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WATCH

Rentals May Give Green Car Market a Tune-Up: Hertz

Green Bonds: The European

Investment Bank led green bond issuance
in 2014. The EIB has sold over $9 billion
since launching the worlds first green
bond program in 2007.

BY SIOBHAN WAGNER,
BLOOMBERG NEW ENERGY FINANCE

AMER: The Obama administration said

it plans to require the oil and gas industry
to cut methane emissions by as much as
45 percent over the next decade, the
presidents latest step to curb greenhouse
gases tied to climate change.
EMEA: Actividades de Construccion y
Servicios SA, Spains biggest
construction company, plans to seek
permission to list a so-called yieldco in
Madrid pooling its clean-energy assets.
APAC: Mytrah Energy Ltd., a developer
of clean-power projects in India, plans to
invest $150 million to build two onshore
wind farms in the country this year.
Climate & Carbon: EU carbon permits
may end the week as as high as 7.50
euros, depending on the outcome of a
vote on a carbon market fix in the
European Parliament's industry
committee.
Focus: BNEF calculates that venture
capital and private equity investment
reached $4.8 billion in 2014, an increase
of 16 percent on 2013.

Hertz Global Holdings Inc. says it's helping grow the

market for greener vehicles by giving customers a
chance to try a rental version before committing to
buying one. "Hertz is actively focused on growing our
'green' fleet to help break down consumer barriers to
these vehicles by providing first-hand experience
driving very fuel-efficient and alternative fuel vehicles,"
said Joy Lehman, global sustainability manager of the
car-rental company. "Simply driving one of these cars is
one of the best marketing tactics."
Currently, 80 percent of Hertz's fleet achieves at least
Source: Hertz
28 miles per gallon on the highway, Lehman said, and
Joy Lehman, Hertz's global
the company also has "thousands" of alternative fuel
sustainability manager
vehicles including hybrids, electric vehicles and "clean
diesel" models.
In order to reduce the carbon footprint of its operations, Hertz said it's investing in
renewable energy. In the last several months, Hertz completed two solar power
installations at car rental facilities located at the international airports of Denver and St.
Louis. It is due to complete another solar project at its location at Newark Liberty
International Airport in New Jersey this month, while an installation at its John F.
Kennedy Airport site should be finished in the third quarter of this year.
Lehman said that once completed, the total installed solar capacity at the four Hertz
airport locations will reach 1 megawatt. "Hertz produces approximately 2.2 [million
kilowatt-hours] of solar energy annually [according to the latest data from 2014] and with
this latest expansion, we will increase our renewable energy generation while continuing
to reduce costs company-wide," she said. Lehman answered questions from Clean
Energy & Carbon Brief on Hertz's sustainability strategy, via e-mail.

Value of Global CO2 Markets Increased by 25% to 50 Billion

Euros in 2014. In 4Q, the Value Rose to 12.6 Billion Euros.

Insight: Nigeria needs more

power-generating capacity, as it faces a
current shortfall of some 3 gigawatts. And
without abundant new build fossil fuel
and renewables this shortfall is only
likely to worsen.

SCIENCE BUZZ
The "social cost" of carbon dioxide
emissions may not be $37 per ton, as
estimated by a recent U.S. government
study. The economic damage caused by
a ton of carbon dioxide emissions often
referred to as the social cost of carbon
could actually be six times higher or
$220 per ton Stanford University
scientists say.

Source: Bloomberg New Energy Finance

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Q&A
Q: What does sustainable growth
mean for Hertz?
A: Globally, Hertz is heavily focused on
ensuring we're decreasing our
environmental footprint as we grow the
business. We're accomplishing this by
focusing on increasing customer access
to alternative fuel vehicles (electric
vehicles, hybrids, clean diesel, etc.),
fuel-efficient [28 miles per gallon or more]
vehicles as well as implementing
sustainable operational best practices like
waterless carwashing, LEED [Leadership
in Energy and Environmental Design]
certification of [headquarters] and rental
locations and tire recycling.
Q: In terms of sustainability goals,
have you come up with any figures on
how much of a positive environmental
impact Hertz can make by investing in
more fuel-efficient or alternative
vehicles?
A: A good example of Hertz's positive
environmental impact is demonstrated
[through] corporate partnerships where
we work with key customers to implement
green travel goals and programs to
reduce [greenhouse gas] emissions from
business travel by increasing the use of
fuel-efficient and alternative fuel vehicles.
One customer example includes the
successful reduction of CO2 [per] mile by
more than 13 percent and increasing
miles driven in fuel-efficient and
alternative fuel vehicles by nearly 15
percent.
Q: Can you make any arguments now
for adding more electric vehicles to the
rental fleet?
A: Mainstream demand for EVs is still
somewhat low. However, as the range
and comfort with these vehicles grows, so
will Hertz's EV fleet. Certain EV markets,
like California, are growing quicker than

