by Cristina Foung
My favorite green product of the week: the GeoBulb LED Light Bulb from C. Crane
What is it?
The GeoBulb is an LED light bulb that uses less than 8 watts of electricity to produce 14% more light than the average 60 watt incandescent bulb. It's roughly the same size and shape as an incandescent bulb and serves as a direct replacement for any indoor fixtures.
Why is it better?
First of all, the energy savings of using LED light bulbs over incandescent bulbs or even compact fluorescent bulbs. Not to mention, the bulb has a life span of 30,000 hours (which at continuous use, that would work out to be about 3 years; even using the bulb 8 hours a day, you'd still get 10 years out of it).
The reason the GeoBulb is a great option is because the quality of light and the brightness is in fact similar to an incandescent. I got a chance to check out some bulbs at West Coast Green. I was amazed at how bright they were, how cool to the touch they were, and how they didn't buzz at all.
Where can you find it?
The GeoBulb does have a steep up-front cost of $119.95. You can order it through the C. Crane website (but it appears to be out of stock until December).
Besides her green products column on Cleantech Blog, Cristina is a passionate advocate for green living at the Green Home Huddle at Huddler.com, which focuses on electric cars, organic personal care, and other green products.
Friday, October 31, 2008
Got a (LED) light?
Voters and Congress Decide the Fate of Public Transportation
By John Addison (10/31/08). A record number of Americans are saving thousands per year by using public transportation from one day per week to living car free. In 2007, a 50-year record was set of 10.3 billion transit trips per year, saving over 4 billion gallons of car gasoline use. 2008 will set a new record that may approach 11 billion trips as more commuters leave their cars parked to brave standing-room-only train and bus rides.
Public transportation and corporate commute programs have helped America finally reduce its dependency on oil, with vehicle miles traveled reduced for the first time. Now, our financial crisis is putting this in jeopardy.
Although public transportation is rescuing Americans, will Americans rescue public transportation? Record ridership, shrinking tax revenues, frozen funds, and fuel prices are overwhelming transit budgets. Where more routes and buses are needed, cutbacks are instead being made.
This Tuesday votes in 33 states will make decisions about the fate of transit funding. In California, decided will be the fate of High Speed Rail.
The American Public Transportation Association (APTA) called on Congress on October 29 to pass economic stimulus legislation that includes funding public transportation projects to create new jobs. APTA has identified 559 public transit “ready-to-go” projects, worth $8 billion, from Chicago to Atlanta, and from NY to LA.
Testifying before the House Committee on Transportation and Infrastructure, APTA Chair Dr. Beverly Scott, who is also general manager and CEO of the Metropolitan Atlanta Rapid Transit Authority (MARTA), testified, “We simply must get our economy back on track, and the most important way to do that is to create new jobs, and give our citizens the tools they need to find jobs and keep working.”
Dr. Scott continued, “Not only do transit systems need assistance for capital projects, transit providers also need help to maintain their current services. Transit systems across the United States are being forced to choose between raising passenger fares or cutting service to make up for shortfalls in local funding and the increased cost of diesel fuel this past summer. The burden is so great that 35 percent of public transportation providers who responded to another recent APTA survey have been forced to cut or plan to cut the level of passenger service they provide in spite of the growing demand. Transit needs to be part of the solution to – not the victim of – the current economic crisis. This could not happen at a worse time. Public transportation ridership has grown dramatically this year, and we need to continue that growth.”
Even the collapse of AIG is having a devastating effect on transit. Dr. Scott as testified, “From the early 1990s to 2003, the Federal Transit Administration urged transit systems to enter into innovative financing deals known as Sale-in/Lease Out and Lease-In/Lease Out (SILO/LILO) transactions. These transactions helped transit systems finance large, capital intensive projects by selling their assets to investors and leasing them back. The transit agencies received up-front one time payments in consideration for future tax benefits for the investors, until these transactions were prohibited in 2003. To secure these transactions, sale proceeds in the form of Treasury securities were placed into an account that AIG and a small number of other insurers guaranteed. Under the terms of the contracts, transit agencies are responsible for replacing the guarantors of the secured assets if they fail to maintain a certain bond rating- often ‘AAA’ status. Unfortunately, because AIG and the other insurers have lost their ‘AAA’ rating, and there are no available financial institutions to replace them, the equity investors are able to find the transactions in default. Under this scenario, through no fault of their own, transit agencies could be forced to pay hundreds of millions of dollars in fees to make the investors whole. The banks have the opportunity to gain 100 percent of the tax benefits that have been disallowed, which would in turn devastate transit agencies, which will be required to pay more than $2 billion to the banks immediately.” Congressional Testimony
Will we keep America moving, our will be go back to being stuck in our cars in gridlock, burning billions of dollars of extra gasoline from countries that are glad to take our money?
