In the press: anticipating industry trends

 Tax exempt bonds in the United States : 

Up untii December 2011 the take up has been slow compared to allocation  in states which are not renewables focussed- showing nudge mechanisms need support to ensure they are effective. 

The good news is that over $1billion has been  placed- in many cases for  small  $1m to $5m schemes. 

See our comments in climate bonds  initiative January 2012 blog http://climatebonds.net/2012/01/the-true-story-of-crebs-and-qcebs-china-ups-solar-target-50-singaporeclimateinsurance

Post Solyndra how to stimulate cleantech manufacturing  on climatebond.net 
"Given the controversy arising from the Chapter 11 bankruptcy of solar systems company Solyndra, shortly after receiving $535 million of US government loan guarantees, it's a brave politician who advocates yet more interventionist support for the renewables industry. It’s certainly not a topic to be raised at your local neighbourhood tea party. Yet, if we are to bring cleantech jobs to western economies given the competition from largely state planned investment in China, we do need to provide a spur to cleantech manufacturing investment.  
Grants have always posed difficulties. They require the state to pick winners and losers and often impose conditions, which can mean that they can't be drawn down (witness past efforts in biomass and marine in the UK).They also encourage an attitude to grant farming, which is incompatible with an emerging and dynamic market sector. Guarantees are good for energy plant deployments, but equally problematic for manufacturing investments.
Far better as a stimulus to growth to offer 100 per cent capital allowances for new investment in cleantech manufacturing facilities allowing the market to decide where funds flow.
Even better, with capital allowances, costs to the taxpayer only occur when profits are earned and then only on the due date of corporation tax payment. That’s much later than the actual investment in capacity — i.e. stimulus now, taxpayer cost later — by which time treasury should already be benefitting from payroll and other taxes generated by the new enterprise.   Such an incentive attracts both new entrants to the market and helps existing players and those converting skills from related industries. 
 True, such benefits are less fun that the immediate announcement of a new grant award at an industry conference, but I'm sure politicians and others would be welcome enthusiastic attendees at the plant openings and factory extensions that would follow, enabling the country to harvest a greater proportion of the jobs arising from low carbon spend rather than exporting them abroad. 

 The brave policy maker could even allow an SME (small or medium sized enterprise) without taxable profits to sell tax losses back to treasury at a 10 to 15 per cent discount — once a factory is up and running — providing security for start up loans.  In this way policy makers could support local manufacturing with little moral or financial hazard and markets decide where success best lies. Even better, there would be fewer forms. 

 

So where do bonds fit in? Bonds can be used to securitize the capital allowances or tax credits granted under the scheme. If guarantees were provided they would be restricted to the value of capital allowances that would normally be offset against a trade’s operations to the point an operation ceased.So, if the manufacturing entity goes bust in a year or two, then only the capital allowances or tax credits to that year would be repaid. That ensures the taxpayer is protected against under-capitalisation or flaky business models.

Bonds with or without guarantees would be provided for demonstration or early commercialisation projects using new technologies, effectively providing research and development support. These could use 100 per cent (or higher) research and development tax credits as the vehicle for monetization again providing protection against grant culture. The qualification criteria for such schemes could simply reference the Climate Bond Standards Scheme.The issuance of bonds would be subject to commercial controls and criteria, exercised by bodies independent of government. This way, failures are part of the normal commercial equation rather than a function of  a politicised process.

Climatebonds.net October  2011

In Cleantechinvestor an article on the democratisation of power through remote net metering

"Of course the devil would be in the detail, but a remote net metering system would greatly increase the number of energy intensive consumers also acting as producers of electricity. A system such as this would provide them with much greater visibility of forward costs and managerial control over exposure to energy usage and prices  - whilst also decarbonising the energy component of their supply chains and reducing their need to carbon offset. 

It would also bring forward the point at which grid parity is reached as investment decisions (as occurs with rooftop solar) would be influenced by the retail rather than wholesale price of electricity. 

