scenario: what if electricity prices...
TRANSCRIPT
Flagship Report: Alternative Energy
Scenario: What if electricity prices fell?
What is the prospect for lower electricity prices? US electricity prices havesteadily increased in nominal terms over the last five decades. However, usinghistory as a guide, we observe two distinct periods of falling prices driven bytechnology and government subsidies. We believe that a confluence of factors couldonce again result in structurally lower prices.
Factors at play – Cheaper natural gas, the falling cost of photovoltaic solar systems,and the emergence of battery storage have the potential to drive down retailelectricity prices. Transmission and distribution expenditure is often cited as a keydriver of higher electricity prices, but our research forecasts a relatively minimalcontribution of these expenditures to the real electricity price through 2040.
Potential impact to power market participants – In discussing implications forpower market participants under a declining electricity price scenario, we posit:1) consumers and utility-scale renewable energy generators would benefit; 2) wires-only utilities would see a mixed/neutral impact; and 3) vertically integrated utilities and retail/commercial scale renewable energy generators would be challenged.
A closer look at SolarCity – As a proxy for the US rooftop solar market, we considerSolarCity’s business model with a particular focus on the annual price escalatorincluded in customer contracts. If electricity prices fall, our analysis suggests thatrenewal rate assumptions may prove aggressive – a risk to the company’s valuation.
Company Type Potential Impact Example Companies
Vertically integrated utilities Negative
American Electric Power Company Duke Energy
Consolidated Edison FirstEnergy
Wires-only utilities (transmission and distribution)
Neutral ITC Holdings UIL Holdings Eversource
Utility scale renewable energy generators
Positive SunEdison
Residential and commercial scale renewable energy providers
Negative SolarCity
Vivint Solar
Consumers Positive
Source: Cornerstone Capital Group.
©GreenJo/Canva
Sebastian Vanderzeil Research Analyst 212-874-7400
Michael Shavel Global Thematic Analyst 212-874-7400
Andy Zheng Research Associate 212-874-7400
Global Thematic Research July 16, 2015
2 Please see important disclosures at the back of this report.
Table of Contents
What is the history of the US electricity market? ................................................................. 3
Could the next structural change be under way? ................................................................. 5
Natural gas .................................................................................................................................... 5
Photovoltaic solar systems ..................................................................................................... 6
Battery storage ............................................................................................................................ 6
What are the current forecasts for electricity prices? ........................................................ 8
Fuel prices ..................................................................................................................................... 8
Transmission and distribution costs ................................................................................. 9
How might electricity price deflation affect different power companies
and consumers?....................................................................................................................... 11
SolarCity ...................................................................................................................................... 13
Why might this not happen?....................................................................................................... 16
Future transmission and distribution expenditure .................................................. 16
System flexibility ..................................................................................................................... 16
Natural gas prices ................................................................................................................... 17
Solar subsidies and net metering ..................................................................................... 17
Clean Power Plan .................................................................................................................... 17
3 Please see important disclosures at the back of this report.
What is the history of the US electricity market?
Average real retail electricity prices across the United States have fluctuated
within a fairly consistent band over the past five decades (Figure 1). As this
implies, nominal electricity prices have steadily increased over the same period.
Figure 1: Real electricity prices by sector, 1960-2014
Source: Cornerstone Capital Group, EIA, 2015
The real electricity price stability of the past 50 years, together with the nominal
increases, could be interpreted as evidence that electricity prices do not
experience significant, lasting decreases. However, looking beyond the past 50
years to the full history of the US electricity market, we note two periods of
significant price decreases driven by rapid deployment of technologies and
government investment/subsidies that improved the cost and availability of
electricity in the US.
Figure 2 shows the average cents per kilowatt-hour (kWh) price for electricity
over the last century.
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4 Please see important disclosures at the back of this report.
