Wind energy execs discuss market dynamics

Trade tensions and tariffs are just part of the changing landscape for the wind energy industry. State and local policy trends, along with ever improving technologies, mean the winds of change are pretty constant. Amid that backdrop, the American Wind Energy Association welcomed industry executives to San Francisco last week to discuss the state of wind energy finance and investment.

Tristan Grimbert, president and CEO of EDF Renewables, highlighted concerns he has about the impact trade wars will have on the industry; in particular the low costs the US currently enjoys. Grimbert added that any increase in costs brought on by trade policies would be important because Brazil and the Middle East already compete or beat the US from a cost perspective.

Mike Garland, CEO of Pattern Energy Group, commented on how competitive the current bidding landscape has become for power-purchase agreements (PPAs). Garland estimates his firm wins about 20% of the bids they submit and was quick to make it clear that he is OK with that success rate.   

“We don’t want to win too many PPA bids because there are a lot of people being very aggressive with their pricing,” Garland explained. “We don’t want to be involved in a race to the bottom.

Chris Brown, president of Vestas – American Wind Technology, cautioned those seeking to install new assets on tight timelines to remember the intricacies of the turbine manufacturing pipeline.

“Everyone wants their turbines in August, but manufacturing doesn’t work that way,” Brown explained.

In terms of available capital, Joseph Osha, Managing Director and Equity Research Analyst at JMP Group, explained that the industry stands poised to benefit from the approximately $20 trillion that is being invested globally through some kind of environmental, social and governance (ESG) program.

The rise of corporate PPAs has had a profound impact on the industry. And while corporations continue to make headlines with deal announcments, California Public Utilities Commission President Michael Picker advised the industry to tweak the way it markets PPAs to expand its focus on the goods movement industry. For example, Picker noted that ports would make an ideal target to those looking to ink new PPAs. 

During one of the afternoon sessions, panelists were asked to make a prediction about where the marketplace would be in one year.

Vestas’ Brown predicted, “Costs are going up, so prices will go up. There will be more chaos than we are seeing now.”

Michael Rucker, president of Scout Clean Energy, said “Developers are going to be feeling the pinch of higher costs just as people keep bidding prices down.”

Clearway Energy Group CEO Craig Cornelius said the consolidation among OEMs has put them in a place where they can be picky and prioritize who they do deals with, so there might be desperation amongst the people who needed to meet certain aspects of their PTC by 2020.

Overall, trends in the wind finance and investment space remain healthy. Will Conkling, Senior Lead, Energy and Global Infrastructure for Google, said renewable energy sourcing is top-of-mind whenever his firm plans a new data center. Conkling says it is a buyer's market at the moment when it comes to pricing, but he added that price isn't the only thing that affects Google's energy purchasing decisions. “We don’t always buy the cheapest power, we buy power at the best value.”