Tuesday, July 26, 2011

New Career (and New Paper) - Carbon Fighter

Hello to my small community of readers,

It's been ages since I wrote about global carbon issues, but I'm using this forum to announce I will be starting a new job soon. No longer an academic (cough), I will be working for BrightSource Energy (BSE) in Oakland, CA. BSE is a concentrating solar thermal power (CSP) technology and development company. Founded by a core group of Israeli technologists who pioneered parabolic trough CSP in California in the 1980's, BrightSource utilizes heliostat power-tower CSP technology to produce more reliable, peak renewable energy. The company has the largest pipeline of utility renewable energy contracts with 2.6 GW between California utilities PG&E and SCE. I will be working in the Originations team focusing on new and existing PPAs and utility relationships.

I also wanted to post the research paper that fellow Haas '11 classmate, Jake Carney, and I published called Credit Risk Implications and Default Mitigation Strategies For Commercial Solar Financing. Here is the paper's problem statement:

"In order to expand the financeable, addressable market for commercial and industrial solar PV systems, innovative approaches must be developed and proven to financiers to facilitate capital flows. In the current financing environment, the common practice is to account for a solar system, which has experienced a host default, for purposes of financial modeling, as having lost 100% of its future economic value. This results in a credit requirement cliff in decision making by financiers. Financiers acknowledge that loss mitigation may very well occur in the event of default, but due to uncertain outcomes, lack of precedents or lack of competitive pressures, the expected value of mitigation efforts is not given any credence – to the benefit of financiers and the detriment of developers and host customers

Leaders in the commercial solar developer community must present compelling cases to financiers regarding legitimate strategies to mitigate lost revenues. Some of these strategies may exist today in the form of regulatory programs, alternative financing structures and comparable scenarios from the real estate industry, while other strategies may need to be explored such as contract structuring, credit support, market-based solutions and policy advocacy."

Sunday, January 30, 2011

Climate Change Groundhog Day Around the Corner

At last column, international representatives were converging on Cancun for the annual “big” conference on climate and carbon. The party line coming out of the conference was that “negotiations were back on track,” hopefully ushering in an era of good feeling, with supposedly more concrete plans and agreements for capping global temperature increase to occur next December in Durban, South Africa. The key outcomes from Cancun were $30B, on the way to $100B, of explicit climate financial aid, including a roadmap for fund oversight, deforestation reduction agreements and a framework for technology exchange and cooperation.

The World Economic Forum in Davos has also focused a great deal on climate and the growing role of developing economics in all things, including carbon solutions. There was plenty of finger pointing at the United States for its lack of action or leadership while China is being a hailed as the technological and economic winner in the climate “arms” race.

The Obama administration is doing its best to stay on the offensive with regard to energy policy, while not mentioning carbon or global warming, given the new Republican congress’s agenda and tendencies. In Obama’s state of the union, he called for a “Clean Electricity Standard” (CES) whereby 80% of the US’s electricity would come from clean sources. The message is a subtle shift and nod of compromise with conservatives as a CES would include nuclear and clean-coal generators. No significant goals to reduce US consumption of fossil fuels for transportation were mentioned by the President.

Obama’s new tactics are coincident with Republican calls and proposals to disrobe the EPA of its mandates, responsibilities and ability to regulate carbon emissions.

Other Articles of Interest:

· IEA Economist says chance of avoiding temperature rise is fading.

· A successful renewable energy credit market (REC) in India may supplant UN CDM market. India was the largest supplier of UN CDM credits in 2009. Participants laud shorter approval processes and looser project requirements. India program includes credits for energy efficiency programs.

· Africa hopes to benefit from UN CDM ban on industrial gas offset projects.