China’s Wind Giant Xinjiang Goldwind Cancels Largest Green IPO of 2010

13 Jun, 2010
China,Goldwind,Sinovel,Wind Energy

China’s Wind Turbine Producer Xinjiang Goldwind has apparently canceled plans for a massive $1.2 Billion Hong Kong IPO .The reasons for the cancellation of this much hyped IPO is not very clear . Note the Chinese Government has issued a “go slow” for Green IPOs given the overcapacity in the Wind and Polysilicon sectors.However Goldwind which is China’s 2nd largest Wind Turbine Producer and  5th largest in the world had got government approval for the HK offering.This IPO was crucial for Goldwind to raise funds for overseas expansion as the Chinese domestic market sees hypercompetition with a Price War between 60 players fighting for survival.

China is trying to create Clean Technology Champions like Sinovel and Goldwind which can compete in international markets with world class Production and Technology.Goldwind has been working on a HK IPO for the last 4-5 months with June 22nd fixed as the date of the HK offering.This IPO would have been the biggest Green IPO in the world in 2010 after wind farm operator Longyuan’s IPO on Dec 2009.Goldwind is already listed on the Shenzhen  stock exchange and the valuation of the IPO was supposed to be at a reasonable level.The first hint of trouble came after WSJ reported that Goldwind had cut IPO price by 8% . This coupled with the sharp decline in the Chinese market and volatility in the world markets due to the Greek Contagion might have given the Goldwind managment cold feet.The Greek Contagion has led to a slowdown in IPO’s all over the world with the Green Industry being severely affected.There have been reports that some European renewable energy infrastructure firms has also been forced to put their IPO’s into cold storage due to market uncertainty.Note the Green Energy sector is in a nascent stage and the need for capital is much greater relative to other mature industries.

China’s Goldwind pulls $1.2 bln Hong Kong IPO – Reuters

China’s second-largest wind turbine maker, Xinjiang Goldwind Science & Technology Co Ltd, has pulled its up to $1.2 billion Hong Kong initial public offering, a source involved with the deal said on Sunday.

Last month, Russia’s Strikeforce Mining & Resources, China Tian Yuan Mining Ltd and Swire Pacific’s (0019.HK: Quote) property arm shelved their IPO plans in Hong Kong.

China Putting Brakes on Green IPOs as some Green sectors face overcapacity

9 Jun, 2010
China,Goldwind,Green IPO,Renewable Energy,Solar Energy,Wind Energy

China has put on hold new IPO’s from its fast growing Green Industry to prevent overcapacity and weed out small players.Though Goldwind (China’s second largest wind turbine producer) has received approval for the Biggest Green IPO in 2010 in HongKong later this month,others are facing hurdles.While no official communication has been released,Reuters reported that the “Go Slow” on Green IPOs had been sent to investment bankers and industry executives.China has been trying to slow down the overcapacity plaguing some Green sectors like Wind Equipment and Polysilicon.The number of players in the Wind Equipment has risen to almost 60 many of which are Small and run on paper thin margins.Same is the case with the PolySilicon sector which has many Entrants running small,uneconomic and environmentally unfriendly plants.

Prevention of capital raising for these cash strapped players will lead to consolidation and benefit the larger companies like Sinovel,Goldwind ,LDK and GCL Poly.This also goes along with China’s strategy of becoming a Clean Technology Leader through home grown World Class Green Technology Champions.

China freezes some renewable energy IPOs: sources – Reuters

Chinese regulators have ordered a freeze on some initial public share offerings in the renewable energy sector, amid fears that overcapacity will weigh on the rapidly growing industry.The government has made no official statement on the freeze, but sources with direct knowledge of the matter said the message had been communicated to executives and investment bankers looking to bring wind or solar power companies to the market.”The government hasn’t said so publicly, but certain sectors including polysilicon and wind are forbidden from hitting the primary IPO market,” said a source familiar with the situation.”They’re holding approval for certain IPOs because of overcapacity concerns.”China Securities Regulatory Committee officials could not be reached for comment. The sources declined to be named because of the sensitivity of the issue.

Clean technology IPOs in China totaled $2.2 billion so far this year against $2.4 billion for the whole of 2009, according to Thomson Reuters data.A freeze on initial public offerings is China’s latest attempt to curtail expansion in an industry that has many small domestic players yet is controlled by just a few.

