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• Solar PV Business Climbs • Exelon Deal: A Case of • Germany Runs Into More Trouble Back On Its Feet, p2 Nuclear vs. Renewables, p4 Due to Coal, Gas Reliance, p6 • Mexico Turns Focus to • Thailand Eyes Renewables to • In Brief: India Gets Bold PrintCarbon Curbs, Renewables, p3
Ease Natural Gas Dependence, p5 On Climate Stance, p7 Shell's BG Bid Underscores Climate Strategy While the primary motivation for Royal Dutch Shell's bid for BG last week may have NUCLEAR EMISSIONS LEGISLATION been short-term concerns, such as shoring up reserve replacement levels and cash WIND CARBON WATER CLIMATE flow, it also underscores one of the main pillars of the Anglo-Dutch supermajor's long-term climate change strategy — to supply more natural gas as a cleaner-burning STORAGE GAS TRANSPORT TAX alternative to coal (NE Mar.26'15). Its acquisition of BG bolsters Shell's already lead- ing position in global LNG supply and trade, demonstrating the attractiveness of natu- OIL TARIFF ELECTRICITY ral gas assets in the largest oil and gas industry tie-up since the last spate of mega- SOLAR REGULATION COAL mergers in the late 1990s (WEO Apr.10'15). Shell's strengthened emphasis on gas could also deflect warnings of "stranded" fossil fuel assets under government carbon controls, but some point out that natural gas also involves a questionable life-cycle carbon footprint and note that oil is a strong component of BG's portfolio.
Climate change is certainly a factor in the proposed transaction since gas is the cleanest fossil fuel and has better growth prospects than oil and coal in a more car- bon-constrained environment, said Marco Scherer of Deutsche Bank's Deutsche Asset & Wealth Management. While investors are mostly focusing on the returns they are getting, the argument for more sustainable investing is certainly becoming stronger, he said. LNG assets are a good example, showing it is possible to combine pure economic considerations and "more socially responsible investing," Scherer said. In particular, the LNG business provides a relatively stable cash flow because it is sold on less volatile, long-term pricing terms than oil or spot gas, Scherer argued. Regional Power Generation Costs In addition, gas projects show a much more stable production rate than oil projects, where production typically declines by a few percent every year, he insisted.
US Europe Japan Asia Mideast But while it may be a good strategy to become more gas-focused from a climate change point of view, another analyst suggested Shell "should be careful not to insist too much on that, otherwise investors could start questioning how safe oil assets will remain in the future." And Shell shows no signs of turning its back on oil — its pro- duction split is around 50-50 between oil and gas, a ratio that will not fundamentally change under the deal with BG. BG's Brazilian deepwater Santos Basin oil play was 140 140 139 103 126 a key selling point for Shell in addition to the gas and LNG side of BG's business.
Shell may see natural gas as a strategic bet and a bulwark against arguments that 302 302 289 308 298 it faces the risk of potentially stranded assets in a future carbon-constrained world, as Levelized cost of energy, or cost of generating electricity over lifetime, gas emits 50% fewer carbon emissions than coal. The firm has maintained that gas including capital, operating, fuel and carbon costs. Dvlpg. Asia = devel- will be an important bridge fuel, or even a destination fuel, for many decades to oping Asia, mostly China and India. Source: Energy Intelligence come — particularly as developing countries such as China look to reduce emis- Chairman: Raja W. Sidawi. Vice Chairman: Marcel van Poecke. Chief Strategy Officer & Chairman Executive Committee: Lara Sidawi Moore. Editor-in-Chief: Thomas E. Wallin, Editorial Director: David Pike. Head Office: 5 East 37th St., NY 10016-2807. Tel.: (1 212) 532 1112. Fax: (1 212) 532 4479. Sales: [email protected]. Circulation: [email protected]. Bureaus: Dubai: Tel: (971) 364 2607. Houston: Tel.: (1 713) 222 9700. London: Tel.: (44 20) 7518 2200. Moscow: Tel.: (7 495) 721 1611/12/13. Singapore: Tel.: (65) 6538 0363. Washington, DC: Tel.: (1 202) 662 0700. Other publications: Petroleum Intelligence Weekly, Oil Daily, International Oil Daily, EI Finance, Energy Compass, Energy Intelligence Briefing, Jet Fuel Intelligence, Natural Gas Week, Nefte Compass, Nuclear Intelligence Weekly, Oil Market Intelligence and World Gas Intelligence. sions. Others are less convinced. Shell's consolidating of its position as a gas and LNG player would "not necessarily" address investor concerns on stranded assets, said Ben Caldecott, head of Oxford University's Stranded Assets Program (NE Feb.19'15). "It depends on the life-cycle emissions of the gas — which varies considerably depending on methane leakage and other factors. There are also other envi- ronmental considerations, such as water use and whether the gas fields in question are in high water stress locations or not," he told EI New Energy. Norwegian environmental group Bellona is also concerned about such life-cycle emissions for natural gas: "You only have to have a few percentages of leakage in transport [such as in gas gathering and pipelines] before it comes out exactly the same as coal fired power plants, which are 30 years old," asserted Hallstein Havag, Bellona's director of policy and research.
