U.S. Voters Deliver Mixed Message to Renewable Energy

Sarah McBride/Reuters

LOS ANGELES, Nov 3 (Reuters) - Tuesday's U.S. election results sent a mixed message on alternative energy, with Republican victories in Congress likely to curb national alternative-energy policy while California results look set to help the sector.

Shares reflected the confusion, with solar stocks mostly down in the morning but recovering in late afternoon. First Solar (FSLR.O) finished flat while SunPower Corp (SPWRA.O) rose 1.3 percent, Suntech Power (STP.N) rose 2.5 percent and JA Solar (JASO.O) firmed 3.5 percent.

Big Republican wins in the U.S. House of Representatives make it unlikely that a bill to curb emissions from fossil fuels or establish renewable-energy goals will make it through Congress.

But in California, clean-energy policies apparently struck a chord with voters, who handed the governorship to Democrat Jerry Brown, a strong proponent of cutting emissions and boosting alternative-energy industries.

California voters also trounced a ballot initiative that would have suspended clean-energy goals until unemployment fell sharply. With 93 percent of precincts reporting, 61 percent of voters had rejected the measure, known as Proposition 23.

The victory in California, the nation's most populous state and by far its biggest market for renewable energy, helped compensate for disappointments at a national level.

The results ensure "that California and the entire United States will continue to grow the clean industries and reclaim leadership in the world," said Rhone Resch, head of the Solar Energy Industries Association.

"I would expect in the next two years that you will see the U.S. becoming the largest solar market in the world, surpassing Germany, China and other countries," he added.

The U.S. renewables sector employs about 93,000 people, a figure that SEIA has predicted would grow by at least 26 percent next year. Resch said the number of jobs could double thanks to growth in California.

SHADOW REMOVED

The threat of California's Proposition 23 had cast a shadow over the clean-energy sector, throwing into jeopardy a policy that the state's public utilities draw 33 percent of their energy from renewable sources by 2020. Passage of the measure could have allowed utilities to slow plans to ink contracts with solar and wind developers.

With the mandate for the 33 percent clean-energy goal now clear, it could trigger more business for solar-power developers as utilities gear up to meet it. The clarity will also help developers win financial backers.

"When you have a clear policy environment, it makes it a lot easier to find investors," said Arno Harris, chief executive officer of Recurrent Energy, a developer of solar plants that has agreed to be taken over by Sharp Corp (6753.T).

"What we've seen time and time again is that investors and lenders really want to see from a firm policy standard."

New agreements could be announced in the next few months, industry veterans say.

The wide margin of defeat gives lawmakers and regulators something of a mandate to go further, according to John Cheney, chief executive of Silverado Power LLC, a solar power developer.

"What this does is put immediate pressure on increasing the renewable energy standard," he said. "It will eventually go much higher than 33 percent."

A potential hiccup lies in California's Proposition 26, which was approved by voters and requires a two-thirds majority to pass various fees, levies and charges that would be declared taxes. But it is unclear how big an impact the proposition will have on clean energy.

Critics say the measure could affect the carbon cap-and-trade plan that the state's Air Resource Board released last week, by forcing the state to set up the trading of carbon permits under the plan in a way that wouldn't count as a tax under Proposition 26.

But Mary D. Nichols, who heads the board, said in a statement that the proposition doesn't impair the state's 2008 plan for reducing greenhouse gases or any regulations developed under the plan. Those regulations include the proposed cap-and-trade plan.

California is part of a group of 11 states and Canadian provinces known as the Western Climate Initiative. Members are supposed to start regional carbon trading in 2012.

New Mexico's participation in the carbon-trading plan is being thrown into question after the victory of Republican Susana Martinez in the governor's race. She opposes the cap-and-trade plan.

In California, an area where developers are seeking clarification is on how much renewable energy California utilities will be able to purchase from out-of-state plants, like those planned for just over the border in Arizona and Nevada, where costs are cheaper.

That issue will likely be hammered out by legislators in coming months, industry analysts say. (Additional reporting by Matt Daily in New York; Editing by Leslie Adler, Gary Hill)

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China's Polysilicon Price Rallying on Expanding Demand

BEIJING, Jul 16, 2010 (Xinhua via COMTEX) --

China's polysilicon price is rallying drastically as the demand on the downstream PV market has expanded rapidly this year.

