Markets
Bloomberg: Global Spending on Renewable Energy to Hit $7 Trillion by 2030
Dec 2nd
Bloomberg: Global spending on renewable energy to hit $7 trillion by 2030
Bloomberg New Energy Finance’s new report, “Global Renewable Energy Market Outlook” predicts that global spending on renewable energy installations will have hit $7 trillion by 2030, according to Onyx Service & Solutions Inc.
The report names the Latin American market one of the big winners over the next 20 years, which bolsters ONYX’s decision to focus efforts in high-cost electrical markets there. The report predicts doubling from 2010’s record-breaking $195 billion, to $395 billion in 2020, before reaching $460 billion in 2030.
According to the report, 15.7% of the world’s energy (including hydropower) will come from renewable sources by 2030. The flourishing economies of Latin America, the Middle East, Africa and India are set to see growth rates of installed renewable capacity of 10-18 percent a year over the period 2010 to 2020, the report noted.
Total, Amyris agree to produce renewable fuels
Total and Amyris Inc. have signed agreements to expand their current research and development partnership and form a joint venture to develop, produce and commercialize a range of renewable fuels and products. Under the agreements, the companies will expand their ongoing R&D collaboration to accelerate the deployment of Biofene and develop renewable diesel based on this molecule produced from plant sugars.
Further, Total has committed to contribute $105 million in funding for an existing $180 million program. In addition, the companies have agreed to form a 50-50 joint venture company that will have exclusive rights to produce and market renewable diesel and jet fuel worldwide, as well as non-exclusive rights to other renewable products such as drilling fluids, solvents, polymers and specific bio lubricants. The JV plans to begin operations in the first quarter of 2012.
Canadian Solar delivers modules for 9-MW solar project in Spain
Canadian Solar has supplied its CS6P-P solar modules solar for a 9-MW solar power plant in the town of Ablitas, Spain. The solar project, being developed by OPDE Group, is scheduled for commissioning in the fourth quarter of 2011. Construction on the solar project was started in mid-October 2011.
JCM Capital, Hay Solar to develop 30-MW of solar projects in Ontario
JCM Capital will finance 30 MW of solar projects in the province of Ontario. Under an agreement with Hay Solar Holdings ULC, JCM Capital agreed to provide full development, construction and long-term equity financing for a 30 MW portfolio of modular 100 kW farm building solar installations located through out Ontario.
JCM focuses on financing and developing solar projects on large commercial and industrial buildings and large-scale solar farms across Ontario, utilizing the province’s Feed-in-Tariff program via solar power purchase agreements with the Ontario Power Authority.
How Imperative Energy Helps European Union Companies Generate Bio-Energy
Nov 20th
Joe O’Carroll, Managing Director of Imperative Energy, discusses what responsibilities his company offers when they help companies decide how to become more responsible about energy use.
Is Occupy Wall Street occupying the wrong street?
Nov 1st
My Dad and I have a running joke when we’re in the car together. “Look,” he’ll say. “Gas is cheap. It’s down to $3.39.” Cheap, he means, compared with the month before when it was $3.79 per gallon.
The joke illustrates a good point. A few years ago we were flabbergasted by gasoline prices that exceeded $3 per gallon. Now we’re really happy when it doesn’t hit $4 per gallon.
When it comes to energy, we’re like frogs in water coming to a slow boil. We’ve gotten so accustomed to high oil prices, we don’t notice anymore that we’re cooked.
In my two decades writing about energy, this is one of the most poignant facts I’ve run across: Oil price spikes preceded 10 of our 11 last recessions. This statistic portrays in a nutshell the grip that petroleum holds on us.
Don’t get me wrong, I’m not letting the banks off the hook. But by focusing so much passion on the banks in casting blame for today’s economic downturn, is Occupy Wall Street letting a major culprit slink off unnoticed down the alley?
The Econbowser.com, source of the 10 out of 11 stat, says that in 2008 high oil prices caused a drop in overall spending, which served as “the knockout punch for an economy that was already wobbly.” The article goes on to say that “there’s no question that more favorable fundamentals are exactly what we would have had if the price of oil had never gone over $100 a barrel.”