Figure 2: Electricity prices, USA, 1900-2014
Source: 1907-1970: Historical Statistics: Vol 1 Series S116,118,119; 1960-1998: Annual Energy Review table 8.13; 1998-2015 U.S EIA; Cornerstone Capital Group
The chart shows major decreases in real electricity prices in 1910-20 and 1936-
45. While there may have been other factors at play, the key triggers were
advances in technology:
1910-20: Following the invention of the electricity generation system by
Thomas Edison in 1882, municipalities installed electricity systems for
lighting and transportation. However, electricity prices remained elevated
until Sam Insull, President of the then-small Chicago Edison Company,
installed new technologies including steam turbines and alternative current
(AC) transformers around 1911. The rapid spread of these technologies
enabled electricity production to increase and be transported over many
miles without significant losses1. Real electricity prices dropped 55% over
this period.
1933-45: Real electricity prices remained steady until the implementation of
President Roosevelt’s New Deal, which included the establishment of the
Tennessee Valley Authority and government-funded construction of a
number of hydropower plants. By 1940, cheap hydropower accounted for
40% of electrical generation in the US, resulting in a significant decrease in
real electricity prices2.
While the past five decades have been marked by relatively consistent real
electricity prices, there is precedent for new technology and government support
to trigger structural change that drives down electricity prices over the long
term.
1910-1920prices decline 1933-1945
prices decline
Since 1960Relatively steady prices
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5 Please see important disclosures at the back of this report.
Could the next structural change be under way?
The technological improvements and government subsidies currently at play in
the US electricity market resemble the conditions during the two structural
events in the 20th century. While there are a number of factors that may drive
down real electricity prices—the power system is highly interconnected, so
delineating the impact of particular factors is difficult—we focus on three with
outsized potential to have an impact over the next decade:
Natural gas prices;
Solar systems; and
Battery storage.
Natural gas
The immense growth in domestic natural gas production has decreased the price
of natural gas delivered to gas-fired power stations, as seen in the charts below.
Natural gas-fired generation consequently has become substantially cheaper. The
falling cost of gas-fired generation, coupled with increasing regulation on other
base load generation such as coal, means that cheaper gas-fired generation
should increase its share of the generation mix.
Figure 3: Forecast Natural Gas Production Figure 4: Natural Gas Electric Power Prices 2002 through 2014
Source: EIA, Annual Energy Outlook Reference Case Source: EIA, 2015
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6 Please see important disclosures at the back of this report.
Photovoltaic solar systems
At the same time, utility and residential scale solar systems are being rapidly
deployed. Replacing fossil-fuel plants with renewable energy plants that produce
electricity at zero variable cost changes the marginal generator that supplies the
market and thereby decreases marginal prices. This so-called merit order effect
tends to reduce wholesale electricity prices3. The forecast reduction in the cost of
solar systems (Figure 5) will make installing solar systems at the utility or
commercial/residential levels more competitive versus other generation sources.
Figure 5: Average U.S photovoltaic module forecasts
Source: NREL, 2014
As a result, photovoltaic solar installations in the US continue to grow: 2014 saw
a 30% increase (by 6.2 gigawatts) over the previous year4. The residential sector
grew by 51% and the utility sector grew by 38%. Installation of solar was 4,751
megawatts (MW) in 2013 with a growth rate of 41%.
Solar is also supported by a range of government subsidies at the municipal, state
and federal levels. Currently, solar projects are eligible for a federal investment
tax credit (ITC) worth 30% of a project’s equipment and construction costs. In
addition to the ITC, solar power generation is explicitly supported by state-based
subsidies such as Renewable Portfolio Standards (RPS). States set RPS targets for
renewable energy generation, making renewable energy generation even more
attractive.
Battery storage
The final factor, which is somewhat longer term, is the emergence of electricity
storage to support the continual uptake of solar systems. At the utility scale, Con
Edison Development and GE have announced a joint venture to develop an 8
MWh storage project for renewable energy in California’s Central Valley. Ongoing
7 Please see important disclosures at the back of this report.
storage research and development should allow more renewable energy to be
dispatched at peak periods5.
At the residential level, the announcement of the PowerWall by Tesla6 is one part
of a major push to commercialize storage. The use of battery storage systems in
tandem with solar panels should enable residential customers to optimize their electricity consumption and avoid peak period prices. The question of when
batteries will be distributed widely enough to influence electricity prices will
depend on battery prices. Figure 6 shows that the cost of batteries is expected to
continue to decrease gradually and, if significant technological advancements are
made, the decreases could potentially double over the same period of time.
