Bloomberg New Energy Finance - Week In Review

This Week In Review was sent on Tuesday 23 September.

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CLIMATE SUMMIT TO HOLD SWAY FOR DAY AS ABENGOA, BARCLAYS STIR UP GREEN BOND MARKET

Today, US President Barack Obama joins more than 100 world leaders in New York for the United Nations summit on climate change.

The brainchild of UN Secretary-General Ban Ki-moon, the summit is meant to help propel the negotiations on a draft global agreement, which has been in a state of limbo up until now. The day-long summit is significant in that an agreement needs to be reached in time for another round of talks to be held in Lima later this year, followed by a formal accord in Paris in 2015.

Such is the sheer number of representatives estimated to speak at the summit – 125 – that each of them has been limited to just four minutes. Conspicuous by their absence will be India’s Prime Minister Narendra Modi and Chinese premier Li Keqiang – both representatives of fast-growing countries with a burgeoning population and energy issues. China is currently the world’s largest greenhouse gas emitter, with India not far behind. 

Rather than seeking a legally binding pact like the 1997 Kyoto Treaty, which the US never ratified, the UN this time wants countries to offer promises of specific action to curb the release of carbon dioxide and other such polluting gases. All this action is aimed at stopping average global temperatures from rising more than 2 degrees Celsius from pre-industrial levels, according to the scientific consensus put forth by the Intergovernmental Panel on Climate Change.

All that you need to know and more about the climate talks to be held today can be found in a white paper released by Bloomberg New Energy Finance, and titled “The data behind the UN deadlock: a need-to-know guide”.

While world leaders will, hopefully, pledge action, some companies and institutions are already doing their bit to help prevent global warming by way of issuing climate bonds. Climate bonds, or green bonds, are issued in order to raise finance for clean energy projects, and this last week saw plenty of activity on that front.

Spanish energy and environment company Abengoa is to issue its first green bond, to raise EUR 500m ($642m) to finance projects. The bond, maturing in 2019, will be offered in dollars and euros to institutional investors, Abengoa said on Monday.

Abengoa’s issue will also be Europe’s first high-yield green bond, the company said on its website, adding that the proceeds will be used for projects comprising renewable energy, water, power transmission, energy efficiency, bioenergy and waste-to-energy plants.

Barclays also said it plans to invest at least GBP 1bn ($1.6bn) in green bonds by November next year. The bank will buy debt that is designed to raise money for low-carbon projects from issuers including the World Bank, it said on Monday in an e-mailed statement. Its current green-bond portfolio is worth about GBP 430m.

“The participation of strategic investors such as Barclays in the green bond market will continue to bring scale and diversity to the market and help mobilise more capital for climate-friendly projects,” Madelyn Antoncic, vice president and treasurer at the World Bank, said in the statement.

Bloomberg New Energy Finance estimates that the market for green bonds may triple in size this year to more than $40bn. 

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After latest feed-in tariff statistics, Japan wind installations will likely reach 186MW by year-end: BNEF

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Q&A of the week

Solar atlas vital for renewables planning 

Vaisala Oyj, a Finnish maker of meteorological equipment, is making a foray into renewable energy in India, a country where solar is on a high, thanks to its newly-elected government that has published ambitious expansion plans for the sector. 

India, under Prime Minister Narendra Modi, plans to lift its solar target fivefold to 15 gigawatts by 2019. Vaisala was recently chosen to create a solar atlas for India. According to its pact with the Centre for Wind Energy Technology, a research and development institution that forms part of the Indian Ministry of New and Renewable Energy, Vaisala unit 3Tier will work with CWET to develop information that will enable India to meet its ambitious solar target. 

“The aim is basically to find out where and how to invest in India to take through that utilisation of its solar energy potential,” said Kjell Forsen, Vaisala’s president and chief
executive. He spoke with Clean Energy & Carbon Brief. 

Q: What benefits can forecasting bring to a business in renewable energy? 
A: Well, it makes running the wind park safer. Also, we’re talking risk mitigation here, for instance, you need to know when the wind is going to be too heavy. Or you need to know when lightning is approaching, you may need to take measures. Also, running the electrical grid and knowing how this variable power output from a wind or a solar park will behave in the near future – that is critical. 

Q: Would you say it’s easier to forecast for regions than for countries? 
A: We do all variations. We do low forecasting for an individual wind park site [to which] we can add on our sensors to further improve accuracy or we can make it nation-wide or for a bigger region. There’s a market for both. For instance, energy traders are typically interested in nationwide forecasts or state-wide. 

Q: Can you talk more on energy trading? 
A: That’s extremely important input for energy traders: to know how…

This is an excerpt from the Clean Energy & Carbon Brief published weekly. To subscribe to the Clean Energy & Carbon Brief, click here.

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