other areas of the country likely due to

incentives and infrastructure. In addition,
Hertz is working with, and experimenting
in, multiple markets to determine which
EV-use cases are best for our customers
and the company. For instance,
partnering with corporate clients that offer
work-place charging by providing them
with EVs at the airports they frequent the
most and offering a gas-free trip.
Q: Does Hertz have a role to play in
expanding EV infrastructure?
A: Hertz currently partners with hotels
and local municipalities to provide EV
access where there are charging stations
but few EVs. In EV-friendly markets, like
California and North Carolina, Hertz also
provides EV charging [at no cost] to
customers.
Q: What will Hertzs global fleet look
like 10, 20 and 30 years from now?
A: We will continue to grow our
fuel-efficient and alternative fuel vehicle
volumes as OEMs [original equipment
manufacturers] produce more of these
vehicles and consumers increase their
demand. In the short term, Hertz is
actively focused on growing our green
fleet to help break down consumer
barriers to these vehicles by providing
first-hand experience driving very
fuel-efficient and alternative fuel vehicles.
Simply driving one of these cars is one of
the best marketing tactics, which luckily
Hertz can readily supply.
Q: What is Hertzs position on
driverless cars like the ones Google is
testing? Do you see a day when you
might have those in Hertz's fleet?
A: Hertz is always looking at ways to
incorporate cutting-edge technology with
vehicular transportation to give our
customers the best rental experience

possible. Autonomous vehicles are the

way of the future and we are certainly
considering this technology, among
others for our fleet. The initial
metamorphosis for the automobile will be
in the mechanics and gadgetry to permit
driving without human intervention. But
this would be swiftly followed by a
transformation in interior design, fueled by
a shift in the way passengers spend their
time during journeys. Without the need for
a steering wheel, gear stick, mirrors and
pedals, there would be more space for
comfortable seating and entertainment
making cars more like mobile lounges or
offices. For most of us, possessing a fleet
of cars to suit every occasion is the stuff
of lottery jackpot dreams. But in a world of
driverless cars, consumers may have the
power to choose whichever vehicle they
wanted depending on their needs at any
given moment. For car rental companies
and car-sharing enterprises which
already have the infrastructure in place to
cater to such a market the prospect is
exciting and inspiring.
Q: What about the carbon footprint of
your operations? Can you name some
low-carbon initiatives Hertz has
implemented?
A: Hertz completed two solar power
installations at car rental facilities at
Denver International and St. Louis
International Airports [last year].
Additionally, solar installations are
underway at Hertzs Newark Liberty
International Airport, to be completed [this
month], and construction at Hertzs John
F. Kennedy Airport location [which should
be finished by the third of quarter of this
year]. Once completed, the total installed
solar capacity at the four Hertz airport
locations will reach 1 megawatt of clean
energy, which will [be] used to power
Hertz customer service areas and other
nearby Hertz buildings.

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Clean Energy & Carbon

GREEN BONDS
Top Green Bond Issuers of 2014
Rank

Organization

Credit ($ Million)

Count

Table Share (%)

European Investment Bank

5,501

15

14.5%

KfW

3,520

9.3%

GDF Suez

3,427

9.0%

World Bank: IBRD

2,950

16

7.8%

Toyota

1,750

4.6%

Agence Francaise de Developpement

1,287

3.4%

Unibail-Rodamco

1,251

3.3%

Iberdrola

1,037

2.7%

Ille de France

830

2.2%

10

Neder Waterschapsbank

681

1.8%

11

Hera

680

1.8%

12

Abengoa

635

1.7%

13

NRW Bank

627

1.7%

14

Verbund

627

1.7%

15

Nordic Investment Bank

555

1.5%

16

NRG Yield

500

1.3%

17

TD Bank

453

1.2%

18

Vornado Realty

450

1.2%

19

Province of Ontario

447

1.1%

The European Investment Bank led

green bond issuance in 2014. The EIB
has sold over $9 billion since launching
the worlds first green bond program in
2007. German development bank KfW
entered the market with a splash in 2014,
taking second place. The bank issued its
first-ever green bonds, giving it a $3,520
million credit and a 9.3 percent table
share for the year.
Paris-based energy company GDF
Suez, in third, led issuance from
corporate entities, earning $3,427 million
in credit and a 9.0 percent table share, by
selling the largest ever green bond to
finance renewable energy and energy
efficiency projects. The International
Bank for Reconstruction and
Development issued 16 bonds in six
currencies totalling $2,950, placing it in
fourth. In March, Japanese car
manufacturer Toyota Motor Corp. put
auto loans in the green by issuing a
first-of-a-kind $1,750 million green
asset-backed security to finance loans
and leases for its hybrid, plug-in hybrid
and battery electric vehicle models in the
U.S.

