Panasonic targets green energy buy-outs
By Jonathan Soble in Tokyo
Published: July 29 2010 11:34 | Last updated: July 29 2010 11:34

Panasonic has placed an Y820bn ($9.4bn, €7.2bn, £6bn) bet on the future of green energy by offering to buy out minority shareholders in two subsidiaries specialising in lithium-ion batteries, solar cells and other environmental technology.

The Japanese electronics group, which is seeking to reduce its reliance on more conventional products such as televisions and refrigerators, on Thursday said it would seek to acquire all the shares it does not already own in Sanyo and Panasonic Electric Works.

It currently owns just over 50 per cent of both companies.

The move is part of an effort by Panasonic and by other Japanese electronics manufacturers to carve out new market niches as profit margins shrink in older businesses and foreign competitors, such as Samsungof South Korea, grab market share with lower prices and increasingly high-quality products.

Panasonic spent Y400bn last year to buy control of Sanyo from an investment consortium led by Goldman Sachs, which had bailed out then-struggling Sanyo in 2006…….

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Australia’s new Prime Minister Julia Gillard has demonstrated strong support for her domestic renewable energy industry.

Sworn in last month to replace previous leader Kevin Rudd, Gillard said she is “committed to Australia’s largest ever investments in solar and other renewables.”

Gillard has not made specific mention of the controversial carbon cap-and-trade system which former PM Rudd had championed.

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A new report from the Renewable Energy Policy Network for the 21st Century (REN21), a body affiliated with the United Nations and the International Energy Agency (IEA), says renewable energy accounts for over half of all new electricity capacity added in the United States and Europe during 2009.

The REN21 report highlights the shift in manufacturing and deployment of these new energy technologies from developed nations to growing ecnomies like China, Brazil and India.

In 2009, China produced 40% of global solar PV and 30% of all wind turbines; a massive increase from 10% in 2007.

However, despite its advances in implementing green power, China’s carbon dioxide emissions also increased in 2009.  It has overtaken the United States and now claims the title of highest emitting nation in the world.

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Last week, President Obama offered a strong show of support for domestic solar power with the offer of $2 billion in loan guarantees for large scale solar projects in the Western United States.

Abengoa Solar is the recipient of the first offer, $1.45 billion to help finance the construction and start-up of a concentrating solar power (CSP) plant in Arizona.  Once operational, the “Solana” plant would add 250MW of electric capacity to the grid, enough to power 70,000 homes and reduce carbon dioxide emissions by 475,000 tons.

A loan of $400 million was also offered to Abound Solar Manufacturing to for the manufacture of thin-film cadmium telluride solar panels, the first time such manufacturing will be deployed anywhere in the world.  When completed in 2013, the manufacturing plant will be capable of producing enough panels to support up to 840MW of new solar every year.

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Worldwide, global venture capital investment in the green tech sector has climbed to $4.04 billion during the first half of 2010.  This represents a 65% increase from the same period last year, and slightly exceeds the investment record set during the “boom year” of 2008.

Data from The Cleantech Group and Deloitte shows that solar energy garnered about 40% of all investments, attracting about $811 million in funding.

“There’s been a very clear resurgence in solar activity and that is largely responsible for the strong quarter,” notes Richard Youngman, head of global research for the Cleantech Group.

Scott Smith, Deloitte’s U.S. clean tech leader believes this VC investment trend will have a positive impact on renewables and low carbon industries.    “The significant strengthening of corporate and utility investment into the clean tech sector, relative to 2009, is very encouraging, given the key role they will play in enabling broader adaptation of clean technologies at scale,” he said in a statement.

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Thanks to the implementation of an industry-friendly feed-in-tariff in 2007, the Italian solar PV market has taken off at a furious pace.

Data from the Interstate Renewable Energy Council (IREC) shows that Italy installed more photovoltaic systems than the entire United States in 2009.  What’s more, by the end of the year, Italy will have installed over 2,500 MW of solar PV power, more than one and one-half times the U.S. total.

Italy is now the world’s second largest solar PV market after Germany.  Unlike Spain, Italy is not planning to remove its feed-in-tariff anytime soon.  It has set a new target of 3,000MW for the next time period of 2011-2013, but will trim the tariffs 18% by Q3 of 2011.  Italy reached its 2010 target of 1,200MW earlier this year.  Most of these new installations are on rooftops or in distributed applications, and according to the Gestore dei Servizi Energetici, almost 1/4 are relatively small (20kW or less).

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According to Global Solar Energy Outlook, a new report published by Pike Research, solar power is expected to reach grid parity by 2013, when its costs will be equal to that of traditional energy sources like coal and oil.

Pike predicts that global solar demand will grow at a compound annual growth rate of 24% between now and 2013.  A confluence of factors, including a new abundance of polysilicon, government stimuli in response to the global economic crisis and increased cost efficiency of solar panel modules, have come together to change solar from a “supply-constrained” to a “demand-driven” industry.

