Ep229: Declan Falanagn, CEO of Bluestar, Discusses Renewable Investing
Nov 9, 2023
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Declan Flanagan, CEO of Bluestar Energy Capital, discusses promising markets, supply-chain risks, capital raising, pricing changes, viability of technologies like battery storage and offshore wind in the renewable energy sector. Topics include growth potential in wind, solar, and storage projects, challenges in the supply chain, battery storage's value and future growth, overcoming hurdles in renewable energy development, and the importance of perseverance and discipline in renewable energy investing.
Blue Star Energy Capital focuses on US, Australia, and Europe for renewable investments.
Cost of capital has increased but project viability depends on contracts and schedules.
Offshore wind and battery storage are crucial for long-term energy transition.
Deep dives
Renewables Market Focus: US, Australia, Europe
Blue Star Energy Capital focuses two-thirds to three-quarters of its development stage capital in the US market due to its attractive risk-adjusted opportunities. Australia, with its robust growth and market size comparable to Spain, is highlighted for renewables expansion. In Europe, a focus on storage markets, particularly in Germany, as a priority opportunity is emphasized.
Cost of Capital and Project Development
While the cost of capital has increased, well-structured renewable projects with favorable contracts and schedules remain financeable. The correction in public market valuations reflects a shift towards realistic growth expectations, ensuring competitive cost of capital for viable projects. Supply chain challenges have slowed project development, with a need to adapt to secure reliable equipment and navigate changing market dynamics.
Tax Equity, Offshore Wind, and Energy Transition
Tax credits remain a central driver for the renewable industry, with considerations around Basel III rules impacting capital costs. Offshore wind, experiencing growing pains, is anticipated to play a significant role in the long-term energy transition despite short-term challenges. Ensuring supply chain scalability, cost efficiency, and policy consistency are highlighted as crucial factors for offshore wind's success.
Storage Market Dynamics and Industry Transition
Batteries are recognized as pivotal in the energy transition, with opportunities for growth based on demand, retirement dynamics, and market conditions. Strategic development in storage requires expertise in supply chain management and optimizing capital investments. The hydrogen market, while promising for industrial use, demands further price-point adjustments and industry learning to realize substantial growth potential.
Renewable Project Development Insights
Successful developers in the renewables sector exhibit discipline, risk appetite, and long-term vision, understanding that project gestation periods typically span five to ten years. Staying focused on market dynamics, policy shifts, and disciplined capital allocation are key to navigating the complexities of renewable project development and ensuring sustained success.
Declan Flanagan, founder and CEO of Bluestar Energy Capital, joins us for a wide-ranging discussion, including what he sees as the most promising markets, supply-chain risk over the next few years, how have the ability to raise capital and pricing changed over the past few months, how viable he sees some technologies such as battery storage and offshore wind, and more.
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