Is Tesla Really the EV King?

by Neal Dikeman, chief blogger, Cleantech Blog

Tesla Motors (NASDAQ:TSLA) has been the electric vehicle darling since almost the day it launched.  I’d argue there are some really neat aspects to its product and strategy, but it is far from a resounding market leader in EVs.

The Range and Battery Scale Advantage

There are a couple of really exciting things to like.  Pulling a quick summary of the prices of all the pure electric vehicles currently selling in North America, I ranked them by EV Price/ Range.  Tesla is and always has been the leader here.  Down in the <$300/mile range, half of the  i3.  Quite frankly it’s been the only game in town for a 200 mi electric car.

And as lithium batteries are the big ticket item in an EV, and Tesla loads up on them, that confers some advantage to go with that high ticket price.   It drives up its price and its range, and puts it still in a class by itself on range. But as you see when graph range vs price, packing all those batteries in also gives Tesla a huge nominal advantage over its competitors compared to where one would project it to be on price.  Tesla talks like this is all technology and battery management that is hard for competitors to match, I think it may be just as much a combination of purchasing scale and simply an illustration of relative cost absorption in a high range EV (at the lower 70-90 mi range of everyone else, the car cost swamps the battery cost, and differential cost of a few mi in range is much less important than the luxury premium).  You can see this illustrated in flatness of the PHEV version of the curve, and the wide differential between the i3 and LEAF, both very close in range.  Of course, as we are largely comparing prices not costs, some dirt in the numbers is also certainly present.

EV $ per Mileage

EV Price vs Range

 

 

 

 

 

 

PHEV $ per eMileage

Plug in hybrids as you’d expect show a much less dramatic differential and flatter curve, with most of the differential driven by luxury vs mass consumer car class than range.  The game in PHEV’s appears to be minimize battery for maximum consumer taste and performance output.

 

 

 

Future Impacts of Scale?

The interesting bet however, is what happens in the future.  Lithium ion batteries are one of the few fast falling cost items in a car, Tesla ought to be able to ride that curve down faster than the others, since it has both more purchasing power than its competitors (several x more battery kwh per car and one of the volume leaders in cars adds up), as well as a larger exposure in its vehicle unit cost structure in batteries than any of its competitors as the batteries make up such a major portion of its vehicle cost.

However, its attempt to vertically integrate upstream into  batteries with the gigafactory might well work against it here, as it gains leverage on the materials in the value chain, but loses leverage against the manufacturing cost, locks in on a single battery design, and has to recover significant capital outlays its competitors do not.

If the rest of the lithium ion industry can cost down as fast or faster than Tesla, it loses out quickly.  Alternately, when another car company rolls out a high range vehicle, Tesla’s advantage can erode fast.  And finally, it is unclear whether either the PHEV or short range EV strategies, requiring fewer costly batteries, simply continue to outpunch Tesla with consumers.  Like its zero emission credit advantage supporting profits when it first launched, this battery scale advantage may also be more short term than sustainable.

North American Market

But possibly most disturbing is trying to tie out this advantage to how Tesla is actually doing with this strategy in its core North American market.  It’s now been hot and heavy in North America for a couple of years.  Should be delivering results, but  things are not quite that rosy for a $20 billion market cap “market leader”.

It was not first, Nissan with the LEAF and GM with the Chevy Volt beat it to the market.

Its core initial US market has seen basically flattish sales growth YoY going on 2 consecutive years now, ostensibly as it scrambled to open new markets overseas, including its struggling Asian market.  But struggling to drive high growth in your first core market is never a good sign.  One wonders how much excess demand per month actually exists for an $80K electric sports car, and if some of Tesla’s shift of production to seed overseas markets is simply a strategy to keep its domestic demand levels pent up, out of concern that there is not adequate growth possible at this price point in one market to satisfy Wall Street’s valuation.  Not a bad idea, but does have implications.  In counter point, while GM and Toyota also struggled for growth, Ford and Nissan delivered strong double digit growth in Tesla’s home market while it stayed flat, and BMW has started to chew the mid luxury market in between.  One wonders if the strategy of twinning a low range low cost EV with PHEVs doesn’t simply deliver better product line punch than the high mileage high cost strategy.

Tesla is not the largest, and has never worn the crown of most EVs sold for a year, coming in 3rd and slipping to 4th in 2013 and 2014, and only barely edging out Ford so far for 2 months of 2015 and helped by weak Chevy sales months so far. Also probably helped as Tesla apparently had to shift about a month’s worth of car production into Q1 from production issues according to its annual letter.

NA EV Company Ranking

NA EV Company Ranking EVobsession.com

 

 

 

 

 

 

Source: Insideevs.com tracker 

Also pictured is the results from a second tracker with slightly different estimates claiming Tesla is actually ahead so far this year.

But almost as interesting to me has been the rise of the BMW.  That i3 which is almost double Tesla’s price/mile is doing rather well.  By some trackers has edged Tesla in sales of its i3 and i8 EV and PHEV in North America in 3 of the last 7 months, with less than a year under its belt.  Arguably the i3 was aimed more at the Volt and LEAF than the Model S, but getting even remotely close to caught by an upstart short range BMW product this early in its cycle was I am sure never part of Tesla’s plan.

BMW vs Tesla

 

 

 

 

 

 

Do note that all Tesla monthly numbers are somewhat suspect, as the company does not publish anywhere near the detail that other automakers do. Charitably it is just playing cards close to the vest?  Not just making it harder to analyze hidden growth misses?

All in all, a quite decent performance for a new auto maker, but far from the dominance you’d expect from a $20 billion market cap brand name.

The author does not own a securities position in TSLA.  Any opinion expressed herein is the opinion of the author, not Cleantech Blog nor any employer or company affiliated with the author.

EV King Tesla – Where Did the Cash Go?

by Neal Dikeman, chief blogger Cleantechblog.com

Since it’s launch, cleantech darling Tesla (NASDAQ:TSLA) has delivered huge revenue growth in the electric vehicle market.  With a market cap of over $20 billion, it’s more than a 1/3rd of that of the massively higher volume GM or Ford.  Largely the market cap has been driven by phenomenal growth numbers, 60% YoY revenues last in 2014, and the company forecasts 70% increase in unit sales YoY in 2015.

But let’s take a deeper look.

