Biden win boon for grid investors — financial execs

Source: By Peter Behr, E&E News reporter • Posted: Wednesday, November 11, 2020

President-elect Joe Biden’s victory over President Trump last week pointed the U.S. toward more clean energy opportunities for the power sector and its funders, speakers at an industry investor roundtable said yesterday.

“This really was a fork in the road for energy,” Catherine Mann, managing director and global chief economist at Citigroup Inc., said at the annual Edison Electric Institute’s Financial Conference.

“To be very simple, under a Biden administration those [U.S.] firms that are engaged in energy are going to be able to compete on a global stage” in emerging clean energy technologies, she said.

“That wouldn’t have been the case under a second Trump administration,” said Mann, whose early career posts included President George H.W. Bush’s Council of Economic Advisers and the Federal Reserve.

Casey Herman, leader of the power and utilities sector for financial services firm PwC, agreed.

“President-elect Biden’s vocal support for decarbonization and clean energy investment, and large-scale electrification, in addition to other infrastructure investments, certainly provides potentially exciting opportunities for the [grid] sector,” Herman said.

If Republicans hold a Senate majority next year, that will reduce the speed and size of a Biden clean energy agenda but will not derail a trend toward decarbonization, he added.

The trend responds to investor and customer demand, “and I don’t think that’s going to subside,” Herman said.

Other speakers echoed these outlooks while acknowledging policy and technology hurdles that lie ahead. Chosen by EEI, the organization of U.S. investor-owned utilities, the panelists painted a bullish picture of what the grid’s transformation can mean to investors, despite challenges posed by the COVID-19 pandemic.

“The country is in a difficult state,” said George Bilicic, who heads the global power, energy and infrastructure investment banking practice at Lazard Ltd. “We need growth in investment.”

While the upbeat news about the development of a COVID-19 vaccine is promising and important, widespread deployment of vaccines is in the distance, Mann said.

The public must be convinced of the effectiveness of vaccines to return the economy to a normal state, she added. “We’re a long way away.”

That raises the importance of new clean energy investment as a potential multiplier for economic growth, Bilicic said.

“Folks should see renewables are beneficial to the environment, but also to plain old-fashioned economic growth opportunities, and the opportunity to create jobs whether you’re in a blue state, a red state or a purple state,” he said.

Mann said there could be room for climate measures in a future pandemic relief bill. “There are a lot of pro-climate Republicans that were very silent for the past 3 ½ years,” she said. They could support fiscal legislation that “moves from being a life preserver to being something that is building a better boat” through investment incentives, she added. “We’ll have to see if it works out.”

The panel’s upbeat outlook even extended to the politically untouchable price on carbon.

A carbon tax “would be an aggressive thing” to try to get into a budget and tax package, Herman said. But he added, “There seems to be some level of growing support that a carbon tax might provide some certainty that might bolster investment as opposed to scaring people away.”

The looming policy challenge from progressives hoping to push Biden away from natural gas did not register as a top obstacle.

“Gas generation will get chopped down a little by renewables,” Bilicic said, but won’t become irrelevant. It will be needed to back up renewable power and cover periods of peak grid demand, he said.

In a second panel, electricity industry executive Maria Rigatti also saw a need for natural gas in diminishing amounts. “From an affordability perspective, there’s still going to be some gas in the mix,” said Rigatti, executive vice president and chief financial officer of Edison International, the Southern California utility.

Several speakers warned of tighter regulation they expect from a Biden administration. The top threat to a successful clean energy transition is the risk that the large cohort of federal and state officials who oversee the industry will go in different directions, Rigatti said.

“We have to make sure we have coordinated policies” to keep pace with tightening clean energy targets, Rigatti added. “If we don’t start hitting the mark in the near term, then … to get to the end is going to be very, very difficult.”