Grid responsive solar PV. Movement toward utility-owned generation. Price difference in a rate-based project vs a non-rate-based utility solar project is the difference between a $30 PPA and a $35 PPA. "It's all about the cost of capital."
13% solar PV panels installed in the US in 2016 were US made. Forecast solar PV penetration currently 2% to become 5.5% by 2022. Market value $87BN/year 2017 to $250BN/year by installing 3,000GW or investing $2.8TN. DOE proposes (i) reduce panel costs to below $0.30/W, (ii) reduce BOP costs by $0.30/W, (iii) 50-year lifetime and (iv) 0.2%/year degradation. Goal 17% solar penetration by 2035.
Solar stocks down 40% since the beginning of 2016. Historical context for decline, oversupply of panels and softening demand.
Japan implements FIT for solar PV. Tightens FIT certification processes and timeframe for developing solar projects. Will impact economics of large scale solar PV projects. Likely lead to consolidation of solar projects.
20-year PPA $0.045/kWh for 100MW solar PV + 30MW 120MWh storage. Solar PV portion $0.03/kWh. 30% federal ITC for both the solar and storage facilities. Dispatchable renewables can challenge peakers on price. 4 hours storage, 1 cycle/day.
Recent solar PV + storage PPAs: (1) Hawaii $0.11/kWh in January 2017. Kauai Island Utility Cooperative. 28MW solar PV + 100MWh of batteries will displace current oil-fired baseload generation, (2) Hawaii $0.145/kWh in 2015. Compete with conventional peakers at $0.20/kWh.
Southern Company takeover of $20BN Vogtle nuclear project management. $8BN government subsidy. Not expected to be completed before 2020.
Oil & Gas
Kinder Morgan $5.9BN IPO to finance pipeline largest in Canadian history. The pipeline is capable of shipping 590,000 BPD from Alberta’s oil sands to Canada’s Pacific Coast, where it could be shipped to the western U.S.
Energy majors exiting traditional O&G businesses. Dong sells O&G to Ineos for $1.3BN, Maersk likely list its $7BN O&G business, Shell and OMV sells O&G to Chrysaor and Siccar Point, Engie sells $3.9BN E&P business to Neptune, Linde and Praxair merge.
Returns for North American infrastructure funds roughly 9%. Median time to exit for venture-backed companies is now 5 years for acquisitions 8.2 years for an IPO, the highest level in a decade. Global VC contributions 2012-15 were the highest of any 4-year period since 2002 with $175BN paid in. VCs still owe $12.8BN to their investors just to break even. 58 funds in 1Q17, $7.9BN + $121BN in dry powder. "Trend of staying private longer will only continue...LPs and GPs are already thinking seriously about addressing more permanent capital structures." US IOU industry in 2016 invested $112.5BN, index 17.4%, beat DJ index 16.5%, S&P 500 12.0%, Nasdaq 7.5%. First state ITC for energy storage. Lessor of $75k and 30% installed cost. $750k aggregate cap. MD RPS 25% by 2020. Federal ITC only applies to storage if its at least 75% charged by an ITC eligible power generation project (e.g. solar, biomass). Behind-the-meter energy storage market by 2021 expected to account for 50% of the annual US market. Today is small accounting for 15% of installed capacity. Driven by (i) system economics, (ii) net-energy metering reform, (iii) changes to utility rate structures, (iv) increasing viability of demand-charge management for non-residential customers, and (v) increased interest in reliability and resiliency. As load growth has decreased in recent years, profit margins from demand response programs have dwindled. Wholesale capacity markets represent a massive untapped opportunity for energy storage. Rules surrounding these markets are not designed to make use of advanced energy storage. Beijing wants China to produce more batteries. Nissan selling to Chinese investor $1BN for a 51% stake in Automotive Energy Supply JV with NEC. Recent SPAC examples include: