Monthly Archives: August 2015

Market

Challenges

„  A report released by the International Energy Association predicts that R&D spending within the ‘low carbon’ sector must increase threefold to more than $50bn pa if global warming is to be limited to 2oC

„  A report released by US think tank the World Resources Institute warned that more aggressive action will by required if the US is to meet its current GHG reduction goal of 26%–28% on 2005 levels by 2025

„  A study led by Charles Darwin University estimates that reduced productivity and absenteeism resulting from heat waves currently costs the Australian economy around $6.2bn pa, a figure that is set to increase considerably with the impact of global warming

Progress

„  Globally, more than 7.7m people were employed in the renewable energy industry at the end of 2014, an 18% increase on 2013, according to a report released by the International Renewable Energy Agency. Around 3.4m of these are based in China, which has 70% of the world’s solar manufacturing capacity. Leading markets in the EU have seen a contraction in employment levels as a result of a surge in Asia and the US

„  A new deal was agreed to remove surplus allowances from Europe’s emissions trading scheme by 2019. This is expected to be confirmed in July

„  Japan agreed to donate $1.5bn to the Green Climate Fund, which is intended to become the main financing arm of the UN FCCC. The agreement means that almost 60% of the $10.1bn pledged to the Fund by 33 governments has been confirmed

„  China reduced CO₂ emissions by an amount equivalent to the entire UK output over the first four months of 2015

„  The Inter-American Development Bank approved two $72m loans for two 70MW wind energy projects in Uruguay. The China co-financing Fund for Latin America and the Caribbean is providing a further $36m to each project

„  BoA Merrill Lynch issued a $600m green bond designed to finance clean energy and energy efficiency projects

„  More than 10,000 residents of Belgium pledged support to an initiative designed to legally compel the government to do more to address climate change

„  A report release by GTM Research predicts that the US market for distributed PV services (eg asset management, O&M etc) will reach $800m by 2020. Similarly, an industry outlook published by Canadian Solar (one of the world’s top three Solar PV manufacturers) estimates that the cost of solar PV modules will fall by 25% over the next three years

„  Maersk Line, the world’s largest container ship operator, announced plans to cut emissions per container moved by 60% by 2020, as part of plans to reduce GHG emissions by 200mt CO₂(equivalent) over the same period

„  Unilever announced that it has saved one million tonnes of carbon emissions since 2008 via a range of initiatives including waste-to-energy installations and factory energy efficiency measures. The company estimates that this has saved it €244m in energy costs

Food for thought

„  A report published by CERES contends that the majority of major food producers are ill prepared to deal with the growing shortage (and increasing price) of water, with few actively tracking water use or incentivising savings throughout the supply chain. Agriculture accounts for around 70% of the world’s water consumption, according to the UN Food & Agriculture Organisation

„  A two day meeting of G20 agricultural ministers held in Istanbul to address the problems of food security and nutrition called for better management of food waste. The UN Food and Agriculture Organisation estimates that 1.3bn tonnes of food, equivalent to 30% of global production, is lost or wasted each year. Globally, it is estimated that food waste costs the hospitality sector £44bn per annum, according to resource efficiency charity WRAP

„  A report issued by the International Centre for Tropical Agriculture warned that the Arabica Coffee plant, which provides c70% of raw materials to the global coffee industry and is key to the livelihoods of an estimated 25m small scale farmers across 60 countries, stands to be heavily impacted by expected climate change. The plant is particularly sensitive to temperature increases (resulting in reduced growth and vulnerability to pests) and will be unlikely to survive indefinitely within key coffee-producing areas without mitigating strategies (such as genetic modification or changes in farming methods). Globally, coffee is the second most traded commodity after oil

O&G sector in decline but still massively subsidised

„  The IMF released a report estimating that fossil fuel companies receive subsidies totalling $5.3tn annually, a figure greater than worldwide governmental health spending and equivalent to $10m a minute or 6.5% of global gross GDP. The report estimates that ending such subsidies would cut global carbon emissions by 20% and half the 3.2m premature deaths that result from air pollution each year

