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Issue 26
Renewable energy country
attractiveness indices
Global highlights
h
This issue sees the US reelinquishing its top position held since 2006 — dropping two points
In this issue: to slip behind China, effe
ectively crowning the Asian giant the most attractive market for
renewables investment. This
T follows the failure in the US Senate’s proposed energy bill to
Overview of indices 1 include a Federal Renewa able Energy Standard (RES) provision. The expiry of the treasury
The low carbon transition to the grant program after 201 10 further provides no real effective incentive mechanism for
grid parity age 2 renewable energy (RE) projects. The US wind index also fell two points, following difficulty
faced by wind developerss to obtain finance due to low natural gas prices and slack
Issue highlights – electricity demand affectting the offtake of wind power.
d bt and
debt d equity
it 6
Spain has suffered a sing
gle point downgrade largely as a result of current deliberations
M&A activity 8 regarding retroactive chaanges to photovoltaic (PV) tariffs. If implemented, these are
expected to have a signifficant detrimental impact on Spain's relative rating across the
IPO activity 9
whole renewables sectorr, reflecting the increased regulatory risk of investing in Spain.
All renewables index 10
Germany dropped a point, having finally announced cuts to solar PV tariffs, which are set
Wind indices 11 ons, given the frantic rush to install in the first half year to obtain
to stunt future installatio
Near-term wind index 12 the higher rates.
A strength of Ernst & Young’s CAI research lies in the fact that Ernst & Young has a
comprehensive network of renewable energy professionals across the globe. The “Country
focus” pages utilize that local knowledge and experience, and this particular issue boasts a
record 15 contributions.
Ernst & Young was ranked the
leading project finance advisor
in the Americas, Europe, Middle
East and Africa between 2001
and 2009 by Project Finance
International
Accepting that there is a wide degree of consensus in most All of this can be contrasted with the more planned economy in
developed countries that they need to take carbon out of their China where capacity build up is burgeoning (in some respects
economies on a relatively aggressive basis over the next 20 overly so) both in terms of generation and manufacturing, with
years, it is reasonably expected that, post recession, the long- Western manufacturers and some international developers
term prospects for the renewables industry are buoyant, vying for their slice of the pie. Small wonder that in this issue
notwithstanding pressures on the public purse and sluggish China has reached the sole number one position in the Country
growth. Attractiveness All Renewables Index for the first time, while the
position of the US shows signs of slipping further if more action
After all, renewables offer significant benefits in terms of
does not occur.
improved security of supply, a hedge against future rises in
energy costs, and for those countries prepared to make the Yet for market-based economies in the developed world, the
necessary investment, the prospect of cleantech jobs. opportunity for renewables is greater than many perceive – as
not only does fossil fuel capacity have to be replaced but also
However, the renewables industry cannot be complacent – there
there is the requirement for a huge increase in electricity
are considerable challenges in the short and medium term –
generation capacity overall as the energy market moves toward
particularly if the sector is to take a major (if not dominant)
a greater use of electricity in relation to transport and the
share of the energy mix as economies transition to a low carbon
provision of heat. The implications of this are only just being
environment.
thought through. For example, in the UK, this may lead to a
Detractors, particularly in the US, state that the cost of doubling of electricity generation in the UK by 2050
renewables puts a burden on general industry making it less notwithstanding radical measures to increase energy efficiency
competitive. Certainly this is currently making cap and trade (as set out in the recently published 2050 Pathways Analysis).
diffic lt to implement
difficult implement. The voluntary
ol ntar carbon offset market is in
For governments, the challenge may well be the extent to which
widely reported difficulty, with the COP16 global summit at
market-based solutions are able to provide the speed of change
Cancun in November regarded as challenging. The latter
and scale of investment required to achieve carbon targets — or
particularly affects projects in the developing world which are
indeed match the level of investment in China. For corporates,
often dependent on joint implementation/clean development
the challenge is likely to be whether they are able to provide the
mechanism (JI/CDM) and voluntary offsets.
levels of capital required for unprecedented growth or whether
For developed economies, it is unlikely to be sensible to base an other players will enter the market.
