Wednesday 27th June 2018

Wind Watch

Member Q&A: Jacob Susman, EDF Renewables
By Frances Salter

Jacob Susman is VP Head of Origination at EDF Renewables, where his primary focus is on originating long-term power contracts with corporate and utility customers. He recently spoke at our Financing Wind conference in New York.

In the simplest terms, what does your company do?

EDF Renewables has a global renewables presence, and our North American business includes Mexico and Canada as well as the US. We cover utility-scale renewables, plus distributed generation, and I have an asset optimisation business that manages renewables assets, both for our own account and third parties.

On the grid-scale side, we have developed about 10GW and we have about 5GW in our portfolio today. The overwhelming majority of those are wind, but solar is very rapidly catching up to wind as a major part of our portfolio. Then there’s the distributed side of the business, which is anchored on a C&I solar company we acquired in 2016 called groSolar, that we have now tacked onto an electric vehicle charging business.

Of the deals you’ve worked on which has been your favourite?

I was on the alternative energy investing desk at Goldman Sachs when renewable energy started to gain traction in the US. My favourite deal from back then was the firm’s investment in Horizon Wind Energy, which is now in operation. The second wind energy project is now approaching commercial operations – it’s called Copenhagen. Another wind energy project, Rock Falls, which has a contract with Kimberly-Clark, is also in operation. So I’d say those are some of the ones I’m most proud to have been involved in. Additionally, there’s a solar project I worked on here at EDF, which we haven’t announced publicly yet.

Which markets do you see the best opportunities in at the moment?

I am probably most bullish on the utilities’ increasing embrace of wind power, which is mostly focussed in the middle of the country. We’re having a lot of success from the Dakotas, down to the southwest. I would say that utilities’ embrace of renewables is present in Texas as well, but probably more based in solar.

What do you think is the biggest challenge facing wind energy?

The industry sounds like a broken record when we say this, but transmission continues to be a major source of untapped potential for at least the wind side of the renewables industry. I think that has to do with corporate buyers, because corporates typically want to settle their financial deals on renewables at the hubs and the renewables need to price their offering at the busbar. The more we can invest in the pathways between busbar and hub, the more these corporate deals can be unlocked.

It should be satisfying to grid operators to be able to beef up the grid, because I think generally they get a regulated rate of return. So it’s probably more a question of co-ordinating better and learning to accelerate some of those processes.

Which trends do you think will affect the wind sector most in the next 5 years?

The biggest change will be moving away from being a tactically-financed industry towards being debt-financed, which will have ripple effects around the industry from the tenures of contracts which can now be a little bit shorter, to the way that we contract for O&M, to who the ultimate financial sponsors are of these projects. It will free up people who are not US tax-based to own a lot more of their own generation.

We’re seeing some return on a little bit of inflation around the world but interest rates have stayed very reasonable. I think you could see the overall cost of capital in these projects coming down markedly once we transition off the PTC. This could partially offset any rise in the cost of wind which comes from losing the tax credit. So overall, to me it’s the shift from tax equity to debt that will be the biggest trend.