News Article | April 30, 2017
It started with a crowdfunding startup, an investment from Prince, and the idea to help new solar companies tackle business challenges that can be hard to overcome on their own. Now, four years later, the idea has morphed into a group called Powerhouse, and notably, in a world flush with tech startups, it’s one of the only incubators out there focused on launching and growing solar companies. Powerhouse runs an accelerator and an incubator program. An accelerator typically provides a small amount of funding, free or low-cost office space, and networking opportunities with investors and customers for young companies that are still developing their first technology and business plans. Since its launch in 2013, Powerhouse has invested hundreds of thousands of dollars collectively into 15 startups, and this summer plans to welcome another few solar entrepreneurs into the program. The group’s incubator division rents office space to more established solar and energy startups across 15,000 sq ft and three floors in downtown Oakland, California. Sometimes the accelerator entrepreneurs graduate into rent-paying companies in the co-working space. Powerhouse now hosts about 15 companies and about 100 people across both groups. Its goal is simple. The organization wants to play a unique role in fostering a new wave of tech innovation in the solar market. Many of the Powerhouse companies are using software, data and the web to make selling or designing solar systems cheaper and easier. They rely on the advice and networking opportunities through Powerhouse to raise money, find customers or exit – through an initial public offering or acquisition. “Powerhouse gave us so much validation and credibility at the beginning, when we didn’t have much to show. It was just enough to get people to believe in us,” says Elena Lucas, the co-founder and CEO of UtilityAPI, an energy data startup. An earlier wave of solar startups was dominated by companies experimenting with different materials and designs for solar cells and panels. Many of those materials-focused solar startups failed in getting the desired technical performance despite large investments from the Bay Area’s venture capitalists. As the price of solar panels dropped dramatically in recent years, the new generation of entrepreneurs and startups are chipping away at other stubborn problems, such as shortening the time it takes to get permits or honing the sales pitch to homeowners. It’s like when fast internet connections finally got cheap and ubiquitous enough to attract the entrepreneurial-minded to build new websites and services on top of it. Tough challenges remain for solar startups. Big utilities and power companies, who are potential investors or customers, don’t generally have experience working with young, renewable energy companies. Meanwhile, US government funding for energy innovation is minimal, particularly with potential federal budget cuts looming and a lack of clean energy support in the White House. But as solar energy becomes cheaper, it’s attracting public and private investments worldwide, evidenced by the $116bn that flowed into solar projects, companies and technologies in 2016, according to Bloomberg New Energy Finance. “The ultimate mission of Powerhouse is to make solar energy the most accessible form of energy in the world,” says Emily Kirsch, co-founder of Powerhouse. Sitting on a bean bag in a nook of the seventh floor of Powerhouse’s headquarters, Kirsch says that despite the rise and success of Silicon Valley-style tech accelerators such as Y Combinator and Techstars, no one else has tried to do the same targeting only the solar industry: “We’re it so far.” The group’s model is showing some success, at least on a small scale, though it’s still early days. Powerhouse takes a small equity stake in its accelerator companies and makes money if they get acquired or go public. Currently Powerhouse gets the bulk of its investment money from a combination of grants, corporate sponsors, like SolarCity and SunPower, and office space rental fees. It’s considering raising money from angel investors so that it could make larger investments and in more companies. None of the companies in its portfolio has gone public or been bought yet, but some of them have attracted funding since going through the accelerator program and increased the value of the companies in the process. Kirsch says the top startups in the accelerator program have seen their values increase by as many as 40 times. Four of the startups in its incubator program have been acquired so far, says Kirsch, though the company doesn’t take a stake in those. But their exits help to build Powerhouse’s reputation among entrepreneurs and investors. Kirsch has been involved since day one. Years ago, when Kirsch was working for Van Jones, an environmental and human rights activist who briefly served as a green jobs adviser to former President Obama, he asked her if she would be interested in helping the then new startup called Solar Mosaic, which provides financing to install solar panels on rooftops, pilot a solar program in Oakland. Meanwhile Jones’s friend Prince was looking to invest a quarter of a million dollars into solar projects in Oakland, and ended up funding Solar Mosaic’s first four solar buildings. Based on that experience – connecting a young solar startup with partners and capital – Kirsch and Danny Kennedy, a former Greenpeace campaign manager who co-founded solar installer Sungevity, launched a company to try to see if the model could work for many more young solar companies. They changed the name of the company, SFunCube, to Powerhouse two years ago. On a visit earlier this year to Powerhouse’s headquarters, dozens of entrepreneurs were heads down working on their products and mingling with potential partners during a weekly open house event. The Powerhouse team connected UtilityAPI with its first investor, Better Ventures, as well as an adviser, Jon Wellinghoff, who is a former chairman of the Federal Energy Regulatory Commission. After going through the accelerator program, UtilityAPI, which creates software to collect data about a building’s energy use and deliver it to customers such as solar or energy storage installers, has