Feeds:
Posts
Comments

Posts Tagged ‘Green Energy Act’

By Ingo Koenig

I recently attended a conference on financing renewable energy projects http://www.marsdd.com/greenenergyforum. I was asked to share some of our European experiences in starting wind farms with the audience.

In Europe, and more particularly in Germany and Denmark, the renewable energies industry is the result of a “grass- roots movement”.

Over the last two decades, ten thousands of people have directly invested in wind farms very often in their own municipality (community wind farms), installed solar panels on their rooftops, wood pellet furnaces in their basements, or geothermal heat pumps in their backyards.

Why did they do it? Germans are very environmentally and health conscious, therefore they so strongly object to coal or nuclear power plants. Also the German government put a Renewable Energy Act into force (very similar to the Green Energy Act in Ontario) that granted a reliable framework for the significant investments necessary for adopting renewable energy. Moreover, state sponsored debt financing has been available. First year losses are tax-deductible and suitable legal entities could be formed easily to run a wind or solar farm.

What is the economic bottom line after 20 years?

  1. A vibrant industry that employs more than 100,000 people in high paying jobs
  2. A world-leader in technology in most renewable energies
  3. More than 10% of all power consumption in Germany is provided by renewable energies.

Could Ontarians do the same thing? Yes, Ontario is the first province or state in North America that has a comprehensive feed-in-tariff system that will reward investments in renewable energy. And we have a lot of great manufacturing capabilities here.

Now Ontarians need to become renewable energy entrepreneurs.

Ingo studied business administration and economics at Kiel University where he received a PhD in economic policy and also earned an MBA from the University of Southern California in Los Angeles, USA. Visit www.koenigconsultants.ca

Blog February 2010

We recently attended a conference on financing renewable energy projects http://www.marsdd.com/greenenergyforum. We had been asked to share some of our European experiences in starting wind farms with the audience.

In Europe and more particularly in Germany and Denmark the renewable energies industry is the result of a “grass roots movement”. Over the last two decades ten thousands of people have directly invested in wind farms very often in their own municipality (community wind farms), installed solar panels on their rooftops, wood pellet furnaces in their basements, or geothermal heat pumps in their backyards.

Why did they do it? Germans are very environmentally and health conscious, therefore they so strongly object to coal or nuclear power plants. Also the German government put a Renewable Energy Act into force (very similar to the Green Energy Act in Ontario) that granted a reliable framework for the significant investments necessary for adopting renewable energy. Moreover state sponsored debt financing has been available. First year losses are tax-deductible and suitable legal entities could be formed easily to run a wind or solar farm.

What is the economic bottom line after 20 years? 1. A vibrant industry that employs more than 100,000 people in high paying jobs; 2. A world-leader in technology in most renewable energies. 3. More than 10% of all power consumption in Germany is provided by renewable energies.

Could Ontarians do the same thing? Yes, Ontario is the first province or state in North America that has a comprehensive Feed-in-tariff system that will reward investments in renewable energy. And we have a lot of great manufacturing capabilities here. Now Ontarians need to become renewable energy entrepreneurs.

<

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to FurlAdd to Newsvine

Read Full Post »

Henry VehovecBy Henry Vehovec

Mindfirst Senior Associate Rob Sinclair co-wrote this article, which should be of particular interest to entrepreneurs looking to develop and finance solar projects.

As soon as the Feed in Tariff (FIT) program rules were finalized on September 24th, developers of large scale solar projects (larger than 500 KW) jump started their activities in preparation for submitting project applications during the FIT initialization period ending November 30th.

solarWhile some projects appear to be quite far along the development curve with signed product and service supply agreements and financing, many developers are struggling to pull together the financial and technical resources required to submit strong applications. This will certainly limit the number of projects that receive FIT contracts and even those that do may experience significant difficulty in financing and building their projects.

Our involvement in financing clients representing more than 30MW of solar capacity provides unique insights. Early indicators suggest:

  • There are deep pools of equity funding available, from domestic, US, European and Asian sources.
  • Investors take many forms from private individuals, retail investment funds, sovereign wealth funds, and industry players with balance sheet capacity.
  • Debt financing seems to be harder to come by and appears to be focused on medium term paper (3-7 years) at rates ranging from 6%-8%.  This could have long-term negative impacts on equity investors if rates rise as expected.
  • For most projects, debt pricing above 8% would leave very little return for equity investors and at rates above 10% most projects would not be financeable.

The risk averse nature of Canada’s big five banks make them unlikely early leaders. Our expectations are that they will wait out the initialization period and enter the market well into 2010, when the rules governing the program are made clearer and the players in the industry shakeout a bit. In the near term we believe large European debt houses with experience in renewables globally, will be first on the scene as they have existing expertise with structuring deals and identifying the most critical factors for success.

Therefore, it is likely that (like the RESOP program) some early contract winners will flounder due to a lack of financing opening the door for stronger players to consolidate good projects and allow weaker players and projects to fade away. Further compounding the difficulty in financing projects, is uncertainty around the new REA process and the supply of project critical components that meet local content requirements.

If these issues manifest we believe that a significant portion of the contracted system capacity that will be awarded during initialization will become available over the following 18-24 months as proponents fail to meet COD commitments.  This will allow that capacity to be re-allocated to new applicants and provide availability until the next wave of transmission and distribution system upgrades come online in 2013-2015.

Henry is President, Coach and Chief Strategy Officer of  Mindfirst Inc. Visit Henry at Mindfirst.

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to FurlAdd to Newsvine

Read Full Post »