economy wholly on fossil fuels. As discussed in the last issue of
The potential is that electricity suppliers and generators double
the CAI, the challenge for governments in developed countries
their revenues in the next 20 to 30 years (which would, for
is to select support mechanisms that are both cost-effective for
example, move E.ON from 27th place in the Global Fortune 500
the taxpayer/consumer, while sufficiently attractive to stimulate
to 5th place). At present, many utilities are relying on joint
the vast quantities of investment required.
ventures or infrastructure and sovereign wealth funds to meet
Obtaining capital remains difficult. As some economies take the funding gap. Even these may have insufficient resources to
faltering steps to the restoration of growth, it is evident that a plug the gap – perhaps leading to the need for asset-specific
relatively high proportion of recent European projects have floats and bond issues, as was more common in the 19th
been reliant on European Investment Bank participation and in century.
the US those projects that go ahead, more often than not, are
For some of those engaged in the more emerging renewable
those which benefit from US Treasury buyouts of the Production
technologies, fiscal pressures in the West may cause difficulties.
Tax Credit/Investment Tax Credit (PTC/ITC).
Without early support, there may be a misplaced assumption by
Government involvement in finance is critical going forward, and policy-makers, that room will still be available for newer
this is exemplified by the UK Coalition Government’s welcome technologies in the marketplace even if their commercial
announcement of a Green Investment Bank as a conduit of deployment is delayed – either due to the rationing of finance
public and private finance – but on terms subject to the rigours due to fiscal pressures or intolerance of the inevitable early
of a forthcoming spending review. And the impact of tightening stage setbacks. It will require considerable resolution on the
government finances on support for renewables will be a part of policy-makers to create an
recurring theme in the coming months in many jurisdictions.
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
€350
€300
€250 Onshore wind max Onshore wind min
€200 Onshore wind average UK
€150 Italy Germany
€100 Spain US (California)
€50 US (New York)
€0
Wholesale grid parity – offshore wind
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
€250
Solar PV max Solar PV min
Solar PV average UK €200
Italy Germany €150
Spain US (California)
US (New York) €100
€50
Wholesale grid parity – solar PV €0
010
011
012
013
014
015
016
017
018
019
020
021
022
023
024
025
026
027
028
029
030
€350
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
€300
€250 Offshore wind max Offshore wind min
€200 Offshore wind average UK
€150
Germany Spain
€100
€50 US (New York)
€0
In the case of larger scale renewables, such as wind, where
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
The analysis indicates that in the case of PV, retail grid parity In the case of the solar sector, prices continue to fall – with the
may be reached generally between 2012 and 2015, with the US level of buoyancy or otherwise in Germany the key factor going
to the fore and the UK having the prospect of parity in 2015 if forward. As mentioned above, solar in the built environment
retail electricity prices rise as shown. Surprisingly, this is also has the advantage that investment decisions will tend to be
achieved ahead of Spain because of much lower retail prices triggered by retail price rather than wholesale price parity. For
anticipated there. However, if solar is judged by the harsher test other technologies, the ability of businesses to benefit from net
of wholesale parity, then it is not achieved until about 2030 in metering, even if the owned plant is remote, would provide a
Italy – with solar CSP achieving parity a few years earlier, similar spur.
between 2025 and 2027 in California and Spain.
As policy-makers plan the transition to a low carbon economy in
In the case of onshore wind, the UK and Italy show signs of the period to 2030 and as far as 2050, they are likely to reflect
achieving parity around 2017, with other countries such as on the timing of grid parity and the possibility of decoupling
Germany and Spain not achieving it until at least 2025. In incentive mechanisms for established technologies – with
reality, even in the UK, offshore wind is unlikely to achieve grid residual support directed towards emerging technologies if
parity on current cost trends until beyond 2030. There is clearly countries
t i are reliant
li t on them
th for
f the
th fifinall push
h ttowards
d
a great prize for innovation in the offshore sector – which still decarbonization. It is inevitable that comparison with the cost of
has the benefit of being able to scale up. If cost reductions nuclear and carbon capture storage will form part of this
occurred at the rate of 7.5% (2012-15) and 5% (after 2015) debate.
compared with the assumed 5% (2012-15) and 2.5% (after For renewables as a whole, it is premature to say that
2015), then grid parity for offshore wind would be brought decoupling from incentive mechanisms is an immediate
forward to 2025 for the UK. prospect, but it is on the horizon. For example, if uncertainty
Of course, the above analysis can only be indicative. It remains in financial markets at the point of crossover then
illustrates the increased value of renewables to economies with support measures may still be required at parity prices to
high underlying energy costs, such as Italy and New York – provide contractual certainty for bank finance.
