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American Fossil Fuel Divestiture

Discussion in 'Energy, Environment, and Policy' started by TheTalkingMule, Apr 18, 2016.

  1. TheTalkingMule

    TheTalkingMule Active Member

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    We have a thread to watch the Saudi's squirm, might as well track American utilities as they try to divest from fossil fuel based production before the whole profit scheme crumbles.

    Once German solar hit about 4-5% of total electricity production the three major utilities lost up to 70% of their market cap and tried to divest from any and all fossil or nuclear production. With solar having grid priority and feed in tariffs set by law, their was no profit to be found in fossil production. The peak afternoon hours that were once the source of most utility profits actually turned NEGATIVE on the wholesale(supply) side.

    Now that solar is getting a foothold and wind gets stronger every day, we should see American utilities trying to quietly jump ship as well.
     
  2. TheTalkingMule

    TheTalkingMule Active Member

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    AEP Sharing Data With Potential Power Plant Buyers, CEO Says

    American Electric Power Co. Inc., which hired Goldman Sachs Group Inc. last year to advise on the possible sale of assets in the U.S. Midwest, opened up confidential data to potential buyers, a step that may indicate the company’s closer to a decision on the package of plants.

    The Columbus, Ohio-based company has “done a lot of things with confidential data rooms” and believes there are buyers interested in the plants, capable of producing about 5,000 megawatts, Chief Executive Officer Nick Akins said in an interview at Bloomberg’s headquarters in New York. Opening up so-called data rooms allows potential purchasers to review private financial information while agreeing not to disclose it.

    Akins declined to comment on rival Dynegy Inc.’s claim that it wasn’t invited to make an offer on the plants in Ohio and Indiana. He said the company will take bids from those “we think are suitable.”

    American Electric is among U.S. utilities looking to get rid of plants that compete in wholesale power markets in favor of running assets offering stable, regulated returns. Cheap natural gas flowing out of the nation’s shale formations has dragged down wholesale electricity prices, squeezing the profits of so-called merchant power generators. Akins said his company is looking to sell its unregulated plants as a package in its effort to “move to a regulated utility.”
     
  3. TheTalkingMule

    TheTalkingMule Active Member

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  4. jhm

    jhm Active Member

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    This is an important theme. It's curious that the distinction is between regulated and unregulated assets. Rather than between assets of high economic value going forward and low economic value. Regulation seems to be the arbiter of what is profitable and what is not. And this is the fundamental mistake that utilities have been making all along. They exist simply to enjoy regulated profits rather than to deliver power at lowest cost thereby creating the most economic value.

    Longer-term all thermal electric plants are unprofitable apart from regulated profits. So smart utilities should divest all of them while they still have some regulatory value which might attract a buyer. If they wait and the regulatory environment continues to shift, then by the time these assets move into the unregulated category, they will have lost that value. So they should seek a buyer while a buyer may be found. The regulatory must change, and the utilities must put themselves in a position to benefit from the changes that must happen. Holding onto assets whose value depends on status quo policy makes it very hard for a player to do anything but cling to status quo policy. Let go of those assets and suddenly new policy options present genuine growth opportunities.
     
  5. TheTalkingMule

    TheTalkingMule Active Member

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    The state of Arizona and SolarCity are headed to arbitration on net metering rates and it should begin the downward spiral in this chapter of American utility profits.

    The Latest: Deal between solar firm, utility ends fight

    A deal between the nation’s largest solar company and Arizona’s biggest utility means competing measures asking voters about how to treat rooftop solar power are being withdrawn.

    The agreement announced late Thursday between SolarCity and Arizona Public Service puts an end to an increasingly public fight pitting the utility against solar companies for now.

    The two sides agreed to mediation over how solar customers are paid for the power they produce on their rooftops. Gov. Doug Ducey and lawmakers negotiated with the two sides and the governor’s office will participate in the talks.​
     
  6. SageBrush

    SageBrush Active Member

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    Not in the US unfortunately.
     

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