Japanese companies are dropping out of offshore wind projects in Taiwan, one of fastest growing markets for the technology, as rising costs and worsening delays plunge the industry into trouble worldwide. This will affect Taiwan's plans to eliminate nuclear power, cut the use of coal, increase natural gas and increase offshore wind capacity.

Germany’s constitutional court ruled against reallocating the unspent money borrowed during the coronavirus pandemic for the energy transition, which will affect government plans. The constitution places limits on government borrowing. The pandemic allowed emergency borrowing, but using that money now for other purposes is unconstitutional.

The German government will provide €7.5 bln of guarantees as part of a rescue package, to save the €110 bln energy projects planned by the company. Engineering problems of the new wind turbines reduced new orders, costs have spiralled, while long term supply contracts locked in sale prices. The company will record a €4.5 bln loss for 2023.

NuScale Power and the Utah Associated Municipal Power Systems have ended the 462MW project. In January, NuScale raised the target price for power from the project from $58/MWh to $89/MWh, citing a “changing financial landscape”. NuScale's VOYGR is the only small modular nuclear reactor (SMR) design certified for use in the United States.

Shares in Ørsted plunged 26% today, extending their drop this year to 60%, after the group recorded $4bn of impairments, after it stopped two projects off the New Jersey coast. The offshore wind industry, which has been championed by governments, has been hit hard by supply chain disruptions, rising costs and higher interest rates.

“Offshore Wind remains difficult this year with losses of roughly $1 billion,” said GE CEO Larry Culp. Offshore-wind developers face increasing challenges including supply-chain disruptions, rising costs for components and higher interest rates. The company expects to spin off its power and renewable energy operations next year, to become GE Vernova.

How soon will the ECB shrink the €1.7 tln stash of bonds it bought during the pandemic (the PEPP)? It is already selling bonds from the larger portfolio amassed during the 2015 fear of deflation. Around €18 billion a month come due under PEPP. Some experts expect the ECB to announce in December that reinvestments will be lowered as early as March.

Pension funds are resisting a UK government push to invest up to £50bn in projects and business to support economic growth, citing lack of suitable investment opportunities and concerns about higher risk. They want tax free dividends on investments in UK companies and call for the government to ensure a stream of “high quality” investment assets.

Sector falls 20% in two months. The decline comes despite tens of billions of dollars in tax credits, subsidies and loans by governments in the US and Europe. The renewable sector is particularly vulnerable to high interest rates, because companies agree long-term contracts, fixing the price at which they will sell energy, before developing their projects.

The bank was sitting on $105.8 bln of losses on a $614 bln portfolio of mostly agency mortgage securities. Rising rates have translated into a decline of about 3% in the value of agency mortgage securities. The held-to-maturity portfolio was valued at less than 85 cents on the dollar. The overall portfolio has a weighted average life of about eight years.

Investment-grade borrowers have sold $12 bln of convertible bonds this year, more than 30% of total issuance. Convertible bonds can be swapped for equity if a company’s shares rise to a specific price. They allow companies to borrow at 2-3 percentage points cheaper rate than a traditional bond. The market used to be dominated by junk-rated companies.

After the government's changes to climate policies, it sold £3 bln of bonds due 2033, with a demand 2.56 times as high. The difference between the yield at the weighted average price and the lowest accepted price (a.k.a the tail) was 1.3 basis points, up from 0.2 in the previous sale. That suggests the UK had to accept a concession to sell the bonds.