Newenergynews today’s study resolving the financial risks of new energy

While the IT sector continues to be a leader in the market (with 29% market share), 2018 has seen the sustained participation of many other industries in this space. More than half the procured capacity over the past year came from outside the IT sector and included industries like telecommunications, retail, manufacturing, and healthcare. This is reflected in Figure ES3, which shows how the participation from different industries has evolved over the years.

Despite the tremendous growth in 2018 (with a 70% increase in announced transaction volume from 2017)i and the increasing diversity in the market, only around 60 companies have completed additional, off-site procurement of renewable energy in the United States.3 When that is compared to the number of companies with decarbonization targets (over 150 companies set targets4 just in the past year), it is clear that this market holds enormous potential for future growth and change.

The Business Renewables Center (BRC) engages with a broad group of stakeholders to bring down market barriers and enable more megawatts of clean energy on the grid. The BRC consists of a membership that is representative of the market it has seen evolve and now works with—over 90% of all US corporate buyers are BRC members and 96% of all US off-site procurement involves a BRC member.5

The PPA contracting structure brings a unique set of risks for each counterparty. Some of these risks (including price, basis, and shape risk) are specific to the wholesale electricity market, and are thus risks that corporate buyers do not encounter in their core business operations. A lack of familiarity with these risks makes it all the more important for buyers to understand them, their implications, and the applicability of different mitigation options (as highlighted in the report). Failure to assess and address these risks could cause buyers to experience unexpected—and significant—financial downside over the lifetimes of their contracts.

While the PPA contracting structure has proven scalable and effective for delivering renewable power, it is only one contract structure with one set of specific risks. The PPA’s unique set of risks may align well with one company’s risk appetite, while misaligning entirely with a different company’s risk appetite. This lack of variety around risk mitigation is increasingly at odds with a market diversifying in size and industry as the spectrum of risk appetites is broadening.

• Market evolution: the BRC has been at the center of this market since its inception. It has seen how this market has grown and diversified in a short period of time. Through conversations with solution providers and by means of general domain knowledge, the BRC has gathered that the pace of risk solution expansion has been much slower than the pace of market expansion.

• Stakeholder conversations: the BRC has spoken to many stakeholders from multiple stakeholder groups—buyers, developers, risk managers, lawyers, financiers, and consultants. All the stakeholders are market leaders in their own right and one theme that emerged from many conversations was that risk mitigation is a growing challenge that must be addressed sooner rather than later.

To satisfy this broadening spectrum of risk appetites, the BRC advocates for an expanded set of risk mitigation solutions and contracting tools, as highlighted in the report. There is a need to move from a one-size-fits-all to a “many-sizes-for-all” approach in risk management that ensures rapid but sustainable market growth in the long run.

• OIL IN THEIR BLOOD, The American Decades, the second volume of Herman K. Trabish’s retelling of oil’s history in fiction, picks up where the first book in the series, OIL IN THEIR BLOOD, The Story of Our Addiction, left off. The new book is an engrossing, informative and entertaining tale of the Roaring 20s, World War II and the Cold War. You don’t have to know anything about the first historical fiction’s adventures set between the Civil War, when oil became a major commodity, and World War I, when it became a vital commodity, to enjoy this new chronicle of the U.S. emergence as a world superpower and a world oil power.

• As the new book opens, Lefash, a minor character in the first book, witnesses the role Big Oil played in designing the post-Great War world at the Paris Peace Conference of 1919. Unjustly implicated in a murder perpetrated by Big Oil agents, LeFash takes the name Livingstone and flees to the U.S. to clear himself. Livingstone’s quest leads him through Babe Ruth’s New York City and Al Capone’s Chicago into oil boom Oklahoma. Stymied by oil and circumstance, Livingstone marries, has a son and eventually, surprisingly, resolves his grievances with the murderer and with oil.

