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How private equity squeezes cash from the dying US coal industry
(Reuters, 2 Mar 2021) Private equity firms are cashing in on demand for fossil fuels to meet surges in energy demand.
Private equity firms are proving there's still plenty of profit in the U.S. coal industry despite a decade of falling demand for the fossil fuel. They are spending billions of dollars buying coal-fired plants on the cheap - and getting paid even when they are not providing power.
Since the end of 2014, at least five U.S. private equity firms have bought coal plants in markets where regulators pay them to be on standby to provide emergency power when demand surges with extreme hot or cold weather, according to a Reuters review of U.S. regulatory disclosures and credit-rating agency reports.
The lucrative investments illustrate how fossil fuels will remain an important part of the energy mix - and continue spinning off cash for investors - even years after demand for them peaks as the world transitions toward cleaner energy sources.
The need for reserve power was on display during the utility crisis this month in Texas - the only U.S. grid system that operates without such an emergency system. A cold snap knocked out several of the state's generating plants and triggered widespread blackouts, leaving a wake of human suffering including several dozen deaths.
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Reuters, 2 Mar 2021: How private equity squeezes cash from the dying US coal industry
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