Investors concerned with environmental risks also need to look beyond potential carbon emissions embed- ded in company resources and reserves, Caldecott added. "There are clearly other sustainability and pollution issues able to generate material financial risks that can strand assets. That's not to say embedded emissions aren't important, but other issues also need to be considered." Concerns like this, about the sustainability and environmental impact of Shell's Alaska plans, have made it a target for environmental campaigners (NE Nov.6'14). Having started with a Greenpeace campaign, the criticism faced by Shell over its Arctic drilling campaign "will build and build" suggests top UK environmentalist Jonathon Porritt. But because Shell is now gaining access to other, attractive deepwater prospects on BG's books, including in Central America and East Africa, the more challenging and controversial Arctic need not be such a high priority for Shell in the future.
Ronan Kavanagh London, and Philippe Roos, Strasbourg Solar PV Business Climbs Back On Its Feet After three years of losses, the solar photovoltaic (PV) manufacturing industry is profitable again. It no lon- ger needs to worry much about growing its market, with demand expected to keep mounting — reaching 50-70 gigawatts in 2018, up from some 47 GW last year, according to the European Photovoltaic Industry Association. However, profits are less comfortable than before the 2011-12 overcapacity crisis as solar modules have become a "commoditized," low-margin business. Even with "reasonably stable" module prices and raw materials costs, along with full utilization of manufacturing capaci- ties, "we do not envision particularly robust profitability" in the upstream segment, Solar PV: Growing Sales, Dropping Prices brokerage Raymond James' Pavel Molchanov wrote in a recent report. To counter- act that trend, downstream integration has become the industry motto.
New business models focused on project development have emerged, allow- ing PV companies to incorporate value-added services such as engineering, pro- curement and construction (EPC) in their offerings. US manufacturer First Solar already extracts over 90% of its revenue from its "systems" segment, which — instead of just solar panels — provides complete turnkey systems including proj- ect development, EPC services, plant management services and project finance expertise. Similarly, French oil major Total's subsidiary SunPower, besides large plants such as the ongoing Solar Star twin projects in California totaling 580 megawatts, is active in the US rooftop market with over 100,000 residential cus- tomers. SunPower has also made a number of recent supporting investments — Sales ($ billion) for example in Sunverge, a residential battery storage company, and Tendril, an energy information and management software company.
Combined sales in gigawatts and $ billion and average module sale price in $ per watt over 2009-15 for the following solar photovoltaic manufactur-ers, totaling 41% of the world market in 2014: Trina, Yingli, Canadian Solar, Last year, global leaders Trina Solar in the UK and Yingli Green Energy of Jinko, JA Solar, ReneSola, First Solar, SunPower. 2015 estimates. Source: China each shipped around 300 MW, or 8%-9% of their total module output, to Companies, Energy Intelligence their own projects. Yingli currently has a pipeline of over 1.6 GW of projects at dif- ferent approval stages in a dozen Chinese provinces, while Trina expects to com- mission some 700 MW-750 MW across the world in 2015, including 30%-40% of distributed generation projects for industrial and commercial customers in China. Once completed, Chinese companies typically sell overseas projects to investors at a better profit than the equivalent sale of solar panels. Trina, for exam- ple, sold 24 MW of projects late last year to the Foresight Group, an independent London-based investment manager, and just completed the sale of a brand new 50 MW plant to the Bluefield Solar Income Fund, another independent investment company, for $88 million or $1,760 per kilowatt.