provided the renewable technologies or the policy mechanisms Moreover, if technology costs rise again due to inflationary
used to support them are not disproportionately responsible for pressures from commodity price increases or supply chain
such costs which could occur where incentives are additional to constraints, then grid parity will be delayed – not inconceivable
the wholesale electricity price. It also illustrates the importance given the vast increase in the demand that could occur from an
of choosing those renewable technologies best able to take aggressive electrification of the heat and transport sectors.
advantage of the natural resource in a particular country – and,
most importantly, for all technologies to continually reduce But one day grid parity will come, and through the low carbon
costs if they are to achieve the desired levels of penetration. transition the renewables industry will have come of age.
that occurred pre-recession. Generation cost: HSBC, IEA, Renewable UK, Roland Berger, Ernst & Young
analysis
Electricity price: HSBC, DECC, Ernst & Young analysis
35 (28.7)
30 (24.6) United States France China
25 (20.5) Germany Japan Italy
20 (16.4) United Kingdom Spain Sweden
15 (12.3) Source: Thompson One Banker
10 (8.2)
5 (4.1)
0) Competing for bank funds
2005
2006
2007
2008
2009
2005 H1
2005 H2
2006 H1
2006 H2
2007 H1
2007 H2
2008 H1
2008 H2
2009 H1
2009 H2
2010 H1
Nov-09
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Jan-10
Mar-10
May-10
Jul-10
the unrated bond market in the first half of 2010.
► Private equity and venture capital; funds raised during the
boom period remain liquid and hold access to committed
UK short UK long US short funds from limited partners.
US long Eur short Eur long
Source: Bloomberg, Ernst & Young analysis Equity markets
Utilizing alternative sources of capital Renewable energy and indices performance
Large corporates increasingly tend to favour the bond markets 1.60
to fund renewables and other investments. However, increasing 1.40
pressure on constrained balance sheets, combined with ever- 1.20
growing capital expenditure programmes, are pushing 1.00
corporates to look to alternative sources of funding. In 0.80
particular, the need to protect credit ratings is critical. The 0.60
following graph shows major utilities have suffered significant 0.40
downgrades to their ratings in the past decade or so. 0.20
US investor-owned
investor owned utilities bond ratings
Jun-07
Aug-07
Oct-07
Dec-07
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Apr-10
Jun-10
Feb-08
Feb-09
Feb-10
- as rated by Standard & Poor's
100%
80% FTSE 100 NEX (Wilderhill)
Nasdaq HSBC Climate Change Index
60% MSCI (Asia ex Japan) MSCI China Broad
40% MSCI AC Europe
20% Source: Ernst & Young analysis
0%
Since the low point of the recession in early 2009, clear regional
At 12/31/2001 At 12/31/2009
differences have emerged during the course of the recovery. The
Below BBB- BBB- BBB BBB+ A- A or higher changes clearly display Asia’s (particularly China’s) head above
Source: Edison Electric Institute the rest while recovering from the economic downturn. With the
recession particularly intense in Europe, it is not surprising MSCI’s
There are a number of sources of alternative funding for
Europe Index remains at the lower end of the spectrum. The
renewable energy developers emerging:
Nasdaq has proved to be more resilient, outperforming the FTSE-
► Private placements; utilizing a restricted group of liquid
100 and most other indices as the US gained confidence during
investors who are looking to provide financing to low risk
renewable sector corporates, for example, Canadian firm 2009 and early 2010. Contrasting this, however, are the NEX
OPEL international raised US$7.6m (€6.2m) in July via Wilderhill and HSBC Climate Change indices, which have found
private placement. This trend echoes wider popularity of the the journey out of recession more difficult. The HSBC index has a
product during the recent bank market downturn. higher weighting of Asian companies and thus has performed
Global US private placement issuance across all sectors better than the NEX.
Amount US$b (€b)
6 (4.9)
In the last quarter, sovereign debt concerns in the eurozone soon
4 (3.3) spread elsewhere, and all markets have taken a dip. The
challenge now for renewable energy companies is to “turn the
2 (1.6)
corner” again towards profitability and attractiveness – and to
0) carry out this transformation despite public sector spending cuts
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec and the risk of a “double-dip” recession.