grown to nine people from the two co-founders. It now has an office space on the sixth floor of Powerhouse after previously using shared desks. Lucas says the co-working space served as a “brain trust” because all the entrepreneurs brought with them different types of expertise. That allowed her to get quick answers about energy policy or technical standards. Another accelerator program graduate, BrightCurrent, which works with big box retailers and solar companies on marketing solar panels and installation services, now employs 120 people and became profitable last year, says John Bourne, the co-founder and CEO of the five-year-old company. Bourne says Powerhouse helped his company connect with investors (like Better Ventures) and customers and hone his sales pitch. During the accelerator program, Bourne met with Kirsch or Kennedy once a week to walk through BrightCurrent’s plans and brainstorm for ways to overcome obstacles. “It can be really isolating, lonely and tough being an entrepreneur. You’re working alone and trying to build something,” Bourne says. When he joined, Powerhouse was operating out of Sungevity’s offices and, he says: “It was a warm great environment, and I found people who cared about what I cared about. That was a huge win for me.” Solar Mosaic’s co-founder and CEO, Billy Parish, says that his company – which is now six years old and employs more than 150 people – has partnered with at least three of the Powerhouse startups on projects, including UtilityAPI, Sunible and BrightCurrent. “Powerhouse is one of the hubs of the solar ecosystem and they are helping bring breakthrough ideas for the industry into existence. Being close to them keeps us in touch with those new ideas and entrepreneurs,” says Parish. In total numbers, Powerhouse is still pretty small. Its companies have contributed to the installation of 242 megawatts of solar, employ 386 people, and have generated $52m in revenue. That’s probably the group’s biggest drawback – it’s limited, it’s very narrowly focused and it’s still operating on a tiny scale. But they’re part of a larger movement to invest and nurture new companies in low-carbon energy. Other companies running energy-related accelerator programs include Cyclotron Road, which has partnered with Lawrence Berkeley National Laboratory, and Otherlab in the Mission District of San Francisco. Last year, Bill Gates and a group of investors launched Breakthrough Energy Ventures to spend $1bn on early stage breakthroughs in energy. Powerhouse co-founder Danny Kennedy, who now heads up the California Clean Energy Fund, describes the importance of ventures like Powerhouse and the California Clean Energy Fund like this: “We need early-stage energy investing programs now more than ever to enable the energy transition. It’s critical.”
News Article | May 3, 2017
Speaking this week at the Bloomberg New Energy Finance conference in New York, Total SA’s chief energy economist, Joel Couse, forecasted that EVs will make up 15 to 30 percent of global new vehicle sales by 2030. Oil demand for transportation fuel see its “demand will flatten out,” after 2030, Couse said. “Maybe even decline.” Colin McKerracher, head of advanced transport analysis at Bloomberg New Energy Finance, sees Couse’s forecast as the highest EV sales margin yet to be forecasted by a major company in the oil sector. “That’s big,” McKerracher said. “That’s by far the most aggressive we’ve seen by any of the majors.” Royal Dutch Shell Plc sees a similar trend with oil demand in transportation flattening out in the near future. Chief Executive Officer Ben van Beurden said in March that oil demand may peak in the late 2020s. In November during an interview, Shell CFO Simon Henry said that demand is expected to peak in about five years. Shell and Total SA have been looking to diversify their energy assets through hydrogen as a transport fuel. In January, both companies joined a global hydrogen council that included Toyota, Liquide SA, and Linde AG. The companies will be investing about $10.7 billion in hydrogen products over the next five years. Like hydrogen fuel cell vehicles, electric vehicles have major walls to climb to find mass adoption in vehicle sales and infrastructure. One barrier is the cost of owning an electric vehicle versus a cheaper, comparable gasoline-engine vehicle. The battery pack in an EV can be quite expensive, making up half the cost of the car, according to BNEF. Backers of EVs point to two trends fast approaching the market; with one being the longer range, 200-plus-miles per charge EVs coming to market like the Chevy Bolt and Tesla Model 3. The higher-priced versions of the Tesla Model S and Model X are thought to be a sign of it, with consumers willing to finance or lease one of these EVs to gain access to more power and longer range. Automakers are feeling pressed by strict emissions reduction rules in Europe and China, with other markets like the U.S., Japan, and South Korea having similar standards. Auto Shanghai has been a showcase for existing and startup automakers launching several EVs to the China market, with some of them ending up overseas. It’s helping that lithium ion battery prices are dropping about 20 percent year, as automakers spend billions on electrifying their vehicle lineups. Volkswagen wants to see at least 25 percent of its vehicles sold in 2025 to be EVs. Toyota is moving toward selling zero fossil-fuel powered vehicles by 2050. Another sign that the Total SA report carries some weight is the diverse and broad portfolio of EVs that automakers till be rolling out on the market soon. “By 2020 there will be over 120 different models of EV across the spectrum,” said Michael Liebreich, founder of Bloomberg New Energy Finance. “These are great cars. They will make the internal combustion equivalent look old fashioned.” Electric cars only make up about 1 percent of global vehicle sales, so making it to 30 percent in the short-term future would be a huge leap. Analysts point to a few market forces that need to be addressed before that technology takes off in sales. Among those issues are pre-incentive prices coming down, distance per charge going up beyond 300 miles, and the fast charging infrastructure becoming pervasive and cost competitive to gas pumps.
