Green Technology and Energy Efficiency Developments Driven by Government Support and Need for Alternative Energy Production

The renewable energy market is evolving in the US with respect to the impact of the Energy Policy Act of 2005. While concerns are increasing over how long global oil supplies will match consumer needs, the pathway is widening for companies offering technological and environmental solutions. With increasing support from a Federal level and individual States increasing their incentives for energy saving products, companies already establishing themselves in this sector are also in a position to expand their product lines and reach into new areas being promoted at a government level. SunPower Corporation (NASDAQ: SPWR), Alchemy Enterprises Ltd. (OTCBB: ACHM), Encore Clean Energy Inc. (OTCBB: ECLNE) and Honda Motor Co. Ltd. (NYSE: HMC) discuss their vision on technology, innovation and market drivers in the changing energy sector.

Encore Clean Energy Inc. (OTCBB: ECLNE) company Director Larry Shultz has said that their company’s product, the Magnetic Piston Generator is a, “heat recovery technology which converts waste heat into electricity. This technology, looking forward, is really the key to our thrust into the clean energy marketplace because what most people don’t know is that for every mega watt of electricity generated in the United States, more than a mega watt of heat goes up in smoke, either up a smoke stack or through a cooling tower.” Further he said that, “American industry is very inefficient where all of that heat is wasted. So what the MPG technology does is it converts that wasted heat into electricity whereby we can continue to harness up to 20% of that wasted energy.”

According to Julie Blunden, Vice President of External Affairs for SunPower Corporation (NASDAQ: SPWR), “we think that SunPower’s growth is a good example of how public policy is helping to drive capital investment as well as technology advances. Our investors and suppliers see that the solar power market is growing rapidly in the U.S. and around the world and have supported our growth to meet that demand. Within the next decade, solar will be at a price parity with retail electricity rates in much of the developed world, offering SunPower access to the trillion dollar global electric market.”

Distributed Energy Systems Corporation (NASDAQ: DESC) President and Director Walter Schroeder says that, “innovators of energy sustainability fall into three distinct categories: manufacturers, developers or integrators.” Further to this he reveals, ”the states that are doing the most are California (who are way out ahead), New York and New Jersey. Connecticut and Massachusetts get honorable mention.”

Commenting on the position of Alchemy Enterprises Ltd., Jonathan Read, President and CEO stated that, “as we are the producers of a power source, we’re reliant on our customer to work with the states on end-user tax credits. We are actively working to position ourselves for Federal tax credits and or grants as it relates to alternative energy.” Talking about government incentives, Read explains, “there are two tiers of state and Federal tax incentives. The first is for the producer of alternative energy technologies and the second tier involves provisions and tax incentives for end users (ie. motorists), which we would partner with once our technology is fully fleshed out and proven.”

As the market grows, we are seeing companies such as Honda Motor Co. Ltd. (NYSE: HMC) expanding their range of services, with the launch of a compact household cogeneration unit, which combines “the world’s smallest natural gas engine-with an efficiency configured, compact, lightweight power generation system employing Honda’s unique sine-wave inverter technology to create a compact unit suitable for residential use, boasting an energy efficiency of 85%.”

To Read “Refining Strategies to Deliver Energy Efficiency and Technology Innovation” in Full Click Here

Marketing for the Fall

Wednesday, April 26th

Richard Stuebi wrote here on Monday, “It’s the Jobs, Stupid.” It certainly is, and it’s an argument for establishing renewable energy that I wholeheartedly champion. It’s also why Kevin Phillips’ “American Theocracy”—a book not without polemic, according to The New York Times, was a rough read.

Pride goeth before the fall, writes Phillips. Unfortunately, he’s not talking about a seasonal summertime loss of self-esteem. Overlay onto the United States the catalysts for the downfalls of the former hegemonies Rome, Holland, Spain and England (imperial hubris, religious zealotry, energy dependence, and indulgence of a ‘borrower-industrial complex’ that forsakes manufacturing) to see the disturbing similarities. You might say the book is the economic/ political/ religious sister to Jared Diamond’s “Collapse.” Both ring loud alarms to rouse the public and its leaders out of stupors of fiction, denial and misdirection. Both say there is time and opportunity to change course and outcome.

As a marketer of cleantech in the U.S., I hope so.

In the U.S., says Phillips, we have a debt problem (which I cover today) as well as a dying manufacturing base (which I will cover next week).

Debt
Last week I met with Jim Welch and his staff at Sun Electric Systems, Inc., a small but successful solar energy company in Colorado, to talk about business development opportunities. Jim has been involved in solar for decades, building a solar company which he sold to Kyocera and then venturing overseas. Recently, he has met with U.S. Senator Ken Salazar, a proponent of clean energy, to deliver the message: the U.S. (and Colorado) need more manufacturing. The staff of Sun Electric Systems will be flying to Germany this June to attend Intersolar 2006, believing that the real activity in the solar sector is happening overseas.

“American Theocracy” goes a long way in explaining why Jim and his staff are heading to Europe this summer: “It’s Manufacturing, Stupid.” Before we get to the matter of manufacturing, U.S. debt deserves a good, hard look: If Jim returns from Germany with great cleantech product to sell in the U.S., as I suspect he will, who’s going to buy it? To whom will marketers be selling?

Here are a few chapter titles from Part III of “American Theocracy”: Borrowed Prosperity: Uncertain politics, and the financialization of the United States; The precarious trajectory of American debt; The emergence of the U.S. debt and credit-industrial complex; Debtor society, credit-card nation; Greed and the 1995-2005 credit bubble.

Marketers, greed and gullibility helped get us here.*

Ø “In 1980 Americans collectively put aside a net 7.4 percent of national income. By 1990 that had fallen to 4.5 percent, and by 2005 to a record-low negative savings rate.”
Ø “Noting how consumer spending accounted for more then two-thirds of the $11 trillion national economy, The New York Times summarized that ‘the machinery of American marketing, media and finance all encourage the consumption habit. Many consumers are unable to resist the overpowering mantra: spend, spend, spend.’”
Ø “Sociologist Robert Manning…detailed how banking deregulation during the late 1990s facilitated an ‘enormously successful mass marketing campaign’ that ‘dramatically altered American attitudes toward consumer credit and debt.’” (One that encourages as-yet-unemployed youth and soon-to-be retirees, as well as everyone else, to borrow like mad.)

Contrasting Phillips’ history of the debt-and-credit buildup, NPR reports this week that consumer confidence is up—the highest it’s been in four years, but that higher oil prices could put a damper on spending. It reports that the economy is strong as jobs come on line, despite the national debt and the deficit. NPR also reports that housing market indicators (as deciphered and delivered by a real estate industry spokesperson) show a cooling but strong housing market, although the inventory of unsold houses is very high.

Shake those pom-poms.

This news comes just weeks after NPR reported, in some markets, an increase in foreclosures, slowed housing price appreciation, and an increase in ‘creative’ mortgage financing (interest only loans, ARMs—$2 trillion of which will come up for renewal in two years). On the personal front, this week Citibank offered me yet another credit card. This one is pre-approved with a $100 gift card and 10,000 bonus points toward a free rewards program—and a default APR of 31.49%. Unnervingly, the time between receipt of the statement (via snail-mail) from my long-standing credit card and its due date seems to be shrinking. The credit card company recommends that I pay online to avoid possible late fee charges. Any fond feelings I once had for my credit card company—and there were some—went by the wayside years ago. Freebies can’t erase the lingering stench of usury.

So while we are encouraged to spend, spend, spend, and the mainstream news reports (almost all) things dandy, the things we buy, buy, buy are manufactured in East Asia (goods) or produced by the Middle East (oil).

Greener Miles

Greener MilesFord (F) is offering Ford owners a new way to balance their choice of automobiles with a growing need to be environmentally responsible.

As consumers find the shift difficult to make , they can feel they are making a positive contribution to a future generation of clean energy users . “Greener Miles” will allow Ford owners to go to the Web Site to determine the amount of carbon dioxide they produce in one year of driving. They can offset the negative impact by investing the equivalent dollar value in clean technology .

