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Look For M&A Activity In Renewable Energy

According to Andrew Redinger, managing director and head of KeyBanc Capital Markets’ utilities, power and renewables group, market pressures caused by the packaging of energy assets into specialized C-­corporations called “yieldcos” are likely to produce an increase in merger and acquisition (M&A) activity for these assets in 2014.

Internal Revenue Service rules prevent renewable energy assets from enjoying the same tax advantages status of real estate investment trusts (REITs) and master limited partnerships (MLPs). Until rules change, Redinger advocates yieldcos - holding companies for energy assets - as financial vehicles for accessing low-cost equity capital.

“An asset with a 20-year power purchase agreement with an investment-grade takeoff that is non-cyclical in nature is an attractive asset class,” Redinger says, adding that it’s more attractive than many real estate assets eligible for REIT and MLP status.

According to Redinger, the yieldco concept has enabled traditional and renewable energy developers to package power assets into C-corps that can avoid paying taxes for a period of time and access attractively priced equity capital. He cites NRG’s packaging of its natural gas, wind and solar energy assets into a yieldco with shares that could be publicly traded as having a transformational effect on the way private equity views renewable energy.

NRG’s yieldco, NRG Yield, made its initial offering of common stock in July at a price of $22 per share and has risen consistently since then, trading at over $38 per share at one point on Dec. 5. NRG Yield says its 1.32 GW portfolio includes three natural gas or multi-fuel facilities, eight utility-scale solar and wind generation facilities, and two portfolios of distributed solar facilities. According to NRG Energy, its wholly owned subsidiary contributed $83 million to its $1 billion revenue in the third quarter of 2013.

The success of the concept, Redinger maintains, will drive an M&A trend for yieldcos next year as some investors seek exits and others endeavor to build up or otherwise tailor their renewable energy assets.

For example, some developers will want to build yieldcos for their renewable energy assets, others will try to sell their smaller assets to existing yieldcos, and still others will decide it’s time to get out and sell their assets to others.

“Assets are going to change hands,” Redinger says. “I’m looking at 2014 to be the year of M&A.”

- Michael Puttré

 

The DOE’s Loan Program Office Bets On U.S. Solar

As 2013 drew to a close, there were approximately 10.25 GW of solar capacity installed in the U.S. About 10% of that total was funded by the Loans Program Office (LPO) of the U.S. Department of Energy (DOE). According to Peter Davidson, executive director of the LPO, the significant growth of the solar sector is due in part to bets placed by the DOE in the form of loans to utility-scale solar power projects banks would not touch.

While a victory lap may be in order, Davidson says the LPO has big plans for this year, including upcoming loan programs that have the potential of influencing the future development of hybrid and distributed generation (DG) solar.

The LPO currently consists of three separate programs: Section 1703, Section 1705 and Advanced Technology Vehicles Manufacturing. The first two, specified in the Energy Policy Act of 2005, authorize the DOE to back innovations in clean energy technology that private-sector banks walk away from due to what they perceive as high risk.

In practice, the 1705 program, which had a sunset of September 2011, had a tremendous impact on the solar sector. According to Davidson, over 80% of the projects that received funding under that section were for solar. In particular, the growth of utility-scale has its origins in 1705 loans.

In terms of utility-scale solar, the LPO has backed 2.8 GW of PV and concentrating solar power plants in the U.S. That’s 22% of the nation’s utility-scale solar capacity and pipeline. Since the 1705 program’s sunset in 2011, there have been 10 new 100+ MW utility-scale PV projects greenlit in the U.S. with private financing. Davidson says nothing makes him happier than getting out of the way for private capital.

“The LPO’s goal as a lender is to prove the technology and then step aside,” he says. “Fund it. Prove it. Get out.”

While the sun has set on the successful 1705 program, Davidson says funds remain under the 1703 program for new energy solicitations. The office is currently finalizing the $8 billion solicitation for advanced fossil fuel projects. An important goal of this solicitation is the development of hybrid generation projects that incorporate renewable energy capacity with existing fossil-fueled power plants.

