Energy Finance and M&A

Wind
Tax equity investors “pushing back” in preparation for tax reforms.
 
Solar PV
Duke Energy supports 10-year PPA, cap 400MW/year. 3GW solar PV installed and 3.5GW planned, 1.5GW more than cap.
Duke Energy reported 1Q17 earnings loss in utilities and commercial businesses.
Cypress Creek Build Transfer model. Sells 79MW solar PV power project located in NC to Dominion that has 535MW of solar PV in development or in operation.
Development cost wind > solar PV, estimated < 1% project cost.
Solar PV sale processes delayed. Global glut of solar panels.
NRG Energy considering sale of clean energy business. Demand by both financial investors and strategic investors is at an all-time high. Other sales include First Solar sale of 8Point3 Energy Partners LP yieldco and Abengoa sale of Atlantica yieldco.
Solar PV development is strong. Utility-scale solar plants now make up 2% of electricity generating capacity, not 2% of utility-scale electricity generation.
Utility-scale solar has grown rapidly over the past five years
 
Thermal Power
South Korea not expected to be a target market for long-term purchase agreements.
Batteries create spinning reserve revenues. TX and Northeast attractive markets. GMP added batteries in Rutland, VT and generated $1.4MM in revenues/year.
ISO-NE proposed changes for capacity market.
 
Latest News
Nominal Discount Rate (After Tax) = 8.3%. CPI 2.4% to 2.6%. Increase in rates June 2017 highly likely. Investment grade rated Green Bond priced +40bps. 5x oversubscribed. Could open demand from investors too who were previously not looking at Green Bonds. Calpine considers recap and sale options. Kleiner Perkins spin-off $1BN Green Growth Fund. G2VP I target $275MM. Green Growth has $1BN AUM. Sale of NRG energy company (not NRG Energy) and SolBright developer. Skadden energy conference  key takeaways:

1. US Infrastucture: Needs $2TN over next 10 years.
2. Natural Gas Prices: EIA reference case $5/MMBtu by 2020.
3. Energy M&A Trading Multiples: 9-10x EBITDA
4. Deepwater Wind: Debt SocGen, HSBC, SMBC, KeyBank, Cobank, La Caixa. Tax equity Citi, GE. Equity DE Shaw.
5. Market Analysis: Power markets are overbuilt, NatGas forecast  price increase.