In addition, it would facilitate the transformation of the business model of utilities to energy management service providers. Remote net metering should work well with smart metering and ‘paid for’ demand management (where users agree to curtail usage for a fee; examples have included the aluminium industry in California, at times of power price spikes and shortages).

The US 1978 Public Utility Regulatory Policies Act (PURPA) actively encouraged co-generation using forestry pulp and other residues. Biomass plants located within paper and related industries reached a capacity of 10GW by the turn of the century, and due to this legacy the US remains the largest global producer of electricity from biomass.  

Remote net metering offers the prospect of providing a similar surge in renewables capacity – not just in biomass and not just in the US, but in most large western economies driven by the need of intense energy users in both traditional and new industries to decarbonise to meet the needs of consumers and regulators.

Remote net metering would be a critical step in the democratisation of power. Industrial consumers could be transformed into energy producers and energy managers, giving them a virtual renewable energy rooftop on the low carbon world ."

Cleatechinvestor September 2011

 In the FT commenting on trends in the solar industry:

Once prices go down they stick “says Jonathan Johns director of climatechangematters.  “and it’s easier technologically to reduce prices in solar than in other technologies , With wind, you have more conventional mechanical moving parts, as well as steel and other inputs’. ‘ the challenge for regulators will be managing the transition.” says Mr Johns.

Financial Times  September  2010

REFocus November 2009

In the FT commenting on fast patent measures to promote  Cleantech  

Mr Johns argues that the filing of patents is only one part of the process of promoting technologies that contribute to a low-carbon economy. “Yes, a lot of universities in the west are researching into clean tech and lots of patents are being granted,” he says. “But the big issue is how to get the flow of capital to take those ideas to prototype, then to demonstration and then to commercialisation.”

Financial Times  May 2011

REFocus October 2010

PV Insider Article on trends in PV technologies

Renewable energy consultant Jonathan Johns director of Climate Change Matters said that thin film has long been put forward as the natural successor to crystalline PV. However European feed-in tariffs tend to support more conventional technologies. Johns mentions the drop in German feed-in tariffs following similar action in Spain.[long term] "This could open the door for thin film in the race to grid parity along with the increasing trend for the corporate sector to generate its own energy. Here capital costs will hold sway with corporates accepting that projects will need to be replaced before the end of their technical life." He added: "As always China will be an increasing factor.

PV Insider March 2010

In the Ends report commenting on the committee on the offshore wind industry and the recent committee on climate change report.

"the current focus on value for money is hardly a surprise" said Jonathan Johns of consultancy climatechangemmaters limited and doyen of the renewable energy world for having set up Ernst And Young's much admired country attractiveness indices for renewables investment ...' 

"Finance was always going to be tight as we came out of the recession and politicians would also realise that a levy on [electricity bills is  renewables is similar to a tax rise. 

But my observation is that it is better to be there for the longer term to 2050 [rather than rush offshore investment to 2020. You need a very clear startegy of how you want to go forward say 40% to 60% renewable electricity by 2050 - and you should draw a path for offshore wind to that. There's a very big prize there.' 


ENDs report  March 2011

 REFocus article commenting on the likely impact of the recession on the design of support mechanisms

 To date, policy measures have largely been fixed by reference to the needs of a particular technology i.e. wind or solar, many of which are at different places on the cost curve. This is likely to remain the case given the scale of the immediate challenge which requires aggressive deployment of all deliverable solutions.

 With the post recession stimulus, paid out of depleted treasuries, value for money is likely to become an increasingly significant factor particularly against a backdrop of rising fossil energy prices.

Looking forward, costs per carbon tonne saved is likely to become one of this century’s key policy indicators, achieving a place alongside internal rate of return and other more conventional indicators in the private sector as carbon gets a price, whether explicitly through cap and trade and specific taxes or implicitly through customer behaviour.