Ford has partnered with TerraPass http://www.terrapass.com/ funds that invest in clean energy projects like wind farms and methane capture.

If you aren’t quite ready to change your car- you can at least invest in the future green generations.

It’s the Jobs, Stupid

Advocates of renewable energy are increasingly promoting the prospects of job creation as a key reason to aggressively move to renewable energy.

One of the more publicized initiatives to link renewable energy to job creation is the Apollo Alliance. This organization recently completed a study that estimates over 3 million jobs to be created in the U.S. as a result of a major national commitment to renewable energy. Of course, the analytic approach and assumptions employed in the study can always be questioned, and the fact that organized labor is intimately involved in the Apollo Alliance raises some concerns about unbiasedness.

Nevertheless, it seems directionally clear that increased renewable energy activity is positively tied to new jobs. This notion of job creation through renewable energy may be resonating better with policy-makers and citizens than the well-worn environmental reasons, and maybe even as well as the energy security/independence rationale, for pursuing renewable energy. I’m reading and hearing of it more frequently. If it is gaining traction and has legs, it might be a useful bandwagon for clean tech supporters to jump onto.

Light metals for lighter cars

The demand for lighter cars, trucks and airplanes to reduce the fuel consumption and hence CO2 emissions is driving a whole range of R,D & C activities into composites, ceramics and light metals technology around the world. In this week’s blog I’m going to take a look at the light metal industry in Australia and showcase a couple of recent innovative Australian technologies.

Light metals category predominantly includes Aluminium, Magnesium and Titanium. These metals are found in the ores of bauxite and magnesite and the mineral sands of rutile and ilmenite in the case of titanium. A basic snapshot of Australia’s resources in light metals is as follows:

  • Aluminium – Australia has 8.5Gt of bauxite and is the worlds largest exporter of bauxite and alumina. The industry is the second largest commondotity export behind coal with export earnings of A$8.9b in 2000-01. (www.abs.gov.au)
  • Magnesium – Some industry specialists predict Australia could produce 800,000 tonnes of magnesium every year by 2020, almost double the 450,000 tonne-a-year existing world market. Australian magnesium exports could account for 50 per cent of the growth in world demand over the next 20 years. (source)
  • Titanium – According to data from Geoscience Australia and USGS, Australia has the world’s largest EDR of ilmenite and rutile with 32%, 44% respectively. Australia supplies about 40 per cent of the world’s ilmenite and about 25 per cent of its rutile. (source)

Looking to the industry and its technology – the areas of innovation exist around the following aspects of refinement and manufacturing.

  • Reducing the energy intensity of refinement,
  • Improving the refinement process,
  • Development of stronger and lighter alloys, and
  • Forming and casting techniques.

Australia has and contines to provide significant support to light metals has a significant amount of government investment. The aluminium industry has received $3 billion since the early 1990s in technological improvements, upgrades and environmental improvements and continued expenditure on new technologies and processes of around $300 million per year.

In 2001 the australian government commited to the Light Metals Action Agenda to create dynamic, internationally competitive Light Metals Industries to 2020 and beyond, reflecting worlds best practice and sustainable development. Specific aims for these industries are:

  • Aluminium to expand its domestic and export market by 30%;
  • Magnesium metal output tonnage of 800,000tpa, with exports capturing 50% of the growth in world demand over the next 20 years;
  • Titanium to develop a metal output tonnage of 25,000tpa establishing a 25% share of the global market; and
  • The downstream sector to continue in the establishment of a vibrant export oriented industry using all three metals in new innovative products.

Now for the cleantech.
The two (paraphrased articles) below present two types of technology coming out of Australia’s focus on light metals I’ve decided to look at today are a new magnesium casting technology, T-mag , and a high temperature aluminium casting treatment technology. As a result of these technologies future cars will be far lighter and stronger as a result.

T-Mag: Magnesium casting technology
source – http://www.solve.csiro.au/1105/article6.htm

The technology, called T-Mag, consistently produces high-integrity magnesium alloy castings from permanent moulds, free of the porosity and other defects that have hindered use of magnesium in the past.

A team of research engineers headed by Dr Thang Nguyen, from CSIRO Manufacturing and Infrastructure Technology (CMIT), has developed a new permanent-mould magnesium casting technology that promises to tame the featherweight but highly reactive metal for mass-production of vehicle components.

Barrie Finnin, leader of CMIT’s Manufacturing Technologies for Transport Theme, says T-Mag can cast lightweight magnesium-alloy engine blocks that will be only two-thirds the weight of current aluminium alloy blocks – a prospect that is already arousing the interest of high-performance car manufacturers in Europe.

It will also be possible to cast high-integrity magnesium alloy wheels. Current casting technology cannot produce wheels of sufficient integrity to be safe and practical at an acceptable cost.


cast magnesium wheel


T-Mag was developed through CSIRO’s Light Metals Flagship. A pilot-scale unit built for research and development has already produced successful demonstration castings, including alloy wheels, and magnesium alloy blocks for a 750cc, water-cooled, motorcycle engine will be cast shortly.

Oil price rises are forcing vehicle manufacturers to pursue further weight savings through use of strong, lightweight magnesium alloy components for powertrain and load-critical applications. But such applications are not economically viable with current casting technologies, Mr Finnin says. He describes T-Mag’s novel, integrated design as a critical enabling technology, with a range of applications beyond the high-pressure (HP) casting technique currently used to produce 85 per cent of the world’s magnesium alloy components.

HP casting is plagued by low as-cast yields: typically, it takes 6–7 kg of metal to produce a 3.5 kg casting. The unused metal cannot simply be recycled because remelting creates oxides and intermetallic compounds, and both the initial melting process and remelting the scrap consume large amounts of energy. “T-Mag requires only 3.7 kg of alloy for a 3.5 kg casting. This reduces recycling and energy use, and saves a lot of melt cost,” Mr Finnin says.

T-Mag could be used with a new magnesium alloy called AM-SC1 for engine blocks. Current magnesium alloys lack the mechanical properties required to operate for long times at high temperatures. However, the new AM-SC1, developed in Australia by a team including researchers from CSIRO, University of Queensland, Monash University and Australian Magnesium Corporation (now Advanced Magnesium Technologies – AMT)

Powertrain systems developer AVL in Europe has successfully trialled an engine made from the Australian alloy in a Volkswagen Lupo sedan. The alloy is being commercialised through AMT.

Mr Finnin says CSIRO will now seek industry partners to commercialise T-Mag: “We’ve only just started to talk to the market about the technology, which is so new that the patents aren’t even published yet.”

high temperature aluminium casting treatment technology
source – http://www.solve.csiro.au/0206/article7.htm

Although heat treatment is commonly used to strengthen wrought and cast aluminium parts, it cannot be used on high-pressure die castings because air bubbles trapped during casting can blistering and distort the parts, making them unusable.

A new heat-treatment technique developed at CSIRO has overcome the problem, allowing high-pressure die cast parts to be strengthened without running the risk of these metal defects.

Dr Roger Lumley, leader of a Light Metals Flagship research team at CSIRO Manufacturing and Infrastructure Technology (CMIT), says high-pressure die casting is commonly used as a high-volume production process in a range of sectors, particularly the automotive industry, where it is used to manufacture parts such as engine blocks, transmission housings and many small parts.

Therefore a strengthening treatment that fits with this existing process is an important development.

“Most of the aluminium parts you see when you open the bonnet of your car are aluminium high-pressure die castings,” says Dr Lumley. The process allows parts to be made quickly – up to 20 small parts a minute.

CSIRO has overcome this manufacturing hurdle by developing a process where die casts can be heat treated. Dr Lumley says this results in quite large improvements in the strength of the part with an excellent surface finish.

Trials at CSIRO’s Clayton laboratories have shown the new process can at least double the strength of high-pressure die cast parts. This means they can be lighter and still do the same task – a factor that is particularly important in the automotive industry where lighter cars use less fuel and have lower greenhouse gas emissions.