Figure 6: Cost of battery storage to consumers (2010 Dollars per kWh)
Source: US EIA, 2012
In addition, Tesla and Panasonic are building battery factories that will come
online in the next few years. Conservative estimates suggest the efficiency gains
from these factories will decrease the cost of batteries by 30%, for a cost of $200
per kWh, while more optimistic estimates believe that batteries will cost $100
per kWh within 10 years7.
While there is uncertainty about the impact of storage on wholesale electricity
prices, a study by Brattle Group, for Oncor Electric Delivery in Texas, states that
storage will enable the deferral of expensive transmission and distribution
expenditure8. These costs are currently borne by retail electricity consumers and
their deferral could materially reduce retail electricity prices.
8 Please see important disclosures at the back of this report.
What are the current forecasts for electricity prices?
In considering whether a structural decrease in real electricity prices is possible
over the next decade, it is useful to examine the reasons that electricity prices are
forecast to rise. The US Energy Information Administration (EIA), in the Energy
Outlook 2015 (AEO 2015), forecasts that real electricity prices will continue to
increase out to 2040 due to future fuel commodity price rises and infrastructure
costs.
The reference case generated by the EIA projects that increasing costs of electric
power generation and transmission and distribution, coupled with relatively
slow growth in electricity sales (averaging 0.7%/year), will result in an 18%
increase in the average retail price of electricity (in real 2013 dollars) from 2013
to 20409.
Figure 7: Average retail electricity prices (2013 cents per kWh)
Source: EIA, 2015
Importantly, no EIA scenario predicts lower real average electricity prices in
2040 than in 2013. It is worth exploring the two key factors, fuel prices and
infrastructure costs, that the EIA believes will drive modest increases in real
electricity prices over the next 25 years.
Fuel prices
EIA predicts a rise in fuel prices, particularly for natural gas, as a result of higher
global oil prices, as these commodities are linked through supply contracts. (The
EIA notes that this link is weakening.) Higher global natural gas prices then affect
domestic natural gas prices as global prices increase the attractiveness and
prospects of US LNG exports.
No EIA scenario predicts lower real average electricity prices
9 Please see important disclosures at the back of this report.
Figure 8: North Sea Brent crude oil spot prices (2013 $)
Figure 9: Average Henry Hub spot prices (2013 $)
Source: EIA AEO 2015 Source: EIA AEO 2015
While the analysis undertaken by the EIA focuses on different scenarios, we
believe the High Oil Price scenario ($150/bbl oil by 2020) is unlikely given the declines of 2014. Furthermore, the remaining oil and gas scenarios suggest that
fossil fuel prices will increase over time. While we do not forecast fossil fuel
prices, we question the linkage between global oil prices and domestic natural
gas prices in the medium-term. If this linkage breaks down, it is possible that US
natural gas prices remain lower for longer, thereby resulting in lower electricity
generation costs.
Transmission and distribution costs
Recovery of capital expenditure by regulated electricity utilities is the other
factor we have identified as a driver of electricity prices over the next 25 years.
While generation prices are determined differently in states with regulated
electricity supplies than in competitive markets, the EIA’s baseline assumption is
that 67% of electricity sales are subject to regulated average-cost pricing and
33% are priced competitively, based on the marginal cost of energy. In fully
regulated regions, both fixed costs (such as the costs of paying off electricity
plant construction and fixed operation and maintenance costs) and variable costs
(fuel and variable operation and maintenance costs) determine the price of
generation.
These regulated costs would be included in future electricity prices. However, it
is important to understand the magnitude of these forecast costs. The forecast
contribution of generation, transmission and distribution to the real electricity
price in 2040 is shown in Figure 10.
Potential exists for natural gas prices to stay lower for longer
10 Please see important disclosures at the back of this report.
Figure 10: Retail electricity price increase forecast, 2013-2040
Source: EIA AEO 2015, Cornerstone Capital Group
While the EIA report points to significant future capital expenditure as the driver
of increased transmission and distribution*, the actual contribution of this
expenditure to the real electricity price in 2040 is relatively minimal. A reduction
in the forecasted increase in generation costs would therefore partially offset the
contributions of transmission and distribution expenditure on prices in 2040.