John Addison publishes the Clean Fleet Report.Monday, October 27, 2008
What's It All About, Algae?
by Richard T. Stuebi
One of the hottest areas of cleantech investor activity in the past year has been algae. Yes, algae. More specifically, technologies that enable the production of fuels from algae.
The concept is premised on the fact that algae is a rapidly-growing organism that converts sunlight and atmospheric carbon dioxide to produce lipids, which in turn can be refined into various hydrocarbons. In other words, a carbon-neutral fuel cycle. Pretty cool.
A number of start-up companies -- such as Solazyme, Live Fuels, Solix Biofuels and GreenFuel Technologies -- have emerged in recent years to pursue this possibility, some fetching sizable quantities of capital from blue-chip investors.
I frequently receive emails with links to videos promising interesting energy/environmental technologies, and most strike me as quackery of some degree or another. However, I recently was pointed to a video produced by a company named Valcent Products (OTCBB: VCTPF) that appears particularly compelling. To be clear, I am not recommending this company or its stock, but I do like the tack that Valcent seems to be taking.
Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.
Tuesday, October 21, 2008
Robert Metcalfe Is Wrong, Clean Technology Alone Will Not Work
In ‘Learning from the Internet’, Robert M. Metcalfe, venture capitalist and Internet pioneer, expands on the dangerous idea that,
I don’t think for a moment that we’re going to conserve our way out of the energy crisis. Internet history shows that prosperity depends on abundant bandwidth. Prosperity (gross domestic product, per capita) is proportional to energy use. We are not going to lower per capita consumptionof energy in the U.S. We are going to enable the rest of the world to be as prosperous by using not less but more energy. We need to make energy cheap, clean and therefore abundant - really abundant, for a really long time.Sounds familiar? This is the same kind of thinking endorsed in an earlier McKinsey study, and also to a lesser extent, by Al Gore in his Moon Shot Challenge speech.
Makes me mad. The average citizen is already confused enough. The last thing we need is more tenors in green tech and green biz to lull us into thinking that technology will get us out of our mess. Besides, I do not see what climate change has to do with the Internet.
We need to get out of this pervasive either-or thinking. Energy conservation and new energy technologies are not mutually exclusive. Instead, they are meant to work together. One without the other will not work. It’s a matter of simple maths, and of mitigating our risks, in the unlikely event that technology does not deliver on all its promises.
Solar Powers more Vehicles as Gasoline use Drops
By John Addison. Solar is powering more vehicles. American’s have reduced their use of petroleum 5 percent this year. So far, petroleum reduction is the result of fewer miles traveled solo as people cut travel to deal with high gas prices and a slowing economy. At the margin, however, solar power is replacing oil.
There are now 40,000 electric vehicles in use in the United States. They are primarily the 25 mile per hour light electric vehicles. Fleets are starting to use heavy electric vehicles, and plug-in hybrids, that formerly required copious gallons of diesel and gasoline. In 2010, consumers will start buying freeway speed electric vehicles.
The U.S. Marine Corp at Camp Pendleton, during my last visit, showed me an 8-station solar car port that they use to charge their 320 light-electric vehicles. Petroleum fuel is a multi-billion dollar part of the U.S. Defense budget. Once the solar panels are installed, however, the sunlight is free. Solar is increasingly also used by the Marines and Army for stationary power in the U.S. and Iraq, reducing the need for petroleum in the form of diesel and JP8 jet fuel for running gen sets to air condition tents and buildings.
Every 44 minutes, sufficient energy from the sun strikes the Earth to provide the entire world's energy requirements for one year, including the energy needed to move vehicles. Solar power grows 40 percent per year, as we become increasingly efficient at turning sunlight into electricity and heat.
Most importantly, with continued innovation and larger scale manufacturing, the price of solar keeps dropping. There is enthusiasm for advancements in photovoltaics (PV) and for large-scale concentrating solar power (CSP). As I researched and wrote this article at the Solar Power 2008 Conference, last week, the evidence of growth was everywhere. 17,000 from 92 countries attended the conference in San Diego, California. 425 companies exhibited, with 450 more turned away due to lack of convention floor space.
8 GW of solar power are now installed. Deutsche Bank forecasts that the photovoltaic market will growfrom $13 billion in 2006 to $30 billion in 2010. Polysilicon supply is expected to triple by 2010. New technology continues to delivers more electricity output with less silicon. These technologies include thin film, high efficiency PV, organic, concentrating PV and balance of system improvements.
For those interested in transportation, one notable area of growth is solar covered parking structures – a cool solution for a planet that is getting hotter.