The Company trades at 7.5x enterprise value/revenues, and 26x price/book.  At the current market cap, it needs to deliver the same revenue growth for another 4-5 years before normal auto net profit margins would bring it’s PE into line with the the other top automakers.  Of course, that assumes no stock price growth during that time either!  Our quick and dirty assessment test:

Take 2014 revenues, roll forward at the YoY growth rate of 60%.  Take the average net profit margins and P/Es of the major autos (we used two groupings, 2-3% and 20-25, and 7-8% and 12-17), roll forward until the PEs align, see what year it is (2018-2020).   That’s our crude measure of how many years of growth are priced in.  And it puts Tesla at between a $20-$50 Billion/year company (7-15 current levels) before it justifies it’s current market cap.  Or c. 300,000-1.5 mm cars per year depending on price assumptions.  Up from 35,000 last year.

Does it have the wherewhithal to do that?

Tesla Financials

 Well, looks awfully tight.  The numbers technically work, continued growth will cure a lot of ills.  But while nominally EBITDA positive now, the company has been chewing cash in order to sustain future grow.  2014 burned nearly $1 billon in cash in losses, working capital and capex to anchor that growth, almost as much in cash burn as the company delivered in revenue growth.

Positive progress on working capital in 2013 disappeared into huge inventory and receivables expansion at the end of 2014, and interest on the new debt for the capital expansions alone chewed up 10% of gross margin, while both R&D and SG&A continue to accelerate, doubling in 2014 to outpace revenue growth by more than 50%.

The cash needs this time around were fueled by debt, which rose over $1.8 bil to 75% of revenues.  Overall liabilities rose even more.  Current net cash on hand at YE was a negative half a billion dollars, seven hundred million worse than this time last year.

The company will argue it is investing in growth, and you can see why it better be.  With almost every cost and balance sheet line currently outpacing revenue growth, at some point a company needs to start doing more making and less spending.

So yes, continued growth outlook is still exhilarating (depending on your views of the competition and oil price impact), but the cost to drive it is still extremely high.  I think we will look back and see that 2014 and 2015 were crucial set up years for Tesla, and the really proof in the pudding is still probably 24 months in front of us.  And my guess is Tesla will be back hitting the market for equity and debt again and again to keep the growth engine going before it’s done.

 The author does not own a securities position in TSLA.  Any opinion expressed herein is the opinion of the author, not Cleantech Blog nor any employer or company affiliated with the author.

Forward Osmosis – Solving Tomorrow’s Water Challenges Using Nature’s Remedy

Nature has an ingenious way of extracting water, but does it have the potential to solve many of today’s global water challenges? Before going into more details on how nature’s way of extracting water can help cut energy usage in water treatment processes, an appreciation is needed of why energy reduction in water treatment is an essential prerequisite for continued global development.

Since water is used in all energy production processes and energy is used to generate fresh, potable water from impaired sources, water and energy are two sides of the same coin. Factor in that global fresh water resources are rapidly declining and energy prices are one the rise due to over-utilization of fossil fuels, you quickly realize that energy reduction in water treatment processes will make a tremendous positive impact on the challenges faced in this water-energy nexus.

Moving back to nature’s way of extracting water, you may have wondered how trees are able to extract water from the soil in which they grow to the leaves in the treetops? Or how mangroves are able to extract fresh water from the seawater surrounding their roots? Given the obvious lack of electrically powered high pressure pumps, nature has come up with it’s own way of generating the pressure needed to transport water in trees and to extract fresh water from seawater in mangroves. It turns out that nature extracts water by utilizing the principle of forward osmosis in which water diffuses spontaneously (and without the input of energy) across a semi-permeable membrane from a low concentration solution on one side of the membrane to a high concentration solution on the other side of the membrane. The driving force for forward osmosis processes being the difference in osmotic pressure between the aqueous streams on either side of the forward osmosis membrane.

Coming back to the trees and mangroves mentioned earlier, the intracellular solution of root cells contains high concentrations of sugars and other dissolved molecules, which in turn generate a large enough osmotic pressure to extract water from soil and seawater respectively and transport this water throughout the stems and leaves of these amazing biological systems.

Now, how can water transport in trees help solve the looming water challenges facing our world today? Well, fortunately scientists have been able to develop artificial forward osmosis membranes and systems for industrial water treatment applications. And since forward osmosis systems do not require electrical energy inputs other than the energy needed to pump solutions across its membranes, it is potentially possible to reduce the overall energy consumption of water extraction by 90% compared to traditional pressure driven technologies such as reverse osmosis and nano-filtration.

Wide-spread adoption of forward osmosis systems in industry is still limited due to lack of high-performing, large-scale system capacity as well as industry preference towards proven technologies with long-term operational track records.

A number of startups and tech companies are working in the area.

 

Oasys Water 

Porifera

HTI Water

As well as ongoing research projects at a number of universities and labs around the world are working hard to commercialize forward osmosis technologies, so don’t be surprised if you – in the near future – start running into examples of forward osmosis being used to treat water in industries or even households.

CJK: Solving PM2.5

Signatories at the 15th Tri-Partite Meeting

Signatories at the 15th Tri-Partite Meeting

PM2.5, which are particulate matters less than 2.5 microns, are perhaps the most important type of environmental air pollution in Asia. Driven by high economic growth, coal plants, particularly those from China, give off these particulates. The problem is so serious that Korea and Japan are directly affected by this pollution. In fact, these matter are able to travel across the Pacific Ocean and contributed to a large part of the pollution in North America.

In spite of the political posturing taking place between Japan and Korea and China, the governments are actively working to address this challenge. Hosted by Ministry of Environment of Korea, the Environmental Ministers Meeting among Korea, China and Japan at the end of this April to implement an initiative on enhancing environmental cooperation and dialogue. The meeting resulted in a communique that was signed by Environment Minister Nobuteru Ishihara, Chinese Vice Environmental Protection Minister Li Ganjie and South Korean Environment Minister Yoon Seong-kyu at the end of their two-day talk in the South Korean city of Daegu. 写真-3Under the agreement, Japan and South Korea will offer technical assistance and support to China for the import, development, production, and deployment of technology for reducing the volatile organic compounds (VOC) that are PM2.5.

