Investing in the Renewable Power Market

THOMAS FOGARTY has spent his entire career managing energy industry project development and financing electric power projects. He has written an editorial in the Daily Bankruptcy Review and has been quoted on the many current challenges facing renewable power. ROBERT LAMB is a Professor at New York University's Stern School of Business and a management consultant. He was previously strategy advisor and debt advisor to the New York State Power Authority and, over the past twenty-five years, has developed and taught customized courses for investment banks and corporations, including Goldman Sachs, Deutsche Bank, Merrill Lynch, Morgan Stanley, Citibank, and American Express. Dr. Lamb has written numerous books and contributed chapters on the financing of public power projects and is a founding member of Standard & Poor's Academic Counsel of Advisors.

Acknowledgments xiii Introduction xv Chapter 1 An Overview of Renewable Power 1 Its All About Natural Gas 2 Control of CO2 Emissions is Not Currently Possible 3 Reality of Demand-Side Management 6 Summary 7 Chapter 2 Analyzing Power Project Economics 9 Regulated Utilities 9 Evaluating a Power Plant 12 Financing a Power Plant 15 Hedge Providers 17 Opportunities with Distressed Renewables 19 Summary 21 Chapter 3 The Challenges of Renewable Power Projects 23 Tax Issues 23 Special Exemptions 25 Summary 28 Chapter 4 Risk Assessment for Power Projects 31 Project Risk Assessment and Risk Mitigations 32 Precompletion Risks/Mitigants 32 Postcompletion Risks/Mitigants 39 Summary 39 Chapter 5 Exploiting Profitability of Distressed and Abandoned Municipal Power Plants 41 Waste-Fuel Projects Have Key Financial Advantages for Investors 42 Duties of Professionals in a Municipal Power Plant 42 The Professional Feasibility Study Engineer 44 Disclosures of Risks in the Bond Offering Materials 45 Calculation of Debt Service Coverage 50 Investment Opportunities at Troubled Municipal Power Plants 53 Summary 54 Chapter 6 Energy Storage 55 Cheap Energy StorageTheMost Vital Game Changer in the World 56 Opening theMarket for Historic Energy Storage Financing 58 Categories of Energy Storage Technologies 60 U.S. Regional Multi-Energy Storage Collaborations 63 Flywheel Technology Energy Storage Has the Lowest Cycle-Life-Cost 65 Summary 67 Chapter 7 Shale Natural Gas and Its Effect on Renewable Power 69 Fracking 69 New Attitudes in Natural Gas 70 Cost of Production 72 Summary 76 Chapter 8 Solar PV and Solar Thermal Power Plants 77 The Economics of Solar Power 77 Financing Techniques 78 The Technology 80 Summary 82 Chapter 9 Wind Power Plants 83 Projects Overview 83 Wind Project Economics 85 Wind Project Power Contracting 87 Wind Energy Prediction 90 Summary 92 Chapter 10 Electric Power Transmission 93 Overview 93 Grid Input, Losses, and Exit 98 High-Voltage Direct Current 99 Controlling the Components of the Transmission System 99 Electricity Market Reform: Costs and Merchant Transmission Arrangements 100 Additional Concerns 102 Summary 104 Chapter 11 Natural Gas Power Plants 107 Gas Turbine Engines 107 Benefits of Gas Turbine Engines 109 Gas Turbines and CO2 109 Gas Turbine Operations 110 Summary 111 Chapter 12 Coal-Fired Power Plants 113 Coals High Output Capacity 113 Life of a Coal Plant 115 Extending Coal Plant Operations 116 Coal Technologies 118 Summary 120 Chapter 13 Biomass Energy and Biomass Power Plants 123 Wood Waste 123 Economics of Biomass 125 Summary 126 Chapter 14 Nuclear Power Energy Plants 127 Global Impact of Japans Three Nuclear Plant Meltdowns 128 Comparative Costs of Energy 130 Key to the EIA Cost Estimates 130 Nuclear Power Plants 50 Years of Electricity Globally 135 Required Up-Front Payment for Nuclear Waste Disposal before a New Plants Approval 136 Asia Will Lead the Next Shift to Nuclear Power Plant Development 137 Chinas New Nuclear Reprocessing is a Vast Expansion of Atomic Fuel 139 Summary: Nuclear Power Faces a Capital Cost and Ongoing Local Approval Challenge 141 Chapter 15 Hydropower Plants 143 A Unique Renewable Technology 143 Hydropower and RECs 145 Hydropower Economics 149 Summary 151 Chapter 16 Geothermal Power Plants 153 Steam Technology 153 Geothermal Project Costs 155 Hydrothermal Power Systems 156 Ground-Source Heat Pumps 156 Standing Column Wells 158 Enhanced Geothermal Systems 158 Direct Use of Geothermal Energy 159 Summary 161 Chapter 17 Energy Efficiency and Smart Grid 163 Demand-Side Management 163 Advanced Meter Infrastructure 166 Increasing Energy Needs 167 Summary 169 Conclusion 171 Where Do We Stand Today in Terms of Renewable Energy? 175 Appendix A 177 Appendix B: DTCs