S&P’s Massimo Schiavo discusses prospects for hydrogen power in The Energy Industry Times

Clean hydrogen is expected to become increasingly prominent in the energy transition over the next decade. Indeed, according to the Hydrogen Council, the fuel could account for 15% of global primary energy supply by 2050.

Writing for The Energy Industry Times, Massimo Schiavo, Director at S&P Global Ratings, looks at how and when a truly hydrogen-based economy might take shape, and how key factors – including policy support, falling production and electrolyser costs and renewables capacity growth – will be necessary to bringing such ambitions within reach.

Read the full article here.

Absorbing the risks of corporate PPAs; S&P Global Ratings writes for PFI’s 2020 Yearbook

To ensure cost certainty and to meet environmental goals, corporate power purchase agreements (PPAs) have become increasingly common. In 2018, 121 corporates reportedly signed such agreements to buy 13 gigawatts (GW) of electricity directly from power generators (rather than from utilities) for a fixed period and at an agreed price.

Despite their advantages, the rise of corporate PPAs has heightened credit and operational risks for market participants. For the Project Finance International (PFI) 2020 Yearbook, S&P Global Ratings’ senior director, Trevor d’Olier Lees, and associate director, Luisina Berberian, assess why corporate PPAs may not offer credit support comparable to traditional PPAs. However, they conclude that strong corporate demand for these arrangements could provide the impetus to finding appropriate mitigants.

Berberian and d’Olier Lees write: “The renewables sector has often overcome teething problems – with market participants finding innovative ways to finance structures and to mitigate any resultant risks.”

You can access PFI’s 2020 Yearbook here. S&P Global Ratings’ contribution is available on page 40 or via this link.

In Power Energy Solutions Solar, S&P Global Ratings’ Rachel Goult considers that the GCC’s solar industry is heating up

With ample desert space and swathes of sunshine all year round, the countries of the Gulf Coorporation Council (GCC) are well placed to benefit from renewable technology advancements and lowering costs in the solar industry. Rachel Goult, Director at S&P Global Ratings, explores developments in the region in Power Energy Solutions Solar.

To read the full article, please click here.

S&P Global Ratings’ research on battery storage technology covered by specialist press

Thanks to rising investments in renewable sources and the declining technological costs, advanced battery energy storage (ABES) technology has the potential to upend America’s existing power model. Some industry experts believe the country’s storage market could increase ninefold from 2017 to 2022.

S&P Global Ratings recently published a commentary series outlining where and when the power market can expect movement – concluding that states such as California, New York, and Massachusetts may be among the early movers. Predicting when the industry can expect change, however, partly depends on the economic rationale for battery storage becoming more established.

Following Moorgate’s outreach, the reports were covered by: Bloomberg, Infrastructure Investor, Windpower Engineering and Development, Rigzone, Energy Storage Networks, and The Energy Mix.

 

Image credit: CC Search user: Steve Bittinger (License)

U.S.’ withdrawal from Paris Agreement is not the death knell for clean energy initiatives, says S&P Global Ratings at CEPEC event

At a recent CEPEC event, S&P Global Ratings, Sund Energy and Chatham House agreed that multilateral climate and environmental initiatives, as well as U.S. state-level clean energy drives, will likely continue regardless of the U.S.’ Paris Agreement withdrawal.

S&P Global Ratings’ Michael Wilkins, Head of Environmental & Climate Risk Research, stated: “The withdrawal from Paris, and by extension the repeal of the Clean Power Plan, represents America undercutting its own potential to lead the global development charge of new carbon reduction technologies. But it should not affect the movement globally.”

“Furthermore, if the U.S. government’s intention is to revive the ailing coal sector and boost employment, the withdrawal seems misguided – especially given that around five times more job opportunities are now created in renewables sectors than in coal.”

The panel concluded that the withdrawal does not spell the end for climate initiatives either at the international or U.S. state level. But as the U.S. steps back from multilateral initiatives – at least, temporarily – the panel speculated that China, along with Europe and the Vulnerable Twenty Group (V20) could be the new driving forces of climate reduction.

Kirsty Hamilton, Associate Fellow, Chatham House, discussed the implications outside of U.S. borders: “There is a view that Trump may be ‘blip’ on the longer-term trend to low carbon energy and renewables. However, the axis driving change on climate is already shifting toward China, together with Europe with ongoing international pressure from newer political groups of countries such as the Vulnerable Twenty Group (V20), who are all looking to ratchet climate reduction commitments. The isolation of the U.S. at the mid-year G20 summit on climate is a case in point.”

Wilkins added: “The East is already taking a leading position. China, for instance, is expected to invest an estimated $4 trillion in renewables before 2040. And S&P Global Ratings has found that almost a third of all green finance issuances are now originating in the Chinese market.”

The event was covered by Energy Voice.

