RECAI: Latest developments

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Country-specific highlights

China streamlines solar. After installing a record-breaking 12GW of solar capacity in 2013, China will be targeting 14GW this year and has ramped up consolidation efforts. In January, the Government published a list of 109 Chinese solar companies still eligible for domestic support, such as favorable financing terms and participation in public tenders, and state-owned electricity grid operators are now obliged to buy all available solar power or risk penalties.

India scales up. After a series of delays, phase two of India’s National Solar Mission attracted bids totaling 2,170MW, almost triple the 750MW on offer. This success is likely to boost support for plans to launch a similar program for wind which will target 100GW of capacity by 2022. Recent Government plans for a 5GW solar project in the Ladakh region further emphasize India’s renewable ambitions.

Mexico shake-up. A radical energy reform bill approved in late 2013 is expected to boost Mexico’s economy and increase international participation across the sector. It will also help create an independent grid operator and a competitive wholesale power market. These reforms, and a new carbon tax which took effect on 1 January, are expected to boost foreign and domestic investment into an already thriving renewables sector.

Australia risks derail. Government bills to repeal the carbon pricing legislation and the US$9b Clean Energy Finance Corporation were approved in the Lower House in November. The Government will also undertake a review of the Renewable Energy Target. Such developments will inevitably have a downward impact on investment as projects begin to be evaluated on the basis of raw economics, although recent analysis identifying Australia as a key grid parity market for wind and solar signal an attractive market in the long run.

Germany drops the axe. The long-awaited formation of a coalition government and proposals on how it intends to tackle rising energy costs have brought much-needed clarity to the German renewables market. However, it also brings capacity and subsidy reductions, as well as surcharge payments for self-consumption. The sector’s reaction has been stoical, but there is little doubt the proposed reforms will reduce the attractiveness of the German market.

UK in a spin. Government proposals to make mature renewable technologies compete for subsidy support under the new contracts for difference regime have thrown the UK market into a spin. Mixed policy signals on its long-term energy strategy continue to reduce investor confidence in the Government‘s commitment to a low-carbon energy future, while the mothballing of large-scale offshore wind projects has also caused concern.

Deal, investment and policy highlights

EU in the spotlight.

The recent release of two major EC proposals looks set to shake-up the global renewables landscape in the coming decade.

2030 climate and energy goals

Climate and energy proposals for the post-2020 period, published in late January, are likely to form the basis of any global climate change treaty in 2015:

  • Binding targets for each Member State to reduce greenhouse gas emissions 40% below the 1990 EU-wide binding renewable energy target of at least 27% in 2030 (this had no specific binding targets on individual Member States though, unlike the 2020 target)
  • An indicative target of increased energy savings of 25% by 2030, though subject to further debate
  • Reform of the EU Emissions Trading Scheme to establish a flexible supply reserve
  • New governance framework to simplify and streamline processes for reporting by Member States.

The reaction

It seems the European Photovoltaic Industry Association said what everyone else thinks when it labeled the 2030 package a “lame duck.”

Criticism of the proposals generally falls into two categories: those claiming that a 40% emissions reduction target does not go far enough, and those attacking the lack of binding renewables targets for Member States.

The outcome was always going to be a compromise, but with the proposals allowing technologies such as nuclear, carbon capture and storage and energy efficiency to be used to meet the overall carbon goal, the imperative behind renewables deployment has suffered.

State aid for renewables projects

In December 2013, the EC invited comment on proposed revisions to state aid guidelines for assessing public support for energy projects. The proposals will probably require most EU-28 countries to adapt renewable support schemes in some way, potentially affecting the region’s global competitiveness.

See our "Key developments” section on page 13 of the report for an outline of the key proposals.