• In the new novel’s second episode the oil-and-auto-industry dynasty from the first book re-emerges in the charismatic person of Victoria Wade Bridger, “the woman everybody loved.” Victoria meets Saudi dynasty founder Ibn Saud, spies for the State Department in the Vichy embassy in Washington, D.C., and – for profound and moving personal reasons – accepts a mission into the heart of Nazi-occupied Eastern Europe. Underlying all Victoria’s travels is the struggle between the allies and axis for control of the crucial oil resources that drove World War II.

• As the Cold War begins, the novel’s third episode recounts the historic 1951 moment when Britain’s MI-6 handed off its operations in Iran to the CIA, marking the end to Britain’s dark manipulations and the beginning of the same work by the CIA. But in Trabish’s telling, the covert overthrow of Mossadeq in favor of the ill-fated Shah becomes a compelling romance and a melodramatic homage to the iconic “Casablanca” of Bogart and Bergman.

• Monty Livingstone, veteran of an oil field youth, European WWII combat and a star-crossed post-war Berlin affair with a Russian female soldier, comes to 1951 Iran working for a U.S. oil company. He re-encounters his lost Russian love, now a Soviet agent helping prop up Mossadeq and extend Mother Russia’s Iranian oil ambitions. The reunited lovers are caught in a web of political, religious and Cold War forces until oil and power merge to restore the Shah to his future fate. The romance ends satisfyingly, America and the Soviet Union are the only forces left on the world stage and ambiguity is resolved with the answer so many of Trabish’s characters ultimately turn to: Oil.

• Commenting on a recent National Petroleum Council report calling for government subsidies of the fossil fuels industries, a distinguished scholar said, “It appears that the whole report buys these dubious arguments that the consumer of energy is somehow stupid about energy…” Trabish’s great and important accomplishment is that you cannot read his emotionally engaging and informative tall tales and remain that stupid energy consumer. With our world rushing headlong toward Peak Oil and epic climate change, the OIL IN THEIR BLOOD series is a timely service as well as a consummate literary performance.

• OIL IN THEIR BLOOD, a superb new historical fiction by Herman K. Trabish, addresses our energy illiteracy by putting the development of our addiction into a story about real people, giving readers a chance to think about how our addiction happened. Trabish’s style is fine, straightforward storytelling and he tells his stories through his characters.

• In Part II, the matriarch tells the tragic story of the second generation and reveals how she came to be part of the tales. We see oil become an international commodity, traded on Wall Street and sought from London to Baku to Mesopotamia to Borneo. A baseball subplot compares the growth of the oil business to the growth of baseball, a fascinating reflection of our current president’s personal career.

• There is an unforgettable image near the center of the story: International oil entrepreneurs talk on a Baku street. This is Trabish at his best, portraying good men doing bad and bad men doing good, all laying plans for wealth and power in the muddy, oily alley of a tiny ancient town in the middle of everywhere. Because Part I was about triumphant American heroes, the tragedy here is entirely unexpected, despite Trabish’s repeated allusions to other stories (Casey At The Bat, Hamlet) that do not end well.

• In the final section, World War I looms. Baseball takes a back seat to early auto racing and oil-fueled modernity explodes. Love struggles with lust. A cavalry troop collides with an army truck. Here, Trabish has more than tragedy in mind. His lonely, confused young protagonist moves through the horrible destruction of the Romanian oilfields only to suffer worse and worse horrors, until–unexpectedly–he finds something, something a reviewer cannot reveal. Finally, the question of oil must be settled, so the oil industry comes back into the story in a way that is beyond good and bad, beyond melodrama and tragedy.

• Along the way, Trabish gives readers a greater awareness of oil and how we became addicted to it. Awareness, Paul Roberts said in THE END OF OIL, "…may be the first tentative step toward building a more sustainable energy economy. Or it may simply mean that when our energy system does begin to fail, and we begin to lose everything that energy once supplied, we won’t be so surprised."

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