A simultaneous Business Forum was held in which  50 (21 delegations and 29 observers) participants from the three countries participated in the meeting. Japanese representatives introduced corporate activities related to reducing CO2 emission, and products that are energy- and resource- efficient. Concepts such as the Smart House and Communities were shown with model sites in Japan and China shown. One Japanese company introduced solutions and actual activities for water pollution management while a Chinese company shown activities in the “venous” industry such as solid waste resource, urban mining and hazardous waste disposal. The Korean representatives introduced their concepts of water / waste water treatment plants, biological treatment, landfill reclamation, and waste sorting and recycling, etc.

In one of the panel discussions, the participants discussed the roles played by the governments in waste management and how that differed from the role of private environmental businesses.  They also highlighted the technology developed and used on water reuse in Northeast Asia and how these can be utilized in other countries. In addition, the role of government in landfill management was emphasized and how governments should play a role in this aspect of the environment.

Seafloor Carpet Turns Surf’s up to Lights On

At the University of California, Berkeley, a team of engineers is pioneering ocean-source energy technology by using “carpet” to capture the energy generated by ocean waves.

The team, which includes wave energy guru and Assistant Professor Reza Alam, and Ph.D. Marcus Lehmann, an engineering researcher, aims not only to capture the kinetic energy contained in the ocean, but eventually to use it to purify seawater – drinking water being an increasingly diminishing resource on planet Earth.

This is particularly true where ever-growing populations living in coastal cities like Los Angeles demand greater and greater quantities of non-saline water for drinking, bathing, washing dishes and clothing, and for irrigation. (Re that latter, it’s disturbing to know that more than half America’s produce begins life in the warm, fertile and currently drought-stricken Central Valley).

As the United Nations Environment Programme (UNEP) notes, half the Earth’s population (about 3 billion people) lives within about 35 miles (or 60 kilometers) of a seacoast, and 75 percent of the globe’s largest cities are located on ocean shorelines. By 2025, that figure is expected to double.

The reason? Man has, since ancient times, migrated to the edges of oceans to take advantage of the edible wealth of sea life, which is more easily captured by fishing than land-based animals are by hunting. Coastal cities also capitalize on one of the oldest transportation modes known to man, namely shipping (which is less energy intensive than freight trains, trucks or airplanes).

Moreover, the Berkeley team has conducted experiments showing just how energy-rich ocean waves are. For example, less than 11 square feet (or one square meter) of their ingenious “carpet” – which is able to capture more than 90 percent of wave energy – is enough to power two U.S. households, or about 1,800 kilowatts of energy. One thousand eighty square feet, or 100 square meters, would generate the same amount of energy as a soccer field covered in solar panels. And all that energy would be generated in or near the world’s coastal cities, where the energy demand is greatest.

The system itself consists of a network of hydraulic actuators overlaid with a rubber mat whose future composition, presumably a durable and salt-water-resistant elastic composite, remains a secret at this point, according to Lehmann.

The cost of this energy is calculable. The cost of desalination can’t be estimated, since the wave energy project is still in its infancy vis-à-vis wave power conversion and absorption, but in its tertiary stages should surpass current desalination costs (from $.40 to $.90 per barrel in Saudi Arabia). A barrel is 31.5 gallons or 119.5 liters.

In these initial stages, however, Lehmann and colleagues are banking on a report from Carbon Trust which indicates that wave energy could produce more than 2,000 terawatt hours (or a phenomenal 2 billion kilowatt hours, or kWh) per year. This is enough to power two million U.S. homes, each using 1,000 kWh, which is well above the average.

Lehmann and his colleagues have also thought ahead to the environmental and sustainability issues. Unlike offshore wind (notably Cape Wind, the recipient of a $600 million loan that will not make it less of an eyesore from the Kennedy Compound in Hyannis Port, or less of an irritant to gas and oil tycoon, and Nantucket shoreline owner, Bill Koch), wave energy production is invisible.

This is because the project(s) rests about 60 feet under the surface, and in otherwise useless sea floor areas, or dead zones, like the Gulf of Mexico. This, forming at the mouth of the Mississippi River, in Louisiana, is the largest in the world. In addition, such projects will, in no location, impinge upon the visual and physical world dominated by fishing or recreational boating, or sea life.

The Alam/Lehmann team seems to have come upon the perfect recipe for “clean” energy. Still, as a rational person, I know nothing is perfect. Lehmann agrees:

“The exact location is part of our research. The downsides are more material needed for the same absorption efficiency at deeper water locations, and (the fact that) the ideal location will not be directly on the ocean floor to minimize environmental impact, sand erosion and sediment residue.”

Within the next two years, Lehmann anticipates testing the system in the field, in either Hawaii or Newport, Oregon, both of which provide wave test centers. (I expect the team to vote for Hawaii, as who wouldn’t?)

In the interim, Lehmann and colleagues continue to use the wave-testing tanks at UC Berkeley, the results of which were presented at the 10th European Wave and Tidal Energy Conference, Aalborg University, Denmark, September 2013.

One of the biggest hurdles to wave energy, according to Lehmann, may be the fact that each wave energy siting will require different materials, tools, and techniques, from the “carpet” material to the height of the hydraulic actuators.

“The challenge of wave energy is to design specifically for every individual characteristic of the designated wave site. Our system allows a lot of parameters to easily adjust.”

An accommodation which wind and solar seem unable to grant. For example, the Mojave Desert solar project mandated the removal of native (and seriously endangered) desert tortoises. And it’s now common knowledge that wind energy companies have filed at least 14 separate applications that would allow them to kill eagles, albeit inadvertently through turbine blade rotation.

Boeing’s SBRC Makes Biofuel from Agricultural Rejects

A decade ago, biofuels were considered the Holy Grail of combustion-engine fuels.

Measurably cleaner than fossil fuels, they were the proverbial light at the end of the tunnel, at least according to some clean energy experts.

Fast forward to 2008, when the biofuel industry’s withdrawal of food crops such as corn, rice, wheat and palm oil caused a world-wide food crisis that affected almost everyone, but the poor most of all. Prices jumped from 102 percent (for rice) to 204 percent (for corn). Food riots spread from Haiti to Bangladesh, and from sub-Saharan Africa to Egypt.

Closer to home, but no less desperate, the most impoverished residents of Mexico and South America were reduced to eating nothing but corn tortillas, since the cost of the cornmeal precluded also buying vegetables on the little money they could scrape together at the end of the day.

It was Darrin Morgan who said, “Corn ethanol is a perfect example of how not  to do things.”

Morgan, who is the Seattle, Washington-based Director of Sustainable Aviation Fuels and Environmental Strategy at The Boeing Company, is refreshingly blunt. Sometimes that directness seems the only way to reach people bombarded by the deluge of 21st century information sources.