“A lot of these parts are designed for their loads and basically the stronger the material, the lighter you can make the part,” says Dr Lumley. “We would like to think that we could see a 30 per cent weight reduction.

“The die casting industry is very, very cost-sensitive, and if you can use less metal per car part, you also save money.

Sam Tartaglia, business development manager at CMIT, says the industry has sought such a technique for many years.

“This is a major advance,” says Mr Tartaglia, who until recently was a senior executive at US-based company Teksid Aluminum, a world leader in the production of aluminium castings.

“While the new techniques will improve existing parts, it will be in new product design that the benefit will be the greatest. The big advantages will come when products are designed taking into account these new material properties.

Dr Lumley says that while aluminium die casting worldwide is dominated by the automotive industry, other industries can use the new process. Examples include builders’ nail-gun casings and even door handles.

“Basically anything that requires a fairly complex and strong part to be produced quite cheaply can be made using this process,” Dr Lumley says.

———————————————————————————————-

Nick Bruse is the General Manager of Clean Technology Australasia Pty Ltd, the organiser of the AustralAsian Cleantech Forums and Dealer Forums, and the leading advocate of Cleantech in Australia. Nick does a weekly blog column on Cleantechblog profiling innovative Australian cleantech, energy, water and environmental technology companies.

Corporate Changes and Positioning- Home Depot Eco Options

Large corporations are now taking the movement to environmental responsibility and energy efficiency to new levels never seen before. It is no longer just to appease a small demographic customer base, but now part of corporate business plans moving forward.

HOME DEPOT INC (NYSE:HD)http://www.homedepot.com/ is addressing their customers that are “more concerned than ever about energy consumption and the quality of the air, water, forests and health of their home & environment. The Home Depot’s Eco Options brand helps customers improve homes and the environment.”

This green movement started in the 70’s, but never really gained the exposure and momentum necessary to go mainstream. It always comes down to cost and economics. As we are confronted with oil prices over $70 and we face the price hikes at the pump, the average person that represents a typical customer that may shop at Home Depot is looking for new choices being dictated by their wallets.

Customers in Home Depot can look for the symbols helping to find energy-efficient products that will lower their energy bills, or products that can improve air quality and reduce emissions that contribute to global climate changes.

Truth and Dare

Wednesday, April 19th

Easter Sunday I was working on the brae bio-bus and listening to a rock station when I heard an ad for an electric and gas utility. It made me think of Seth Godin’s 2005 book “All Marketers Are Liars: The Power of Telling Authentic Stories in a Low-Trust World.” In that book with the catchy title (which Godin admits was meant to encourage sales), he proffers that all marketers tell not lies, necessarily, but stories. The book begins, “I’m not going to tell you the truth. I’m going to tell you a story.”

The utility that created the ad that aired Sunday will remain nameless. In 2004 I wrote about this utility’s opposition to a renewable portfolio standard that was about to be put to a vote of the people…people who are, in large part, the utility’s customer base. The lobbyist for the utility’s opposition group was as angry as hornet in a poked nest over what I had written – and he threatened legal action. I had dared put a toe in the waters of free speech during a political campaign. (To play on the trailer for Al Gore’s, “An Inconvenient Truth:” Nothing’s scarier than telling the truth.) My article was banished from the web for being ‘provocative.’ The RPS legislation was enacted by virtue of the vote.

After reading Godin’s book and the run-in with the lobbyist, I emailed Godin to ask the difference between politics and marketing. He replied…nothing; they are the same thing. Ouch. Frank Luntz in an interview with Frontline talks about the differences between selling ‘politics’ and selling soap: “the way you communicate an idea is different than the way you communicate a product. However, the way you measure [the response in both instances] is quite similar.”

Utility marketers do lots of research on customer satisfaction levels and struggle to improve them – and a vote can be informative, and unique, market research for measuring those levels around a specific issue. A vote can be analyzed right down to campaign advertising buys and voting records. Once a marketer has this information, it can tell an authentic story. Proponents of the RPS are doing exactly that. They are now reaching out in counties where the vote (and advertising) in favor of the RPS was weak. They have a good story: job creation, economic development, cleaner air, water preservation, energy security…a story that tugs at the enteric, emotions and passions.

On the other hand, the utility is running this ad. It sells nothing specific; the utility has few, if any, products. Clearly, though, it has a story to tell – and it is sticking by its pre-RPS vote story, unwavering. (This ad may even be the same one it ran before the vote.) The spokesperson in the ad says she works for the utility. This is (or was once) true. I’ve met her. She’s a bubbly actress, as well as a current (or former) employee of the utility. She says she’s standing at the site of a utility’s wind farms, and names it. Yes, the utility owns and operates this wind farm – it’s part of the utility’s voluntary premium green pricing program. She goes on to say that the utility is the country’s leading utility in wind energy. Yes, by sheer numbers, not percentage of its customer base, and according to the NREL/DOE list of premium green-priced programs, it is. (If green-priced programs are apples, grid-based energy sources are oranges – and the RPS is all about oranges.) She then says the utility doesn’t need a mandate telling it to use clean energy, because it already does – a direct shot at the RPS and an appeal to its base constituency from the vote NO campaign (the high-trust, anti-regulation, right-leaning voter segments). It’s an assertion open to debate (and articles that tick off lobbyists). Then she says something about the environment and emission controls at the utility’s pulverized coal-fired plants.

Godin wrote, “Be aware: If your stories are inauthentic, you cross the line from fib to fraud. Marketers fail when they are selfish and scurrilous, when they abuse the tools of their trade and make the world worse.” And Luntz told Frontline: “You cannot lie ever, because a lie destroys the credibility of the project, and the credibility is more important than anything. Credibility’s even more important than clarity. They have to believe you before they will listen to you. So you can’t lie.”

On Easter Sunday I heard the same old saw, the same old story from the utility that opposed clean energy legislation enacted by the vote of the people, its customers. Somewhere around the words mandate and environment, I couldn’t help but wonder, when is a story just a story (a Godin “lie”) and when is a story (a fib), fraud? Is this ad an authentic story, or is it a fraudulent fib? Did the utility measure the votes of the RPS? Did it determine that it and its story still had credibility? Or is it just winging it?

The utility ad would have us believe that the utility just loves clean energy technology and the environment; it just doesn’t love being told what to do, and it will do the right thing when left to its own devices. Perhaps this is the story that the utility tells itself, about itself. (Per Godin, “We tell ourselves stories that can’t possibly be true, but believing those stories allows us to function. We know we’re not telling ourselves the whole truth, but it works, so we embrace it.”) If that’s the case here, this investor-owned utility is truly disingenuous; it is a regulated monopoly/monopsony; it’s already supposed to be told what to do, in case it, or the segment of the public to which it is appealing, forgot. If the passage of the RPS legislation revealed a few things, it’s that the message (“we don’t need to be told what to do because we do it anyway”) may not have been all that effective. Furthermore, a long list of the utility’s voluntary actions (from continued opposition to the RPS in rulemaking, to dismissal or foot-dragging on wind projects and coal gasification technology, to construction of a hotly contested pulverized coal-fired plant, to resistance to demand-side management programs, to opposition to wind outside the green pricing program) doesn’t quite jive with the utility story. These actions, attitudes and behaviors do not occur in a vacuum; they are covered by mainstream media…which its customers read.

There’s a bright(ish) spot in all of this politicking. The utility is running ads supporting the RPS-mandated solar rebate program. The word is out. The rebates are here…even if the steady supply of PV panels is not. It is suggesting that it will include lots of wind in its energy portfolio going forward…though back to issue of trust, we’ve heard a whole lot of that before and have little to show for it.

In a low-trust world, when it comes to clean energy, can the utility find an authentic story or will it continue to tell the only one it wants to hear?

Ethanol is a Growth Opportunity for Cleantech

Ethanol is a growth opportunity for cleantech. When you drive, there is most likely ethanol in your fuel tank. Ethanol is a fuel from a plant source that is normally mixed with gasoline. The percentage varies widely. All current U.S. vehicles can run on a blend of up to 10% ethanol (E10).(1) (Karen Lundegaard, Wall Street Journal, 4/17/06.) Some states require ethanol as an oxygenating agent in gasoline, replacing MTBE and tetraethyl lead.