Canadian Solar, another Chinese manufacturer, is aggressively managing its global pipeline of proj- ects, including recent purchases it made in Japan and the UK, two very active PV markets at the moment, as well as an acquisition last month from Japan's Sharp of Recurrent Energy, a US solar developer. Recurrent has 1 GW of late-stage projects located in California and Texas repre- Solar Profits Rebound Slightly After Crisis senting a revenue potential of some $2.3 billion over the next 2-3 years under the company's "build and sell" business model, Canadian Solar emphasized.
Instead of selling projects, it is increasingly popular for manufacturers to place them in a "yieldco" where they can float operational assets to investors looking for stable returns without the risks associated with volatile policies and getting projects up and running (NE Jul.3'14). Yieldcos contain projects with predictable cash flows, usually from power purchase agreements or feed-in tariff schemes (NE Apr.17'14). They typically offer investors good growth prospects and higher returns than bond markets, while lowering the cost of capital for par- ent companies because operational power plants with long term contracts are less risky than plants in development while being unexposed to the volatility of module markets — in a similar way contracted LNG assets are less risky for oil and gas companies than projects in development and spot oil and gas markets. Canadian Solar plans to launch a yieldco later this year, while First Solar and SunPower are in advanced negotiations to form a joint yieldco.
Average module selling prices were down 5% in 2014 at 60¢ per watt, down Combined sales and net profit in $ billion over 2009-14 for the following from 64¢/W in 2013, a much smaller decrease than the previous four years during solar photovoltaic manufacturers: Trina, Yingli, Canadian Solar, Jinko, JA Solar, which prices fell by a cumulated 65%, down from $1.76/W in 2009. However, mod- ReneSola, First Solar, SunPower. The sector came out of crisis in 2013 with ule prices are expected to decrease much further as markets continue to grow and fast-growing sales but limited profits. Source: Companies, Energy Intelligence manufacturing efficiency improves — by up to 50% in the next 20 years according the International Energy Agency's recent PV technology roadmap to 2050.
Philippe Roos, Strasbourg Mexico Turns Focus to Carbon Curbs, Renewables Over a year after Mexico passed historic constitutional reforms liberalizing its energy sector, efforts to encourage use of renewables and curb greenhouse gases (GHG) have stalled as the government has focused its attention squarely on its first oil and gas bid round. Yet with the auction launched in December and now well under way, there are signs that the government is beginning to move on its green energy plans as well. A major energy transition law is working its way through the legislature, and Mexico recently became the first developing country to introduce its pledge ahead of landmark global climate talks in Paris later this year.
In late March the government pledged to slash its GHGs no matter what, while vowing to up its game if other global emitters come to the table. The government will unconditionally aim to reduce the country's GHGs and short-lived climate pollutants by 25% below baseline or "business as usual" levels by 2030. This would involve cutting Mexico's GHG emissions by 22% from its baseline scenario while cutting black carbon — the highly light-absorbing component of particulate matter — by 51% over the period. The government also says it could reduce total emissions by up to 40% below baseline levels in the presence of a global climate deal. The move made Mexico the first fairly large developing country to present an Intended Nationally Determined Contribution (INDC) under the UN Framework Convention on Climate Change ahead of the Paris conference. However, because the targets are measured against Mexico's baseline projections, they will not actually reduce Mexico's emissions below today's levels. Instead, under the unconditional plan, combined direct emissions of GHGs and black carbon in 2030 would still total 829 million metric tons of carbon dioxide equivalent — about 6% higher than the 781 million metric tons of CO2e produced in 2013. Yet, without action under its INDC pledge, the govern- ment predicts emissions would surpass 1.1 billion metric tons of CO2e over that time frame.
