daily read by 14,000+ organizations. Subscribe here.

Posted by Guest Contributor at 11:33 AM | Permalink | Comments (1)

Doug Young

China is quickly learning how to play the game of tit-for-tat trade wars, with news that Beijing has launched a new anti-dumping probe against wines imported from the European Union. Anyone who has followed recent China-EU trade relations will know, of course, that announcement of this new probe by the Commerce Ministry comes the same day that the EU formally announced anti-dumping tariffs against imported Chinese solar panels.

While I certainly don’t condone this kind of trade war rhetoric, I have to say that China’s decision to target Europe’s wine industry looks like a very smart selection for this kind of probe. For starters, wine is one of Europe’s most famous products and is one of its biggest exports. At the same time, Chinese consumers are quickly discovering a fondness for imported wines, with European varieties fetching some of the highest prices.

All that said, let’s have a look at the actual news that saw the EU formally impose an 11.8 percent anti-dumping tariff on Chinese solar cells to take effect on Thursday. (English article) The tariffs were widely anticipated following a months-long investigation, and were actually quite a bit lower than most people had expected. But the rate could rise to 47.6 percent in August if China and the EU don’t reach a negotiated settlement in the matter before then.

Chinese solar panel makers were predictably dismayed, with Trina (NYSE: TSL) issuing a statement expressing its disappointment. (company statement) Yingli (NYSE: YGE) said it hopes the 2 sides will be able to negotiate a settlement, which is what some individual EU leaders have been pushing for to avoid a trade war. (company statement)

In addition to its usual angry statements of denial and condemnation, China this time has also responded by launching its own investigation into wines imported from the EU. (English article; Chinese article) This latest probe is similar to one that China previously launched against US makers of polysilicon, the main raw material used to make solar cells. China opened that investigation last year after the US imposed similar punitive tariffs on Chinese solar cells.

Media are pointing out that by targeting wine, China is looking to punish southern EU members like France and Italy that are big wine producers and were strong backers of the solar anti-dumping tariffs. At the same time, any Chinese anti-dumping tariffs on EU wines would have less impact on northern European nations, most notably Germany, which opposes the punitive tariffs on Chinese solar cells.

Personally speaking, I think this move targeting wine looks quite shrewd and is probably even justified. Europe is famous for providing extensive subsidies to its farmers, and the wine industry is one of the biggest recipients of the kind of state support that China gives to its solar panel makers. China’s growing thirst for wine means that anti-dumping tariffs against EU products could also have a major impact on some its major winemakers.

Of course the timing of China’s probe looks quite questionable, and anyone who doesn’t believe this particular investigation is linked to the solar trade war would be quite naive. The Chinese probe also looks dubious because most wines imported from Europe are already subject to relatively high taxes and are more expensive than domestic brands. That means any claims that EU subsidies are hurting the Chinese wine industry are most likely untrue.

I’m not a fan of trade wars, and I honestly don’t think this move by China will do much to help create a better atmosphere of trust if the 2 sides really want to mediate a solution. But at the same time, at least China’s wine probe may put some added pressure on the EU to try a bit harder to negotiate an acceptable solution to prevent the solar trade war from escalating.

Bottom line: China’s launch of an anti-dumping probe against EU wines will boost hostilities, but could also add pressure for the 2 sides to resolve their ongoing solar dispute.

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

Posted by Doug Young at 12:34 PM | Permalink | Comments (0)

Doug Young

After more than a year of antagonism, I’m happy to see that the voice of reason finally seems to be coming to the ongoing clash between China and the west in their prolonged dispute over Beijing’s state support for solar panel sector. Germany seems to be the driving force behind this welcome change in tone, following German Chancellor Angela Merckel’s remarks last week that she opposed anti-dumping tariffs on Chinese solar cells being proposed by the EU’s trade office. Merkel correctly realized that a trade war over solar panels wouldn’t benefit anyone, and could potentially deal a crippling blow to a sector that will be critical to the world’s future energy security.