In addition to the $8 billion for advanced fossil energy, Davidson says money remains under the 1703 authorization for a dedicated renewable energy loan program this year. In particular, the LPO is interested in backing projects for integrating DG capacity into the grid. It seems likely that DG solar will be a beneficiary of such programs.

- Michael Puttré

 

DOE Awards $13M For Solar Manufacturing

The U.S. Department of Energy (DOE) has awarded over $13 million for five projects in an effort to develop domestic photovoltaic and concentrating solar power (CSP) manufacturing and commercialization efforts. Private sources are providing about $14 million in cost share funds to at least match the DOE awards for each individual project.

Part of the DOE’s SunShot Initiative, the awards include the following:

• Abengoa Solar is receiving $1,943,463 - plus $1,943,463 cost share - for demonstrating new manufacturing and assembly technologies for use in CSP parabolic trough systems.
• PPG Industries Inc., in partnership with Flextronics International, is receiving $2,148,729 - plus $2,148,733 cost share - to design and pilot a rapid PV module assembly process that replaces labor-intensive steps with automation.
• Solaria Corp. is receiving $2,007,474 - plus $3,011,211 cost share - to cut costs for its low-­concentration silicon PV modules by automating manufacturing process steps.
• SolarWorld Industries America Inc. is receiving $2,438,126 - plus $2,461,316 cost share - to incorporate an advanced light management system into its PV module production process.
• Suniva Inc., in partnership with Georgia Institute of Technology, is receiving $4,499,678 - plus $4,918,986 cost share - to deploy a low-cost, high-efficiency silicon PV cell technology into the marketplace within three years.

 

Double-Digit Growth In Global PV Seen For 2014

Analysis from IHS attempts to somewhat dampen some expectations for global solar photovoltaic installations in 2014 without wanting to seem like a wet blanket. The company’s latest quarterly update from 2013 on solar demand expects installations to be in the range of 40-42 GW this year and makes a point of disagreeing with recent forecasts that it could reach 55 GW.

Installations hit 35 GW last year, IHS says - a forecast in line with earlier expectations. Thus, global new PV installations are expected to increase about 15% this year.

According to Ash Sharma, senior director for solar research at IHS, there are significant risks, particularly in China, Japan and emerging markets, that could serve to hinder new PV capacity. For example, the lack of policy and incentive frameworks in China to support distributed generation, combined with the lack of experienced installers and relative expense of building rooftop installations, is expected to prevent the government’s National Development and Reform Commission from reaching its 12 GW target for this year.

In terms of the supply chain, IHS says based on the bottoms-up analysis of more than 100 countries, it does not expect that a shortage of PV component supply will occur in 2014, nor does it expect a major increase in prices.

 

U.S. Solar PV Pipeline Grows to 43 GW

The pipeline of solar photovoltaic projects awaiting completion within the U.S. has grown by 7% in the last year, and now exceeds 43 GW, says a report from NPD Solarbuzz. According to the report, the growing project pipeline remains a key factor in driving the positive outlook for the U.S. PV industry, which is now forecast to become the third-largest solar PV market globally this year, after China and Japan.

Moreover, small to medium projects - those up to 30 MW in size - are taking over from large projects - those in excess of 100 MW - as the main drivers of U.S. PV pipeline growth, NPD Solarbuzz says.

Currently, a few mega-scale PV projects are dominating short-term U.S. solar PV deployment. These projects include the Mount Signal Solar, Copper Mountain, Calexico, Desert Sunlight and Topaz projects. According to the report, the 10 largest U.S. solar PV projects account for more than 5 GW of new solar PV capacity coming online during the next three years.

However, NPD Solarbuzz says the focus of solar PV project developers has now shifted to project sizes below 30 MW. During the past 12 months, the number of projects in the U.S. pipeline in this category has increased by 33% to more than 2,100 projects.

NPD Solarbuzz says developers of solar PV projects in the U.S. have to transition more quickly from the planning stages of a project and into construction in order to qualify for the 30% solar investment tax credit, which is due to expire at the stroke of 2017.

