[Top News] from [REUTERS]
[Green Business]
Public finance can scale up climate investment
Mon Oct 26, 2009 2:30am EDT
By Nina Chestney
LONDON (Reuters) - Public finance could help stimulate private investment in climate change solutions in developing countries, a report commissioned by the United Nations' Environment Program showed on Monday.
World leaders are grappling with how much funding should be provided for poor countries as part of a deal to tackle climate change which they hope to clinch in Copenhagen in December.
"Today's report underlines a range of public policy options that reflect the varying circumstances currently prevailing in developing economies and show how existing barriers to a green economy can be leap-frogged," said UNEP's Executive Director Achim Steiner.
Investments of around $530 billion a year are needed to help avert the dangerous effects of climate change and drive forward low-carbon economies, according to the International Energy Agency.
The World Bank estimates that around $475 billion of that investment must happen in developing countries.
Although the drain on public finance is severe following the financial crisis, the private sector is not able to shoulder the financing burden because returns from low-carbon investments do not outweigh the risks.
Public finance mechanisms could help manage the risks the private sector can't control and improve returns for investors, the report said.
SOLUTIONS
The mechanisms can help shape private capital, with previous research suggesting that $1 of public money spent through well-designed mechanisms can encourage between $3 and $15 of private sector investment.
The report suggests several ways to stimulate that investment:
* Provide and expand insurance cover against country risk, such as breach of contract or war, to support low-carbon funds.
* The same bodies providing country risk cover could also provide low-carbon policy risk cover where countries go back on policy frameworks that underpin low-carbon investments, such as emissions trading or renewable energy incentives.
* Public finance could provide currency funds which offer cost-effective hedges for local currencies which would otherwise not be available in the commercial foreign exchange markets.
* Improve deal flow to provide a series of commercially attractive projects and vehicles specializing in early-stage low carbon projects.
* The public sector could invest directly in low-carbon funds through 'first loss equity', which would reduce risks for private investors.
The report was commissioned by UNEP, along with several investor and climate groups. Research was carried out by Vivid Economics.
The full report is available at www.unepfi.org.
(Reporting by Nina Chestney; Editing by William Hardy)
[Green Business]
Italy green boom may stutter over incentive doubts
Mon Oct 26, 2009 7:22am EDT
By Stephen Jewkes and Svetlana Kovalyova - Analysis
MILAN (Reuters) - Uncertainty over the future of generous incentive schemes is a major risk factor for the green energy sector in Italy, which has blossomed after rival Spain lost its allure by cutting down on sweeteners for investors.
Incentives designed to help Italy catch up with European Union efforts to fight climate change have attracted funds from investors ranging from families to private equity funds and sports car maker Ferrari.
As a result, shares in nine Italian renewable energy companies listed on Milan's bourse have been rising since April and the trend remains positive if the incentives stay, according to Althesys Strategic Consultants, which compiled the Italian Renewable Index (IREX).
But pressed to ease the budget deficit -- expected to run at 5.3 percent of GDP this year -- Rome plans to cut incentives for the solar sector which guarantee steady returns for 20 years and has announced changes to a market-based green certificate scheme which supports wind power generation.
Local and foreign creditors and investors say funds could be routed away from the Italian market if the government fails to clarify its plans on incentives quickly.
"The uncertainty will kill the market," said Bruno Derungs, a partner in CPE, private equity fund of London-based clean energy project investment manager Climate Change Capital. CPE invested 10 million euros in Italian solar firm Enerqos.
Foreign funds are attracted by high double digit IRRs (internal rates of return). Derungs said investors would accept a fall in IRR on solar projects to 8-9 percent from 12-15 percent at present, but not more.
The Italian government plans to reduce solar energy gradually to ease the impact and avoid shocks that practically paralyzed the market in Spain..
"The government is at a turning point and has to reassure the market on the incentives front. If it cuts (solar) incentives by 10 to 15 percent that's OK. Any more and projects could be put at risk," said Valeriano D'Urbano, managing director at UBI Banca's Centrobanca.
Spain's PV plants multiplied more than fourfold to about 3,200 megawatts in 2008 but hopes of becoming a world leader in solar power collapsed when the government capped new installations qualifying for tariffs and cut subsidies.
Since Spain slashed incentives, Italy has become a magnet for solar systems makers, such as the world's leader Q-Cells. Norway's state-owned utility Statkraft called Italy a top solar market due to abundant sunshine and strong outlook when it acquired eight solar projects there in September.
FUNDING AVAILABLE
Wind parks and photovoltaic (PV) systems which turn sunlight into power have mushroomed in Italy in the past few years. Wind power generating capacity jumped 30.5 percent to 3,525 MW and PV capacity surged 400 percent to 431 MW in 2008 alone, according to data from national power grid Terna.
Under EU 2020 targets, the country still needs to double its green energy capacity to make about 20 percent of all energy from renewable sources. According to industry estimates that means investing between 50 billion and 100 billion euros.
More conservative Italian banks now finance most of the renewable energy projects in the country as many foreign banks, hit by the crisis, retract to focus more on home markets.