Is the Green Investing Opportunity in Pumped Hydro Storage being overlooked

7 Jun, 2010
Solar Energy,Wind Energy

Pumped Hydro Storage Introduction

Pumped Hydro Storage along with Compressed Air Energy Storage (CAES) are the less glamorous cousins of Energy Storage Approaches like Lithium Batteries,Flywheels and Capacitors .The Green Investing Limelight has been firmly taken over by startups like A123 Systems which have failed to perform to their initial hype.Pumped Hydro Storage on the other hand is already extensively used by Power Companies to store low cost electricity during off peak hours and then used during peak times to supply the high demand.There is 90 GW of Global Pumped Hydro Storage already existing in the world and with increasing Solar and Wind Energy  this Capacity is only going to grow.The main use of Pumped Hydro Storage is for Grid Energy Storage rather than Energy Storage for Automobiles and Electronic Products.The Electric Utilities are the main customers of this Technology using Pumped Hydro Storage for

  1. Load Balancing – Storing Power during Low Usage Periods and Generating Power at High Usage Periods
  2. Accommodation of Intermittent Sources of  Energy – Solar Energy and Wind Energy are  growing at a scorchingly fast rate of 50% and 30% CAGR over the last several years.Larger share of these forms of renewable energyin the Electricity Mix is driving the growth Grid Storage.
  3. Reducing Capital Investments as Peak Power plants like Natural Gas Combined Cycle Plants are much more expensive to run than normal Thermal and Nuclear Energy Plants

Advantages and Disadvantages of Pumped Hydro Storage

This form of Energy Storage also leads to losses of between 15 – 30% due to inefficiency.There are also minor problems of environmental impact of large hydro plants and availability of  favorable sites. However Hydro power storage is quite inexpensive with  with estimates ranging from $500-$1500/kW power and $50-$150/kWh energy storage capacity; which is about 1/10th the cost of energy storage like Lithium Batteries.The main advantages are that it uses existing infrastructure of Hydro Power which has a large global installed base.In the 1930s technology was developed for building Turbines which could generate Electricity and also serve as Motors allowing Storage of Hydro Power.Also Pumped Hydro Storage has High Reliability of >99% and  relatively Long Cycle times which means that the stored electricity can be used in a few hours to a few days.

Why Invest in Pumped Hydro Storage

The trend towards Pumped Hydro Storage  is increasing with countries like China,Scotland,USA and Australia proposing massive new capacities.While USA has 21 GW and Europe 38 MW ,China has around 14.55 GW of Pumped Hydro Storage Capacity.China intends to increase this to 41 GW by 2020, which at $300,000/MW would mean an investment of ~7.5  BillionDollar by China alone over the next 10 years.

How to Invest in Pumped Hydro Storage

There are not a lot of glamorous startups in this form of Energy Storage unlike other segment of Green Industry like A123 Systems,Solyndra and Tesla.Most of the companies that can used to invest in this space are large global industrial companies like Toshiba and Emerson Control Systems.While a pure play is difficult to find,Investing in these Conglomerates is also a Less Risky Green Investment.

China State Grid to up pumped storage hydropower capacity – Reuters

The State Grid Corp of China, China’s dominant grid operator, plans to raise its pumped storage hydropower generating capacity to 21 gigawatts (GW) by 2015 and 41 GW by 2020, complementing the fast development of irregular renewable energy sources such as wind and solar power.On Sunday, the State Grid started building a 1.2 GW pumped storage hydropower plant in southern Jiangxi province, the first phase of a planned 2.4 GW capacity expansion that will have a total cost of about 5 billion yuan ($732.3 million).China had only 14.55 GW of pumped storage hydropower capacity at the end of 2009, according to the State Grid.China’s total power generating capacity was 874 GW at the end of 2009

Clean Technology Race – Singapore has its priorities misplaced by incentivising Manufacturing

31 May, 2010
Green Investing,Solar Energy,Wind Energy

Clean Technology is the the Industry that every country in the world is  pursuing aggressively to gain an early mover advantage .Singapore which is a financial and trading hub is no different as it also tries to attract clean technology dollars to its shores.Norwegian Renewable Energy Corporation (REC) which is one of the biggest Solar producers in the world is setting up a huge wafer-module plant in Singapore.This has been the only major CleanTech triumph that Singapore has managed so far.Even calling REC a triumph may be doubtful as REC as it has seen its profits and stock price crash in the face of  Chinese competition and Funding difficulties.Compare that  to its close neighbor Malaysia which has managed to attract multiple solar companies like First Solar,Q-Cells and Sunpower.

