2GreenEnergy senior investment advisor Bill Paul appeared on PBS’s Consuelo Mack’s show WealthTrack, which is airing on about 200 PBS affiliates in North America this week. Needless to say, the traffic on the site – and one my phone – is fairly intense. It’s wonderful to hear so many great questions and opportunities in the renewable energy space. Check out the show (linked above); he did a fantastic job as always.
I’ll be hitting the Smart Grid Conference at the Los Angeles Convention Center over the next couple of days, and I hope to see numerous 2GreenEnergy readers there.
If you want to meet for coffee, please hit “contact” and let me know.
I was keeping a tally sheet at last week’s Renewable Energy Finance Forum, so I could let readers know the issue that was brought up most often and granted the most overall prominence. The clear winner: China is eating our lunch in the migration to renewables. Inexplicably and tragically, the US is content to drop further and further behind in the development of energy technology with each passing week. While China is hiring, researching, developing, importing, exporting — and dominating the world of 21st Century energy, we seem to be content to argue and point fingers at each other.
If there is a central theme to the Renewable Energy Finance Forums generally, it’s pragmatism. You can listen to every word from the presenters — as well as from each the other participants as they network on breaks between the marathon sessions — and trust me: there isn’t so much as a breath of idealism. The show isn’t about what should happen, it’s about what will happen.
I had lunch the other day with an incredibly bright guy, a very practical physicist whose business characterizes materials for companies in solar, wind, and electric transportation — as well as dozens of other industries. I immediately saw that he was lukewarm on renewable energy. “I’m here to drum up business, but I’m reluctant to be connected with an industry that relies on subsidies,” he sneered.
When I pointed out that oil and gas get 12 times the subsidies that clean energy receives, he looked down at his arugula sheepishly and replied quietly,” Well, I guess what I meant to say is ‘subsidies that might go away.'”
Those few words encapsulate the root of the clean energy problem. Not only are the subsidies for fossil fuels enormous, they are taken for granted; they’re so well entrenched that they’re completely invisible. Contrast that to the mountain that is made out of the relatively small tax credits and government grants under TARP and ARPA-E to stimulate development of clean energy.
I have to hand it to these oil companies for the deftness with which they’ve soaked us for everything we’re worth. The checks that we taxpayers write to them every day go completely unnoticed. These people have taken larceny and elevated to the plain of art. The lesson here is clear and simple: we must not underestimate the skill of the people we’re playing against.
Michael Eckhardt, the president of The American Council on Renewable Energy (who’s retiring after many years of wonderfully effective service to us all), served as the emcee of the Renewable Energy Finance Forum West 2010. At one point, he attempted to put the concept of “one trillion” into perspective for the audience. A million seconds is two weeks; a billion seconds ago, it was 1970; a trillion seconds ago, it was 30,000 BC.
A poignant example came up in a story about the difference between the Chinese commitment to renewables versus our own here in the US. One of the presenters had recently fought hard to get a matching $1 million grant from the DoE under the ARPA-E program, and was thrilled that we had bested the other contestants in this victory, but he heard the news as he happened to be in China, talking to an associate who had recently received the equivalent of several billion dollars. “We’re talking days and weeks; they’re talking decades and centuries,” he said.
It doesn’t sound like a piece of cake to be a CEO of a power utility. Sure, as we have discussed elsewhere, there are ways to lock in and hide profits, while staving off the world’s insistence that we migrate to renewables. But there are a great number of issues that make life extremely complicated for these folks.
Demand is declining, as technologies for energy efficiency and smart grid begin to reduce the overall consumption of kilowatt-hours.
Even the small incursion of renewables (especially solar) means reduction of on-peak (highest-rate) billing
Utilities will soon be in competition with the oil companies, as people begin to plug in their cars.
Most of the states have done a fairly decent job at legislating Renewable Portfolio Standards (RPSs) that force utilities to cut Power Purchase Agreements (PPAs) with solar and wind developers.
Overall: times must be fairly interesting at the utilities.
In the Renewable Energy Finance Forum session in which presenters from Citibank, Credit Suisse, Deutsche Bank, and JP Morgan, offered their observations on the industry, several pointed to the strategies that multinational oil companies (BP, ExxonMobil, Chevron, etc.) have vis-à-vis renewables. From the content of these talks, it became obvious that such participation is divisive – even within their own ranks — for a number of reasons.
While clean energy may be the way of the future, if you’re an oil company, it’s certainly the enemy of the present. Even the most aggressive repositioning of the oil companies as “energy companies” (BP as “beyond petroleum,” Chevron as “part of the solution” etc.) is such obvious PR fluff that it leaves most people with a very bad taste in their mouths about these entities’ sincerity and their status as corporate citizens.
On another line, from the standpoint of internal capital allocation, the return on asset stats associated with oil exploration beats the pants off the development of renewables. Thus prudent and responsible managers, who themselves are managed according to the short-term profits they drive, have only disincentive to push investments in renewables.
At the end of the day, we see a great ebb and flow, as internal arguments play themselves out.
I was talking with a friend the other day who asked me about the political affiliation of conservationists. After all, Theodore Roosevelt, the father of modern conservationalism, served as president as a Republican, and there is no doubt that even today, one can find many conservative republicans who work very hard to preserve our great gifts of nature.
Having said that, I believe that most of the more active conservationist organizations tend to endorse democrats and more progressive independents. Here are the Sierra Club’s endorsements: http://www.sierraclub.org/politics/endorsements/. And more radical groups like GreenPeace are obviously even less likely to endorse political conservatives.
As it turns out, my friend is one of those rare birds who embraces the best tenets of both sides of the political fence. I congratulated him on his ability to look at different, opposing ideas openly and thoroughly. “Not everyone can do that,” I praised, reminding him also what Aristotle taught us: It is the mark of an educated mind to be able to entertain a thought without accepting it.
At the Renewable Energy Finance Forum you’ll hear largely about the wins, where developers have taken the most mature clean energy technologies, addressed the many financial risk factors, and presented a can’t-lose package to a bank or other funding entity. That means that you’ll hear about solar (photovoltaics) and wind FAR more often than still-nascent technologies like geothermal, hydro, concentrating solar power, etc.
That’s understandable, since if people don’t make money bringing clean energy along, it’s not going to happen. And no one wants to take unnecessary risks, especially in this climate.
The point of “grid parity,” i.e., the point that an incremental megawatt of solar is the exact same cost as an incremental megawatt of gas or coal, is projected to occur somewhere between early 2014 and late 2018. This is based on the fact that although natural gas prices are low and are expected to remain so, the cost of PV is falling steadily.
When this happens, of course, one should expect an explosion of solar development. Even the utilities in the South (great progressive social thinkers that they are) who have routinely said, “Suh, if clean energy means mah costs go up one penny pah kilowatt-hour, we’re not intahrested,” will be buying and selling clean without a problem.
I love some of the metaphors I hear in my travels. And here’s an apt one, presented this morning by Mike Eckhard, president of ACORE (American Council on Renewable Energy, who hosts the Renewable Energy Finance Forums):
Proposition 23 is like a nuclear holocaust: an event that, fortunately, is unlikely – but if it happens, we’re all dead.
It’s paid for by a couple of oil companies in Texas, and has little support from anyone outside the oil industry – but it’s worded such that, if it passes, it will set clean energy back several decades. I urge California voters to kill it, lest it kill us.