* EIA AEO2015 Pg.9 “There has been a fivefold increase in investment in new electricity transmission capacity since 1997, as well as large increases in spending for distribution capacity. Since 1997, roughly $107 billion has been spent on new transmission infrastructure and $318 billion on new distribution infrastructure, both in 2013 dollars. Those investments are paid off gradually over the projection period. Although investment in new transmission and distribution capacity does not continue in the AEO2015 Reference case at the pace seen in recent years, spending still occurs at a rate greater than that needed to keep up with demand driven by requirements for additional transmission and distribution capacity to interconnect with new renewable energy sources, grid reliability and resiliency improvements, community aesthetics (including burying lines), and smart grid construction.”
+ Price Increase
from Generation
from Transmission
from Distribution
2013 RetailElectricity
Price
2040 RetailElectricity
Price
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(2013 $)
11 Please see important disclosures at the back of this report.
How might electricity price deflation affect different power companies and consumers?
In light of our analysis, we believe there is insufficient evidence to dismiss the
possibility of stable or falling US electricity prices over the medium to long term.
This scenario presents a risk to companies dependent upon steadily increasing
electricity prices and would likely have wide-reaching impacts across various
industries (i.e. utilities, traditional and renewable energy, and industrials).
In Figure 11, we discuss implications for power market participants. This is not
an exhaustive list and the complexity of the power system means that our
assessment assumes all other factors remain constant.
We also take a deeper look at SolarCity (SCTY) given its status as a proxy for the
growing US rooftop solar market.
12 Please see important disclosures at the back of this report.
Figure 11: Potential impacts to power market participants
Company Type Potential Impact Reasoning Example Companies
Vertically integrated utilities
Negative
Existing capital investment in baseload generation is dependent on rising electricity prices where demand is flat or falling. Analysis by Lawrence Berkeley National Laboratory Lab10 suggests that vertically integrated utilities with existing fossil fuel generation capacity will face asset write-downs and decreasing returns on equity as renewable energy penetration increases. Impact of falling prices may be less for utilities with large gas fired generation capacity which can be cheaply used to fill in between periods of renewable power generation.
American Electric Power Southern Company
Duke Energy Consolidated Edison
FirstEnergy
Wires-only utilities (transmission and
distribution) Neutral
The impact of falling electricity prices is unknown given that a strong regulatory regime exists to ensure return on investment to these companies. Assuming continued flat or falling demand and potential falling wholesale prices, it is possible that consumers will revolt against continued transmission and distribution charge increases*. A countervailing force is the transmission and distribution expenditure proposed to refurbish existing networks, integrate renewable energy systems and improve grid resiliency.
ITC Holdings UIL Holdings Eversource
Utility scale renewable energy generators
Positive
Ongoing improvements in technology and continued subsidies (ITC and RPS) means that utility scale renewable energy generators should improve in commercial attractiveness. A study by MIT states that utility scale PV is cost competitive with natural gas generation in California assuming solar generators could capture the full value of subsidies 11.
SunEdison
Residential and commercial scale renewable energy
providers
Negative Flat or falling electricity prices may reduce the attractiveness of higher cost residential solar systems to protect against higher power bills; however, falling panel prices and innovative financing models could enable some companies to generate returns.
SolarCity Vivint Solar
Consumers Positive Lower electricity prices should benefit electricity consumers.
Source: Cornerstone Capital Group
* In 2010-2011, PG&E rate payers in Central Valley, California revolted against a proposed rate increase and the company sought new regulatory rate increases from the California State Government. The resulting reform is outlined on the PG&E website - http://www.pge.com/en/myhome/saveenergymoney/plans/rateupdates/about/index.page
13 Please see important disclosures at the back of this report.
SolarCity
SolarCity is the leading supplier of solar as a service to US residential,
commercial and government customers. The company is vertically integrated
with functions spanning solar module production, selling, financing, installing,
and monitoring and maintenance. It sells renewable energy to customers at
prices below utility rates, typically facilitated by long-term customer agreements
in the form of a Power Purchasing Agreement (PPA), lease or loan.
