On a recent trip to Germany to study the country’s energy policy, the phrase “energy transition,” or “energiewende” as the Germans s
Renewables attract utility investment dollars.
wait until conditions improve without significantly impacting growth in our business.
Langston, OG&E: We’re fortunate to have access to public-market equity and debt to finance our projects. We don’t anticipate that project financing will be a problem for us either. The recent financial turmoil has restricted the traditional tax equity for developers, but we’ve also seen a few of those projects start to happen. That’s good. It helps our whole industry.
The market impacts the availability of financing for everybody in the short term, but we believe the industry will be solid in the long term. The federal loan guarantees in the stimulus package might open up some additional opportunities for us as well as others. But it underscores how important it is for us to get the regulatory support we need to maintain our credit rating, so we can obtain the financing necessary to continue moving forward with our strategy. Without that, it will be difficult to pull off our objective of adding no fossil generation by 2020. Given our favorable regulatory climate, we’ll be in a good position.
Fortnightly: How would a federal RPS affect your company’s investment plans?
Langston, OG&E: We don’t support mandates. Mandates happened in the cogeneration era and too often they result in not everyone being able to play, such as cooperatives, and it inflates market prices to levels that aren’t appropriate. The RPS isn’t needed.
We aren’t naïve. We recognize this is a national issue, but if you ask me what we need, it’s not an RPS. It’s more transmission. You can ask people to build more wind farms, but if you have no infrastructure to deliver it, then wind is a non-starter.
If a national RPS creates a standard that’s too high or takes effect too quickly to get infrastructure in place to deliver it, that would harm customers. But if it’s gradual and reasonable, and it’s synched up with construction of transmission, that’s a good thing for the long-term. A nationwide RPS puts everybody on a level playing field and puts Oklahoma in the position of being a wind energy exporter. We can’t consume all the wind energy that will be created in Oklahoma.
Stoering, Xcel: It won’t affect us much, because all eight states we serve have an RPS or some kind of renewable energy objective. All of those states probably exceed any federal standard that would emerge. But if a market for RECs emerges, that might be an opportunity for us if we’re ahead of the state standard and we have excess credits.
We support a federal RPS as long as it’s crafted properly not to disadvantage utilities with less proximity to renewable resources. If it includes basic fairness, we support it.
Smith, Duke: The way the legislation gets structured will tell us a lot about exactly what we’ll do. It’s safe to say that given the different bills we’ve seen circulated, the level of investment in renewable energy will increase if any of them take shape. We’ll pursue PPAs and we’ll look to invest more as well. And the