 |  | | Obama's clean power plan held up as crude oil tax makes an entry The clean power plan of the Environmental Protection Agency of the US – which required states and utilities to use less coal and more wind power, solar power or natural gas – was temporarily put on hold last week. The plan is designed to lower carbon emissions from power plants by 32% from 2005 levels by 2030. At least five states said they would continue with efforts to curb emissions, despite the stay: Colorado, New York, California, Virginia and Washington. "We will stay on course and continue to develop the elements for a Virginia plan to reduce carbon emissions and stimulate our clean energy economy," Governor Terry McAuliffe said in a statement. Virginia is one of the 18 states seeking to defend the clean power plan from legal attacks. Although the move is a blow to the Obama administration, it is unlikely to derail the decarbonisation of the US power sector, Bloomberg New Energy Finance said in a note titled: US Supreme Court routes clean power plan into the slow lane. BNEF modelling suggests very little incremental work above the US business-as-usual trajectory would be required to comply with the clean power plan. From clean power to clean vehicles: Tesla Motors announced that its Model 3 would be unveiled on 31 March, and production and deliveries would start in late 2017. It will have a price tag of roughly $35,000 before incentives like the federal tax credits or state rebates. The company is pinning its hopes of getting out of the red and into sustainable profitability with this vehicle, whose lower price is expected to broaden its appeal to more buyers. General Motors' German brand Opel said it would introduce its first fully electric car next year as part of a 29-model line-up overhaul, putting pressure on Volkswagen as it reels from the diesel-emissions scandal. The new car, dubbed the Ampera-e, will have five seats and a longer range than most battery-powered cars and be "affordably priced," chief executive officer Mary Barra said. General Motors is set to roll out its all-electric Chevrolet Bolt later this year. President Barack Obama meanwhile proposed to raise $319bn over the next decade via a $10.25-per-barrel tax on crude oil. The money would be steered to a "21st Century Clean Transportation Plan to upgrade the nation's transportation system, improve resilience and reduce emissions," according to the budget documents. While major questions still remain unanswered, including how and when the fee would be charged, the White House envisions collecting the tax from an estimated 4bn barrels of domestic and imported oil in 2022, once it is fully phased in. The Organisation of Petroleum Exporting Countries expects there to be 1.7m electric vehicles on the road by 2020. Bloomberg New Energy Finance expects 7.4m electric vehicles on the road by then, thanks to a steep fall in battery prices. Details about our assumptions and projections can be found in the note: Heads in the sand? Opec's 2040 oil outlook. In Australia, AGL Energy announced a plan to build 1GW of new large-scale renewables by setting up of a fund that could be as large as AUD 3bn ($2.1bn). It will invest AUD 200m, and seek other equity investors to make up 30-40% of the fund, while the remainder will be mobilised via the debt route. Will this trigger a market restart? Our note has the details. There was action in the biofuels sector last week, with China's Sunshine Kaidi New Energy Group announcing an investment of EUR 1bn ($1.1bn) in a new biodiesel plant in Finland, betting liquid fuels will play a key role in the transport sector over the coming years. SolarWorld won a bid to have European Union tariffs on Chinese solar panels extended to Malaysia and Taiwan after the EU found that China's exporters used the two other countries to evade the levies. China, meanwhile, pushed past the EU to emerge as the region with the most power capacity. It now hosts a third of the 432GW installed across the globe. In offshore wind, the parent of toymaker Lego boosted its investments, joining the Danish pension fund PKA to buy half of an unbuilt 258MW project in the UK from Dong Energy. Kirkbi and PKA agreed to pay about GBP 660m ($956m) and will each own 25% of the Burbo Bank Extension project, off the coast of Liverpool, UK, according to a statement on Dong's website. The wind farm is due to be completed in 2017 and will be the first to use the 8MW wind turbine produced by MHI Vestas Offshore Wind. | |  | | US CPP target for 2030 would require little work above its business-as-usual emissions trajectory, finds BNEF |  | | | Very little incremental work would be required above the US business-as-usual trajectory (blue line on graph) to comply with the CPP, if it were to be enforced, according to BNEF modelling. US power-sector emissions will end in 2030, 29% below 2005 levels under BNEF's BAU forecast, even without taking clean energy tax credit extensions into account. | |  | | Pakistan's 'immense