Finance

Subsidies for renewable energy projects, a mainstay of U.S. policy for 20 years, is coming to an end. What next?

After a slowdown in the first half of 2012, merger activity in the power sector may be heating up again. One surprising target given the current environment: Coal.

As electric power utilities look ahead, they see the need for major financial investments, but also view a more difficult world in which to raise the needed funds for financing generation and transmission. That’s the conclusion of the 12th annual survey of global power and utility firms by PwC.

Renewable energy sources have increasingly become a focal point of U.S. regulatory and financial institutions as well as trade associations and legislatures. One area of particular interest is programs that have been established by local and state governments to encourage homeowners to become more energy efficient through the use of Property Assessed Clean Energy (“PACE”) loans.

Scaling back and outright expiration of government subsidies will make financing renewable energy projects more difficult in the future, according to experts at the law firm of Mintz Levin Cohn Ferris Glovsky and Popeo. But there will still be a greater appetite for renewables than there is supply, so it should still be possible to find the funds to build the projects.

Consider state clean energy funds as potential replacement funding sources for future clean energy projects.

Despite a quiet 2011, this year promises to be one of the biggest for power industry mergers in quite some time—if FERC lets it happen.

The energy trading business is changing as Wall Street adjusts to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act. What does that mean to you?

Public power utilities depend upon access to capital at favorable rates. So the munis pay special attention when Wall Street rating agencies talk about tinkering with how they establish bond ratings for municipal utility projects. Thus, recent moves by Moody’s Investors Service has drawn some fire from public power.