Energy Finance and M&A

Solar PV & Wind
Renewables new build 18.4 GW in 2017. 55% of new build.
Majority of solar PV M&A has been development stage, wind operating stage.
PURPA contracts in NC, SC, UT and MT. QFs constitute 18% of capacity in NC, 26% in Utah and 24% in Montana. 24 GW QFs in development in non-RTO regions NC 5.9 GW, SC 2.3 GW, Utah 2.4 GW, OR 2.9 GW, CO 1.4 GW and MT 1.5 GW.
PSCCO RFP for 1.8 GW - Wind 1.8c/kWh and Solar 2.95c/kWh. Wind + Storage 2.1c/kWh and Solar + Storage 3.6c/kWh. 430 bids representing 111 GW.
ERCOT has 2 GW solar PV in the interconnection queue, 13 GW under evaluation. Average energy price was 2.6c/kWh in 2017. 25% load is served by utilities, munis and coops; 75% by 1 to 3-year contracts. Utility-scale solar PV in west TX challenge is transmission. Solar PV projects < 50 MW closer to load at the distribution level. Build Transfer to utilities rather than count on PPAs.
NH goal revised from 15% to 6% renewables by 2025, a level achieved in 2017.
 
Thermal Power
Gas-fired generation fell by 8.1% to 34% US generation in 2017. Coal 12.5 GW of planned retirements for 2018.
Michigan proposes 30% renewables by 2030. Consumers Energy will stop using coal by 2040, closed 7 of its 12 coal-fired power projects in 2016, lowered CO2 38% from 2008 levels. Rely on natural gas, hydro, energy efficiency and renewables (40%).
 
Energy Storage
Energy storage targeted at $100 BN peak power market led by gas-fired power (1% of 1.2 TW market). Wind/Solar + Storage needs to be about 2.5c/kWh to beat base load gas-fired power. Energy storage is not 100% efficient, net energy sink.
FERC order to develop rules for energy storage. CPUC require energy storage rules to ensure energy storage can be both a buyer and a seller.
Energy storage fee for service $40-60/month. Sonnen battery production facility for 10,000/year residential solar + storage projects. $150 MM Renewable Technology Fund. Tesla 100MW/129MWh and SolarReserve 150MW/1,100MWh  project.
 
Oil & Gas
Tight oil will be 8.2 MM BPD by 2040 representing 70% of US production. Mostly from the Permian (43%), Bakken (20%) and Eagle Ford (17%) basins.
 
Latest News
US retailers installing indoor farms in-store. Japan to cancel and replace FIT with auction of 200 MW/year. Issued contracts for over 16 GW of biomass capacity above target of 6-7 GW in 2030. Nuclear 80-yr life extension proposed. 99 nuclear facilities in the US. Proposed regulatory rollback might reverse environmental rules and delay implementing efficiency rules. Expect 100x increase in oil-less cars from 3 MM to 320 MM by 2040, comprise 15% of 2 BN cars. Car oil consumption in 2040 will equal 2016 at 18.7 MM BPD. US market update:
(1) Tax Equity - $10 BN in 2017, $11 BN in 2016, $13 BN in 2015, $10.1 BN in 2014 and $6.5 BN in 2013. 15 tax equity investors, 35 potential investors and 10 possible. $2.3 BN utility-scale projects and $1.5 BN in residential solar. 40% to 50% of the capital stack tax equity for solar, 50% to 60% for wind.
(2) Project Finance - $40 BN in 124 deals. 70-90 lenders. Total market capacity $5 BN. 20 to 30 lenders offer loans longer than 15 years. Tenor typically 5-7 years mini-perm. Pricing L +  1 3/8 to 1 1/2. Short-term construction loans pricing L + 100. Quasi-merchant L + 325 bps. HoldCo Loans L + 300 to 350 bps. DSCR wind base case 1.4x and 1.0x on a P99 basis for contracted projects. DSCR solar 1.3x.