News Article | May 3, 2017
Following Shell, oil major Total has now also indicated it is expecting increasingly tough competition from electric vehicles (EVs), writes John LeSage of Oilprice.com. One significant trend is the wide range of EVs that will be available in a few years. Courtesy Oilprice.com. Speaking at a recent Bloomberg New Energy Finance conference in New York, Total’s chief energy economist, Joel Couse, forecasted that EVs will make up 15 to 30 percent of global new vehicle sales by 2030. Oil demand for transportation fuel see its “demand will flatten out,” after 2030, Couse said. “Maybe even decline.” Colin McKerracher, head of advanced transport analysis at Bloomberg New Energy Finance, sees Couse’s forecast as the highest EV sales margin yet to be forecasted by a major company in the oil sector. “That’s big,” McKerracher said. “That’s by far the most aggressive we’ve seen by any of the majors.” Royal Dutch Shell earlier projected a similar trend with oil demand in transportation flattening out in the near future. Chief Executive Officer Ben van Beurden said in March that oil demand may peak in the late 2020s. In November during an interview, Shell CFO Simon Henry said that demand is expected to peak in about five years. Shell and Total have been looking to diversify their energy assets through hydrogen as a transport fuel. In January, both companies joined a global hydrogen council that included Toyota, Liquide, and Linde. The companies will be investing about $10.7 billion in hydrogen products over the next five years. Like hydrogen fuel cell vehicles, EVs have major walls to climb to find mass adoption in vehicle sales and infrastructure. One barrier is the cost of owning an electric vehicle versus a cheaper, comparable gasoline-engine vehicle. The battery pack in an EV can be quite expensive, making up half the cost of the car, according to BNEF. Backers of EVs point to various positive trends. One is the longer range, 200-plus-miles per charge EVs coming to market like the Chevy Bolt and Tesla Model 3. The higher-priced versions of the Tesla Model S and Model X are thought to be a sign of it, with consumers willing to finance or lease one of these EVs to gain access to more power and longer range. Another is that automakers are feeling pressed by increasingly strict emissions reduction rules in Europe and China, with other markets like the U.S., Japan, and South Korea adopting similar standards. Then it’s helping that lithium ion battery prices are dropping about 20 percent year. Finally, automakers are spending billions on electrifying their vehicle portfolios. Volkswagen wants to see at least 25 percent of its vehicles sold in 2025 to be EVs. Auto Shanghai has been a showcase for existing and startup automakers launching new EVs to the Chinese and international markets. “By 2020 there will be over 120 different models of EV across the spectrum,” said Michael Liebreich, founder of Bloomberg New Energy Finance. “These are great cars. They will make the internal combustion equivalent look old fashioned.” Electric cars only make up about 1 percent of global vehicle sales, so making it to 30 percent in the short-term future would be a huge leap. And there are still major barriers, related to price, driving range and availability of infrastructure. But the likes of Total and Shell clearly regard EVs as a major challenge now. This article was first published on Oilprice.com and is republished here with permission.
