What does the Terra Firma Withdrawl from Infinis Energy Reveal About Energy Subsidies?
Okay, so that’s a big, ‘ole gnarly headline, but a very important question. First, the news:
From The New York Times’ Dealbook:
Terra Firma, the European private equity fund founded by the British financier Guy Hands, is considering an exit from one of its big bets on renewable energy.
The company said on Monday that it was “exploring options to crystallize the value” of its 68.6 percent stake in Infinis Energy, a provider of wind power and other forms of renewable energy, including a potential sale. Terra Firma listed Infinis in an initial public offering in London in November 2013.
“Given that Terra Firma owns a significant majority stake, it believes there is merit to exploring potential interest in the stake as a whole alongside other options, including the potential for market sell downs,” the private equity fund said in a news release.
Terra Firma added that there was no certainty that a sale of any or all of its holdings in Infinis would take place, and did not specify on what terms it would consider such deals.
Of course, the natural next question is, “Well, why?”
The answer lies in the U.K.’s energy subsidies and the government’s perceived favoritism toward offshore wind, which Mr. Hands was highly critical of in a recent blog post. Hands claims onshore wind will undoubtedly be the cheapest energy source in a mere several years and the government is not taking notice. He cites a study for the European Commission found that onshore wind is “already far cheaper than gas, and half the cost of coal generation, when environmental and health factors are considered.”
“But rather than support this success,” he wrote, “the onshore wind industry finds itself under attack from government,” and claimed that “the government is putting its faith–and public money–in expanding offshore wind and the potential of shale gas.”
This leads to a larger question about the energy subsidies and the forms of energy they favor, perceived or otherwise. Discouraging investment isn’t exactly anyone’s goal, though often times that is what occurs. A similar situation arose earlier this year in California as the solar industry cried foul of a bill that required a set amount of power to be purchased from geothermal energy from the Salton Sea. The opponents of that bill made the same argument as Mr. Hands.
“I am not, despite my involvement with onshore wind, asking for the extra funds to be diverted to our sector,” he explained. “All we need is a level playing field. This requires the same level of subsidies for all generation, whether on or off-shore wind, nuclear power, gas fired power stations, biomass, shale gas, solar or clean coal, adjusted for their environmental effects.”
Certainly, this is a large question. Are subsidies fair? With investments such as this dropping, is it time to rethink the approach to subsidies? What do you think? Let us know in the comments!
Toyota unveils electric van and Volvo opens fuel cell lab
Toyota is launching its first zero emission battery electric vehicle, the Proace Electric medium-duty panel van, across Europe.
The model, which offers a choice of 50 or 75kWh lithium-ion batteries with range of up to 205 miles, is being rolled out in the UK, Denmark, Finland, France, Germany, Italy, Spain and Sweden.
At present, alternative fuel vehicles (AFVs, including battery electric vehicles) account for only a fraction – around 1.8 per cent – of new light commercial van sales in the UK, but a number of factors are accelerating demand for practical alternatives to vans with conventional internal combustion engines.
Low and zero emission zones are coming into force to reduce local pollution and improve air quality in urban centres, at the same time as rapid growth in ecommerce is generating more day-to-day delivery traffic.
Meanwhile the opening of Volvo's first dedicated fuel cell test lab in Volvo Group, marks a significant milestone in the manufacturer’s ambition to be fossil-free by 2040.
Fuel cells work by combining hydrogen with oxygen, with the resulting chemical reaction producing electricity. The process is completely emission-free, with water vapour being the only by-product.
Toni Hagelberg, Head of Sustainable Power at Volvo CE, says fuel cell technology is a key enabler of sustainable solutions for heavier construction machines, and this investment provides another vital tool in its work to reach targets.
"The lab will also serve Volvo Group globally, as it’s the first to offer this kind of advanced testing," he said.
The Fuel Cell Test Lab is a demonstration of the same dedication to hydrogen fuel cell technology, as the recent launch of cell centric, a joint venture by Volvo Group and Daimler Truck to accelerate the development, production and commercialization of fuel cell solutions within long-haul trucking and beyond. Both form a key part of the Group’s overall ambition to be 100% fossil free by 2040.