India looks to solar; creditors back wind

Suzlon hit the headlines last week after it announced on 9 July that its creditors had approved the company's plan to issue up to $US577 million in convertible bonds. The restructuring plan should help Asia's second-largest wind-turbine maker clear a fundraising hurdle. Suzlon is leading gains this year among global wind-energy companies on expectations that its recovery will be underpinned by a deal with bondholders and by a new government in India that favours clean energy. Having not reported a profit since 2009, the company is seeking to recapture demand after its financial woes slowed its ability to carry out orders.

Indeed, Suzlon may already be enjoying better health, having regained its position as India's largest wind-turbine market in FY2014, according to a recent Bloomberg New Energy Finance report . But it will face increasingly fierce competition to maintain this position, though it – together with Wind World India – used to have a substantial lead in project installations. In FY2014, Gamesa India was pipped to the number one spot by just 7MW, having made the impressive leap from sixth place in FY2013 to second. Overall, the megawatt difference between the four-largest turbine makers in FY2014 was just 70MW. Though it took first place in FY2013, Wind World India has been facing financial difficulties in recent years: this in part drove the 20 per cent drop in projects in FY2014, putting it in third place.

However, it was solar – rather than wind – that was the main renewable energy beneficiary of the first financial budget of India’s new government. All of the new initiatives for renewable energy generation announced on 10 July, amounting to INR 10 billion ($US0.17 billion), mentioned only solar. However, the funds allocated to most of these initiatives are insufficient to meet their ultimate goals and they will need further resources in the coming years, says Bloomberg New Energy Finance . Indeed, the most significant announcement for renewable energy was the doubling of the Clean Energy Cess on coal – albeit to a still moderate INR 100 ($US1.66) a tonne. This tax is expected to contribute some INR 68.6 billion ($US1.1 billion) to the National Clean Energy Fund, which supports clean energy subsidies. This move may generate some debate but overall the budget is likely to pass with little modification.

Meanwhile, advocates of EU carbon market reform have been keeping a close eye on the European Parliament as MEPs have been selecting new committee chairs and members following the elections in May. On 7 July, the Environment Committee selected Giovanni La Via, a member of the European People's Party, which opposed the temporary carbon market fix known as 'backloading'. The Environment Committee will play a crucial role in the forthcoming legislative process surrounding the market stability reserve in the European Emission-Trading System (EU ETS).

However, Bloomberg New Energy Finance does not expect La Via's appointment to have a significant impact on the passage of legislation to reform the carbon market. While the chair is an impact role for coordinating the committee's activities, the real political prerogative lies with a proposal's rapporteur, who is likely to be nominated this week. They will almost certainly be a member of the European People's Party, with one potential candidate being Belgium's Ivo Belet, who supported auction curbs. Nonetheless, votes on EU ETS reform could be just as tight as during the backloading saga and the votes of non-attached MEPs and party 'rebels' will again hold the power to sway the outcome.

Originally published by Bloomberg New Energy Finance. Reproduced with permission.