NewEnergyNews: Holiday Reading: Third-Party Finance for the Other 90 Percent (of Commercial Buildings); EPR Squared says its “real estate structure” can put solar on multi-tenant buildings.

NewEnergyNews

Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

The challenge: To make every day Earth Day.

YESTERDAY

  • THE STUDY: THE JOBS BONANZA IN INDIA SOLAR
  • QUICK NEWS, Sept. 30: NAT GAS, SOLAR, WIND LEAD 1H 2014 NEW BUILD; COOLER PANELS COULD HEAT UP SOLAR; OFFSHORE WIND, PROMISE AND POLITICS">
  • THE DAY BEFORE

  • THE STUDY: ADDING UP THE CLIMATE CHANGE NUMBERS
  • QUICK NEWS, Sept. 29: PRES SAYS YES TO CLIMATE ACTION, SENATE STUCK; FLAWED NEW PLAN FOR NEW ENERGY IN CALIF; SOLAR PANELS GET BETTER
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    GET THE DAILY HEADLINES EMAIL: CLICK HERE TO SUBMIT YOUR EMAIL ADDRESS OR SEND YOUR EMAIL ADDRESS TO: herman@NewEnergyNews.net

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    THE DAY BEFORE THE DAY BEFORE

  • Weekend Video: Obama On Climate Change At The UN
  • Weekend Video: Jon Stewart Heats Up Over Climate Change
  • Weekend Video: Colbert Asks If “This Changes Everything”
  • THE DAY BEFORE THAT

  • FRIDAY WORLD HEADLINE-HIGH WATER RISING – EVERYWHERE
  • FRIDAY WORLD HEADLINE-MOROCCO WIND BOOM COMING
  • FRIDAY WORLD HEADLINE-INDIA BOOSTS ITS SOLAR BUILD
  • FRIDAY WORLD HEADLINE-ABU DHABI BUYS A PIECE OF NORWAY’S STAKE IN UK OFFSHORE WIND
  • AND THE DAY BEFORE THAT

    THINGS-TO-THINK-ABOUT THURSDAY, Sept. 25:

  • TTTA Thursday-THE PRIVATE SECTOR FACES CLIMATE CHANGE
  • TTTA Thursday-SOLAR WILL POWER SCHOOLS, EARN MONEY FOR TEACHERS
  • TTTA Thursday-A RIDE IN TOMORROW’S CAR
  • TTTA Thursday-A LOOK AT SEE-THROUGH SOLAR
  • THE LAST DAY UP HERE

  • THE STUDY: FREEING THE NATIONAL TREASURE IN U.S. NATIONAL LABS
  • QUICK NEWS, Sept. 24: ROCKEFELLERS DIVEST OIL FOR NEW ENERGY; BOLD $8BIL WIND BUILD-TRANSMIT-STORE PROJECT; CALIF TARGETS 1.5MIL 0-EMISSIONS CARS BY 2024
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    Anne B. Butterfield of Daily Camera and Huffington Post, is a biweekly contributor to NewEnergyNews

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT)

    November 26, 2013 (Huffington Post via NewEnergyNews)

    Everywhere we turn, environmental news is filled with horrid developments and glimpses of irreversible tipping points.

    Just a handful of examples are breathtaking: Scientists have dared to pinpoint the years at which locations around the world may reach runaway heat, and in the northern hemisphere it's well in sight for our children: 2047. Survivors of Superstorm Sandy are packing up as costs of repair and insurance go out of reach, one threat that climate science has long predicted. Or we could simply talk about the plight of bees and the potential impact on food supplies. Surprising no one who explores the Pacific Ocean, sailor Ivan MacFadyen described long a journey dubbed The Ocean is Broken, in which he saw vast expanses of trash and almost no wildlife save for a whale struggling a with giant tumor on its head, evoking the tons of radioactive water coming daily from Fukushima's lamed nuclear power center. Rampaging fishing methods and ocean acidification are now reported as causing the overpopulation of jellyfish that have jammed the intakes of nuclear plants around the world. Yet the shutting down of nuclear plants is a trifling setback compared with the doom that can result in coming days at Fukushima in the delicate job to extract bent and spent fuel rods from a ruined storage tank, a project dubbed "radioactive pick up sticks."

    With all these horrors to ponder you wouldn't expect to hear that you should also worry about the United States running out of coal. But you would be wrong, says Leslie Glustrom, founder and research director for Clean Energy Action. Her contention is that we've passed the peak in our nation's legendary supply of coal that powers over one-third of our grid capacity. This grim news is faithfully spelled out in three reports, with the complete story told in Warning: Faulty Reporting of US Coal Reserves (pdf). (Disclosure: I serve on CEA's board and have known the author for years.)