Mexico's pledge reflects a common thread among developing countries when it comes to GHG policy, based on the argument that their emissions will need to increase as their economies continue to grow. Under that view, economically developed historical emitters will be the ones that need to shoulder the burden for reducing their emissions below current levels. Climate negotiators will be closely watching the release of INDCs from other developing countries, including Brazil, India and China. So far, only seven governments have formally submitted INDCs: Switzerland, the EU, the US, Norway, Gabon and Russia, in addition to Mexico.
Mexican officials did not provide specifics about how they would meet their emission goals, instead presenting targeted reductions by sector. For example, combined emissions of GHGs and black carbon would fall 31% from baseline levels both in power generation and in the residential and commercial sector. The plan also envisions a 28% decline from the baseline in waste, and a 27% drop for transport. The government also promises to work on a reforestation program aimed at ending net deforestation by 2030. In doing so, Mexico claims, it would remove 11 million met- ric tons of CO2e from the atmosphere — compared to the 36 million metric tons of CO2e of net emissions that would otherwise be expected.
Mexico's Energy Consumption By Source Meanwhile, Mexican legislators appear to be nearing passage of a new energy tran- sition law that would provide an impulse to adopt renewable power in the electricity sector. A version of the law approved in December by the Chamber of Deputies, Mexico's lower legislative house, would require at least 25% of power generation to come from green sources in 2018. That percentage would then rise to 30% in 2021 and eventually to 60% by 2050. The law would require the energy ministry and the National Commission for the Efficient Use of Energy to set a "road map" to meet those goals within 260 working days following the law's approval. The energy reform had called for Congress to approve the transition measure — often called the "green pack- age" — by Dec. 20 of last year (NE Jun.5'14). Despite that deadline, the legislation remains under discussion in the Senate. However, pressure from environmental groups to pass the law is growing, and some key senators are pushing for the upper house to vote on the measure before the Senate's current ordinary session ends on Apr. 30.
Mexico's government is also advancing — albeit slowly — with the launch of clean-energy certificates, a concept introduced last year in a new electricity law that followed from the 2013 energy reform. As part of an effort to encourage Based on 2012 data. Source: US Energy Information Administration renewable power, Mexican electricity regulator CRE will issue the certificates to power generators in accordance with the amount of electricity they generate from green sources. Large electricity users, in turn, must purchase a volume of certificates equivalent to a government-set percentage of their power consumption. On Mar. 31, the energy ministry published a regulation that would require such users to acquire clean-energy certificates equivalent to 5% of their electricity consumption beginning in 2018.
Jason Fargo, New York Exelon Deal: A Case of Nuclear vs. Renewables US utility giant Exelon is seeking to buy out Pepco Holdings, which provides power to states in the US mid-Atlantic, in a proposed merger that would create the largest utility in the US. But the deal is being gridlocked by critics who say it would hurt renewable energy development and kill power mar- ket competition. If approved, the merger would hook the region up to Exelon's mostly nuclear power generation, which Pepco would start distributing — making it challenging for nascent renewable ener- gy to squeeze in and gain market share.
Chicago-based Exelon proposed the acquisition in April of last year, and it has been approved by the Federal Energy Regulatory Commission (Ferc) but the company is now seeking approvals from state governments. Exelon had acquired Baltimore Gas & Electric about three years ago without much con- troversy, so many expected this deal would be similarly smooth. In fact, the deal with Pepco Holdings, which services Washington DC, Maryland, Virginia, Delaware and New Jersey, has been approved by the latter three states, as well as settled with Montgomery and Prince George's Counties in Maryland.
The opposition extends all the way up to Maryland's Attorney General Brian Frosh, who filed a brief with the state's utility regulators stating that the merger would "harm Maryland customers, offers no tan- gible, incremental benefits of sufficiently meaningful value, and is not in the public interest." He also claims that the deal could stymie the growth of renewables and distributed energy in the area. He has recent history to back him up — Exelon doesn't have a pristine record in renewable energy. In Illinois, Exelon, complaining that competition from other energy sources was making its nuclear plants uneco- nomic, threatened to shut down three of its nuclear power plants when legislators attempted to update the state's Renewable Portfolio Standard, which would lend support to renewable energy projects. The strate- gy worked — the legislation stalled, as did other energy legislation. Exelon was able to do this through its considerable clout as a power provider to a big majority, 70%, of the Illinois population through its deliv- ery company, ComEd. Critics are afraid that could happen in the mid-Atlantic: If the merger goes through, Exelon would have control over 80% of the mid-Atlantic power market.