But there’s good news too. When oil prices are high, the innovators emerge. And that’s what is happening today. Over the last few months I’ve run into some pretty intriguing – possibly game changing – new energy technologies. Here are a few.
This week I interviewed Riggs Eckleberry, CEO or OriginOil, a company that has found a highly efficient way to harvest algae and extract its oil, a process that takes advantage of algae’s sensitivity to electrical fields. The approach promises to save both energy and water in processing algae. As Eckleberry puts it, algae is a renewable “petroleum that is being made fresh instead of fossilized.” He sees algae becoming an important part of the energy mix in the short-term and a serious competitor to petroleum in the long term.
In working on an article for an upcoming issue of Renewable Energy World magazine, I learned about Dyesol, an Australian company that uses dye sensitive solar products to generate electricity. Dyesol describes the process as ‘artificial photosynthesis.’ It uses an electrolyte, in this case a layer of titania (a pigment used in white paints and tooth paste) and ruthenium dye sandwiched between glass in a window. Light strikes the dye and excites electrons that are absorbed by the titania to become an electric current many times stronger than that found in plant photosynthesis. The window creates electricity using both the artificial light in the building and the sunshine outdoors.
Meanwhile, Swapnil Shah, CEO of FirstFuel, described to me how his company conducts in-depth energy audits on commercial buildings without ever setting foot in the building. FirstFuel’s analytics software offers a “zero touch” alternative to cumbersome building energy audits. Already being used by several utilities, the software program also provides specific recommendations for efficiency improvements. To run its analytics, FirstFuel only requires easily accessible information about the building, such as its billing history and address. The program relies on the Web and GPS to obtain the rest of the data it needs. (More on FirstFuel in next week’s blog.)
Innovators like these folks worry that when oil prices drop, investors and policymakers will lose interest in finding energy alternatives. It’s a pattern we’ve fallen into before. Just as high oil prices precede recessions, low oil prices precede periods of apathy. Maybe we’ve been cooked enough this time to reverse the pattern.
Written by Elisa Wood; who is a long-time energy business writer. To read more of her articles on energy visit www.RealEnergyWriters.com.
Considering China for Manufacturing Alternative Energy Solutions
Oct 19th
China has long been thought of as low cost manufacturing location for all kinds of products. In fact many of the Fortune 500 companies have some of their operations located in China for that reason. When it comes to manufacturing highly technical products, such as those needed for Alternative Energy Solutions, China still offers some opportunities but also has begun to develop some challenges.
The best types of manufacturing to bring to China are products or processes with high labor content that utilize a mature process. This minimizes the involvement of expat support (high cost) and prevents a company from having a number of technical support resources on call and traveling frequently. Fully automated manufacturing is not typically embraced by Chinese labor culture; therefore a mutually acceptable solution would be to identify areas that are critical to product quality and yields where variation can be minimized with fixturing or islands of automation.
There are three primary reasons why companies look to set up manufacturing operation in China.
- LABOR COST: Low cost of labor and still thought to be plentiful- although the labor cost has close to doubled in the past 5 years (RMB appreciated from 8.1 to now 6.3 and labor rates have increased nearly 50% during the same period. This is still much cheaper than western labor rates, although it seems to be steadily increasing. A company locating operations in China will tend to employ more headcount than in US due to the “one person –one job” culture, unlike the US where cross-training is common
- EXPANDING MARKET: China is the largest potential growth market in the world now. In order to avoid duty charges and tax charges you need to produce in the China market. China has Export Processing Zones (EPZ) located throughout the country, designed for companies that want to produce in China for export. However, if you want to sell into the China market and avoid large taxes you need to be manufacturing in the country, but outside the EPZ.
- JOINT VENTURES: The China Government is involved in all major contracts and tax incentives, companies may have to be a “China Owned” business. This usually means partnering with another China business that will own a 51% share of the joint venture. This works well if the US company brings the technology and know-how and the China partner focuses on managing the Government contracts, tax incentives and labor
Areas to investigate further:
- Labor cost and inflation are going up quickly. It is expected the labor cost will double again in the next five years. Coupled with China’s devalued RMB, this could lead to a significant increase in labor rates in the future.
