Warning! Covid green impacts incoming

Governments have a unique opportunity to super-charge the wind industry. But will they have the confidence to take it?

This week, 11 non-governmental organisations wrote to the European Investment Bank. Their open letter called on the EIB to ensure that the European Union’s Green New Deal is central to its response to Covid-19.

Last month the EIB committed to mobilise €40bn to support SMEs in the EU. This month it added to this with a €25bn guarantee fund to support €200bn investment. Big news like these can pass with little fanfare during a crisis.

That’s why the NGOs – which include Greenpeace, Oil Change International and WWF – said the EIB must continue its plan to go green, including in wind farms. It said the EIB cannot give a “blank cheque… to economic models and projects that are taking us to the next crisis, the climate crisis”.

Their concerns echo those of others. Christiana Figures, executive secretary of the United Framework Convention on Climate Change, warned the $10trn to $20trn that governments will inject into the global economy “will determine the contours of the economy” for many years. Decarbonisation will be key.

And, on 31st March, 31 European infrastructure bodies, including WindEurope, called on European institutions to hold firm to their Green Deal goals.

The fear is Covid-19 bailout money will be used to support polluting sectors that then carry on with business as usual. This is why the German environment minister has been under fire for bailing out aviation companies; and why, in the US, we must keep a close eye on whether oil gets a huge bailout.

We don’t doubt the climate crisis is still on many politicians’ minds.

This week, environment ministers from 30 countries, including China, India and UK, made similar calls to put the climate at the heart of bailouts during the global Petersberg Climate Dialogue. But these won’t be the ministers taking final calls on Covid-19 bailouts. That's why we should worry.

Why this matters

For the most part, those in business let politicians get on with the politics.

Covid-19 hasn’t hit renewables as hard in the short-term as other sectors. It wouldn't be hard to find an airline exec who’d happily trade places! And yes, deals are being done. We’ve seen some big ones so far this week (see news). These can project an image that wind is continuing as normal.

In many ways it is. Turbines keep turning. People need power. It’s tempting for businesses to turn inwards during a crisis and focus on their core activities.

But that would be a mistake.

The wind sector has spent a decade distancing itself from direct government financial support. But investors in the wind industry still need a supportive framework, from capacity auctions to revenue stabilisation mechanisms and planning rules. The decisions made now could be crucial to their growth.

If the bailouts for non-renewable sectors impose tough green rules on their recipients then it could really help wind. More pressure to hit net zero carbon emissions means more pressure to buy electricity from wind farms. Indeed, the EU is looking at what green mechanisms it can add in any support to aviation companies. But we can't take that progress for granted.

That's why wind companies must keep on the front foot in three ways.

The first is simple. Keep communicating. Keep getting the message out about the importance and resilience of wind. The performance of the companies in this sector since the pandemic hit shows there are reasons to be confident.

The second is to be clear on what’s at stake. It’s easy to be overwhelmed by life in lockdown, but the bailouts now will shape the next business cycle. We must fight back against those who want to erode hard-won renewable support.

And the third is to look for the opportunities in these dark days.

For example, energy storage has been a bright spot of recent upheaval, with some projects seeing profits up 20%. This is an example of how they could help both the grid and your own portfolios.

There may not be much each of us can individually do to shape these bailouts. But if we talk with a united voice, we can do more than we think.

NEWS IN BRIEF

MASDAR CONCLUDES £466M REFINANCING

Masdar has closed the £466m debt refinancing of its 20% stake in the 630MW London Array offshore wind farm in UK waters. The debt was set to mature for the project in December 2032. Read more

NORDEX REFINANCES €1.21BN CREDIT FACILITY

German manufacturer Nordex has refinanced a €1.21bn guarantee credit facility until April 2023 with an international banking syndicate. The syndicate is made up of 21 banks led by Banca IMI, BNP Paribas, Commerzbank, HSBC and UniCredit. Read more

DUKE ENERGY TARGETS 16GW BY 2025

US utility Duke Energy has committed to double the amount of wind, solar and biomass in its portfolio to 16GW by the end of 2025. Its current 8.1GW renewables portfolio includes 2.5GW of Duke-owned wind farms. Read more

WPD TEAMS UP ON 600MW IN TAIWAN

Wpd has teamed up with a subsidiary of Taiwanese LeaLeaGroup to develop a 600MW wind farm off the coast of Changhua. The pair are set to submit the project to bid in Taiwan's upcoming offshore wind tender round. Read more

ENERCON COMPLETES 564MW TURKEY DUO

Enercon has completed turbine installations at the 312MW Soma wind farm in Turkey for Polat Enerji, which is due to be commissioned next month; and the 252MW Karaburun wind farm in Turkey for an unnamed client. Read more

GLENNMONT SELLS FINNISH STAKE TO KANSAI

Glennmont Partners has agreed to sell a 15% stake in the 211MW Piiparinmäki wind project in Finland to Japan's Kansai Electric Power Company. The project is due to be commissioned in late 2021. Read more

GIG HITS FINANCIAL CLOSE ON 47MW TYSVAER

Macquarie's Green Investment Group has reached financial close on its 47MW Tysvaer project in Norway, which is set to be made up of 11 Siemens Gamesa turbines. Read more

KIT KAT MAKER SIGNS RACE BANK PPA

Ørsted has agreed a 15-year power purchase agreement with Nestlé, which is set to buy the output from 31MW of the 573MW Race Bank offshore wind farm in UK waters. The deal is due to start on 1st May. Read more

VOLTALIA PICKS NORDEX IN BRAZIL

Voltalia has picked Nordex to supply 17 turbines for its 59MW Ventos Serra do Mel 4 project in Brazil, which is due to complete in spring 2021. Read more

ENECO TEAMS UP ON POSHYDON PILOT

Eneco has teamed up with Neptune Energy to supply energy from its 129MW Luchterduinen wind farm to the Poshydon green hydrogen project. Read more