On Wednesday, David Strahan at The Guardian calculated some lump sums for us. A couple of years ago, when it became clear that we were running into serious supply problems with oil, one pundit after another told us that we would never have to worry about coal. After all, in the US alone, there was 250 years’ worth of supply at current consumption rates. Well, that was then, and this is now. And if skyrocketing feedstock costs aren’t enough to deter you from building a coal plant, maybe rising capital costs will. Is King Coal’s reign looking shaky? It might be time to re-visit Tom’s article on constructing a peak coal portfolio. On Wednesday, Keith Johnson at the WSJ’s Environmental Capital wondered whether TXU was in too much debt to go green. The question is framed wrongly – it’s not about whether TXU is too leveraged to go green, but rather about whether looming climate regulation will upset the economics of the power generation industry to a degree where the firm’s new capital structure won’t be optimal anymore. But the point is well made; while KKR and TPG were hoping that the cancellation of coal plants would reduce risk, it turns out that too much leverage may still put them in an environmentally-driven bind. Damned if you lever up to your eyeballs and cancel coal projects, damned if you don’t. On Wednesday, Jennifer Kho at Greentech Media wondered whether there would be competition for First Solar. Judging by the firm’s trailing and forward PE ratios, you definitely wouldn’t guess there’s competition on the way. Whether the challenger discussed in the article makes it or not, it is somewhat dumbfounding that no one had gone after First Solar in any meaningful until now. But I for one certainly don’t think that that will remain the case forever, and until I have a clearer picture of what the competitive landscape will look like once the industry has matured a bit, I wouldn’t touch that stock at this level with a ten-foot pole. On Friday, Robert Rapier at R-Squared Energy Blog argued that cellulosic ethanol was dead. This is an interesting take on the ethanol debate, and not a new point of view from the author. Of course, political leaders have invested much political capital in both corn-based and cellulosic ethanol, and this could ensure that many hurdles are surmounted at whatever the cost. Path dependency in policy-making can be an incredibly powerful force, and the US is showing no sign of veering off the ethanol path. Although I do like gasification technology, I’m definitely not ready to write-off cellulosic ethanol just yet. On Saturday, Neal Dikeman at Cleantech Blog told us about doing cleantech the right way. I’ve discussed GE’s cleatech moves on a number of occasions in the past. There’s no doubt that by applying its notorious corporate culture and discipline to the emerging fields of cleantech and alt energy, GE has been able to achieve great successes, fast. As pointed out by Neal, this flies in the face of VC folks who often believe that large conglomerates are not nimble enough to play in high growth spaces like cleantech. In fact, in these times of uncertain equity markets, larger and more stable firms are a safer way to play cleantech than emergent pure-plays. Where’s GE headed to next? Looks like electric cars and batteries.