Following that behind-the-scenes pressure from Germany and perhaps 1 or 2 other European leaders, the EU’s trade commission has suddenly backed down in its previously aggressive stance towards China in the dispute. Media are reporting that the EU’s trade commissioner has decided to impose an 11.8 percent punitive tariff rate on imported Chinese solar cells from Thursday this week, far lower than the 47 percent rate that was initially planned. (English article) But the rate would rise to the original 47 percent in 2 months if China and the EU can’t reach a settlement before then to resolve the matter.

The dispute centers around western claims that China unfairly supports its solar panel makers by giving them numerous economic advantages, including cheap loans, low-cost land and tax incentives. Those incentives led to a huge build-up of China’s sector over the last decade, which resulted in a massive oversupply that has sent the global industry into a prolonged slump over the last 2 years. As a result, many of the western firms that pioneered the technology have gone out of business, and most of China’s big players are only continuing to operate with support from Beijing. (previous post)

Unhappiness about Beijing’s strong support for its solar sector led the US to impose anti-dumping tariffs on imported Chinese solar cells last year, and the EU is preparing to take similar steps following its own investigation. In both cases, Beijing did little or nothing to try and resolve the matter to avert a crisis, even though it had plenty of time to try to intervene while the months-long investigations were occurring.

Last week Beijing finally got a little more proactive by sending a delegation to Europe to try and negotiate a settlement. But those talks quickly broke down due to lack of experience by the Chinese negotiators. (previous post) Shortly after that happened, Merckel came out publicly and said Germany opposed the sanctions, which appears to be the main driver for this sudden softening of the EU’s stance in the matter.

So the big questions become: What will happen next, and will the 2 sides be able to reach a settlement before August? My guess is that we’ll see the Chinese side send a new delegation to Europe in the next week or two, and that this time we’ll finally see some serious negotiations take place. Since it’s unlikely that China can dismantle its extensive state support for the industry so quickly, we’re more likely to see the Chinese companies agree to simply raise their prices to a level that is comparable with products from their European and North American rivals.

I would give this latest round of negotiations a good chance of success, perhaps at around 70-80 percent, since I think that both sides truly want to settle this matter without a trade war. If they do reach an agreement, that could become a template for similar talks with Washington that could perhaps result in the rollback of US tariffs, providing another major boost for the embattled sector.

Bottom line: A softening of Europe’s stance in its solar panel dispute with China means the 2 sides now have a 70-80 percent chance of negotiating a settlement to the matter.

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

Posted by Doug Young at 12:07 PM | Permalink | Comments (0)

by Sean Kidney

The Massachusetts AA+ green bond I mentioned last week got a lot of coverage on release this week – even the WSJ ran the story. But there was a twist: it seems the State had to scale back the total $1.1bn GO [general obligation] offering to $670m on tepid demand, but the green bond bit was 30% oversubscribed.

For all you prospective issuers out there: the green bonds also lured as many as 9 new institutional investors for Massachusetts bonds. One buyer went so far as to say “We think more municipalities should do the same." So perhaps this is Massachusetts starting a trend yet again?

Mind you, for those of us concerned about climate, Massachusetts is applying a broad interpretation of “green”, as Assistant Treasurer Steve Grossman said to BloombergTV. The bond has more of a Parks & Recreation focus than the IFC / World Bank flavors that inspired them, with only a subset of allocations looking like they would qualify under the Climate Bond Standard.

Cut to Climate Bond Standard board member, California State Treasurer Bill Lockyer:

“Climate Bond Standards offer a valuable tool to help investor to assess the integrity of environmental claims for green bonds.”

One important point: Massachusetts say they will be putting effort into transparency for investors via website reporting – good on them.

Sean Kidney is Chair of the Climate Bonds Initiative, an "investor-focused" not-for-profit promoting long-term debt models to fund a rapid, global transition to a low-carbon economy. 

