Bloomberg New Energy Finance - Week In Review

This Week In Review was sent on Tuesday 20 May.

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Against the backdrop of General Electric's USD 17bn bid for Alstom, and Siemens' plan to make a counter-offer, the French government gave itself the power last week to block foreign takeovers in industries it considers strategic. 

A decree signed on 14 May by economy and industry minister Arnaud Montebourg broadened a 2005 law to make government approval mandatory for foreign investment in areas such as energy, equipment, plants and transportation critical for national security. 

The new French decree puts pressure on GE to improve its offer, which Montebourg characterised as an "absorption" of Alstom rather than an alliance like the one that he said Siemens is proposing. "There are talks with Siemens that are very constructive, which is not the case with GE. We want alliances that give our companies a global scale. We don’t want dismantling," he said.

Bloomberg New Energy Finance published its 'First look at sides of the GE-Alstom-Siemens triangle' at the beginning of the month. This Analyst Reaction looks at the main bones of the two proposals and the implications for the grid, storage, nuclear, fossil-fuel, wind, hydro-electric and transport businesses.

Staying with France, earlier this month the government announced the GDF Suez led consortium as the sole winner of its second offshore wind tender: it bagged the 500MW Le Tréport and the 500MW Iles d’Yeu et de Noirmoutier sites, where it will deploy 125 Areva 8MW turbines. In the first tender, developers for four projects with total capacity of 1.9GW were selected in 2012.

This raises Areva's total European offshore wind pipeline to 3.3GW and cements its second position after Siemens' 6.3GW, according to Bloomberg New Energy Finance. The latter figure includes the order that Siemens signed last week for the 600MW Gemini wind offshore wind park in Netherlands. The EUR 1.5bn contract also includes services. Alstom, at 1.4GW, is in third position in the market. 

The French government is targeting 6GW of marine renewable energy by 2020 comprising tidal and offshore wind. Bloomberg New Energy Finance expects only around 2GW of offshore wind capacity to come online by 2020, according to our latest analysis captured in the note: "One set all" after second French offshore tender

The other main news in Europe was from the UK, where the Department of Energy and Climate Change proposed that solar projects bigger than 5MW would not receive renewable obligation certificates from next April instead of the previously planned 2017 cutoff. Also, under the new system of contracts-for-difference, solar and onshore wind plants will have to compete with other technologies from October. 

The UK government's ReStats database shows 1.4GW of PV applications pending, with 92% of the capacity coming from applications greater than 5MW. Bloomberg New Energy Finance therefore expects another boom this year in the UK, with 800-1,100MW utility-scale projects coming online before the changes are implemented.

In Asia, China announced very aggressive targets for renewables for 2017: it aims to more-than-triple solar capacity to 70GW, have 150GW of wind power, 330GW of hydro power and 11GW of biomass power. The world's largest investor in clean energy also aims to operate 40GW of nuclear plants by 2015 and 50GW by 2017.

In India, Blackstone-backed Hindustan Powerprojects said it plans an initial public offer of shares in its solar unit. Goldman Sachs, UBS and Credit Suisse have been appointed managers to the offering.

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Global asset finance for large-scale solar projects hit another historical low in Q1 2014 at $6.7bn

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Q&A of the Week

Moniz: Future needs gas with carbon capture

Natural gas power plants will need to be fitted with carbon capture systems if they are to play a role in a low emissions energy future, US Energy Secretary Ernest Moniz said at Bloomberg New Energy Finance’s energy summit in New York on 8 April. 

Moniz told Michael Liebreich, chairman of the advisory board at Bloomberg New Energy Finance, the US is “half way” to meeting a goal to reduce greenhouse gas emissions by 17% at the end of the decade, compared with 2005 levels. 

The use of natural gas over coal for power generation has largely helped cut emissions in recent years, he said. Still, Moniz pointed out this trend was market-driven by low gas prices, and more will need to be done to make the fuel lower-carbon.

Michael Liebreich: How can you pursue a climate action plan and accelerate a transition to clean energy, all without requiring new federal legislation? 

Ernest Moniz: The president has made this pretty clear. Right now the climate action plan that we’re executing is one that’s based completely on authorities that we already have. Things like the EPA [Environmental Protection Agency] regulations are a very visible part of that, but it’s also technology innovation. It’s appliance standards. It’s new analyses that can guide policy, especially for energy infrastructure. I would say for the long term, for really driving carbon down, we will ultimately need legislation that is sufficiently robust. 

ML: If you look at the scale of decarbonisation commitments made, is it believable to have an “all of the above” energy strategy, which implies exports of gas and potentially oil, Keystone Pipeline and domestic consumption of fossil fuel?

EM: Sometimes a long-range plan is...


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