When California Governor Arnold Schwarzenegger opened the Solar Power International conference, he highlighted Applied Materials’ 2 MW solar power that also shades their parking lot. The vast solar shading is designed to efficiently capture energy using SunPower 19% efficient panels implemented horizontally with a system that rotates the panels to track the sunlight.
Envision Solar specializes in solar parking structures. Designed by architects, Envision uses biomimicry to have parking structures that suggest groves of trees. NREL in Colorado uses an Envision solar carport with a charging station for two vehicles including its plug-in hybrid and EV. Other organizations have installed Envison solar parking structures with the support poles pre-engineered with wiring for future charging or integration of nighttime energy-efficient lighting. These organizations include the University of California San Diego and major solar panel maker Kyocera.New Jersey Transit is preparing for a future where parked cars can be charged with sunlight while people use public transportation. Premier Power Renewable Energy recently completed the first of two 201kW solar canopies, on the rooftops of two large six-story parking garages at the new Trenton AMTRAK Transit center. Each project includes more than 600 solar panels. The solar systems will eliminate approximately 141 tons of CO2 emissions annually.
The New Jersey parking structures are also equipped with 110v charging stations for Plug-in Hybrid Electric Vehicles (PHEVs) and Electric Vehicles (EVs). Participating in the October 14 ribbon cutting was the Mid-Atlantic Grid Interactive Cars (MAGIC) consortium, which includes the University of Delaware, Pepco Holdings, Inc., PJM Interconnect, Comverge, AC Propulsion and the Atlantic County Utilities Authority, created to further develop, test and demonstrate Vehicle-to-Grid technology.
At Google, part of their 1.6 MW solar PV installation is a solar carport structure that includes charging stations for Google’s plug-in hybrid converted Toyota Priuses and Ford Excapes.
The conference included many lively debates about whether the financial crisis would stop solar’s growth in 2009. Large projects usually require millions for project financing. Allowing customers to pay by the kilowatt with power purchase agreements requires long-term financing. Illiquidity will surely slow growth.
In most U.S. states, however, electric utilities are required by law to expand the percentage of power that is delivered with renewables. In California, for example, the renewable portfolio must be 20 percent by 2010. Pacific Gas and Electric is installing 800 MW of utility scale solar PV to meet part of that. Arizona Public Service has contracted with Abengoa to install 280 MW of concentrating solar thermal that includes molten salt towers to store six hours energy for delivery during peak hours.
Utilities have deep pockets and these volume projects are lowering costs. With illiquidity in other sectors, utilizes will increasingly drive centralized solar. In areas with positive regulatory environments and with robust grids, utilities will also encourage decentralized solar PV as part of their mix.
United States power utilities spend $70 billion annually for new power plants and transmission, plus added billions for coal, natural gas, and nuclear fuel. For $26 to $33 billion per year investment, ten percent of United States electricity can be from solar by 2025, details the Utility Solar Assessment Study, produced by clean-tech research firm Clean Edge.
By 2050 solar power could end U.S. dependence on foreign oil and slash greenhouse gas emissions. In their Scientific American article, Ken Zweibel, James Mason and Vasilis Fthenakis detail the scenario. A massive switch from coal, oil, natural gas and nuclear power plants to solar power plants could supply 69 percent of the U.S.’s electricity by 2050. This quantity includes enough to supply all the electricity consumed by 344 million plug-in hybrid vehicles.
The price tag for the transition would be $400 billion, but this could be spread over a number of years. Should this seem too expensive, consider the alternatives. This is a fraction of what the U.S. has spent for the war in Iraq.
In the final keynote of the Solar Power International conference, U.S. Senator Maria Cantwell (D-WA) explained that both Republicans and Democrats ultimately supported an 8-year extension of solar and other renewable investment tax credits in the Emergency Economic Stabilization Act of 2008. This bill also included $7,500 tax credits for the purchase of new plug-in hybrid and electric vehicles. Senator Cantwell also strongly supports United States investment in a smart and robust grid, and in bringing high-voltage lines from major sources of renewable energy to major markets.
The transition to clean energy is increasingly recognized as an excellent investment. Due to rapid cost reduction, solar is a growing part of the solution that includes electric vehicles, energy efficiency, wind, bioenergy, geothermal, and other renewable sources. Compared to business as usual with oil and coal, renewable energy is downright cheap. The International Energy Agency estimates that by 2030, $5.4 trillion must be invested to increase global oil production.
John Addison publishes the Clean Fleet Report and writes about cleantech and renewable energy. He has a modest stock holdings in Abengoa and Q-Cells.
Monday, October 20, 2008
LED There Be Light
by Richard T. Stuebi
As some of my long-time readers may know, I have never been a truly ardent fan of compact fluorescent lighting (CFL). Why?