2008 2009 2010
Source: Ernst & Young analysis
Dong Energy has sold its entire stakes in two Norwegian energy
companies, Nordkraft and Salten Kraftsamband, to the Troms
Kraft Group for a total of US$329m (€269.5m). It received
DKK1.1b (€147m) for its 33% stake in Nordkraft and DKK900m
(€121m) for its 24% stake in Salten Kraftsamband. Dong said
its rationale was the difficult regulatory environment
surrounding hydroelectric projects in Norway. It also said it
preferred to focus on the development of wind assets rather
than hydropower.
Sources
All information relating to M&A activity in the sector is obtained from publicly
available sources.
Sources
All information relating to IPO activity in the sector is obtained from publicly
available sources.
This issue sees the US suffering a two-point drop, to fall behind Q2 saw Australia increasing one point, following the Australian
China, following failure to include a Federal RES provision in the Senate passing an amended renewable energy legislation,
Senate’s proposed energy bill. Construction of new RE targeting 20% of energy from RE. The two-part Renewable
developments is also expected to stagnate following the Energy Target is effective from 1 January 2011. The
expiration of the treasury grant program at the end of 2010 Government also committed A$652.5m (€458m) over four
with no news of renewal, thus providing no real effective years to set up a Renewable Energy Future Fund. However,
incentive mechanism. doubts still remain whether the new Government will establish a
national market for trading carbon emissions.
Germany also dropped a point, having finally announced cuts to
solar PV tariffs, which are set to stunt future installations, given Japan saw a one-point increase, following a 2.6-fold growth in
the frantic rush to install in the first half of the year to obtain its solar cell market in the financial year to 31 March, owing to
the higher rate before the announcement. the country’s aggressive climate policies. The Government
confirms it will maintain feed-in tariff (FiT) support in the current
India suffered a one-point drop following the Government’s
fiscal year.
mandate to use local PV manufacturers for the 22GW National
Solar Mission (NSM). Indian firms’ solar output is relatively small New Zealand rose a point, following the launch of an emissions
and may be insufficient given the big targets. Despite this, India trading scheme in a bid to curb carbon emissions. As a result,
could float special bonds to generate funds for the Jawaharlal energy, transport and manufacturing industries will have to pay
Nehru NSM. for their emissions of gases which is expected to have a knock-
on effect in boosting RE deployment in the country.
Rank1 Country Wind index Onshore wind Offshore wind Near-term wind
1 (1) China 7
75 78 67 81
2
2 (2) US 6
68 72 56 76
3 (3) UK 6
67 64 77 54
4 (4) Germany 6
65 63 71 52
5 (5) India 6
63 71 42 54
6 (6) Italy 6
62 65 53 46
7 (7) Canada 6
60 65 46 45
7 (7) France 6
60 62 56 46
9 (9) Ireland 5
58 58 57 41
10 (9) Spain 5
57 62 42 46
11 (11) Portugal 5
54 58 42 38
12 (12) Netherlands 5
53 51 57 37
13 (12) Sweden 5
52 52 53 34
13 (14) Belgium 5
52 50 57 37
13 (15) Greece 5
52 56 41 40
16 (16) Poland 5
51 54 42 39
17 (17) Australia 5
50 54 41 40
18 (18) Norway 4
48 49 45 33
19 (19) Denmark 4
47 44 56 34
19 (20) New Zealand 4
47 51 36 32
19 (20) Brazil 4
47 51 35 35
22 (22) Japan 4
45 48 39 27
23 (23) South Africa 4
43 46 34 36
23 (23) Turkey 4
43 46 35 32
25 (25) Finland 3
35 34 37 23
26 (26) Austria 3
34 46 0 31
27 (27) Czech Republic 3
33 45 0 31
Notes: Source: Ernst & Young analysis
1. Ranking in Issue 25 long-term wind index is shown in brackets
2. This indicates US states with RPS and favorable renewable energy regim
mes
In Q2, China increased a point following Chinese Government In contrast, Italy‘s onshore wind potential score has increased,
aims to launch 90,000MW of wind capacity by 2015. China also following EDF Energies Nouvelles’ commissioning of Italy's
started generating power from its first pilot offshore wind largest wind farm at 99MW installed capacity.