 

PV Materials Move
On Asian Demand

Analysis from Frost & Sullivan says competitiveness of solar photovoltaic power due to continuous technological innovations and efficiency improvements, leading to lower costs per watt, spurs the Asian PV materials market. This market earned revenues of $1.94 billion in 2012 and estimates this to reach $4.80 billion in 2018, the report says.

China, Taiwan and Japan together account for over 70% of the global solar PV cell or module production, the report says. According to Frost & Sullivan, the close relationship between module manufacturers and material suppliers improves the material suppliers’ insight into the market and ensures timely delivery, as well as enhanced product offerings.

At the same time, the tightening of incentive policies has slowed down the solar sector and, in turn, the PV materials market, Frost & Sullivan says. Sudden changes in government support plans can harm the industry, as the uncertainty deters both investors and manufacturers. As a result, Frost & Sullivan expects the PV materials market in Asia to witness only moderate growth between 2012 and 2015.

 

PV Mounting Market Poised For Growth

The North American PV mounting systems market is poised to grow 67% between 2013 and 2018 to account for more than $1.5 billion, according to a new report from Miami-­based Wolf Research. This market value growth will be strongest in the rooftop segment.

According to the report, the compound annual growth rate (CAGR) between 2013-2018 for the flat roof-mount market - primarily commercial buildings - will be 17.5%. For the pitched roof-mount market, the CAGR is expected to be 16.1%.

By contrast, ground-mount, the dominant segment in 2013, will experience slower growth during the next five years as utility-scale solar energy projects slow down, but is expected to still account for 37% of the revenue opportunity in 2018, Wolf Research says.

According to the report, the top three market share leaders for PV mounting systems in North America during the first half of 2013 were Schletter, Unirac and IronRidge in terms of MW capacity of supported solar installations. Schletter was also the market leader in ground-mount systems; Zep Solar was the leader in pitched-roof installations; and IronRidge was the leader in flat-roof installations.

Significant market share shift for established as well as emerging competitors underscored the need for continued innovation and controlling manufacturing costs, Wolf Research says. The healthy PV market in North America is attracting new competitors from overseas and domestic start-ups alike, resulting in increasing price competition and investment in new production, as well as accelerating product innovation and differentiation.

 

Solar And Natural Gas To Advance Hand-In-Hand

Unsubsidized utility-scale solar electricity will become cost-­competitive with gas by 2025, according to a new report from Lux Research. Moreover, the analysis firm says, increased gas penetration actually benefits solar by enabling hybrid gas/solar technologies that can accelerate adoption and increase intermittent renewable penetration without expensive infrastructure improvements.

The levelized cost of energy (LCOE) from unsubsidized utility-scale solar will close the gap with combined cycle gas turbines to within $0.02/kWh worldwide in 2025, a Lux analysis of 10 global regions found. Solar’s competitiveness is led by a 39% fall in utility-scale system costs by 2030 and accompanied by barriers to shale gas production - anti-fracking policies in Europe and high capital costs in South America.

Lux Research analysts created a bottom-up system cost model and analyzed LCOE to evaluate solar, gas and hybrid technologies’ competitiveness under different gas price scenarios across 10 regions around the world through 2030.

Solar can be competitive with natural gas as early as 2020 if gas prices are between $4.90/MMBtu and $9.30/MMBtu, depending on the solar resource, Lux says. In the report’s scenario of gas prices above $7.60/MMBtu, solar will be broadly competitive by 2025 in all 10 regions.

 

Upsolar Brings Rooftop Leasing To France

Upsolar has introduced its Pass Locasolaire program that enables homeowners in France to lease the space on their rooftops for solar electric systems.

Under the program, qualifying property owners can host an Upsolar rooftop PV installation of 6 to 9 kW that will feed power into the local grid. Hosts pay EUR 500 for the first year, after which they receive up to 15% of the generated power’s value. Alternatively, participants will have the option to purchase their systems after one year of operation.

While rooftop lease programs have been a key part of growing the residential solar market in other regions, this model has been slower to catch on in France, Upsolar says.

