This spring, 40 SOM and FES students studied “Financing Green Energy” with Lecturer in Finance Jon Anda. Students analyzed cleantech stocks, debated the merits and risks of upcoming cleantech IPOs, and read academic papers at the leading edge of energy and environmental economics. The conversation ranged across renewables, efficiency, PEVs, nuclear, natural gas with CCS, and hybrid power plants. The underlying theme was that advanced analytics on energy system costs and lifecycle analysis are critical to decision-making and understanding cleantech valuations.
Andrew Kraczkiewicz, a second-year joint degree student between SOM and FES, commented on the class, “Jon Anda’s fast-paced lectures forced us to make quick buy or sell judgments about clean energy stocks and strategize about the option value of companies as well as possible investment exit strategies. The assignments were creative and challenging, and the class left me wanting more.”
For the first assignment, students wrote essays advocating their best ideas for public policies (in the US, China, or India) designed to increase capital flows to green energy in a way that would be economically efficient and accretive to global competitiveness. Top papers covered PACE, on-bill financing, carbon intensity disclosure, and transmission cost allocation.
The second assignment was an 8-minute video pitching an existing VC portfolio cleantech company to a follow-on investor in the private market. “Oscar winning” videos included student pitches on behalf of Bloom Energy (which won Prof. Anda’s “Trusted Partner” Award), Nest (earning the “Full-Story” Award) and Mission Motors (receiving the coveted “Here's a Check” Award!).
The final project consisted of group presentations designating “pairs trades,” where teams selected one cleantech stock to be long and another (cleantech or fossil fuel) to be short, in order to maximize risk-adjusted returns over a 5-year timeframe. Compelling arguments were made for investors to go long companies like A123, Ameresco, BYD, SunPower, Waste Management, and Zolt. Short positions against these were for Suzlon, Patriot Coal, Amyris, Nordex, Pacific Ethanol, and Kior.
“Financing Green Energy provided an excellent opportunity to evaluate not just green technologies, but the green companies seeking to develop them,” reflected first-year FES student Dustin Meyer. “All of us were pushed to develop effective and innovative financing strategies that could succeed in pushing the green energy sector forward.”
Overall, the course identified the challenges of financing green energy without a price on carbon, and the “financing gap” between today's capital markets and the tens of trillions needed for the world to get on a 450ppm and 2 degrees C pathway. While it may be early to specialize in financing green energy, the opportunities in this field are such that learning about it is clearly a popular “long” for SOM and FES students.
Declared Tommy Hayes, a first-year joint degree student between SOM and FES, “I'd recommend this course to anybody who wants to go work for a cleantech company - in any type of position.”