The explosion at a natural gas-fired power plant under construction on Sunday killed at least five people and injured 12. The plant, located in Middletown, Conn., is owned by Kleen Energy Systems, a special purpose company owned by Energy Investors Funds (EIF), an energy-focused private equity fund with substantial investments in renewable energy. Read More »
In these recessionary times it’s all about sticking to fundamentals: steer away from exotic investments; invest in 30-year Treasuries; pay down the 17% APR credit card; and that island vacation…? forget about it….
That rule also seems to apply to the energy sector. There has been a lot of talk about a green-focused stimulus that will help build more wind or solar power stations and deploy cars running on carbon-free fuel cells. But despite all this goodwill and assured government money — not just in the U.S. but across the globe – the clean energy sector remains at a standstill, capital expenditure paralyzed.
The paralysis comes amidst anecdotal reports that the credit market have started to loosen up and money is flowing again, but it seems that when it comes to energy, investors are also “sticking to fundamentals” and putting that money into “old energy.”
Case in point was the closing this week of a $3 billion project loan for the construction of the Dolphin Energy Project, a pipeline that once operational will pipe natural gas from Qatar to the United Arab Emirates. The financing was apparently a “roaring success,” according to veteran industry publication the Middle East Economic Survey, which noted that 23 banks participated in the syndicate.
Meanwhile, financing across the board — venture capital, private equity, or project finance — remains paralyzed in the clean energy sector, in a state of “deep hibernation,” said a report issued this week by New Energy Finance.
To be fair, there is some deal flow, but mostly by investors that secured capital when it was still available. One of these was veteran energy-focused private equity fund, Energy Investors Funds (EIF), which this week acquired a 30-megawatt biomass power project in Watertown, Conn.
Mountain View, Calif.,-based Ausra announced it had raised $25.5 million from current and new investors. Last January, GER reported that Ausra was scaling back plans to build large utility-scale solar power plants because it was unable to secure financing to support such projects. Backed by a new business plan that is more in tune with these lean economic times, the company says it will use this latest funding round to deploy smaller and cheaper power facilities that will generate clean electricity for stand alone facilities like hospitals, oil refineries or food processors. Last fall, in a separate financing round, the company raised more than $60 million.
A small slice of the stimulus pie did make its way this week to Miami where General Electric and Florida Power & Light said they would partner to, over the next two years, develop a $200 million smart grid network for 1 million business and individual customers. Half of the project cost will be covered by stimulus money.
On earth day President Barack Obama made a strong appeal for comprehensive climate legislation and renewed his call for a new energy matrix, the first time he had done so in a while. His speech came just a few weeks after the House Energy and Commerce Committee released a draft of a comprehensive climate change bill.
In California the state’s Air Resources Board approved the nation’s first fuel standard that will seek to cut green house gas emissions by 10% by 2020. The regulations are the first in the nation and will be gradually phased in, starting January 1. The measure, which was approved in a 9-1 vote late Thursday, seeks to reduce 16 million metric tons of greenhouse gas emissions annually.
Energy Investors Funds (EIF), has acquired a 30-megawatt biomass power project that is under development in Watertown, Conn., from Tamarack Energy. The acquisition was done via EIF’s United States Power Fund III. Terms of the transaction were not disclosed.
As part of the acquisition some project management staff from Tamarack will transfer to EIF. The plant is expected to begin commercial operations in about two years.
Once operational the facility, which will generate electricity by burning small tree branches, stumps, old cargo pallets and trees taken down as part of forestry management programs, will sell all of its output to Connecticut Light & Power.
EIF controls 4,000 megawatts of operating power assets, including 16 hydroelectric facilities and a portfolio of 19 landfill gas-fired facilities across the United States. The fund controls another 2,200 megawatts of power assets under development or construction.
