The world of renewable energy finance is vast: encompassing
everything from venture capital funding for innovative start-ups, to
research and development (R&D) and manufacturing expansion spending,
to project finance and all the way through to investing in clean energy
companies on the stock market. Because of that, for the general public,
predicting where money will flow over the course of the next year is a
shot in the dark at best. But there are finance experts who spend their
lives tracking where the money is and where it isn’t and here we offer
you their expert opinions on renewable energy cash flow in 2014.
Funding Innovation: Venture Capital Dollars No Longer Available
Renewable energy finance experts describe the early days of clean
tech venture capital (VC) investment as being one fraught with
“exuberance” and “frothiness.” Investors were eager to fund what they
believed would be the next big thing and clean tech aka green energy aka
renewable energy was where the action was. Dallas Kachan of boutique
cleantech research and advisory firm Kachan and Company points to
biofuels as a technology that received billions of dollars of investment
capital in 2007 and 2008 and now has very little to show for it. Not a
good result for an early-stage investor.
Kachan
said that in 2014 VCs will be funding what he called “capital efficient
plays,” for example, “energy efficiency or efficiency in
general…so-called cleanweb investments,” he said. Cleanweb refers to
the intersection of IT and sensors and big data, i.e. products and
services that drive efficiency in homes by using the cloud (think nest
thermostats) or drive efficiency in workflow or access to capital such
as crowdfunding. “There has been an emphasis on capital efficient
initiatives as opposed to 2007 and 2008 and the massive billions of
dollars that we saw go into biofuels, for instance,” he explained.
VC investment in renewable energy has been trending down for the past
two years in fact and it will continue to do so in 2014 and beyond,
said Kachan. “We predict that in 2014, we will continue to see companies
having a harder and harder time raising venture capital,” he said, “but
that’s not necessarily a bad thing.” Kachan, a seasoned cleantech investment advisor, believes that 2014
may actually be the year that renewable energy expectations and
deliveries begin to match. In other words, the technology is mature
enough that investors understand what it is capable of providing and
invest accordingly. In addition, major corporations are getting into
renewable energy. “The largest companies in the world are taking a more
active, aggressive role than ever in wanting to profit from clean
energy,” said Kachan who explained that renewable energy and clean tech
are still following the same trajectories of those technologies that
came before them. “This is representative of the overall lifecycle of
the maturation of the clean tech space,” he said. “If you look at other
technology revolutions in the past where venture capital played a
dominant role in the early days, sources of capital diversify over
time,” he explained. “That is clearly underway in cleantech,” he concluded and we need not
worry about it. “It’s important to remember that this doesn’t mean the
sky is falling, it just means that we are following the same trends, the
same waves that happened in other industries.”
Project Finance: Utility-Scale Wind and Solar Still Grabbing the Lion’s Share
With five solid years of installed capacity growth coupled with
steady cost reductions, it’s no surprise that renewable energy finance
experts agree that large-scale wind and solar projects will receive the
biggest portion of renewable energy dollars in 2014. “Utility scale solar, mainly photovoltaic solar, and utility-scale
wind will continue to be active in their growth in particular outside of
the U.S.,” said Adam Umanoff, partner with Akin Gump law firm. Lynn
Tabernacki, managing director of renewable and clean energy at Overseas
Private Investment Corp. (OPIC) agreed. “In 2014, solar and wind will
remain the mainstay of renewable energy investments because of sustained
cost reductions for plant construction using these technologies,” she
said.
Umanoff pointed to the Middle East as a region that is looking to tap
renewable energy as an electricity source in the coming years. He said
that Middle Eastern countries would like to dramatically reduce the
amount of oil they use a fuel source for electricity generation so that
they can garner more profits from selling their oil on the open market.
“That’s what we’ve seen in the past year,” he said, mentioning, “the
Saudis came out with a huge 5-GW plus mandate for solar.” Umanoff
believes that CSP plus storage will play a role in building up that
supply of renewable energy capacity.
Large energy end-users are also becoming more interested in renewable
energy, said Umanoff. He said that the industry is active in Latin
America. “In Chile, we’ve got very high power prices, relatively
unreliable supply, and yet active commercial activity,” he said. And the
same goes for Africa, “especially around the mining industry. There we
are seeing both wind and solar looking very attractive,” he explained.
Tabernacki agreed and pointed to an uptick in public/private
partnerships in developing nations as helping give rise to more
renewable energy projects. “From the public side for example, the Power Africa Initiative
has marshaled U.S. government trade and development resources for the
specific purpose of energy development in six pilot countries in
Africa,” she said. Specifically those countries are Kenya, Liberia,
Ethiopia, Nigeria, Ghana, and Tanzania. Tabernacki also sees these types
of partnerships in Asia. “There is a similar program directed to
South-East Asia under the US-Asia Clean Energy Partnership,” she
explained.
“Mobilization of grant funding, technical assistance, transaction
advisory services, and project financing from these public sources is
expected translate into an increase in renewable energy investments in
these regions next year,” Tabernacki concluded.
No comments:
Post a Comment