Exelon has also been very vocal against the federal wind production tax credit — which, as it desired, has elapsed — to the extent that it was kicked out of the American Wind Energy Association in 2012. Opponents also point out Exelon's opposition to net metering and distributed generation, which has led the solar community in Maryland and Washington, DC, to be up in arms over the merger. Pepco, in contrast, has supported net metering in the past (NE Jan.15'15). "There's a concern that this merger would make Exelon the main player in the PJM grid," which stretches from Chicago to Virginia, and give Exelon unprecedented influence over the grid rules, which are set by the utilities, said Anya Schoolman, president of DC Solar United Neighborhoods.
If the deal doesn't go through, it would be a strong blow to Exelon. The company, which is the larg- est nuclear operator in the US with 23 reactors, has struggled to balance the costs of its aging reactors with competing costs from renewables and natural gas. To sweeten the deal, Exelon bumped up offers of Maryland ratepayer refunds from $40 million to $94.4 million, and DC ratepayer refunds from $14 million to $33.8 million, and added a $50 million "green sustainability fund" to make loans to solar and energy storage developers in Maryland. It's not clear if any price will be right, however. Tim Judson of the anti-nuclear advocacy group Nuclear Information and Resource Service called those offers a "pit- tance compared with the risk and cost to ratepayers." The case is being reviewed by the Maryland Public Service Commission, and it remains to be seen whether they agree.
Rosa Lin, Washington Thailand Eyes Renewables to Ease Natural Gas Dependence Thailand's government is taking steps to trim its reliance on natural gas for power generation in favor of alternative energy sources, including renewables and clean coal. After a two-year delay due to political chaos and public debate, the Ministry of Energy has unveiled the country's new 20-year Power Development Plan (PDP), which seeks to cut the market share of natural gas to 40% of total power demand by 2036. Natural gas reliance is viewed as a problem because its own domestic reserves, including substantial amounts extracted since the 1980s from the Gulf of Thailand, are dwindling, plac- ing Thailand's energy security at risk. Another consideration is retail prices, which can be brought down if Thailand lessens its imports and relies mostly on cheaper priced local reserves. Under the PDP plan, clean coal will replace lignite as a fuel source and meet 25% of power consumption, up from 21% at present. Renewable energy will rise from 5% to 20%, and the balance will come from imported power and long-awaited nuclear power. The government will work to achieve those targets by setting attractive buying rates through the issuance of licenses for new renewable energy projects.
It is clear that the private sector will spearhead new investment in renewable energy power plants, rather than government entities. With a clear government target now in place, a sizable list of private investors, mostly local companies using imported technologies, have announced plans to engage in power development projects. Indeed, private investors have in the past been so enthusiastic that the authorities are now talking to companies with projects in the pipeline about delaying start-up schedules, since demand is not likely to meet previously expected targets. The new PDP assumes an average GDP growth rate of 3.9%, down from an earlier 4.5% estimate — although it was actually subsidies, not economic forecasts, offered by the government that had made the investments attractive. The government has since changed to a fixed tariff system based on the type of feedstock. Wind power is rewarded at the highest rate, but biomass plants using crop waste are the main target of regulators because farmers would benefit.
For industrial-sized solar plants that could together add 3,000 MW of power, the government is now work- ing on the bidding specification process, while approvals for domestic-scale installations are now automatic. Ministry of Energy Permanent Secretary Areepong Bhoocha-oom said that licenses for up to 12,000 MW of renewable energy will be issued over the plan's duration and he urged private investors to participate. Since the military took over state administration in May 2014, it has through the Ministry of Energy subsidized 86 renewable projects that will generate a combined 280 MW of power.
