Projects don’t get done in energy infrastructure—or in any field—without money. Lots of it. POWER-GEN International’s Show me the Money track follows the trail, showing the ways deals can get done—or not done.
Elias Hinckley, who chairs the Show Me the Money track, talks about his career, where the future probably leads us and what POWER-GEN offers in content focused on the almighty dollar and its place in the grid. Plus, he offers a little bit about what brings the engineer and financier together under one roof.
Hinckley is an energy finance partner at the law firm K&L Gates in the Washington, D.C. office. His practice incorporates tax, policy, and market insight to solve complex financing challenges for renewable energy companies, private equity, hedge funds, tax equity investors, real estate investors, independent power companies and public utilities.
Hinckley writes regularly on energy finance, policy and related topics and is on the board of directors for the Clean Energy Leadership Institute and the advisory boards of the Energy Collective and the Our Energy Policy Foundation. He also is an adjunct professor of international energy policy at the Georgetown University Edmund A Walsh School of Foreign Policy.
1. What happened earlier in your career to draw you toward energy finance and markets?
“I first started working in the energy industry kind of by chance—but what I recognized almost immediately was that access to energy and energy economics underpinned how our entire economy operates. This market is hugely capital intensive and also fantastically dynamic, so what I saw was an enormous set of related puzzles. How do we realize value and how do we harvest the necessary capital to solve these puzzles which are vital to solve for modern society to operate?”
2. Perhaps you stand at the crossroads where the power grid, investors, regulators and environmentalists meet. What direction do you think all of this takes in the near future?
“I think we have a sense of the general direction—lower cost renewables and storage along with increased pressure to reduce emissions drives a transition in the grid towards renewables. At the same time, new applications of data, AI, and machine learning at the power consumer level will continue to erode overall demand for power.
“What we don’t know is how quickly this occurs (globally or market by market). For example: Right now in the U.S. power markets the pace of new energy storage deployment is limited by wholesale market design and the inability for a storage system owner to monetize all of the value created by adding new storage, so how market design evolves—and this is a multifaceted process including FERC, state governments, buyers, and owners—will inform the pace of these broader trends.”
3. So much of clean energy’s momentum seems to be built on major companies making long-term PPA deals for renewables. Will that momentum slow down. Why or why not?
“In some instances this has already occurred—certainly a number of utilities have pulled back from offering PPAs. Given the trends in wholesale pricing in many markets this seems entirely reasonable (balance a commitment to long term pricing when prices are trending down against a future volatility hedge). This goes back to market design—if there isn’t a clear price signal for things like available capacity it gets really hard to find investors comfortable with the longer term revenue story for new projects without finding some other revenue protection like a hedge, which is expensive and at a macro level inefficient.”
4. By one name or another, the Show Me the Money Track has been part of POWER-GEN International for years. Why is it important to have the finance sector engaged at the same conference as engineers and operations chiefs?
“This event creates a rare opportunity to connect disparate areas of the power business. Engineers and operations teams don’t typically think much about finance and finance rarely gives much thought to the real nuts and bolts of a power project. However, both sides are necessary to make things work and to build new assets, so this forum provides an opportunity to learn how your side of the business fits with the other, as what is important to the other side.”
5. What will Show Me the Money offer this year that might be unique from previous conferences?
“We’re digging in little more on how some of the macro trends noted above are starting to materially change how the energy business gets financed. And we will also be examining how the investor and investment landscape is changing and really try to help the audiences think about how this will trickle down and affect their day-to-day business.”