Posted by Guest Contributor at 10:28 AM | Permalink | Comments (0)

By Harris Roen

The stock market has been paying attention to SunPower (SPWR) in a big way. At the end of May the stock hit an annual high of 23.76, a gain of 125% from where it was just a month earlier. That price is quadruple levels it was trading at in the beginning of the year.


Since May, the stock has seen about a 17% correction, and is trading sideways in the 18 to 20 price range. Volume at these high price levels have been impressive too—shares exchanging hands in the past 30 trading days exceeds that of the previous 64 trading days.

Investors have been impressed with the latest earnings report, and the company estimates that earnings per diluted share will turn positive next quarter, beating analyst estimates. Despite this recent jump in the stock price, is SPWR still a good investment?

SunPower is a small to medium sized California-based solar company with about 5,000 employees and $2.5 billion in annual sales. This vertically integrated solar company is involved in the manufacture, installation and service of photovoltaics. SunPower delivers solar to a huge array of customers around the globe, from rooftop residential systems to commercial, government and utility-scale power plant clients. SunPower claims to have the largest U.S. residential and commercial installed base, with over 100,000 residential systems installed.


A look at SunPower’s comparative financials paints a mixed picture of the company’s future prospects. The chart above measures SPWR against the average of 23 other solar companies in the same size range (those with annual sales between $1 billion and $10 billion).

When comparing debt and sales growth, SPWR beats out the competition. It posts numbers 50% above the other companies. It measures poorly, though, on earnings, profits and return on equity. Having said that, it should be noted that these three later measures are all negative on average for solar companies in the group, it’s just that SunPower’s numbers are more negative. So for example, the current EPS for SunPower is -2.8, compared to an average for the other solar companies of -1.3.


Solar installation as an investment theme is hot on analyst’s radar these days, and it is largely due to this part of SunPower’s business that the stock is getting so much attention. It is important, then, to compare SPWR against the other big players in solar installation.


The chart above shows SunPower compared to four other publically traded major players in solar installation: Real Goods Solar (RSOL), SolarCity (SCTY), Sunvalley Solar (SSOL) and Akeena Solar (WEST). This comparison, again, shows a mixed picture. SPWR compares well in market cap and price/book ratio, but measures up poorly on sales, net margin and return on equity.

I believe the main justification for investor interest in SunPower is its history of positive earnings surprises—this is a metric where SunPower shines. To illustrate, when earnings came in at $0.22/share for the first quarter of 2013, it handily beat consensus analyst estimates of $0.06/share. Similarly, earnings per share of $0.18/share for the fourth quarter of 2012 exceeded the average analyst estimate of $0.14/share. Once a trend like this is established, professional investors take notice.

So while SunPower may not rise to the top of comparable companies, it continues to be an investor favorite. As long as the company continues to perform well in the ultra-competitive solar sector, SunPower will remain one of the Roen Financial Report’s top picks.

Disclosure

Individuals involved with the Roen Financial Report and Swiftwood Press LLC do not own or control shares of any companies mentioned in this article. It is possible that individuals may own or control shares of one or more of the underlying securities contained in the Mutual Funds or Exchange Traded Funds mentioned in this article. Any advice and/or recommendations made in this article are of a general nature and are not to be considered specific investment advice. Individuals should seek advice from their investment professional before making any important financial decisions. See Terms of Use for more information.

About the author

Harris Roen is Editor of the “ROEN FINANCIAL REPORT” by Swiftwood Press LLC, 82 Church Street, Suite 303, Burlington, VT 05401. © Copyright 2010 Swiftwood Press LLC. All rights reserved; reprinting by permission only. For reprints please contact us at cservice@swiftwood.com. POSTMASTER: Send address changes to Roen Financial Report, 82 Church Street, Suite 303, Burlington, VT 05401. Application to Mail at Periodicals Postage Prices is Pending at Burlington VT and additional Mailing offices.
Remember to always consult with your investment professional before making important financial decisions.