Top Green Bond Underwriters of 2014

Rank

Organization

Credit ($ Million)

Count

Table Share (%)

Bank of America Merrill Lynch

3,813

30

10.1%

SEB

3,726

24

9.8%

Credit Agricole

3,195

26

8.4%

Morgan Stanley

2,863

18

7.6%

JPMorgan

2,324

18

6.1%

Citigroup

2,220

15

5.9%

HSBC

2,102

14

5.6%

Deutsche Bank

1,939

11

5.1%

Goldman Sachs

1,215

3.2%

10

Natixis

812

2.1%

11

BNP Paribas

739

2.0%

12

Barclays

713

1.9%

13

Credit Suisse

643

1.7%

14

Unicredit

643

1.7%

15

Santander

611

1.6%

16

DZ Bank

571

1.5%

17

RBC Capital Markets

560

1.5%

18

Royal Bank of Canada

475

1.3%

19

Nomura

464

1.2%

Source: Bloomberg New Energy Finance, Bloomberg Terminal

In terms of underwriting, Bank of

America Merrill Lynch is on top, having
participated in benchmark issues from
Agence Francaise de Developpement,
the European Investment Bank, GDF
Suez, Unibail-Rodamco and
Iberdrola SA. Sweden-based
Skandinaviska Enskilda Banken AB
comes second, bringing in $3,726 million
and a 9.8 percent table share. SEB was
the sole lead underwriter on 17 of its 24
underwritten deals with a strong focus on
Scandinavian issuers: it underwrote $156
million from Swedish real estate company
Vasakronan and $177 million from
Norwegian utility BKK. Credit Agricole
takes third with $3,195 million in credit
and a 8.4 percent table share across 21
deals. It participated in its own $133
million of offerings (seven bonds issued in
seven currencies in November), as well
as KfWs $2 billion issue in July, four EIB
deals and AFDs $1.3 billion sale in
September. Morgan Stanley and
JPMorgan Chase round out the top five
green bond underwriters of 2014 with
$2,863 million and $2,324 million,
respectively.

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AMER
GE Gets $491M Turbine Order for Brazil Wind Projects
General Electric Co. agreed to supply 346 megawatts of wind turbines worth as much
as 1.3 billion reais ($491 million) to the Brazilian renewable-energy developer Casa dos
Ventos.
The order was confirmed Jan.12 by a GE press official, who didnt want to be identified
because of company policies.
Casa dos Ventos will use 216 megawatts of equipment at the Sao Clemente park in
Pernambuco state and another 130 megawatts for the Tiangua project in Ceara state,
according to Lucas Araripe, the developers new-business director. Work on the Tiangua
project is expected to begin in the first half of the year, Araripe said in a Jan. 9 interview
in Sao Paulo. Casa dos Ventos is negotiating another deal with turbine suppliers for
about 350 megawatts of turbines worth as much as 1.5 billion reais, Araripe said. Casa
dos Ventos is the biggest wind developer in Latin America, according to Bloomberg New
Energy Finance. It has more than 1 gigawatt of wind farms under construction or in
operation, and has sold 3.5 gigawatts of projects to other companies.
Vanessa Dezem

D.E. Shaw Acquires 300MW Wind Farm From Apex

D.E. Shaw & Co., a $34 billion hedge fund, purchased a 300-megawatt wind farm
from Apex Clean Energy Inc. for an undisclosed sum.
The Balko wind farm in Beaver County, Oklahoma, is expected to begin producing
power later this year, New York-based D.E. Shaw said in a statement. Apex began
developing the project in 2009.
The Public Service Company of Oklahoma and Western Farmers Electric Cooperative
have agreed to buy power from the Balko wind farm under long-term contracts.
The project is using 162 1.85-megawatt General Electric Co. turbines and will
produce enough electricity for about 111,000 homes.
Justin Doom

Ecolab in Deal With SunEdison for Solar Power in Minn.

Ecolab Jan. 13 announced it had signed a contract with SunEdison Inc. that will
allow it to offset about 90 percent of the electricity it uses for its Minnesota operations
with solar power.
The St. Paul, Minn.-based company, which sells hygiene, energy and water
technologies, won't change its physical sourcing of electrical power. Rather, it will
contract with SunEdison for 16 megawatts of the power generated by its first solar
gardens.
Raj Rajan, vice president and global sustainability leader for Ecolab, told Bloomberg
BNA in an e-mail that SunEdison plans to begin developing solar gardens in the state
this year. He said the gardens should be operational by early next year. The energy
created by the gardens will allow Ecolab to claim electricity credits on its utility bills, he
said.
Bloomberg BNA

Musk: Texas Leading Candidate for Transit Test Site

Texas is a leading candidate for a testing facility for the Hyperloop, a high-speed
mass-transit system, said Tesla Motors Inc. Chief Executive Officer Elon Musk.
The state also could be a site for Tesla battery and car plants, Musk said at an event in
Austin Jan. 15 held by the Texas Department of Transportation.
Musk, who is also the chief executive of Space Exploration Technologies Corp., a
satellite company, has promoted an underground system that could carry passengers at
speeds of 760 miles (1,223 kilometers) per hour. Musk has said the idea could be a fifth
mode of transportation, after trains, planes, automobiles and boats.
Lauren Etter