Ethanol is reducing the U.S. dependency on foreign oil. We are growing our own fuel. Brazil has used ethanol to reduce its dependency on gasoline by 40%. In the U.S., 2%.

There is a heated debate about whether ethanol helps the environment. If you live in Brazil, the answer is that ethanol is a big help. In Brazil, ethanol is processed from sugarcane, a cellulosic source. This cellulosic ethanol produces over eight times more energy than the fossil energy used in its production.(2) (Hunt, Sawin, Stair, “Cultivating Renewable Alternatives to Oil,” State of the World 2006.)

In the U.S., the vast majority of ethanol is processed from corn. There may be no environmental benefit if the “wheel-to-wheels” process uses diesel farm equipment, fertilizer from fossil fuel, coal produced electricity, and diesel fuel delivery trucks.

Ethanol creates a major economic opportunity for the USA. We produce 33% of the world’s ethanol, second only to Brazil. Major firms like ADM and Cargill are rapidly expanding capacity. General Motors and Ford have been promoting E85 (85% ethanol, 15% gasoline). GM launched a national campaign, “Live Green Go Yellow.” GM will produce some 400,000 flex-fuel vehicles this year, up from 275,000 in 2005. Ford is planning 250,000 flex-fuel vehicles in 2006 (including versions of its popular F-150 pickup truck), up from some 200,000 last year. Daimler Chrysler is the leader in diesel and will take the lead in biodiesel, promoting more mpg. These three are all fighting to regain market share from hybrid leaders Toyota and Honda.

Which is better, hydrogen or ethanol? Hydrogen transportation is cleaner with almost no health damaging emissions. Renewable hydrogen produced at the fueling site, running in a fuel cell, produces zero greenhouse gases. Hydrogen reformed from a fossil fuel, then transported 1,000 miles to a fueling station, results in more “wheel to wheels” greenhouse gases than cellulosic ethanol produced near the pump.

Which will become a dominate fuel? Both. E10 will first be widely deployed in the U.S. E85 will grow more slowly because new pumps are required. Hydrogen is more disruptive, requiring new vehicles, fueling, codes and is more costly. In the long run, hydrogen may be the bigger winner as costs fall dramatically. Hydrogen can be produced from more sources ranging from wind electrolysis to being processed from the same plant sources as ethanol.


(1) Karen Lundegaard, “Hybrids get all the attention, but biofuels are also starting to gather steam,” Wall Street Journal, 4/17/06.

(2) Hunt, Sawin, Stair, “Cultivating Renewable Alternatives to Oil,” State of the World 2006, p.69.

India’s growing renewable energy market

India and China’s growing economies are adding to the current global oil dependency as world oil demand is estimated to reach 90 million barrels per day (bpd) before the end of this decade. With current prices fluctuating in the $60’s and experts such as T Boon Pickens saying we could see $100 barrel, there is a global push and demand to seek alternative energy solutions.

India and China could see the high growth they are experiencing come to a significant slow down if oil prices are too high and no solutions are in place.Technology to reduce the dependency on oil and gas needs to be implemented to find short-term and long-term solutions.

India is taking heed and now ranks fourth in the world for wind energy behind Germany, Spain and the United States. The country’s monsoon winds, contribute to their current annual power production . The World Wind Energy Association (WWEA) sees India as a leader in Asian countries in the area of generating wind power. India, with overall capacity (4,430 MW) and additions (1,430 MW) is taking steps to deal with a pending energy crisis.

The world is listening as wind energy currently delivers worldwide 1 per cent of the global electricity generation.

China moved up from 10th position in 2004 (764 MW) to 8th in 2005 (1,260 MW), and with installations, has reached the sixth position worldwide. The Chinese Government adopted a renewable energy law in 2005 with the goal of strengthening its manufacturing industry so it can produce an increased number of turbines to meet its future demands.

Global energy players are being asked to make progress in addressing a global-energy policy approach to secure energy efficiency and environmental protection.

Mixing Oil and Water in Middle East

This week I spoke with a colleague from the Oil/Gas and Engineering Services industry and we were discussing the Middle East, and opportunities for companies to deploy clean oil tech or water efficiency/purification technology into this area. I thought id comment on this and a few Australian technologies I’ve seen that might be able to take advantage of this market.

The stable Middle Eastern oil producing countries are attractive due to last few years of high oil prices cashing up this area of the world. Now when coupled with the increasing pressure to clean up and increase efficiencies in oil industry, and the significant demand for water by an affluent large population, this presents a big opportunity for companies to introduce efficiency technologies in both industries.

Technologies which can which have even meager greenhouse gas or water efficiency improvements coupled with the ability to deploy into the region can benefit significantly from the available cash to invest into this area.

The real key in these markets are the organisations that are already operating in the middle east through oil relationships, such as large engineering and industrial firms, that can deploy small scale improvements in large volumes.

So lets look at a couple of Australian oil/gas and water technologies that if deployed on a large scale are of significant interest.

The first is a company called Katrix based out of Melbourne, Australia. Katrix was established in 2001 to commercialise a new class of mechanical technology for fluid compression, expansion and internal combustion engines. The Katrix technology is an innovative fluid processing technology able to compress, expand, transfer or internally combust various fluids.” “The technology now is in commercial development with clearly defined products expected to be launched into the market from 2006 onwards.

The functional motor/expander unit as I understand (when talking with their CEO) can be effective at the scale of a small scooter sized engine.

From a middle east perspective this technology has a key application of being able to operate as a micro-power generator when placed at gas expansion points in natural gas lines or other industrial oil systems:

As a fluid motor or expander, it is expected to revolutionise micro-power generation through its proven high isentropic efficiency (>50%) at the sub-100kW power output range, with clearly identified developments that increase this to 75% or more.

The Second in the water industry is NSW company IOteq and their ISAN® disinfection technology.

“Ioteq produces innovative, environmentally friendly, fully automated, cost effective disinfection solutions for agriculture, horticulture, waste water, manufacturing, industrial and consumer applications. The Isan system is the Ioteq vehicle used for the control and delivery of the active ingredient, BioMax® Iodine, as well as the collection of all disinfection by-products by the BioRes® resin.

The Isan System, in all its many sizes and configurations, is a sophisticated, highly engineered, fully automated disinfection process. However, whilst very smart in its features and controls it is also extremely simple to use making it a breakthrough technology in some of the target industries.


source: ioteq website

With systems capable of treating water flows from 10,000 litres per hour to millions of litres per day, they all include combinations of electrodes for measuring iodine levels in the target water stream, a control unit which automatically controls the running of the system, iodine canisters to deliver the BioMaxA iodine, and resin canisters containing BioResA resin to collect all iodine by-products after disinfection has been completed.”

This technology has cross industry applications but provides the obvious ability to recycle water in significant volumes. Something which would be of interest in the middle east as desalination is a costly activity hence the more times you can use the water the better.

PowerGen Renewables: Viva Las Vegas!

This past week, I attended probably the largest annual pan-renewables event in the U.S.: PowerGen Renewables, held each spring in Las Vegas. This event is produced by Pennwell (which puts on the immense annual PowerGen show for the conventional power generation industry), and is organized by the American Council on Renewable Energy (ACORE).

The keynote session packed a huge hall, with a claimed attendance of 2500. The first presenter was the new leader of DOE’s Energy Efficiency and Renewable Energy (EERE) shop: Alexander Karsner. (March 23 press release) It’s notable that Karsner is actually a renewable industry guy himself, having led Enercorp, a project developer that includes some wind in its portfolio history. Karsner’s speech was probably pretty compelling on paper, but (in my view) he tried too hard to express his passion and instead came off a more than a little overly-strident, even militaristic. Oh well, perhaps with time he’ll polish off his “hot” edges; he’ll certainly have plenty of opportunities to do so in future speeches.

