The Week in Green Energy: One (More) Year…

by Terrence Murray - December 17, 2010

Certainty — albeit short-term certainty — that’s what the renewable energy industry got this week. By signing a controversial bill , President Obama also extended key green energy federal subsidies, (the provisions were inserted in the tax bill), including the game-changing 1603 direct cash grants.

President Obama signs tax bill into law.

As we’ve reported, it was widely understood that the bill extending the Bush tax cuts would also extend federal green subsidies. One looming question though, was whether the 1603 grants — and not just the investment and production tax credits — would also be part of the legislative package. Republicans had repeatedly criticized the 1603 funding as “just more government spending,” fueling concern with wind, solar developers that the grants would get the hatchet. They didn’t. The tax bill signed into law by President Obama on Friday, gives developers until the end of 2011 to apply for the government cash.

The sector’s full-court-press has obviously paid off. But the extension also underscores what’s wrong with the current U.S. energy policy, or lack thereof. Much like the other funding programs, including production and investment tax credits, the 1603 are only given short-term leases that lay the groundwork for more regulatory uncertainty in a year, when the grants sunset.

The renewable energy industry would be better off with the long-term certainty created by a cap-and-trade regime and a federal Renewable Electricity Standard (RES). But with Republicans about to take control of the House, cap-and-trade is all but dead. However, RES has a pulse as some Republicans have said that they would support the initiative.

Yesterday, GE Energy Financial Services and co-developer Caithness Energy supporting the construction of the 845 megawatts Shepherds Flat wind-generated power plant, a game-changing project set to cost $1.38 billion to build. West LB Securities, Citi, Bank of Tokyo-Mitsubishi UFJ and Royal Bank of Scotland arranged the Department of Energy-backed debt supporting project construction.

The financing comes as number of renewable energy developers are still having a hard time raising capital, both as debt or even by selling shares, as last fall’s failed First Wind IPO demonstrated. But Shepherds Flat is an all-together different animal. Its rock-solid backing (GE, the Federal government, it doesn’t get better than that…) made it one transaction banks rushed to finance. An industry source tells G.E.R. that the debt financing was actually oversubscribed.

VC and PE Watch

VantagePoint Venture Partners, one of the largest greentech-focused investors, is reportedly raising a $1.5 billion fund that will support late-stage green technology companies.

Capital Dynamics, the Swiss private equity firm, plans to raise about $800 million over the next two years for two green energy-focused funds.

The private equity arm of the Ontario Teachers Pension Plan invested C$75 million ($74 million) in Calgary-based BluEarth Renewables, a developer of hydro, wind and solar power projects in North America.

GE participated in a $30 million Series C financing supporting Soladigm, an energy efficiency company that develops windows that automatically tint in reaction to outside conditions.

Sungevity, an Oakland, Calif. installer of rooftop solar systems, raised $15 million in a Series C round of financing.

Bladon Jets, a British developer of micro gas turbine engines for cars and power generation, raised $500,000 ($786,100) in a recent funding round led by the Oxford Investment Opportunity Network (OION).

Rambling

Questioning climate change… That’s in essence what Fox News is asking its journalists to do. An email memo, , authored by Fox News Washington bureau chief Bill Sammon, urges Fox journalists, reporting on climate change, to also “IMMEDIATELY” mention that the data set demonstrating climate change has been “called into question.

The Sammon memo was sent out during the Copenhagen Climate Change summit and shortly after a data leak that many deniers claimed proved climate change was a sham.

The agreed upon data demonstrating that the earth’s temperatures are rising comes from NASA, the federal National Climate Data Center and a joint initiative by Britain’s Met Office and the University of East Anglia (home of the infamous leaks). All three data streams indicate that the planet’s surface has warmed about 1.4 degrees Fahrenheit since record keeping began, .

Why does the U.S. run away from market-friendly mechanisms like cap – and – trade? At a time when for the rest of the world climate change is largely settled science, look no further than the Sammon memo to understand why the U.S. continues to deny itself a long-term energy policy that would include a cap-and-trade provision and provide long-term regulatory certainty.

Photo: The White House

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