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US clean energy gets glimpse of a Trump future

US clean energy gets glimpse of a Trump future


A US presidential win for putative Republican nominee Donald Trump is looking likely to be a challenge for clean energy in the nation, following Trump’s announcement that he would “cancel” the COP21 agreement, oppose a carbon tax and review subsidies for wind and solar power generation.At an oil industry conference in North Dakota last Thursday the real estate tycoon said that wind power is a “problem” and is “killing all the eagles… Plus it is very, very expensive and it doesn’t work without subsidies.”

On another note, he endorsed the proposed Keystone XL oil pipeline by TransCanada, with the condition that the US “should be given a significant piece of the profits.” President Barack Obama has previously rejected the project to connect Canadian oil-sands with refiners in the US Gulf Coast, saying that it wasn’t in the national interest.Trump’s first major speech on energy issues was given to a 7,000-strong crowd, made up of many oil and gas sector workers, in the oil-dependent state of North Dakota. The Republican candidate’s backing for the fossil fuel industry stands in stark contrast to Hillary Clinton, the Democratic Party’s front-runner, who once said she would “put a lot of coal miners and companies out of business” and is well-known for her renewable energy support.

Trump has questioned Congress’ vote last December to extend subsidies for wind and solar projects until 2019 and beyond. That move, it is estimated, will generate at least $25bn in new tax incentives, according to the BNEF Analyst Reaction: Yes, US Clean Energy, there is a Santa Claus.The US Energy Department was less than friendly to offshore wind energy last week, cutting funding for two projects designed to test the viability of the technology in waters off Virginia and Oregon states.

Principal Power of Seattle failed to attract the funding it had hoped for a floating turbine array off Coos Bay, Oregon. The company’s 24MW project needed to secure a power purchase agreement with a local off-taker in order to be eligible for the $47m in construction cost funding, according to a BNEF Research Note. The difficulty in securing such an agreement could explain the project’s failure to attract the anticipated funding.

Meanwhile, the growing number of rooftop solar installations and energy-efficient appliances in the US are depressing grid power demand and changing the status quo for the country’s utilities, many of which are looking to consolidate to counter rising operating costs. Last week it was announced that Great Plains Energy would buy Westar Energy, the biggest utility in Kansas State, for $8.6bn, paying $51 per share in cash and $9/share in stock.

Another sector increasingly forced to reconsider its business model is the lighting industry, which is being transformed by the expansion of LED technology. Long-lasting LEDs reduce the demand for new light-bulbs but also introduce new business opportunities for connected and controllable lighting.Royal Philips recognised these challenges and opportunities, spinning of its lighting division last week in an IPO that raised EUR 750m ($839m). “The IPO sees Philips divesting itself from an increasingly uncertain industry as it focuses on its healthcare business, and gives the new company the flexibility to focus on reinventing itself for the new era of LED lighting,” said a BNEF analyst in response to the trading debut.

On the topic of public markets in Europe, the IPO of Dong Energy may value the Danish utility as high as DKK 106.5bn ($16bn). The company said it plans to sell between 15.1 percent and 17.4 percent of its existing shares at a target price of DKK 200-255. The Danish state plans to reduce slightly its holding as a result of the IPO, from its current stake of 59%.Meanwhile, Germany’s Chorus Clean Energy has signaled provisional acceptance of a takeover offer by Hamburg-based Capital Stage in a share-swap deal worth $356m. The acquisition would create one of Europe’s biggest wind-and-solar park investors and would allow the companies to enter new countries.

Elsewhere, things are heating up with solar power tenders in the Middle East. On Thursday, Dubai Electricity & Water Authority will announce the next phase in a 3GW solar park that the Persian Gulf emirate plans to build by 2030.The state utility seeks advisors for a 200MW concentrated solar power project, a move that will “help to keep the country’s options open by supporting the dwindling number of solar thermal technology developers,” wrote Jenny Chase, head of solar at BNEF. A price of $150-$180/MWh is likely for solar thermal, she said, far above the record low price of $29.9/MWh for solar PV secured for an 800MW facility in the desert last month.

Source:Bloomberg New Energy Finance
Anand Gupta Editor - EQ Int'l Media Network


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