Thailand's long history with independent power production has ensured that electricity supply to both industrial and retail consumers has never been put at risk. The country has more than a 30% power reserve, according to the state Electricity Generating Authority (EGAT), with peak demand of 27,050 MW compared to current capacity of 34,700 MW. Still, this has not stopped energy needs from topping the government agenda. Currently, EGAT generates 45% of capacity but exercises full control over the national grid, with private sector plants accounting for a greater 48% of the total and imported power the remaining 7%. But it is natural gas that feeds almost all the private sector plants and about a half of state power, accounting for 66% of total power needs, says the ministry's Policy and Planning Office in its latest reports. This share has, however, fallen from a peak of 72% in 2010.
Gary van Zuylen, Bangkok Germany Runs Into More Trouble Due to Coal, Gas Reliance Record losses at German utility E.On have highlighted the near-impossible job of profitably running coal, lignite and especially natural gas-fired power stations in Northwest Europe. Both E.On and its peer, RWE, have recently recorded major losses and are blaming fossil fuel power generation because fuel and operating costs outstrip wholesale sale prices already dampened by renewables. To address this problem, utilities are taking steps to exit conventional power generation, although Germany's environmental targets could erode interest in such assets. No help is expected from the government in the form of capacity pay- ments, a mechanism used in the UK that pays generators to keep baseload capacity operational in case renewables fail to produce enough electricity. German Chancellor Angela Merkel and Economic Affairs and Energy Minister Sigmar Gabriel oppose such measures because Germany is suffering from chronic overcapacity — until recently there was no ceiling on renewables, so growth was unchecked. E.On already announced late last year it was exiting the traditional generation business, while RWE Chief Executive Peter Terium said the economic conditions facing coal- and gas-fired power stations are "extremely grave" and "got worse rather than better" over the year (WGI Dec.3'14). Terium predicts RWE will make an operating loss in the "not too distant future" if wholesale electricity prices remain around cur- rent levels of €32 ($34) per megawatt hour. Analysts suggest they will. Terium said that up to 45% of RWE's conventional power station fleet in Northwest Europe is losing money. "I'm not talking about book values: these power stations are costing us real money," he said. Terium says to keep loss-making power stations operational, Germany must offer generators some form of additional revenue stream. One of Germany's four largest power producers, Vattenfall Europe, part of Sweden's Vattenfall, is fol- lowing Germany's drift toward renewables. In an effort to slash group carbon dioxide emissions from its generation fleet, Vattenfall announced last autumn its wish to sell lignite-fired power stations and mines in Germany. It said the sale, potentially worth €3 billion ($3.3 billion), was the only way of reaching its goal of slashing emissions to 65 million tons per year by 2020 from 82.3 million tons in 2014. But Vattenfall has yet to find a buyer, with its sales plans complicated by German moves to crack down on dirty power plants to ensure national emissions targets are met. The assets up for sale are all in eastern Germany. Possible buyers of the Vattenfall assets, which include EPH and CEZ of the Czech Republic and German utility Steag, are watching developments closely. EPH says that although it is interested in Vattenfall's lignite division, "we need clear statements from the politicians regarding [the] future of lignite in Germany." With some industry players fearing Gabriel's plans could doom the sale, Vattenfall tells EI New Energy it would be wrong to impose a national penalty on lignite and coal-fired generation, arguing that the EU's Emission Trading System "is the instrument of choice for effective climate protection. Double regulation through national law only leads to emissions increases in the rest of Europe in connec- tion with a loss of German value creation, jobs and tax revenue." German utility giant RWE, a big user of lignite for power generation, predicts that "the proposals will introduce a total exit from lignite in the short run. Not only power plants, but also the associated open-cast mines and operations, would need to be closed down. Restructuring costs for the companies affected would run into the billions." Interest in the lignite assets could be dampened if the German government makes good on pledges to squeeze out a further 22 million tons/yr of carbon emissions savings from the power sector. A white paper released in late March proposed making the country's oldest and most inefficient coal and lignite power sta- tions pay a "climate protection fee." The intention is to force the dirty units to close, reducing emissions and tackling Germany's massive problems with overcapacity, stemming largely from the renewables boom. The anti-lignite drive is being led by environmentalists, who say Germany will miss nationally set targets for cuts in greenhouse gases unless roughly two-thirds of proven lignite reserves are kept in the ground.