“Solar prices are plunging quickly, and lower pricing will fuel a surge in demand in 2010 and beyond,” says senior analyst Dave Cavanagh.  Cavanagh predicts to see a “significant shakeout amongst solar suppliers in the next two years” as companies face increased pressure due to pricing trends and oversupply of solar modules.

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Oil and gas major Total and Spain-based solar company Abengoa Solar have been appointed to construct the largest concentrating solar power (CSP) plant in the world in Masdar, the carbon-zero city and renewable energy initiative of Abu Dhabi.  Abu Dhabi aims to achieve 7% renewable energy generation by 2020.

Called “Shams 1,” this planned CSP plant will extend over an area of 2.5 square km and have a generation capacity of approximately 100MW.  Once completed, it will be the first of its kind in the Middle East region, and the first CSP plant to be registered with the United Nation’s Clean Development Mechanism (CDM).  This registration will make Shams 1 eligible for carbon credits.

“This project, which will be the first utility-scale, commercial solar power project in the UAE, represents the translation into reality of the vision the Abu Dhabi leadership had for renewable energy in the Emirate,” said Dr. Sultan Al-Jaber, CEO of Masdar.  Looking ahead, Abengoa Solar’s director of international development Michael Geyer believes this project is only the beginning.  “The Middle East,” he said,  “is a region that offers both an unlimited solar resource and infinite site locations for implementation of solar plants in its deserts.”

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With domestic energy demand expected to grow almost 250% by 2028, Saudi Arabia must plan strategically to meet its future needs.  The desert kingdom is looking to renewable energy – specifically solar – to play a bigger role in its domestic energy mix.  Saudi Arabia is aiming generate between 10-20% of its energy from renewables by 2020.

In a recent statement, Saudi Aramco CEO Khalid A. Al-Falih warned “if no efficiency improvements are achieved, and the business is as usual, the oil availability for exports is likely to decline to less than seven million barrels per day by 2028, a fall of three  million barrels per day while the global demand for our oil continues to rise.”

The Kingdom is planning to invest nearly $80 billion to boost its power supply to 60,000MW, with solar energy likely to be the largest new contributor.  By 2020, solar technology could satisfy up to 5GW of Saudi Arabia’s total energy demand.

Saudi Arabia is reportedly in talks with Abu Dhabi’s carbon-free Masdar City initiative regarding a possible future collaboration.

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At first glance, Saudi Arabia may seem an unlikely supporter of renewable energy, considering the vast oil resources under its control.  On the contrary, Saudi Arabia is looking to take advantage of its other prolific resource – sunlight – with new solar power projects designed to keep the country competitive as renewables increasingly play a role in the overall energy mix.

Mohammed Y. Al-Qahtani, executive director of petroleum engineering and development at Aramco believes “renewables will have an important place in the total energy equation.”   Saudi Arabia is looking to use its substantial solar resources as a substitute for oil to generate power domestically as well as to power desalination plants.  Although solar is currently more a more expensive means of power generation than oil or gas, Al-Qahtani expects this will shift over time.

The Kingdom recently invested in one of the world’s largest solar-heated complexes at a school in the northwestern part of the country, and is considering participating in the Desertec Initiative which would transmit electricity from North Africa and Middle Eastern solar power plants to Europe.

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The Asian Development Bank (ADB) is providing $2.25 billion in financing to the Asia Solar Energy Initiative, in the hopes of attracting significant additional investment – on the scale of $6.75 billion over  the next three years.  The Asia Solar Energy Initiative (ASEI) will develop large-scale solar power projects in the Asia and Pacific region, aiming for 3,000MW in installed generating capacity by 2012.

“With energy demand projected to almost double in the Asia and Pacific region by 2030, there is an urgent need for innovative ways to generate power whole at the same time reducing greenhouse gas emissions,” said Rajat Nag, managing director at ADB.  Central Asia is a region of particular interest, thanks in part to the vast amounts of desert land available for massive solar construction.

In 2009, ADB supplied nearly $1.3 billion in funding for clean energy projects, exceeding its $1 billion target.  Beginning in 2013, the Bank is aiming to increase its investment to $2 billion/year.

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The U.S. Department of Energy (DOE) under the leadership of Energy Secretary Steven Chu is not waiting around for the Senate as it works to draft new climate legislation.

Secretary Chu announced Friday that the DOE will invest over $200 million over the next five years to increase deployment of solar and wind energy technology throughout the United States.  This funding will “help strengthen American competitiveness in renewable energy and transform the US into a lasting manufacturing presence in the 21st century clean-energy economy,” said Chu.

The DOE funding will support both manufacturing-focused research projects in wind and solar, as well specific funding for research into advanced processes for use in the photovoltaic (PV) industry.