News Article | May 24, 2017
This column originally appeared in the WINDPOWER show daily. The U.S. wind industry is proceeding at full steam. After two consecutive years installing more than 8,000 megawatts (MW), wind growth shows no sign of slowing down. The industry just experienced its strongest first quarter since 2009 and the second strongest first quarter ever. At more than 84,000 MW installed, the U.S. has enough capacity to power 25 million American homes. Another 21,000 MW remain in the pipeline, enough to add another Texas to the country’s grid. So it’s not surprising to hear that industry experts are bullish about the next five years. Yesterday, consultants from MAKE, Navigant, Bloomberg New Energy Finance, and IHS Markit gathered to provide their wind energy market forecasts during one of WINDPOWER’s most popular sessions. One thing remained abundantly clear: U.S. wind growth will be robust over the next half decade. While expectations vary to some degree, consultants forecast between 40 and 45 gigawatts (GW) of new wind through 2021. On average this equates to roughly 9 percent annual growth, far faster than the overall U.S. economy. The consultants point to a number of factors driving wind power’s growth. First, the multi-year extension of the production tax credit provides long-desired policy certainty. Second, the industry continues to innovate, integrating new advancements in blade technology, material design, system controls, and other improvements. That drives down wind’s cost, already down over 66 percent since 2009. Experts expect costs to fall further in the years ahead. Third, corporate buyers continue to drive demand for wind power. After comprising 39 percent of the megawatts contracted through power purchase agreements in 2016, corporate buyers continue to contract for wind power in early 2017, with deals from companies like Home Depot and Intuit already inked. Looking at the broader electricity market, continued power plant retirements are expected to boost demand for wind as utilities seek low-cost options to diversify, modernize, and replenish their portfolio. One consultant expects 36 GW of coal to be retired in the next decade. Finally, at the state level renewable portfolio standards will driving wind deployment in certain parts of the country, especially as states consider expanding their programs or adjusting them to encourage offshore wind. Despite the upbeat expectations, the panelists cautioned some barriers could moderate wind’s growth. Historically low natural gas prices and aggressive cost reductions in solar energy will challenge the economic position of wind. Weak load growth across most parts of the country is expected to dampen demand for all power generation technologies as well. Finally, in this bull market for wind it is critical for transmission to keep apace to ensure wind is delivered to market. Regardless, this unprecedented period of American wind power growth should continue.
News Article | May 23, 2017
For policymakers who are interested in job creation, investing in renewable energy is considerably more effective than investing in fossil fuels, writes Allan Hoffman, author of the blog Thoughts of a Lapsed Physicist and formerly with the U.S. Department of Energy. Solar and wind are powerful engines of job creation and economic growth. Job creation is always a safe issue for politicians to address and it played a crucial role in our recent presidential election. Donald Trump achieved his unexpected upset victory over Hillary Clinton by appealing to disaffected workers in normally Democrat-leaning states such as Pennsylvania and Wisconsin. A primary focus of the Trump campaign was jobs in the manufacturing and coal-mining industries, where many workers had been laid off in recent years. Some people have blamed these job losses on Obama Administration policies, including support for solar and wind energy. What are the facts? The fact that renewable energy, mostly in the form of solar and wind energy, is entering the energy mainstream, both in the U.S. and in other countries, is a reality. This is often attributed to their reduced costs and role in reducing carbon emissions. What is often overlooked or given minimal attention is that investment in the manufacture and deployment of these clean energy technologies creates many ‘green jobs’. What data supports this statement? Data for the U.S. was available from the Green Jobs Initiative of the Bureau of Labor Statistics in annual reports for fiscal years 2009, 2010, and 2011. Unfortunately, budget sequestration brought an end to this program in 2013. Today other organizations are filling the gap, e.g. The Solar Foundation’s annual ‘National Solar Jobs Census’, monthly reports from the U.S. Energy Information Administration (EIA), and occasional reports from other non-governmental organizations. On a global basis the International Energy Agency (IEA) has become a source of jobs information, as has the International Renewable Energy Agency (IRENA) through its Renewable Energy and Jobs Annual Reviews. Two highlights of IRENA’s 2016 Review were that (a) global direct and indirect employment in the renewable energy industry had reached 8.1 million in 2015, a 5% increase over 2014, and (b) solar photovoltaics (PV) was the largest renewable energy employer at 2.8 million jobs, an 11% increase over 2014. Solar Foundation data indicated that in 2016 the U.S. solar industry (8,600 companies) employed 260,00 workers. This was an increase of more than 20% for the fourth straight year and more than 178% since 2010. This outpaced the overall 2016 national jobs growth rate of 1.5%. California led U.S. states in solar employment with 100,050 jobs. How do these numbers compare with numbers in the fossil fuel industries? In 2015 workers employed directly in oil and natural gas extraction numbered about 187,000, a decrease of 14,000 from 2014. Indirect related jobs number about 2 million, of which about 40% are at gas stations. Another fossil fuel industry that received considerable attention during the 2016 election was coal mining. It accounted for 68,000 jobs in 2015, continuing its decrease of recent years. Looking ahead, what can we expect? As oil and natural gas prices increase from their recent lows, and fracking is therefore reinvigorated, the number of related extraction jobs should stay approximately level. This should continue as long as no cost penalty is imposed on carbon emissions, and Trump Administration support for maintaining and expanding fossil fuel extraction is strong. Coal is a different story. Long the basis of more than half of U.S. electricity generation, coal’s share of that market is now down to about a third and heading lower. When combusted it is the dirtiest of the fossil fuels, and automation of the coal