Denver-Based Investment Banking Firm Pursues Energy Projects

Ward Cerny, a vice president with the Denver-based investment banking firm of Green Manning & Bunch, specializes in financing-related issues for the firm's energy and power clients.

An active advocate for renewable energy, Mr. Cerny says, "Colorado is a great place [for the wind energy industry] because there is lots of wind and geographically it is in the center of the nation and that is where many wind energy companies want to be located."

I first met Mr. Cerny, who has a bachelor's degree in international business from George Washington University and an MBA from the University of Chicago, several months ago at an ABA-sponsored teleconference focusing on renewable energy. It intrigued me that an investment banker was interested in the new energy economy and even, in the case of Mr. Cerny, was a member of the American Wind Energy Association. So Ann Vessels, the director of DU's externship program and I met him for lunch last week to talk about a side of renewable energy that often does not attract enough attention but is absolutely critical to the success of renewables: project finance.

Among Mr. Cerny's observations:

• Wind power has emerged as the top source of renewable energy, with worldwide capacity expanding from 16,000 megawatts of electricity capacity in 2000 to more than 120,000 MW in 2008 (annual growth rate of 28 percent).

• The credit crisis has had a short-term effect on annual wind installations, as access to project finance is tight and many tax equity investors have left the market.

• Volatility in fossil fuel prices, specifically those of oil and natural gas, threatens to price wind power out of some markets.

• Wind component manufacturers and service companies have continued to vertically integrate in order to secure their supply chain, but as the supply chain develops, he expects to see the industry trend toward consolidation into a few major assembly companies with a larger group of sub-tier suppliers.

• Utilities and large independent power producers will continue to be the dominant acquirers of wind power producing assets, as large power producers hedge against the uncertainty and price volatility of carbon.

• Governments worldwide have pledged $415.5 billion through economic stimulus packages toward greener energy developments.

He also made this extremely interesting comment: "The skill set needed for upstream oil and gas work is nearly the same as in windpower. They are very similar." In addition, he mentioned that developing coal-fired power and wind power is quite similar: "In 10 years there will be a very gray area when comparing the skills needed to do either."

As we neared the end of the conversation Mr. Cerny pointed out that despite what some might hope for, the rapid replacement of fossil fuels with renewable sources is still a ways in the future. While the use of oil and gas will not go away anytime soon, the need to nurture the development of renewables must nevertheless be a key strategy in America's energy future. And in some instances -- as mentioned above -- skills developed in one energy sector may serve one well in another sector.

The development of "human capital," meaning professionals who are familiar with the entire energy industry, is key to the country's energy future, he concluded.

Ward Cerny embodies the spirit of the new energy economy that is taking shape in the shadow of the Rocky Mountains in an energy city called Denver.