Energy Finance and M&A

Solar PV & Wind
NYS 50% renewables by 2030. NYS PPA price 2.17c/kWh 20-year PPA. 11% lower than 2017. 88 proposals from 30 developers, 26 chosen. 22 solar PV, 3 wind and 1 hydro. $3 BN investment.
ISO NE expects wind to grow 34%, solar 142% and storage 2,000% by 2026.
DTE plans to add 4 GW renewable energy.
Commercial solar PV 30% ITC phase down in 2020 to 26%, 2021 21% and 10% 2022. Residential solar PV ITC expire in 2022. Wind expire in 2019.
 
Thermal Power
1.1 GW $1 BN CCGT planned for Michigan. PPA 6.7 c/kWh. PURPA contracts proposed not approved. 141 developers submitted interconnection applications.
 
Energy Storage
Energy storage cost expected to drop dramatically by 2020. Expansion in CA and the NE. Demand for storage is expected to grow from $300 MM/year to $4 BN in the next 2-3 years. $30 BN market for storage, capacity for around 85 GWh of power storage. Energy storage market and technology assessment. USDOE energy storage database.
 
Oil & Gas
Siemens micro-scale distributed LNG facility allows liquefaction at the project. 30,000 gas project will monetize stranded gas. 2 projects in the US and Canada.
Outlook for O&G (i) US exporter (ii) sustained low cost gas and (iii) innovation creates value keeps costs low.
US will account for 40% global gas supply growth to 2022, China 40% gas demand.
 
Latest News
Expected stable power prices. $230 BN global loan market for infrastructure and energy projects. Average project finance loans have margins of L+150-200 bps. US needs $200 BN in infrastructure investment. DVO two-stage mixed-plug flow waste to fuels project produces CNG $2.30/gallon. Market price $2.50/gallon. $6 MM awarded to 17 AD projects in California, Maine, Massachusetts, Michigan, New York, North Carolina, Ohio and Washington. Market dynamics have resulted in demand for organic produce > supply. Sales organics $5.5 BN, 15% US sales. Premiums of 30 to 50%. USDA REAP loans for CHP, wind and solar in certain locations. $25 MM loans up to 85% leverage. Back-leverage wind and solar market:
Structure - Unlevered structure, TE investor at project, back leverage at holdco.
Deals - $5.5 BN renewable representing 50 deals, most back levered.
Yields - Very similar to project debt at L +150 bps.
Tenor - Over 10 years
Default - Very low defaults. Spread compression closer to project debt.
Coverages - Solar 1.30x, wind 1.40x. Very similar to project debt.
Debt Sizing - P99 1-year at 1.00x. Again similar to project debt.
Security - Project during construction, dividends during operation
Leverage - 95% all-in
Liquidity - Many debt providers, few TE. Ergo TE has the upper hand.