US cleaning up in capital boost for energy tech

As of March 31, more than $150 billion in capital investment has been announced for utility-scale clean energy projects and manufacturing facilities in the US, since incentives under the Inflation Reduction Act were signed into law last August, analysis by the American Clean Power Association shows.

This is equivalent to five years of American clean energy investment, surpassing total investment into US clean power projects commissioned between 2017-2021.

American Clean Power’s Clean Energy Investing in America report details several other landmark achievements for the industry, including announcements of 47 new or expanded utility-scale clean energy manufacturing facilities.

ACP said clean energy had clearly started to “transform the make-up of American manufacturing and investment”.

Since the Inflation Reduction Act was passed, the ACP said signs of rapid growth for maturing American clean energy industries are emerging.

“Plans for an unprecedented amount of new solar, battery, and offshore wind plants are being drawn and developed,” the report said.

“The new incentives offer companies a significant opportunity to invest in new utility-scale wind, solar, and storage projects and manufacturing facilities, while passing on savings to American consumers.”

However, the ACP urged the Biden administration and Congress to continue improving trade policies, support next-generation technologies, finalize effective tax implementation and work to enact “commonsense permitting reform”.

Ahmed Maqsood, a banker on the energy team at Société Générale in New York, says: “Battery storage is often an overlooked but nonetheless critical component of the energy transition. “Simply put, as states across the US continue to push forward with their renewable portfolio standards, the demand for BESS will accelerate exponentially to provide replacement capacity value and grid stability.”

Société Générale acted as a coordinating lead arranger and green loan structuring bank for the $98.9 million financing to support the construction and operations of a BESS portfolio in Southern California.

Hecate Grid, a joint venture between Hecate Energy and InfraRed Capital Partners, is in the process of completing the construction of the four standalone BESS units battery energy storage assets in Southern California.

The projects comprise a total portfolio of 290MWh which, as of April 4, one was operational and three were under construction.

UK-based retail and commercial bank NatWest says that the UK and Europe are in the midst of an energy transition journey. NatWest says battery storage is a growing, fastevolving market as BESS assets are expected to be critical to meet the energy transition and the bank has committed to provide an additional £100 billion ($126 billion) of climate and sustainable funding and financing between 1 July 2021 and the end of 2025.

This includes financing to the BESS sector where NatWest has arranged, structured and advised multiple first of their kind financings across the full spectrum of tenors, revenue models and buildout strategies to support the rollout of BESS assets.

Looking to the future Jacob Lloyd, head of NatWest’s specialist asset finance, is optimistic about the growth of the BESS market and lenders’ potential to contribute to progress towards net zero through deploying more capital.

“The opportunities are fast flowing across all of Europe. And they don’t seem to be slowing down.”

Developing economies

As of February 2023, the World Bank’s Energy Sector Management Assistance Program (ESMAP) has helped to attract public and private financing to the total of $725 million in Burkina Faso, Ethiopia, Maldives, Sierra Leone, Tanzania, Ukraine, and Western Africa.

ESMAP has to date supported 14 World Bank lending projects including six mini-grid projects to boost

CHINA’S AMBITIOUS TARGETS

Manuela Ferror, the World Bank’s regional VP for East Asia and Pacific, has said China now requires less energy, less minerals, and less water than it did just 10 years ago to power growth.

But to achieve the ambitious goals that China has set for itself to become carbon neutral by 2060, China needs to do more and to start sooner.

Ferror told the World Bank Economic Summit of China Development Forum 2023 in April that battery storage is part of the solution to China “catalyzing climate action to unlock new sources of growth, new sources of job creation and new sources of innovation”.

Many low-carbon technologies, including wind and battery storage, exhibit increasing returns to scale in innovation, in manufacturing, and in operation, Ferror said.

“This offers China a comparative advantage relative to other smaller countries. The progressive deployment of low-carbon technologies in China can push down prices overall, reducing abatement costs. And that is achievable because of its scale.” the take-up of renewable energy and increasing battery storage capacity by 2,527MWh.