"Banks like SocGen, Santander and WestLB are still active but they focus on solar projects where fixed tariffs offer better cash flow visibility. Wind tariffs are market-based and uncertain," a Milan investment banker said.
If a project is credible, the funding is there as long as government incentives -- feed-in tariff for solar power and market-based green certificates for wind -- remain in place to guarantee steady cash flow and low risk.
"The credit crunch had slowed the funding process for some developers and reduced the number of banks working in project financing. But it has not stopped funding," says Centrobanca's D'Urbano.
DEATH KNELL FOR WEAKER PLAYERS
One consequence of tight funding may be a consolidation in the sector, with weaker players getting weeded out.
There are a lot of projects that won't make it because of the lack of funding for smaller investors, Massimo Orlandi, CEO of Italian holding company CIR's energy unit Sorgenia said.
"A cut in renewable incentives could expedite the process," he said.
Major players on the Italian market such as utilities Enel and Edison have boosted their renewable energy pipeline by buying up projects from struggling developers and are looking around for new opportunities.
Enel Green Power -- Enel's renewable unit with wind, solar, hydro and other renewable energy assets around the world and a total installed capacity of above 4,500 MW -- has said it plans small wind power acquisitions by the end of this year.
(Editing by Sitaraman Shankar)
[Green Business]
German firm plans 100 MW wind farm in Bulgaria
Mon Oct 26, 2009 8:58am EDT
SOFIA (Reuters) - Germany's privately-held N-Vision Energy plans to invest up to 140 million euros ($210.5 million) to build a 100 megawatt wind energy park in Bulgaria, its managing director said on Monday.
The new wind farm will be built near the town of Kyustendil, some 68 km south of capital of Sofia, and is expected to become operational by the end of 2011, Sebastian Noethlichs, managing director of N-Vision Energy, said.
Up to 75 percent of the park will be debt-financed, Noethlichs said, adding the European Bank for Reconstruction and Development and export credit agencies are expected to take part in the funding of the project.
Wind park projects in Bulgaria have mushroomed over the last couple of years as investors take advantage of incentives such as preferential prices which Sofia offers for power produced from renewable energy sources.
The Balkan country plans to increase the share of renewable energy to 16 percent by 2020 as part of European Union efforts to combat climate change.
The new project will be the second largest in Bulgaria after the 156 MW park built by AES Corp. near the town of Kavarna on the northern Black Sea coast, which was officially connected to the national grid earlier this month.
(Reporting by Irina Ivanova; editing by James Jukwey)
[Green Business]
Public finance can scale up climate investment
Mon Oct 26, 2009 2:30am EDT
By Nina Chestney
LONDON (Reuters) - Public finance could help stimulate private investment in climate change solutions in developing countries, a report commissioned by the United Nations' Environment Program showed on Monday.
World leaders are grappling with how much funding should be provided for poor countries as part of a deal to tackle climate change which they hope to clinch in Copenhagen in December.
"Today's report underlines a range of public policy options that reflect the varying circumstances currently prevailing in developing economies and show how existing barriers to a green economy can be leap-frogged," said UNEP's Executive Director Achim Steiner.
Investments of around $530 billion a year are needed to help avert the dangerous effects of climate change and drive forward low-carbon economies, according to the International Energy Agency.
The World Bank estimates that around $475 billion of that investment must happen in developing countries.
Although the drain on public finance is severe following the financial crisis, the private sector is not able to shoulder the financing burden because returns from low-carbon investments do not outweigh the risks.
Public finance mechanisms could help manage the risks the private sector can't control and improve returns for investors, the report said.
SOLUTIONS
The mechanisms can help shape private capital, with previous research suggesting that $1 of public money spent through well-designed mechanisms can encourage between $3 and $15 of private sector investment.
The report suggests several ways to stimulate that investment:
* Provide and expand insurance cover against country risk, such as breach of contract or war, to support low-carbon funds.
* The same bodies providing country risk cover could also provide low-carbon policy risk cover where countries go back on policy frameworks that underpin low-carbon investments, such as emissions trading or renewable energy incentives.
* Public finance could provide currency funds which offer cost-effective hedges for local currencies which would otherwise not be available in the commercial foreign exchange markets.
* Improve deal flow to provide a series of commercially attractive projects and vehicles specializing in early-stage low carbon projects.
* The public sector could invest directly in low-carbon funds through 'first loss equity', which would reduce risks for private investors.
The report was commissioned by UNEP, along with several investor and climate groups. Research was carried out by Vivid Economics.
The full report is available at www.unepfi.org.
(Reporting by Nina Chestney; Editing by William Hardy)
[Green Business]
Italy green boom may stutter over incentive doubts
Mon Oct 26, 2009 7:22am EDT
By Stephen Jewkes and Svetlana Kovalyova - Analysis
MILAN (Reuters) - Uncertainty over the future of generous incentive schemes is a major risk factor for the green energy sector in Italy, which has blossomed after rival Spain lost its allure by cutting down on sweeteners for investors.