The keynote session also included ex-CIA Director Jim Woolsey, who made an outstanding case for biofuels as a means to dramatically reduce our dangerous reliance on the Middle East for transportation fuels, as well as reduce emissions. If you get the chance to hear him speak on this topic, make your schedule work for it.

But, GE’s “Ecomagination” talk was strangely flat, and after the keynote session, the event lost steam. There were probably only a couple hundred attendees by Day Two, and the exhibition floor distinctly lacked a buzz for the whole show.

Perhaps this is due to the fact that the hall was much bigger than it needed to be, but the lack of crowds trolling the booths suggests that there may not be much of a market for a trade show that spans the various forms of renewable energy.

The wind industry was not very well represented. Among the bigger players, GE was the only manufacturer and enXco the only developer to exhibit. Probably this is because the U.S. wind market is “large enough” for industry players to see the upcoming AWEA Windpower Conference in Pittsburgh in June as the only venue that matters.

In the solar industry, much the same story applied: only Kyocera among the major photovoltaics manufacturers had a booth. Presumably, the solar companies view Solar Power 2006 in San Jose this October as the place to be.

On the other hand, the biofuels crowd was far more prevalent than at previous PowerGen Renewable shows. With $60+/barrel oil, and the lack of an established leader in the biofuels trade show arena, I guess that’s not surprising.

ACORE talks about its identity as a “big tent” for all renewable interests to rally under. This probably makes sense for policy issues in Washington, which is where ACORE was founded and remains based. But, with this 3rd annual show now in the books, the verdict remains unclear (at best) for a trade show among corporations in different segments of renewables. It would appear that companies with interests in wind want to do business with each other, not so much with solar parties, and vice versa.

Welcome to Contributor to the Blog – Nick Bruse – Cleantech Forum

I wanted to welcome Nick Bruse to Cleantechblog. Nick will be doing a weekly Sunday column profiling new Australian clean technology companies. He launched his first column this week with a profile of two Australian clean coal technologies, and an overview of the state of technology development in the Australian coal industry.

Nick Bruse is the General Manager of Clean Technology Australasia Pty Ltd, the organization that runs the Cleantech Forum. He co-coordinated the Inaugural 2005 Cleantech Forum in Melbourne, and coordinates the Cleantech Dealer Forums. He also established and coordinates the Sustainable Enterprise Network for small entreprenerial businesses in Melbourne.

Nick has a Masters of Engineering and a Masters of Entrepreneurship and Innovation. He is the director of Strike Consulting, an organisation that works with clients to identify and validate opportunities to grow their business successfully. He previously worked for Ericsson Australia as an Investment Manager assessing early to mid stage start-up companies for investment, and while there developed an internal innovation seed fund.

My firm, Jane Capital, does a significant amount of work with energy, environmental, and software technology companies in Australia. As a result, we are excited to have Nick on board, and are looking forward to his column.

Batteries not Bullets

Wednesday, April 12, 2006

I might have heard James Woolsey* deliver his opening speech on clean energy at the 58th Conference World Affairs in Boulder, except that it’s been a very busy week. There were presentations for Colorado Interfaith Power & Light in Denver. A wave energy start-up wanted input on its marketing message and a new urbanism real estate developer wanted some guidance on solar photovoltaics. The Green House Network needed someone to administer registration for a conference on climate change and coal-fired plants…so I signed on. Because I couldn’t put it down, I finished reading “Electric Universe” by David Bodanis.

And my dad came out from New York for a brief visit. He’s a corporate attorney – Chinese and Saudi clients…you get the drift – with an ivy undergrad engineering degree. Growing up, time alone together was scarce (divorce, etc); I recall being truly alone him only once, in his garden, talking about tomatoes. (We’re both nuts about gardening.) I don’t have a garden these days, but I do have the ‘brae bio-bus’ project. Absent easy chit-chat about purple heirlooms and pests, I hit him up for advice on the electrical configuration for the bio-bus. I showed him my two maintenance-free 6volt 220ah Lifeline batteries, the solar trickle charger on the starter batteries, and my favorite new toy, a Xantrex 400watt modified sine wave inverter, battery, AC/DC box with charge control panel, AM/FM radio and AC wall wart charger. I pulled out pictures of a 2000watt pure sine wave inverter/charger, a 300amp T fuse block, a distribution box, and solar panels – and the schematic I’d drawn. He thumbed through “The RVers’ Guide to Solar Battery Charging: 12volt DC-120volt AC Inverters” and a Real Goods catalog. Taking shelter from a rare drizzle in Denver, could my dad figure out how AC shore power connects to the inverter/charger? Yes, indeed.

Accelerating Advanced Hybrid Technology into the Marketplace

In the midst of this fascination with the electric universe, I spoke with David West, founding member of the Plug-in Hybrid Development Consortium and Vice President of Marketing for Raser Technologies – an R&D company that develops and licenses advanced electric motor and controller technology. Raser is a member of the Consortium, along with: A123Systems, International Battery, Delta-Q Technologies, Daiken, ENAX, Electrovaya, Maxwell Technologies, and two utilities, Pacific Gas & Electric and Southern California Edison.

All Consortium members have a financial interest in market adoption of the plug-in hybrid electric vehicle (or PHEV) – from the manufacturers of components like batteries to the electric utilities. Yet, I’ve heard enough people interested in clean energy declare defensively, “I’m not a tree hugger,” that David’s comments were refreshing. Plug-in hybrids aren’t just about making money; no, they are also about making a better planet. These hybrids are part of a viable vision – one in which the power of batteries, not the force of bullets, meets our growing demand for energy.

The PHEV is not a brand new car, but a line extension of existing models (“I’ll take that spiffy number over there in midnight blue, the PHEV with a roof rack, thank you!”) The fuel efficiency and low emissions of PHEVs put to shame not only standard combustion engines, but also other non-plug-in hybrids (and pseudo-hybrids…see below). We’re talking 100+ MPG.

DaimlerChrysler is the first (and only) manufacturer building plug-in hybrids but is focused on passenger vehicles and sedans, like a 15-passenger van prototype called the Dodge Sprinter. This PHEV, based on Mercedes-Benz commercial vehicle technology, can get up to 20 miles on electric power. (Not quite the rig for me, bio-bus and all.) So, how does the average car-buying consumer get from “I want to buy a PHEV, darn it!” to cruising down the road in a fully-warrantied, mass-produced plug-in hybrid electric vehicle from a major auto maker?

I posed the question to Felix Kramer of CalCars which advises and supports the Consortium. “That’s the Holy Grail,” Felix replied, “That’s what we’re trying to make happen. And we don’t have an auto maker stepping up to do it. Once the auto maker does, it will be one to two years.” CalCars is a non-profit startup formed by entrepreneurs, engineers, environmentalists and consumers that tackles national security, jobs and global warming – at the same time. It is presenting PHEVs, along with wind and solar power, as the coordinated response to two of today’s greatest challenges: global warming and energy security.

Market Viability

The tipping point – when climate change/global warming is part of the national consciousness and influences purchasing decisions – is upon us. But energy security? My dad left me a copy Kevin Phillips’ “American Theocracy.” Part I of the book is titled ‘Oil and American Supremacy,’ and it describes our long history of exchanging bullets for energy, right up through the current invasion of Iraq. To quote Congressman Ron Paul of Texas (“Iran: The Next Neocon Target”) who spoke last week on the House floor about the high price tag of bullets for oil, “Where’s the outrage?”

Not waiting for the ‘energy security tipping point’ – or the outrage – Plug-in Partners, a national grass-roots initiative out of Austin, Texas, is taking soft orders to demonstrate market interest in PHEV to auto makers – to demonstrate the viability of PHEVs to the big guys (who have gotten so big they can’t see their own toes.) The major auto makers are, apparently, incapable of kicking themselves into gear, but they do have that marketing/PR thing down pat…if it’s got a battery and some electricity, but it still gets lousy fuel efficiency, call it a hybrid! That’s the ticket!

