CPV RETAIL BLOG

May 3, 2024

While much has been made of the logistical and technical challenges associated with the energy transition, less talked about are the economic challenges for the build out of renewable and low carbon resources at the scale needed to achieve true decarbonization...

Show Me the Money

While much has been made of the logistical and technical challenges associated with the energy transition, less talked about are the economic challenges for the build out of renewable and low carbon resources at the scale needed to achieve true decarbonization. The capital requirements for supporting such a build out are staggering, particularly in light of recent advancements in AI and data center expansion plans that are expected to drive significant load growth according to ISO forecasts. Transmission and distribution upgrades alone are projected by researchers to cost trillions of dollars before addressing the need for new thermal generation needed for reliability amidst growing baseload demand. Despite all the recent setbacks, states also continue to push for more offshore wind development, a venture that requires tremendously deep pockets and a balance sheet that can support massive spending before revenues start kicking in.

Access to substantial capital, meanwhile, is a major challenge for companies in this sector and is only exacerbated by rising interest rates affecting debt availability and hurdle rates. For almost a decade, the world experienced interest rates that were at or near zero with some places having ventured into the realm of negative interest rates. Those days are long gone and now project cash flows will have to support potentially large interest payments, thus adding even more pressure and difficulty to capital raises. Add these issues to the myriad of challenges that many projects are dealing with while the entire energy delivery system goes through a metamorphosis and it becomes clear that well-established, industry leaders like CPV will be increasingly relied upon to help drive progress.

CPV has a proven track record, since 2010 the team has brought online 5.3 GW of natural gas, wind, and solar generation. Over the last 12 years, CPV has developed and financed over $7.8 billion in energy facilities.

What does that mean for you? You can rest assured CPV will be that owner, developer, and operator answering the market needs as we have for the last 25 years. As an affiliate, CPV Retail can access that reliable power and deliver it right to you. We have standard solutions but pride ourselves in offering customized, sustainable solutions for this evolving landscape. Are you ready to learn more? Contact Us

PJM Regulatory Review

PJM Regulatory Review

  • New EPA rules on emissions limitations will almost certainly add both costs and uncertainties to proposed thermal additions in areas seeing significant load growth. The EPA’s analysis concludes that due to advances in pollution control technology, it expects little adverse financial impact to ratepayers.
  • Offshore wind continues to face difficulties in New York as GE Vernova scrapped plans to build 18 MW turbines forcing the developers to add sites to deliver the agreed-upon amount of power utilizing only 15.5 MW turbines.
  • The Electric/Gas Coordination Senior Task Force is expected to codify the endorsed solution in a May 3 call.
  • The FERC approved PJM’s $5.1 billion transmission expansion plan which has been proposed to deal with the massive load growth originating from data center expansions in Virginia and Maryland.

Market Drivers

Energy Market Update

  • After years and years of delays caused by various environmental concerns and a doubling of the cost ($3.5 billion to $7 billion), Mountain Valley Pipeline has asked for permission to commence commercial operations in May.
  • Natural gas prices remain under pressure after a 93 BCF injection was reported last Thursday and the transition from heating-degree-days to cooling-degree-days accelerates with the first 90-degree day of the year in Washington DC.
  • US gas production continues to come in around 100 BCF/D as producer shut-ins and natural well declines help low prices solve low prices. Freeport LNG’s extended outage has not helped as more gas is now available to inject into storage facilities which are already too full for this time of year.
  • Power prices in PJM reacted to the first real hot weather seen this year by trading up to $55/MWh for Monday as PJM demand pushed back above 100 GW.
  • The great data center demand growth story continues to percolate through the ether as forward demand forecasts continue to escalate and market participants debate the veracity of the growth projections.  

Forward Pricing

Renewable Energy