Asian Countries Advantages over Singapore

Singapore has always been an also-ran in the manufacturing sector with its electronics and semiconductor manufacturing sector never attaining a critical mass.Its small size and relatively expensive labor puts it at a substantial disadvantage compared to other Asian countries .

  1. India has  a large domestic market and cheap labor which give its substantial advantages over Singapore.The government is also moving aggressively in the solar energy space.It already has a big domestic wind industry
  2. China is dominant in the solar industry with almost 50% of the world’s marketshare.It is on its way to dominate the world’s wind industry as well.
  3. Japan has got one of best high technology bases plus a big home market as well.Companies like Sharp,Panasonic,Mitsubishi are Clean Technology leaders.
  4. South Korea has one of the biggest green stimulus programs in the world.Its massive conglomerates like Samsung,Hyundai and LG are also making aggressive moves in the Green Industry
  5. Malaysia can match the benefits,tax credits and other incentives given by Singapore  with its  lower cost labor . Malaysia is offering an unheard of 15 year tax holiday for high tech companies along with cheap state loans.

Singapore should focus on Services than Manufacturing

Singapore seems better placed to promote its strengths as a financial and trading hub rather than a manufacturing centre.It possesses unique advantages based on the strong rule of law,transparency,efficiency and cosmopolitanism.In my opinion It should focus its energy on Services rather than Manufacturing.

Singapore chases green dollars in clean-tech race – Reuters

Luring REC was a major coup and key element of Singapore’s drive to become a global hub for clean-tech investment, development and education and a center for the carbon market.The clean-tech sector is also part of the government’s efforts to try to gradually shift one of Asia’s most energy-intensive economies onto a greener footing as well as tap a boom in green energy and services in the region.

“We believe that Asia is going to be a huge market for clean-tech products and solutions and we want to make sure Singapore is plugged into this entire market place,” said Goh Chee Kiong, director, clean-tech, at the government’s Economic Development Board, or EDB.

It has rolled out a series of investments, tax sweeteners and other incentives since 2007 to achieve its goal.This is a well-rehearsed formula that has helped the economy of five million people become one of the richest in the world on a per-capita basis, and one of the most nimble as it tries to compete with rivals such as Hong Kong and Shanghai.The city’s clean-tech sector employs nearly 10,000 people and the aim is to reach 18,000 people by 2015.

For all its business acumen, the government has been accused of not putting in the same effort to cut the nation’s growing greenhouse gas emissions, which at roughly 12 tonnes per capita are higher than some European countries.Singapore is not obliged under U.N. treaties to commit to binding emissions cuts but has pledged, at a minimum, to cut emissions by 11 percent from projected levels by 2020 from 2005′s output and has rolled out a blueprint.Green groups, such as WWF, think the government should be more ambitious by pledging absolute cuts in its carbon emissions, said Amy Ho, managing director of WWF Singapore.

Honda and Coda look towards Chinese Battery Technology for their Electric Vehicles

25 May, 2010
China,Electric Vehicles,Solar Energy,Technology,Wind Energy

China is leading US in Clean Energy Manufacturing while it lags behind the US in Technology .While the US government is only thinking that they might lose the clean energy leadership to the Chinese,the Reality is that they are already behind in the Clean Technology Race.This is being confirmed from actions by US as well as Japanese firms looking to China for Clean Technology.China is proposing to give a subsidy of as much as 60,000 yuan per Electric Vehicle which would automatically move a large part of Battery Manufacturing and Technology to China.Note China is already the biggest market for automobiles surpassing US last year.

Honda which is one of the top automakers in the world known for its high quality is also looking to China to develop batteries for its future Electric Vehicles.Honda  has been a laggard in the EV space unlike its Japanese peers  Toyota (Prius) and Nissan (Leaf) . Honda considers China to be a leader in Battery Technology and  thinks China will be its biggest market overtaking US in the coming years.

California startup Coda was also forced to look at China for developing Battery Technology.It partnered with a Chinese company ianjin Lishen Battery Joint-stock Co. and will use this technology in setting up a Battery plant in Ohio.The lack of any big Battery player in US forced Coda to look to China.I am pretty sure that Coda would have produced the Battery packs in China if not for the high transportation costs.