1. Probably most importantly to me, in my experience with CFLs, I haven't been satisfied with their start-up characteristics. They take a little while to "warm up" to full luminescence, and until then, the light seems very sickly to me. It actually makes me a bit nauseous. I know that better quality (i.e., more costly) CFLs perform better than cheaper generics, but even CFLs from General Electric (NYSE: GE) that I've bought still don't turn on as well as I have come to expect from four decades of living with incandescents.
2. Except for some new (and considerably more expensive) products, CFLs generally don't work with dimmers. I once found this out the hard way -- snap, crackle, pop. I don't know about you, but a lot of the light circuits in my house are on dimmers, and as a result I continue to run incandescents on them.
3. It is becoming more well-known that CFLs contain mercury, and hence their disposal is a real issue. Even worse, if one were to break, the release of mercury represents a significant risk -- at best a big clean-up nuisance.
4. CFLs aren't cheap. True, CFL prices are coming down to become closer to the levels of old/inefficient incandescents, but they are still substantially more costly. For lights that are rarely used, the extra investment doesn't make much sense to me, as the energy actually saved is small.
So, I've been eagerly awaiting the emergence of LED (light-emitting-diode) products for consumer application. I like the quality of LED light, and LEDs don't have the mercury issue, so it seems like the superior long-term lighting solution.
I've been told that household LED lighting is still many years away, but at least some products are trickling into the marketplace. For instance, see EarthLED Lightbulbs, which are available at Think Geek. Clearly, they are still a niche item for the early adopters, as they cost $60-100 per unit, but at least their emergence into the market now puts consumer LED lighting on the gameboard, hopefully on a quicker path of cost reduction as learning curve and scale production effects are achieved.
Since LEDs have virtually infinite lifetimes, in the future, there will no longer be a need to make lamps with removable bulbs in sockets. Savvy marketers out there should begin working to overturn the old paradigm of reusable lamp/disposable bulb, making way for LED lamp fixtures that are inherently designed to capitalize on the unique and compelling advantages offered by LED lighting.
Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.
Sunday, October 19, 2008
Renewable electricty dominates California utility plans
by Mark Henwood
On Thursday (10/16) I attended the User Group meeting of Plexos Solutions LLC, a boutique firm providing software and consulting to the rapidly changing California electric market. One of the presentations covered issues surrounding integration of renewable energy resources into the California Independent System Operator (CAISO). This is important to sustainable energy investors because virtually all the growth in generating capacity in California is forecast to come from renewable resources. While the fundamentals of this market have been overwhelmed by broader market conditions this last month, over time the fundamentals provide the tailwind that will lift stocks. And the growth expectations for renewables are very high in the California market.
Over the period 2007 - 2012 the CAISO is planning for increases over existing capacity of:
- 5,053 MW of wind, a 187% increase,
- 1,064 MW of geothermal, a 68% increase,
- 946 MW of concentrating solar, a 203% increase,
- 508 MW of utility scale PV solar, a 2,032% increase, and
- 221 MW of biomass, a 28% increase
In the concentrating solar sector, the state currently has 354 MW of large projects operating with the last one completed in 1990, 18 years ago. Most of this capacity is owned by FPL Energy, part of a large regulated utility. So the new capacity has to come from a sector that hasn’t, in California at least, been able to construct a project for many years. Equally noticeable it the paucity of publicly traded companies in the concentrating solar sector. Solar Millennium (S2M.DE) is one the few with significant concentrating solar activity.
The state currently has 8 projects with 3,689 MW of large concentrating solar projects in the permitting pipeline. But these numbers are deceptive. Of the 8, two projects are actually “solar/thermal” hybrids like the existing operating projects. These two projects represent 1,180 MW of capacity with 112 MW attributable to solar. The remaining 6 projects are a gamut of technologies ranging from troughs, reflectors, towers, and Sterling engines. These projects are all owned by private companies or municipal utilities and currently don’t present an opportunity for public market investors.
The PV solar sector provides more avenues for public investors to participate via investment in the PV supply chain. If the numbers work out the utility market represents a multi-year, very large opportunity. Let’s take a look.
As of the end of 2007 California had an estimated 279 MW of installed PV in homes and businesses and 25 MW of utility scale projects. This makes sense since the home and business markets are net metering against retail rates whereas utility scale projects have to compete against wholesale markets. So the premise is that PV solar is now becoming sufficiently competitive at the wholesale level to install over 500 MW in the next 5 years.