It’s so sad. The gears of “free market capitalism” vis-à-vis transportation – a market that responds to market signals – are utterly gummed up. Jump-starting the PHEV car market will require the likes of CalCars, the Plug-In Hybrid Development Consortium, Plug-in Partners, Woolsey and a flotilla of like-minded people…and one, just one, major auto maker.

In a year or two, I’d like to be towing a (little) PHEV behind my bio-bus and, in true American fashion (if I can’t live and work and eat all within walking distance, or avail myself of public transportation), I hope to be salivating over the next iteration of clean, efficient cars like the Extreme Hybrid™ – a car that gets hundreds of miles to the gallon. And, of course, I’ll be hoping my PHEV makes my Porsche-driving brother really jealous – for all the right reasons.

*“Woolsey, CIA director for President Clinton from 1993 to 1995, a Booz Allen Hamilton vice president and a member of the American Commission on Energy Policy, said a combination of non-grain ‘cellulosic’ ethanol, ethanol-burning cars and plug-in hybrid vehicles are among the best ways to wean the country from fossil fuels. Woolsey drives a Toyota Prius with a bumper sticker that reads ‘Osama bin Laden hates my car’ and has solar cells on his roof. Woolsey has a clear distaste for America’s financing both sides of what he calls ‘the long war’ with Islamic radicals in the Middle East…Where does that money come from? ‘When you pull into a filling station, turn the rear-view mirror just a little bit so you can look at yourself,’ Woolsey told the full house at Mackey Auditorium. There are plenty of others to blame, starting with auto makers churning out Hummers to government policy that gives tax breaks to people who buy them, Woolsey said.” The Boulder Daily Camera, Tuesday, April 11, 2006.

Is Applied Materials Entering the Solar Equipment Manufacturing Business?

I heard a rumor not too long ago from a friend that Applied Materials was entering the solar business. Specifically, that Applied was developing a business unit that would build and sell a suite of “standard” solar manufacturing equipment process lines. If this is true, it would be a big step forward for the industry, which typically today has been expanding with equipment from a range of small and mid-sized vendors. An entry by Applied would not only provide credibility for the industry, but might go a long way to provide much needed investment into the solar supply chain.

To confirm this rumor, and get an idea of what kind of solar technologies and processes Applied might be doing, I started making a few inquiries and searches. No mention of solar in their annual report or on the their website. Nothing in the mainstream press or on any of the solar blogs I follow, nor in my favorite solar news site, Solarbuzz.com. However, we struck data on several job sites and the US patent database.

After reading the materials, I am still not sure exactly what kind of products and processes Applied is going after. Many of the patents have only oblique references to solar, and limited or no references in the claims themselves. And there are a wide range of references. But based on a combination of a inclusion of and recent increase in reference to solar in the patent search, and recent open positions for some fairly specific non R&D solar skill sets, I would be comfortable saying that the rumor is likely true, and Applied is at least running a program to evaluate building solar cell manufacturing equipment. And it’s likely to involve plasma enhanced chemical vapor deposition and physical vapor deposition systems, and likely to hit the market in the next 12-24 months based on the type of engineers they are hiring, but not likely in the next 12 months, as I could find no evidence of sales and sales engineers hires, or any of the news buzz I would expect to preced this type of entry.

The references we dug up.

On Monster:
This was a bit informative. The position called for: “Product (PECVD and PVD systems for Thin Film Silicon Solar panel manufacturing) promotion to AKT internal constituencies (mostly to sales) and to external customers:
  • Development of collateral materials together with technical marketing or engineering (for technology, specifications, facilities, concept)
  • Customer visits to present AKT products and benefits
  • Coordination of follow-up with sales / technical marketing
  • Support timely collection, organization and distribution of key information related to system specifications, facilities requirements, process performance, etc.”
A second Monster.com ad called for a Process Engineer III with knowledge in:
  • Amorphous silicon (a-Si) solar (cell)
  • Microcrystalline (nanocrystalline) silicon (mc-Si or nc-Si) solar (cell)
  • Photovoltaic
  • Thin film solar (cell)
  • PECVD
And on Yahoo Hot Jobs, a broad ad for multiple process engineers:
“the processing and characterization of thin film CVD solar cell/photvoltaic devices on amorphous and microcrystalline silicon; OR PVD of Transparent Conductive Oxide on solar devices”.

In the US Patent Office Database: A search for patents & published applications with Applied Materials as the assignee and “solar” in the text turned up 53 results.

Published Applications included:
1 20060060138 Diffuser gravity support
2 20060051507 Electronic device manufacturing chamber and methods of forming the same
3 20060038554 Electron beam test system stage
4 20060030088 Shadow frame with cross beam for semiconductor equipment
5 20050287688 Water-barrier performance of an encapsulating film
6 20050220604 Substrate support bushing
7 20050180737 Substrate support bushing
8 20050063800 Substrate support
9 20040194701 Method and apparatus for silicon oxide deposition on large area substrates
10 20040170407 Substrate support
11 20030203123 System and method for metal induced crystallization of polycrystalline thin film transistors
12 20030164362 Pre-heating and loadlock pedestal material for high temperature CVD liquid crystal and flat panel display applications
13 20030161706 Substrate support
14 20030150849 Heated substrate support
15 20030143410 Method for reduction of contaminants in amorphous-silicon film
16 20030141820 Method and apparatus for substrate processing
17 20030072639 Substrate support
18 20030067180 End effector assembly
19 20020175160 PRE-HEATING AND LOAD LOCK PEDESTAL MATERIAL FOR HIGH TEMPERATURE CVD LIQUID CRYSTAL AND FLAT PANEL DISPLAY APPLICATIONS
Patents Issued
1 7,024,063 In-situ real-time monitoring technique and apparatus for endpoint detection of thin films during chemical/mechanical polishing planarization
2 7,001,242 Method and apparatus of eddy current monitoring for chemical mechanical polishing
3 6,963,393 Measurement of lateral diffusion of diffused layers
4 6,960,263 Shadow frame with cross beam for semiconductor equipment
5 6,924,462 Pedestal for flat panel display applications
6 6,917,755 Substrate support
7 6,915,592 Method and apparatus for generating gas to a processing chamber
8 6,897,411 Heated substrate support
9 6,885,458 Apparatus and method for determining the active dopant profile in a semiconductor wafer
10 6,876,454 Apparatus and method for in-situ endpoint detection for chemical mechanical polishing operations
11 6,860,791 Polishing pad for in-situ endpoint detection
12 6,855,484 Method of depositing low dielectric constant silicon carbide layers
13 6,849,152 In-situ real-time monitoring technique and apparatus for endpoint detection of thin films during chemical/mechanical polishing planarization
14 6,824,343 Substrate support
15 6,806,203 Method of forming a dual damascene structure using an amorphous silicon hard mask
16 6,743,340 Sputtering of aligned magnetic materials and magnetic dipole ring used therefor
17 6,719,818 Apparatus and method for in-situ endpoint detection for chemical mechanical polishing operations
18 6,634,686 End effector assembly
19 6,620,956 Nitrogen analogs of copper II .beta.-diketonates as source reagents for semiconductor processing
20 6,610,374 Method of annealing large area glass substrates
21 6,537,133 Method for in-situ endpoint detection for chemical mechanical polishing operations
22 6,528,767 Pre-heating and load lock pedestal material for high temperature CVD liquid crystal and flat panel display applications
23 6,521,082 Magnetically enhanced plasma apparatus and method with enhanced plasma uniformity and enhanced ion energy control
24 6,451,390 Deposition of TEOS oxide using pulsed RF plasma
25 6,329,292 Integrated self aligned contact etch
26 5,964,643 Apparatus and method for in-situ monitoring of chemical mechanical polishing operations
27 5,863,598 Method of forming doped silicon in high aspect ratio openings
28 5,788,453 Piezoelectric wafer gripping system for robot blades
29 5,674,786 Method of heating and cooling large area glass substrates
30 5,607,009 Method of heating and cooling large area substrates and apparatus therefor
31 5,512,320 Vacuum processing apparatus having improved throughput
32 5,212,537 Calibration technique for monochromators and spectrophotometers
33 4,682,566 Evacuated equipment
34 4,563,367 Apparatus and method for high rate deposition and etching

Other interesting finds:
Applied is buying into a green power initiative with the City of Santa Clara, which indicates at least some internal support for green initiatives.