- High employee turnover rates are common and can drive higher training costs, losses in productivity and can impact yield.
- China Government can control markets and change rules and regulations with little notice
- Concerns over IP security have become elevated, as documented in a new book “America the Vulnerable” by Joel Brenner, former Inspector General for NSA. This includes hacking corporate IT servers, cell phones and even penetrating expat email accounts via in-country hotel internet access.
Manufacturing in China still is a low cost option for companies with mature products and processes that have high labor content. Total operating costs are increasing in China and with pressure from the US and WTO pushing to have China devalue the RMB (or impose import tariffs on products produced there) may create a less favorable environment in the near future.
Written by John Pinho, the president of NeoTech LLC, a consulting firm helping high technology firms figure out innovative ways to effectively expand their operations on a global basis. With over 30 years of engineering, operations and international project execution expertise, NeoTech can add value at every step of your strategic vision.
Desert Year: Robust Economy and Lessons of the Sonoran Agave
Aug 23rd
There is a good deal of worry about the robustness of our nation’s economy. And rightly so. Especially since we have about 5 million fewer jobs today than in 2007, even as we have about 10 million more people to support with those available jobs.
In an effort to understand why economic performance has been so lackluster, we are constantly taking our economic temperature. We measure it every way we can. But it is also true that – other than the occasional surprise – what you measure is what you find; and we may not be measuring all of the right things.
The current measure of our economic well‑being is the ebb and flow of dollars transacted in the marketplace. These dollars are usually indexed against things like investment, labor output or population. From these various indices we suppose that we can obtain a reading on how well the economy is doing.
Examining the economy from a resource rather than a market perspective, however, may yield an entirely different understanding of the economic process. To better illustrate this point let us borrow some momentary insights from Arizona’s Sonoran desert environment.
In the desert, similarities in plant appearance are poor indicators of whether or not plants are related to one another. While the agave plants have vegetative structures similar to those of the aloe family, neither plant lineage can be determined until we examine their flowers.
The vegetative parts of both the agave and the aloe plants are mostly products of the very few adaptive mechanisms available to help a plant survive in the desert.
These survival mechanisms include extensive root systems and the ability to store water in the leaves and stem of a plant. With so few adaptive features available to them, even plants from unrelated families may look very much alike.
Flowers, in contrast to the plant structures, are the result of intricate relationships with the animals that pollinate them. Because of this dynamic two‑way interaction with animals and insects, flowers are more complex than the leaves or stems of a plant.
The relationship between the agave and the aloe plants is revealed, not by looking at their vegetative structures, but by comparing their flowers and fruits. It turns out that despite initial appearances, the Sonoran Agave and the South African Aloe have entirely different histories and origins.
In a similar way, we may develop a different understanding of why the nation’s lagging job creation is so lackluster if we measure it in a wholly different manner. And here we might build on the work of my colleagues Bob Ayres and Benjamin Warr in their book, The Economic Growth Engine: How Energy and Work Drive Material Prosperity. Measurements might include, for example, not just how much energy we are actually throwing at our various economic processes. More critically, we might ask how efficiently we actually might be in converting that energy into useful goods and services. This might reveal different insights than if we only ask how many dollars are consumed in the production process.
As the data from Ayres and Warr might suggest, when viewed from an energy rather than a market perspective, the American economy is perhaps 13 percent energy (in)efficient.
It takes energy to explore, mine and produce or transform coal, the oil and the natural gas needed to power our homes schools and businesses. And it takes energy to clean up the many wastes produced by that production and consumption of energy. Based on 2005 data we waste, in short, about 87 percent of all the energy consumed in our various economic activities.
As we might imagine, that level of huge waste creates an array of costs that might otherwise constrain a more robust economy. That level of waste adds a very large burden to our air, land and water resources. But we would not find this out by looking only at the dollar transactions of the marketplace. As with the Sonoran Agave and the South African Aloe, we need to look at more than the familiar indicators to understand the full historical relationships that determine the robustness of our nation’s economy.
