Insights

Thought leadership, news, and commentary from the front lines of the clean energy revolution.

We deliver real-world energy solutions today to build a sustainable tomorrow. - See more at: http://www.blueoakenergy.com/blog/#sthash.XOerM0Fn.dpuf
We deliver real-world energy solutions today to build a sustainable tomorrow. - See more at: http://www.blueoakenergy.com/blog/#sthash.XOerM0Fn.dpuf
We deliver real-world energy solutions today to build a sustainable tomorrow. - See more at: http://www.blueoakenergy.com/blog/#sthash.XOerM0Fn.dpuf

Three Takeaways from the S&P Global Market Intelligence Conference

March 20, 2017

Solar Flares: Dispatches from the Road to Renewables

By Sean Gately

Last month Coronal Energy, powered by Panasonic, was represented at the 30th annual Power and Gas M&A Symposium hosted by S&P Global Market Intelligence in lower Manhattan. The conference, billed as the pre-eminent executive industry event bringing utilities and Wall Street together, lived up to the hype. Presentations and roundtable discussions were led by a high-level roster, including from the energy sector Westar, Exelon, Southcross Holdings, Southern Company, Quantum Utility Generation, and Duke Energy (the keynote speaker was former Duke CEO, Jim Rogers) and representing Wall Street were energy experts from Lazard, Marathon Capital, Morgan Stanley, JP Morgan Chase, Citi, and Barclays.

A Solar Developer’s POV

Though the event spanned many topics, three themes emerged from the perspective of a utility-scale solar developer.

1. Load will remain flat or decline for the foreseeable future.

There was a consensus throughout the conference that energy sales “growth” is flat or even declining. Reasons cited for this trend included declining energy intensity of the U.S. economy (energy input per dollar of GDP output), slowing population growth, a decline in domestic industrial manufacturing, and the rise of distributed generation (e.g., rooftop solar) and large corporate PPAs that are displacing traditional utility kWh sales. As a solar developer, it begs the question, “Where will new generation opportunities come from?”

Chart: US EIA Electricity End Use

2. Coal and nuclear fleet retirements, plus accelerating demand for renewables, will drive new generation.

The replacement of the nuclear and coal fleets, in combination with upward trends in corporate and city greenhouse gas reduction and renewable energy targets, will be the impetus for new generation assets, with a decided shift in the generation mix of the U.S. bulk power fleet. One presentation projected that 92% of the replacement assets will be derived from a mix of gas, wind, and solar, with renewables making up the majority of that package! In other words, nukes and coal are losing on the basis of economics. Solar and wind are winning also on the basis of economics, as cost-competitive and even least-cost generation sources. As v10 of Lazard’s Levelized Cost of Energy Analysisreleased in December 2016—noted, unsubsidized renewable energy is becoming increasingly cost-competitive vs. conventional generation under a growing number of scenarios. This includes utility-scale solar PV emerging as the most economically viable peaking resource (even relative to a combined-cycle gas turbine) across many U.S. metro regions, including Los Angeles, Chicago, Philadelphia, and Boston.

3. “Renewables are here to stay.”

Solar is the foundation of tomorrow’s energy system, employs more people than coal, oil, and gas combined (solar jobs grew 25% in the U.S. in 2016), and annual capacity additions for solar rose 95% last year (installing 14.6 GW in 2016 and accounting for the #1 source of new electric generating capacity). Multiple speakers cited customer demand and cost reduction as determining factors. Lazard places the unsubsidized cost of thin-film utility-scale solar PV between $46/MWh and $56/MWh. Additionally, corporate demand has created a “second set of clients” that is critical to the renewable industry’s continued growth.

Although the conference was not targeted towards renewables, the sector was given considerable attention. Growth in our sector will most likely come from replacing the retirement of assets with older technology and demand from corporate buyers.  Comprehensive tax reform provides a bit of instability, but throughout history this sector has excelled in uncertain markets. 

Follow us on LinkedIn and Twitter.

Sean Gately is Manager of Origination, Eastern Region, for Coronal Energy, powered by Panasonic.

Back to blog