Posted by Guest Contributor at 01:27 PM | Permalink | Comments (0)

Doug Young

China’s struggling solar panel makers must are slowly transforming into de facto state-owned enterprises as they take increasing loans from Beijing, with Canadian Solar (Nasdaq: CSIQ) becoming the latest to take a handout from the policy lender China Development Bank (CDB). If Beijing is trying to convince Europe and the US that it’s not unfairly supporting its solar sector, then this certainly isn’t the way to do it. But that said, I doubt that Canadian Solar or many of its peers could get financing to maintain their operations from any true private sector banks right now, as the future remains unclear for most due to their precarious financial positions.

This latest deal looks at least slightly positive for Canadian Solar, as the 270 million yuan ($44 million) loan it has just received will be used to finance a specific project in western China rather than simply to fund day-to-day operations. (company announcement) But despite the loan’s stated use, I do suspect that Canadian Solar will actually use most of the funds immediately to fund its daily operations that are still losing big money. Just so everyone is clear that this loan is a gift from Beijing, the CDB is offering a one-year grace period where Canadian Solar presumably won’t have to pay any interest — a condition it would never be able to get from a commercial lender.

While this news hardly looks encouraging to me, investors seemed to think differently, bidding up Canadian Solar’s shares by 3.5 percent after the announcement came out. Perhaps the markets are taking this deal as a sign that Beijing will continue providing low-cost financing for Canadian Solar until the industry finally returns to profitability. Other solar shares also rallied on the news, with Yingli (NYSE: YGE) up 3.9 percent and Trina (NYSE: TSL) up 2.7 percent.

This kind of financing seems to be Beijing’s new approach to propping up its solar companies while they wait for a 2-year-old slump in their sector to ease. Rather than provide major funds, CDB seems to be giving mostly smaller loans in the $40-$150 million range to help companies fund their operations for a few months while they wait for the market to improve.

Yingli received its own largess from the CDB in April, when it announced 2 new loans worth a combined $165 million. (previous post) Mid-sized manufacturer ReneSola (NYSE: SOL) announced its own new 320 million yuan ($51 million) credit line from CDB in March, and LDK (NYSE: LDK) said a month earlier that it received a similar 440 million yuan in new CDB financing. CDB has also provided past financing for the now-bankrupt Suntech (NYSE: STP), and late last year provided major new funds for wind power equipment maker Ming Yang (NYSE: MY).

So, what’s the bottom line in all of this? As I’ve said above, this kind of preferential financing is unlikely to convince Europe or the US that Beijing is committed to ending state support for its solar sector. That could make negotiations difficult for China when it tries to stop the EU from imposing anti-dumping tariffs on solar panels imported from China in upcoming talks.

Over the more medium term, I would expect the CDB to keep making more similar loans to the solar panel makers for the next year or so, with each such loan providing enough money to fund operations for the next 2-4 months. Recipients of the loans do indeed look well positioned to emerge as sector leaders once the industry finally stabilizes, which is perhaps why investors are favoring many companies that receive CDB loans.

Bottom line: China Development Bank will provide loans to China’s solar panel makers to fund their operations over the next year until the sector stabilizes.

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

Posted by Doug Young at 09:17 AM | Permalink | Comments (0)

by Debra Fiakas CFA

Sometime back Poet, LLC, the private producer of ethanol based in Sioux Falls, SD (my home state), filed a lawsuit against the State of California, strenuously objecting to rules related to ‘carbon intensity’ adopted by the California Air Resources Board (CARB) When the dust settled, the California rules were still standing and Poet skulked off to the appeals court.  The appeal was filed this week in the California’s Fifth Appellate District in Fresno.

