S&P Global Ratings analysts said that renewable energy suppliers that depend on PG&E Corp. are still being paid in full after the California utility’s bankruptcy but aren’t likely to climb out of junk territory anytime soon, WSJ Pro Bankruptcy reported. Green-energy producers are vulnerable to more potential downgrades as the impact on their finances from PG&E’s bankruptcy restructuring comes into focus, S&P analysts said on Friday. Several power suppliers that rely on PG&E for most or all of their revenues have already been downgraded, reflecting fears the utility may use bankruptcy law to cancel or renegotiate billions of dollars in energy purchase deals. PG&E hasn’t yet signaled which supply agreements it wants to keep and which to discard. The utility likely “will not make an immediate decision,” meaning years of potential uncertainty for some projects, said S&P analyst Anne Selting. Read more.
In related news, a major battery storage project that would help California replace three of its natural gas power plants may need to be scrapped as a result of PG&E Corp’s bankruptcy, Reuters reported. Californian electricity and gas supplier PG&E filed for bankruptcy protection in January, in anticipation of significant expected liabilities from wildfires in the state. The bankruptcy poses a threat to California’s climate change ambitions by putting in limbo dozens of large solar, wind, and other clean energy projects PG&E has contracted with other companies. Because PG&E can reject contracts in bankruptcy, energy developer esVolta LP said in papers filed with the U.S. Bankruptcy Court in San Francisco on Wednesday that it feared it would not be able to line up financing for its 75 megawatt Hummingbird battery storage project. “Hummingbird’s position is becoming untenable,” esVolta said in the filing, noting PG&E had said it was not in a position to make a decision on whether to keep or reject its contract for using the planned battery-storage facility. Read more.
