On May 30, A Word About Wind held its first annual Financing Wind New York conference.  Tickets to the conference sold out and the attendees were generally wind pros with considerable experience.  The panelists provided many useful insights regarding the wind industry.

Below are soundbites from the conference.  They are organized by topic, rather than chronologically, and were prepared without the benefit of a transcript or a recording.

Offshore Wind

“Right now, globally there is 18 GW of offshore wind.”  — North American Leader, European Based Offshore Wind Developer

“Expecting 20 to 30 GW of offshore wind by 2030.  So that means a couple of gigawatts a year of offshore wind.”   — North American Leader, European Based Offshore Wind Developer

“Offshore wind can be very close to the load centers, 20 to 30 miles away from where people are actually using the electricity.  That makes offshore wind easier than onshore wind, which is now facing transmission challenges to get their power to where people actually use it.” — North American Leader, European Based Offshore Wind Developer

“The European model has been to have the local utility build out to the offshore wind.  In the US, the trend appears to be wind generators are responsible for getting their wind to shore.  I expect wind developers will end up paying for the grid connection.  There is a discrete set of permitting and risks building that connection 30 miles out in the water to the project.” – President, Transmission Developer

“Energy is politically driven, so having manufacturing facilities set up here in the US is very important.”   — North American Leader, European Based Offshore Wind Developer

“Energy policy is very much driven by the states.  However, the federal government under Trump has been supportive of offshore wind.  The Trump administration has taken on board streamlining the offshore wind permitting process and has been supportive of new offshore wind leases.”  — North American Leader, European Based Offshore Wind Developer

“If you don’t have the states coming out with targets and running RFPs for offshore wind, you don’t have projects.  State policy is more important than federal policy, but we are spending a lot of time in Washington working on federal policy.”  — North American Leader, European Based Offshore Wind Developer

“Connecticut, New Bedford, Massachusetts, and New York, New Jersey and Virginia are all looking into investing in ports” to accommodate offshore wind construction.  “The investments are necessary to handle these big offshore wind components.”  — North American Leader, European Based Offshore Wind Developer

“There is $600 to $700 million needed for port infrastructure to accommodate offshore wind” in the US. — Audience Member

“We have seen offshore wind cost come down [by two thirds] in Europe.  In the US, we are seeing costs coming down too.  Costs coming down is driven by volume.”  — North American Leader, European Based Offshore Wind Developer

“You see a lot of big players come into the US offshore wind market.  That should give you some confidence in this market.”  — North American Leader, European Based Offshore Wind Developer

“We keep pushing the limits for the technology and for it to be smarter.  We try to standardize.  We try not to do bespoke solutions for each project.”   — North American Leader, European Based Offshore Wind Developer

“The North American market can piggyback quite a lot on Europe, not quite the same conditions as the North Sea, but the Northeast is good enough.”  — North American Leader, European Based Offshore Wind Developer

“We just bid on our first non-subsided offshore wind project in Europe.  It can be difficult to compare what is ‘subsidy free’ and what is ‘not subsidy free’.”  — North American Leader, European Based Offshore Wind Developer

“We think it will be fantastic to have three or four major turbine manufacturers for offshore wind.”  — North American Leader, European Based Offshore Wind Developer

“Most people prefer long term power purchase agreements (PPAs), and so do we.”    — North American Leader, European Based Offshore Wind Developer

Economics of US Onshore Wind

There is no reason that utilities will not continue to buy wind power at $25 an hour.  Maybe we start thinking about wind as partial base load when combined with storage and possibly solar, rather than competing on price alone.  – CEO, North American Development Arm of a European Utility

“The US still represents the best risk adjusted area for wind, relative to political risk, etc.”  President, Insurance Company

“There are few investors interested in just investing in projects from the notice to proceed (NTP) to the commercial operation date (COD) in ‘build-transfer’ type transactions” in which the utility buys at COD and rate bases the project. – CEO, North American Development Arm of a European Utility

Wind and Public Policy in the US

 “California did not want wind and wanted local solar, now California wants wind.  You are going to see that continue to flip and flop.” – President, Transmission Developer

 “The biggest risks are around the interconnection process.  The interconnection process can be completely out of synch with the permitting process and the process of securing offtake.  The system is kind of broken, but there is a small number of players willing to roll the dice on early stage development.  There is very little capital taking development risk.  Everyone wants projects NTP or COD, so there is a small number of players dealing with interconnection risk.” – CEO, North American Development Arm of a European Utility

 “There is actually a scarcity problem regarding projects with interconnection agreements.”  – CEO, North American Development Arm of a European Utility

“A recent change in the market over the last couple of years is utilities wanting to own wind projects and rate base them.”    – CEO, North American Development Arm of a European Utility

“What is really needed from utilities is to build more transmission and move the electricity from the generator to the customer.  There are so many people willing to take low priced PPAs, why do we need to rate base wind?”  CEO, Renewables Developer

Transmission

 “Siting interstate transmission is really difficult.”  President, Transmission Developer

“The model of pure transmission is proving every bit as difficult as we might have imagined and then some.”  President, Transmission Developer

“FERC now allows developers to build wind together with transmission.”  President, Transmission Developer

“The technology improvements we see for medium speed wind are going to be necessary given transmission challenges.” President, Transmission Developer

Corporate PPAs

“One hundred thirty companies have signed 100% renewable energy pact.”  Renewable Energy Manager, Automaker

“The overall quality and financiability of the corporate PPA deals is not as strong as utility PPA deals.” – Head of Originations,  North American Development Arm of a European Utility

“Ultimately it comes down to how sophisticated is a corporate offtaker?  Does the potential offtaker understand the risks?  I am concerned if a potential corporate offtaker thinks that the PPA is risk free to it.”  – VP Originations, Renewables Developer Americas

“A corporate approval process can take time, but it is generally quicker than a utility’s approval process if public utility commission (PUC) approval is required as some utility PPAs must be; also, it is not a public process, unlike a PUC approval.” – VP Originations, Renewables Developer Americas

“Three drivers [for corporate PPAs] – environmental, fixed price power (hedge) and economics.  Often, if economics is the lead driver, a virtual PPA may make the most sense so we can pick the most attractive project in the company.” – VP Strategic Renewables, Energy Management Company

“If [a company is] under International Financial Reporting Standards (IFRS), a virtual PPA is subject to mark-to-market accounting.  So an offtaker subject to IFRS prefer a direct purchase PPA.” VP Strategic Renewables, Energy Management Company

Storage

“I don’t how many years it is going to take for there to be enough storage.” – CEO, Renewables Developer

 “We are 0 for 2 in trying to pair storage with wind.  It makes more sense to us to pair storage with solar.  That has to do with the investment tax credit rules and demand charges.” Head of Originations,  North American Development Arm of a European Utility

“We did a 1 MW compressed air storage facility.  Our takeaway from that was let’s not do that again.  We have a winning technology for storage, and it is batteries.” – VP Originations, Renewables Developer Americas

Related Capabilities

Practices –