Despite differences in the contractual terms of these agreements, a consistent
feature is the inclusion of an annual price escalator. This escalator varies by
contract but 2.9% appears to be a commonly quoted rate.* That said, SCTY
disclosed in the most recent quarter that the average annual escalator for MW
deployed was 2.2%, so assuming an effective rate escalation between 2 and 3%
appears reasonable†.
Figure 12: Residential PPA, Lease and MyPower Comparison
Source: Company presentation (2/18/15)
Applying this escalator to the current electricity rate of $0.13 offered to SCTY
customers (based on blended 1Q 2015 deployments), we calculate that
customers will be paying approximately $0.19-0.23/kWh by the end of the
twentieth year of the contract. This is relative to a possible grid electricity price of $0.31/kWh (based on the historical growth rate of ~3.1% in SCTY’s current
markets). We highlight Year 20 because PPA and lease customers have the option
to renew their contract for another 10 years or terminate the agreement at this
point. However, as seen in Figure 13, should grid electricity prices stabilize or
decline, SCTY customers will be paying more for electricity than grid customers
within 8-12 years, depending on their contracted annual escalator.
* http://www.solarcity.com/sites/default/files/solarcity-contract-resi-ppa-example.pdf† This represents a blended average of both commercial and residential leases and PPAs, as well as SCTY’s MyPower loan product.
14 Please see important disclosures at the back of this report.
Figure 13: Forecast electricity price comparison*
Source: Cornerstone Capital Group, EIA, Company filings
This relationship is key: If prices paid by SCTY customers rise above grid prices,
the risk of lower renewals increases. In a less probable but still possible scenario,
existing customers may default or demand renegotiation to a lower price. The
MyPower product offered by SCTY engages a customer in a 30-year loan to own,
alleviating some of the renewal uncertainty associated with PPA/lease. Still, the
company expects MyPower to be about 25-30% of their mix in 2015, which
indicates there is still renewal risk associated with new megawatts deployed.
For lease and PPA energy contracts, SCTY assumes the contracts are renewed at
a contract price equal to 90% of the contractual price in effect at expiration of the
initial term (Year 20) through the remainder of the expected 30-year system life.
This means that SCTY’s base case is that 100% of customers will renew for 90%
of what they are paying in Year 20. Should retail electricity prices stabilize or
decline, this assumption may prove aggressive. SCTY states that approximately
one-third of the $147 million of Economic Value Creation in Q1 2015 come from
years 20 through 30.†
* The Forecast – historical growth 3.06% line is provided as an indication of possible future electricity prices for comparison with the SCTY blended electricity price. The line does not include a range of factors which could increase or decrease prices over this period. † Economic Value Creation is a key metric in measuring the economics and expected cash generation from installations. It represents an estimate of the NPV of the forecasted net project cash flows available for distribution from MW Deployed during the applicable period under Energy Contracts.
15 Please see important disclosures at the back of this report.
Figure 14: Economic Value Creation for MW Deployed in 1Q 2015 – 1/3 of value is non-contracted
Source: Company filings, Cornerstone Capital Group
The company also provides Retained Value sensitivities, which indicate that
Retained Value declines by approximately 4% with every 10% drop in the
renewal rate (utilizing a 6% discount rate).*
Figure 15: Retained Value Sensitivity ($/Watt)
Discount Rate
4% 6% 8%
Renewal Rate
70% 2.10 1.64 1.32
80% 2.20 1.71 1.37
90% 2.30 1.78 1.41
100% 2.41 1.85 1.46
Source: Company filings, Cornerstone Capital Group
Herein lies a risk to SCTY’s valuation. If investors become skeptical about the
company’s forecasted renewal rates, projected economic value creation and
retained value may be cut due to lower forecasted cash flows or a higher
discount rate (greater risk premium demanded).
* Retained Value is a key metric which represents the NPV of all future cash flows from contracts that have been booked, net of costs.
16 Please see important disclosures at the back of this report.
Why might this not happen?
Several factors have the potential to prohibit falling retail electricity prices. In
our view, key factors include:
Future transmission and distribution expenditure;
Power system flexibility constraints;
Natural gas prices;
Solar subsidies and net metering; and
Clean Power Plan.