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Research expects investments in renewble energy to grow to $653.35 billion within five years, as governments and investors around the world funnel money into this growing sector.

Despite the widespread economic malaise and the tight credit market, global investment in renewable energy increased 43.4% between 2008 to 2009, reaching $336.78 billion.  Since 2001, the industry has achieved a combined annual growth rate (CAGR) of 30.8%.

China’s total investment of $11.48 billion made it a major player in the Asian markets, says GBI, with notable investments made in wind and solar projects.

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European Union countries aim to reduce emissions of carbon dioxide by 80% below 1990 levels by 2050; keeping within scientific recommendations to limit global temperature increases to 2°C.  Major new investment will be needed to achieve cuts on this scale, specifically in renewable power projects and electricity infrastructure upgrades.

However, despite these costs, a new report from three leading consulting firms predicts that the cost of electricity in Europe in 2050 would be no higher than it would under a “business as usual” plan with no carbon-reduction action taken.

The study, jointly published by McKinsey, European Climate Foundation and E3G, highlighted the following 3 points:

- Renewable power infrastructure is capital-intensive at the onset, yet over time costs less to run than do traditional power plants.

- Replacing outdated coal-fired power plants with new ones is actually more expensive that substituting wind or solar farms instead

- Smart grid investment continent-wide will provide major savings in energy efficiency, and help improve the reliability (and price) of renewables.

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Renewable energy is becoming a more significant player in the U.S. energy dynamic, according to latest figures from the Energy Information Administration (EIA).

In its latest Monthly Energy Review, the EIA says renewable energy production made up over 10% of total U.S. energy production in 2009, a 5.5% increase over 2008 levels and a nearly 16% increase from 2007 levels.

Biomass contributed the most, accounting for 51% of all renewable energy production, followed by hydropower at 34.2%.  Next in line were wind, geothermal and solar power, contributing 8.9%, 4.7% and 1.2% respectively.

At this stage, renewable energy contributes almost as much as nuclear power to the nation’s energy mix.

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According to the European Photovoltaic Industry Association (EPIA), the global solar PV sector grew by 44% in 2009, bringing on 6.4 GW of new power capacity – a yearly record.  This brings total global capacity to over 20 GW.

The German market led the world in demand, closely followed by Italy, Japan and the United States.  The EPIA predicts Germany will remain the largest demand market in 2010, however propsed cuts in government subsidies – which had been very favorable to the sector – may reduce that demand.

Despite its strong showing last year, solar PV represents only 0.5 % of total installed electricity capacity worldwide, and remains more expensive per kWh than other types of power generation.

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Bloomberg New Energy Finance says although global spending on renewable energy may double by 2030, it still may not be enough to combat the worst dangers of climate change.

Projections from the Global Energy and Emissions Model (GE2M) shows that investment in renewable energy must reach at least $230 billion by 2020, and $500 billion by 2030.  Likewise, to achieve a high level of carbon emissions reductions, the price of carbon will need to increase to $100/ton by 2030.

“These findings confirm that in spite of the ongoing economic malaise, investment in renewable energy should continue to grow, driven heavily by existing government targets.  If governments take the threat of climate change seriously, there will be an increasing role for renewable energy up to 2030,” remarked Guy Turner, director of Carbon Market Research at Bloomberg New Energy Finance, who foresees growth in wind, solar PV and biomass technologies.

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Data from the Earth Policy Institute (EPI) demonstrates just how China took the lead in the global solar manufacturing race. By the end of 2008, Chinese production was 5 times that of the United States, says EPI. The United States is now in fifth place, behind Germany, Spain and Japan.

“Although this technology for converting sunlight into electricity was developed in the U.S., Japan took an early lead in production, surpassed only in recent years by China and Germany,” says the report.

Despite China’s vast PV manufacturing capacity, the nation is not yet a large solar cell buyer. However, an additional study from Lux Research predicts that trend will change soon. Massive spending on large solar projects throughout the nation may make China the world’s largest solar market within five years. This strong predicted growth will likely push the solar market to 26.4GW total global capacity and $77 billion in revenues by 2015.

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The global clean energy sector was predicted to take a bath or at best remain flat last year in light of the dismal global economy.  However, according to a new report from clean tech research and publishing firm Clean Edge, the sector not only stayed afloat, but produced increased revenues in three major areas.

Clean Edge data shows that combined global revenues for solar photovoltaics (PV), wind energy and biofuels grew 11.4% from 2008 levels to reach $139.1 billion in 2009.

Significant growth in China’s clean tech sector contributed to this growth in global revenues.  China is now the world’s largest PV cell manufacturer, and over the past year has announced major plans to build wind and solar “megaprojects.”  China may end up spending between $440 billion to $660 billion on clean energy over the next ten years.

Click here to download the Clean Edge report