And Morgan’s news is exhilarating: Boeing’s research consortium (Boeing, Honeywell UOP and Eithad Airways; known jointly as the Sustainable Bio-Energy Research Consortium (SBRC) at the Masdar Institute of Science & Technology in Abu Dhabi has found a class of plants that can grow in the desert, on salt water.

These plants, known as halophytes (or xerohalophytes), have been adapted by Nature over thousands of years to survive harsh growing conditions, notably saline water and desert soils. These halophytes are also nearly indifferent to high temperatures and water shortages, making them ideal for the purpose.

Nature also, and perhaps unintentionally, made these halophytes low in the lignites that make plants grow upright and bind their structure. This means that it takes much less energy to extract the highly useful sugars that go into making of superior biofuels – a discovery that seems to be a first, since no one else appears to have patented the process.

The final step of the equation, notes the SBRC, is incorporating aquaculture; the raising of plants and fish in a cooperative, water-based environment. This final stage provides a perfect complement to halophytes, which thrive on fish wastes comprised of the very ingredients found in chemical fertilizers. The entire pilot project fits on a two-hectare plot within the Masdar City limits, and bears the name “integrated seawater energy and agriculture system”, or ISEAS.

Is it sustainable?

“Yes!” says Jessica Kowal, Boeing Commercial Airplanes Environment Communications representative. “In fact, that sustainability awareness is what a colleague of mine called ‘the triple bottom line; economic, social, and environmental.”

Kowal also reminds me that Boeing has other partners around the globe, most recently with South African Airways, or SAA, and the Roundtable on Sustainable Biomaterials (RSB), an enterprise which aims to help small landowners enter the biofuels marketplace.

But Boeing does not follow in the path of some other multinational monopolies like Monsanto, which requires that farmers grow a single, genetically modified and licensed crop.

“What we are seeing is that, in some cases, there may be opportunities to develop new biofuel crops. That is, to add a crop to a farmer’s itinerary.  It’s not an either/or scenario, it’s an ‘and’.” Kowal notes, adding that Boeing and its partners are very much committed to the idea that this initiative has to be productive on many levels, including the environment, in countries where they roll it out.

The fact that the initiative relies on two resources that are considered worthless in most locations – salt water and desert soil – is a big plus. The addition of fish or shrimp, as in aquaculture, is clearly a value-added proposition. The fact that Boeing’s consortium is also looking at a newer and even more energy-efficient fuel conversion technique puts the initiative well over the top. That both the FERC (United States Federal Energy Regulatory Commission) and the UAE, or United Arab Emirates, are offering their leadership is, in Kowal’s words, “very exciting!”

“The aviation industry has been looking at biofuels for a long time, and there is a real desire to find an alternative to petroleum.”

Welcome to the real Holy Grail. And for those who cite the aviation industry as being highly pollutive, Kowal is quick to note that it accounts for only about two percent of transportation industry emissions according to a 2013 fact sheet from the IATA, or the International Air Transport Association.

It’s hard to imagine, but in the not-too-distant future major airlines may operate in a very real near-zero-emissions framework, without having to buy into carbon credits or ecosystem “fixes”.

Not that that’s a bad thing.

Cliff Majersik, IMT, Identifies Efficiency as Energy’s Biggest Asset

The Institute for Market Transformation (IMT) is a Washington, DC-based nonprofit working in the areas of energy efficiency, green building, and environmental protection. Much of IMT’s effort goes toward correcting inadequacies in the construction/remodeling vertical that prevents investors from taking a stake in energy efficiency and sustainability in the United States.

Cliff Majersik, Executive Director, referred in this interview to a guest post in another clean tech blog which details the 2013 end of a former U.S. – Russian nuclear energy program called Megatons to Megawatts.

As Majersik points out, the diminution of nuclear fuel stocks is not as disconcerting as it initially seems on paper, even though nuclear energy now provides about 20 percent of America’s electrical energy. The reason is simple: where nuclear energy historically leaves off, energy efficiency takes over.

This, as noted by John A. Laitner, a researcher at the American Council for an Energy-Efficient Economy (ACEEE), has been the case since 1970. In fact, Laitner observes, efficiency has met 75 percent of new service requirements in the nation.

For Laitner, the information is a selection of graphs and charts. In layman’s terms, between 2004 and 2010, the U.S. upped its energy efficiency spending by 80 percent, or about $574 billion in 2010. In that same year, energy providers spent 170 billion on infrastructure, but investment in energy efficiencies topped $90 billion, or more than half that amount.

Majersik stresses the importance of efficiency.

“The fact is that (since 1970) our economy has fundamentally transformed. Everyone used to drive around in clunkers that got 15 miles to the gallon, and everyone used to live in homes that were completely uninsulated and had incandescent lights and antiquated leaky ductwork serving furnaces and air conditioning.

“That has changed, and as a result energy use occupies a far smaller portion of the overall economy, even as population rises and engineering develops more and more products which run on that energy use.”

Majersik hesitates to pinpoint the largest area of potential future energy conservation, but suggests that buildings, both commercial and residential, are the likely – if often unsung – heroes.

“But don’t ignore the whole landscape. Homes, businesses, offices, cars, heavy vehicles, and industry; all have become more energy efficient.”

On a city-by-city basis, Majersik favors New York City, and is it any wonder given its energy conservation policies from benchmarking through mandatory sub-metering for large tenants? Not to mention the mandatory audits that provide information to occupants, building departments, energy providers and a host of other interests on the real cost of energy. New York even has retrocommissioning – a long name for a building “tune-up” which evaluates the total structure and suggests ways in which owners and landlords can increase efficiency without breaking the bank.

Tack on a mandatory decadal lighting upgrade, from incandescents to compact fluorescents, or CFLs – and then one more step to the LED technology that is taking the industry by storm – and you have one of t he world’s biggest cities sipping energy instead of gulping it.

The  result? New York now spends considerably more money on people, by making buildings more comfortable, than it does on energy, which often has to be imported, at considerable expense and without the attendant job creation if the same energy were generated in the U.S.   

Even so, there’s a long way to go. Majersik points to mortgage underwriting, which may evaluate the thickness of the glass doors in front of your future home’s fireplace, but not the thickness of the insulation in the attic.