potential' to be $1bn-a-year market Pakistan should be one of the next emerging economies to break through the $1bn-a-year investment barrier for renewable energy excluding large hydro, the head of the country's government agency promoting green power said. In 2015, the Asian nation of 182m people attracted a record $720m of investment in wind and solar, according to Bloomberg New Energy Finance, and it is now starting to attract interest from more foreign companies. "We recently conducted some roadshows to promote investments... We received a very good response from the US, from Europe and from China as well," Amjad Ali Awan, chief executive officer of Pakistan's Alternative Energy Development Board, said in a telephone interview. China is currently leading clean energy investments in the power-deficit country under the China-Pakistan Economic Corridor. The 900MW solar project of China's Zonergy is progressing as per schedule, with the first 300MW to be commissioned in about three months. In addition, another 650MW of wind and solar projects are in line to achieve financial close this year. Denmark's Vestas Wind Systems said this month that it would help Pakistan's Punjab government obtain $2.2bn in financing for building 1GW of wind projects in that state. Investor interest has not been dampened by the recent fall in electricity prices, which are linked to the price of fossil-fuels. Industrial tariffs for instance were cut by about 20% or PKR 3 per unit on January 1 2016. "I don't think that changes the appetite for renewables," Awan said. He underlined the main draw for investors: an assured 17-18% return-on-equity. Pakistan relies on fossil fuels (natural gas, oil, diesel) for over two thirds of its electricity, with large hydro providing the balance. AEDB is pushing for the share of renewables excluding large hydro to be raised to as much as 20% of overall electricity generation. Limited transmission capabilities, land acquisition difficulties and security concerns could pose obstacles to renewables expansion. The following is an extract from a Q&A with Amjad Ali Awan, chief executive officer of Pakistan's Alternative Energy Development Board, published in this week's Clean Energy and Carbon Brief: Q: Do you think renewable energy investments in Pakistan could leap the $1bn barrier this year?
A: The potential is immense. We are receiving a good response from investors, despite the reduction in solar feed-in tariffs effective on 1 January. On the wind side, only one corridor in the southern side is active right now. The potential there is 35,000MW, and only 300MW have reached commercial operation so far. Nine projects with about 479MW of capacity have achieved financial close and are under construction, while another 560MW of projects are at different stages of development. In solar, a 100MW plant is operational, while another one of 300MW has achieved financial close. In the next three months, it is likely that commercial operation will be achieved.
Q: The largest chunk of renewables investment is coming from China, some of it under the $45bn China-Pakistan Economic Corridor, or CPEC. How is that progressing?
A: It is proceeding as per targets. The projects that are in CPEC – wind projects of 200MW and 900MW of solar – will achieve commercial operation in time. There are 34 energy projects under CPEC. Q: Which are the other countries active and interested in investing in the renewable energy sector in Pakistan?
A: We recently conducted some roadshows to promote investments, including in the US. We received a good response from there and from Germany as well. The good thing about Pakistan is we have a very clear policy, and that policy has been working for the last 20 years. The documentation is evolved. Those are bankable documents. We are ensuring around 17-18% return on equity. We have very generous fiscal incentives for investors. That is why we are receiving a very good response from the US, from Europe and from China as well... This is an excerpt from the Clean Energy & Carbon Brief published weekly. To subscribe to the Clean Energy & Carbon Brief, click here. | |  | | | | | | BNEF services | Contact BNEF | Unsubscribe Copyright © 2007-2016 Bloomberg Finance L.P. All rights reserved. This email has been sent to you by Bloomberg New Energy Finance, a division of Bloomberg Finance L.P. Please feel free to forward it to colleagues interested in renewable energy and energy technologies, provided it is complete and identifies Bloomberg New Energy Finance as the source. Bloomberg New Energy Finance does not purchase data from or to third parties. If you have received this from a colleague and would like to receive your own personal copy each week, please contact sales.bnef@bloomberg.net Please send any queries/comments to the Week in Review editor, and make sure you send us your own financial transactions in renewable energy and energy technology sector: editor.bnef@bloomberg.net.
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