One of the first test cases was recently announced. On July 10, 2008 the California Public Utilities Commission approved a 7.5 MW contract between First Solar’s (FSLR) FSE Blythe project and Southern California Edision. Unfortunately much of the economic information was not disclosed but some key data can be gleaned from the record. First, the company is projecting an excellent 27% capacity factor for the project, significantly higher than typical estimates for PV projects. But equally important is the company is pursing the development receiving a price at or below the “market reference price” which is based on a highly efficient modern thermal plant. After accounting for some messy seasonal and time-of-use factors I calculate the project will receive approximately USD 0.14/kWh on average plus a 30% tax credit now that the Emergency Economic Stabilization Act of 2008 passed. If FirstSolar can make money at this project then they are very near the holy grail of grid parity (at least until the credit expires December 31, 2016). And the utility systems can, according to the CAISO, absorb large amounts of solar power for years to come. Game on.
Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks. Mark has no position in the stocks mentioned in this article.
Friday, October 17, 2008
Market Turmoil ..... just when you thought is was safe to invest in Water!
With the recent turmoil in the markets, optimism has been a commodity in short supply and good investment opportunities as scarce as hens teeth; though this may be changing if you believe Warren Buffets ‘buy now’ call. In the midst of this, two new water based investment funds were recently launched.
On September 30, 2008, the investment group Calvert launched the Calvert Global Water Fund (CFWAX). This fund is its latest Sustainable and Responsible Investment (SRI) mutual fund, part of a new series of investment portfolios known as Calvert Solution™ Strategies. Calvert have partnered with KBC Asset Management International, Ltd., of Dublin, Ireland, to sub-advise them on the management of this fund. KBC apparently ‘boasts an eight-year track record of strong performance in the global water sector’. Be that as it may, their timing for the launch probably wasn’t great given the stampede out of equities and they have dropped 18% from $15 at the start of October to approximately $12.20 today.
KBC say that they stay on top of the technological issues involved in the water cycle through its outside environmental advisory committee of scientists. Jens Peers, lead portfolio manager of the Calvert Global Water Fund says ‘we believe that no other water asset management group has set up a comparable committee of unbiased experts."
Another recent development was that Four Winds Capital Management launched the first London listed water fund on July 24th. The fund, which is referred to as the Aqua Resources Fund was launched on the London Stock Exchange and will invest in water related assets in areas such as infrastructure, technology, recycling, treatment, distribution and water to energy, mainly by taking direct stakes in unquoted companies and projects. The investments must be at least 60% involved in water activities.
Aqua Resources could have done with some help on their website however, it really isn’t very inspiring, it doesn’t have very much meat to it and contains platitudes such as ‘The Company intends to implement its investment policy via its investment strategy. Using global research and sourcing, the Company intends to build a portfolio focused on investments that offer water-related returns.’ Yawn!
However one thing which differentiates Four Winds from other water funds is that they are focused on unquoted assets. This enables them to access a broader base of investments and go after small cap, pure plays, in the water sector. Most other water funds focus on public equity investments with significant non water business activities, e.g. Nestle and General Electric. Leonora Walters provides some good commentary on this at the Investegate.
Despite all the long term positive signs and reasons to invest in water, this didn’t however stop a number of water indexes from taking a hammering in the past few weeks, the ISE-B&S Water Index (^HHO) is down approximately 30% since the start of August and the Global Water Intelligence (GWI) Global Water Index was down 9.9% between 10th August and 19th September 2008. So it seems like in the old movie, when people hear the scary music they still go running for the beach.
Paul O’Callaghan is the founding CEO of the Clean Tech development consultancy O2 Environmental. He lectures on Environmental Protection technology at Kwantlen University College is a Director with Ionic Water Technologies and an industry expert reviewer for Sustainable Development Technology Canada.
Drive as green as the inside of a kiwi
by Cristina Foung
My favorite green product of the week: the PLX Kiwi Fuel Saving Device
What is it?
The PLX Kiwi is basically a fuel efficiency monitor for any car. It's an on-board display that shows you quite a bit of information, including your miles per gallon and how much you spent (or saved) on fuel in a given trip.
Why is it better?
Before the Kiwi, you might have been guessing at your car's fuel efficiency. But now, you can see your MPG at the exact moment you're driving. It gives you real time feedback which helps you adjust your driving style to maximize your fuel efficiency and minimize your carbon footprint (and save money). Just don't keep your eyes on the Kiwi and forget about the road.
The Kiwi also comes with another nifty feature. It's called the "Drive Green" mode. This setting lets you run through different driving lessons. The lessons teach you strategies to maximize smoothness, acceleration, and deceleration (among other things).
By making drivers more aware of their habits, their fuel economy, and their potential gas savings, the Kiwi helps cut gasoline consumption and therefore emissions. Now mileage monitors are no longer just for Prius drivers.
Where can you find it?
You can get the Kiwi for $299 directly from PLX Devices.
Besides her green products column on Cleantech Blog, Cristina is a passionate advocate for green living at the Green Home Huddle at Huddler.com, which focuses on electric cars, organic personal care, and other green products.