Obama Unveils Plan to

Cut Methane Leaks
The Obama administration said it
plans to require the oil and gas
industry to cut methane emissions by
as much as 45 percent over the next
decade, the presidents latest step to
curb greenhouse gases tied to climate
change.
The U.S. Environmental Protection
Agency will issue rules this year
targeting new production and
transmission systems to reduce
methane leaks by 40 percent to 45
percent by 2025, the administration
said. The EPA also will expand
voluntary programs with states and
industry on equipment already in use,
a step that falls short of what
environmentalists sought.
We are outlining a comprehensive
set of steps that will have a positive
effect on the climate, on the economy
and on public health, Dan Utech, the
top White House adviser on climate
and energy, said on a conference call
with reporters.
The measure may be one of the last
major climate initiatives of President
Barack Obamas term -- following
moves to curb carbon pollution from
cars and power plants -- and
represents a challenge to
Republicans who won majorities in
Congress partly with promises to rein
in federal regulations.
Mark Drajem

BNEF says: This is not the only EPA

rule on greenhouse gas emissions
from oil and gas operations. In 2012,
the agency issued regulations on
volatile organic compounds from oil
and gas operations. From this year
forward, producers must use so-called
green completion of well sites to
comply with the VOC standard, a
practice that will also contain methane
emissions. Green groups, citing
methane's greenhouse potency and
long-lived effects, have threatened to
sue EPA unless it issued separate
methane regulations.

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EMEA
Morocco Awards Solar Thermal Plant to ACWA, SENER
Morocco awarded two of the worlds largest solar thermal power projects to Saudi
developer ACWA Power International and Sener Ingenieria y Sistemas SA of Spain.
The partners beat five groups for the contract to develop the 200-megawatt NOOR II
and 150-megawatt NOOR III plants near Ouarzazate, the Moroccan Agency for Solar
Energy said on its website. The announcement comes after financing deals with donors
such as the World Bank closed on Dec. 19, it said.
The facilities in southern Morocco will be among the largest biggest solar thermal
power plants globally as only two larger ones operate. They are part of the countrys
plan to install 2,000 megawatts of solar capacity by 2020. The technology involves the
use of mirrors that concentrate sunlight to generate steam and run power turbines.
ACWA is already developing the 160-megawatt NOOR I project for about $1 billion
after winning the initial tender in November 2012. Three groups of companies were
shortlisted for the second phase and four for the third one in August 2013.
Marc Roca

Impax Plans Last of $387M Fund for Irish, Finnish Wind

Impax Asset Management Group Plc, a London-based investor, plans to channel the
remaining capital from its second 330 million-euro ($390 million) clean-energy fund into
onshore wind farms in Ireland and Finland.
The recovery of the Irish economy and availability of project finance debt has made
Ireland an attractive country for investment, Ian Simm, chief executive officer of Impax,
said in an interview in London Jan. 13. It regards Finland as a key market for wind
acquisitions, having already bought two projects in the country last year from
Fortum Oyj.
Louise Downing

Acciona Opens Chilean Wind Farm as 255MW Planned

Acciona SA, Spains second-largest clean-energy operator, opened its first wind farm
in Chile as part of plans to build 255 megawatts of renewable capacity there.
It has completed the 45-megawatt Punta Palmeras plant in the coastal town of Canela
using its own turbines, the Alcobendas, Spain-based company said in an e-mailed
statement. Acciona aims to invest about 400 million euros ($470 million) in Chile over the
next three years to reach its clean-energy capacity target, it said.
The investment will deliver the wind and solar plants the company will need following
its award in the Latin American nations latest tender for power-supply contracts. Acciona
will supply 600 gigawatt-hours of electricity from clean sources for 15 years from 2018.
The company, which also has infrastructure and water units, operates almost 8.5
gigawatts of clean-energy capacity including wind farms in more than a dozen countries.
It is also building its first Chilean solar park for GDF Suez and plans to build others for
third parties this year, it said.
Marc Roca

Polish Lawmakers Pass Law Introducing Auctions

New regulations introduce auctions of fixed-price contracts to produce clean power
and gradually scrap green-certificate subsidies. The first auction will be held in first
quarter of 2016, Andrzej Czerwinski, chairman of Parliamentary Energy Committee
said by phone.
The cut-off date for investors preferring to use existing green-certificate support
instead of starting in auctions is set at the end of 2015, Czerwinski said.
Lawmakers decided on 100 percent subsides level for energy produced by
households. The new law will be further considered by the Senate this week and needs
to be signed by the president before it may take effect.
Konrad Krasuski

ACS Plans Spanish

Yieldco Listing
Actividades de Construccion y
Servicios SA, Spains biggest
construction company, plans to seek
permission to list a so-called yieldco
in Madrid pooling its clean-energy
assets. Saeta Yield will target
institutional investors, offering stable
dividends from 689 megawatts of
wind and solar power plants in Spain
as well as future projects,
Madrid-based ACS said in a
regulatory filing. It will sell 51 percent
of Saeta to raise about 500 million
euros ($585 million), according to two
people with knowledge of the matter.
ACS, like peers such as Abengoa
SA, aims to pool the long-term cash
flows of its renewable assets into a
publicly traded entity to boost liquidity
and cut capital costs. The move
comes after Spain approved new
rules capping the earnings of
renewable energy plants in June,
ending years of uncertainty for the
industry. ACS already put on sale its
renewable assets in late 2010, selling
many in the following year before
regulatory changes started. Of those
left, Saeta will initially own 16 wind
farms with a combined 539
megawatts and three solar-thermal
power plants with 150 megawatts.
Marc Roca

BNEF says: The amount that ACS

plans to raise for Saeta Yield, at 500
million euros, looks very ambitious
given that the other yieldco-type
vehicles in Europe the six
U.K.-listed project funds and
Germany's Capital Stage have
never raised as much as this in one
lump. They have generally gone for
smaller initial IPOs, with top-up issues
later. In addition, investors could well
be cautious, given Spain's track
record at imposing retroactive cuts in
tariffs for existing projects. Given that
background, if a flotation of Saeta
Yield is successful, it would be a
strong signal of investor appetite for
yieldcos in southern Europe.