 

Image Credit: CC user: gckwolfe(License)

 

S&P report warns that Argentina’s renewables plan requires a stronger regulatory framework to succeed

The Argentine energy sector faces a predicament. During peak seasons, the country’s inefficient electricity generators are unable to satisfy growing power demand – at best obliging the country to import electricity and at worst leaving some areas in the dark. In response, the Argentine government hopes to attract US$15 billion of investment (most likely from the capital markets) in an effort to modernise its grid – setting a 20% renewable energy mix target for 2025.

A report published by S&P Global Ratings, however, opines that the plans to boost the Argentine grid with more wind and solar energy sources may face difficulties. Investors may have already been dissuaded from renewables as a consequence of the country’s default history and low wholesale electricity prices. But eclipsing these concerns is the unpredictable regulatory framework that oversees the country’s renewables investments.

For Argentina to continually attract investors, a more investor-friendly regulatory framework could form part of the solution. This includes providing guarantees to investors that power purchase agreement terms are honoured – including timely invoice payments. Without rapid action, S&P Global Ratings believes investors’ risk-return calculations may begin to swing out of the country’s favour.

The report was covered by specialist press outlets, including Power Engineering International, Power Finance and Risk, Energy Live News, and RENews.

 

Photo credit CC search user: Global Panorama. (License).

S&P’s Michael Ferguson shows that U.S. hydropower remains a promising asset in a feature for AlphaQ

Although hydropower’s future in America’s energy strategy is unclear following the election of President Trump, Michael Ferguson, director, US Energy Infrastructure, S&P Global Ratings, believes that U.S. hydro assets will remain resilient.

In a guest commentary for AlphaQ’s February edition, Ferguson explains that, by leveraging hydropower facilities’ advantages – such as longevity, low variable cost structures and flexible generation capabilities – the U.S. can meet demand pattern changes more efficiently.

Ferguson states: “Project longevity provides one crucial advantage to energy ratepayers: insulation against a volatile commodity price – both in terms of power pricing and capacity costs. In this respect, we expect hydro financing to remain robust in the face of any exogenous political or market forces.”

The full article can be found here (page 28-29).

 

 

Image: CC credit to Ralph Arvesen (License)

S&P’s Michael Ferguson explains why U.S. hydropower is experiencing a renaissance in an article for FTSE Global Markets

Donald Trump’s election victory has prompted discussion concerning a future overhaul to America’s energy policy. In turn, this has heightened uncertainty for many U.S. infrastructure investors – notably in renewable energy projects, such as hydropower.

In an article for FTSE Global Markets, Michael Ferguson, director, US Energy Infrastructure, S&P Global Ratings, explains why these fears are largely unwarranted and that, in fact, American hydropower facilities are enjoying a financing renaissance. Indeed, he notes that asset financing transactions involving the country’s existing hydro plants have commanded bond prices more attractive than those of comparable fossil fuel facilities.

Ferguson writes: “While we are unlikely to witness the construction of new plants in the near future, this marked increase in financing for the incumbent 2,200 assets is likely to continue during the next decade.”

With industry trends suggesting that hydropower will be resilient to any market or political pressures, it appears hydro assets will continue to be refinanced – likely on favourable terms.

To read the full article, please click here.

 

 

CC Image courtesy of Raquel Baranow. No changes were made to original image. (License)

S&P rating on MidAmerican Energy Co.’s first green bonds is covered by specialist press

S&P Global Ratings has assigned its ‘A+’ issue rating and ‘1+’ recovery rating to MidAmerican Energy Co.’s (MEC) – a subsidiary of Warren’s Buffett’s Berkshire Hathaway – first “eligible green” bonds.

MEC’s first mortgage bond issues, worth $375 million (due 2027) and $475 million (due 2047) respectively, will replenish the utility’s general funds that were used to begin construction on two wind farm projects in Iowa – the 551-megawatt Wind X and 2,000 megawatt Wind XI. The rating reflects the likelihood of full recovery of principal given the bonds have collateral with ample coverage.

When Wind XI, the largest single economic development project ever in Iowa, is completed later this year, MEC will be generating enough electricity with renewable resources to satisfy approximately 85% of the state’s retail customer demand.

As a result of Moorgate’s media campaign, the rating gained coverage with the infrastructure and institutional investor press, including Environmental Finance, FTSE Global Markets, and Global Capital (subscription required).

 

 

Image credit (without changes): Blatant Views

S&P Global Ratings’ research into the risks associated with U.S. hydro assets in the age of Trump featured in the specialist press

Despite the U.S. president Donald Trump’s agnostic approach towards climate change, a recently-published S&P Global Ratings report has found the 2,200 U.S.-based hydropower facilities are experiencing a financing renaissance.

While questions have been raised due to the nation’s stagnating hydropower capacity and fears the resource will be side-lined under Trump’s administration, S&P believes a resurgence of hydro asset financing will continue due to the assets’ longevity and importance to the region’s decarbonisation strategy, which is unlikely to be revoked.

In addition, the FAQ report addresses the key questions associated with rating such finance, including how to determine both the asset life and resource risk of hydro facilities.

The report’s findings were covered by Infrastructure Investor, Hydroworld, The Voice of Renewables, and Penn Energy (subscription required).

Image credit: Creative Commons, user: cletch