Wednesday, October 15, 2008
Huge Opportunities to Do Good and Do Well with Green IT
McKinsey is on a roll, with yet another eye opening report, this time on 'How IT Can Cut Carbon Emissions'. The study highlights the key role IT can play in maximizing energy efficiency across sectors, more than compensating for carbon emissions from IT equipment manufacturing and operation.
Yet another example of the blatant business opportunities awaiting those willing to jump in the green tech train. What a great time to be in IT!
Marguerite Manteau-Rao is a green blogger and marketing consultant on sustainability and social media. Her green blog, La Marguerite, focuses on behavioral solutions to climate change and other global sustainability issues. Marguerite is a regular contributor to The Huffington Post.
Monday, October 13, 2008
Cleantech Venture Capitalists Beware - What You Don't Know About Energy Can Kill You
Oil prices quietly (at least in the cleantech world), slipped below $80 last week, off some 50% from its highs a few months ago. Did I say 50%? Yes 50%. And gas has slipped, too, as with some variations, natural gas historically trades at a roughly 10:1 price ratio of Barrels to MCF.
It's easy to get caught up in the cleantech hype and forget that only 10 years ago this year oil prices fell two thirds caught between rising supply from a decade of drilling and nasty Asian flu, triggered in part by, wait, a financial debt crisis, that time in emerging markets. Sound familiar? And oil hit less than $11 per barrel, less than 1/13th of its recent high, with people talking $6.
And it's easy to forget that the half decade following 1998 the not yet named as such cleantech investment sector hyped fuel cells, microturbines and distributed generation on the back of clean cheap natural gas, which was the fuel of the future.
And it's easy to forget that rising commodity prices wiped 99% of those business cases (only a few billion in value, though!) off the map until not a single cleantech venture investor today discusses distributed generation at all. But after a short hiatus, solar and ethanol exits on the back of some huge subsidies came through and cleantech was boomed.
And it's easy to forget that only a couple of years ago we as an industry debated the viability of hybrids and biofuels - because of a breakeven at $40-50/barrel or higher (the oilman's breakeven in Saudi Arabia is maybe $5/bbl)? Breakeven at $40 in biofuels? Corn ethanol maybe, cellulosic, dream on. But the switch from MTBE to ethanol came through on the policy side and unforeseen Chinese demand growth pushed oil prices stratospheric. And the corn ethanol plant owners built hundreds of plants at 5% of the size of average refinery, made hay and traded at tech multiples. Only to get crushed when corn prices, driven up by (gasp!) demand and higher natural gas and oil drove up their feedstock, fertilizer and transport costs and margins down. Welcome to refining, freshman.
And it's easy to forget that the core economic value proposition for solar has the ever present cost escalation analysis - "lock in your power costs, energy prices have risen x% per year, if they continue to do so you'll be paying 2.5x your current power prices in 30 years". And that the solar industry quietly ignores that energy prices will decline not rise with economic turmoil. But the ITC and feed in tariffs came through paying more than half the cost and so the party goes on.
It's easy to forget that energy is about commodity prices. And commodity prices are about cycles, supply AND demand. And that demand is GDP growth driven in energy. And that in our global markets GDP growth is more interlinked than ever, making it more, not less subject to cycles.
And that alternative energy is called alternative because it's the most expensive form of energy, meaning it's the swing producer, the type of guys who get killed in cycles (subsidies aside, of course).
And that the big fortunes made in cleantech investing todate have not been made on high risk early stage technology bets, but on 10 or 20 year old technologies who were in the right place at the right time when the policies came in. Or the low cost manufacturers of mature known technologies (think corn ethanol or wind developers and Chinese solar manufacturers) who moved fast when policies moved, making hordes of "that's not a venture" bets. Disruptive technology has never been the winner.
In energy, there is no disruptive technology, only disruptive policy that makes some technologies look disruptive after the fact. In energy, the risk is in the scale up, not the R&D, and the end application is so massive, so capital intensive, and so utterly dependent on commodity prices, that you can't invest in it like you invest in IT. It takes longer, 10x as much money, and the ante up to play the game for one project is the size of your largest fund. At scale, there is no capital efficient strategy in energy.
But we are Silicon Valley and we smash open gates with technology, and we know better than those energy dinosaurs in Houston, London, and Abu Dhabi, right? They just don't get it, right? One game changing technology can force the oil companies and power companies to their knees. The one I've found really is new and different. This entrepreneur has discovered something new. And it can be *cheaper* than oil (if you define cheaper right).
Beware Silicon Valley, the great fortunes, wars, and economic crises of the world for 100 years are not technology ones, they were energy made. Half the schools you went to were built by oil money. And the entreprenuerial spirit in this industry was born in the hardscrabble oilfields of Pensylvania and Texas, and grew up in the far reaches of the globe. And the oil companies those entrepreneurs founded have forgotten more about technology in energy than you even know existed.