Originally approved in 2009, California’s ‘low carbon fuel standard’ (LCFS) is aimed at sorting apples and oranges in the renewable transportation fuels market by requiring that producers meet an average declining standard of carbon intensity.   Now they must reduce total carbon measure by 10% over the next seven years.  Carbon intensity is measured as the sum of all greenhouse gas emissions associated with the production, transportation, processing and consumption of a fuel.   CARB calls this a ‘pathway’.  More about pathways later.

Ethanol is at a disadvantage all around because it cannot be distributed through existing fuel pipelines.  It must be sent by rail or truck tanker to end-markets, adding to the carbon intensity.  What is more, ethanol fuels produced out-of-state end up classified lower than in-state product because the added transport element contributes even more to carbon intensity 

It is understandable why Poet has its corporate hackles up over the California rules. California is the largest ethanol market in the U.S.  The largest ethanol producers need to command a share.  Only Archer Daniels Midland (ADM:  NYSE) producers more ethanol than Poet.  Poet is not alone in its efforts to fight state bureaucrats.  The Renewable Fuels Association and Growth Energy also filed suit against California over the low carbon fuels standard.

Investors should also note that Poet is not arguing against the underlying principal of CARB’s LCSF.  Poet has told court that CARB failed to adequately assess the environmental impact of the standard before it was adopted.

The California Air Resources Board (CARB) is a group to watch in the renewable fuel industry.  They like it that way.  CARB was set up in 1967 by then Governor Ronald Regan.  It is a one-of-a-kind group, established before the federal government took over air quality standard setting for the country through a 1970 amendment to Clean Air Act.  Now the other forty-nine states are stuck with using CARB rules or federal rules.

CARB is not in the least intimidated by Poet’s arguments against the standard.  Earlier this year several parties with interests in the renewable fuel market weighed in to support CARB and its LCSF.  Natural gas supplier Clean Energy Fuels Corp. (CLNE:  Nasdaq) and California’s leading electric utility Pacific Gas & Electric (PCG:  NYSE) as well as the California Biodiesel Alliance and the National Biodiesel Board all filed briefs with the court extolling the virtues of CARB and its LCSF.  The briefs made note of California’s nascent cap-and-trade program, which sets California out ahead of the rest of the country.

Of course, these folks have a different view on California’s carbon intensity standard because it shifts the competitive balance in their favor.  Renewable diesel and algal-based fuels, for example, are so-called ‘drop-in’ fuels that can be distributed using the existing pipeline infrastructure.  These fuels come out looking good in the carbon intensity competition, even the producers from outside California.

So it is the ethanol industry against the renewable fuel industry.  What appears to be a blow to ADM and Poet may end up being a boon to others.

Companies that might benefit include Sapphire Energy, which produces an algal-based renewable diesel.  In March 2013 Sapphire landed an off-take agreement with oil refiner Tesoro Corp. (TSO:  NYSE).  Tesoro is buying an undisclosed amount of algal-based oil produced at Sapphire’s New Mexico plant.  Sapphire claims its plant has been producing two barrels of oil per day, but could ramp to 100 barrels per day.  Tesoro has reportedly agreed to take all production as the facility ramps to capacity.  The EPA still has not approved Sapphire’s fuel for on-road use.

Algal-based biofuel releases the same amount of carbon dioxide that was used to grow it.  This is about half the carbon dioxide released by burning gasoline.  However, when the carbon dioxide used to grow algae comes from power plant or other emissions, the carbon intensity is lowered.  Investors should note that there are a number of algal-based fuel producers in California.  The Algae Biomass Organization recently updated a U.S. map showing locations across the country

CARB has a table of carbon intensity ‘pathways’ for various fuels.  The table is to be used as guidance for all parties targeting the renewable fuel market in California.  CARB has invited renewable fuel producers to apply for new pathways.  With the competitive field tilted toward renewable diesel, it is not surprising that the market is attracting the interest of some big players. Indeed, oil refining giant Neste Oil (NEF: F)  has applied for a ‘pathway’ or carbon intensity measure for its non-ester renewable diesel product it calls NExBTL.  Neste’s Singapore plant produces about 250 million gallons of it per year from Australian tallow.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. 

