"developers should bear the capture price risk" runs somewhat counter to the vanilla CfD logic. Do you reckon the 'capability-based CfDs' touted by Belgium (and now Denmark) is the right way to go?
I agree with your comments about the oil and gas companies. They are too used to soaking the consumer to pay for very high returns on their investments that they can't cope with the better value that CfDs bring to energy consumers!
Very interesting. So the narrative of majors being useful to steer oil&gas money to renewables is a myth? Because majors are better suited for high risk high return and short term investments rather than long term commitments?
There's no shortage of money for renewables, despite what one may hear. There's no need for oil&gas majors' money, especially as it comes with strings attached - notably that pressure to be profitable at a level that these projects should not be able to achieve.
Majors can do long term, but they are not geared to do (relatively) low risk - and renewables needs to be low risk to attract cheap capital and thus be competitive
Crystal clear to me except for one thing. What does that mean for a form not to be geared for low risk projects? If you can handle risky projects you should be able to do easier projects (meaning lower risk) isn’t it?
The thing is that investors in oil&gas companies expect high returns, so if you employ the capital for lower-risk endeavors, returns on that capital are below expectations and stock prices tank
Thanks for sharing, Jerome!
"developers should bear the capture price risk" runs somewhat counter to the vanilla CfD logic. Do you reckon the 'capability-based CfDs' touted by Belgium (and now Denmark) is the right way to go?
Thanks
Can you remind me the rules of the CfDs? I have not followed closely the most recent developments there. Maybe by email?
Yes surely - will write to you on linkedin
I agree with your comments about the oil and gas companies. They are too used to soaking the consumer to pay for very high returns on their investments that they can't cope with the better value that CfDs bring to energy consumers!
Very interesting. So the narrative of majors being useful to steer oil&gas money to renewables is a myth? Because majors are better suited for high risk high return and short term investments rather than long term commitments?
There's no shortage of money for renewables, despite what one may hear. There's no need for oil&gas majors' money, especially as it comes with strings attached - notably that pressure to be profitable at a level that these projects should not be able to achieve.
Majors can do long term, but they are not geared to do (relatively) low risk - and renewables needs to be low risk to attract cheap capital and thus be competitive
Crystal clear to me except for one thing. What does that mean for a form not to be geared for low risk projects? If you can handle risky projects you should be able to do easier projects (meaning lower risk) isn’t it?
The thing is that investors in oil&gas companies expect high returns, so if you employ the capital for lower-risk endeavors, returns on that capital are below expectations and stock prices tank