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Clean Energy & Carbon

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APAC
Modis Solar Ambitions Advance With SunEdison Plant
SunEdison Inc. will invest $4 billion to build the biggest solar panel factory in India,
advancing Prime Minister Narendra Modis effort to rein in pollution by expanding
renewable energy.
The manufacturer based in Maryland Heights, Missouri, will form a venture with the
Indian power provider Adani Enterprises Ltd. to build the photovoltaic plant, with as
much as 7.5 gigawatts of annual production capacity. Construction is expected to begin
this year, the company said in a statement Jan. 12.
With some of the quickest-growing carbon dioxide emissions in the developing world,
India is under pressure to join in the international fight against global warming. Modi will
meet President Barack Obama in New Delhi next week where the two are expected to
discuss climate issues following last years pact between the U.S. and China to
coordinate pollution cuts.
The prime minister has been revising upward Indias aspirations for solar, said
Pashupathy Shankar Gopalan, SunEdisons managing director for South Asia and
Sub-Saharan Africa. The factory very nicely plays into the aspirations for the country to
grow solar significantly, as well as wanting to create stronger domestic manufacturing.
Justin Doom

Japan's METI to Set Aside 130.7B Yen for Renewables

Japan's Ministry of Economy, Trade and Industry is requesting 130.7 billion yen ($1.12
billion) for fiscal 2015 to promote renewable energy, according to a document posted on
the ministry's website.
The amount includes support for development of offshore wind and geothermal
projects, according to the document.
The METI is also requesting 128.8 billion yen for energy saving and 11.9 billion yen to
promote the use of hydrogen, the document showed. The budget needs to be approved
by parliament.
Bloomberg News

Hanwha Q Cells Connects Japan Solar Plant to Grid

Hanwha Q Cells GmbH connected a 24-megawatt solar power plant to the Japans
electricity grid.
Hanwha Q Cells Japanese unit developed and will act as an independent power
producer for the project located in Kitsuki, Oita prefecture in south-western Japan, the
company said in an e-mailed statement.
Hanwha Q Cells operates two additional generators in Japan and is currently building
two more, the 1.2-megawatt Kushiro City and the 3-megawatt Awa City projects.
Stefan Nicola

Beijing-Shanghai Freeway Gets EV Charging Service

China State Grid Corp. has built 50 fast-charging stations for electric cars on the
freeway between Beijing and Shanghai, the first in the nation, according to its microblog.
Each station will involve four 120-kilowatt charging machines and eight charging poles,
the Xinhua News Agency reported. Cars can have 80 percent of their electricity relfilled
within half an hour, the report said.
The company plans to build charging stations on seven more freeways by 2020,
Xinhua said.
Bloomberg News

Mytrah Planning $150M

Indian Wind Investment
Mytrah Energy Ltd., a developer of
clean-power projects in India, plans to
invest $150 million to build two
onshore wind farms in the country this
year. The developer, listed on
Londons Alternative Investment
Market, is already talking with debt
providers on the projects, Bob Smith,
executive vice president of
London-based Mytrah, said in an
interview in the capital. It plans to add
1,500 megawatts of capacity by 2016
and will consider buying projects and
raising money to enable it to build
facilities faster.
In India the biggest need is new
power as power-consumption growth
is very high, Smith said. We can
build wind farms in India without
subsidies that produce power thats
cheaper than fossil-fuel alternatives
such as coal. That means suppliers
choose wind over coal.
At the same time as building out
capacity in the Asian nation, Mytrah is
talking to equipment manufacturers
on tying up to expand the local
supply chain, he said. The company
can provide access as it already has a
presence, Smith said.
The government in November said it
planned to more than double the
share of renewables in the mix of
fuels it consumes.
Louise Downing

BNEF says: The Indian wind market

has become interesting once again,
following the reinstatement of
accelerated depreciation in May last
year. The expected increase in
feed-in tariffs in some states in 2015,
the rising electricity tariffs, the ability
to build "without subsidies" and the
government's ambition to add some
40 gigawatts of new wind installations
in the next 5-7 years could see the
market edging toward 3 gigawatts of
annual installations or more, sooner
rather than later. Installations dipped
to 1.7 gigawatts in 2013 while over 2
gigawatts was added last year.