Be forewarned, you do not have a comparative advantage here. The oil men invented risk taking, AND risk management. The oil men are bigger, faster, smarter, richer, have more scientists and more entreprenuerial spirit than you, AND they know energy.
So while you fight the good fight to develop technology to change the world, don't forget, be humble, learn what can be learned, build what can be built, and walk softly, because the elephant in this room floats like a butterfly and stings like a bee, and he has yet to take the field.
. . .
The little guys whose pension funds are paying you a cushy 10 year guaranteed contract are counting on you to put aside your hubris.
Neal Dikeman is a partner at Jane Capital Partners and the CEO of Carbonflow. He is the Chairman of Cleantech.org and edits Cleantech Blog. He is from Houston, is a Texas Aggie, and believes in both energy and the power of technology to change the world.
Update on Offshore Wind
by Richard T. Stuebi
In Cleveland, the Great Lakes Energy Development Task Force (a collaboration involving many local public, private and academic organizations, led by the Cuyahoga County government) has commissioned a feasibility study for developing the Great Lakes Wind Energy Center (GLWEC). The GLWEC would include a demonstration offshore project in Lake Erie off of downtown Cleveland, along with an applied research center to facilitate the development of lower-cost next-generation offshore wind energy technologies and approaches.
The long-term market opportunity for offshore wind just in the Great Lakes (much less the oceans of the world) is huge. A 2004 study indicated a theoretical potential for almost 250 gigawatts (250,000 megawatts!) of wind installations in the Great Lakes, and the Land Policy Institute at Michigan State University recently released a report indicating 322 gigawatts of potential in the waters offshore the state of Michigan alone. Of course, nowhere near this much offshore wind generating capacity is likely to be installed, but even if 50 gigawatts becomes installed in the coming decades, at $4 million per megawatt, this would represent $200 billion of investment in the Great Lakes. This seems worth pursuing with some vigor.
As a member of the Task Force, I recently traveled to Hamburg to present the state of progress in developing the GLWEC at Germanischer Lloyd's annual offshore wind workshop. This gave me an opportunity to "take the pulse" of how the wind industry was currently assessing prospects for offshore wind.
The general state-of-affairs is that the wind industry is preoccupied with prospects in the onshore markets around the world to pay much more than tangential attention to offshore opportunities. For instance, according to the 2007 Report of the Global Wind Energy Council, 20,076 megawatts of wind energy was installed worldwide in 2007, but according to statistics from the European Wind Energy Association, only 210 megawatts was installed offshore (all in Europe). With only 1% of the market, it's easy to see how much a runt offshore wind remains in the overall wind industry.
A key theme of the discussions was the need to maximize reliability/availability/lifetime of offshore turbine designs to minimize overall life-cycle costs of offshore wind energy, given the costs and challenges associated with installation and servicing turbines on top of tall towers in the middle of large bodies of water often exposed to heavy seas and weather.
The wind industry appears to be realizing how naive it was in thinking it would be relatively straightforward to move from onshore to offshore, while simultaneously seeing that offshore wind market needs are rapidly approaching because onshore wind prospects will not be sufficient to meet overall demands for new wind energy installations. In other words, the wind industry is likely to become more serious and earnest in taking head-on the offshore promise and challenge in the relatively near-future. The industry leaders can't avoid it forever. But, in the main, they are avoiding it for now.
In the meantime, I am aware of several entrepreneurial companies -- some of whom working in stealth mode, some of them with substantial wherewithal -- that are following Clayton Christensen's Innovator's Dilemma playbook and aggressively developing innovations to take on a market niche that the "big boys" aren't terribly interested in right now. As a result, the current leaders of the wind industry -- Vestas (CO: VWS), General Electric (NYSE: GE), Siemens (NYSE: SI), Gamesa (MCE: GAM), Suzlon (NSE: SUZLON) and so on -- may wake up a few years ago and find that they "missed the boat" in offshore wind.
Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.