An industry insider told Xinhua-run Shanghai Securities News that due to higher production cost and a shorter term of product delivery, the price of home-made polysilicon is about 450 yuan per kilogram or 66 US dollars per kilogram, which is much higher than the imported price of 60 US dollars/kilogram, though the home-made product is inferior to imported one.

The suspension of production at Mitsubishi, the largest producer of silicon in the world, and the suspension of supply by OTC, another large-scale silicon producer in Japan, has aggravated the shortage of raw-material supply of silicon on the global market.

On the current market, both solar cell producers and silicon wafer producers are worrying that the inventory of polysilicon to ensure a normal production is in a badly low level, and the inventory of some companies can only meet the demand for one-week production.

China has a big polysilicon production capacity, which is estimated at 100,000 tonnes a year by the end of this year, but only 57,000 tonnes of production capacity has been constructed and actual production was 20,230 tonnes at the end of 2009.

Market watchers are predicting that the price of polysilicon will reach a high of 70 to 80 US dollars or 476 to 544 yuan and the price rally is to kick off a new round of development in the PV market.

In these circumstances, those PV solar power companies with an integrated industrial chain, especially those with polysilicon production capacity like LDK Solar (LDK.NYSE), are more likely to find favor in the market.

LDK Solar, a solar wafer and PV product manufacturer in China, is building a polysilicon plant with an annual production capacity of 15,000 tonnes, and has put the first phase project with a capacity of 5,000 tonnes into trial operation. With the capacity of ensuring polysilicon supply and lowering production costs, such solar power companies may seize a bigger market share on the burgeoning PV market. (Edited by Han Bing)

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Mayfield Fund Invests $21.5 Million in SolarCity Inc...

Mayfield Fund is a veteran venture firm that typically makes early-stage, technology-focused investments. But it has taken a different route with its first investment in the solar space.

Its lead role in a new $21.5 million round for SolarCity Inc., which installs and leases solar systems for homes and businesses, is a growth-stage deal in a company with a services-oriented business model.

“There’s so much innovation happening in solar cell technology, you just don’t know who will win,” said Navin Chaddha, a managing director at Mayfield who’s taking an observer seat on SolarCity’s board. “It’s best to go with a technology-agnostic company that owns the residential and commercial customers.”

The venture firm provided the majority of the Series E-1 round, according to Chaddha. He called the deal a growth investment, since SolarCity is already profitable. It came out of Mayfield’s $400 million 13th fund, of which about 30% is dedicated to growth-stage deals, while the rest is for early-stage, he said. The deal closed in June, according to Chaddha.

SolarCity was valued at $250 million when solar panel maker First Solar Inc. bought a 10% stake for $25 million in 2008. Since then SolarCity’s revenue has grown five-fold, Chaddha said, and the valuation is higher as well. He declined to give specifics but said the valuation is not five times what it was a year and a half ago.

Other participants in the latest round were existing investors Draper Fisher Jurvetson, DBL Investors and Generation Capital.

SolarCity, based in Foster City, Calif., will use the funding to make select acquisitions, expand to new states in the U.S. and hire personnel, according to Chaddha. The company recently bought the assets of an energy efficiency projects company called Building Solutions.

SolarCity’s solar installations now cover thousands of roofs but can go on a million more, Chaddha said, adding that the company has done more residential and commercial installations in California than any other company.

Mayfield has made several other clean technology-focused investments, including demand response company CPower Inc. and Lattice Power Corp., a maker of materials for the manufacturing of light emitting diodes.

“We want to bring IT to the energy business,” said Chaddha of the firm’s clean-tech focus. Within this space, it’s looking at lighting, smart control systems, software for energy management, networking technology for smart grid, and other sub-sectors.

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Clean-Tech Investments Hit a High, With Solar Shining Brightest

The solar energy sector has re-emerged as a favorite among green-tech investors, who also lined up behind biofuel companies at a time when crude oil began to gush from a BP well in the Gulf and carmakers were getting ready to launch cars partly or completely run on electricity.

Clean-tech venture investments for these two sectors stood out among the deals announced during the second quarter, in which $2.02 billion -- a 43% jump from the same period last year -- went to 140 private companies worldwide, according to a preliminary report from the Cleantech Group and Deloitte released Thursday. In all, green-tech companies raised $4.04 billion for the first half of this year, beating the record of $4.02 billion set during the first half of 2008.