„  Norway’s $916bn oil find moved forward with proposals to divest from companies with a reliance (either through revenues or power use) of more than 30% on coal. If passed in Parliament, the motion is expected to affect companies including RWE, Eon and Vattenfall

„  Coal use in China fell by 8% relative to the corresponding period in 2014, according to Greenpeace Energydesk

„  Global coal stocks have fallen in value by 70% over the past five years, according to the Institute for Energy Economics and Financial Analysis

„  Oxford University announced that environmental oversight of its $2bn endowment fund will be bolstered while it will no longer consider direct investments in coal and oil sands companies

„  Six of Europe’s largest oil and gas producers (BG Group, BP, Eni, Royal Dutch Shell, Statoil and Total) submitted a request to the UN to be involved in devising a global carbon pricing system

„  Figures released by consultancy Rystad Energy estimate that more than $100bn of spending on new projects by the world’s energy companies has been slowed, postponed or axed following oil price declines

„  Calls for a crackdown on the shale industry have been heightened in light of growing evidence linking it with increased incidence of seismic activity:

Interesting deals / companies / funds

Innovation

„  UK-based Lontra has developed an energy efficient compressor that could be deployed in a vast range of application such as fridges, car air conditioning systems and factory machinery. The company recently closed a £2.5m funding round

„  A team of researchers at MIT reported that it has developed a technique that can be used to apply a layer of highly durable graphene to the internal surfaces of steam condensers, which are used in the majority of electricity-generating power plants. Early results show that doing so improves condenser efficiency by a factor of four (resulting in a 2%–3% efficiency improvement for the power plant as a whole), with further improvements likely

„  Researchers at Delft University of Technology have created a ‘bioconcrete’ that is capable of repairing itself when cracks form. The material contains capsules of dormant bacteria and calcium lactate, which react with water to form limestone that fills developing cracks

„  A team of researchers at Bristol University have developed a technique that enables radio devices to transmit and receive signals on the same channel simultaneously. The development has the potential to increase data transfer rates, expand network capacity and reduce power consumption within mobile devices

„  Holland-based Nerdalise  is reportedly developing novel methods to use distributed servers as heat sources in domestic settings. It is one of a number of companies looking at ways to recycle waste heat from IT equipment

„  Spain-based Vortex Bladeless unveiled a new wind turbine design that contains no contacting moving parts. Based on the principles of natural frequency and vorticity, the design harnesses passing wind to generate oscillations that build to the natural resonance of the structure, thus optimising energy capture. The structure employs magnetic levitation to ‘float’ above its base in order to eliminate friction and remove the need for lubricating oils. With fewer parts, the design promises to increase efficiency and deployment density while reducing costs (both manufacturing and operational) and environmental impacts. The company, which has developed partnerships with Harvard University and Sun Edison, is currently conducting a crowd funding campaign

VC Funding

Growth / M&A

„  US-based SolarCity secured a $500 loan facility from BoA Merrill Lynch, Credit Suisse and Deutsche Bank. This is thought to be the largest facility of its kind for distributed solar projects and will be sufficient to fund development of approximately 500MW of generating capacity

„  Weathernews Inc Japan acquired Weathermob in a move designed to augment its crowd sourced weather information services

UK

„  SSE confirmed that one of the UK’s largest coal-fired power stations, the 980MW Ferrybridge C Facility in West Yorkshire, will close by next year. The company reported that the ongoing costs of keeping the plant operational could not be justified given its five year maximum lifespan under current EU environmental rules

„  The ERDF invested €13m into a €25m marine energy project designed to deploy a10MW array of devices built by Sweden-based Minesto in Welsh waters by 2019

„  Figures released by the Green Deal Finance Company revealed that more than £50m of finance has been put in place to date under the Green Deal energy efficiency scheme

„  The Green Investment Bank acquired a £236m stake in the £1.3bn, 400MW Rampion Offshore Wind farm, which is being developed by E.On