“At the federal level (Fannie Mae or Freddie Mac),  mortgage loan guidelines tell the lender to look at the potential borrower’s income, credit score, mortgage payment, home insurance and real estate taxes.  They do not look at the new home’s potential energy bills, even though those bills are larger than either insurance costs or property taxes.”

Not surprisingly, an IMT-generated study has shown that people who choose energy efficient homes are better at paying their mortgages in a timely fashion. This might simply be the result of having more money in their bank accounts after the energy bills are paid. But it might also tie in to their higher sense of what is good for the planet.

Whatever the cause, these eco-neighbors are 32 percent less likely to default on their mortgage, and 25 percent less likely to prepay a mortgage – which is good for homeowners, but bad for lenders.

Majersik sums it up:

“By not factoring energy efficiency into mortgages, we are under-investing in energy efficiency. This initially provides hopeful homeowners fewer options for financing. It also forces them to eventually deal with their energy-hog dwellings as the price of electricity skyrockets on the back of natural gas supplies (which peak oil supporters say was reached in the 1990s).”

This dealing is prohibitively expensive. While a builder can buy and install solar panels and efficient windows at a discount from retail because they buy in bulk, a homeowner will be forced into top-dollar negotiation or into less energy efficient alternatives, whether windows,  solar panels, or an Energy Star furnace and air-conditioning unit.

“More than 90 percent of new mortgages are issued following federal mortgage underwriting guidelines.” Majersik notes.

But that is changing, as people from all walks of life and all lifestyles see the looming danger in an earth overheated by burning fossil fuels. In fact, it would be fair to call these initial decades of the 21st Century “The Race to the Finish”, as clean energy technologies struggle to replace a century’s worth of fossil-fuel excess before we pass the climactic point of no return.

LEED v4, the Evolution of Green

It’s particularly troubling to those of us watching the energy efficiency marketplace to see one program or another take a hard hit. That’s why the 2010 class action lawsuit by Henry Gifford against the US Green Building Council – the parent organization of LEED (Leadership in Energy and Environmental Design) – had such wide-ranging responses from both efficiency experts and the public.

When Gifford led the charge – for fraud, wire fraud, unfair competition, unjust enrichment, deceptive trade methods, and false advertising (with Sherman antitrust and RICO violations thrown in just to make sure nothing was missed) – the building energy efficiency movement turned into a flooded anthill. Some professionals couldn’t get far enough away from the maligned USGBC: others kept going back to try and close the floodgates of criticism.

Did the USBGC deserve to be dragged through the mud? Yes, said Gifford, who admitted that LEED criteria had cost him lucrative efficiency work because he doesn’t participate in the system. No says the USBGC, which pointed out that Gifford capitalized on the difficult metrics of LEED before 2009, and then persisted in the same vein even when LEED made requirements stricter and began demanding proof.

Moreover, Gifford isn’t an engineer, and his efforts were more damaging to “green” building – the real focus behind LEED – than an entire cohort of anti-greens wearing funny hats and carrying placards.

Not to mention that much of the pressure behind the controversy was the result of LEED standards (e.g., Cradle to Cradle materials certification) which plastic industry professionals say left them out of the green construction loop. In fact, it was this bias that inspired the U.S. Chamber of Commerce to support another green building leader, the American High-Performance Buildings Coalition, which reportedly manages to mesh green building with chemically-derived materials.

Enter Brendan Owens, Vice President of LEED technical development, who works with volunteer committees to elaborate and streamline LEED rating systems. In this role, Owens is also focused on LEED’s newest evolution, LEED v4. Owens liaises, via USGBC’s executive committee, for ASHRAE/IES/USGBC Standard 189.1, a 2011 metric for “total building sustainability” that can be applied to all but residential low-rise buildings. He is also a representative to the International Code Council for the International Green Construction Code, and on the board of directors for the New Buildings Institute, where his qualifications as a licensed professional engineer help craft new green-building developments.

It would be wrong to suppose that the 2011 lawsuit turned LEED into the ugly stepsister. In fact, according to Owens, LEED recently crossed the 20,000 certified commercial project mark globally, with another 45,000 buildings in the pipeline. On the residential side, 16,000 homes meet LEED standards, and another 30,000 to 40,000 are in the queue.

But Owens refuses to get into the minutae of green. Instead, he says:

“What LEED v-4 represents to me is the natural evolution of the green building market over the past 10 to 15 years, and the increasing ability of the construction industry to engage in high-performance green building both domestically and around the globe.”

As the causative agent, he cites a significant transformation in the status quo of the building marketplace.

“We have seen technologies that were considered “fringe” 10 years ago become mainstream strategies that are popping up in building codes all over the world.”

From Owens’s perspective, V-4 advances the definition of high performance by focusing on green verification, where significant design-to-operation performance gaps create precisely the kind of seeming obscurantism that Gifford complained about. Unfortunately, Gifford’s lawsuit merely muddied the waters and left an undefended frontier that anti-green (and anti-climate change) individuals used to their advantage.

Fortunately, LEED’s four certification levels (Certified, Silver, Gold and Platinum) have not changed, and the use of formerly “brown” materials (like plastic) will get a pass of sorts. That is, LEED hopefuls will be encouraged to use green materials, but will not be penalized for using ‘bad’ ones (Owens’s word, not mine).

“The materials market, as much as any other venue, has experienced significant transformation. The revisions that were made in November of 2013 were a complete reworking of the way that we think about the materials from which we make buildings.”

LEED’s Cradle-to-Cradle lifecycle assessment of materials remains very important, but it may not be the deciding factor in certification. As Owens notes:

“We also encourage builders to focus on the other things that the lifecycle assessment – and the way it is currently practiced – isn’t very good at exposing. For example, what kind of impact a product has on human health, or its effect on the ecosystems from which it is extracted.”

For example, bamboo – used in everything from floors to furniture, and even in eating utensils – is billed as ultra-green (fast to replenish itself, needing only a little water, easy to process). But if the bamboo grove being harvested is also the habitat of beloved panda bears – not really bears and symbolic of peace rather than the occasionally lethal aggressiveness of real bears – the product is definitely not green. One would be better off using real oak parquet.

It is this significant shift in the way project teams are encouraged to think about materials that Owens feels is most important. For example, when asked about biofoam, an insulative agent derived from soybeans, he replied that ‘there is no such absolute as a “green” material (or a red one, or a brown).”

