When the CEO of one of the largest utilities in the U.S. says that the future of electricity is distributed, you listen up.
During this morning’s keynote address at the Renewable Energy Finance Forum (REFF) in New York City, American Electric Power President and CEO Michael Morris proclaimed that “by 2035, this industry will be fundamentally different. I think you’ll be dealing with a much more distributed infrastructure, interfacing with the customer in a new and interesting way.”
This is coming from a utility with a portfolio of 38,000 MW of capacity – 70% of which is from coal fired generation facilities. Five or ten years ago, a comment like that was unheard of. Today, it seems to be the norm as executives from the largest multi-national corporations and power companies proclaim that the era of renewables is upon us.
“I don’t know of a single utility executive who doesn’t think that renewables aren’t important,” said Morris. “This is an industry that is ready to move forward.” ::continue::
Sure, words are words and action is action. But even if the lack of movement on a comprehensive national renewable energy bill has disappointed many people in the industry, the recognition of the importance of the industry by people like Michael Webber says a lot about where things are going.
Now we just have to get going. Which is why more than 700 renewable energy professionals are in New York this week, engaging in a discussion with the financial community on how to get more projects in the ground.
The tables have turned over the last year or so. Back in the dark days of late 2008 and early 2009, there was a dearth of capital for project developers. The tax equity market had imploded, banks were hardly lending and the public markets had dropped through the floor. That’s changed around.
Today, financial institutions are much more willing and able to deploy capital. The problem is that developers are having a harder time actually making use of that debt or equity. The drop in demand for renewables due to lower natural gas prices and reduced power consumption is causing problems for merchant power providers selling electricity on the spot market or developers trying to sign a power purchase agreement.
There’s a lot of talk here at REFF-Wall Street about how the public policy debate will influence the next couple of years. Will the grant program be extended? Will the production tax credit be renewed? Will there be a price on carbon? All of those factors will determine how much the industry grows when the economy picks back up.
Of course, nobody knows how it will pan out. As is always the case in renewables, uncertainty is the name of the game.
At least we can be happy knowing that people like Michael Morris of AEP are confident that renewables will play a major role in their investment decisions going forward. The outlook for the next year or two is still not certain, but the long-term picture is becoming increasingly clear.
“It really is a changing world. We are adjusting, we are growing, we are changing,” said Morris.