Applied Ventures was mentioned in a January 2006 article on Dow Jones Newswires stating that solar energy was one their areas of interest.

Thoughts on Offshore Wind Energy in US

In Europe, wind energy is moving offshore. It’s simple, really: Europe is densely-populated, land is scarce and hence valuable, and so anyone wanting to develop new wind projects is looking at putting turbines in the Baltic Sea. A side benefit is that the wind resource is more plentiful offshore, not subject to disturbance from hills and trees.

In the U.S., prospects for offshore wind are not as rosy. With the continued NIMO (Not In My Ocean) efforts by local residents to scuttle the proposed Cape Wind windfarm off Nantucket, it’s hard to see much development coming to fruition there, or along the similarly aesthetically-picky Pacific Coast. As for the South Atlantic and Gulf Coasts, they are so vulnerable to hurricanes that would-be project developers are likely to be scared off.

FPL is developing a 140 megawatt windfarm off Long Island, and this one has a chance of actually being built. But this is because Long Island faces very high energy prices and future shortages that are almost unparalleled in the U.S. Electricity prices approach 20 cents/kwh, based almost solely on natural gas and oil burning powerplants located on the island, and there is limited additional power import capability from the mainland. (Of course, it helps that the project is being developed off the coast of Jones Beach, rather than the Hamptons.)

In the Midwest, there may be a brighter long-term future for offshore wind. There is likely to be ample good wind resource in the Great Lakes; Lake Erie looks especially promising, and has the added advantage of being rather shallow. Perhaps in a few decades, there could be gigawatts of wind generating capacity in the Great Lakes.

But, the problem remains economics. Excluding the PTC, onshore wind projects produce power at roughly 5-8 cents/kwh, whereas in contrast offshore wind costs reportedly are about double that level – even factoring in better wind and correspondingly higher capacity factors that are available offshore.

Offshore wind technology can improve. Most wind turbines available for offshore application are enlarged “marinized” versions of onshore designs. A clean-sheet approach to offshore wind designs offers the prospect of cutting costs by perhaps 50%, though such improvements are likely to take several years to achieve. Some observers (such as The Economist, recently) suggest that vertical axis designs, rather than the dominant horizontal axis “propeller” approach, may lead to better economics for offshore application.

But that’s all in the future. With so much vacant and windy land in the Plains and West, windfarm developers in the U.S. can well afford to ignore offshore for now and focus on onshore project opportunities for the foreseeable horizon.

Australian Clean Coal Technologies

This week i’d thought i’d throw some light on Australian Clean Coal Technologies – the economic and funding environment and a couple of Australian companies. Australia has a significant vested interest in clean coal technologies with funding and technology development occurring around the country. The vested interest is due to Australia having large coal resources and more importantly coal is a major export earner for Australia and accounts for around 80% of Australia’s total energy generation. The full stats are below.

The energy debate in Australia shifts from nuclear, clean coal and renewables with developments on all fronts. Its worth noting the funding environment for clean coal technologies in Australia as well, with support at from industry and at the state and federal government level.

The major areas of technology development are in the areas of:

  • Coal Seam Gas & Methane Capture
  • Coal pre-processing & storage (demoisturisation, pelletisation)
  • Coal gasification and turbine tech
  • C02 separation & flue-gas cleaning
  • C02 sequestration

Some of the companies and technologies that have recently been in the press have been the pre-processing technologies:

LaTrobe Lignite Developments Pty Ltd (LLD) has patented technology for the drying of Brown Coal to levels of 15% moisture content for use in low emission power generation. The low temperature evaporation tech can be achieved using waste heat available from electricity generation. The process yields a high quality thermal coal called PacCarb®. This can achieve increased boiler performance, higher outputs, and greatly reduced greenhouse emissions. LLD are seeking partners and A$400million to scale up from a demonstration plant to a 100MW Large Scale Demonstration Plant.


Another company the Binderless Coal Briquetting Company, asubsidaryy of White Energy Technology Limited, is commercialising the efforts of CSIRO researchers who have been the first to develop a binderless coal briquetting process. According to the company website “Binderless briquettes are briquettes formed from either bituminous or sub-bituminous coals that are held together by the natural bonding mechanisms in coal. They do not require any of the binders normally used to briquette coal which substantially reduces the production cost.”


Stats from Australian Coal Association and Energy Information Administration

“Australia has more than 74 billion tonnes of identified black coal reserves which is enough to last well over 200 years at current rates of production”

“Australia is the worlds largest exporter of coal 2002, Australian coal producers shipped 225 million tons of coal to international consumers and consumed another 160 million tons (both hard coal and lignite) domestically, primarily for electricity generation. Coal-fired power plants accounted for 78 percent of Australia’’s total electricity generation in 2002, a level that is projected to be maintained over the forecast horizon”

To put this in perspective worldwide “although coal deposits are widely distributed, 57 percent of the world’’s recoverable reserves are located in three countries: the United States (27 percent), Russia (17 percent), and China (13 percent)”


BP Solar – Closing the "Grid Parity Gap"

Wednesday April 5, 2006

Last week I wrote a bit about BP Solar’s advertising and branding – it’s part of the marketing story, but definitely only part. Strategy is key.

BP Solar (North America) employs strategic marketing (though, how BP’s Alternative Energy marketing group which looks to be out of Houston, and BP Solar’s marketing in Frederick, as well as BP Solar’s overseas marketing groups work together is a curiosity). Vivienne Cox, BP’s Executive VP of Gas, Power & Renewables, said in November, and Karen Sterling of BP Solar’s North American marketing and communication’s group repeated to me, BP Solar’s goal is to drive solar to grid-parity – in other words, to make PV equal in cost to grid power for homeowners and businesses and to make it more widely available. That, says Sterling, is when solar will be attractive to more people.

BP Solar began collaborating with The Home Depot® in October 2004 to target the residential sector and with SunEdison to target the commercial and business sectors (like big box retailers) within select geographic markets. (SunEdison is working with Goldman Sachs, the investment house, and other financing institutions.) Grid-tied residential, commercial and business segments are BP Solar’s focus (off-grid, remote applications, not so much.) Recently, BP Solar engaged with Treasure Homes in California, leveraging the builder channel. (Unlike other cleantech marketers, BP Solar chooses to bypass, or has the fortune of not needing, the electric utility channel, going directly to consumers. That’s a good move – and another topic for another day.) BP Solar (NA) targets markets that offer the biggest solar incentives: California, New Jersey and Long Island. As for where to best leverage product in other markets, Sterling notes, “The marketplace changes, and it hasn’t been defined completely.”

The value propositions for solar PV, however, have been. To residential customers, PV is: clean, reliable, silent, pollution-free power that protects customers from the volatility of utility power…and “beautiful” deep blue, dark-framed panels. (BP did not ignore the issue of aesthetics.) BP Solar offers business and commercial customers roof systems, ground systems for large open areas, canopy systems for parking areas and walkways and building integrated PV – BIPV – in the form of rooftop tiles. The value propositions are: energy savings and other financial benefits – cost savings, protection against rising energy prices, energy efficiencies, revenue for ‘green attributes of solar (that is, renewable energy credits), and government incentives – as well as leadership in environmental stewardship. Commercial solar is (still!) emissions-free, silent and unobtrusive.

BP Solar has trademarked its programs (BP Solar Home Solutions™, BP Energy Solutions™, EnergyMax™). It is selecting qualified professional installers. Online customer support offers quotes and FAQs (though more technical information, similar to those put together by Xantrex, the inverter manufacturer, would be helpful.) Sponsorships include the BP Solar Neighbors Program™ and the Solar Decathlon (which Jeff Lyng’s team from the University of Colorado-Boulder has twice won which makes those of us in Colorado – and particularly those of us who supported passage of Colorado’s RPS – very proud.)