Although investors were more bullish during the second quarter than they were a year ago, they clocked slightly less than the $2.04 billion (among 192 deals) recorded for this year's first quarter.

Corporate investors are playing a bigger role in green tech. Some of them needed to pony up to meet government mandates, while others sought to enter or expand their reach in various emerging green-tech sectors. Corporate giants, such as Shell (RDS.A) and Alstom (ALSMY), took part in about 15% of the second-quarter deals.




"Public Markets Are Pretty Much Closed"

Raising money from going public remains difficult for many startups. Eight companies have postponed or ditched their initial public offerings so far this year, including the high-profile cancellation by Solyndra, a California-based maker of solar panels that decided to sell $175 million in convertible notes instead of going public.

The lackluster IPO market likely led to some of the large private equity and debt deals that exceeded $100 million during the second quarter, says Richard Youngman, the Cleantech Group's vice president of global research. Some startups also were able to raise good money after they had received federal stimulus funds.

"We have companies that are much more mature, and the need for capital is much greater. Public markets are pretty much closed," says Youngman. "If you look at some of the mega deals, you'll see a strong correlation between those who had received funding from government programs within the last year."

Shiny Deals in Solar, Smart Grid

The solar sector was a big winner in the second quarter. It garnered $811 million among 26 deals, including the debt financing by Solyndra. California's BrightSource Energy raised $150 million in equity and counted French industrial giant Alstom as a new investor. Another California company, Amonix, raised $129.4 million in equity.

Solar power has gotten a lot of love from American utilities, particularly because many states now require their electricity retailers to increase the amount of renewable energy they sell. Many utilities are both building their own solar farms as well as buying solar electricity from producers. They signed 1,539 megawatts of power purchase agreements for the first half of this year, a 148% hike from 621 megawatts in the second half of 2009, the Cleantech Group says.

Meanwhile, companies that are figuring out various steps for making fuels from plants, agricultural wastes or other types of biomass collectively raised $302 million in 13 deals during the second quarter. High-profile deals include the $61 million in equity from California-based Amyris Biotechnologies, which also raised an additional $47.8 million from Singapore's Temasek Holdings. Virent Energy Systems in Wisconsin received $46 million from Shell and Cargill Ventures, while Kior in Texas grabbed $40 million.

Smart-grid and energy-efficiency technology developers also pocketed substantial investments. The term "smart grid" refers to a wide range of software and equipment to help utilities and their customers better monitor and manage energy distribution and use. The sector raised $256 million in 11 deals during the second quarter. Landis+Gyr, a Swiss maker of meters with advanced communication technology, raised $165 million. Florida-based OpenPeak, which creates home energy management devices, bagged $52 million.

China's Clean-Tech Push

Overall, the second quarter saw 19 IPOs totaling $2.31 million, and 12 of the offerings totaling $1.73 billion came from the Chinese market. California-based Tesla Motors (TSLA) was among the three companies that went public in North America and collectively raised $304 million.

"Right now, data suggest that if there's appetite for clean-tech IPOs, then that appetite is stronger in the East than the West," Youngman says. Some of the largest Chinese IPOs over the past year: China Longyuan Electric Power raised $2.2 billion, while Chongqing Water raised $511 million.

Although Tesla Motors' $226 million IPO this week met with an enthusiastic investor response, it was an exception. When Solyndra filed to go public last December, it was looking at raising as much as $300 million. But the company, which had raised $970 million in equity and won approval for a $535 million federal government loan to build a factory, said unfavorable market conditions forced it to cancel the IPO.

Nobao Renewable Energy, a Chinese company that builds geothermal energy systems to heat and cool buildings, also ditched its IPO plan last month. Trony Solar, a maker of amorphous-silicon solar panels in China, postponed its IPO as well last December.

Meanwhile, JinkoSolar (JKS), a crystalline-silicon solar panel maker from China, went public on the New York Stock Exchange in May this year and failed to excite investors. The company's shares launched at $11 and closed at $11.01 on the first day.

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Yingli Secures $5 Billion Loan from Development Bank

China may double the world’s capacity for making solar panels by loaning Yingli Green Energy Holding Co. 36 billion yuan ($5.3 billion) to expand production, a Bloomberg New Energy Finance analyst said.

