CLASS OF 2016
WORLD-GENERATION FEBRUARY/MARCH 2016
26
beginning, but time and effort early pays
off as the project proceeds.”
Next is the execution planning. “The
execution team analyzes what is different
about its project, starts with a standard plan
and modifies it to suit the project. The man-
tra has always been plan-plan-plan and our
plans are living documents; they can and do
undergo revisions. We also take pride in
‘looking around the corners.’ We think
about the variables, what might be differ-
ent, and we are ready for the unusual. We
are not looking at what we did last month,
but what’s going to be happening in three
months, including weather and issues that
might affect supply of craft. We don’t send a
team into the field and wave goodbye. We
are always looking at ways to support them,
to get them what they need on time, to
eliminate or lower potential roadblocks.”
Osborne is not unmindful of the com-
petitive nature of the business. “Combined
cycle is highly competitive and is pressed
with aggressive schedules,” he says. “It’s a
low-margin and high-risk business.
Everyone knows these jobs have to be done
efficiently, and for Bechtel most projects
operate under lump-sum turnkey contracts.
Osborne believes that other Bechtel
advantages are cultural. “We have a strong
relationship with the building trades,” he
says. “We’ve worked with them for a long
time. We have a very strong safety culture,
one we can put up against anyone else in
the industry. We also have a very strong
family culture; we want people to go home
to their families every night; I think we are
a leader in this. We want to be the contrac-
tor of choice, an employer that emphasizes
safety, family, and a place where people can
bring up any kind of issue. Generally, people
on a project work for us for three years.
They are part of our team. We want Bechtel
projects to be places people want to work.”
Bechtel’s relationship with OEMs and
vendors is also strong, according to
Osborne. “They know we will live up to our
promises,” he says.
SCOTT OSBORNE
CONTINUED FROM PAGE 6
level is only viable if there is no net meter-
ing. Net metering is not viable above a cer-
tain percentage of distributed generation
because it imposes a cost on the utility.
Someone has to assume the storage.
If distributed generation grows quickly,
then we will reach the ceiling for net meter-
ing and any additional storage will have to
done by the customers.
Storage will happen; there is no ques-
tion about it. Whether it happens in three,
four or five years depends on the distribut-
ed generation market.
WHAT WILL BE CARBON’STIPPING POINT?
Tristan Grimbert:
Carbon pricing is
the most American way to address global
warming. What is more volatile than CO2?
It goes everywhere. It is a global issue, and
carbon pricing is the capitalist way to
address it. Cap and trade was proposed by
Americans, and then it was shut down.
Carbon pricing would be a better way than
a haphazard mix of subsidies with, for
example, a New Mexico PTC and some tax
exemptions and different provisions in
Arizona. No. Let’s price what is creating the
problem and, then, if we have to produce
massive wind in California or Texas, we will
do it because the market is sending the
right price signals. It may take some cata-
strophic climate event, but I have no doubt
it will come because it is the American way
to address global warming.
WHAT ARE DEVELOPER RETURNSTODAY?
Tristan Grimbert:
Too low. I am not
in the business of deploying at the lowest
cost of capital. I am in the business of creat-
ing value. The cost of capital is one part of
the equation, but the job is to find differen-
tiators. It is not the size of the market; it is
not the growth; it is how much better you
are than your competitors. The returns for
this effort are always too low.
SOME OF YOUR COMPETITORS HAVE YIELD
COS. DO YOU SEE EDF RENEWABLE ENERGY
MOVING INTHAT DIRECTION?
Tristan Grimbert:
No, I don’t. Right
now our business model is that we develop
projects for ourselves and we sell up to
50% to co-investors. Sometimes we sell
more, and sometimes less. We do tap the
market by selling assets. We see yield cos
playing in that market, but they are only a
portion of that market and there are plenty
of investment firms and other people who
are trying to deploy long-term capital at
competitive rates, so we do not think it
necessary to have our own yield co.
We can sell to yield cos or we can sell
to people who are not yield cos but have an
efficient cost of capital and are looking for
long-term investments.
EDF RENEWABLE ENERGY HAS BEEN A
BUYER OF DEVELOPMENT RIGHTSTO
PROJECTS FROM SMALLER DEVELOPERS.
ISTHAT PIPELINE GETTING SMALLER,
STRONGER, OR REMAININGTHE SAME?
Tristan Grimbert:
We have done
some acquisitions. What is difficult about
the development business is that when you
think you are 90% done, it means you are
only half way through. Getting the project
to be completely de-risked is what really
trades value.
Because the market has run faster
than anybody expected, and we have been
very successful, the pipeline is a little
small today. We started about a year ago to
rebuild our pipeline. We are doing that
partly by acquisition. We may buy a pipe-
line. We may buy a project. We will keep
developing ourselves. The overall supply of
new projects is low compared to the appe-
tite of the market. I attribute this to the
impending expiration of the tax credits.
TRISTAN GRIMBERT
CONTINUED FROM PAGE 20