Posted by Debra Fiakas at 03:08 PM | Permalink | Comments (0)

By Harris Roen

Mutual Funds

Performance for MF’s have been outstanding, following a surge in solar stocks, energy efficiency companies, and other alternative energy sectors. Over the past 12-months the average alternative energy MF returned 30.3%, and not a single fund was down for the year. Three-month and one-month returns were similarly spectacular, gaining 10.5% and 7.3% respectively on average, also with no losers.

I expect this trend to continue, as many of these alternative energy sectors are bouncing back from the overly pessimistic levels of 2012.

Exchange Traded Funds

Returns for ETFs have been more variable, ranging from a gain of 68.3% in one year for First Trust NASDAQ® Clean Edge® Green Energy Index Fund (QCLN), to a loss of 52% for iPath Global Carbon ETN (GRN). This loss for GRN is not surprising, since it is pegged to Barclays Capital Global Carbon Index. This index is trading at 10% of what it was five years ago.

On average, alternative energy ETFs have had respectable gains for the past one-month, three-months and 12-months. As with MFs, these gains reflect the solid returns and improving prospects seen in several of the alternative energy sectors.

Disclosure

Individuals involved with the Roen Financial Report and Swiftwood Press LLC do not own or control shares of any companies mentioned in this article. It is possible that individuals may own or control shares of one or more of the underlying securities contained in the Mutual Funds or Exchange Traded Funds mentioned in this article. Any advice and/or recommendations made in this article are of a general nature and are not to be considered specific investment advice. Individuals should seek advice from their investment professional before making any important financial decisions. See Terms of Use for more information.

About the author

Harris Roen is Editor of the “ROEN FINANCIAL REPORT” by Swiftwood Press LLC, 82 Church Street, Suite 303, Burlington, VT 05401. © Copyright 2010 Swiftwood Press LLC. All rights reserved; reprinting by permission only. For reprints please contact us at cservice@swiftwood.com. POSTMASTER: Send address changes to Roen Financial Report, 82 Church Street, Suite 303, Burlington, VT 05401. Application to Mail at Periodicals Postage Prices is Pending at Burlington VT and additional Mailing offices.
Remember to always consult with your investment professional before making important financial decisions.

Posted by Guest Contributor at 08:07 PM | Permalink | Comments (0)

Bluefield IPO to Be the Second Green Energy Fund Flotation in London This Year

by Alice Young

Bluefield Solar Income Fund Limited, an investment fund focussed on solar power, plans to raise £150 million in a London IPO. The Bluefield IPO will be the second flotation of a green energy find on the London Stock Exchange this year following the IPO of Greencoat UK Wind (LON:UKW).

Bluefield Solar Plans London IPO

On Wednesday, May 29, London-based Bluefield Solar announced that it intended to launch an initial public offering on the LSE’s main market. The fund, which is focussing on large-scale agricultural and industrial solar assets, said in a press release that it was seeking to raise £150 million by way of a placing and an offer for subscription of ordinary shares. Bluefield expects its shares to start trading in July.

One of the fund’s cornerstone investors will be Vestra Wealth LLP which has committed to subscribe for no less than 15 million ordinary shares. Numis Securities is acting as broker and financial adviser to Bluefield in relation to the London IPO. The fund will also be advised by Bluefield Partners.

The fund plans to invest the proceeds from the IPO in UK-based agricultural and industrial solar energy assets. “Solar energy should play an important part in the UK’s energy mix going forward,” John Rennocks, the proposed Non-Executive Chairman of the fund, said in the press release. On Wednesday, the Financial Times quoted James Armstrong, a managing partner in Bluefield Partners, as saying that large-scale solar energy was “poised to become a major investment theme in the UK”.