Duke Energy is also being forced to look to China for technology in the Renewable Energy segment as US continues to dither and play petty games on the Energy and Climate Bills.Both of the above examples show that China is taking the lead not only in Manufacturing but also in Technology in the Green Industry.

Honda eyes China to develop car batteries – Economic Times

Honda Motor Co is interested to develop electric car batteries in China to tap the country’s technology and vast resources, its chief executive said, adding that a breakthrough was needed to bring the zero-emission cars into the mainstream. Having surpassed the United States as the world’s biggest auto market last year, China has become an increasingly important battleground for global automakers, which are keenly awaiting Beijing’s policy on the promotion of greener cars.

U.S., China Firms To Make Electric-Car Batteries in Ohio – WSJ

A California-based electric-car startup—Coda Automotive—will build a factory in Ohio that could employ more than 1,000 workers initially and that will use Chinese technology to produce automotive-grade lithium-ion batteries for an all-electric car the U.S. company plans to launch in California later this year.The deal is a rare example of a U.S. auto maker having to tap a Chinese company for high technology. Another unusual facet of the venture is the creation of manufacturing jobs both in China and the U.S.Initially, Coda plans to bring in batteries from Tianjin, China, where Coda recently opened a battery plant it jointly owns and runs with Tianjin Lishen Battery Joint-stock Co. with capacity to produce more than 20,000 battery packs a year. But because electric-car-grade, lithium-ion batteries are heavy and expensive to ship across the Pacific, Coda has been searching for a production site in the U.S., finally settling this week on Ohio.

Reality Check for US Commerce Secretary – USA is already far behind China in Clean Energy

22 May, 2010
China,Goldwind,Sinovel,Solar Energy,USA,Wind Energy

The United States could fall behind China and other countries in clean energy technology unless Congress passes energy legislation, U.S. Commerce Secretary Gary Locke said on Saturday- Reuters

While the Commerce Secretary is “only thinking” that the US could fall far behind ,The Reality is that US is already far behind in the Solar and Wind and is at risk of falling behind in the other newer sectors of the Green Industry as well.

USA is far behind China in Solar

USA has fallen far behind China in solar manufacturing despite Silicon Valley being the hotbed for technology innovation in solar . If it was not for First Solar, no US company would figure in the top 10 rankings by 2011 as the Chinese and Taiwanese use their low cost and processing skills to tighten their grip on the world market. Numerous startups like Miasole,Nanosolar,eSolar are in the process of moving from pilot to commercial production but the support from the government does not measure up . Evergreen Solar has  given up on the US and shifted its manufacturing base to China  while other technology innovators like Energy Conversion Devices are on their “deathbed”.Sunpower and First Solar the other major companies are trying to compete by expanding their facilities in Asia, retaining only a  token presence  in the US (less than 10% of their future capacity will be located in the US). Technology giant Applied Materials has shifted its manufacturing and R&D base  to China as well. While all this is going on, US continues its petty politicking over the climate bill which ironically has support for “offshore drilling”

In Wind US is in a more pathetic condition

Except for GE , US does not have a single company in the top 10 turbine makers for wind. There does not exist a single large pure play wind turbine maker in the US. Despite US being the world’s largest wind market in 2009 , US hardly manufactures even 10% of the world’s wind turbines.In contrast Chinese wind makers like Sinovel,Goldwind ,APower are planning big foreign expansions making the dominant European companies like Vestas  go into the red.

Energy Efficiency,Storage and other forms of Renewable Energy a  Saving Grace

In the still nascent markets of Energy Efficiency ,Energy Storage and other forms of renewable energy like geothermal ,tidal ,biomass and nuclear energy the US still leads along with Europe, but the Chinese government has been proactively seeking investment in these areas as well. Its a matter of time that once these technologies cross the early adopter curve, companies in Asia will actively look to attain leadership here as well.Innovative companies like Ormat, Comverge,EnerNoc , Johnson Controls,A123 systems still give the leadership to the US in these areas.But unless they are given more government support and subsidies , you can see them moving off to Asia like the solar and semi companies like Evergreen,Applied Materials.

Summary

US is still the leader in technology innovation and R&D in the green technology area,however it is way behind in the manufacturing area.Its only a matter of time that the Asian countries develop the technology once they move further along the experience curve.Companies in the US like IBM,Applied and others have already shifted a large part of R&D to these countries.Unless US soon implements on  a coherent long term policy to mitigate climate change and develop clean energy , it would fall too far behind to matter at all

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