“It’s a question of how you use it, and the alternatives. We are encouraging product teams to focus on materials for which disclosure activities have occurred. This includes not only a green profile, but a human health profile and a sourcing profile. When you have all three, you have a complete picture of the product.”

Bottom line, says Owens, LEED v-4 is focused on “intregrative processes, design and operation” – a wholesome approach that most would agree supports and furthers the aim of green building.

Now if we could just get everyone to agree on what those aims are ….

Silent Guardian: Drones without the Scare Factor

Over at Bye Aerospace, Inc., Founder George Bye and colleagues are designing drones. But don’t worry. The Denver, Colorado company, founded in 2007, isn’t the site of the next Evil Empire, and the drones which will eventually start going out the door (here or elsewhere, but not under their own power) are meant for peaceful occupations, including defense and security operations aimed at hardening borders, for example – a worthy cause given the recent incursions by Mexican drug cartels.

What other peaceful occupations, you might ask? For me, what immediately comes to mind are African elephants, whose herds have been thinned almost beyond breeding potential thanks to constant poaching by small groups of men illegally killing them for the ivory in their tusks.

Once the ivory is collected, from mature animals which would otherwise serve to teach, constrain, and lead the herd to safety, the rest of this amazing animal is often left to rot, even though malnutrition is ubiquitous across the continent. Nor is there any doubt that the culling is accomplished to the sights, sound and smells of terror and pain, with infants left to die when the herd is wiped out. In fact, with poaching figures rising about the same percent annually and threatening to reduce breeding populations by at least 25 percent over the next decade, experts are beginning to panic. According to Tom Milliken, an Ivory Trade expert and wildlife trade monitoring executive at TRAFFIC, “We’re hugely concerned.”

But perhaps less so now that drone technology has proven itself useful in guarding endangered animal species in Kenya. As Bye and team point out, their Global Range Solar/Electric Hybrid Surveillance Aerial Vehicle is low maintenance and high performance, delivering advantages that park rangers – no matter how well-intentioned – can’t.

Going by the name Silent Guardian, these solar-electric hybrid unmanned aerial vehicles (UAVs) beat out all the competition when it comes to surveillance. Unlike manned vehicles, this solar-powered craft can stay aloft almost indefinitely, almost anywhere around the globe, using the power of the sun and the science of solar photovoltaics (PV) to achieve what is known as ISR, or “persistent Intelligence, Surveillance and Reconnaissance.”

Speaking from Bye Aerospace headquarters at Denver’s Centennial Airport, due south of the Family Sports Center Golf Course, George Bye is quick to note that the company is well-prepared to offer not only scalable aeronautical engineering consulting services, but to integrate those concepts with advanced technologies, notably clean energy.

For Bye, who has always been in the thick of aeronautics, his previous and lengthy experience as a former Air Force pilot (think Desert Storm), and his immersion in the industry for 40 years, signal the type of experience that can sort viable alternatives from pie-in-the-sky proposals. This is perhaps why the company’s flagship offering, Silent Guardian, goes one step further than the typical offering – high-altitude, long-range mission persistence – by promising to deliver global range mission persistence.

This ‘higher and longer’ offering is what Senior Vice President (Government Programs) Kerry Beresford describes as “the next evolution in aircraft design, offering a level of performance and capability that will re-define the typical ISR mission.”

And what is a typical ISR mission? Bye and Beresford see it expanding into a social safety net in the near future. Citing Hurricane Katrina as an example, Bye compares the actual use of P3 aircraft to the potential (future) use of Silent Guardian, which could have provided 24/7 monitoring of both Katrina’s movement and its effect in minute detail – a role the P3s were unable to fill since they had to be landed, refueled and provided a new pilot at regular intervals.

“We could have monitored Hurricane Katrina from a weather forecasting and detail of movement 24/7 operation instead of sending up P3s. Then, of course, taking Katrina to the next step, we have overhead the potential ability to locate survivors and resources, and use communications on drones to recover cell phone connectivity immediately.”

Katrina isn’t the only scenario to benefit from “persistent, global” flight ability. Besides wildlife and natural resource monitoring, these Silent Guardian prototyped drones – which can stay up for weeks, at 10 percent of the cost of typical solutions like Cessna or Piper Cub planes – will also accurately trace the location of piped resources like oil, gas and water, and measure suitability for wind turbines, for example, by recording and calibrating wind flow.

The same is true for mapping power lines, examining terrain for water resources, checking the moisture content of the soil in areas plagued by forest fires, and even monitoring such fires to predict the sort of anomalous windstorm that killed 19 firefighters in Arizona in the summer of 2013. And UAV’s can do this without the cost of an expensive airplane, fuel, a pilot, and continual maintenance.

The one clear advantage of drones in wildlife surveillance, according to Bye, is that poachers see there is no longer a place to hide. Where the Piper Cub must fly over a swathe and then turn back to keep the area under observation, or return to base for refueling, Silent Guardian can simply hover. Imagine how nerve-wracking that would be if you were planning to kill a bunch of wild animals for their tusks, fur, flesh or fat!

Taking advantage of its “crosswork”, which incorporates individuals from other companies like Boeing and United Launch Alliance, LLC (a joint venture of Boeing and Lockheed Martin), Bye and colleagues maintain a finger on the pulse of the aerospace industry. As Bye notes:

“The applications and missions for UAV aircraft appear to be growing as airborne persistence is enhanced. Silent Guardian is a unique hybrid platform to serve these growing mission requirements.”

But Bye Aerospace isn’t flying on one wing. Two other UAV programs with close ties to Bye Aerospace, Silent Falcon and Starlight Lighter than air Solar Electric UAV, are being designed to circumvent the fact that most UAVs are “defense oriented, mission specific and not well suited to civil use”.

Perhaps most important, Bye Aerospace is committed to providing scalable services ranging from product development to complete aircraft assembly. And it is this wide-ranging flexibility that promises aerospace innovations fit for the 21st Century.

 

Time running out for CleanTech Revolution means more pressure for BlueTech Innovation

Has a Cleantech crash spurred the need for Bluetech innovation?

The recent CBS 60 Minutes documentary, The Cleantech Crash, was an apocryphal tale of wasted government funding and failed companies, and left one feeling sorry for a much maligned Vinod Khosla, deemed to be a prime architect behind the ‘failed cleantech revolution’. Khosla has rallied with a strong and stirring rebuttal in open letter to CBS.

