NewEnergyNews: On The Road Reading: Clean Power Finance Brings Solar REC Trading In-House; Will CPF Capital & Trading take the risk out of the revenue stream?

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 COST OF ADDING SOLAR TO A UTILITY’S OPERATIONS
  • QUICK NEWS, 7-21: U.S. WIND, SOLAR TO GROW THROUGH 2020; NEW GEOTHERMAL RISING; CHINESE HAVE RIGHTS IN OREGON WIND BUY
  • THE DAY BEFORE

  • Weekend Video: Colbert Gets Into Coal Rolling
  • Weekend Video: How Solar Power Plants Store And Use Solar Energy
  • Weekend Video: A Story About People And Wind Energy
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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

  • FRIDAY WORLD HEADLINE-THE CLIMATE CHANGED WORLD IS NOW 5 TIMES MORE DANGEROUS
  • FRIDAY WORLD HEADLINE-THE MONEY IN SOLAR, Q2 2014
  • FRIDAY WORLD HEADLINE-EU STILL GROWING OCEAN WIND
  • FRIDAY WORLD HEADLINE-$109MIL FROM GERMAN BANK BACKS KENYA GEOTHERMAL
  • THE DAY BEFORE THAT

    THINGS-TO-THINK-ABOUT THURSDAY, July 17:

  • TTTA Thursday-THE PREMATURE EVACUATION FROM CLIMATE CHANGE EXCITEMENT
  • TTTA Thursday-NEW ENERGY TO SUSTAIN BIG GROWTH – EIA
  • TTTA Thursday-SOLAR’S COST TO UTILITIES
  • TTTA Thursday-HOW UTILITIES CAN EVOLVE IN A NEW ENERGY WORLD
  • AND THE DAY BEFORE THAT

  • THE STUDY: HOW TO PROTECT A CAP AND TRADE PROGRAM
  • QUICK NEWS, July 16: 88% OF NEW U.S. POWER IN MAY WAS NEW ENERGY; THE FIGHT FOR WIND IN OHIO; U.S. CRITICAL SYSTEMS REGULARLY BREACHED
  • THE LAST DAY UP HERE

  • THE STUDY: THE COSTS AND BENEFITS OF NET ENERGY METERING FOR DISTRIBUTED RENEWABLES
  • QUICK NEWS, July 15: THE SMART GRID IS COMING; LA UTILITY WANTS A SOLAR FEED-IN TARIFF, NOT NET METERING; FORESEEING A SELF-DRIVING VEHICLE MARKET
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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, January 14, 2013

    On The Road Reading: Clean Power Finance Brings Solar REC Trading In-House; Will CPF Capital & Trading take the risk out of the revenue stream?

    Clean Power Finance Brings Solar REC Trading In-House; Will CPF Capital & Trading take the risk out of the revenue stream?

    Herman K. Trabish, July 31, 2012 (Greentech Media)

    In pursuit of a more secure revenue stream for its investors, Clean Power Finance (CPF) is expanding into the tricky renewable energy credit (REC) commodity market.

    CPF’s software platform, which came on-line in 2007 backed by venture capital, is presently used to quote some 40 percent of all U.S. residential solar deals. Installers use CPF’s web tools to design, propose and sell solar systems. CPF is also leveraging its software experience to improve the processes of finding and winning of customers. With institutional investors’ backing, CPF uses its installer-partners to channel third-party dollars into distributed solar installation by the hundreds of millions.

    With these services, CPF is lowering the risk in solar and bringing money into the sector at the rate of over a million dollars a day.

    Third-party finance, the fastest-growing solar financing mechanism in the U.S., works because institutional investors see solar as a sound, low-risk place to put their money while, through lease and power purchase agreements (PPAs), installers can offer businesses and homeowners solar systems with little or no upfront costs.

    The financing mechanism works well for all involved. Institutional investors get the 30 percent federal investment tax credit and the federal accelerated depreciation as tax shelters. They also get the lease or PPA payments as a revenue stream. CPF earns a fixed fee from each deal. Installers get the work because businesses and homes get solar electricity at below utility bill rates.

    Now CPF hopes to make the revenue stream that comes from the trading of solar renewable energy credits (SRECs) more appealing to investors by adding CPF Capital & Trading to administer the program.

    “We are striving to build a marketplace and platform that can be leveraged by providers of capital looking to invest in solar systems and seekers of capital who are looking for financial products to sell to home and business owners to grow their businesses,” explained CPF Senior Vice President of renewable capital markets Kristian Hanelt.

    SREC markets, he said, “are unique in their own ways and can be quite intimidating for investors looking to deploy capital into solar but who aren’t tasked with spending time learning granular ins and outs of marketplaces.”

    In 29 states and the District of Columbia (D.C.), there are mandates requiring electricity providers, generically called Load Serving Entities (LSEs), to obtain a portion of their power from renewable sources. In many of those states, LSEs are allowed to use purchased credits, called Renewable Energy Credits (RECs), to comply with part of their renewables obligation.

    Sixteen states and D.C. have a carve-out specifying a portion of the renewables obligation to be solar (or distributed generation). Six states (Delaware, Maryland, Massachusetts, New Jersey, Ohio and Pennsylvania) and D.C. provide for the sale of SRECs to meet a portion of the carve-out. North Carolina is in the process of implementing SREC sales.

    If a state (1) has a solar carve out, (2) allows trading of SRECs by generators of solar electricity, and (3) penalizes LSEs who do not comply with the renewables and solar requirements, an SREC market can be an effective way to drive the growth of solar there.

    Sales of SRECs were until now “non-contracted and subject to commodity risk,” explained CPF Director of Environmental Markets Paul Joyce, who will head up CPF Capital & Trading. Joyce was with the Chicago Board of Trade for ten years, then at the San Francisco Department of Environment and, most recently, led REC trading at the 3Degrees Group.

    Demand for SRECs, and, consequently, the price of SRECs, fluctuates with market demand.

    When LSEs are building or buying their own renewables projects, for instance, demand may fall off. If obstacles prevent bringing those projects to fruition, the LSEs many need the SRECs and demand may rise.

    Current prices, according to SRECTrade.com, range from $15 per megawatt-hour (atypically low, for Ohio’s out-of-state buyers) to $545 per megawatt-hour (atypically high, for Massachusetts’ emerging and carefully controlled market). More typical prices range from around $150 per megawatt-hour (New Jersey, July) to $295 per megawatt-hour (D.C., July). Now, through CPF Capital & Trading, the SREC revenue stream will be part of the contract between investors and CPF, guaranteeing the investor a return and transferring the volatility of commodity trading to CPF.

    “Investors don’t want to become experts in local markets or carry commodity exposure to something they don’t understand,” Hanelt explained. As an expert in the field of commodities and RECs trading, Joyce’s role, Hanelt said, will be “to de-risk commodity exposure” for CPF investors.

    Given the sheer volume of SRECs being added through U.S. solar growth, Hanelt said, “We see this as a multi-million-dollar-per-year opportunity.”

    The revenue from the sales of SRECs was already available to CPF investors, Hanelt explained, but they did not always take advantage of it because of the associated risk and uncertainty. Now, he said, the company will create an SREC market for them. “Investors still get the SREC value, but now without the volatility.”

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