Bluefield Solar was founded by former partners of Foresight Group, a large renewable technology investor. Jon Moulton, the private equity tycoon and chairman of investment company Better Capital (LON:BCAP), sits on its investment committee.

Green Energy IPOs

The Bluefield IPO announcement came two months after the floatation of Greencoat UK Wind (LON:UKW), a wind energy investment fund managed by UK-based infrastructure fund Greencoat Capital, which raised £260 million in March through a London IPO. Greencoat owns stakes in onshore and offshore wind developments.

UK government support for clean energy has offered an incentive to renewable energy producers to seek London listing. Electricity suppliers have been encouraged to increase the share of renewables such as solar and wind power in the electricity mix they sell to customers.

The Renewables Infrastructure Group (TRIG) backed by Renewable Energy Systems is reportedly considering a flotation, hoping to raise £300 million for its portfolio of 18 wind farms and solar parks in Britain, Ireland and France.

This article first appeared on iNVEZZ.com, an informational and educational resource for retail investors. The portal provides news, analyses, commentary on data on the markets and investment products available to private investors. It encourages engagement and contribution from all stake holders in the retail investment world, covering energy, equities, funds, forex, real estate and more.

Posted by Guest Contributor at 10:54 AM | Permalink | Comments (0)

James Montgomery

The Skies are Brightening as Manufacturers Resume Spending to Improve Efficiency

Slumping solar PV equipment spending has finally bottomed out, and we're about to witness a "revival" in investments that will finally close the yawning gap between oversupply and demand, according to a pair of analysts reports.

Solar PV manufacturers spent nearly $13 billion in 2011, but then their investments plunged more than 70 percent to $3.6 billion in 2012, and will probably drop another 36 percent this year to $2.3 billion, the lowest level since 2006, says Jon-Frederick Campos, analyst with IHS Solar. But with prices showing signs of stabilizing, companies that idled manufacturing lines and lowered utilization, and put off expansions in the last 12-18 months, are adding new plants and production capacity in emerging markets where some of the best growth is happening: Middle East to Africa to Latin America, he said.

Two signs Campos has seen over the past six months that indicate reached the bottom of PV investments: "average selling prices, though still not completely favorable, have been stabilizing and have actually shown increases thus far in 2013," he said. And second, he points to improved forecasts and stronger financials from PV companies, thanks to improving market conditions. "The rest of 2013 and early 2014 will eliminate much of the overcapacity still out there."

Ed Cahill, research associate at Lux Research, isn't exactly so optimistic, saying we haven't actually reached the bottom yet: "It'll be worse next year, when a lot of consolidation will happen," starting with the vertically integrated manufacturers who are most exposed to price pressures across the board. But like Campos he sees demand going up and supplies going down over the next couple of years, with prices rising and profits reemerging. "When will those two match up? We see it in 2015," when capacity dips to 58 GW, and demand surges to 52 GW. (He clarifies that roughly a 12 percent overcapacity beyond demand is "a healthy amount" that provides a cushion for manufacturers; after 2015 that buffer could shrink down to 5 percent and create what he calls a "supply-constrained" environment in 2016.) Total demand is seen reaching 62 GW by 2018, led by China (12.4 GW of installations) and the U.S. (10.8 GW). Those numbers assume "multiple large movements within the market," from new financing models for distributed solar projects, to governments fast-tracking utility-scale project development in emerging markets, and shutting off government support for smaller and struggling manufacturers.

Increasing demand and decreasing capacity lead to the market's return to equilibrium in 2015. (Source: Lux Research)

Both Campos and Cahill think crystalline silicon (c-Si) will continue to dominate the solar PV market and that's where the real gains will be seen to further lower costs. Improvements continue to be made all over the module bill-of-materials, from the starting wafer material (direct solidification, epitaxial silicon, and quasi-mono silicon ingot) to structured saw wires, selective emitters, rear passivation, backside contacts, metal wrap-through, and anti-reflective coatings. Small improvements in specific areas can add up; just ramping utilization back up to 90 percent should save manufacturers $0.09/W, Cahill notes. "Capacity-boosting investment is what got the industry in trouble," Campos adds. "Technology and process step-up investments are the key to our industry's continued revival."