Cleantech, (if narrowly defined by in terms of renewable energy technology), is indeed in the doldrums.

The figures quoted by Michael Liebrich, founder and chairman of the advisory board for Bloomberg New Energy Finance, at the Ceres 2014 Investor Summit on Climate Risk support this. Global investment in clean energy fell for the second year in a row to $254Bn last year with investment in Europe falling from $98Bn to $58Bn, a drop of 41%.

The vision for a green revolution has not materialized and this is primarily as a result of two things: shale gas and the global economic crisis.

Shale gas, and unconventional fossil fuels in general, have pushed the timeline for a cleantech transition towards low-carbon energy systems out by at least 50 years. As a result, energy security has ceased to be a political driver in North America as a result of unconventional fossil fuels.

Indeed, the global economic crisis has impacted projects in many industry sectors. The downturn halted the upward pressure on oil prices and sidelined the economic viability of renewables, which must compete with and are benchmarked against an incumbent energy system with an ever-changing and volatile canvass.

The economic viability of renewables are linked to oil prices. In fact one of the single biggest challenges to building a stable economic platform for renewable energy, is the volatility of fossil fuel energy, where the goal-posts keep moving.

Appetite to address climate change is gone, but climate change is not

Whatever appetite there may have been in the good times to address climate change and spur a move towards a low carbon economy with feed-in tariffs and production tax credits is now gone. Both of these support mechanisms are under pressure and the very notion of a carbon tax seems like a distant out of context idea from the pages of a history book.

There is no money, political will, or need (in terms of primary energy needs) to fund the transition to a low carbon green energy economy.

While climate change may have disappeared from the political agenda and the media, it continues to do its work quietly, and occasionally loudly, as we experience extreme weather events.

The ascendancy of unconventional fossil fuels and resulting demise of cleantech renewable energy are working in tandem to compound water pressures

Ironically, the ascendancy of unconventional fossil fuels and the resulting demise of cleantech renewable energy create more pressure on water resources and hence more water technology opportunity than would have been the case if we had transitioned to a low carbon economy.

From an operational perspective, solar PV and wind energy use essentially no freshwater and they help mitigate climate change.

On the other hand, both conventional and unconventional fuel energy sources require water in the extraction process and create produced water, which has to be treated.

Currently, we meet almost 80% of our primary energy needs through fossil fuels and that looks set to continue for the coming decades. It’s been reported that the world average freshwater intensity for conventional on-shore oil extraction is 21m3/TJ, while shale gas freshwater intensity ranges from 3-17m3/TJ.

The subsequent carbon emissions from combustion accelerates climate change, which again, puts more pressure on water resources and leads to intense rainfall events which have to be managed.

The cleantech energy revolution was never going to solve our water issues, but its absence exacerbates them.

Water is now more than ever inextricably linked to the future of how we provide energy for the planet and feed the people on it.

Cleantech is alive and well in areas of energy efficiency, resource recovery and water re-use

The cleantech umbrella includes more than renewable energy, and is alive and well when it comes to areas such as energy efficiency and resource recovery.

There is still a compelling business case and opportunities in saving energy and recovering resources and in general doing more with less. There are opportunities to convert waste and wastewater to energy and to recover nutrients and other valuable materials.

Based on recent analysis, we estimate there is 49 million MW hours of energy potential present in municipal wastewater each year in the USA and 1.1 million tonnes of phosphorous entering municipal wastewater plants in Europe, equivalent to 34% of total EU phosphorous imports each year.

All of this creates for opportunities for value generating innovation and re-evaluating systems efficiencies to create cleantech opportunities.

This is reflected in the fact that in 2013 27% of the water investments tracked through the BlueTech Innovation Tracker mapped to energy and resource recovery. When we look at highly disruptive technologies by theme, again there is a concentration and clustering around energy efficiency and resource recovery, with 29% of Disrupt-o-Meter™ highly disruptive companies in the energy and resource recovery area, 13% in low energy desalination.

All of these have a compelling value propositions in their own right, as does water re-use.

Interesting times ahead for water

There is a Chinese saying – may you live in interesting times – which is regarded as both a blessing and a curse. Whether we like it or not, we are living through such times, and I believe the changes we will see in the water system in the next two decades will represent a very unique period in our history in terms of how we manage water.

 

Eco Pro 2013

This December, I had the pleasure of attending Eco-Products Exhibition (Eco-Pro) 2013 in Tokyo, Japan. Though not well known outside of Asia, Eco-Pro is the largest event of its kind in this part of the world. In its 15th year, 185, 000 visitors attended this years event with 711 participants showcasing their environment-oriented products, services, and technologies. Though a majority of them are well-known big companies, mid- or small-size enterprises (SMEs), NGOs, and universities had a large presence as well.

Every year, Eco-Pro features a particular theme. With the recovery of Fukushima on everyone’s mind and the uncertainty in fossil fuel supply, the focus on 2013 was on renewable energy.  In July 2012, the government of Japan introduced a feed-in tariff (FIT) to promote energy generation from renewable resources including solar, wind, geothermal, and biomass. As a result, the application for the development of renewable energy reached 13 GW (million kW) in February 2013, only six months after the introduction of the FIT scheme. For investors in these projects, this policy guarantees 100% purchase of all power at a fixed price for electricity generated by solar PV systems larger than 10kW.

In spite of this monumental achievement, only about 10% is actually generating power. Japan still gets less than 2% of its energy from renewable sources (excluding hydropower).

The key to integration of renewable energy sources, which are highly intermittent, is it the deployment of energy storage systems to store energy when it is not needed and release it when demand is higher.

As one of the largest solar PV panel maker in the world, Kyocera is also operating a utility scale solar plant (so-called mega-solar projects) with a rating of 70 MW, enough to power 22,000 households in Kyushu. To store the excess energy produced during the daytime, the company has developed 14.4kWh lithium ion batteries at the household level. The capacity is sufficient to operate a refrigerator and TV simultaneously for 24 hours during power outages. While these units cost $24,000, smaller batteries from Panasonic can be purchased for as low as $9000.

The interface between renewable energy generators and the grid or battery system is an area of technology that is undergoing rapid innovation and is one of the barriers to deploying widespread renewable energy systems. In Japan, NEC has developed inverters that requires no power conditioning. That means direct current from a solar panel can go directly into a battery without being converted into alternating current (AC), which is how electricity is generally transmitted on a grid. This eliminates power loss and boosts overall efficiency.

