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CCBJ News Update
May 24, 2013
Goldman invests nearly $1 billion in renewables
Moniz confirmed as energy secretary
Ontario loses WTO appeal
Tesla to raise $830 million, pays off DOE loan
$120 million in funding for Cape Cod solar projects
Gehrlicher Solar raises €85 million in financing
Alterra, EDC form geothermal JV
Siemens receives 100 MW turbine order
Lux: Solar PV market to rebound strong
CCEMC to provide $50 million for clean fossil
Goldman invests nearly $1 billion in renewables
In separate deals involving initiatives in the United States and Japan, investment banking firm Goldman Sachs (New York, NY) is putting up a total of nearly $1 billion dollars to finance the development of renewable energy projects. In the United States, Goldman Sachs has reached an agreement with rooftop solar system installer SolarCity (San Mateo, CA) under which the bank will provide more than $500 million in financing for the installation of about 110 megawatts (MW) in rooftop solar generating capacity. The new combined lease financing represents an expansion of an agreement that was originally reached between SolarCity and Goldman Sachs in 2012 and is the largest agreement of its kind in the United States, according to the companies. “Our firm has set a target of $40 billion in financings and investments in renewable energy over the next decade, and we believe SolarCity’s range of distributed solar solutions targeting a wider customer base will help us move toward a low-carbon energy future,” said Stuart Bernstein, global head of clean technology and renewables at Goldman Sachs.
In Japan, the bank has announced plans to invest up to 50 billion yen (about $487 million U.S.) in renewable energy projects over the next five years. In addition, Goldman Sachs said that it will take as much as 250 billion yen in bank loans and project financing over the same period to help move forward other renewable energy projects. In August 2012, Goldman Sachs formed Japan Renewable Energy Co., a unit that will plan, design, and operate wind, solar, fuel cell, and biomass power plants in Japan.
Moniz confirmed as energy secretary
In a vote of 97 to 0, the U.S. Senate has confirmed the nomination of Ernest Moniz to serve as the next secretary of the U.S. Department of Energy (DOE), an appointment that has largely been received positively by industry and environmental groups. The Edison Electric Institute cheered the appointment, calling Moniz “a visionary leader with excellent credentials for his new job,” while National Grid U.S. President Tom King praised Moniz, a former director of the Massachusetts Institute of Technology’s (MIT) Energy Initiative, for having “excelled at creating solutions that address the energy and environmental challenges of today” and for recognizing “the concerns of tomorrow.” The Solar Energy Industries Association (SEIA) described Moniz as “uniquely qualified to tackle the many policy challenges facing our nation and the world.” The Sierra Club offered more cautious praise, congratulating Moniz on the confirmation but urging him to rethink his support for hydraulic fracturing, or “fracking,” for natural gas and for the development of liquefied natural gas terminals in the United States.
Ontario loses WTO appeal
The World Trade Organization (WTO) has ruled in favor of Japan and the European Union (EU) and rejected an appeal by the province of Ontario of a previous decision to overturn the domestic content requirements in an Ontario’s renewable energy development program. Ontario’s feed-in tariff (FIT) program had required that renewable energy project developers purchase 50 to 60% of the systems and equipment for their projects from Ontario suppliers, but that provision has now been affirmed as illegal by WTO. If the province chooses to ignore the WTO ruling, it could face trade sanctions by Japan and the EU. Alternatively, the Ontario government could modify its FIT program in several ways, including abandoning the domestic content requirements entirely or establishing a two-tiered pricing system under which ratepayers would pay a higher price for electricity generated by facilities with mostly domestically manufactured equipment than for electricity generated by facilities primarily using foreign equipment.
Tesla to raise $830 million, pays off DOE loan
Enjoying is first quarterly profit ever in the first quarter of 2013, electric vehicle (EV) maker Tesla Motors, Inc. (Palo Alto, CA) has announced plans to raise approximately $830 million in a stock and debt offering and has completed the process of paying off the company’s $465 million federal loan. Tesla founder Elon Musk, who already owns 27.5% of the company, plans to buy an additional 1.2 million shares for about $100 million as part of the deal. Following the announcement on May 16, the price of Tesla shares increased 8.4% to $92 per share in after-hours trading. The decision to raise more capital now “is a smart move because the company is smoking hot in the stock market,” Thilo Koslowski, an analyst at technology research firm Gartner, Inc., told the Los Angeles Times. In regulatory filings, Tesla said that the $465 million loan from DOE, which the company paid off nine years early, was instrumental in helping it develop the Model S EV, which has been well received by automobile industry analysts and wealthy car buyers.