project at East China Sea bridge with capacity of 100MW. China
Spain dropped a point, following a 35% cut in subsidies expected
will invite public bidding for more offshore wind power projects
for the wind energy sector over a 30-month period. This is said
in the next five years to reach an installed offshore wind-power
to save the Government as much as €1.2b in reduced subsidy
capacity of 5GW by 2015.
payments. Despite this, Spain’s Aragon region approved a bill to
US fell a further two points in the Wind index, following low foster 1GW wind power for commercial start-up beginning in
natural gas prices and slack electricity demand, which give 2013.
utilities “no incentive to sign long-term contracts” with wind-
Brazil has risen a rank as the Brazil commission approved a 10%
farm developers. Without those PPAs, developers are having
renewables target for 2018, which effectively brings the
difficulty obtaining funding. Only 539MW was installed in Q1,
previous target forward four years. This follows the two
marking the lowest first quarter of new capacity since 2007.
renewable energy auctions held in August. The national energy
Despite substantial growth identified in Q1, India has dropped a research company has registered 517 companies for
point, following the Government having cut its five-year target participation with a combined capacity of 15.8GW.
for new wind energy generation from 11GW to 9GW, in light of
the global economic slump.
China aims to develop renewable and nuclear energy with the China Longyuan Power Group Corp. plans to spend about
goal of increasing the share of non-fossil fuels in total primary CNY92b (€11.1b) over the next five years to become the
energy consumption to 15% by 2020. world’s No.1 wind-power producer. The Hong Kong-listed
company aims to install at least 16,000MW of wind turbines in
In 2009, of the overall national energy capacity, 7.8% included China and overseas by 2015.
nuclear, solar and wind power systems in the non-fossil
category.
t
Markets
Chinese regulators have ordered a freeze on some initial public
share offerings in the renewable energy sector, amid fears that
overcapacity will weigh on the rapidly growing industry.
Solar
China plans to develop 13 solar power projects in the western
region as part of a Government aim to cut emissions and boost
energy investment in the area. The Government is tendering for
bids to develop the projects in six provinces, which will have a
combined capacity of 280MW.
Biomass
China needs CNY413.5b (or roughly €49.9b) in investments
over the next 10 years to harness its biomass energy potential
in rural areas, said Asian Development Bank (ADB). If livestock
manure and crop stalks were converted into clean fuel, it could
provide electricity to around 30m rural people in China who are
still dependent on kerosene lamps for lighting, the report said.
Contact:
Ivan Tong
Tel: +86 10 58153373
Email: ivan.tong@cn.ey.com
Ben Warren
Tel: +44 (0)20 795 16024
Email: bwarren@uk.ey.com
Offshore wind
Thousands of MW of potential wind farm projects off Germany Contact:
are on hold pending completion of critical species and habitat Dr. Frank J. Matzen
protection measures. The German Federal Office for Tel: +44 (0)207 951 0331
Environment (BSH) has said it must finish its investigation into Tel: +49 6196 996 25259
Email: frank.matzen@de.ey.com
the effects of noise and foundation issues before significant
progress can be made on applications. Dr. Florian Ropohl
Tel: +49 40 36132 16554
Email: florian.ropohl@de.ey.com
Contact:
Roberto Giacomelli
Tel: +39 331 6744229
Email: roberto.giacomelli@it.ey.com
Nevertheless, there is still a significant level of uncertainty The largest offshore wind farm in the world, with 300MW,
about the future of renewables policies, which causes some owned by Swedish utility Vattenfall has produced its first power
discomfort for investors. to the grid. Additionally, Dong Energy's 172MW Gunfleet Sands
offshore farm in the Thames Estuary has been fully
The coalition has cut funding for low carbon programs, including
commissioned and is now supplying electricity to the national
reducing funding for offshore wind development and the UK
grid.
g
C b T
Carbon Trust.
t Th
The C
Carbon
b T Trustt will
ill receive
i £12.6m
£12 6 (€15.6m)
(€15 6 )
less money from a budget of around £100m/year. The offshore Biomass
wind capital grants scheme, the low carbon technology program
The Department of Energy and Climate Change (DECC) outlined
and a geothermal grant program will have their budgets reduced
in July its support for the next two decades of “straight
by a total of £6.9m (€8.5m), while £5.4m (€6.7m) will be
grandfathering”, i.e. guaranteed renewables support for
eliminated by the early closure of the bio-energy capital grants
technologies. This important go-ahead for bioenergy projects
scheme and the energy saving trust.
should release some £13b of private capital into the industry.