 

SolarWorld Acquires Manufacturing Plants

SolarWorld AG says it has a deal to acquire Bosch Solar Energy’s solar assets, including its cell and manufacturing operations in Arnstadt, Germany, along with about 800 employees. SolarWorld says the acquisition, which it expects to complete in February, will boost its annual global production capacity of crystalline-silicon wafers, cells and modules to over 1 GW.

The company will operate major sites concentrating on three product categories: polycrystalline cells and modules in Freiberg, Germany; monocrystalline cells and modules in Arnstadt; and high-wattage cells and modules in Hillsboro, Ore. The newly formed SolarWorld Industries-Thuringen GmbGH will operate the Arnstadt facilities.

 

Spire Installs PV Module Line In Eastern Europe

Spire Corp. has installed its photovoltaic module manufacturing line in Eastern Europe. The line will be used to produce PV modules for the local regional market.

The company says it is providing ongoing technical support for the training and ramp-up of the line.

 

SunEdison Partner Boosts DG Solar Fund

SunEdison says De Lage Landen Financial Services (DLL) has increased its investment in a sale-leaseback fund to over $100 million. The fund, created in December 2012, provides financing for distributed generation (DG) solar photovoltaic projects SunEdison develops in the U.S.

SunEdison says the fund is focused on commercial and municipal solar energy projects. Providing low-cost funding creates new markets and increases the customer base for solar energy, the company says.

 

Toshiba To Launch German PV Business

Toshiba Corp. says it will enter the photovoltaic solar power business in Germany with a new on-site consumption model for apartment buildings. The company says it is responding to rising electricity rates in the region with an on-site consumption model that will operate independently of the feed-in tariff system.

Toshiba says it plans to launch the business in March, installing systems in apartment buildings in Villingen-Schwenningen and Ostfildern, in Baden-Wuerttemberg, operated by real estate company GAGFAH. The systems will be funded and owned by a group of pension funds.

The German branch of U.K.-based Toshiba International Europe (TIL) will install Toshiba’s PV systems in family apartments owned by GAGFAH, and operate and manage them. TIL will purchase the generated power from the pension funds and sell it to the apartment buildings’ residents at a lower rate than that charged by electric utilities. When the PV system is not operational - on cloudy days and at night - TIL will purchase electricity in the wholesale market and sell it to residents at the same rate as electricity from the solar power system.

Toshiba will initially install 3 MW solar power systems serving 750 apartments and plans to install over 100 MW in Germany by 2016. Going forward, the company says it will also install stationary batteries and integrate a micro energy management system with the goal of developing a self-sufficient model for on-site consumption that delivers solar-power electricity day and night.

 

Renewable Energy
Siting Guide Released

A new primer jointly developed by the U.S. Department of Defense (DOD) and the Natural Resources Defense Council (NRDC) addresses core issues for developing renewable energy sources on or around military ranges, airspace and installations. The guidelines are intended to help developers better evaluate solar and wind projects and avoid potential conflicts with military operations or sensitive environmental areas.

The new renewables siting considerations were developed in concert with the Renewable Energy and Defense (READ) Database, a geographic information system tool NRDC created that combines geospatial data on DOD installations, military flight training routes, radar and other information, along with data on environmentally sensitive areas, national monuments and other protected lands.

 

Solar Safety Issues Addressed In New Guide

The popularity of solar photovoltaic rooftops has created a need for guidance on their installations, given many building codes in Canada do not address relevant PV safety and structural issues. A lack of guidance in this area can expose installers and first responders, such as firefighters needing rooftop access to residential and non-residential buildings, to unnecessary risks.

The new Canadian Standards Association (CSA) publication, “SPE-900, Solar Photovoltaic Rooftop-­Installation Best Practices Guideline,” provides guidance and best practices for the design and installation of PV rooftop systems.

Published by the CSA Group, SPE-900 addresses fire risks, lightning strikes, maintenance, structural guidelines, loading conditions, PV modules and racking, waterproofing, and electrical issues.

As a future development, the CSA has worked with stakeholders and are evaluating the need to develop the SPE-900 into a standard for PV installation for rooftop and ground mount. In evaluating this opportunity, the CSA says it would look into any existing documents related to fire and building construction so that conflicting requirements are avoided.