In Business Green commenting on the ascendancy of China in the renewables market post recession

 Jonathan Johns director at consultancy climatechangematters said the Ernst And Young renewable ecountry attractiveness report showing the ranking of china as no 1 

'highlighted the difference between China's planned economy and the more volatile policy environment experienced in democratic countries.

 [it is] a small wonder that China has reached number one position in the [ratings ] for the first time , while the position of the US shows signs of slipping if more action does not occur." he said.

 Business Green report  September 2010

 Guest columns In Ernst and Young's  Country attractiveness indiceshttp://www.ey.com/GL/en/Industries/Oil---Gas/Oil_Gas_Renewable_Energy_Attractiveness-Indices

Issue 34  2020 targets are we doing enough to keep the lights on ?

With many economies still dependent on a high proportion of fossil fuels will they be able to close the renewable energy gap?


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Issue 32 Post durban: can community renewables and smart grid brighten a low margin decade ? with carbon prices unlikely to provide a near term floor and individual countries regulatory policies focusing on reducing costs what are the implications for the renewable industry. Can smart grid and community renewables provide a new business opportunity ? 
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 Issue 30 Biomass the next major business opportunity or continuing carbon conundrum? why has biomass fallen so far behind in the investment race and does it deserve an upgrading from investors and policy - makers? 
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Issue 28 Renewable support mechanisms the transition to low carbon In developed countries the challenge is to meet increased targets for carbon reductions whilst gaining benefits of economies of scale and declining technology costs-but without the policy tools or fiscal budgets available to more planned new growth economies, which benefit from greater state sponsored liquidity and a more controlled industrial and planning policy.
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 Issue 27 Cancun : low carbon must not ignore the developing world poor: as the west and the BRIC economies form their different growth standpoints negotiate atCancun over the shape of the world's future low carbon economy, let us hope that the  solutions that emerge do not ignore the developing world poor 
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Issue 26 the low carbon transition to the grid parity age one day grid parity will come, and through the low carbon transition the renewables industry will have come of age.
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 Issue 25 "shift to green' -challenges  for renewable support mechanismsThe increased acceptance that economies will “shift to green”, with renewables commanding a high share of the future energy mix, brings with it not only opportunity but also responsibility: to ensure that value for money is achieved on behalf of the consumer / taxpayer while appropriate levels of returns are achieved for the industry. That way true sustainability lies.
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 Issue 24 Renewables - the last 10 years  Lessons for the future : for economies left behind, the danger is that dependence on increasingly expensive fossil fuels is replaced by dependence on imported low carbon economies 
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In reFocus commenting on remote net metering in the crystal ball  session at the Euromoney Renewable Energy Finance Forum London

The second day of REFF featured streams on wind, solar, tidal and “digital energy”, including smart grids, integration of renewables and EVs, and Jonathan Johns of Climate Change Matters chaired the concluding “crystal ball” session. He echoed Asier Mata’s comments by pointing out that the journey from support mechanisms to grid parity was critical:

 “Rooftop solar has the advantage that grid parity is defined by the retail price of electricity whereas for other technologies, away from the point of consumption, it’s the wholesale price. If we allowed net metering from remote locations, it would transform the investment landscape, bringing in huge amounts of capital from general industry keen to own their own generation capacity.”

 “ This is what happened in India,”added Andrew Garrad, president of GL Garrad Hassan, from the floor.

Conferences/ Media
Chair opening session REFF London Sept 2012

Session chair Nexgen 2012: insurance risk in biomass

Panellist  Cleantech cluster marine energy in the Southwest  30 November 2011

Session chair  renewables futures debate Bath 9 November 2011

Chair REFF London Sept 2011 Generating transactions: Understanding investor appetites 


Chair of alternative finance session Waste Finance forum January 2011

Chair of clean coal session Coaltrans Amsterdam October 2010

ITV 1 Tonight documentary re Cleantech manufacture   July 2010

Various appearances on politics southwest 2009/2012