04-12-2011 12:41 PM CET - Business, Economy, Finances, Banking & Insurance

Sector Spotlight - Q1 2011 Renewable Energy Roundup

Press release from: InfraNews
By Peter Kneller

Regulatory changes formed a large part of the news in the renewable energy sector in Europe in the first three months of the year, with incentive systems in France, Italy and the UK all being the subject of alterations. On the deals side, utilities’ sales of equity stakes in offshore wind farms continued with Dong selling off a 50% share in Anholt to Danish pension funds, while in the UK infrastructure funds were involved in a GBP300m deal in the solar PV social housing sector.

The Italian government’s notification that it would be reducing PV feed-in tariffs for new plants, when announced in March, came as little surprise.

The country has seen multiple thousands of MWs of PV installed since new regulation was passed in July 2010 setting out F.I.T rates to the end of 2013. Such has been the pace of construction that the Italian government felt compelled to do something to slow it down. Not least were concerns that the connection of so many new solar PV plants would start to have a noticeable effect on consumers’ bills.

New feed-in tariff rates effective from June 1 are due to be announced at the end of April. In the meantime, the regulatory uncertainty has caused a temporary paralysis of the market as developers of new projects wait for further details.

France announced a change in feed-in tariff regulation for solar PV at the start of March. Not only will incentives be restricted to as little as 160MW of ground-mounted new-build annually, subsidised contracts will be subject to an auction process which would involve developers bidding with bespoke F.I.T prices.

The decision came after a four-month moratorium on new plant applications. New projects outside the auction process will receive EUR0.12/kWh, a rate not currently deemed financially viable.
In the UK, meanwhile, the Government published proposals in March to reduce financial support for larger scale solar-produced electricity. The planned changes include significant reductions in an effort to head off a proliferation of industrial-scale 5MW plants being planned by investors. The government will confirm new tariff rates on Aug.1.

GIB Capital Boost
Announcements on the UK’s forthcoming Green Investment Bank were also made in the budget on Mar.23, with Chancellor George Osborne committing a further GBP2bn to the initiative on top of the GBP1bn pledged at the spending review in October. In addition, the launch of the GIB has been brought forward from 2013 to next year.

The GBP2bn in additional funding for the bank will be sourced from asset sales, Osborne said. However, government advisors said that the bank has been underpinned by the treasury, meaning the government will provide funding if any of the asset sales do not take place.

The Chancellor also sketched out the GIB’s borrowing capabilities which will come into effect by 2015/2016, once the target for debt to be falling as a percentage of GDP has been met. This should allow the vehicle to raise, potentially, an additional GBP15bn in funding.

However, details on which sectors the GIB will invest in, and at which stage of the capital structure, are yet to be disclosed. The final proposals and design of the initiative are to be published by May 2011, according to the Department of Energy and Climate Change (DECC) and the Department for Business Innovation and Skills (BIS).

In Turkey, new regulation which differentiates between renewable energies was introduced in January. The new USD0.13/kWh rate for solar PV, while higher than the generic USD0.05/kWh renewables tariff rate it replaces, is still not regarded as high enough to drive widespread investment in the sector. However, there is optimism a higher tariff could be introduced in the future.

To read the full article, click here: http://www.infra-news.com/analysis/sector-spotlight/853688/sector-spotlight-q1-2011-renewable-energy-roundup.thtml

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