 

Utilities Drive Capacity
In Northeastern U.S.

According to the latest installment of its region-by-region report of U.S. renewable energy capacity by the American Council On Renewable Energy (ACORE), renewable energy is fast becoming more cost-competitive in the Northeast.

Three large utilities in Massachusetts, for example, recently signed long-term contracts to purchase renewable energy at less than $0.08/kWh, below the cost of most conventional sources in the region.

According to the report, there are renewable energy targets in every northeastern state, many of which have solar energy carve-outs. New York and Pennsylvania are first and second, respectively, in both renewable power with and without hydropower.

 

CECET Opens Solar Panel Testing Lab In N.Y.

Intertek’s Center for Evaluation of Clean Energy Technology (CECET) subsidiary has opened the PV Certification Testing Lab in Cortland, N.Y. The New York State Energy Research and Development Authority (NYSERDA) provided a portion of the funding of the center under the state’s N.Y.-Sun initiative launched by Gov. Andrew Cuomo.

The facility will test generating capacity; performance over time; impacts of snow, extreme temperature and other adverse weather conditions; and other aspects of solar generation performance. Lab equipment will also perform electroluminescence testing, which can be used to spot stress cracks and other minute damage to panel composite materials. Specialized ovens will be used to test for accelerated aging in heat and cold, simulating years of exposure in weeks.

According to NYSERDA, the nearest solar panel testing laboratories are located in the southeastern U.S. and California. Locating a testing site in New York will allow scientists to test equipment performance during the extreme winter and summer conditions in the Northeast, as well as offer ease of access and convenience to solar panel manufacturers based in this region, the state agency says.

 

TVA To Increase Renewables Capacity

The Tennessee Valley Authority (TVA) is offering a total of 126 MW of renewable energy capacity in the coming year through a variety of power-purchasing programs for homes, businesses and commercial installations, marking a 7% increase over 2013.

The federal agency says it is revising its three renewable energy programs in response to increasing demand for solar energy, with a majority of new capacity offered at prices competitive with wholesale costs. Those changes are as follows:

• Doubling the residential capacity set aside in the Green Power Providers program, making 10 MW of capacity available for these small renewable projects of less than 50 kW;
• Increasing capacity for midsize solar projects by 60% in the Solar Solutions Initiative (SSI) program, which focuses on installations from 50 kW to 1 MW;
• Offering 16 MW of capacity through SSI this year up from 10 MW in 2013 - the TVA also will extend the program to 2015; and
• Removing the 50% cap on any one technology under the Renewable Standard Offer program, which supports 100 MW of large projects between 1 MW and 20 MW.

With 2014 incentives, the TVA will pay $0.14/kW for solar energy through Green Power Providers and $0.10/kW through SSI - a price reduction of 26% and 17%, respectively, from 2013. The TVA says it will continue to purchase output under the Renewable Standard Offer program at prices competitive with the market.

The TVA says it currently has 128 MW of operating or committed solar projects under contract at more than 2,000 locations in its jurisdiction. The TVA’s renewables portfolio also includes 1.5 GW from wind and 60 MW from biomass.

 

BrightSource Energy Names New CEO

BrightSource Energy Inc. has named David Ramm to the position of CEO. Ramm previously served as executive chairman for the company’s board of directors and will continue to serve as chairman.

Ramm assumes the role of CEO as the company seeks to transition itself from a U.S. concentrating solar power project developer to becoming a global solar thermal technology provider that offers development support, as well as engineering and operational services.

 

Meyer Burger Receives PV Printing, Inspection Order

Netherlands-based Roth & Rau B.V., a member of the Meyer Burger Group, has received a contract from a U.S. customer to supply PiXDRO JETx inkjet printers for printing high-performance monocrystalline solar cells. The contract also includes wafer inspection systems from Hennecke Systems, another member of the Meyer Burger Group.

The inkjet printing and inspection systems are planned for use in a 100 MW production facility in Malaysia. Meyer Berger says the printing systems are capable of front and rear printing of up to 900 wafers per hour. R