Written by Skip Laitner, Guest Blogger, Energy Efficiency Markets. John A. “Skip” Laitner is Director of Economic and Social Analysis for the American Council for an Energy-Efficient Economy (ACEEE), based in Washington, DC. John ‘Skip” Laitner is an economist, enjoying a desert year while on research sabbatical from the American Council for an Energy-Efficient Economy. Skip is discovering some surprising insights from his time in the desert that can inform the way one looks at the economy and social systems. In a series of posts entitled Desert Year, Skip lends us his new insights, as well as his 40 years of experience as an energy and natural resource economist, to probe the economic, climate, and energy challenges that confront us.He can be reached at jslaitner@aceee.org.
This article has been reposted from Real Climate Economics.
Top Ten United States Cleantech Accounting Firms 2011
Aug 15th
Accounting, auditing of financial statements and the host of services provided by accounting firms are extremely important to businesses, investors and stakeholders in the clean technology industry. Accounting firms assist in addressing a number of issues that are extremely relevant to the myriad clean technology companies, as well as advising on proper application of accounting standards, accessing governmental support and tax incentives, establishing effective systems of business processes and controls, executing merger and acquisition transactions and raising capital. They also audit the companies’ financial statements, assist with Federal, state, local and international tax compliance and provide outsourced internal audit services.In certain situations, accounting firms may act as corporate finance advisors in the raising of capital or securing debt for the company or individual cleantech projects.
Below is a list of the top ten accounting firms in the United States that are working with various renewable energy and other clean technology companies, from small entrepreneurial ventures to large, global businesses.
- KPMG, whose member firms provide audit, tax and advisory services to companies in more than 150 countries, takes a global view of Cleantech as a pivotal component of its Climate Change & Sustainability Services — a team with almost two decades of experience working in and around the emerging issues associated with energy and environmental sustainability. Leaders of the service include acknowledged experts in various sectors of Cleantech and sustainability from industry, government organizations, non-government organizations, and academia. KPMG’s superior work credentials include audit engagements with more than 50 Cleantech companies in the United States alone, including some of the largest names in the sector. KPMG provide tax and advisory services to solar and wind projects throughout the United States, including some of the world’s largest solar projects under construction in the United States. KPMG’s global reach includes representing successful bidders under Australia’s solar flagship program and providing assistance to companies in Germany, Spain, Saudi Arabia and Kuwait. KPMG recently launched a Global Center of Excellence on Sustainability in Amsterdam to generate and coordinate Cleantech thought leadership and stimulate global discussion and awareness on key issues and topics not only for the firm and its clients, but also for the broader market. KPMG’s Global Energy Institute serves as a knowledge-sharing forum on a number of important topics.
- Ernst & Young is a global leader in assurance, tax, transaction and advisory services in more than 140 countries around the world. The firm is also the leader in serving fast growth companies around the globe and in serving VC-backed companies through its Strategic Growth Markets practice. For the 13th consecutive year, Ernst & Young was selected as one of Fortune Magazine’s “100 Best Companies to Work For.” Additionally, the firm is celebrating its long-time commitment to leading business innovators this year with the 25th anniversary of its Entrepreneur of the Year program, which has honored many cleantech trail blazers including the 2011 global winner, Olivia Lum, CEO of Singapore’s Hyflux. The firm’s Global Cleantech Center homepage, www.ey.com/cleantech, provides access to thought leadership and other resources from its network, including cleantech investment analyses, the firm’s Global Renewable Energy Attractiveness Indices and the firm’s 4th annual Global Cleantech Insights and Trends Report.
- Deloitte is the leader in serving clean tech companies. With its multidisciplinary experience in energy, technology, life sciences, manufacturing and consumer products, coupled with its deep understanding of the power and regulated utilities markets, Deloitte is well-positioned to help clean tech companies – solar energy, biofuels, batteries and fuel cells, energy efficiency, other renewables, and service and materials companies – across their entire life cycles and to grow and diversify their offerings. Leadership in Clean Tech also demands active participation across industry’s diverse community. The company’s commitment is demonstrated by its involvement in and support of a wide range of associations, conferences, and seminars, including Cleantech Group and Cleantech Open
- PricewaterhouseCoopers is one of the top accounting powerhouses around the globe with offices in more than 150 countries. This industry-focused accounting firm deals with performance improvement, transactions, human resources, tax, and audit fields, as well as crisis management assistance and stakeholder issues. In 2010, Fortune Magazine listed PricewaterhouseCoopers as one of the Best Companies to Work for in America. PricewaterhouseCoopers knows that innovation is extremely important, especially in the clean technology center, and helps them with growth strategies, obtain necessary resources, and fully manage their ROI.
