This week, Green Energy Reporter traveled to Washington, D.C. for the annual Renewable Energy Technology conference (RETECH). The event was held at the cavernous Washington Convention Center where, maybe because of the size of the place or because of the impending blizzard, attendance seemed thin. Aside from the looming snowstorm, on the minds of the people who made it to the conference were two issues: cap-and-trade and access to capital.
In some ways, the two initiatives are interlinked. As the back-and-forth in Congress for and against the pricing of carbon goes on, the renewable energy business, like any business, wants long-term certainty. Yes, the Obama administration has rolled out some popular funding programs, like the direct cash grants, but these are limited over time, subject to renewal, and so continue to leave the country with no real long-term policy when it comes renewable energy.
Cap-and-trade, many of the attendees said, by establishing a regulated market, would open up investments in carbon cutting technologies and in doing so help anchor the long-term certainty that many in the industry say is missing.
But will President Obama and Congress be able to make cap-and-trade happen this year? As GER wrote, opinions are split. Some cleantech executives and policy influencers are confident that by the end of the year the U.S. will have some sort of carbon pricing scheme in place. It could be cap-and trade or it might also be cap-and-dividends. Others are more pessimistic, arguing that the momentum for carbon pricing has fizzled away. Susan Preston, a partner at CalCEF, a $30 million clean energy investment fund in San Francisco, citing fatigue for the issue on Capitol Hill and beyond, says that while she supports cap-and-trade, she doesn’t think it will pass this year. “On cap-and-trade? I am willing to concede,” she says.
So, if not cap-and-trade, or at least not this year, then what could instill the sort of clarity cleantech companies and investors are asking for? Various options are making their way through Congress. One is the formation of a government-backed Green Bank, which would provide cheap funding to renewable energy developers as well as capital for cutting edge, high-risk technologies. A couple of bills were introduced this year supporting the initiative but they remain stalled in the slow and heavy legislative process.
Another option could be a federal Renewable Electricity Standard that would force power utilities to generate a portion of their electricity from clean energy. A recent study released this week, estimates that a federal RES mandating that utility generate 25 percent of their power from renewables by 2025, could add 274,000 new green energy jobs. This is the sort of data that could justify having an RES provision inserted into one of the jobs bills Congress is debating right now.
In the clean energy race while the U.S. remains stuck on the starting blocks, debating what sort of policy it wants to implement, China is charging ahead and executing it own ambitious policy and in doing so disbursing billions of dollars to support the construction of wind and solar farms. According to data released this week by the Global Wind Energy Council, last year the country doubled its wind capacity and installed more wind turbines in 2009 than either Europe or the U.S., which last year added 9,922 megawatts of new wind capacity.
BP and Royal Dutch Shell (both companies support cap-and-trade) came out with fourth quarter earnings this week. On its cleantech business, BP Chief Executive Tony Hayward didn’t divulge anything new, saying that over the coming year the company would continue to focus on its biofuel business. It would also grow its U.S. wind power portfolio, lower production costs at its solar panel business, and oversee a large investment in a carbon storage project in the United Arab Emirates.
As for Shell, it announced a $12 billion joint venture with Cosan, one of Brazil’s largest producers of sugar-based ethanol. The deal confirms the Anglo – Dutch company’s biofuel-focused renewable energy strategy set in motion last year when it said it would drop all new investments in wind, solar, and hydrogen energy.
VC Alert
Vulcan Power Company, a Bend, Ore. developer of geothermal energy projects, raised $108 million in private equity funding from Denham Capital, an energy-focused investment firm. Tesla Motors, which raised over $220 million in venture capital, filed for an Initial Public Offering.
Rambling
This week also marked a milestone of sort for the renewable energy industry when Chinese photovoltaic solar panel company Yingli Green Energy announced that it would join McDonald’s, Budweiser and other blue-chip brands as a tier one sponsor of the upcoming FIFA Word Cup in South Africa. This marks the first time a green energy company – and a Chinese company, for that matter – sponsors a World Cup event. Yingli did not disclose how much it paid for the right to plancard its logo in stadiums and other venues, but according to press reports, the price tag for tier one sponsorships starts above the $100 million mark.