Future transmission and distribution expenditure
In our opinion, a major risk to long-term electricity price deflation is the
regulated returns to transmission and distribution (T&D) infrastructure that is
slated to be developed over the next decade. These costs are locked into future prices. The Department of Energy and the International Energy Agency (IEA)
state that the US power grid will require between $900 billion to $1 trillion over
the next 15 years to modernize the grid, integrate renewable energy sources and
replace aging infrastructure.
The DOE’s “Quadrennial Energy Review: Energy Transmission, Storage and
Distribution Infrastructure,” released in April 2015, references a study by Edison
Electric Institute which states that “the US electric utility industry would need to
make a total infrastructure investment of $1.5 trillion to $2.0 trillion, of which
transmission and distribution are expected to account for about $900.0 billion.”12
The Edison Electricity Institute’s study, released in 2008, forecasted large growth
in coal-fired generation between 2010 and 2020 as well as an annual increase in
electricity sales of more than 1%. Both of these forecasts have not come to
fruition, so forecasted transmission and distribution expenditure would be
different than the 2008 forecast.
Additionally, the IEA provides commentary in the World Energy Outlook 2015
that “almost a further $1 trillion in T&D expansion and replacement” will be
needed in the US13. The report does not provide further detail on the timing and
incremental costs of this expenditure.
System flexibility
The Future of Solar Energy report by MIT explores the potential impact of solar
system penetration on wholesale electricity prices and states that power system
flexibility (the ability to move from one generation source to another) may be a
The cost of planned infrastructure spending is locked into future prices
17 Please see important disclosures at the back of this report.
source of price increases as the number of solar systems increases14. Their view
is that solar production will drive wholesale electricity prices down during peak
generation periods for solar; however, the heightened dependence on expensive
flexible generation, such as gas-fired power stations, in non-solar production
times may increase the average price of wholesale electricity.
Natural gas prices
The other risk is that natural gas prices rapidly return to levels seen in the last
decade, increasing the price of natural gas-fired generation. This may occur as a
result of supply reduction through the implementation of government
regulations that slow industry growth, or through significant increases in
demand. The EIA forecasts that the natural gas prices will increase from a spot
price of natural gas at Henry Hub averaged $2.85/ million British thermal units
(MMBtu) in May 2015, and forecasts that the price will be $3.42/MMBtu in 2016
due to increasing demand.
Solar subsidies and net metering
A factor that may hamper the fall of electricity prices is the removal of renewable
energy subsidies. The legislated step-down for the ITC to 10% at the end of 2016
has prompted some concern about continued growth in utility scale; however,
the Obama Administration announced it intends to grant a permanent extension
to the ITC15. Major changes to subsidies may impact the uptake of solar systems
and reduce the deflationary impact of solar on electricity prices. In addition, net
metering is a major contributor the economic viability of residential solar, and changes to net metering arrangements may materially impact the rollout of
residential solar systems.
Clean Power Plan
The final, and most complex, factor with the potential to increase the retail price
of power in the short term is the US Environmental Protection Agency’s (EPA)
Proposed Pollution Guidelines for Existing Power Plants under President
Obama’s Clean Action Plan. This proposed rule, released in June 2014, proposes
state-specific, rate-based goals for carbon dioxide emissions from the power
sector, as well as guidelines for states to follow in developing plans to achieve the
state-specific goals. The accompanying regulatory assessment released by the
EPA states the impact of the proposed rule is a 1.1-3.2% increase in average
electricity bills to 2020 but a 3.2-5.4% decrease by 2025.16
Reductions in subsidies could hamper solar growth
18 Please see important disclosures at the back of this report.
Sebastian Vanderzeil is a research analyst with Cornerstone Capital Group. He holds an MBA from New York University’s Stern School of Business. Previously, Sebastian was an economic consultant with global technical services group AECOM, where he advised on the development and finance of major infrastructure across Asia and Australia. Sebastian also worked with the Queensland State Government on water and climate issues prior to establishing Australia’s first government-owned carbon broker, Ecofund Queensland.
