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Anyone with a vested interest in clean energy has reason to feel uneasy this week as Pacific Gas & Electric plans to file for bankruptcy protection. The potential damage goes far beyond one California utility, reaching to the foundations of the clean energy economy, and I’ll tell you why.

I’m Dan Gearino, providing you with news and analysis about the energy transition. Send me news tips and comments at dan.gearino@insideclimatenews.org. Thanks for reading!


— Dan

The Bankruptcy Felt Around the Clean Energy World

PG&E said on Monday that it will file for bankruptcy because it is unable to cover its potential liability for wildfires that were started when trees came into contact with the company’s power lines.


The announcement shows the costs of being unprepared for the disasters tied to a warming world.


San Francisco-based PG&E is a key player as California moves toward its goal of getting 100 percent of its electricity from renewable sources by 2045.


Now, the company’s financial decisions will be subject to approval by a bankruptcy court for a period that could last for years.


But that’s not the part that scares developers. Their big concern is that the court could force changes to the company’s renewable-energy power purchase agreements.

A power purchase agreement, or PPA, is a contract between the owner of a power plant and an entity that wants to buy the power. It is the most common financial instrument for buying and selling renewable energy. And, having a PPA in place is often essential for developers to obtain financing to begin construction.

The company has billions of dollars of renewable energy PPAs on the books, some of which extend to the 2040s.


Most of the company’s PPAs are for solar power, including some from years ago when solar equipment was much more expensive. The power prices don’t look good today, and a bankruptcy court could force PG&E to renegotiate those deals.


Here’s where this becomes a national problem:


Many other utilities face climate risks that could lead to bankruptcy. Renewable energy developers could be looking at a ledger full of PPAs whose prices are not nearly as firm as once thought, said Ben Serrurier of Cypress Creek Renewables, one of the country’s largest renewable energy developers.


“If PPAs—even with a major utility—are subject to change, it could raise borrowing costs and hamper new development,” he told me.


While his company doesn’t have any PPAs directly affected by PG&E’s bankruptcy, just about every developer stands to lose from the potential erosion of confidence in PPAs.


This type of risk is not new and should not be a surprise, said Ron Lehr, a former Colorado utility regulator who is now a consultant for Energy Innovation, a clean energy think tank.


“Bankruptcy risk existed all along,” he said. In other words, that risk should have been priced into existing contracts. If it wasn’t, then it should be going forward—especially as climate change worsens and poses such wide-ranging risks.


While the bankruptcy process unfolds, PG&E says it will have enough money to pay for ongoing operations. So the lights will remain on, but not much is certain beyond that.


“Our goal will be to work collaboratively to fairly balance the interests of our many constituents—including wildfire victims, customers, employees, creditors, shareholders, the financial community and business partners—while creating a sustainable foundation for the delivery of safe service to our customers in the years ahead,” Richard C. Kelly, chair of the board of directors, said in a statement.

(Photo: Justin Sullivan/Getty Images)
 

Tough Questions on Race and Rooftop Solar

A new study shows that rooftop solar is being installed more often in white neighborhoods than in black and Hispanic neighborhoods.


Deborah Sunter, a Tufts University engineering professor and lead author of the study, told me the findings show a disparity that policymakers should work to reduce so that the benefits of solar can reach more deeply into more communities.
 

“It’s likely that if this gap is not addressed, it will continue to get worse,” she said.
 

Houses in white-majority census tracts are 21 percent more likely to have rooftop solar than houses in census tracts with no majority racial or ethnic group, says the study, published last week in the journal Nature Sustainability.
 

Houses in black- and Hispanic-majority tracts were 69 percent and 30 percent, respectively, less likely to have rooftop solar than those tracts with no majority group.
 

The figures are adjusted for income and only include houses with roofs that can support solar. The gaps would be even larger without these adjustments.
 

Sunter says the next step is for researchers to determine why these gaps exist.
 

She hopes that her research will lead others to look at how to spread the environmental and financial benefits of rooftop solar to places that are less likely to enjoy those benefits. This has implications for the clean energy economy, showing that there is likely an opportunity for solar installers to make inroads in underserved communities.
 

Looking for EVs in Detroit

Despite lots of talk about electric vehicles, automakers’ new models are mostly trucks and SUVs this week at the North American International Auto Show in Detroit.
 

This is not a surprise. As my colleague Marianne Lavelle wrote in October, U.S.-based automakers continue to focus on large vehicles that run on gasoline while talking about ambitious plans for EVs.
 

“I tend to treat these automaker promises to roll out electric vehicles kind of like New Year’s resolutions,” Simon Mui, a senior scientist at the Natural Resources Defense Council who focuses on clean vehicles, told the Associated Press. “There’s often a gap between what they promise and what they actually deliver.”
 

The most important EV announcement may have been last week at the Consumer Electronics Show when Nissan unveiled the new Leaf Plus, an improved version of its all-electric Leaf. The model goes on sale this spring and has a battery range of 226 miles, up from 151 miles with the current Leaf.
 

I wrote last week about how EV sales rose 81 percent last year, thanks to strong sales of the Tesla Model 3. Those numbers likely will rise substantially if automakers follow through on announced plans for new models, including electric trucks and SUVs.
 

Meanwhile, the Detroit show is a reminder that buyers and automakers remain focused on gasoline models.

(Photo: Marcel Kusch/picture alliance via Getty Images)
 

New York’s Cuomo Goes Big on Offshore Wind

New York Gov. Andrew Cuomo wants to develop 9,000 megawatts of offshore wind by 2035, part of a plan that he says will make New York a hub for the offshore wind industry.
 

That goal would blow away (sorry!) other states that have set offshore wind targets and would quadruple New York’s current standard. It was part of a speech this week and briefing book that show Cuomo hopes to make some big moves on clean energy now that his fellow Democrats control of both houses of the legislature.


His plans also include a doubling of distributed solar, from a current goal of 3,000 megawatts by 2023 to a new one of 6,000 megawatts by 2025. Distributed solar includes rooftop solar and other projects that are usually located on homes and businesses, as opposed to utility-scale solar projects.


Like the offshore wind plan, the solar goal, if achieved, would transform the clean energy economy in New York and the surrounding region.
 

The renewable energy plans would help New York meet a target of getting all of its electricity from carbon-free sources by 2040, a timetable that is five years faster than the goal set by California.
 

While these ideas are mere proposals at this point, the scale of Cuomo’s ambitions, and the fact that his party controls the statehouse, means he is well positioned to make this happen.
 

Federal Shutdown Hits Offshore Wind Projects

The partial shutdown of the federal government is leading to delays in the Vineyard Wind project, an 800-megawatt offshore wind farm.
 

The federal Bureau of Ocean Energy Management was to hold public meetings to discuss the project’s environmental impact statement, and those meetings are on indefinite hold, according to Greentech Media.
 

Meetings were scheduled for the first three weeks of this month. Vineyard Wind’s developers are urging residents to submit comments to the government online in place of the comments that would have been made at the meetings.
 

The companies were hoping to start construction this year on the 800-megawatt project, which would be the largest offshore wind farm in the country. Delays are a normal part of such a large project, but I doubt that developers had any idea a record-setting government shutdown would be among the obstacles.

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