- Grant Thornton International Ltd is a global accounting organization serving clean technology and energy companies around the globe. Their cleantech professionals possess deep industry understanding and business and financial knowledge. Through independently owned and managed accounting and consulting firms with more than 2,400 partners in over 100 countries they provide assurance, tax and specialist advisory services to privately held businesses, publicly held companies and public interest entities in this dynamic and growing sector of the global economy. Services offered to cleantech companies, in addition to the traditional audits of financial statements, international, federal, state and local tax planning and compliance and business advisory, also include a full range of accounting, internal audit, merger and acquisition structuring and due diligence, governance risk and compliance, SOX readiness, IT and business processes, compensation and employee benefits, valuation, corporate finance and economic and business advisory. Grant Thornton member firms and their over 30,000 professionals provide the experience, expertise and trust need to grow and succeed in the world of clean technology including accessing the public capital markets through initial and follow-on public offerings of stock and debt.The Grant Thornton International Cleantech Steering Committee coordinates their global focus on serving the cleantech industry and includes member firm partners from leading and emerging economies. Grant Thornton is the global accounting firm sponsor of the Global Cleantech Cluster Association’s (GCCA) 2011 Later Stage Cleantech Company Awards.
- BDO USA, LLP is the U.S. member firm, the world’s fifth largest international accounting and consulting network. BDO USA provides assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. The firm has deep roots in both the technology and natural resources industries, and oversees cleantech engagements in the U.S. and abroad through the global BDO network. Through dedicated Cleantech and Alternative Energy practices, BDO leverages extensive industry knowledge and technical experience to help companies navigate tax credit incentives, SEC comments on climate change, IPO readiness, sustainability reporting, value-added alternative energy tax strategies (including a focus on green energy tax), obtaining LEED certification, FCPA compliance, IFRS consulting, and navigation of joint interest audits.
- Reznick Group is a top 20 national CPA firm with 10 offices nationwide and over 1,000 professionals. Reznick Group focuses on renewable energy and offers a broad array of accounting, tax and business advisory services specific to this industry. With services tailored to investors, infrastructure developers and producers of renewable energy power, clients include independent power producers, energy project developers, entrepreneurial companies, financial institutions, utilities, governments and municipalities, technology firms and mid cap to large cap companies. Since the American Recovery and Reinvestment Act of 2009 created many new financial incentives for the renewable energy industry, Reznick Group has helped clients leverage those and other incentives, like Section 1603 grants. While guiding clients through the renewable energy regulations that are in place, Reznick Group also provides clients with the industry insights and financial advice needed to move ideas, and business, ahead.
- RSM McGladrey has over one-hundred offices throughout the United States and is a leading firm offering wealth management, tax and business consulting, retirement resources, international business services, and investment banking. In 2008, RSM McGladrey partnered with CTEK Denver Ventures and created a new facility to foster and support regional entrepreneurship and innovation using capital resources, advisor network, community venture centers, and technology transfer. The incubators formed by the venture, known as CTEK Stapleton will focus on clean technology and biotechnology.
- CBIZ is one of the leading national providers of a number of accounting services, including attest and assurance, compliance, accounting and tax, internal audit, information security, business valuation, budgeting and forecasting, mergers and acquisitions, strategic planning consulting, and benefits and insurance. The goal of CBIZ is to provide the clean technology industry with the assistance they need to achieve all business objectives.
- Crowe Horwath LLP is one of the largest national public accounting and consulting firms. This firm offers a number of services, including tax, audit, advisory, performance, and risk. Crowe Horwath LLP has a number of clean technology industry specialists. They are able to provide deep insight and a comprehensive understanding. This offers maximum opportunity for complete success when it comes to achieving all business goals and elevating their competitive advantage.