digging process and competition from fracked and low cost natural gas has signaled the beginning of the end of the coal era and related jobs in the U.S. In addition, utilities are not adding new coal powered systems because their capital and operating costs are higher than for new natural gas, wind and solar power plants (data provided by EIA). What are the prospects for renewable energy and related jobs in the U.S. in the future? As reported by the American Wind Energy Association (AWEA), at the start of 2016 jobs in the U.S. wind industry totaled 88,000, an increase of 20% over 2014. This was made possible by the installation of nearly 9,000 megawatts of new electrical generating capacity across 20 states, an increase of 77% over 2014. Wind accounted for 41% of all newly installed U.S. electrical capacity in 2015, ahead of solar (28.5%) and natural gas (28.1%). This growth will continue both onshore, where essentially all U.S. wind turbines have been installed to date, and offshore as this large resource begins to be tapped. Two recent reports have documented the equally impressive prospects for solar energy’s growth. IRENA’s ‘Letting In the Light: How Solar Photovoltaics Will Revolutionize the Electricity System’ states that “The age of solar energy has arrived. It came faster than anyone predicted and is ushering in a shift in energy ownership.” Bloomberg New Energy Finance reported in a June 2016 report that “..solar and wind technologies will be the cheapest way to produce electricity in most parts of the world in the 2030s..” Already the largest source of renewable energy jobs in the U.S., solar energy will be a major factor in shaping our future energy system and creating new jobs. A recently published book Sun Towards High Noon: Solar Power Transforming Our Energy Future (Pan Stanford Publishing; Peter Varadi editor and contributor) discusses the jobs issue in detail along with other issues, including solar financing, markets, and quality control. What conclusions can be drawn? If a primary national goal is to create jobs in the energy sector, investing in renewable energy is considerably more effective than investing in fossil fuels. Solar and wind are no longer niche businesses, their widespread use addresses global warming and climate change, and their manufacture and deployment are powerful engines of economic growth and job creation. The U.S. Congress must recognize this and put policies in place that accelerate their growth. Other countries recognize this potential and are moving rapidly onto this path, some even faster than the U.S. We must not be left behind as this energy transition unfolds in the next several decades, but we must also not forget the people who will be displaced from their jobs in traditional energy industries. Allan Hoffman is author of the blog Thoughts of a Lapsed Physicist. He is a former Senior Analyst in the Office of Energy Efficiency and Renewable Energy at the U.S. Department of Energy (DOE) and physicist by training. Hoffman is a contributor to a new comprehensive handbook, Sun Towards High Noon, edited by solar pioneer Peter F. Varadi, which details the meteoric expansion of the solar (PV) industry and describes how solar power will change our energy future.
News Article | May 10, 2017
Despite impressive European wind power investment figures in 2016, new investment will slow in 2017 due to policy revisions and continued technology price declines, says WindEurope and Bloomberg New Energy Finance. In a short note on its website, Bloomberg New Energy Finance (BNEF) this week pointed to figures published earlier in the week by the region’s wind energy trade group, WindEurope, that new wind energy projects in 2016 attracted €43 billion ($47 billion) worth of investment, up 22% over the €35 billion of 2015. Specifically, the WindEurope figures showed that new asset financing for wind power projects reached €27.6 billion in 2016 with a record breaking €18.2 billion in offshore wind, while onshore wind investments dropped by 5%, the first decrease for the sector in five years. However, according to both WindEurope and Bloomberg New Energy Finance, investment levels are likely to slow in 2017. One of the primary reasons for this investment slowdown, according to WindEurope, is the inflation of investment levels over the past two years as projects hurried to reach a developmental-stage wherein they qualified for government subsidies, before governments transitioned to auction-based remuneration mechanisms. With these transitions already in effect in major markets like Germany and France, WindEurope predicts that there will be a lull before the results of these auctions lead to final new investment decisions. “Wind was the largest recipient of power sector investments in 2016,” said Giles Dickson, Chief Executive Officer of WindEurope. “The competitiveness of our industry and reduced risk perceptions have brought in major financial players who are looking to diversify their portfolios. Cost reductions across the industry’s value chain mean investors can finance more generation capacity for less money.” Bloomberg New Energy Finance echoed these sentiments, highlighting the historic results of Germany’s most recent auction, the recently-opened tender for UK offshore wind, and future auctions in the Netherlands, France, and Spain. However, it is also important to note that another reason wind power investments are declining is simply because less money is needed to achieve the same results. “Nowadays, you need less investments to get a similar level of capacity,” Joel Meggelaars, a WindEurope spokesman, in an email to BNEF. “And the high levels of investment in recent years were a result of projects being squeezed through the gate before countries moved away from feed-in-tariffs.” WindEurope nevertheless raised the specter of geographical inequality when it comes to just how widespread the European wind energy revolution has become. “What is worrying is the uneven growth geographically. 80% of new investments came from four countries alone, the UK, Germany, Belgium, and Norway,” explained Giles Dickson. “14 EU Member States did not announce any new wind energy investments in 2016. Many countries struggle to manage the transition to auctions. Only 7 EU Member States have clear policies for renewables beyond 2020 – the unclear policy outlook in the rest makes investors and project developers go elsewhere. The National Energy & Climate Action Plans required under the Clean Energy Package (by 1 January 2019) will be crucial to sustain investments.” Check out our new 93-page EV report. Join us for an upcoming Cleantech Revolution Tour conference! Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech daily newsletter or weekly newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.
