What is Goldman Sachs doing in rural Texas? Probably some of its bankers have wondered that themselves, when they find they're three hours from the nearest latte.
A Texas turbine.
Photo: NREL / Cielo Wind Power
One of Goldman's subsidiaries, Houston-based Horizon Wind Energy, is constructing a $600 million, 400-megawatt wind farm in the boonies west of Dallas. Financiers of other wind-power projects and explorations, spread across central and west Texas, include Wells Fargo; JPMorgan Chase; Macquarie, Australia's largest investment bank; and John Deere's credit division, which already has close ties to rural America.
To some extent, the lure of wind for such financial powerhouses is obvious. Bankers are always looking for high-growth sectors for investment or loans. Wind fits the bill, as the fastest-growing energy segment in the world. In Texas -- which last year passed California to become the largest wind-power producer in the U.S. -- the boom is sometimes likened to the gold rush. Energy giants such as BP and Shell are investing heavily too.
From the perspective of local developers, the interest is more than welcome. "It's nice to have steady financial backing," says Randy Sowell, a wind developer in West Texas. His company, Austin-based Fremantle Energy, has entered into a joint venture with Macquarie to start up wind and renewable-energy projects in the U.S. "You need to have that substantial muscle behind you to have that commitment."
Rob Powell of Austin-based Verde Energy also appreciates the long-range financing that big banks can provide. Verde Energy, which helps homeowners and businesses get quotes for installation of renewable-energy systems, recently partnered with Wells Fargo, which will make loans to homeowners seeking an installation.
Big-money backers are particularly crucial when it comes to buying wind turbines. Manufacturers haven't been able to keep up with soaring global demand, so turbine prices have risen substantially in recent years and wind development now requires a sizeable capital outlay. Nowadays you need "millions of dollars of non-refundable reservation fees for turbines two to three years in the future," says Sowell. Local developers have little prayer of raising that kind of cash, but to a Wells Fargo or a Goldman, it's small change.
The prospect of a tight turbine market doesn't faze Wells Fargo, which is soon to close on its fifth wind deal. (Of the four completed so far, three are in Texas and one is in Maine; the company has no solar deals yet.) Most major wind developers have pre-purchased the turbines they'll need through 2009, says Barry Neal, Wells Fargo's head of environmental finance, so they won't suffer from the shortage.
Investment banks are also attracted to the wind biz by the federal production tax credit, which amounts to 1.9 cents-per-kilowatt-hour for wind-generated electricity over 10 years. "Many times the developer or sponsor of the wind farms doesn't have the income to fully take advantage of those tax credits," says Neal. "To do that, they really need to bring in large institutional investors." Wind developers large and small hope (and expect) the feds will continue to renew the tax credit; it's been allowed to lapse in years past.
Could the big boys lose interest? Texas may be poised for a slowdown. Not only are there turbine shortages, but construction of transmission lines has not kept up with growth -- so even though Texas needs all the energy new wind farms could provide (especially with plans for a number of TXU coal plants recently scuttled), the immediate potential of wind is limited. Another problem is that the Panhandle, with some of the fiercest winds in the state, is on a different grid system from the rest of Texas.
"We're getting ready to hit the wall on transmission all over the state by early next year or the end of this year," says Sowell. That's a problem the financial giants may not be able to buy their way out of.
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Truly Scrumptious Posted 4:31 pm
26 Mar 2007
Why do I have this unsettled feeling in my gut right now?
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Rune Posted 8:36 pm
26 Mar 2007
But don't worry, neither of the silent Zilkhas are CEO of Horizon Wind Energy today. Goldman Sachs has installed Alec G. Dreyer as the new head honcho. Alec came to Horizon from Dynegy, Inc., which saw its stock finally rise almost as soon as Dreyer left, after sinking like a stone then remaining more or less flat while he was there, during which time the company's credit was declared to be "junk" by Standard and Poor's--the result of an illegal trading scandal similar to the one pulled off at El Paso Corp. (Not that Dynegy has cleaned up its act. As David Roberts recently pointed out, Dynegy is in a merger deal that will make it the owner of the most dirty coal fired electric generation plants in the United States.)
While he was there, Dreyer did get some unique experience at Dynegy . . . as a named defendant in a law suit in which he was among those leaders of the company who failed to protect the retirement benefits of employees. More importantly to Goldman Sachs, which is supposedly very concerned about promoting environmental responsibility, Dryer was also a losing defendant in a case in which the EPA busted the company for failing to install pollution control equipment, which led to a bunch of emissions violations. Those violations were Dreyer's responsibility for, as president of the company, it was up to him to oversee"environmental policy for all of Dynegy, as well as environmental compliance activities."
