Bloomberg New Energy Finance - Week In Review

Steps forward in solar as spotlight turns to sector’s "largest" company 

Solar companies from Hong Kong to France last week made upbeat noises about the outlook for their sector, while Bloomberg New Energy Finance released a report looking at the business and strategy of one player in the sector, Hanergy Thin Film. 

GCL-Poly Energy Holdings, the biggest maker of polysilicon and wafers used in solar panels, said it expects to generate its first profit in three years after demand for its materials rose along with record installations of photovoltaics.

The Hong Kong-based manufacturer said it expects a profit of at least HKD 1.8bn ($232m) for 2014 compared with a loss of HKD 664.3m the previous year, according to a stock exchange filing made 4 March. It cited a “modest recovery” in the solar market, and cost reductions.

Bloomberg New Energy Finance says the decreasing supply glut in polysilicon and wafers shrunk last year, and that has been good news for GCL. The price of polysilicon in 2014 fluctuated between $19/kg and $22/kg, much stronger than the $16-18/kg in 2013. GCL also appears to have got its costs under control, and has benefitted from the beginning of trade barriers against Chinese import of US polysilicon. Those have hit US producers Hemlock and REC, according to Bloomberg New Energy Finance.

Also last week, Solairedirect said it plans to raise EUR 175m ($193m) through an initial public offering in Paris before the end of June as the French solar-park developer expands outside its home market.

The IPO on Euronext, which will be managed by Citigroup and Deutsche Bank, will allow Solairedirect to retain bigger stakes in the parks it develops and operates, the Paris-based company said in a statement on 5 March.

Solairedirect, which operates, or is developing, a total of 57 solar parks, plans to expand in Latin America, Africa, the US, the Middle East and Southeast Asia as well as in France.

The main challenge for Solairedirect will be to drive down prices so that projects can deliver returns without subsidies. Bloomberg New Energy Finance believes this will be possible, especially in India because of the tender process, and in the Caribbean and Chile because of high electricity prices.

In its APAC PV Market Outlook, Bloomberg New Energy Finance estimates that 2014 global PV installation totalled between 45.1GW and 47GW. The PV is market is expected to grow strongly once again in 2015, with installations between 52.7GW and 58GW.

Last week Bloomberg New Energy Finance looked in an Insight Note at the meteoric rise of Hanergy Thin Film, which has seen its stock market capitalisation soar from $4.4bn in July 2014 to more than $34bn in March 2015. On this measure, it is now the largest solar company in the world.

The main items of value for Hanergy Thin Film are thin-film technologies, and its project development pipeline in China. The note said that China is a large PV market, at some 13GW in 2014 (about $17bn), but that Hanergy Thin Film has disclosed "very little about its participation" it it.

Elsewhere, there was some positive news for the future of offshore wind in the US last week. Deepwater Wind received $290m in financing that will allow it to begin building its Block Island offshore wind project in Rhode Island, the first one in the US.

"We’ll have steel in the water this summer," chief executive officer Jeff Grybowski, a former chief of staff to the governor of Rhode Island, said in an interview with Bloomberg News last week. "It’s an enormous step for the project, and it’s an equally enormous step for the offshore wind industry in the US."

Other US offshore wind projects have struggled to reach completion. The $2.6bn Cape Wind project off Massachusetts has been under development for 13 years, stalled by legal battles with local fishermen and Native American tribes. 

According to an update on the Cape Wind project in this Research Note, recently two Massachussetts utilities – National Grid and NSTAR – terminated their power purchase agreements with the 438MW offshore wind project, based on its failure to secure financing for year-end 2014.

Bloomberg New Energy Finance says Cape Wind is not “yet dead” but its options for life-support – securing financing without an off-take agreement, or challenging the utilities’ decision in court – are daunting.

Deepwater Wind succeeded where Cape Wind failed by choosing a less controversial site and a more manageable size, according to Bloomberg New Energy Finance. This is a major milestone.

UK solar market to reach 8GW this year, 10.5-12.6GW by end of 2017, according to BNEF estimates

UK solar market to reach 8GW this year, 10.5-12.6GW by end of 2017, according to BNEF estimates

Q&A of the week

China could lift hydro market back to 40GW in 2015

Hydropower has been attracting investment equivalent to about 25GW of new capacity per year globally since 2011, according to Voith, the closely held German company that is one of the 'big five' makers of hydro-electric turbines.

Roland Munch, chief executive officer of Voith Hydro, said that 2015 could see a spurt in hydropower investment, to 'above 40GW', as contracts are awarded for two huge Chinese projects.

His estimates for the annual capacity put out to contract would make hydro a strong third among renewable power technologies worldwide, behind wind and solar photovoltaics, which added 48GW and 46GW respectively in 2014.

Munch said that he sees an important future for hydro as 'a flexible energy generation option to stabilse the grid, to balance wind and solar', as the latter two technologies expand their shares of electricity produced. 

Q: The timing of very large projects in hydro-electric means that it is quite difficult to tell whether the underlying trend in the market is growing, or flat with ups and downs, or indeed past its best. What trend do you see?
A: We have seen over the last decade a base market for hydropower of approximately 20GW, and then comes China. If we look at the contracts awarded rather than the capacity installed, 2006-08 saw tremendous activity in China, enough to push the global market to more than 40GW per year. It was a similar picture in 2010, due to the 11.3-gigawatt Belo Monte project in Brazil. After that, the last three years, we have been back to the level of about 25GW awarded per year for the global market, with China responsible for 5-7GW of that. In 2015, we expect a new peak above 40GW, with two big projects – Baihetan and Wudongde – from Three Gorges Corporation totalling 26GW likely to be awarded. And for the years after that, we see a global market of about 25-28GW per year.

Q: Which have been the most active markets for hydropower worldwide, other than China?
A: Japan has...

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