Japan Approves New Renewable Energy Feed-In Tariffs

On June 18, Japan's Ministry of Industry approved the implementation of renewable energy feed-in tariffs.  These tariffs, set to last for at least 20 years, are among the highest in the world (see chart below) and they become effective from July onwards. Bloomberg New Energy Finance estimates that Japan's photovoltaic (PV) market alone could be worth at least 10 billion USD, with Japan poised to overtake Italy as the world's second largest solar energy market.

The new Japanese green tariffs require utility companies to purchase electricity from renewable sources, such as wind, solar, biomass, geothermal and different forms of biomass.  Japan's government views this requirement as a positive step towards reducing its historic reliance on nuclear power and thereby mitigate against a potential future "nature+nuclear" national catastrophe a la Fukushima.

Japan only generates about 1% of its energy from renewable sources at present, but analysts predict that the country should unlock at least 30 billion USD in fresh renewable energy investment by means of these new tariffs. It will be interesting to watch how feed-in tariff policies evolve in the USA and other major economies -- much work still needs to be done in order to reduce our global dependence on greenhouse gas emitting fossil fuels.

Cheers -- Jon

Green Energy Firm Raises $12 Million For Renewable Gasoline Venture

Primus Green Energy Inc. (www.primusge.com), a firm that has developed a special process to produce gasoline from biomass and natural gas, recently announced it has finalized a $12 million investment funding by IC Green Energy Ltd. This recent funding adds to $28 million raised by the company since 2007. The company has a Norh Carolina test facility in operation and seeks to commence construction of a commercial production plant in 2013.

The company's proprietary technology takes synthetic gas (or "Syngas") derived from either biomass or natural gas gasification processes, and converts it to gasoline and other usable fuels. Its end products have been independently lab tested to generate the equivalent of 93 octane gasoline.  Primus estimates that its fuel will sell at similar market prices as commercial gasoline once commercial production has begun.

Historically, syngas conversion has been challenging to bring into commercial production due to low efficiency conversion rates. But according to company sources, in the case of Primus's proprietary technology, the conversion  rate can approach 33% which would make commercial production profitable and scalable.

Could this the the future of fuel at the pump? Time will tell! If things keep going on track, the company could consider conducting an IPO by 2014 if market conditions are favorable, according to sources.

Kind regards from Kiev,
Jon

Renewable Energy IPO in USA - first of hopefully several during 2012

Greetings from Kiev!

It's a cold winter in Ukraine but a hot market, it seems,  for renewable energy companies tapping into the capital markets.  Two weeks ago, in climate change skeptical USA, an Iowa company named Renewable Energy Group Inc. completed its 72 million dollar IPO on Nasdaq (ticker: REGI).  While the book closed at the low end of the projected raise, the successful placement in January (typically a quiet month for IPOs) shows demonstrably strong continued investor interest in alternative energy as a growth market in America.  The global economic picture is not conducive to bull market placements at this time, with the market weighed down by macroeconomic concerns in the Europe and with other alternative fuel companies trading below their IPO prices last year (such as Gevo Inc. and KiOR Inc. and notably Solazyme Inc.)

Renewable Energy claims to be the largest producer of biodiesel in the U.S., using low cost feedstocks (such as inedible animal fat, used cooking oil, and inedible corn oil) to create fuel. Over the first 3Q of 2011, total revenue nearly quadrupled to $557 million compared to the same period a year earlier, but its loss widened to $27 million from $25 million in the 2010 period. 

This recent IPO underscores the growth potential in the alternative fuels sector, and it will be interesting to see how similarly situated companies in Central and Eastern Europe, with their superior access to feedstock and fuel supply inputs, can take advantage of the global capital markets to undertake their own IPOs and private placements.

Cheers from Kiev,

Jon