Incentives designed to help Italy catch up with European Union efforts to fight climate change have attracted funds from investors ranging from families to private equity funds and sports car maker Ferrari.
As a result, shares in nine Italian renewable energy companies listed on Milan's bourse have been rising since April and the trend remains positive if the incentives stay, according to Althesys Strategic Consultants, which compiled the Italian Renewable Index (IREX).
But pressed to ease the budget deficit -- expected to run at 5.3 percent of GDP this year -- Rome plans to cut incentives for the solar sector which guarantee steady returns for 20 years and has announced changes to a market-based green certificate scheme which supports wind power generation.
Local and foreign creditors and investors say funds could be routed away from the Italian market if the government fails to clarify its plans on incentives quickly.
"The uncertainty will kill the market," said Bruno Derungs, a partner in CPE, private equity fund of London-based clean energy project investment manager Climate Change Capital. CPE invested 10 million euros in Italian solar firm Enerqos.
Foreign funds are attracted by high double digit IRRs (internal rates of return). Derungs said investors would accept a fall in IRR on solar projects to 8-9 percent from 12-15 percent at present, but not more.
The Italian government plans to reduce solar energy gradually to ease the impact and avoid shocks that practically paralyzed the market in Spain..
"The government is at a turning point and has to reassure the market on the incentives front. If it cuts (solar) incentives by 10 to 15 percent that's OK. Any more and projects could be put at risk," said Valeriano D'Urbano, managing director at UBI Banca's Centrobanca.
Spain's PV plants multiplied more than fourfold to about 3,200 megawatts in 2008 but hopes of becoming a world leader in solar power collapsed when the government capped new installations qualifying for tariffs and cut subsidies.
Since Spain slashed incentives, Italy has become a magnet for solar systems makers, such as the world's leader Q-Cells. Norway's state-owned utility Statkraft called Italy a top solar market due to abundant sunshine and strong outlook when it acquired eight solar projects there in September.
FUNDING AVAILABLE
Wind parks and photovoltaic (PV) systems which turn sunlight into power have mushroomed in Italy in the past few years. Wind power generating capacity jumped 30.5 percent to 3,525 MW and PV capacity surged 400 percent to 431 MW in 2008 alone, according to data from national power grid Terna.
Under EU 2020 targets, the country still needs to double its green energy capacity to make about 20 percent of all energy from renewable sources. According to industry estimates that means investing between 50 billion and 100 billion euros.
More conservative Italian banks now finance most of the renewable energy projects in the country as many foreign banks, hit by the crisis, retract to focus more on home markets.
"Banks like SocGen, Santander and WestLB are still active but they focus on solar projects where fixed tariffs offer better cash flow visibility. Wind tariffs are market-based and uncertain," a Milan investment banker said.
If a project is credible, the funding is there as long as government incentives -- feed-in tariff for solar power and market-based green certificates for wind -- remain in place to guarantee steady cash flow and low risk.
"The credit crunch had slowed the funding process for some developers and reduced the number of banks working in project financing. But it has not stopped funding," says Centrobanca's D'Urbano.
DEATH KNELL FOR WEAKER PLAYERS
One consequence of tight funding may be a consolidation in the sector, with weaker players getting weeded out.
There are a lot of projects that won't make it because of the lack of funding for smaller investors, Massimo Orlandi, CEO of Italian holding company CIR's energy unit Sorgenia said.
"A cut in renewable incentives could expedite the process," he said.
Major players on the Italian market such as utilities Enel and Edison have boosted their renewable energy pipeline by buying up projects from struggling developers and are looking around for new opportunities.
Enel Green Power -- Enel's renewable unit with wind, solar, hydro and other renewable energy assets around the world and a total installed capacity of above 4,500 MW -- has said it plans small wind power acquisitions by the end of this year.
(Editing by Sitaraman Shankar)
[Green Business]
German firm plans 100 MW wind farm in Bulgaria
Mon Oct 26, 2009 8:58am EDT
SOFIA (Reuters) - Germany's privately-held N-Vision Energy plans to invest up to 140 million euros ($210.5 million) to build a 100 megawatt wind energy park in Bulgaria, its managing director said on Monday.
The new wind farm will be built near the town of Kyustendil, some 68 km south of capital of Sofia, and is expected to become operational by the end of 2011, Sebastian Noethlichs, managing director of N-Vision Energy, said.
Up to 75 percent of the park will be debt-financed, Noethlichs said, adding the European Bank for Reconstruction and Development and export credit agencies are expected to take part in the funding of the project.
Wind park projects in Bulgaria have mushroomed over the last couple of years as investors take advantage of incentives such as preferential prices which Sofia offers for power produced from renewable energy sources.
The Balkan country plans to increase the share of renewable energy to 16 percent by 2020 as part of European Union efforts to combat climate change.
The new project will be the second largest in Bulgaria after the 156 MW park built by AES Corp. near the town of Kavarna on the northern Black Sea coast, which was officially connected to the national grid earlier this month.
(Reporting by Irina Ivanova; editing by James Jukwey)
