Tag Archives: published
New Report Analyzes Opportunities in European Biomass and Biogas Power Market
Published on July 5, 2013 at 8:19 AM Europe’s aim to produce 20 percent of its total power from renewable sources by 2020 will sustain the region’s biomass and biogas power market. Although biomass and biogas installed capacity will widen as a new wave of coal-to-biomass power plant conversions gains momentum, year-on-year revenue growth is likely to decrease. New analysis from Frost & Sullivan, Opportunities in the Biomass and Biogas Power Market in Europe, finds that the market earned revenues of euro 3.33 billion in 2012 and estimates this to reach euro 3.77 billion in 2017. “Biopower plants are increasingly preferred as a source for large-scale power generation owing to their low capital requirements,” said Frost & Sullivan Energy and Environmental Research Analyst Ashay Abbhi. “Their efficiency, longer operational times, and reliability further boost their popularity over other sources of renewable power generation.” While advances in biomass and biogas power generation will be vital to Europe achieving its ambitious 2020 target, deteriorating economic conditions in the continent have limited market expansion. Countries have cut down or even stopped subsidies for power generation from biomass and biogas, jeopardising the prospects of plant owners. The lack of steady raw material supply in the region poses another challenge. High-demand customers are willing to pay more to keep their power plants running, which triggers a rise in feedstock and equipment prices, affecting profitability. The withdrawal of government incentive schemes further dampens revenues. “Government support is necessary for technology development, especially as constant innovation will enable a reduction in capital expenditure,” observed Abbhi. “For now, the conversion of coal power plants to biomass plants will be the strongest market trend as it requires far less investment than setting up a greenfield biopower plant.” Going forward, the Western European biopower market, which is dominated by countries such as Germany and the United Kingdom, will slowly give way to opportunities in the developing Central and Eastern Europe markets. Poland is expected to be a hotspot in this region. Source: http://www.frost.com Continue reading
Fund Review: BGF World Agriculture fund
ivestock investment boosts short-term performance By Nyree Stewart | Published Jul 01, 2013 A recent short-term performance boost for the $294m (£187.1m) BGF World Agriculture fund is a result of a move towards more downstream areas of the agriculture sector, such as livestock, in the past six months. However, the fund’s performance has lagged its benchmark in the year to date. The Luxembourg-domiciled fund, co-managed by Desmond Cheung and Richard Davis, targets agriculture sector growth but specifically focuses on capturing what farmers are doing at any one point in the cycle. Mr Cheung explains: “Some of our competitors would expand quite a bit further away into the food sector, but while we have a little bit of food sector exposure in this fund, it is mainly due to the fact they have direct relationships or dealings with the farmers. So we don’t generally buy into companies such as Wal-Mart even though obviously it is in the food supply chain.” Process The fund’s investment process is primarily bottom-up, with Mr Cheung noting the key underlying driver is stock selection based on valuation, with a three- to five-year view on the company. But he adds: “Obviously, this is quite a cyclical sector, so we have to include a top-down overlay to determine which part of the cycle we are in. We try to incorporate the two and come to a conclusion on the recommendations on each of the names and the size of the position within the fund.” The fund is also not constrained by the market cap of companies available within the agriculture sector, and currently has roughly 10 per cent of the fund allocated to small caps, with a further 30 per cent weighting in medium-sized businesses. Performance Since launch in March 2010, the sterling-hedged share class of the fund has returned 15.81 per cent to June 10 2013, compared with a 24.92 per cent return from the benchmark FSE DAXglobal Agribusiness TR USD, according to Morningstar. However, on a discrete-year basis, the fund’s sterling share class significantly outperformed the index in 2012, with a return of 11.49 per cent compared with the benchmark return of 8.32 per cent. The manager points out the fund has not excluded any parts of the agriculture sector, so while some may have the perception the universe consists solely of seed or fertiliser or equipment companies – areas that are fairly consolidated – this is not the case. “The way we classify or define the agriculture sector is little bit wider. On one side you have arable farmers, which are those growing crops such as corn, wheat and soya beans and so those would be captured more under the seed, chemicals, equipment or fertiliser companies. But then other parts of the farming world that have been neglected in the past three years are the livestock sectors. When corn or soya bean prices rallied in the past couple of years, those are effectively the input costs that go into the production of meat, so they’ve been suffering from the high rises in crop prices.” Continue reading
European Union Directive Is Driving Biofuel Production
EU Renewable Energy Directive targets set to benefit the agriculture industry By Jonathan Turney | Published Jul 01, 2013 Bioethanol as a renewable transport fuel (RTF) is set to become one of the most important markets for British agriculture. The UK currently imports the majority of its high-protein animal feed requirements, making British farmers particularly susceptible to volatile overseas commodity markets. The bio-refining of low-grade UK wheat to bioethanol provides a solution to this, as it produces a high-protein animal feed co-product (dry distillers grains with solubles), thereby reducing the need to import protein substitutes (such as soy) from more ecologically sensitive parts of the world. At the same time, the European Union Renewable Energy Directive (RED), which aims to reduce greenhouse gas emissions, creates a huge market for RTFs. Under the EU mandate, 10 per cent of the total road transport fuel pool must come from blended RTFs by 2020. RTFs such as bioethanol are currently one of only a few commercially viable and technologically proven alternatives to fossil fuels that can realistically address unprecedented climate change. Other fossil fuel alternatives remain a long way from availability and are unlikely to achieve the same market penetration. Electric vehicles, for instance, are only expected to replace approximately 0.1 per cent of road transport fuel by 2020. Likewise, longer-term projections of the effectiveness of hydrogen fuel cells are still unproven, so are unlikely to materially contribute to the emissions-reduction strategy. The UK is well placed to be a global leader in RTF production, with a domestic surplus of low-grade feed wheat – currently exported – required in the bio-refining process and a large domestic market for petroleum. In addition, the UK has a highly skilled workforce, relative to other parts of the world. The northeast of England is particularly well suited for RTF production as it has close proximity to arable land, existing petrochemical infrastructure and a deep-water port on the Humber, all of which provide optimum conditions for the domestic production of RTFs. The UK farming and agriculture industry stands to benefit greatly from this. The high-protein animal feed, which is produced as part of the bio-refining process, can be used directly for feeding UK livestock and negates the need to import other high-protein animal feeds. Concerns have been raised in the past about the benefits and disadvantages of using food in RTF production, the so-called ‘food versus fuel’ argument. This is not relevant here since the bio-refining process actually enhances the food chain rather than erodes it, with the efficient extraction and use of the raw commodity’s constituent components being starch and protein. Moreover, a government review in 2008 also found that RTF policies had less of an impact on food prices for cereal-based RTFs than other feedstocks. Cereal crop prices ranged from a drop in price of 2.6 per cent in the EU to an increase of just 2.6 per cent in southern Africa and Brazil. On the other hand, oilseeds, the feedstock for most biodiesels, were the worst affected, with projected price increases of 50-72 per cent. Away from agriculture, the UK as a whole also stands to gain economically from increased production of RTFs. To meet the RED mandates, the UK will need to install further RTF capacity by 2020. To achieve this, the RTF industry is creating new jobs and reinvigorating manufacturing opportunities in economically deprived parts of the country, and is receiving considerable political support to ensure the UK is not perceived as being the laggard in Europe. Investment in RTFs, therefore, can provide a win-win situation for the agricultural industry, investors and the UK manufacturing industry alike, as the UK continues to work hard to fulfil its Renewable Transport Fuel obligations by 2020. Jonathan Turney is associate director at Future Capital Partners Continue reading