    Glustrom's research presents a sea change in how we should understand our energy challenges, or experience grim consequences. It's not only about toxic and heat-trapping emissions anymore; it's also about having enough energy generation to run big cities and regions that now rely on coal. Glustrom worries openly about how commerce will go on in many regions in 2025 if they don't plan their energy futures right.

    2013-11-05-FigureES4_FULL.jpgclick to enlarge

    Scrutinizing data for prices on delivered coal nationwide, Glustrom's new report establishes that coal's price has risen nearly 8 percent annually for eight years, roughly doubling, due mostly to thinner, deeper coal seams plus costlier diesel transport expenses. Higher coal prices in a time of "cheap" natural gas and affordable renewables means coal companies are lamed by low or no profits, as they hold debt levels that dwarf their market value and carry very high interest rates.

    2013-11-05-Table_ES2_FULL.jpgclick to enlarge

    2013-11-05-Figure_ES2_FULL.jpg

    One leading coal company, Patriot, filed for bankruptcy last year; many others are also struggling under bankruptcy watch and not eager to upgrade equipment for the tougher mining ahead. Add to this the bizarre event this fall of a coal lease failing to sell in Wyoming's Powder River Basin, the "Fort Knox" of the nation's coal supply, with some pundits agreeing this portends a tightening of the nation's coal supply, not to mention the array of researchers cited in the report. Indeed, at the mid point of 2013, only 488 millions tons of coal were produced in the U.S.; unless a major catch up happens by year-end, 2013 may be as low in production as 1993.

    Coal may exist in large quantities geologically, but economically, it's getting out of reach, as confirmed by US Geological Survey in studies indicating that less than 20 percent of US coal formations are economically recoverable, as explored in the CEA report. To Glustrom, that number plus others translate to 10 to 20 years more of burning coal in the US. It takes capital, accessible coal with good heat content and favorable market conditions to assure that mining companies will stay in business. She has observed a classic disconnect between camps of professionals in which geologists tend to assume money is "infinite" and financial analysts tend to assume that available coal is "infinite." Both biases are faulty and together they court disaster, and "it is only by combining thoughtful estimates of available coal and available money that our country can come to a realistic estimate of the amount of US coal that can be mined at a profit." This brings us back to her main and rather simple point: "If the companies cannot make a profit by mining coal they won't be mining for long."

    No one is more emphatic than Glustrom herself that she cannot predict the future, but she presents trend lines that are robust and confirmed assertively by the editorial board at West Virginia Gazette:

    Although Clean Energy Action is a "green" nonprofit opposed to fossil fuels, this study contains many hard economic facts. As we've said before, West Virginia's leaders should lower their protests about pollution controls, and instead launch intelligent planning for the profound shift that is occurring in the Mountain State's economy.

    The report "Warning, Faulty Reporting of US Coal Reserves" and its companion reports belong in the hands of energy and climate policy makers, investors, bankers, and rate payer watchdog groups, so that states can plan for, rather than react to, a future with sea change risk factors.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    It bears mentioning that even China is enacting a "peak coal" mentality, with Shanghai declaring that it will completely ban coal burning in 2017 with intent to close down hundreds of coal burning boilers and industrial furnaces, or shifting them to clean energy by 2015. And Citi Research, in "The Unimaginable: Peak Coal in China," took a look at all forms of energy production in China and figured that demand for coal will flatten or peak by 2020 and those "coal exporting countries that have been counting on strong future coal demand could be most at risk." Include US coal producers in that group of exporters.

    Our world is undergoing many sorts of change and upheaval. We in the industrialized world have spent about a century dismissing ocean trash, overfishing, pesticides, nuclear hazard, and oil and coal burning with a shrug of, "Hey it's fine, nature can manage it." Now we're surrounded by impacts of industrial-grade consumption, including depletion of critical resources and tipping points of many kinds. It is not enough to think of only ourselves and plan for strictly our own survival or convenience. The threat to animals everywhere, indeed to whole systems of the living, is the grief-filled backdrop of our times. It's "all hands on deck" at this point of human voyaging, and in our nation's capital, we certainly don't have that. Towns, states and regions need to plan fiercely and follow through. And a fine example is Boulder Colorado's recent victory to keep on track for clean energy by separating from its electric utility that makes 59 percent of its power from coal.

    Clean Energy Action is disseminating "Warning: Faulty Reporting of US Coal Reserves" for free to all manner of relevant professionals who should be concerned about long range trends which now include the supply risks of coal, and is supporting that outreach through a fundraising campaign.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    Author's note: Want to support my work? Please "fan" me at Huffpost Denver, here (http://www.huffingtonpost.com/anne-butterfield). Thanks.

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    Anne's previous NewEnergyNews columns:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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    Your intrepid reporter

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  • Monday, December 24, 2012

    Holiday Reading: Third-Party Finance for the Other 90 Percent (of Commercial Buildings); EPR Squared says its “real estate structure” can put solar on multi-tenant buildings.