In its June budget, the Government suggested it may introduce This welcome result for the industry illustrates a shift in attitude
FiTs for large-scale renewable projects, such as offshore wind towards further encouragement from DECC.
farms and marine energy, and could keep the ROC or existing
The exception of supporting bioliquids such as combined heat
projects only.
and power (CHP) fuel or landfill waste substances somewhat
Access to finance minimizes the news, but the highlighted interest in the field
should lead to further progress. The assurance of return to
The Co-operative Bank says it will double its funding for
investors should catalyze interest in a business that has
renewable projects, lending £200m (€246.9m) this year to
remained dormant over the last eight months.
renewable projects, up from £100m (€123.5m) in 2009.
Wave
Infrastructure
Wave energy developer Aquamarine Power has unveiled the
The Government pledged to build a power distribution grid
design of its Oyster 2 wave energy converter, which will be built
offshore, removing one of the barriers to expanding wind and
in Scotland. The new 800KW device will deliver 250% more
tidal energy planning to new plants to generate electricity.
power than the original Oyster 1. It will be another step on
building the world’s first commercial wave farm.
Contact:
Ben Warren
Tel: +44 (0)20 795 16024
Email: bwarren@uk.ey.com
On 28 June 2010, the French Parliament adopted the Grenelle Grenelle 2 makes widespread changes to administrative
2 Environmental Law, which details the Government’s measures processes for approving renewable energy projects, including
to improve energy efficiency, protect the environment and reducing administrative requirements for onshore and offshore
reduce CO2 emissions The policies follow previous Grenelle wind projects. The Government dropped its proposal of a
Environment plans and debates, that took place in 2007 and are minimum 15MW – threshold for new onshore wind farms
articulated around the following six main thrusts: energy following protests from the industry, but it won approval in the
efficiency, transportation, energy consumption decrease, bill a five-turbine minimum threshold for new wind farms. Now,
renewable, waste risk management, and environmental in order to benefit from the FiT, wind power plants must now
governance. comprise at least five turbines.
One of the key measures to promote renewable energy Until the Law was adopted, the benefit of the wind energy FiT
production is the implementation of regional climate, air and system was reserved to wind farms installed within the so-called
energy schemes (SRCAE). The SRCAE are regional renewable “zones de développement de l’éolien (ZDE)” which are set up by
energy plans to be drawn up by the Préfets of the region and the Préfet. The Law sets forth that a Pursuant ZDE is no longer
shall define the regional objectives with respect to energy required for offshore wind facilities.
control, determine the options available to reduce air pollution, In addition to the building permit procedures (including the
and determine objectives to achieve valuation of ground energy carrying out of an environmental study and a public inquiry),
potential. Each region of France is to set up a SRCAE within one wind turbines with a tower higher than 50 meters will also be
year as from the date of publication of the Law and an subject to the “industries classified for the protection of the
assessment of the scheme will be made after five years. environment” regulations and procedures. The Law provides
Solar that this new regulation shall not apply to building permit
applications made before the listing of wind turbines
Article 33 of the Grenelle 2 Law validates the three Ministerial installations as industries classified and for which the public
Orders of 12 January and 15 January 2010 that govern the inquiry opening order was already passed.
solar PV FiT benefit for electricity generated by solar PV plants.
The Law also stipulates that wind turbines shall only be installed
These orders were challenged before the administrative courts
at least 500 meters away from houses and apartment flats or
on the grounds that the prior consultation requirements had not
areas which could be used for habitation.
been complied with and the new FiTs were immediately
enforceable against the applications made under the previous
order dated 10 July 2006.
Contact:
Jean Christophe Sabourin
Tel: +33 1 55 61 18 55
Email: jean.christophe.sabourin@ey-avocats.com
Policy There are more than 3,500MW of solar PV already installed due
to the FiT scheme and consequently the PV boom in 2008.