The funds from the state-run China Development Bank Corp. follow an agreement to lend as much as 50 billion yuan to Suntech Power Holdings Co. in April. Some 30 billion yuan was also loaned to Trina Solar Ltd. by the bank in the same month, according to New Energy Finance. The three New York-traded companies are China’s biggest solar firms by market value.

“The loans are enough to increase the world’s solar wafer and cell capacity by 100 percent,” said Jenny Chase, head of solar-energy analysis for New Energy Finance in London. “It will allow the Chinese companies to deliver unprecedented economies of scale.”

The money will allow China to strengthen its position as the world’s largest maker of solar panels used to generate electricity from the sun’s rays. Yingli and its Chinese competitors shipped 43 percent of the world’s solar panels last year, according to the London-based research group owned by Bloomberg LP.

Yingli will use the funds to finance both domestic development and boost its overseas business, the Baoding-based company said in a statement on its website. The company didn’t provide further details or disclose terms of the loan.

China Development Bank also extended an eight-year loan of $70 million to Yingli in December 2008 to fund expansion. The company said in a separate statement it has started production on a solar panel factory able to make 400 megawatts of generation capacity a year.

Capacity Expansion

Yingli expects its newest production lines to reach full capacity by the end of the third quarter, raising its total output capacity to 1 gigawatt. The China Development Bank loan may be enough to raise Yingli’s production capacity to as much as 5 gigawatts, Chase said.

The 50 billion yuan loan agreement with Suntech may be used to help expand output capacity, said spokesman Rory Macpherson.

“The strategic agreement signifies China Development Bank’s confidence in the ongoing growth of Suntech and the solar industry,” he said. “The use of the funds was not specified though could potentially be used for capacity expansion.”

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IMS Research Estimates 14.6GW Installed in 2010

Despite only a small improvement in solar inverter component supply expected in the second-half of the year, IMS Research has raised its forecast for global photovoltaics system installations. The market research firm expects installs to reach 14.6 GW, a 95% increase from 2009 and nearly three times size of the market back in 2008. Increased demand from Germany and other European countries is fuelling demand but growth in other regions such as the U.S. is playing a part, IMS Research said.

“Basing our forecast on inverter production is incredibly important this year as it’s well documented that inverter supply is limiting the PV market to a massive extent,” noted Ash Sharma, PV Research Director at IMS Research. “Although demand may be higher than this 14.6GW, if customers are not able to secure inverters then installations will not be completed.”

According to the market research firm, the top three markets in 2010 will be Germany, Italy and Czech Republic, which are predicted to install a combined 9.8GW of new PV capacity. Germany is expected to account for some 47% of new capacity, IMS Research said.

However, emerging markets in Asia and North America will gain share over Europe, leading to a slight share fall for EMEA countries to 78% of the market.

With acute shortages in top-brand inverters, IMS Research noted that double ordering is taking place.

“It’s possible we may see a large number of orders cancelled in 2H’10 or excess inventory in the supply chain,” noted Sharma.

German Lawmakers Compromise on FiT Reductions

German lawmakers have today (July 9) approved the easing of solar subsidy cuts for three months, lessening the blow by three percentage points until the end of September. The proposal has now been passed by a committee of both houses of parliament, changing the government plan to cut subsidies for solar power fed into Germany's electricity grid by 16% for rooftop equipment, 15% for farmland and 11% for spaces such as former industrial or military sites.

The reductions will be introduced retroactively from July 1, scaled back by three percentage points for each category until Sept. 30, when the full 16, 15 and 11% cuts will take effect.

Germany's solar industry says the three-month reprieve will do little to shield the industry, beyond offering a slightly softer landing in the short term. Industry representatives in Germany have warned this week that the feed-in tariff cut will increase pressure on companies such as Q-Cells and Solarworld as they face competition from producers in China.

"Germany's solar industry now faces the big challenge of lowering production costs even faster than they were cut in the past," said Carsten Koernig, head of the BSW German solar-industry lobby.

"It's not much of a concession, and it won't really change anything for any companies," said another spokesman for trade body BSW. "But we're happy the debate is finally coming to an end, so industry and consumers will have a basis on which to make plans."

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