Gas-fired generation remains way down the merit order in most of Northwest Europe, except in the UK where gas is dominant, with coal and lignite much cheaper than either pipeline gas or LNG. Gas and coal prices have dropped considerably in the last year, making little difference for the dominance of coal over gas. For gas to regain competitiveness, gas prices would need to fall further, with coal and carbon prices spiking sharply. Analysts are not expecting that to happen, especially with weak Asian coal demand putting downward pressure on global prices.
India Gets Bold on Climate Stance agreed to release the proposed 2016 RFS require- biofuels made from food crop sources at 7% of At a gathering in Berlin this week, Indian Prime ments by Jun. 1, with the 2016 obligations final- final energy consumption in transport by 2020, Minister Narendra Modi slammed historically ized by Nov. 30. By law, the EPA is required to under a current 10% renewable transport energy emitting, developed countries and asserted that finalize annual RFS requirements for blending target. Parliament's environment committee New Delhi will set the agenda at climate talks in ethanol into gasoline and diesel by Nov. 30 of the backed a compromise proposed by member states Paris later this year. Modi criticized the Western preceding year, but EPA issued the 2013 require- in the EU Council, setting the 7% cap. This com- world, which he characterized as having destroyed ments eight months late and has not issued the promise did not however include a proposed 0.5% nature, for dictating that India cut its carbon emis- 2014 or 2015 requirements yet — in large part target for advanced biofuels that had previously sions even though the South Asian nation's emis- due to controversy over the required blending been discussed. Ethanol industry body ePure com- sions are among the lowest in the world — a refer- volumes (NE Nov.27'14).
plains this "undermines" a core objective of the ence to India's per-capita carbon footprint, which is reform, which was to encourage better biofuels in far lower than in China or developed countries. France Eyes 100% Renewables terms of life-cycle emissions. This threatens to India has maintained that since its economy needs France could feasibly move to 100% renewable leave the advanced biofuels industry stuck at the to expand to pull millions out of poverty, its carbon energy in its power mix, and doing so would cost starting gate in Europe (NE Mar.5'15). footprint will need to increase. Modi touted India's roughly the same as the country's current target Nonetheless, while ePure described the compro- ambitious 175 GW renewable energy capacity tar- of 50% nuclear, 40% renewables and 10% fossil mise as a disappointing result, it also said a pro- get by 2022 to demonstrate India's commitment to fuels, French energy conservation agency Ademe spective deal may go some way to restoring much fight global warming (NE Feb.19'15). Earlier on found in a new leaked report. The document was needed policy certainty for the biofuels industry.
Apr. 6, at a conference in New Delhi, Modi supposed to be presented at a conference next lamented that India's culture of respecting and lov- week, but Ademe is holding it several more UK Elections May Impact Wind ing nature has not been sufficiently communicated months because it needs additional work. Leaked If the UK's Conservative Party — now part of a in the global arena and that the country is some- copies — one of which was obtained by Energy ruling coalition with the Liberal Democrat Party — times perceived as a barrier in climate efforts.
Intelligence's Nuclear Intelligence Weekly — wins a general election next month, it has pledged show a nearly finalized report, lacking only an to withdraw support for all new onshore wind US Biofuel Targets Get Deadline executive summary and annexes. The report con- farms and give local councils the right to decide The US Environmental Protection Agency (EPA) cludes that 100% renewable power generation — whether projects are built. In an election manifesto has agreed to a deadline for setting long-overdue with 63% wind, 17% solar and 13% hydropower issued last week, Prime Minister David Cameron, biofuel blending obligations under the Renewable — would cost €119 per megawatt hour ($128). who is part of the Conservative Party, said he Fuel Standard (RFS) through a settlement with This is 31% more expensive than today's €91/ would "halt the spread of onshore wind farms" two oil industry trade groups, the American MWh ($98/MWh), but almost identical to the because they often "fail to win public support" and Petroleum Institute and American Fuel & government's planned 50% nuclear scenario, at are "unable by themselves to provide the firm Petrochemical Manufacturers. Oil refiners are the €117/MWh ($126/MWh), given that consider- capacity that an energy system requires." Cameron compliant parties under the RFS, and both the oil able new nuclear capacity would need to be con- offered strong support for new nuclear power sta- industry and corn ethanol lobbies have lamented structed to meet that goal.