News Article | November 16, 2015
The Bill and Melinda Gates Foundation would have had $1.9bn (£1.3bn) more to spend on its lifesaving health projects if it had divested from fossil fuels and instead invested in greener companies, according to a new analysis. The Canadian research company Corporate Knights examined the stock holdings of 14 funds, worth a combined $1tn, and calculated how they would have performed if they had dumped shares in oil, coal and gas companies three years ago. Overall, the funds would have been $23bn better off with fossil fuel divestment. The Wellcome Trust, which is the world’s biggest health charity after the Gates Foundation, would have been $353m better off. The huge Dutch pension fund ABP would have had $9bn in higher returns, while Canada’s CPP would have had $7bn more. “There are billions of dollars potentially being left on the table by these large funds as a result of hanging on to fossil fuel stocks and being underexposed to the $3tn [environmental] sector,” said Toby Heaps, chief executive of Corporate Knights. Separately, a fossil free index from one of the world’s largest providers of financial indexes, MSCI, has just completed its first year with returns 60% greater than its parent index. The Gates Foundation and Wellcome Trust are widely recognised for their important work and have been the focus of a Guardian campaign asking them to divest their large endowments from fossil fuels. Climate change poses the greatest threat to health in the 21st century, according to doctors, and to avoid catastrophic impacts, most known fossil fuel reserves must be kept in the ground. If the world’s governments keep their word and halt global warming, those reserves could become worthless, meaning there are both financial and moral arguments for divestment. Investors managing over $2.6tn of assets have already committed to divestment, including Norway’s sovereign wealth fund, the world’s largest. The Bank of England has also warned of potentially huge losses. “The number one complaint about divestment we’ve heard from fund managers is that it would cost them too much money,” said Jamie Henn, communications director at 350.org, the climate campaign that commissioned the new research. “As it turns out, they are dead wrong. The energy industry of the 21st century is going to look nothing like the fossil fuel industry of the 20th. Institutions that don’t change with the times stand to lose big and, as this new analysis shows, they already are.” 350.org are partners on the Guardian’s Keep it in the Ground campaign. The Corporate Knights research examined how 14 large investment funds would have performed if they had divested from fossil fuels in October 2012. The fossil fuel firms excluded were the top 100 coal companies and top 100 oil and gas companies, ranked by the size of their reserves by Fossil Free Indices, plus utilities generating more than 30% of their power by burning coal, as ranked by South Pole Group. In the analysis, the excluded investments were replaced by increased investments in green companies already held by the funds. Green companies were those getting more than 20% of their revenue from environmental solutions as verified by FTSE Environmental Markets or Bloomberg New Energy Finance, a pool of 1,600 companies with a combined market capitalisation of $3tn. The analysis found the New York City Employee Retirement scheme would have been $1.6bn better off with divestment, as would Australia’s Future Fund. “The period of analysis coincides with a tough market for oil and commodities in general,” said Heaps. “Over the next few years, many oil stocks – if not coal utilities – could jump back, but in the long term, I don’t think a lot of prudent market watchers are betting that the carbon intensive sectors are going to outperform the market in general.” A crunch UN climate summit begins in Paris in two weeks, at which governments are expected to agree a deal to significantly cut future carbon emissions. The Bill and Melinda Gates Foundation Trust does not comment on its investment holdings and decisions. Bill Gates has called fossil fuel divestment a “false solution” and in June announced he would invest $2bn of his own fortune in innovative renewable energy projects over five years. A spokeswoman for the Wellcome Trust said: “The Trust’s long-term investment strategy has led to a total return of over £9bn since September 2008, while returns over both 10 and 20 years up to September 2014 have averaged above 10% per year in nominal terms.” This would allow charitable spending of £1bn a year for the next five years, she said. The director of the Wellcome Trust, Jeremy Farrar, said on Sunday that the impacts of climate change on health “affect us today, never mind affecting our children or our grandchildren. This is not some abstract threat; it is immediate and it is personal.” The MSCI fossil fuel free index replicates its broad All Country World Index (ACWI), but without 124 companies identified as having large reserves of coal, oil and gas. In its first year, to October 2015, the fossil free index produced gross returns of 6.5% compared to 4.1% for the ACWI. The significant outperformance of the fossil free index reflected the troubled year suffered by energy companies, said Tom Kuh, head of ESG indexes for MSCI: “The challenge for investors is to figure out whether what is going on with energy is cyclical or structural.” Kuh noted the upcoming UN climate summit, the coal industry’s troubles of the last five years and recent legal investigations in the US into ExxonMobil and said: “There seems to be more pressure coming from regulators and policymakers on fossil fuel companies because of the role fossil fuels play in climate change.” He said demand for fossil free and low carbon indexes was growing and that the fossil fuel divestment campaign had brought the issue to prominence in the last two years. MSCI will also be providing carbon footprints for all 160,000 of its indexes in 2016. “Carbon is increasingly becoming a factor that investors are looking at in understanding risk in their portfolios,” Kuh said.