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Clean Energy & Carbon

CARBON & CLIMATE

Parliament Vote May Push Up EU Carbon Price to 7.50

EU Carbon Trading Volumes

BY JAMES COOPER, BLOOMBERG NEW ENERGY FINANCE

Last week European carbon prices rebounded 7.30 a metric ton, partly driven by a
leaked draft proposal from the rapporteur of the European Parliaments industry
committee. The rally suggests the market has largely priced in a bullish result from this
Thursday's ballot, opening up price risk to the downside. European emission allowances
may end the week as high as 7.50 or as low as 6.80, depending on the outcome of
the industry committee ballot on Thursday.

Political Horse Trading Begins

EUA volatility may persist this week as the market looks to the build-up to, and
outcome of, Thursdays vote. Despite the non-binding nature of the ballot, a lack of
consensus or support for an early MSR start may lead to months of delay. Industry
committee rapporteur Antonio Tajani of the European Peoples Party last week failed to
find sufficient support for his compromise amendments, which included a 2019 start,
compared with the main four parties target of 2017. Shadow rapporteurs will meet again
today. But a compromise seems unlikely. The lack of consensus appears to have
prompted the other four parties to devise an alternative compromise, with a 2017 start
date and a transfer of the backloaded allowances to the reserve, according to Bloomberg
News today. This proposal as well as the plan from Tajani may go head to head on
Thursday, with the ITRE rapporteur seeking an ally in the currently split European
Conservatives and Reformists.
Clear support for some form of MSR is apparent within the industry committee, while
the precise configuration continues to split the 67 parliamentarians. A 2017 compromise
among the four groups would fail to reach the 35-vote barrier if all group members follow
party lines. Similarly, Tajanis proposal which postpones deciding how to deal with the
backloaded volume, would require all EPP, ECR, Europe of Freedom and Direct
Democracy and unattached members to vote in favor. This is an unlikely scenario as
some EPP members such as Sean Kelly have shown support for a 2017 start.
A lack of agreement leaves open the possibility that the industry committee vote
produces a text that could find opposition within the environment committee. BNEF
analysis suggests there is sufficient support on the environment committee for an early
start date (2017 or 2018) and growing consensus on a measure to deal with the
backloaded volume. If the environment committee rejects a document from its industry
contemporaries and passes different measures, rapporteur Ivo Belet could deem the
proposal as having insufficient support for a trialogue and would turn to a plenary vote
for a mandate to enter into discussions with member states and the Commission.
Such a scenario befell backloading, and could cause similar delays to the MSR. A
plenary vote may not be possible until April, potentially delaying passage further into the
year if it overlaps with the summer recess. The market could find some short-term
bearish sentiment should this occur. Still, the continued upward pressure offered by a
backloading price squeeze is likely to limit the downside.

Carbon Markets in 2014

The total value of global carbon markets increased by 25 percent to 50 billion last
year, according to BNEF. Global trading volumes, however, came off in 2014 down by
12 percent from the previous year. This was primarily due to the start of backloading, as
reduced auctions likely reduced secondary market churn of primary EUAs. In addition,
the December-2015 price gained 43 percent over 2014. The volume and value of the
United Nations offset market continued to languish in 2014, falling 72 and 78 percent
respectively. Outside Europe, California and the Regional Greenhouse Gas Initiative saw
a 141 percent uptick in volumes last year on 2013 levels, and the value of the market
grew by 92 percent. The California price rose by 23 percent over the year, whereas
RGGI prices climbed 97 percent. Hubei and Shenzhen, two of the seven Chinese pilot
carbon markets, registered the most trading activity in 2014.

Source: EMIS <GO>

UN Carbon Trading Volumes

Source: EMIS <GO>

CO2 in Atmosphere

Source: NOAA/ESRL

Arctic Sea Ice

Source: NSIDC

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Bloomberg Brief

Clean Energy & Carbon

FOCUS
Rich Variety of Deals, Modest Dollar Volumes for VC/PE in Clean Energy in 2014
BY ROHAN BOYLE,
BLOOMBERG NEW ENERGY FINANCE

Venture capital and private equity

investors have been slow to return to
clean energy and energy efficiency after
billions of dollars were wiped out by the
corporate distress of the last few years,
especially in the solar and low-carbon
vehicle sectors.
Bloomberg New Energy Finance
calculates that $4.8 billion was invested in
2014 an increase of 16 percent on 2013
yet far below the $12.3 billion record set
in 2008. Last year began promisingly
enough by the end of June, investment
had increased quarter-on-quarter for the
previous 12 months. But this momentum
was to dissipate in the second half of
2014 when two of the lowest quarterly
totals since 2006 were recorded. The 58
deals in the final three months of the year
were valued at $1.1 billion, marginally
higher than the $1.0 billion seen the
previous quarter. This picture is in
contrast to the general improvement in
venture activity in all sectors. A total of
4,474 venture financings were announced
worldwide in 2014, with an aggregate
value of $87 billion, which was a 58
percent improvement on the year before,
according to market research firm Preqin.
Companies located in Asia saw significant
growth in investment, with five of the top
10 venture capital deals in 2014
taking place in either China or India, it
reported. Furthermore, investment
conditions in low-carbon energy would