I'm not sure these are the best credentials for a supposedly green business leader, but kudos to Goldman Sachs for getting Dreyer into a business in which there isn't much opportunity to cut costs by increasing dangerous emissions. Now if Goldman Sachs could just set a good example for Dreyer by cleaning up its pattern of illegal trading. Perhaps that will be a little easier now that the scandal ridden Henry Paulson stepped down as CEO so he could contribute to the Bush administration as the U.S. Treasury Secretary.
So, like I said, what could possibly go wrong with such marvelous leadership and experience to draw upon? Well, other than the fact that the electric grid in Texas won't carry much more energy, the turbines needed to generate the energy are back ordered for a couple years, and they are installing them in tornado alley, where they could easily be destroyed, year after year, by weather that is expected to become increasingly violent as global warming progresses, I mean. ;-)
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Delay And Deny Posted 1:37 am
27 Mar 2007
The stock jumped today because Connecticut may use their systems for "clean" generation.
See...that's why I'm more Green that you Gristers...I put my money where my mouth is!
http://biz.yahoo.com/ap/070327/fuelcell_energy_contract.h ...
DANBURY, Conn. (AP) -- FuelCell Energy Inc., which makes stationary fuel cells, said Tuesday the Connecticut Clean Energy Fund chose six projects that would receive 68 megawatts of the company's fuel cell products.
FuelCell Energy valued the deal at up to $200 million if all six projects receive approval.
The state's two electric distribution companies will review the energy fund's recommendations and perform additional analyses, leading to their selection of the projects to receive long-term power purchase agreements.
Shares of FuelCell Energy jumped $1.39, or 19.3 percent, to $8.59 in morning trading on the Nasdaq Stock Market.
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Delay And Deny Posted 2:44 am
27 Mar 2007
http://www.quietrevolution.co.uk/qr5.htm#
The cost is $48,000 -- not cheap, but on an installment plan you don't have to be Julia Roberts to Go Green.
They've featured this article in http://digg.com
The quietrevolution (QR) was designed in response to increasing demand for wind turbines that work well in the urban environment, where wind speeds are lower and wind directions change frequently.
The elegant helical (twisted) design of QR ensures a robust performance even in turbulent winds. It is also responsible for virtually eliminating all noise and vibration.
At five metres high and three metres in diameter, it is compact and easy to integrate, and with just one moving part, maintenance can be limited to an annual inspection.
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Rune Posted 4:28 am
27 Mar 2007
Hydrogen fuel cells are not energy sources, they are inefficient batteries that wear out and need to be refurbished or replaced every few years. The systems produced by FuelCell Energy, Inc. are powered by hydrocarbons. At this point, it is not clear that hydrogen fuel cells will ever make economic or environmental sense. Meanwhile, there is enough hype and public funny money in the system to create an industry that delivers posturing rather than real progress for its customers.
See...that's why I'm more Green that you Gristers...I put my money where my mouth is!
Some of us "Gristers" have designed and installed our own clean energy generation and conservation systems and we use them every day instead of just throwing money at a company that can't deliver a truly clean and renewable energy system or do anything about the end users' energy efficiency. Actually getting informed and involved by taking responsibility for your own energy production and consumption instead of making arms lengths investments that are primarily aimed to make some money, not account for one's own energy and related emissions seems a little greener to me.
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Bruce Frykman Posted 8:43 am
28 Mar 2007
Rather than rely upon the latest for profit technology fads like Priuses etc. that just end up breaking, going obsolete, and eventually filling our landfills, my solution recycles the waste products of energy consumption while it greens the planet.
It involves liberating the wonderful gas called hydrogen from limitless fuel sources called hydro-carbons whereupon it this wonderful gas combines with a dangerous atmospheric plant produced pollution and in the process produces water vapor which helps cloud formations which in turn helps cool our fevered planet.
Another benefit of this reaction is a gas that readily dissolves in the earth's oceans where solar energy converts it into phyloplankton, the basis of the food chain for all sea born life. Its salmon food folks.
The only drawback is that it is intensively life supporting and threatens all of the the Earth's dead places. Our wastelands could actually be threatened with shrinkage only to be filled with critters frolicking in newly formed natural greeneries. Im working out a method of correcting this deficiency using Zyklon-B as a catalyst.
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GreyFlcn Posted 10:58 am
28 Mar 2007
Austin Powers Up Green: 'Plug In My Hybrid Baby'
http://www.treehugger.com/files/2007/03/austin_powers_u_1 ...
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Liara Covert Posted 8:38 pm
05 Apr 2007
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