Energy Finance and M&A

Solar PV & Wind
MA competitive auction price cap $0.17/kWh. Bid prices expected to be 30-40% below the ceiling. 400 MW in queue for the SREC II incentive program. Must be complete by March 31, 2018.
Very low PPA prices for wind and solar plus storage:
(1) Solar + Storage = $36/MWh
(2) Wind + Storage = $21/MWh
2014 RFP 430 proposals for 238 projects representing 112 GW. Wind and solar 358 bids representing 101 GW. 2013 RFP 55 proposals. Results:
(1) Wind - $18.10/MWh. 42 GW bids, 17 GW awarded
(2) Wind + Solar - $19.90/MWh
(3) Battery storage - $21/MWh
(4) Solar - $29.50/MWh. 30 GW bid, 13 GW awarded. 152 proposals for 75 projects.
(5) Wind + Solar + Battery Storage - $30.60/MWh.
(6) Solar + Storage - 87 bids, 59 projects.
 
Thermal Power
Thermal power projects at the mercy of gas prices. In future, renewables might have a detrimental effect on thermal power.
FERC rejects "90-day' rule.
 
Energy Storage
500 MW energy storage installed in the US in 3 years. 29% in CA. Utilities and IPPs targeting frequency regulation. Utilities also targeting peak shaving, ramping support, provision of reactive power and backup power.
Solar + Storage expected to increase energy output up to 50%. Energy storage market could reach $100 BN by 2030.
Energy storage popular business model outside the US. Integrating energy storage with wind and solar occurring inside the US.
 
Oil & Gas
Oil prices expected to remain low. Industry will focus on how to generate cash, reduce costs, limit investments in oil and gas, and diversify.

Latest News
2017 annual funding $70 BN up 16% but number of deals down 4%. China largest investor in clean energy at $44 BN, US is 2nd. Energy trends for 2018:

1. Storage - 41.8 MW of storage deployed 3Q17, up 46% yoy.
2. Nuclear - 10 decommissioned, 20 under review for closure.
3. PURPA - Debate will intensify over rates, contract length
4. Net Metering
5. Wholesale Market Reform

US market outlook:

1. Equity markets likely peak in the first half of 2018.
2. EU and Japan can outperform the US in 2018.
3. Business and consumer confidence near 30-year highs.
4. Hedge Fund leverage highest in 10 years.

Tax change implications for energy companies:
(1) Repeal of the corporate AMT
(2) 30% cap on deducting interest.
(3) Tax rates for corporations fall from 35% to 21%
(4) Sales of state credits increase the net yield from 65 cents to 79 cents.