„  Oxford University launched a £300m joint venture designed to commercialise research and technologies developed through the university

Market

Scale of Problem / Opportunity

• Global CO₂ concentrations reached a record high in March 2015, according to the US government.
• A report published by the UN University estimates that 41.8m tonnes of electronic waste were discarded globally during 2014, with just 16% of this captured by reuse or recycling schemes.  The report estimates that the iron, copper, gold and other precious metals contained within such waste has a combined market value of $52bn.
• Taiwan introduced water rationing across several major cities following the country’s lowest rainfall in 70 years. Similarly, California introduced mandatory cuts (of up to 36%) in urban water use as the state enters its fourth consecutive year of drought.
• Investment levels within the renewable energy and sustainability sector are falling well below those required to avert significant climate change, according to figures released by Bloomberg New Energy Finance. The figures presented (see graph below) omit a number of secondary social / geopolitical areas that will require investment as a result of changing climate (i.e. the ‘threat multiplier’ effect).

Continuing Government, Corporate & Consumer Engagement

• Vancouver announced a commitment to move to 100% use of renewable energy for electricity, transport and heating/cooling systems within 20 years.  More than 50 major cities have made a similar commitment.
• The governor of California issued an executive order to reduce the state’s GHG emissions to 40% below 1990 levels by 2030.
• The Irish government announced the approval of Europe’s first grid-connected hybrid flywheel energy storage plant, which stores mechanical energy to support the grid and is emission-free, requires no direct fuel input and uses no water.
• Microsoft has reportedly realised annual savings of $10m since 2012 through placing an internal price on carbon. In doing so, the company  generates a fund that is used to reduce its carbon footprint or develop new technologies.
• BNP Paribas, Societe Generale and Credit Agricole announced that they will not provide finance to any Great Barrier Reef coal mines.
• Bernhard Matthews outlined an investment plan to become energy independent by 2016 and carbon neutral by 2020.
• AGL Energy, one of the largest energy producers in Australia, announced plans to fully decarbonise its energy generation by 2050.
• Diageo announced plans to deliver a 50% efficiency improvement in its water use, as well as the intention to extend this targets to its supply chain.
• 98% of BP shareholders backed a resolution calling for more transparency on a number of environmental factors including investments in low carbon technology, climate change lobbying activities and annual carbon dioxide emissions from activities.
• TESLA reported that it delivered 10,000 electric cars during Q1 15, representing a 55% increase on the corresponding period in 2014. The company has set a sales target of 55,000 cars for 2015.
• Sales of electric vehicles in China grew by 220% during 2014, according to a report released by RNR Market Research. With almost 75,000 vehicles sold, China accounts for 23.5% of the global EV market. 15% of global sales were captured by Chinese manufacturers.

Inflexion point?

• A report released by HSBC concluded that renewable energy is becoming mainstream, with deployment now being driven by ‘hard economics’ rather than the ‘green idealism’ that was the basis for previous inefficient subsidy schemes.
• Annual clean energy generation capacity addition has now overtaken that of fossil fuels, according to figures released by Bloomberg NEF, which projects that annual clean energy deployment will be more than four times that of carbon-based alternatives by 2030. Major projects confirmed during April included:
  • A 25MW floating wind farm that could be installed off the coast of Portugal by mid 2016.
  • Plans to invest €30bn across 20 German offshore wind farms.
  • A $265m World Bank investment into three projects designed to boost rural renewable use in Argentina.
• The number of US clean energy patents filed in 2014 (3609) was at an all time high, according to the Clean Energy Patent Growth Index published by IP law firm Heslin, Rothenburg, Farley & Mesiti:

Interesting deals/companies/funds

Innovation

• Scientists at the University of California Berkeley have developed a system that mimics the natural photosynthetic process using a combination of semiconducting nanowire arrays and bacteria. Powered by solar energy, the set-up can convert a combination of water and carbon dioxide into the building blocks of biodegradeable plastics, pharmaceuticals and liquid fuels.
• The International Renewable Energy Agency and European Space Agency launched a new tool that utilises satellite-captured gravitational data to help pinpoint areas that show potential for geothermal energy installations.
• TESLA announced the launch of the Powerwall, a rechargeable 7kWh lithium ion battery priced at $3,000 ($3,500 for a 10kWh model) that is designed to provide back-up power to homes and businesses reliant on renewable energy. Likewise, Ecotricty announced a pilot roll-out of an energy storage device for consumers. Through addressing the problem of electricity outage and breaking grid reliance, such systems are seen as vital to widespread renewable energy adoption. The energy storage technology market is set to exceed a value of $21bn p.a. by 2024, according to a report released by Navigant Research.
• Researchers at Stanford University have developed a new high-performance aluminium-ion battery that could represent a safer and more environmentally friendly alternative to lithium-ion and alkaline batteries in wide use today. The flexible batteries, which could be deployed at both small and large scale, can be recharged in less than a minute and are able to withstand thousands of recycling cycles without capacity loss. More.

VC Funding

• UK-based water/wastewater treatment company Arvia Technology, which has developed a proprietary graphene-based filtration technology based on research conducted at the University of Manchester, raised £4m from undisclosed backers.
• US-based Water Smart Software, which develops customer engagement solutions that employ  analytics and behavioural science to reduce water consumption, raised $7m from investors including DFJ and the Westly Group.
• US-based Terralux, which developers LED lighting and building intelligence solutions, raised $11m from investors including EnerTEch Capital and Generation Investment Management.
• US-based FirstFuel, which develops SAAS building energy management software, raised $23m Series-C from investors including Electranova Capital, Battery Ventures, RockPort Capital Partners, Nth Power, E.ON Ventures and Next World Capital.
• US-based Peloton Technology, which develops a range of technologies that improve safety and fuel efficiency within trucking fleets, raised $16m from investors including Intel Capital.
• US-based Folsom Labs, which develops SAAS solutions that facilitate optimal evaluation and design of solar systems, raised $1m from angel investors.
• US-based GreenLancer, which operates an e-commerce platform designed to provide access to solar system designs, raised $5m.
• US-based Yeloha, which develops a platform that facilitates peer-to-peer sharing of solar power generation assets, raised $3.5m from investors including Carmel Ventures.
• US-based PingThings, which develops predictive analysis solutions designed to improve electricity grid resilience, raised funding from investors including GE Capital.
• US-based Aircuity, which develops advanced building monitoring and airflow management systems for commercial clients, raised $6.3m funding from investors including Source Squared.
• China-based Cnano Technology, which develops carbon nanotubes with applications in energy storage systems, raised $15m from investors including Pangaea Ventures.
• Sustainable chemistry company Sirrus raised $6.5m from investors including Braemar Energy Ventures and GM Ventures.

M&A

• Philips sold its LED business to GO Scale Capital for £1.8bn.
• Siemens sold tidal stream technology developer Marine Current Turbines in return for a larger stake in Australia-based Atlantis Resources, in a further sign of consolidation within the marine energy sector.

UK

• Plastic bag usage in Scotland has fallen by 80% since the introduction of the 5p charge in October 2014, according to early figures released by retailers.
• AIM-listed UK Oil & Gas Investments claimed to have discovered a world class oil reserve in Surrey.
• China-based Trina Solar sold the UK’s largest solar power plant (49.99 MW) to Bluefiled Solar Income Fund in a $88m transaction, as part of its strategy to build and sell solar assets.
• UrbanWind raised £30m from Zouk Capital to fund the installation of wind turbines on sites with planning permission in place.
• UK-based Geothermal Engineering is reportedly working with Cuadrilla to investigate the possibility of recycling used and exhausted O&G fracking wells as geothermal power sources.
• Supreme Court judges ruled that the UK is breaching EU limits for nitrogen dioxide in urban areas and ordered the government to take action.