Seeing Through to The Other Side
The past 2 months of COVID related disruptions has changed the landscape in ways we are just beginning to grasp – societally, economically, and individually.
April 27, 2020
Within the Energy patch, we have seen massive layoffs across the value chain, with ACORE reporting 106,000 clean energy jobs lost in March alone, wiping out all 2019 job gains across the sector. Oil & Gas has seen even more severe upheaval, with the price of WTI dropping from $60/bbl at the beginning of 2020 to $10/bbl today, briefly trading below $0/bbl when front month prices were transitioning from May to June. It is hard to imagine how the majority of E&P and OFS companies in this country avoid restructuring, and many commentators wonder if capital will ever come back to the space.
These are unprecedented and unsettling times, and our hearts go out to all that are affected.
Here at GreenFront, with a focus on Alternative Energy (Solar/Wind/Biogas/Cleantech), our view is that despite today’s adversity and an attendant decrease in 2020/2021 growth rates, the longer-term outlook remains exciting. Coronavirus does not change two key realities:
Renewable energy from utility-scale solar and wind is now cheap enough to compete economically with any other source of power, and storage technologies continue to chip away at intermittency issues
The growing demand for renewable energy is real, with the majority of the general population indicating a preference for clean power sources
In the face of today’s upheaval, the number of positive headlines around activity in Renewables is truly noteworthy:
The North American solar development arm of Lightsource BP secured $250mm in project finance for its Lamar County, TX solar project, signed an agreement to build, own, and operate the largest solar project in Arkansas, and completed the largest solar farm in Kansas, all done by people working remotely from their living rooms
On April 22, Verizon announced it had entered into a virtual PPA for 254MW with Clearway and Invenergy, saying “we are committed to sourcing or generating renewable energy equal to at least 50% of our total annual electricity usage by 2025”
In the past week, solar developer 8minute Solar Energy announced that it had 1) added 3GW of projects to its pipeline, 2) completed an equity raise from its existing investors plus a significant new one, and 3) started lining up a corporate level credit facility to support its go-forward plan
Here in GreenFront’s home state of Virginia, Governor Ralph Northam signed the Clean Economy Act into law, making Virginia the first southern state with a 100% clean energy standard with the goal of adding more than 16GW of renewable energy generation capacity between now and 2045
There are dozens more stories like the ones above, all of which have happened in the Spring of Coronavirus, and during an administration in Washington D.C. that is reflexively hostile toward Renewables.
On a more personal note, within GreenFront, the rate of activity has not slowed down at all. Our direct experience in the past few weeks has been that Corporates still want to sign PPA’s for renewable power, Developers still want to source capital to grow their businesses, and Investors still want to deploy their funds.
We are very busy right now, and that gives us faith that the Renewables Industry will persevere through hard times.