According to the World Bank, China accounted for 24% of global energy R&D spending in 2019.

Meanwhile, Ferror said start-ups in the country have attracted more than a third of global early-stage energy venture capital over the past five years alone.

Growth in climate change-related patents has also accelerated in China, especially in low-carbon information and communications technology, in buildings, and solar power.

However, Ferror said low-carbon patenting accounts for only 5% of all patenting inventions, “leaving room for China to catch up to advanced countries where that share is higher”.

From a historical perspective, China’s innovation policy has been particularly successful in driving competition that reduces the manufacturing costs of existing technologies, for example, wind and solar energy and energy storage, Ferror said.

The initiative also supports capacity building and training to clients involved in ESS project and mentors women in the energy storage industry.

ESMAP’s Energy Storage Program — an international partnership between the World Bank and 43 other entities — has also developed an energy storage sizing app.

This can be used by countries to get a preliminary assessment of energy storage sizing requirements and to project the cost of hybrid solar PV and ESS, using storage for smoothing and shifting applications.

The program’s international partners include government departments, academia and multilateral banks such as the European Bank for Reconstruction and Development, Islamic Development Bank and bodies such as the European Association for Storage of Energy, the Korean Battery Industry government in 2021 has already led to a series of reforms around mining that have begun to yield some successes in attracting inward investment and expanding production, the bank says.

Association and the China Energy Storage Alliance.

The World Bank-administered ESMAP trust fund provided $7.4 million in funding for the Energy Storage Program in fiscal 2021-2022 and the program’s concessional financing has helped to unlock a further $276 million through the multilateral Climate Investment Fund and the Green Climate Fund — which is party to the UN Framework Convention on Climate Change.

In Africa, the World Bank says that at a time of energy transition and rising demand for metals and minerals, resource-rich governments have an opportunity to better use natural resources to finance public programs, diversify economies and expand access to energy.

According to the latest Africa’s Pulse, the bank’s April 2023 economic update for Sub-Saharan Africa, countries could potentially more than double the average revenues that they currently collect from natural resources.

While the global low-carbon transition will eventually lead to significant declines in demand for Africa’s oil, gas, and coal resources there may be a marked increase in the demand for the minerals required for the clean energy transition — such as lithium, cobalt, copper, platinum, and manganese, many of which are abundant across

Africa and used for batteries, EVs and other technologies.

The bank says tapping these fiscal resources in the form of royalties and taxes, while continuing to attract private sector investment, requires the right kinds of policies, reforms, and good governance.

According to data compiled last year by the International Energy Agency, Zimbabwe now has one of the 10 largest reserves of lithium in the world, while other countries, such as Namibia, have started building lithium mines.

South Africa is the world’s largest producer of manganese and the Democratic Republic of Congo is home to nearly 70% of the global supply of the cobalt used in lithium ion batteries.

Madagascar, Mozambique and Tanzania are among the 10 countries with the largest graphite deposits.

Zambia’s election of a new

Zambian government revenues from mining are also on the rise. The country also made a marked shift toward regional cooperation when it signed a memorandum of understanding agreement with the DRC and the US to develop resources found in both nations to manufacture batteries. The bank says countries in the region, most of which face infrastructure and capital constraints, should now be looking to the African Continental Free Trade Area (AfCFTA) to collectively build regional clean energy value chains.

AfCFTA is a key avenue for building clean energy value chains regionally, the bank says. It brings together 54 African countries with a total population of more than one billion people and (based on 2020 bank data) a combined GDP of more than $3.4 trillion.

“AfCFTA offers an unprecedented opportunity to develop the mineto-market value chain within the continent.”

World Bank senior economist James Cust said: “Rapid global decarbonization will bring significant economic opportunities to Africa. Metals and minerals will be needed in larger quantities for low-carbon technologies like batteries and with the right policies could boost fiscal revenues, increase opportunities for regional value chains that create jobs, and accelerate economic transformation.”