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Trump and Clean Energy

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If you work in renewable energy the last few days are probably not the best you've had, the Donald's ascension to the most powerful office in the world is to say the least worrying. Amid his various claims he has actively denied climate change (Chinese conspiracy), championed deregulation in the coal and fracking industries threatened to rip up the Paris agreement and attacked the recent administrations Clean Power Plan.

Great.

But the question is really what change can he actually enact? If we have learnt anything over the last few weeks, it's that nothing is a sure thing, particularly where Trump is involved as he has a tenacity and capacity to create change in unforeseen ways.

Ultimately it comes down to dollars and cents. Wind and Solar are now extremely stable industries in the US- the recent extension of the ITC and PTC tax credits have created a favorable market for major institutional tax equity investment and there are plenty of developments in the pipeline. Repealing this initiative would be extremely complicated and would inevitably call into question the lift on the ban of US Oil exports which would be extremely unpopular among a key demographic of Trump supporters.

Additionally, the cost of renewable energy production has achieved a remarkable reduction, even without the extension the cost of production has achieved parity among the major energy producing options. Levelized cost of Electricity is a useful way of making broad market comparisons; across areas of optimum available resources Wind and Solar are extremely competitive but even weighted for regional variances they come in at the low end of the scale.

What the extensions offer though is the opportunity for an additional appetite for investment that will help the industry to approach critical mass where ultimately it is a stronger fiscal option than traditional fossil fuel generation. This will be determined on a number of factors:

·      Increasing efficiency and innovation in PV technology and Wind turbine generation techniques are imperative.

·      The surrounding infrastructure both in terms of storage and grid integration are essential as well, producing the energy isn't enough, the industry needs to be able to offer stable continuous supply in all situations.

·      Ultimately what the industry needs is the people on the ground to facilitate this deal flow, we have seen a real appetite from developers for finance professionals that have structured, originated and closed these tax equity deals.

I am positive that this will occur and I think that now he is in office his policies will normalize, he is currently sitting on an unsustainable platform and anything too over the top will hopefully be blocked by saner heads. In the meantime though we are continuing to see healthy growth and plenty of opportunities in the US across Wind and Solar, particularly with relevance to Tax Equity experience – Developers are actively seeking out those who have structured corporate indemnity risk mitigation from both the tax equity side and the back leveraged financiers.

 

I am always open to conversations with professionals in the industry looking for new career options as well as opening up our client base in this specific niche. If you think we could help you please feel free to get in contact via:

·      keith@pangea-resourcing.com

·      + 44 203 142 7810

Thanks for reading and please let me know your thoughts.

Keith Barlow