Show me the money, show me the moneeey!! Or maybe something else

In my previous post , I wrote about the fact that “Enel, the Italian ex-monopolist of electricity and one of the three largest utilities in Europe, had announced that the company might enter a bid to build a coal-fired plant of 4,000MW in India”. Most importantly this move came from a company that is a world leader in electricity generated from renewable sources. I ended my post asking whether it was possible to change the ethics of businesses so that cleaner type of investments may be preferred to traditional ones (e.g. solar energy vs. coal).
Interestingly enough, just after I made that post a new article in the Economist
announced a $45 billion purchase of  TXU, a Texan energy utility, by a group of private-equity firms led by Kohlberg Kravis Roberts and Texas Pacific Group. Such announcement is indeed interesting because prior to this purchase, TXU was planning to build 11 old-tech coal-fired stations in Texas and possibly more elsewhere. However, after the purchase, the new private-equity owners of TXU said that they will use a completely different approach: they will only build three new coal-fired plants and none elsewhere; they will increase spending in energy conservation; they will invest heavily in new clean-energy technologies; and finally William Reilly, chairman emeritus of the World Wildlife Fund and former administrator of the US Environmental Protection Agency, will join the board of directors and lead effort in making climate stewardship central to corporate policies.
Apparently this was the “shadow price” paid by the new owners to some environmental lobbyists in order to get the green light on the deal (and future investments). Moreover, according to TPG, while in the past TXU was depending only on public shareholders, this deal has added two other types of stakeholders, i.e. consumers of the State of Texas and environmentalists.
Now, let’s forget for a minute what their real agenda may be (e.g. fewer plants being built means, tighter reserve margins which lead to higher electricity prices). Instead, I think that this relationship among these three types of stakeholders may be representative of the internal conflict faced by most of us (at least in this blog I would hope): there is the shareholder inside us who wants to receive a good dividend, period ; there is the environmentalist who cares about pandas; and then there is the consumer who is somehow stuck in the middle (e.g. I care about the environment but I still like my Hummer so much).
Therefore it seems to me that we may have two options in front of us if we want to change things: either we find a way to make cleaner energy technologies more profitable than traditional ones so that shareholders remain happy. Or environmentalist convince consumers to join their cause (read change both their mentality and habits) and then bring them into the decision making process, like in the TXU case. Two stakeholders against one? There’s should be no match! 

Comments

[Nathan Rive]

Quick comment (need to do some work!): a blog posting in one of my favorite green blogs, Environmental Economics (link) asked whether they only announced that they would build 11 coal plants just to get bought out. Furthermore, now that TXU are out of the picture, other smaller companies can go ahead and build coal plants. So who's winning now?

[Matteo Di Castelnuovo]

Thanks for the info Nate. TXU has a long tradition of coal-fired generator and so coal has always been in its DNA. Building more coal-fired stations is BAU for them. In terms of giving more chances to smaller companies, I am nost sure: you need big muscles to build coal-fired stations 1) because capital costs are still very high (its overnight cost of capacity is twice as much as a CCGT) and 2) because you need to fight much harder to get the authorizations. But hey, maybe this is all a joke...I don't know...I just like to think that this may be an example of how things may change