$120 million in funding for Cape Cod solar projects
Broadway Electrical Co. Inc. (Boston, MA) announced that its financial partner, Rockland Capital, has closed on debt financing of $120 million to support the development of 37 MW of solar energy systems on Cape Cod and Martha’s Vineyard, including 24 MW for member municipalities of the Cape and Vineyard Electric Cooperative. Deutsche Bank and Key Bank will provide the financing in a deal that was modified from the original contract language to give Broadway Electric extensive rights in the event that the cooperative defaults on the projects. Most of nine towns and entities involved in the projects have reportedly signed off on the new language. The original deal encompassed the development of 50 MW of solar power systems, but some projects were removed from the list because of problems with certain rooftops, concerns about clear-cutting, and other property-related issues.
Gehrlicher Solar raises €85 million in financing
An international group of banks led by Germany’s BayernLB has provided financing totaling €85 million (about $110 million U.S.), including €30 million in guarantees, over a period of two years to Gehrlicher Solar AG (Donach, Germany), a global developer of solar photovoltaic (PV) projects. In addition, Bayern Mezzaninekapital GmbH & Co. KG has extended mezzanine capital of €6 million to Gehrlicher Solar for the same period. “In spite of a very tough industry environment, we believe more than ever in the long-term potential of photovoltaic, and that ultimately convinced our finance partners too,” said Klaus Gehrlicher, the company’s founder and CEO, in announcing the financing on May 16. Gehrlicher Solar has subsidiaries and joint ventures operating in Brazil, the Czech Republic, France, Great Britain, India, Italy, Romania, Spain, South Africa, Turkey, and the United States.
Alterra, EDC form geothermal JV
Renewable energy developer Alterra Power Corp. (Vancouver, B.C.) and Philippines-based geothermal energy company Energy Development Corp. (EDC) have formed a joint venture to pursue the development of the Mariposa geothermal energy project in Chile and to share in three geothermal concessions held by Alterra in Peru. Under the agreement, EDC will fund 100%, earning 70% in interest, of the next $58.3 million in development costs for the Mariposa project, which is located about 300 kilometers south of Chile. The project consists of the Laguna del Maule and Pellado concessions, encompassing a total of 104,000 hectares of surface area and, according to Alterra, offering a potential electricity generating capacity of about 320 MW. Alterra has conducted extensive exploration and infrastructure work at Mariposa, including the drilling of three slim-hole wells and the construction of a 26-kilometer access road.
Siemens receives 100 MW turbine order
Eskom, the national utility in South Africa, has placed an order with Siemens Energy (Erlangen, Germany) for 100 MW of wind turbines to be installed at the Sere wind power plant on the west coast of South Africa. Under the contract, Siemens will deliver 46 units of the model SWT-2.3-108 turbine to the Sere site, beginning in the second half of 2013. The SWT-2.3-108 turbine has an output of 2.3 MW, with a rotor diameter of 108 meters and a tower height of 115 meters. The facility is expected to start up operations during the first half of 2014. The contract represents the second wind turbine order for Siemens from a project developer in South Africa.
Lux: Solar PV market to rebound strong
After a difficult couple of years, the market for solar PV power will bounce back modestly to reach 35 gigawatts (GW) of total installations in 2013 and then ramp up more rapidly to reach 61.7 GW in 2018, according to a recent report by Lux Research (Boston, MA). The report, titled Market Size Update 2013: Return to Equilibrium, projected that market forces will prompt a compound annual growth rate (GAGR) of 10.5% for the solar PV market over the next five years, leading to a $155 billion market in 2018. “A manufacturers’ nightmare is turning into a long-term boon for the industry,” said Ed Cahill, a Lux research associate and the lead author of the report. “Record low prices pushed gross margins to near zero or below, but they’ve made solar installations competitive in more markets. Supply and demand will come back into balance in 2015, easing price pressure, returning manufacturers to profitability and restoring the industry to equilibrium,” he added.
CCEMC to provide $50 million for clean fossil
The Climate Change and Emissions Management Corp. (CCEMC; Edmonton, Alberta), a non-profit established by Alberta regulation to facilitate climate-change response actions in the province, is offering up to $50 million to fund research and development projects that can reduce emissions from fossil fuel production. Eligible projects will be those that reduce emissions across the fossil fuel value chain, from extraction and preparation to upgrading and refining and other types of processing. The maximum that CCEMC will contribute to an individual project in this round of proposals is $10 million, including up to one half of a project’s eligible expenses. CCEMC said that it will not match other government funds, including offset credits, or in-kind contributions.