Written by Shawn Lesser, Co-founder & Managing Partner of Atlanta-based Watershed Capital Group – an investment bank assisting sustainable fund and companies raise capital, perform acquisitions, and in other strategic financial decisions. He is also a Co-founder of the GCCA Global Cleantech Cluster Association ”The Global Voice of Cleantech”. He writes for various cleantech publications and is known as the David Letterman of Cleantech for his “Top 10″ series. He can be reached at shawn@watershedcapital.com
Iran Opens Oil Bourse – Harbinger of Trouble for New York and London?
Aug 3rd
The last three years of global recession have dealt a major blow to American capitalist ideas trumpeted throughout the world on the value of “free markets.” Wall St has been revealed as a form of casino economy, with the bankster insiders gambling with other people’s, and eventually, the government’s money in the form of bailouts. As the Republicans in Congress, scenting victory in the 2012 presidential elections, hold a gun to the Obama administration’s head and rating agencies consider downgrading U.S. government bonds in light of Washington’s possible defaulting, many ideas around the world that previously seemed implausible because of the dominance of the U.S. economy are garnering renewed interest.
Not surprisingly, many of these concepts originate in countries not enamored with Washington’s influence, perhaps none so more than “Axis of Evil” charter member Iran, which has seen its economy hammered by more than three decades of U.S.-led sanctions. Now Iran is working a program, that, if it succeeds, could help undermine the dollar’s preeminence as the world’s reserve currency more effectively than a Republican filibuster.
Iran’s sly weapon against the Great Satan’s currency? An oil bourse on Kish Island in the Persian Gulf, which has now begun selling high-grade Iranian crude oil.
Mohsen Qamsari, deputy director for international affairs of the Iranian National Oil Company was modest about the exchange’s initial capabilities, saying, “The commodity stock exchange has been pursuing a mechanism for offering crude oil on the stock exchange for a long time, and it has taken the preliminary steps, to the extent possible. Considering the existing banking problems, foreign customers are not expected to be taking part in the first phase of offering crude oil on the stock exchange, and this will be done on a trial basis. Today Bahregan heavy, high quality, low sulfur crude oil with less sourness will be offered on the stock exchange for the first time. In the first phase, a 600,000 barrel shipment will be offered.”
Given that the world currently consumes roughly 83 million barrels of crude oil each day, the initial oil offerings at the Iranian stock exchange are hardly going to make or break the market, but they do represent an attempt by a significant oil producer to divert revenue streams from New York Mercantile Exchange, the world’s largest physical commodity futures exchange, which handles West Texas Intermediate benchmark futures, and London’s Intercontinental Exchange, which deals in North Sea Brent. All trades are in dollars, effectively giving the U.S. currency a monopoly.
The Kish Exchange dates back to February 2008, when instead of Tehran, Kish was chosen because it was designated as a free trade zone. The Exchange was set up to trade contracts in euros, Iranian rials and a basket of other currencies other than dollars. The previous year, Iran had requested that its petroleum customers pay in non-dollar currencies. But the Exchange initially traded contracts only for oil-derived products, such as those used as feedstocks for plastics and pharmaceuticals. Now the institution has taken the next step.
Even as Congress remains tone-deaf to the recession’s effect on American jobs and the economy, others have taken careful note. On 17 June 2008, addressing the 29th meeting of the Council of Ministers of the OPEC Fund for International Development in the Iranian city of Isfahan, Iranian President Mahmoud Ahmadinejad told those in attendance, “The fall in the value of the dollar is one of the biggest problems facing the world today. The damage caused by this has already affected the global economy, particularly those of the energy-exporting countries…
Therefore, I repeat my earlier suggestion, that a combination of the world’s valid currencies should become a basis for oil transactions, or (OPEC) member countries should determine a new currency for oil transactions.”
What it would take for Iran’s new exchange to survive and flourish are some heavy-duty customers that Washington would be wary of picking a fight with, and Tehran already has one – China.
