This is an exclusive interview with Bryan Lawrence, a member of Yorktown Partners LLC, and the founder of Oakcliff Partners LLC.
Mr. Bryan R. Lawrence founded Oakcliff Capital, an investment partnership in 2004. Mr. Lawrence is Partner and Principal of Yorktown Partners, LLC. Prior to starting Oakcliff, he was a Partner and Managing Director of Lazard Freres & Co. LLC. He holds a Bachelor’s Degree from Yale, a Master’s Degree in history from Cambridge and an MBA from Harvard.
MOI Global: We read about falling costs for wind and solar. What is your view of the prospects for those forms of energy?
Bryan Lawrence: The falling cost of solar panels has made it possible for companies like First Solar to build utility-scale solar plants in sunny places like Nevada that deliver electricity at a price of 4 cents / kWh, which is competitive with natural gas-fired electricity. The 4 cent cost reflects a 30% upfront tax credit from the government, but stripping this subsidy out would still leave solar-fired electricity at 6-7 cents, compared to 4-5 cents from a modern combined-cycle gas turbine (CCGT) burning natural gas.
In the sunny parts of India, that 6-7 cent unsubsidized price is a bargain compared with diesel-fired electricity at 25 cents, even if it is available only when it is sunny. Solar penetration is expanding rapidly in developing countries because they do not have access to the developed world’s transmission grid and utility-scale generating facilities, and instead rely on expensive diesel generators. It’s a cruel fact that a wealthy American’s electricity is cheaper than a poor Indian’s because India has not made the investment to build a modern and efficient power grid. Bill Gates makes the point that the most effective way to improve the lives of the world’s 2 billion poorest people would be to give them cheap energy like we have in the US.
The cost of wind power has also dropped due to improvements in turbine design. With a production tax credit from the government of 2.3 cents / kWh, wind power developers are able to deliver electricity from new utility-scale wind plants at 4-5 cents, indicating that unsubsidized costs have fallen as low as 6-7 cents.
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