News Article | May 11, 2017
2017 could be a big year for the development of microgrids in remote and non-electrified regions and countries, with storage companies and technology behemoths leading the way on installing and investing in storage microgrids and solar for regional and island countries and communities. A new report published by Bloomberg New Energy Finance (BNEF) earlier this month highlighted the growing trend currently in play in the microgrid sector — specifically the combination of solar with storage microgrids. According to Bloomberg’s 2Q 2017 Frontier Power Market Outlook, “Market fundamentals and other developments in 1Q tended to support the economics of small-scale clean energy systems.” Specifically, several large emerging countries reliant upon diesel generators encountered increased diesel prices, and policy developments in India are believed to be further increasing the value of solar with storage microgrids. As a result, BNEF concludes that developing countries are now responsible for purchasing the majority of solar PV exports from China. Chinese PV equipment exported to Asia, Latin America and Africa (% of total exports) The deployment of island microgrid systems has also increased pace, with energy storage companies such as Tesla, Fluidic Energy, and Electro Power Systems continuing to deploy significant capacity in the first quarter. Specifically, Tesla’s island microgrids represent 36% of the company’s total power storage capacity deployed to date. In fact, numerous new project announcements have been made over the past six months, while several existing projects integrated new sources of energy generation and storage. Numerous commitments were made by outside parties — such as the International Renewable Energy Agency, the Abu Dhabi Fund for Development, Schneider and Engie, and Microsoft and Facebook — have contributed to accelerating the development and deployment of microgrids across the Asia Pacific region. Further west, the evolution of distributed energy in India has been given a boost by two separate shifts — the recently announced 2017-18 budget, and a decisive win by the ruling Bhartiya Janta Party (BJP) in parliamentary elections in Uttar Pradesh, the country’s most populous but also one of its poorest states. According to Bloomberg, both of these developments have the opportunity to boost policy support for India’s off-grid and rooftop energy market and improve the reliability of the country’s power supply. Check out our new 93-page EV report. Join us for an upcoming Cleantech Revolution Tour conference! Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech daily newsletter or weekly newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.
News Article | May 10, 2017
Renewable energy has been growing at a breakneck pace in the U.S. for several years. Solar and wind made up the largest share of new capacity additions in 2016 for the third year in a row, with nearly two thirds of all new capacity. As more wind and solar farms are built, their costs continue falling, to the point where in several regions across the U.S., wind and solar are cheaper to build than coal and natural gas. It’s clear that, as Bloomberg New Energy Finance’s Michael Liebreich declared last month, “this is not alternative energy. This is just mainstream, power-generating technology.” Despite these economic and technology trends, the Trump Administration is attempting to alter America’s energy landscape, favoring fossil fuels over low-carbon energy technologies in an attempt to alter the picture for renewable energy in the U.S. In recent weeks, two potential policy shifts—opening up new areas to increased oil and gas drilling, and adding a tariff to imported solar panels— have been circulating at the federal level. But just how might these changes impact renewables? Energy Innovation used the Energy Policy Simulator (EPS) to forecast wind and solar capacity additions to 2050 under three scenarios: a business-as-usual (BAU) scenario, a low natural gas price scenario, and a solar import tariff scenario. The EPS open-source computer model is freely available for public use through a user-friendly web interface or by downloading the full model and input dataset. The EPS models the U.S. as a national power grid, accounts for limitations on renewables deployment due to limited grid flexibility, and includes endogenous price decreases based on the cumulative installed capacity of wind and solar. Using the EPS, we find that low natural gas prices actually increase new long-term solar and wind capacity by inducing retirement of uneconomic coal power plants and increasing the amount of flexible natural gas on the grid. Unsurprisingly, a tariff on solar panel imports would result in a large solar capacity decrease by 2050, though it would add additional wind as well as some natural gas. The BAU scenario assumes no new federal policies, except those that have already been approved or currently exist, are enacted in the future. The Clean Power Plan is not included in this scenario, since it is currently being litigated. In the BAU scenario, wind capacity increases from 81 gigawatts (GW) today to 209 GW