seem to be improving. Many key clean

energy markets are enjoying strong
economic growth, while confidence
among investors is increasing and there
are more exit opportunities available.
Indeed, more money was invested in
clean energy public equity in 2014 than at
any time since 2007 the $18.7 billion
raised was up 52 percent on the previous
year. So why is clean energy venture and
private equity investment still stuck in the
doldrums? Many funds have yet to see
significant realizations of their
investments. It has taken longer to deliver
than in some of the other sectors, says
Alex Betts, a managing director at
Climate Change Capital Private Equity.
Growing realizations will certainly
support the recycling of capital, he
added. But where managers choose to
put this money is another matter. Venture
capital and private equity investors are,
by their very nature, constantly seeking
out companies and technologies that will
help drive the evolution of the industry.
The sector is maturing away from
renewable energy-orientated products
and services. Our strategy is evolving into
a wider resource-efficiency mandate,
although we were always wider than just
clean energy, Betts said.
In recent years, venture capital and
private equity investors have tended to
gravitate toward technologies that don't
require enormous sums to develop, while
avoiding exposure to areas with policy
and subsidy risk.

VC/PE Investment in Clean Energy Reached $4.8B in 2014

The underlying investor appetite in this

sector is for later-stage companies. I think
that institutional investors are still
interested in early-stage technology, but
mostly where it is very capital-light, Betts
said. This has helped to fuel strong
interest in the area of energy efficiency,
via technologies such as in LED lighting.
In October 2014, for instance,
Boston-based LED lighting company
Digital Lumens scored a $23 million
Series C funding round, bringing total
backing for the company to almost $65
million. Its wireless LED networks include
sensors that collect data about
performance that can be used in
commercial and industrial facilities to
improve energy efficiency.
Power storage is another area that is
looming large on many investors radars
as greater renewable energy penetration
poses integration challenges. The race to
produce a low-cost utility-scale storage
product is hotly contested: among those
competing are U.S. liquid metal battery
technology developer Ambri Inc., which
raised $35 million in venture investment
last April, and Eos Energy Storage,
which claims its battery systems will bring
costs as low as $160 a kilowatt-hour, well
within the range to make them financially
attractive, according to analysts at
Citibank.
This January, Eos raised the first $15
million of a planned $25 million in funding
meant to scale up manufacturing of its
hybrid zinc cathode, aqueous
electrolyte-based batteries. It previously
raised about
$27 million in two funding rounds. The
start-up is reportedly in discussions with
large contract manufacturers that might
be willing to replicate its production lines,
and help it to reach its goal of 100
megawatts of annual capacity in 2016.
On a smaller-scale, Sonnenbatterie
GmbH, based near Munich, specializes in
lithium storage devices for solar
installations. It has sold almost 4,000
units in Europe, and entered the U.S.
market in March. In December 2014, it
raised $9.4 million in equity from venture
capital investors to expand abroad. Also
in December, Seeo Inc., a U.S.
lithium-polymer battery maker backed by
billionaire Vinod Khosla, got a $17
million round of financing led by
Samsung Groups venture capital arm.

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Lithium-ion technology developers
attracted more than 50 percent of the
$1.2 billion invested in the stationary
energy storage sector by the venture
capital and private equity community
between 2004 and the first quarter of
2014, according to Bloomberg New
Energy Finance. The technology is
expected to continue to dominate the
sector in the short and medium term.
Other technologies include a saltwater
battery being developed by Aquion
Energy Inc. In November 2014, it
scooped $36.8 billion in a pre-initial public
offering round from investors including Bill
Gates. The company says its batteries
cost about the same as the lithium-ion
kind, contain no toxic metals and pose no
risk of overheating. A unit about the size
of a dishwasher can provide back-up
power for a home for as many as four
hours. Many investors appear to be
betting on the wider market rather than
just a specific technology, according to
BNEF. General Electric Co., for
instance, in addition to its acquisition of
U.K.-based sodium nickel halide battery
manufacturer Beta R7D and its
establishment of GE Energy Storage, also
invested in A123 Systems, a developer
and manufacturer of lithium-ion batteries,
and SustainX, a developer of compressed
air energy storage systems.
Although venture capital and private
equity investors continue to put money
into stationary energy storage companies
some $70 million was recorded in the
final quarter of 2014 the sector remains
immature, erratic and competitive, say
BNEF analysts. Most developers of these
technologies have yet to commission or
secure financing for significant capacity,
and the opportunity for successful exits
for investors appears to be some time
away. Venture capital and private equity
investors are also betting on companies
developing solutions to a very different
set of problems cultivation of feedstock
for biomass power plants. In December
last year, U.S.-based Genera Energy
Inc. received a $4 million investment from
WindSail Capital Group to help it
produce biomass made from crops,
including switchgrass, in new regions. It
supplies the biofuels, biopower and
bio-based products industries.
A similar company, NexSteppe Inc.,
received $22 million in funding last

