$26 MM equity funding for energy storage involving salt and rocks.
Oil & Gas
Oil prices continue to fall and gas prices rise. WTI lost 40% of its value in 4 years.
Fed raised rates by 25 bps to a range between 2.25% and 2.5%. Fed cut its projections for 2019 from 3 rate hikes to 2. Unemployment is still at its lowest level since 1969. Fed lowered forecast on growth. Investment-grade rated sponsors are paying UST + 1.4% up from UST + 1%in 2017. Below investment grade sponsors are paying UST + 4.5%, up from 3.2% PE 1-year rolling IRR 18.9%. VC net cash flow $36.3 BN. HNW focus on impact investing as a means to achieve social and economic goals. Family offices control $4 TN of assets, that is more than hedge funds and equivalent to 6% of the value of the world's stock markets. Indicative PE term sheet. $15/ton carbon tax not expected to be approved. Real risk of a credit bubble. PE raised a record of nearly $750 BN globally in 2017. Textbook M&A transaction. Acquisition, add-ons, and IPO within 5 years. Investment in sustainable business can lead to better results.
Solar PV module prices down 15% yoy.
Solar PV promoted on brownfield sites. 1 GW of clean energy and 20,000 jobs by 2020. EPA has vetted 80,000 brownfield sites in addition to it’s national program.
Capital markets opportunities in renewable energy: Standardize, securitize, scale.
Lack of offtake arrangements globally expected to lead to more merchant project finance. Indicative project finance: merchant power 55-60% leverage and an expected DSCR of 1.8-2x, contracted power 85% leverage with a ratio of 1.25-1.3x.
Oil & Gas
Oil prices expected to increase 2Q19. US oil net exporter for the 1sttime since 1973.
Green Bonds used to finance clean energy projects that count towards LEED certified buildings. The issuance is the first for an apartment REIT. Market expects 2 business cycles before mass adoption of sustainable business. Climate investment was $70 BN in 2016. 990 institutions with $7.2 TN of AUM declared some form of fossil fuel divestment. Going forward, 2,400 asset managers representing $82 TN have agreed to UN PRI commitment on ESG issues. Total AUM committed to PRI has grown 19% in the past 12 months. US had 205 IPOs in 2018 raising $52.8 BN, a 14% YOY rise by volume and 31% by proceeds. Asset management and automation are leading factors for investment in new technology. Carbon tax will reduce emissions 40% by 2030. Legislation will impact emissions and have emissions implications that will have an effect on distribution. CA will require market-based rates by 2020. Other states are following close behind. US has 71 MM advanced meters, about 50% meters installed in 2016. s45Q energy tax credit of $35/ton of carbon capture used for EOR and $50/ton for carbon capture and storage. Previous credits were $10 and $20, respectively. Most installed facilities use carbon capture for EOR. 10 of the world’s operating CCS facilities are located in the US. Lower return expectations for buyout, growth, VC and real assets funds. Fees are under pressure. LPs expect to increase their private markets allocation. Return expectations:
Energy efficiency at big box stores through remote PPAs, lighting and HVAC.
Electrolysis of water to create hydrogen fuel used in CHP projects. No CO2 emissions. Efficiencies greater than 90%.
Hydrogen generation from renewables could be mixed with gas to produce power.
Energy storage using silicon. Salt can heated to only 1,000 degrees, silicon 4,000 degrees. Light from silicon used by solar PV to generate power.
Energy storage will be a $4.5 BN by 2023. Energy storage Q3 2018 deployments in MWh rose 3x YOY. Energy storage annual deployments will reach 3.9 GW by 2023.
Energystorage to be $620 BN by 2040. Large-scale lithium-ion storage costs will fall another 52% by 2030, already had a 80%+ cost decline since 2010.
Record surge in venture funding of AgTech. Megatrends: Decentralization, decarbonisation and gas replacing diesel.