in 2050. Under the same scenario, solar photovoltaic (PV) capacity increases from 33 GW today to 316 GW in 2050. This includes 134 GW of distributed (rooftop) solar. By 2050 wind comprises nearly 14% of total installed capacity in the U.S., while solar makes up 21%. Coal actually experiences a capacity decline between now and 2050, decreasing from approximately 266 GW today to 228 GW in 2050. The BAU scenario uses price forecasts from the U.S. Energy Information Administration’s Annual Energy Outlook (AEO) 2017 without the Clean Power Plan. That forecast projects power sector natural gas prices increase from $2.92 per million BTUs (MMBtu) in 2016 to $5.73 in 2050. However, President Trump’s policies to open up more land for oil and gas drilling could increase natural gas supply and keep prices lower than forecast, so what happens to solar and wind capacity if gas prices stay low for longer than expected? In our low natural gas price scenario, we use prices from the AEO’s “High Oil and Gas Resource and Technology” case, which assumes higher resource availability and lower costs, and projects power sector natural gas prices only increasing slightly to $3.82/MMBtu by 2050. When natural gas prices are lower than forecast, more renewables capacity is actually built out in future years. By 2050, continued low gas prices could induce an additional 58 GW of solar PV and 47 GW of wind on top of BAU projections. Two factors drive this increase. First, lower than expected natural gas prices cause additional coal power plants to become uneconomic and retire when gas prices are low. In this scenario, lower natural gas prices cause an additional 26 GW of coal retirements by 2050. When these plants retire, their capacity must be made up from new resources, and renewables are quickly becoming the cheapest available option. Second, low gas prices cause additional natural gas plants to come online, offering a significant amount of grid flexibility and allowing additional renewables to integrate into the system.
News Article | May 12, 2017
It’s no secret that solar PV is now the cheapest form of new-build utility-scale power generation around, but according to global research group Bloomberg New Energy Finance, we’re not far from the point when it will also be cheaper that incumbent fossil fuel generators. Kobad Bhavnagri, BNEF’s head of research in Australia, said that prices like 2.69 US cents/kWh had ensured that solar PV was now the cheapest source of new generation in the world, and even in Australia which he said had “finally become an efficient utility-scale PV market.” But the problem for big solar remained that “new plant still have to compete with old,” which at the moment, puts incumbent coal ahead of the game – in Australia and many other parts of the world. But not for long. Bhavnagri says that the cost reductions of solar PV are no becoming “so significant” that BNEF can foresee a time when new solar will become cheaper than operating, existing coal. “So, new solar is right now hands down easily cheaper than building a new coal-fired power station, and will shortly be cheaper than building a new gas-fired power station,” he said. “However… renewables and new plant have to compete with the old. And the economics of the old, and the fact that they only have to compete on their operating costs, has blocked out competition from the new. “However, by 2032, solar will get so cheap that it will become cheaper to build a new large-scale solar farm than it will be to burn coal. And that is a tipping point for the energy system.” Bhavnagri says that between now and 2040, “and really for the foreseeable future,” the vast majority of Australia’s new generation capacity will be renewable. “By our calculations, about 39 per cent of our power supply will come from renewable sources by 2030, and over 50 per cent by the year 2040,” Bhavnagri said, in spite of Australia’s recent history of climate and renewables policy uncertainty, and thanks to major policy levers like the RET and ARENA. “The work of ARENA, largely, has really helped to build experience… and expertise to build solar at competitive rates, and that will materialise in the dominance of solar …in the remaining capacity of the renewable energy target,” he said. Bavnagri says the amount of capacity that is forecast to come on-stream by 2020 – BNEF says about 9GW of renewables, the majority of which will be solar – will “easily compensate for the loss of Hazelwood and, therefore, put downward pressure on electricity prices.” “The new renewables that is, thanks to the Renewable Energy Target, coming on-stream is going to save the day,” in terms of Australia’s sky-rocketing electricity prices, Bhavnagri said. “Because that new supply will produce more competition, it will reduce our reliance on very expensive gas and will help to put downward pressure on electricity prices. “So, it is really renewable energy target to the rescue.” Check out our new 93-page EV report. Join us for an upcoming Cleantech Revolution Tour conference! Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech daily newsletter or weekly newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.