Transcript: Renewable & Alternative Energy
Elliott: Welcome to Five Minute Capital, CIT’s executive insight series which takes on financial issues in five minutes or less. Today we’ll be talking about renewable and alternative energy with Peter Gaw, President of CIT Energy. Welcome back Peter.
Peter: Thank you, Elliott.
Elliott: Peter, as you know people are very interested renewables and alternative energy. It’s a very hot topic right now. Where are these financial deals being done?
Peter: Well, overall the energy business is booming and that is certainly the case in renewables and alternative energy. Two sectors we are seeing right now - one is on the power side - which is for wind development and solar development. Both those areas are very significant as far as growth potential that we are seeing. You know we are under enormous pressure in this country and around the world on renewable energy and we have to see alternatives. On the alternative energy side we are seeing a lot of activity both in ethanol but now biodiesel in particular. Those are going to be important components as we look out at a variety of resources beyond just hydrocarbons.
Elliott: Are these energy sources economically viable, yet?
Peter: They vary. Wind certainly has come a long way both from a technology standpoint and an economic standpoint. It still does rely on subsidies from the government to a far lesser extent than it did ten years ago. Solar is still not commercially applicable. I think the issue that we’ve seen in solar, is that we’ve seen a fifty percent reduction in solar costs, every year, for the last ten years. But it is still not economically viable on its own. It will rely on subsidies and that will continue for some period of time. But, I think it’s very important, as we look out, we have to identify new sources and these are two of the highest potential in our minds.
Elliott: Do you think the government will always be involved in this?
Peter: I think to a large extent, yes. This is as much a public policy issue as energy issue. And I think we have determined both as a country but as a globe that we have to promote alternatives beyond just oil and gas. And I think the government will stay involved. It will decrease over time, which I think is important, but I think government leadership in this area is critical. Elliott: You talk about leadership, many states are trying to pass legislation for renewable energy benchmarks. Do you think that’s a good idea?
Peter: Well, I think it’s important for states to be involved and states to set expectations on renewable energy but those expectations have to be realistic. And I think in many cases we have benchmarks that probably are unattainable and in some cases you have to put a solar panel on the back of every cow in order to meet the standards. But, I think it’s critical to have standards. And what we’re seeing is with our client base at CIT Energy is people are very focused on this. The investment opportunities are high and people are moving into the renewable area in great speed.
Elliott: Tell us about some of the latest changes in technology in this area of renewable and alternative energy.
Peter: Well I think this is one of the highest growth areas which is often times not noticed. What we’re seeing in solar for example - enormous advances in photovoltaic technology - the application of solar both from a retail, as well as a commercial standpoint, and industrial standpoint, this is very important. I think those applications and those technological changes are going to accelerate as we go out over the next ten years and I think it will be a very exciting time. We are seeing it in wind as well. Turbine capacity has gotten much more efficient - greater capacity. We are seeing it in things like smart homes, advanced metering design. The amount of venture capital that’s moving into the energy area is astounding and I think this is one of the key solutions that we have to looking at a diversified energy supply.
Elliott: So, has solar power changed that much in the last ten years or so say?
Peter: Well, as I have said before, we’ve seen a fifty percent reduction, every year, for the last ten years of prices for solar, so that gives you a sense of the advancement. I think we are seeing enormous new designs in solar, photovoltaic designs that make it much more applicable to our lives on a daily basis. So, the investment that we’re seeing is significant and the advances we are seeing are significant. It’s probably something we don’t notice every day but it is going to be an important part of the solution.
Elliott: Is cheap renewable energy still that far off?
Peter: I think that renewable energy will never be cheap. I think we have to get adjusted to that. There is a cost of diversifying our energy supply and that’s part of that cost. Can it be competitive? Absolutely. We are seeing that with wind right now for example. Is it going to be long term cheap? Unless there is a sudden technological development beyond our expectations, I think the cost of energy, and energy prices, are going to be high.
Elliott: Anything you haven’t mentioned yet regarding renewables and alternative energy that you think is worth watching?
Peter: Well, I think the one thing that I will say is the energy technology and the advancement in energy technology are very important. At CIT Energy we’re supporting our clients as they invest in renewable and alternative energy and I think we are going to see some major changes in the next twenty-five years that we couldn’t imagine today.
Elliott: Peter Gaw, CIT Energy President. Thank so much for joining me.
Elliott: And thank you for listening to Five Minute Capital. Please log on to podcasts.cit.com for more. I’m Elliott Forrest. This has been a production of CIT. CIT – Capital Redefined