QUICK NEWS, June 11: THE MLP, A NEW WAY TO FINANCE RENEWABLES; NUMBERS SAY UTILITIES WANT WIND; CALIFORNIA SOLAR MATCHES POWER LOST BY NUKE SHUTDOWN

THE MLP, A NEW WAY TO FINANCE RENEWABLES MLP Parity Act: Disrupting Distributed Energy

William Pentland, June 10, 2013 (Forbes)

“…Senator Chris Coons (D-DE) and Congressman Ted Poe (R-TX) introduced the Master Limited Partnership Parity Act, which would allow renewable energy power generators to take advantage of the tax benefits of master limited partnerships…MLP boosters believe that passage of the legislation would likely be a game-changer for the renewable energy industry, attracting additional capital to the sector and enhancing the sector’s access to equity, which is typically reserved for corporations…MLP skeptics say that the proposed legislation would have at most a modest impact on investments in renewable energy…[and] renewable energy is poorly suited for the MLP structure compared to fossil fuels…

“…[Investing Daily’s Robert Rapier] makes a compelling point. MLPs have typically been used to finance proven technologies with predictable cash flows and limited exposure to commodity risk. These specific attributes are commonly cited as the reason why MLPs have been so successful in the midstream energy sector, which are de facto “toll collectors” charging other energy companies fees for transporting and storing oil and gas. Energy technologies that have not yet been deployed at scale may not be well suited to take advantage of the MLP structure.”

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“…[B]oth the boosters and the skeptics miss the mark…The proposed legislation would significantly alter the structure of the fledgling distributed energy industry….[As] a limited liability company (LLC) treated as a partnership for taxation purposes and traded on a public exchange…MLPs pass 100% of their taxable income through to their investors who pay income taxes…By avoiding double taxation, MLPs have access to lower cost of capital, which allows them to build and operate low-return assets to provide a sufficient rate of return to attract investors.

“Currently, there are more than 100 MLPs trading on major exchanges with a total market capital of about $400 billion. The majority of these MLPs are in midstream…A smaller but still significant share…are focused on upstream…In recent years, MLPs have moved into “downstream” activities…Downstream is ultimately where the most disruptive change may take place if Congress passes the MLP Parity Act by allowing variable-distribution MLPs with access to lower-cost capital to roll up local energy integrators and solutions providers…[It] may accelerate the emergence of unregulated entities of scale capable of competing with regulated utilities…”

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NUMBERS SAY UTILITIES WANT WIND The Numbers Don't Lie: U.S. Utilities Continue To Embrace Wind Energy

Jeff Anthony, 6 June 2013 (North American Windpower)

“Evidence that utilities are increasingly turning to wind energy is well documented, and recent announcements show this trend accelerating…Utilities are increasingly recognizing the hedge value against fossil fuel price volatility and the zero fuel risk premium that wind energy brings to a generation portfolio.

“By the end of 2012, the top five electric utilities with wind power capacity on their systems were Xcel Energy, MidAmerican Energy (including PacifiCorp), Southern California Edison, Pacific Gas & Electric and American Electric Power. Eight utilities currently purchase or own more than 1 GW of wind power each…[M]ore than 1,400 utilities purchase or own wind power directly or through wholesale electric power providers, including joint action agencies, generation and transmission cooperatives and other authorities. This means that over 43% of the 3,250 electricity providers in the U.S. have wind energy in their generation mix…”

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“…[A] number of recent announcements continued to underscore the trends of utilities doing even more with wind power…MidAmerican Energy announced plans to add up to 1,050 MW of wind generation…in Iowa by year-end 2015…Xcel Energy, also in May, announced that it would sign new power purchase agreements in Colorado for an additional 550 MW of new wind projects…[increasing] the amount of wind generation in its Colorado system by 25%...The Michigan Public Service Commission approved two power purchase agreements for wind projects in that state to supply wind energy to DTE Energy, the state’s largest utility…[allowing] DTE Energy to reduce a renewable energy surcharge for their residential customers from three dollars to 43 cents…

“…[T]wo trends emerged: utility growth in operations and maintenance of wind turbines and the impact of large, corporate purchasers of wind energy…Companies such as Google, Facebook and Apple have all made announcements recently…and utilities are increasingly receiving more inquiries and requests from their large corporate and industrial customers…Utilities agree that this trend will only increase, and AWEA will be working with them to devise common and practical business models and solutions…”

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CALIFORNIA SOLAR MATCHES POWER LOST BY NUKE SHUTDOWN Solar power breaks through 2,000 megawatt threshold

June 7, 2013 (California ISO)

“Solar power shines, setting a new all-time high output of 2,071 megawatts (MW) at 12:59 p.m. today, June 07, 2013. This [amount more than doubled since last September when solar peaked at 1,000 megawatts] of energy…[and] is enough to power more than 1.5 million homes across sunny California.”

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“California is the largest producer of solar power in the nation…[On the record-setting day, peak] demand was about 36,000 megawatts…[S]olar power supplied more than five percent of demand for electricity…[and the grid operator said the state is expected to continue comparable levels of solar production]…”

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