In order to reduce both dependence on foreign oil and carbon
emissions, the Spanish Government authorized a generous FiT The agreement for premium cuts for wind energy in Spain was
scheme, creating strong wind and solar PV markets. relatively easily reached. This is not the case for PV and it is still
not clear which cuts may be coming in Spain’s compensation
This led to a flood of investments causing a bubble effect system for PVs. The Government is also investigating
(investors achieving 15% IRRs under a Government guarantee). irregularities under the 2008 FiT plan as there are installations
Although g the Government introduced a new pre-registration
p g that were connected under false or misleading circumstances.
circumstances
system for future renewable projects and reduced the regulated The latest news on this is that the Government may offer
tariff, this did not stop the tariff deficit. pardon to the plants with anomalies if they are willing to accept
A €20b electric tariff deficit presents the Government with a less beneficial rates.
different series of challenges: securitization of utilities debt Main companies: Fotowatio, T-Solar, Solaria.
after the credit crunch, managing of the phasing out of the
nuclear energy, carbon subsidies, behavior of petroleum, Thermosolar
natural gas, coal prices, etc. Currently Spain operates 432MW of thermosolar capacity but
Given the current economic climate, the Government is today there are 100 applications for thermosolar power plants
reviewing bonuses presently granted to renewable energies. totaling 4,300MW of capacity.
There are ongoing talks with the industry about retroactive cuts To prevent a bubble from emerging as observed in the PV
in tariffs. sector, the Government has decided that new plants will be
In addition to industry associations and investors concerns, the subject to a tariff-premium moratorium during the first year of
banking sector has also raised its voice, given the risks faced by operation, while an undisclosed number of projects are to
renewable projects which are highly leveraged. experience starting delays. As in the wind sector, there will also
be a cap on the number of hours in which thermo solar plants
Due to the uncertainty of the tariff regime, companies had to
are eligible to obtain rates above market prices.
postpone their planned IPOs (i.e., Renovalia and T-Solar) and
are looking to invest in other markets such as the US, Latin Main companies: Abengoa, Acciona, ACS.
America or Italy. To rectify this, the Government is working on
the implementation of measures in order to ensure future
stability.
Contact:
Eva Abans
Tel: + 34 93 366 38 05
Email: evamaria.abansiglesias@es.ey.com
Victor Duran
Tel: + 34 91 572 73 50
Email: victor.duranschulz@es.ey.com
Contact:
Mark Porter
Tel: +1 416 943 2108
Email: mark.porter@ca.ey.com
Contact:
Maurice Minogue
Tel: +353 (0)21 4805700
Email: maurice.minogue@ie.ey.com
Contact:
Georgios P Smyrnioudis
Tel: +30 210 2886 461
Email: georgios.p.smyrnioudis@gr.ey.com
Contact:
Diederik van Rijn
Tel: +31 88 407 8775
Email: diederik.van.rijn@nl.ey.com
Planning Contact:
In accordance with the Spatial Planning and Development Act, Kamil Baj
use of property and building development of a given property is Tel: +48 23 557 8855
determined by the local spatial development plan. A zoning Email: kamil.baj@pl.ey.com
permit is required for properties not included in the plan Jacek Rodzeń
mentioned and it should be issued within two months. However, Tel: +48 23 557 6234
in practice it may take up to four to six months. Email: jacek.rodzen@pl.ey.com
Contact:
Luiz Claudio S. Campos
Tel: +55 21 2109 1710
Email: luiz-claudio.campos@br.ey.com
5. Geothermal index
3E 8 Electrawinds 26
Electricity Supply Board, Electricity Supply Board
A2SEA 8 International 22
ABB 8 Eneco 24
ACS 20 Enfinity 26
BARD Group 8 15
8, 15, 24 Fotowatio 20
E.ON 2 Nissan 22
Renault 22
Renova Energia 9
Renovalia 9, 20
Salten Kraftsamband 8
Siemens Energy 8
Solar Millennium 14
Solaria 20
SolarWorld AG 7
Suncor Energy 21
SunEdison 14, 21
TenneT 24
Tra Investments 22
TransAlta 21
T-Solar 20
Van Oord 24
Ventyx 8
Veolia 23
Contact
For further information on our services and for future copies of the indices,
please visit our website www.ey.com/renewables or contact:
Ben Warren
Partner, Ernst & Young LLP
bwarren@uk.ey.com
Andrew Perkins
Partner, Ernst & Young LLP
aperkins@uk.ey.com
Dane Wilkins
Director
dwilkins1@uk.ey.com
Arnaud Bouille
Director
abouille@uk.ey.com