    Holiday Reading: Third-Party Finance for the Other 90 Percent (of Commercial Buildings); EPR Squared says its “real estate structure” can put solar on multi-tenant buildings.

    Herman K. Trabish, July 5, 2012 (Greentech Media)

    Third-party financing of solar projects is growing. Fast.

    California, which represents 40 percent of U.S. solar, went from 42,933 total kilowatts installed in the first five months of 2011 to 77,473 in the same period of 2012. But kilowatts installed with cash went down from 23,360 to 21,223, while kilowatts installed using third-party financing nearly tripled from 19,572 to 56,250.

    Yet 90 percent to 95 percent of commercial building rooftops remain essentially beyond the reach of third-party financing, according to real estate research firm data cited by Energy Producing Retail Realty, Inc. (EPR Squared, EPR^2) Founder/CEO Chris Pawlik.

    “When you have a commercial building with multiple tenants,” Pawlik said, third parties “can’t technically finance those unless the owner takes it on, [and] commercial owners won’t do that.” Third-party financiers, he explained, “can get an agreement signed or financing in place because they have the credit of the off-taker that takes care of the risk.” With a twenty-year commitment, third-party financiers have certainty that their loan will repaid.

    But, Pawlik said, “owners typically own properties five to seven years and tenants are typically in properties five to ten years. You can’t have a ten- to twenty-year agreement in situations like that.”

    Pawlik’s “real estate structure” resolves the impasse. “We develop a real estate interest on site and have that be separated from the land and the improvements, through a legal method that has precedent in real estate.” It is similar to agreements with property owners for cell tower and billboards, though, Pawlik stressed, the solar legal structure is not identical.

    DLA Piper, which Pawlik called “the gold-standard, top-tier law firm” for commercial real estate, “has finalized the form documents we need to take to the owners to show them how this structure would work.”

    EPR^2 has “a dozen or so deals in the pipeline with groups that have either portfolios of properties or single properties,” Pawlik said. The first deal, he explained, must be one that demonstrates to the 60,000 California real estate brokers, agents and mortgaging agents that “this is almost identical to a real estate transaction.” When they see commissions in it for themselves, he said, “we can really scale the idea and bring it to a size at which pension funds and insurance companies will start looking at it.”

    Institutional investors, Pawlik said “love the fact that EPR is a hard asset and an inflation hedge linked to electricity prices.” But the opportunity, he explained, must be very large before it attracts investment from them.

    EPR^2 can take it there, Pawlik said, because the legal structure “gives the owner an operating expense reduction or a cash flow increase” and because investors’ returns “are on par with what real estate, infrastructure and renewable project investors are currently receiving but we’re providing them with a better risk profile.”

    Pawlik is not a solar developer. EPR^2 will “work with the best-in-class EPCs [engineering, procurement and construction providers] and contractors that have much more experience” and will be only “the real estate and finance specialist in putting these transactions together.” From preliminary discussions, there are “most likely” EPCs he could not yet name, Pawlik said, but “we can do more deals with others.”

    The revenue stream that comes from tenants’ service payments, Pawlik said, “covers the returns demanded by our investors; it covers a spread for the owner of the property, and it covers the development costs and fees.

    According to Pawlik, solar’s obstacle has been, “How do we drive liquidity? How do we make people buy in?” The problem, he explained, is not returns or technology. “The real estate structure is not working.”

    EPR^2 is “addressing the obstacles for owners and tenants and making sure the investors are getting a similar type of asset as they would if they were investing in a commercial building.”

    Using “real estate structures that already exist, the revenue comes from either the owner or tenants paying for something they are already paying for, but at a discount. Those revenues are distributed to investors and the owner of the property.”

    EPR^2 earns “the development fee for putting the deal together,” Pawlik said, but “we are working with our investors to provide them with a preferred return. We potentially participate on the up side, [and] if it works out as good or better than we expected, everybody makes more money.”

    By properly sizing the system to its real estate setting, Pawlik said, the building needn’t stay atypically occupied or be in any way different from any commercial property. “We might be producing 10 percent to 50 percent of the load on the building. The building would have to go 50 percent to 90 percent vacant for us to have an issue.”

    Pawlik mentioned he had pitched his concept to SunEdison founder and solar industry graybeard Jigar Shah. It is, Shah observed to GTM, an “interesting concept,” but, he said, he has “no idea if it will work. The concept is modeled on another effort he had previously undertaken that worked and is still working now.

    “Our next step is to finish the development process with an owner to show how we intend to benefit the property and benefit them,” Pawlik said, “and then take it to other owners and take it across entire portfolios. We are at the edge making the leap.”

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