China, the world’s largest buyer of Iranian crude oil, has renewed its annual import pacts for 2011. In 2010 Iran supplied about 12 percent of China’s total crude imports. According to the latest report of the China Customs Organization, Iran’s total oil exports to China stood at 8.549 million tons between January and April 2011, up 32 percent compared with the same period last year. Iran is currently China’s third largest supplier of crude oil, providing China with nearly one million barrels per day.
China simply ignores Washington’s squeals about sanctions, but it is concerned about the bottom line, and unless Iran makes its oil prices more attractive versus competing supplies from the rest of the Middle East or South American exporters, it may be hard for the OPEC member to boost its share in the rapidly expanding Chinese market.
Enter the Kish Exchange.
China’s Ambassador to Tehran Yu Hung Yang, addressing the Iran-China trade conference in Tehran on Monday, said that the value of the two countries’ trade exchanges surged 55 percent during the first four months of 2011 over the same period a year ago to $13.28 billion and further predicted that the figure would surpass $40 billion by the end of the year.
So much for sanctions, eh?
So, while Washington prepares to commit political hara-kiri, Iran is preparing to take away a little of the capitalist glow from New York and London. If the Chinese decide to start paying for their Iranian purchases strictly in yuan, expect the trickle away from the dollar in energy pricing to become a stampede. That ought to give Washington politicos an issue to think about besides gay marriage.
Written by. Dr. John C.K. Daly for OilPrice.com. The opinions expressed in this article are solely those of the author, Dr. John C.K. Daly. For more information on oil prices and other commodity related topics please visit www.oilprice.com
Choosing The Right Energy Provider For Your Business
Apr 22nd
When considering which energy provider will best fit your company’s needs, it is important to make an apples-to-apples comparison. There may be items or clauses in the contract that might not be in your company’s best interests. For example, some providers might offer a larger bandwidth, a tolerance of how much you have to stay within in order to not get penalized. If your business is industrial in nature, like a manufacturer, then this is something that you must look out for because your bandwidth will need to be wide. More >
Electricity Deregulation Advantage: Choosing When To Save
Apr 15th
Texas makes up approximately 40% of the total deregulated load around the country. While Texas has had some ups and downs, the outcome of the State deregulating its electricity market has been pretty positive. Some will use California as an example to argue that states are better off being regulated than deregulated. And they might have been right in the past. But many will argue that customers will have the right to choose because it gives them more control over their business’s energy costs. If you are interested in taking advantage of deregulated markets, then check out the tips below.
Selecting The Right Energy Procurement Contract
Apr 8th
If you are uneducated about how energy procurement contracts work, then this article is for you. Typically energy providers will offer customers a term contract. It is important to select a term that provides you the best opportunity to take advantage of any dips or rises in the markets. For example, it might be in your best interest to not sign a long term pricing contract if you think that energy prices are going to drop soon. Conversely, you should sign a long term agreement if you think that prices will soon rise. In many cases, customers will sign contracts, in 1-5 year terms, so that they can provide their companies with some flexibility while also helping their business plan for a cost that they can fix.
As you are settling on the right term you will also need to consider how your energy will be priced. There are three common options; a fixed rate, variable rate and a heat rate. Each option comes with a certain amount of risk. A fixed rate is having your energy costs fixed and nothing moves except for your lines and wires costs.
A variable rate means that the price of your power will change during the term of your contract. The rate will typically be based on what real time energy prices are and will change as the market changes. This allows you to take maximum advantage of times when prices are low. You can also get burned if prices quickly rise.
A heat rate product is a type of a variable rate that allows you ride the natural gas market based on a special formula. There are only certain states that offer heat rates because some states rely on more natural gas generation than others. The nice option about heat rates is that, in many cases, you will be able to lock in prices for different times and partial loads of your contract. So, for example, you can lock in the first six months and then float the backend of the contract. There are numerous alternatives to this example that can also potentially fit your business’s needs.
It is extremely important that you understand current market conditions before you sign a procurement contract with an energy supplier. You could be leaving a lot of money and savings on the table.
Written by Josh Stern, President of JASMAHN Consulting.
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