tions and gas-fired generation, potentially fueled by about the EPA's delay, arguing that it has created indigenous shale gas. In 2014, onshore wind uncertainty for their industries. The EPA agreed to EU Biofuel Reforms Edge Forward accounted for 29% of the UK's renewable electric- issue the proposed RFS requirements for this year The EU moved a step closer this week to an ity generation, second to biomass, with an average by Jun. 1, 2015 and will finalize the 2014 and agreement in long-running efforts to reform biofu- load factor recorded at 26.5% in 2014, compared 2015 RFS requirements by Nov. 30, 2015. It also el policy — capping the use of first generation with 37% for offshore wind.
CLEAN ENERGY EQUITY MARKETS Energy Equity Index Values Energy Equity Class Performance Source: Standard & Poor's Source: Standard & Poor's Energy Futures: Reference Prices DATA: The complete set of EI New Energy data is available to web subscribers, including full levelized cost of energy (LCOE) calculations, fuel switching thresholds, electricity pro- Carbon (€/ton) duction by sector, ethanol and biodiesel fundamentals, carbon prices, methodologies and reader's guides. Historical data is available as a premium Data Source product.
Crude oil ($/bbl) Global Carbon Prices Nymex light, sweet Europe (€/ton) Natural gas ($/MMBtu) CCA (Calif.) Dec ‘15 RGGI (Northeast) Dec ‘15* All prices are front month. EUA = EU Allowances; CER = Certified Emission Reductions New Zealand (NZ$/ton) under UN CDM. ICE UK gas converted from p/therm. *Short tons. Source: Exchanges Benchmark months. *Short tons; all others metric tons. Source: ICE, OMF Newbuild Power Generation Costs EU Carbon Futures Prices EU Carbon Futures Prices
ECX front-month futures. Source: ICE Source: Energy Intelligence Global Electricity Prices Key Biofuel Prices France (Powernext) Scandinavia (Nordpool) Ethanol Midcont. Ethanol NY Harbor US Mid-Atlantic (PJM West) US Southwest (Palo Verde) Canada (Ontario) 614.00 612.00 +2.00 551.75 543.00 +8.75 813.25 818.00 -4.75 Singapore (USEP) 808.25 818.00 -9.75 808.25 800.50 +7.75 Wholesale prices. Source: Exchanges Source: Thomson Reuters, ICAP, Exchanges EDITOR: Lauren Craft ([email protected]). DEPUTY EDITOR: Ronan Kavanagh. EDITORIAL: US: Jason Fargo, Rosa Lin, Naki B. Mendoza, Emily Meredith, Bill Murray, Barbara Shook. LONDON: Jason Eden, Mark Smedley. STRASBOURG: Philippe Roos. MOSCOW: Nelli Sharushkina, Nadezhda Sladkova. SINGAPORE: Maryelle Demongeot, Kimfeng Wong. DUBAI: Alex Schindelar, Thomas Strouse. INDIA: Rakesh Sharma. DATA: Ed Feinberg. PRODUCTION: Michael Win. Published weekly. Copyright 2015 by Energy Intelligence Group, Inc. ISSN 2168-5185. EI New Energy is a trademark of Energy Intelligence. All rights reserved. Access, distribution and reproduction are subject to the terms and conditions of the subscription agreement and/or license with Energy Intelligence. Access, distribution, reproduction or electronic forwarding not specifically defined and authorized in a valid subscription agreement or license with Energy Intelligence is willful copyright infringement. Additional copies of individual articles may be obtained using the pay-per-article feature offered at www.energyintel.com.

Source: http://www.smithschool.ox.ac.uk/research-programmes/stranded-assets/EI%20New%20Energy%20Apr%2016.pdf