Enbridge to Acquire 20 MW of Solar Energy From First Solar
"These agreements demonstrate continued momentum in First Solar's project development business," said Frank DeRosa, First Solar Senior Vice President of North American project development. "We are very pleased to extend our relationship with Enbridge that began with Sarnia, and to work together to increase renewable energy generation in Canada."
The 5-MW Tilbury Solar Project is located in Tilbury, Ontario. First Solar completed construction on this project in December 2010.
The Amherstburg II Solar Project is located in Amherstburg, Ontario, which is about 70 kilometers from Tilbury. It consists of two separate facilities that, together, total 15 MW. Construction is expected to begin in March 2011, and to be completed in Q3 2011.
Under the terms of the agreements, First Solar constructed (and, in the case of the Amherstburg II Solar Project, will construct) the projects under fixed-price engineering, procurement and construction (EPC) contracts, utilizing its advanced thin film photovoltaic technology. First Solar will also provide operations and maintenance services to Enbridge under long-term contracts. Enbridge will sell the facilities power output to the Ontario Power Authority pursuant to 20-year Power Purchase Agreements under the terms of the Ontario Government's Renewable Energy Standard Offer Program.
Eoin Treacy's view
There are a number of factors that affect the performance of renewable energy
shares. The first is that without subsidies they are not competitive with fossil
fuels. This means that they tend to be high beta energy investments, more likely
to advance when oil prices are high. Counterwise, they plummeted when oil prices
fell from their 2008 peak near $147.
Because renewables are not competitive without subsidies, to both manufacture and purchase the necessary infrastructure, stiff competition has evolved between those seeking to access the abundant subsidies on offer. Over the last few years China has come to dominate the production of solar cells and wind turbines. China based manufacturers have access to low cost loans, land and labour. They also benefit from a loose regulatory framework in which to conduct business. This has helped them to nudge out previously dominant companies in Europe and the USA.
A review of solar companies clearly illustrates winners and losers, with the defining characteristic being that a Chinese manufacturing presence offers a distinct advantage. Trina Solar, LDK Solar, JA Solar, Solar Fun Power Holdings and ReneSola are relative strength leaders.
First Solar which is the largest producer of thin film panels is an exception because it does not appear to have a Chinese manufacturing facility. It broke successfully above $150 this week and a sustained move below $135 would be required to question medium-term upside potential.
The caveat for all renewable energy, at least until the technology has developed to an extent where comparisons no longer matter, is that they depend on high energy costs to be viable. However, while oil, coal and uranium prices are rising, US natural gas prices are still within a base.
Unconventional shale, sand and tight gas is changing the energy sector. The market is being flooded with cheap, relatively clean, abundant, secure fuel which is becoming ever more attractive as the relative cost of other sources increases. It is only a matter of time before ideology gives way to economics and additional uses are found for natural gas.
Exploiting unconventional gas is not without controversy, but the problems which need to be solved are comparatively minor when compared to the subsidies required to foster a renewable energy industry which is increasingly being dominated by China.