SAFE, CLEAN, INEXHAUSTIBLE
5 TYPES
OF CLEAN ENERGy
“Clean energy” can refer to a range of technologies. Here are five that tap into power that’s virtually inexhaustible.
“Clean energy” can refer to a range of technologies. Here are five that tap into power that’s virtually inexhaustible.
Solar panels, deployed on individual homes and businesses, shared among communities or as large-scale solar facilities, have become less expensive and more efficient in recent years. That’s making it competitive with other technologies and driving a rapid growth in solar adoption.
Wind turbines produce some of the lowest-priced renewable energy. In places with enough wind, it’s already cost-competitive without subsidies, and in some regions it’s even cheaper than fossil fuels.
Sustainable biomass energy is derived from living or recently living organisms—everything from forest residue to algae and switchgrass.
Geothermal energy taps into the internal heat of the earth—from hot water just below ground to steam produced by molten rock much further down.
Falling or running water is one of the oldest energy sources in the world. When sustainably designed, hydropower can be a reliable source of clean energy.
Solar power—in particular, rooftop solar—is expected to continue its already rapid growth in the next few years.
view chartNo fuel costs—all you need is a clear view of the sky.
Enough solar energy falls on the earth in one hour to satisfy global energy needs for a year.
Source: National Geographic
Rooftop solar installations can reduce energy bills for U.S. consumers. New programs allow homeowners to lease them with little to no upfront cost—and the resulting savings can cover the lease payments with money to spare.
Reductions in energy bills from rooftop solar1
1Range cited by U.S. solar companies
Source: Goldman Sachs, North Carolina Clean Energy Technology Center
Over seven gigawatts of solar were installed in the U.S. in 2015. That’s enough to avoid over ten million metric tons of greenhouse gas emissions annually—equivalent to the carbon sequestered by:
Sources: Goldman Sachs, U.S. Energy Information Administration and Environmental Protection Agency
In 2016, the U.S. solar industry employed 260,000 people—up 25% from the year before. That was more than 15 times the job growth of the economy overall.
Source: Department of Energy, Bureau of Labor Statistics
The switch to renewables is just one way that the world’s energy usage is changing. Smarter, internet-connected devices are giving consumers the ability to track their power consumption and control lights and appliances.
Here’s how today’s technologies will come together in the house of tomorrow:
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“I’d put my money on the sun and solar energy.
What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle
that. “
Source: Uncommon Friends: Life with Thomas Edison, Henry Ford, Harvey Firestone, Alexis Carrel, and Charles Lindbergh, by James Newton
It takes great ideas to move an industry forward. But it takes capital to bring a great idea from the whiteboard to reality. Here are some of the key steps along the way:
In this early phase, governments, venture capital and other investments fund early development, prototyping and initial production. These can be risky for the investors, but capital at this phase is crucial for getting successful ideas off the ground.
If the early work is successful and the technology is proven and commercialized, the company usually launches an initial public offering (IPO) of stock or issue bonds. With access to capital markets, the company can scale up operations or expand its production facilities to reach more customers. Once the business has entered the markets, it becomes easier and more efficient to connect with investors and raise capital.
In recent years, new financing structures have provided the clean energy industry with greater capital access to grow and deploy renewable technologies at scale. Here are two examples—one raising money by issuing equity (i.e., stock), and another using debt (i.e., bonds).
what is a yieldco
A YieldCo is a publicly listed vehicle that owns operating assets such as solar power plants, allowing investors to share in the cash flows and growth from additional operating asset acquisitions, while recycling capital to the parent company for new development.
High-growth clean energy companies carry business risks. These include the need to fund project developments that require large amounts of upfront capital with returns spread over a long period of operation—building renewable power plants, for example. This risk drives investors to seek greater returns, which can lead to a higher cost of capital.
Once clean energy plants are built, they generally offer stable, reliable, long-term cash flows. A YieldCo gives investors a chance to participate in that cash flow stability through a dividend (or "yield") while avoiding the associated development risks.
In addition, YieldCos often have a pipeline of future assets to acquire from the Parent Company or third party developers, allowing investors to realize cash flow growth in addition to yield. For clean energy developers (e.g. a Parent Company), aggregating operating assets and selling them through the YieldCo provides a mechanism through which it can free up capital that can be used to fund additional clean energy growth and development.
Sources: Goldman Sachs Global Investment Research
1. Before securitization: companies have a mix of loans on their balance sheets, each generating individual cash flows.
2. With securitization, assets are aggregated into a special purpose vehicle.
3. The aggregated, diversified assets are structured into bonds that can be sold to investors.
Clean energy companies often own many smaller-scale assets—rooftop solar leases, for example—which generate stable cash flow over time, but may not provide upfront liquidity.
Securitization allows companies to aggregate expected cash flows from those smaller-scale assets into larger, diversified bundles. “Slices” of these securitizations are then structured as bond tranches and sold to investors, who receive a portion of the cash flows over time. The companies get upfront capital that they can reinvest in growth, while still maintaining a residual ownership interest in their projects.
Technological innovations and new financing methods are making renewable energy more accessible than ever before. As a result, solar, wind, hydropower and other sustainable sources are expected to account for half of our global energy mix by 2030, according to estimates from Bloomberg New Energy Finance.
This transformation will allow the world to meet its growing power needs more sustainably—helping to create a cleaner, healthier and brighter future.
Total Installed Generating Capacity, 2012-30 (GW)
Source: Bloomberg New Energy Finance - New Energy Outlook 2015
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