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REFF West Conference Report, Part 1.

We recently attended the 2nd annual "REFF-West" (REFF for Renewable Energy Finance Forum) conference in San Francisco on behalf of Seeking Alpha.  Seeking Alpha made arrangements for us, as contributors, to receive "press credentials" to the event, and we agreed to select some highlights to report back to SA readers.

 

First, a few words on the sponsor of this event: ACORE, the American Council on Renewable Energy, and Euromoney Energy Events.  ACORE is an organization supported by member companies in renewable energy that does a lot of work promoting the sector through events like this conference, REFF Wall Street and the annual Phase II Policy Forum famously held in the Cannon Caucus Room on Capitol Hill. Keeping the theme consistent with the conference title, the panels were representative of a wide spectrum of the renewable energy finance chain, from Venture Capital to Project Finance to Government. 

 

This two-day event had an array of speakers (61 to be exact, spread across 12 thematic "sessions").  Each speaker provided a presentation (often mainly an infomercial for their firm/organization) and then answered questions from one or two moderators.  Given the format, the quality of the dialog really came down to the effectiveness of the moderator to identify key themes and pursue them; in general, the quality of the conversation was very good and we'd recommend attending future REFF events.  At the end of each panel, Michael Eckhart, the President of ACORE, did a nice job of summarizing what he felt we’d learned from that exchange.    

 

To synthesize a large amount of information into blog-able sized posts we decided to distill the conference into broader themes and to post separately about each of them:

 

1. The High Level Perspective on the Renewable Energy Sector.

 

As the cleantech industry has matured, “The highs are higher and the lows are lower.”  That was the assessment of the situation by Dan Reicher of Google.org and we found that, as a theme, it ran through almost all the presentations and discussions. 

 

The highs:

- Unprecedented federal funding of tens of billons of dollars due to the American Reinvestment and Recovery Act (ARRA) has flowed into the sector.  Along those lines, the Obama administration is the most forward thinking government towards renewable to occupy the executive branch of the US after a long history of blunders in R& D and policy in the area. 

- The upcoming Copenhagen Summit has put carbon emissions into the forefront of the global dialog.

- The advancements in technology for renewable energy have made them, in many situations, within striking distance of traditional fossil fuels on a cost basis. 

- Finally, oil price volatility has refocused people’s attention on the need for energy security and stability, which renewables provide.

 

The lows: 

- The Federal deficit situation means that once the funds from the ARRA are deployed, the industry faces a “massive cliff,” as Richer states, from which Federal support for the sector will fall when the stimulus runs out in 18 months.

- In the 2009, the US is facing the first year-over-year decline in electricity demand since World War II, something that a half century of previous crises could not do.  This reduces the pressure on the power generating industry, absent RPS standards, to embrace renewable projects at this time.

- The current House and Senate energy legislation is stalled and important political capital is being used for healthcare legislation instead.  Almost all of the presenters, with the exception Matt Rogers of the Department of Energy, do not think that a cap and trade bill passes by the end of 2009 and are skeptical that it will even be done in 2010.  

- The prospect for an agreement in Copenhagen that puts a real price on carbon seems remote at best. 

- The recent discoveries in shale based natural gas and large oil fields in Brazil and the Gulf of Mexico threaten to dampen the price signal for energy that is necessary to make renewable competitive.

Finally, everyone echoed the fact that if you are involved in the renewable sector today the government is your partner, whether you like or not, which is very different from how capital providers normally look at favorable market opportunities.  Our next blog post will summarize theme number 2: the array of government initiatives that are being launched in California, which may become models for the rest of the country.  

If there is any topic you would like further elaboration on, feel free to post a comment and we’ll respond.

Disclosure: NA