Whatever one might think of BP (the huge oil company, greenwashing), it is launching solar PV into the mainstream, across the collective radar screen – recognizing that clean energy is a good strategic investment for the company and its investors. In the Ceres recent sustainability investor report (“2006 Corporate Governance and Climate Change: Making the Connection”), BP scored very high in the oil/gas sector. And that’s great.

It would also be great if smaller players in this market could avail themselves of deep pockets, international brand name recognition and market share, too. Short of that, I’m hoping that BP Solar’s “continued innovation and technology gains across the solar value chain” will include next-generation semiconductor technologies to which BP can apply its ample marketing muscle – and Jeff Lyng and his team can incorporate into future Solar Decathlons!

US Cleantech IPO Filings 2006: VeraSun – Analysis of an Upcoming Ethanol IPO

Nasdaq and the US stock exchanges are not dead for cleantech IPO filings, despite the emergence of the AIM exchange in London as the place to list for cleantech, energy tech and environmental companies.

We’ve had four cleantech filings in the US this year so far, in solar, water, and 2 in ethanol.
  • Ascent Solar Technologies, Inc.
  • Aventine Renewable Energy Holdings, Inc.
  • Basin Water, Inc.
  • VeraSun Energy Corporation
I ‘m going to do a blog column on each of them in the coming weeks, so let’s start with VeraSun. You can read their SEC filing here.

VeraSun Energy Corporation (NYSE: VSE Proposed) – Filed for a $150 mm IPO on March 30. Morgan Stanley & Lehman Brothers are the lead underwriters. With $236 mm in revenues and $29. 9 mm in EBITDA in 2005, the company claims to be the 2nd largest ethanol producer in the US. VeraSun has two plants operating, Aurora, SD, a 120 mm g/yr plant, and Fort Dodge, IA, a 110 mm g/yr plant that started in late 2005. They are in construction on another 110 mm g/yr plant in Charles City, IA, and plan to build two more with the proceeds from the IPO. They are targeting 560 mm g/yr by 2008.

Their process, like most, is a corn fermentation/distallation process. They use a dry milling process, with natural gas as the fuel source and they claim on their website 2.8 gallons of ethanol + 18 lbs of distillers grain per bushel of corn.

Process summary from VeraSun’s prospectus:
“1. In the dry-mill ethanol process, the corn kernels are first ground into a flour, or “meal,” and mixed with water in cookers to form a slurry, called “mash.”
2. In the cooking system, the action of heat liquefies the starch in the corn and enzymes are added to break down the starch to fermentable sugars.
3. The cooked mash is then cooled and pumped to the fermenters where yeast is added. The action of the yeast converts the sugars in the mash into ethanol.
4. The fermented mash is pumped to the distillation system where the ethanol is separated from the non-fermentable solids (the stillage), and water is removed to concentrate the ethanol to a strength of 190-proof (95% ethanol).
5. The ethanol is further concentrated in a molecular sieve dehydrator to a strength of 200-proof (99+% ethanol), to produce fuel-grade ethanol which is then denatured (rendered unfit for human consumption) with gasoline and transferred to storage tanks.
6. The stillage from the distillation system is sent through a centrifuge that separates the coarse grain from the solubles. The solubles are then concentrated in an evaporator system. The resulting material, condensed distillers solubles or “syrup,” is mixed with the coarse grain from the centrifuge and then dried to produce dried distillers grains with solubles, a high quality, nutritious livestock feed. Some of the distillers grains may bypass the final drying stage and be sold as wet distillers grains with solubles.”

They are also selling a branded E85 fuel called VE85 in the Midwest, and have partnered with Ford, as well as GM as part of its Live Green Go Yellow marketing campaign, to promote ethanol fuels. Interesting though it is, the VE85 product accounts for well less than 1/2 a percent of current revenues.

Another tidbit, it appears that Aventine, another ethanol company which has also filed to go public this year, is the marketer/buyer of most of VeraSun’s ethanol production, despite being a competitor producing ethanol from its own plants. VeraSun has stated its intentions to go direct in 2007. Also, the company issued bonds to build its new Charles City facility, and at $210 mm in debt, is levered a serious 9.5x Debt/EBITDA until the new facilities come on line. EBITDA and Gross Margins were both down in 2005 compared to previous year, about half driven by squeezed margins in part from higher average natural gas prices, and in part from increasing SG&A from the expansions. The high current leverage has kept net income at a breakeven level for 2005.

By my back of the envelope calculation from the SEC filings, 2006, based on a full year’s operations from both facilities, an 85% capacity factor, $1.80/ gallon in revenues (ethanol + distiller’s grain), and $0.25-35/gal in EBITDA (in line with their range todate, would likely be between $350 mm in revenues and $49 – $68 mm in EBITDA, bringing leverage down to a more manageable 3-4.5x Debt/EBITDA range. in 2007/2008 with a target of at $520 mm revenue, $72-$101 mm in EBITDA on an annualized pro forma basis for the Charles City plant coming on line (estimated as 3Q 07). Pro forma for the in planning Welcome and NW Iowa plants, the numbers would be $856 mm revenues, $119-$167 mm in EBITDA.

I have not had a chance to delve into the hedging strategies. And keep in mind that those are good EBITDA margins for a refiner, and I’d expect them to get beaten down into the high single digits to low double digits like the oil industry as the industry matures. Keep in mind also that last year the company made the vast majority of its gross margin in just 1 quarter out of 4. So expect some volatility.

I then went and did a back of the envelope valuation based on this analysis.
The 12/31/05 book value /share is $3.05. So we can start there.

A quick estimate of Yr 3 Net Income, using the assumptions above, a 32 year average depreciation on assets at $1,250/ gallon installed cost x rated capacity, requirement of another $115 mm in debt to complete the build out with a 10% average interest rate, and a 39% tax rate, got a net income of between $40 and $70 mm in Yr 3.

The current valuation multiples for oil & gas refining companies are 11x EPS and 5.5x EBITDA. Using those numbers with no discount, I calculated a 2009 estimated value range after VeraSun is fully built up, and discounted that back at a 10% WACC to get a post-IPO valuation that ranged between $281 and $568 mm in equity valuation. After subtracting the $150 mm IPO raise, that leaves a per share range of c. $2.77-$8.82, depending on whether you believe the $0.25/gallon EBITDA margins or the $0.35 ones. We’ll see what the underwriters come up with. I’ll be particularly interested in what operating margin assumptions and what P/E they are forecasting. Given how hot the ethanol sector is right now, I’d expect this float to go out at the high end of my range, and probably trade well, but at the end of the day, it is a refiner, not a tech company.

Black and Green: Strange Bedfellows

Most environmentalists have a knee-jerk wretching reaction to coal. In a word, coal is “dirty”. Uncontrolled, burning coal results in about twice the carbon emissions as burning natural gas — not to mention all of the other nasties (sulfur dioxide, NOx, particulates, mercury, etc.).

So imagine my surprise when I met the other day with Kurt Waltzer, a consultant who works for the Ohio Environmental Council, who showed me a report on how coal was basically the ONLY answer for reducing carbon dioxide emissions.

The OEC recently completed a study entitled the Ohio Climate Road Map, which paints a detailed picture of how Ohio could take actions in the coming decades to stabilize the climate. Buried in the report (page 18 to be exact) is an innocuous looking chart that shows alternative climate mitigation strategies for the electric sector. Closer examination reveals the punchline: if a significant reduction in CO2 emissions from powerplants is truly required, the other emission reduction strategies often touted by environmentalists — efficiency, cogen, renewables — ain’t gonna get us there on their own. To achieve the required reductions, we need coal: gasified coal with sequestration.

In other meetings last week with coal interests, I am seeing evidence that coal supporters are beginning to get it: that the combination of improved technology AND tightened environmental stringency (along with the fact of depleting oil/gas resources) are strong tailwind forces at their back, and it may well be very advantageous for them to join the ride.

So coal may be moving towards environmentalism, and environmentalists may be moving towards coal. I’m reminded of the line from “Ghost Busters”: “Dogs and cats living together — mass hysteria!”