Jim Montgomery is Associate Editor for RenewableEnergyWorld.com, covering the solar and wind beats. He previously was news editor for Solid State Technology and Photovoltaics World, and has covered semiconductor manufacturing and related industries, renewable energy and industrial lasers since 2003. His work has earned both internal awards and an Azbee Award from the American Society of Business Press Editors. Jim has 15 years of experience in producing websites and e-Newsletters in various technology.

This article was first published on RenewableEnergyWorld.com, and is reprinted with permission.

Posted by Guest Contributor at 09:36 AM | Permalink | Comments (0)

Doug Young

Trade War. photo via Bigstock

It’s been interesting to watch all the different interpretations coming out of a brief flurry of talks in Europe late last week aimed at settling a trade dispute between the EU and China over Beijing’s support for its solar panel makers. About the only thing that everyone agrees on is that some talks did happen, and that China took the interesting step of letting an industry association rather than government officials handle its side of the negotiations. But after that, no one seems to agree on why exactly the talks fell apart or whether there’s hope that they might be restarted before the EU finalizes proposed punitive tariffs on imported Chinese solar panels. Adding further intrigue to the mix, German Chancellor Angela Merkel has come out during a meeting with visiting Chinese Premier Li Keqiang to say that Germany opposes punitive tariffs and wants to see the dispute resolved before a trade war begins.

I have to commend Merkel for breaking with the EU trade commission to try and find a constructive solution to the dispute, since a trade war isn’t in anyone’s interest and could deal a serious blow to this important sector. But that said, it’s far from clear that China’s inexperienced negotiator will be able to work constructively to find a solution to this impasse, which stems from western allegations that Chinese solar panel makers receive unfair state support.

The current state of confusion has its origins in remarks last week by an official from the Chinese Chamber of Commerce for Import and Export of Machinery and Electronic Products, a government-backed industry group that was chosen to represent Chinese solar panel makers in talks with the EU. After the talks broke down, the frustrated official returned to Beijing where he said his group had made an offer that had been rejected by the EU’s trade office. (English article)

That prompted an EU to quickly fire back to call the Chinese statement misleading because formal talks had yet to be launched. An EU spokesman further added that the meeting last week was only “technical preparatory talks”, and that formal negotiations could only begin after the EU commission considering the case publishes its preliminary findings.

Clearly there are some communication problems here, which I blame on both sides. For his part, the Chinese representative probably has little or no experience negotiating in this kind of major trade dispute, and simply thought he could make a quick offer and settle the matter. The EU, meanwhile, failed to realize the Chinese negotiators lacked understanding of the EU’s process for settling this kind of talks. If they wanted to handle the situation better, the EU negotiators should have realized they would be dealing with a relatively inexperienced Chinese team and made more effort to educate them about the EU’s dispute resolution process.

Merkel’s entry into the situation seems a bit unusual, since individual EU leaders seldom speak out on this kind of dispute and usually let the bloc’s trade representative handle such matters. (English article) As I said before, I’m happy to see such a major national leader finally speaking out on the need to negotiated solutions in these kinds of disputes rather than conducting investigations and unilaterally imposing punitive tariffs.

Merkel’s words and China’s willingness to finally admit there is a problem and seek a negotiated solution both look like good signs that both sides want to resolve the matter and perhaps a trade war can be averted; accordingly, I’d put the chances of success for a negotiated settlement relatively high, perhaps at about 70 percent.

Bottom line: Despite some confusion, talks to resolve the EU-China dispute over solar panels should have a good chance of success due to both sides’ desire to avert a trade war.

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

Posted by Doug Young at 10:15 AM | Permalink | Comments (0)