Michael Shavel is a Global Thematic Analyst at Cornerstone Capital Group. Prior to joining the firm, Michael was a Research Analyst on the Global Growth and Thematic team at Alliance Bernstein. He holds a B.S. in Finance from Rutgers University and is a CFA Charterholder.
Andy Zheng is a Research Associate at Cornerstone Capital Group. Andy graduated from Bowdoin College with an interdisciplinary major in Mathematics and Economics and a minor in Visual Arts. He spent his junior year studying abroad at the University of Oxford and the summer prior to that at the Sorbonne in Paris. Andy passed Level I of the CFA Program in January 2014.
Research support has been provided by Eli Pinhas, Research Intern, Cornerstone Capital Group.
Public companies mentioned in this report, price as of July 15, 2015 close
American Electric Power Co. AEP $55.68 Panasonic Corp PCRFY $13.12
Consolidated Edison ED $60.79 SolarCity SCTY $52.54
Duke Energy Corp DUK $74.02 SunEdison Inc SUNE $31.08
Eversource Energy ES $47.72 Tesla Motors TSLA $263.14
FirstEnergy Corp FE $33.86 UIL Holdings Corp UIL $46.84
General Electric Co GE $26.77 Vivint Solar VSLR $11.11
ITC Holdings Corp ITC $33.78
Source: Cornerstone Capital Group
19 Please see important disclosures at the back of this report.
1 Smithsonian Institute, Emergence of Electrical Utilities in America, http://americanhistory.si.edu/powering/past/h1main.htm 2 DOE, 2015, History of Hydropower, Department of Energy, http://energy.gov/eere/water/history-hydropower 3 MIT, 2015, Future of Solar Energy, https://mitei.mit.edu/system/files/MIT%20Future%20of%20Solar%20Energy%20Study_compressed.pdf 4 SIEA, 2014, Solar Industry Data, http://www.seia.org/research-resources/solar-industry-data 5 Business Wire, 2015, Con Edison Development Enters in Agreement to Procure GE Energy Storage System, April 15 2015, http://www.businesswire.com/news/home/20150416005122/en/Con-Edison-Development-Enters-Agreement-Procure-GE#.VaPto_lVhBd 6 Tesla, Power Wall, http://www.teslamotors.com/powerwall 7 “Tesla’s Gigafactory May Hit $100/kWh Holy Grail Of EV Batteries, Report Predicts” Clean Technica, http://cleantechnica.com/2014/09/05/teslas-gigafactory-may-hit-100-per-kilowatt-hour-holy-grail-ev-batteries-report-predicts/ 8 Brattle Group, 2014, The Value of Distributed Energy Storage in Texas, Prepared for ONCOR, November 2014 9 EIA, 2015, Annual Energy Outlook 2015 with Projections to 2040, April 2015, http://www.eia.gov/forecasts/aeo/pdf/0383(2015).pdf 10 Satchwell et al, 2014, Financial Impacts of Net-Metered PV on Utilities and Ratepayers: A Scoping Study of Two Prototypical U.S. Utilities, Berkley National Laboratory, September 2014 11 MIT, 2015, Future of Solar Energy, https://mitei.mit.edu/system/files/MIT%20Future%20of%20Solar%20Energy%20Study_compressed.pdf 12 DOE, 2015, Quadrennial Energy Review Report: Energy Transmission, Storage and Distribution Infrastructure, April 2015, http://energy.gov/sites/prod/files/2015/05/f22/Summary%205.18.15.pdf 13 IEA, 2014, World Energy Outlook 2014, pg 231 14 MIT, 2015, Future of Solar Energy, https://mitei.mit.edu/system/files/MIT%20Future%20of%20Solar%20Energy%20Study_compressed.pdf 15 PVtech, 2015, Obama proposes permanent extension of solar’s ITC, Feb 02, 2015, http://www.pv-tech.org/news/obama_to_propose_permanent_extension_of_solars_itc_according_to_reports 16 U.S EPA, 2014, Regulatory Assessment of Proposed Clean Power Plan Rule, http://www2.epa.gov/sites/production/files/2014-06/documents/20140602ria-clean-power-plan.pdf
20 Please see important disclosures at the back of this report.
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