Bloomberg Brief

September to develop crops that can be

used as feedstock. Total Energy
Ventures and ELFH Holding GmbH
joined existing investors including
Braemar Energy Ventures and DuPont
Ventures in the Series C funding round,
San Francisco, California-based
NexSteppe said. Braemar led a $14
million funding round for the firm in 2011.
The solar sector produced a number of
interesting venture capital and private
equity deals in the fourth quarter. In terms
of technology, the most eye-catching was
a $23 million Series C funding of Heliatek
GmbH, a German manufacturer of
organic solar panels. It uses
semiconducting carbon-based molecules
instead of silicon to make cells, and
produces flexible solar panels via an
innovative roll-to-roll process involving
vapor deposition.
In terms of new markets, two African
investments were perhaps the most
interesting of the final three months of
2014. Tanzania-based solar company Off
Grid Electric raised $16 million from U.S.
distributed solar company SolarCity
Corp. and the U.K.s Zouk Capital LLP,
having scooped $7 million earlier in the
year. As of March 2014, about 10,000
households in Tanzania and surrounding
countries were signed up to Off Grid.
Customers pay an initial $6 installation
fee for a solar system. The energy
generated is stored in batteries and only
released when the customer sends a
mobile payment. We see the company
reaching a million customers quite soon,
Zouk Capital CEO Samer Salty said.
Furthermore, Off Grid Electric is
leapfrogging the Western world and
proving that distributed energy is highly
scalable, financially viable and has an
immediate positive impact on hundreds of
millions of people. Off Grid Electric isnt
alone in Africa d.light Energy Pvt Ltd
sells solar lanterns and M-Kopa Kenya
Ltd sells rent-to-own solar home systems
that are largely prepaid. In October,
SolarNow, a Uganda-based solar asset
finance company, closed a $2 billion
equity round from Novastar Ventures
and Acumen. The company provides a
range of modular 50 watt to 500 watt
solar home systems and DC appliances
through a franchise model.
A challenge for investors is that firms
such as these and others, including

Clean Energy & Carbon

10

Suntransfer, One Degree Solar and

Redavia tend not to look for capital of
more $10 million. This makes due
diligence and support an expensive
business for such small deals. Another
risk is that the intellectual property may
be difficult to defend if other firms selling
cheaper products piggyback on the
success of top brands.
As PV module prices have fallen,
venture capitalists and private equity
players have shown increased interest in
distribution and finance business models,
particularly in the U.S. In the first eight
months of 2014, three firms with
consumer-facing residential solar
businesses in the U.S. had raised a
combined $365 million, each hoping to
achieve a rapid and profitable IPO like
SolarCity Corp, according to BNEF.
A further two such firms received very
large private equity investments recently.
In January, U.S. security company
Protection 1 raised more than $250
million to fund its residential solar
operations. The companys Brite Energy
typically leases systems using a model
similar to those of SolarCity and Vivint
Solar Inc. Protection 1 has almost 2
million residential and commercial
customers, and is seeking to leverage
these relationships to expand into solar
power. It began offering rooftop power
systems in San Diego in September
2014, and now has six offices in multiple
U.S. states, according to a statement. It
works with MySolar IX LLC, a joint
venture of Morgan Stanley and Main
Street Power Co. In November,
Sunnova Energy Corp. closed a $250
million funding round, bringing the total
amount it raised last year to almost half a
billion dollars as it seeks to expand
residential solar sales in the U.S. The
company offers residential solar power
through leases or power-purchase
agreements, and raised $110 million in
August and $145 million in June 2014. It
seems likely that this business model will
continue to attract investment, so too will
the developers of power storage
technologies as the potential rewards
should be substantial. However, the
scarcity of successful exit stories to
inspire envy among their peers will
continue to hold back investors, some of
whom are still smarting from losses
sustained in the sector.

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Jan. 19, 2015

Clean Energy & Carbon

11

INSIGHT
Nigeria Looks to Add New Renewable, Fossil Capacity
Nigeria needs more power-generating capacity, as it faces a current shortfall of some 3
gigawatts. And without abundant new build fossil fuel and renewables this shortfall is
only likely to worsen, as Africas biggest economy expands by a compound annual rate
of 5 percent this year (according to the International Monetary Fund), its population
surges, and the country seeks to reach 100 percent electricity access by 2030.

NYSE-BNEF EMEA Clean

Energy Index

Development of renewables, as well as other technologies, has been hindered by the

delayed and, as yet, incomplete reform of the power sector. Still, project developers
should have greater certainty when the next stage of the reform (the transitional
electricity market) begins in the near future.
Nigeria has a set of ambitious clean energy targets: under the revised Renewable
Energy Master Plan, the country aims to reach 728 megawatts of renewables plants by
next year. If the targets are achieved, solar technologies are set to benefit most, with 30
gigawatts of photovoltaics and 18 gigawatts of solar thermal targeted by 2030. (See
chart below.) The 2030 target for overall capacity is a startling 315 gigawatts some 30
gigawatts more than Japans current total and around twice the size of Germanys grid.
Still, there are signs that the government may reduce this level of ambition in the new
renewable energy policy that is under development.

NYSE-BNEF AMER Clean

Energy Index

Nigeria's 2030 Target for Power Capacity is 315 Gigawatts

NYSE-BNEF ASOC Clean

Energy Index

Source: Bloomberg New Energy Finance

Bloomberg Brief: Clean Energy & Carbon

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