Friday, May 04, 2018

Moving On With Solar in Ohio

First Solar (FSLR:  Nasdaq) recently announced plans to build a new manufacturing plant in Ohio. The solar module manufacturer already has a large presence in Ohio near Perrysburg.  The new plant will be located nearby and will have capacity to produce 1.2 gigawatts of the company’s Series 6 thin film photovoltaic modules per year.  With the 600 megawatt capacity in the existing plant, First Solar’s presence in the U.S. will be 1.8 gigawatts, ensuring the company keeps its position as the largest manufacturer of solar modules in the U.S.
Capital investment in the new plant is projected to be $400 million.  First Solar management may be feeling quite prescient to have planned a U.S. expansion.  The new plant comes will be a plus for First Solar if Trump makes good on his tough talk about tariffs and abandonment of trade agreements.  In January 2018, the Trump administration imposed tariffs on solar panels as part of a plan to boost jobs. 

Tuesday, May 01, 2018

Bellying Up to Green Bond Table

DTE Energy Company (DTE:  NYSE) recently priced a ‘green bond’ issuance of $525 million to support renewable energy and energy efficiency.  The thirty-year bonds provide a coupon payment at 4.05%.  DTE is planning to buy solar arrays and wind turbines with its newly flush cash kitty.  The capital raise is of significance less for its size and purpose and more for the fact that a U.S. electric utility company is tapping this unusual financing vehicle.
True enough, green bonds are nothing new.  Created to fund projects with environmental or climatic benefits, the first green bonds were issued in May 2007 by the European Investment Bank (EIB).  The EIB’s Climate Awareness Bond was focused on renewable energy and energy efficiency.  The next year the International Bank for Reconstruction and Development (IBRD) issued the first bond actually labeled as a ‘green bond’, raising $440 million to support climate-focused projects. 
Image result for green bond image
Such special interest financing instruments help mobilize capital for projects that might otherwise fail to impress investors who are conditioned to evaluate project revenue against only internal expenses while ignoring external costs borne by society.  Projects delivering environmental or climate benefits include all benefits and costs.  Investors in green bonds certainly do not abandon the conventional financial metrics such as maturity, coupon, price, and credit quality.  However, cost/benefit analysis of the particular project gets attention as well.

Friday, April 27, 2018

Plastic Precedent

The American Chemistry Council advocates four solutions to the building plastic waste and contamination problems.  The recent post “Four Rs in Plastics Solution” on April 17th  describes the four Rs: ‘reduce, reuse, recycle and recover’.  Clever developers are finding all sorts of ways to repurpose plastic that has been properly sent to recycling as well as plastic that has become trash.  It is a plus for investors who are looking for lucrative and responsible projects to deploy their capital.

In this post we look at more commercial applications for recovered plastic.  Then we look at what it means for investors who are first to the table in the nascent recycled plastic sector.

Tuesday, April 24, 2018

Ultimate Plastic Claw Back

The post “Four Rs in Plastics Solution” on April 17th described the American Chemistry Councils’ recommendation to ‘reduce, recycle and recover’ plastic as solutions to fix the plastic contamination problem in our land and waterways. Once ‘cracked’ and chemically chained together, polymers that make up plastic do not give up their chemical properties easily.  Some plastics can last for hundreds of years.  While highly functional, plastics are anything but environmentally benign.
Each plastic type has its own typical mode of degradation.  When enough heat is applied to it polyethylene turns into a mixture of molecules that resemble gasoline.  Other plastic polymers only break up at the end of their long chains of molecules and they ‘upzip’ into various monomers, most of which are toxic.  To make matters worse toxic additives and fillers that help make plastic useful can leach out easily, contaminating the food chain and interrupting plant growth and animals reproduction. 
The building volume of plastic in landfills, fields, forests, and waterways is becoming a monumental problem.  Finding substitutes such as glass containers or reusing and recycling plastic are parts of the solution.  However, others see recovery of wayward plastics as critical to reducing contamination of the environment, especially the food chain.