Wind power just got kicked in the NUTS , someone h
Post# of 126911
(Total Views: 264)
Posted On: 03/05/2021 9:47:02 PM
Wind power just got kicked in the NUTS , someone has a BIG bill to pay !!!
Anyone Want to Buy a Texas Wind Farm?
The WSJ is out with a piece about the devastation last month's storm wreaked on Texas' wind industry. As much as one-third of Texas' total installed capacity of 32 GW is in major distress.
From the article:
Many wind farms in Texas, to get construction financing, enter into long-term hedged contracts with financial institutions in which the wind farm operator agrees to provide a steady stream of electricity to the counterparty.
If it cannot deliver electricity—because the wind isn’t blowing—the operator agrees to pay to purchase electricity on the wholesale market, or agrees to pay the counterparty to purchase it on its behalf.
In the case of this storm, the operators with frozen farms were required to buy all of their contracted energy at the then prevailing wholesale rate - $9000/mwh. This compares to the rates normally available for between $20-50/mwh.
Black swan strikes. Here's the money shot:
If nothing is done to unwind the power prices, they wrote, at least 46 projects totaling nine gigawatts of capacity “would suffer severe financial losses.” There are 31.9 gigawatts of wind power on the main Texas grid, and half or more were financed with hedged contracts, according to market observers.
For instance, in a state court filing, the owner of a 210-megawatt wind farm mostly in Deaf Smith County in the Texas panhandle said its counterparty on its hedged contract, JPMorgan Chase & Co., said it owed $71 million—while its annual revenues were only $15 million.
As I pointed out at the time this occured, Texas is in for a massive rethinking of it's green energy strategy. You are already seeing it in the "cooling off" of many, formally foolproof, green energy companies.
As a Texan, I want this problem fixed. As an O&G investor, I am incredibly pleased that this problem occurred when it did. It has helped rationalize the continued need for fossil fuels and provided a timely boost to my portfolio.
Anyone Want to Buy a Texas Wind Farm?
The WSJ is out with a piece about the devastation last month's storm wreaked on Texas' wind industry. As much as one-third of Texas' total installed capacity of 32 GW is in major distress.
From the article:
Many wind farms in Texas, to get construction financing, enter into long-term hedged contracts with financial institutions in which the wind farm operator agrees to provide a steady stream of electricity to the counterparty.
If it cannot deliver electricity—because the wind isn’t blowing—the operator agrees to pay to purchase electricity on the wholesale market, or agrees to pay the counterparty to purchase it on its behalf.
In the case of this storm, the operators with frozen farms were required to buy all of their contracted energy at the then prevailing wholesale rate - $9000/mwh. This compares to the rates normally available for between $20-50/mwh.
Black swan strikes. Here's the money shot:
If nothing is done to unwind the power prices, they wrote, at least 46 projects totaling nine gigawatts of capacity “would suffer severe financial losses.” There are 31.9 gigawatts of wind power on the main Texas grid, and half or more were financed with hedged contracts, according to market observers.
For instance, in a state court filing, the owner of a 210-megawatt wind farm mostly in Deaf Smith County in the Texas panhandle said its counterparty on its hedged contract, JPMorgan Chase & Co., said it owed $71 million—while its annual revenues were only $15 million.
As I pointed out at the time this occured, Texas is in for a massive rethinking of it's green energy strategy. You are already seeing it in the "cooling off" of many, formally foolproof, green energy companies.
As a Texan, I want this problem fixed. As an O&G investor, I am incredibly pleased that this problem occurred when it did. It has helped rationalize the continued need for fossil fuels and provided a timely boost to my portfolio.
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