Energy groups must find new sources of funding

Robin Pagnamenta, Energy and Environment Editor, in Davos

A revolution in the way the US produces and uses energy has the potential to lead the world out of recession, but energy companies will need to tap into new sources of non-bank funding, the head of one of America’s largest power groups said today.
James Rogers, chairman and chief executive of Duke Energy, said that there was building momentum in the US for a concerted push to slash carbon emissions by building low-carbon sources of electricity and investing in energy efficiency.
However, he said that the collapse of the global credit markets was forcing companies such as Duke, which plans to invest $25 billion (£17.5 billion) over the next five years in new wind, solar and nuclear power stations as well as energy efficiency equipment, to look beyond traditional sources of funding and the use of banks as financial intermediaries.
“I don’t think it is going to go back to business as usual,” he told The Times on the sidelines of the World Economic Forum in Davos.

“The crisis has really motivated a rethink about how we raise finance.”
He said that Duke was planning to establish an in-house team that would seek to build long-term direct relationships with investors, including sovereign wealth funds in Asia, Chinese national banks, wealthy individuals or pooled funds.
“Capital is our lifeblood, so this is a pro-active approach,” he said. “It’s about going to where the money is.
"In some ways this is a return to the pre-1980s model of business investment, where it will be about a set of long-term relationships.”
Mr Rogers said that the total investment programme required to overhaul America’s energy infrastructure would cost “trillions of dollars” and would create huge numbers of jobs that would help to stimulate the US and global economy.
“Even though the capital markets are in uncharted waters, addressing climate change will give us the focus to pull out of this recession,” he said.