Sunday, October 12, 2008
Keeping America Moving
By John Addison (10/11/08). A record number of Americans are saving thousands per year by using public transportation from one day per week to living car free. In 2007, a 50-year record of 10.3 billion trips per year, saving over 4 billion gallons of car gasoline use. 2008 will set a new record that may approach 11 billion trips as more commuters leave their cars parked to brave standing-room-only train and bus rides. Fifteen thousand who run global transportation systems convened in San Diego from October 6 to 8 to examine a range of strategic issues and to review 800 exhibitors at the American Public Transportation Association (APTA) Expo. As transportation managers accommodate record numbers of passengers, they face challenges. Most transportation funding is spent on highways, not on public transportation. Fare revenue is only a fraction of budgets. Loss of property and sales tax funding is forcing operators to cut budgets. Diesel fuel prices have increased 166 percent in four years. Buses designed to stay on the road for 12 years are being kept in operation longer. When new buses are ordered, reduced fuel cost is a priority. 63 percent of buses ordered in 2007 were alt-powered using hybrid technology, natural gas as a fuel, or both. City light-rail is typically powered by electricity. Public transportation is increasingly using renewable energy (RE) by installing more solar power and contracting for RE with public utilities. The shift to fewer car miles on highways and alt-powered transportation is helping the nation need less oil. U.S. use of oil refined products in transportation is estimated to be reduced 5 percent this year. Should rail and public transit resolve their budget crises, oil use will drop further. Member organizations were encouraged to overcome all obstacles in accommodating record riders by Dr. Beverly Scott, APTA’s new Chair and also CEO of MARTA in Atlanta. When federal funding of public transportation expires in 2009, APTA will ask the new Congress for a $123 billion 6-year funding package. Pushed to the wall, several major transit systems are making politically unpopular fare increases. Some are cutting routes, frequencies, and making layoffs. In his speech, Jim Simpson, Federal Transportation Administration (FTA) Administrator encouraged executives to consider public-private partnerships (PPP). At the Expo, I visited with Veolia (NYSE: VE), the world leader in transportation service contracts and management. Veolia has 120 contracts to run transportation in 30 countries for annual revenues of about $8 billion. A good example of an effective PPP since 1993 is Veolia’s partnership with the Regional Transportation Commission (RTC) of Southern Nevada. I have personally been impressed in using their bus rapid transit while attending Las Vegas conferences. During the life of this partnership, ridership has increased from 15 to 60 million per year. At the APTA Expo, on of Las Vegas’ new 62-foot rapid transit vehicles was on display, looking more like a bullet train than a bus. The vehicles are designed by Wright with ISE doing the hybrid-electric drive systems using Siemens components. Fifty of the new vehicles will be delivered to Las Vegas. For transportation operators that cannot make capital expenditures, PPP can provide a way for private corporations to buy needed equipment, then utilize the rail and buses as part of service contracts. Unfortunately, the expansion of public-private partnerships (PPP) envisioned by the FTA goes in the face of some of its obsolete legislated rules for funding. In the long-term public transportation will serve a growing number of Americans because of increasing oil prices, plus increased preference for urban living by the young, by families, and by retiring boomers. As transit stops being a neglected child compared to highway funding, it will meet the financial challenge of expanding routes and increasing frequency by adding rail, adding buses and employing more drivers and maintenance professionals. Significant growth will reduce or oil dependency, make people more productive, and unclog the streets and freeways. Even those who never use transit will benefit from lower gasoline prices, less time in gridlock and breathing cleaner air. Significant growth will be supported by high speed rail linking suburbs and linking transportation systems. Jim Simpson, (FTA) Administrator, regularly takes the 3 hour Amtrak Acela regularly from New York to Washington, D.C. Often he cannot get a seat as record demand soars ahead of investment in more rolling stock. Amtrak carried a record 28.7 million people in fiscal year 2008. The company has posted six years of ridership and revenue growth, recently benefiting from high gas and airline prices. The number of trips over the past year increased 11% and revenue 14%. On November 4, voters in 33 states will be making decisions about approving transportation funding. In California, voting on Proposition 1A will decide if the nation has a second high-speed rail system that could cover 800 miles and carry forecasted ranges of 32 to 68 million annual rides by 2020. It will cost far less than the alternative of expanding highways and airports. Should voters give the system the green light, the $10 billion of California taxpayer funded bond will need to be matched with $10 billion federal and $10 billion of public-private partnership money. The system will be electric, using no petroleum. A study by the American Automobile Association (AAA) shows that the average cost of owning and operating a passenger vehicle is 54.1 cents per mile. The IRS allows you to deduct 58.5 cents per mile for business. This is over $8,000 per year per vehicle, based on 15,000 miles of driving. Depreciation is part of that cost. Anyone who has bought a car for $20,000 and later sold it for $5,000 understands depreciation. Fuel, maintenance, tolls, parking, insurance, and tickets add up. Most households have two vehicles, costing them over $16,000 per year. More Americans will save thousands by using public transportation. For some it will be one day per week, for others it will be the primary way that they travel. City and regional systems are offering trip-planners, dynamic maps, and realtime GPS information to those using the Internet, text messaging, and smart phone technology. I have frequently used Google Transit to plan trips that have several transit legs. Enjoy the savings of time and money from public transportation. John Addison publishes the Clean Fleet Report with over 100 articles and reports about vehicles and transportation. Disclosure: the author is a modest long-term stockholder in Veolia. All his stock holdings are getting more modest every day. John now uses transit more frequently than his car. |