While the technologies demonstrated here are inspiring, the institutional aspects of solar projects was also highlighted at this year’s Eco-Pro. Developing the market conditions to properly manage solar projects remains a big challenge. In Japan, mega-solar projects are typically profit-driven rather than as CSR. There is a concern that after the 20-year FIT period is over and the initial costs have been paid off, the operators may lose interest in maintaining these facilities, which would be a detriment to the local community it serves.

Nevertheless, these projects can contribute to the well-being of society if managed appropriately. For example, in Inami town in Wakayama prefecture, the local government is working with private businesses and its university to develop their solar project. This is the first public-private partnership of its kind of Japan and is operated by Plus Social. The company will take in the revenues under this scheme while supporting local activities in Wakayama prefecture and Kyoto. At the same time, Ryukoku University will play an important role in educating the public in Inami town.

Innovations in Vehicles

Another major area of innovation for the environment is in cars and other vehicles in the transportation sector. Complementing the integration of renewable energy are electric vehicles that could not only use emission-free electricity from the sun or wind, they can act at storage mediums to accommodate the variable nature of these sources on the grid. Below are three automotive technologies featured at this year’s Eco-Pro. They demonstrate new innovations that not only use less energy, but also reduce pollution.

Toyota

toyotaToyota’s Prius has set the standard for hybrid vehicles with not only domestic sales but also a formidable international market. At this Eco-Pro, they showcased the new Prius HPV, which can be wirelessly charged when parked. By parking properly over a power source, the vehicle is charged by a system consisting of an on-board charging unit, a wireless communication control, and a secondary coil. It relies on resonance between the oscillating magnetic field between the two coils so that power can be transmitted to charge an exhausted battery. With the 4.4kWh lithium-ion battery pack, the car can be charged in 90 minutes.

Bridgestone

BridgestoneAs one of the world’s largest producer or tires for vehicles, Bridgestone has begun development of next generation Air Free (non-pneumatic) tire. Today’s conventional tires requires an inner tube. Although their durability and use have improved substantial since vehicles first came on the road, their disposal has been problematic. Often they are left in landfills where the results could be toxic if they catch on tire. On the other hand, Bridgestone’s new concept tires have no inner tube or metal components inside.

With a unique structure of spokes stretching along the inner sides of the tires supporting the weight of the vehicle, there is no need to periodically refill the tires with air, meaning that the tires require less maintenance. At the same the worry of punctures is eliminated. The spoke structure within the tire is made from reusable thermoplastic resin, and along with the rubber in the tread portion, the materials used in the tires are 100 percent recyclable.

While the R&D and have only been going on a couple years, the company expects to commercialize them in a few years. They will first appear on light vehicles and those that travel short distances in the city.

Mazda

mazdaAs companies around the world are now touting their efforts to improve the energy efficiency of their products but also in their production process, the car industry is not standing still.

Car companies have poured enormous investments in building vehicles with better mileage but some are also developing new technologies to lower the energy consumption during the production process.

Mazda demonstrated their superlight aluminum engine, but they also showed how the manufacturing could be improved. It turns out that the most energy intensive part of automobile production is not the assembly itself, but the painting process. That’s because it consists of multiple coats of paint that have to be baked. By applying a new process, Mazda has been able to paint their cars with fewer steps, less volatile chemicals, and less energy in the coating process.

Predictions For Cleantech in 2014

Continuing a tradition since 2007, once again we bring you some end-of-year thoughts about where we think the cleantech investment theme is going.

Our cleantech-specific analysis and advisory firm Kachan & Co. focuses on this space. We publish research reports. We get briefings from companies introducing new technology. We publish a cleantech analysis service. We’re quoted in the press. We pore over what’s going on in the world in clean/green tech markets and have made some informed calls over the years, like China’s cleantech dominance, the rise of efficiency technologies and the downturn in cleantech venture capital funding.

This year, we’re of the opinion that industry-watchers should take heart. Especially if you’ve been on the page that cleantech is past its prime or otherwise unworthy of your attention of late. Why? Because we’re more optimistic about the year ahead in cleantech than in our last two years of predictions (read 2012 and 2013), which were uncharacteristically negative for a firm that’s often been something of a cheerleader for the cleantech space.

What’s different this year? As you’ll read below, we believe the world turned an important corner in cleantech in 2013.

Gradual recovery in 2014
If you’ve not been looking carefully into the tea leaves this past year, you may have missed the quiet recovery already underway in cleantech, a process we expect will gain even more momentum through 2014.

We had the chance to take a close look at the fundamentals of cleantech this fall in co-authoring a new (and free!) 38-page research report. Titled Cleantech Redefined: Why the next wave of cleantech infrastructure, technology and services will thrive in the twenty first century, the paper analyzes the most recent investment research available across a number of industries and major impact areas.

One section of the report compares the cleantech wave to other technology booms of the last 50 years, like the dot com boom, the networking craze, biotech, the PC and the microprocessor. We found a number of parallels and a number of reasons for optimism comparing the cycles. After 20 years in technology, personally, the more I looked at the data, the more it felt I’d seen this movie before. After an initial frothiness and correction, there’s always a resetting of expectations and execution and a gradual “climb out” of the trough. Gartner calls it a hype cycle. And climbing out of the trough is where we are today in cleantech.

The recent downturn in venture capital investing in cleantech doesn’t mean the sky is falling. The dip becomes less threatening when viewed in the historical context of how venture capital always spikes early in emerging categories, later to be augmented with other sources of capital, such as often-unreported corporate and family office investment, as industries develop. It happened in the dot com, networking, biotech and PC eras, and this transition is now well underway in cleantech, as shown below. We offer a lot more detail, with additional figures and graphs, in our report.

Venture capital playing a lesser role

While venture capital was the dominant source of clean technology financing in California in 2008, it played a lesser role in 2012. Source: CB Insights, Collaborative Economics. Excludes project finance and unattributed investments.

Another takeaway from the above: Pay less attention these days to venture capital investment as an indicator of the health of the cleantech space. You risk not seeing the real picture.

In addition to an analysis of patterns in venture funding in previous bubbles vs. what’s occurring today in cleantech, our 38-page analysis on the state of cleantech today also looks at overall investment levels into clean and green innovation and projects. It contemplates what’s to be learned from models like the technology adoption life cycle (of “chasm” fame.) It factors in the recent recovery in publicly traded cleantech funds and other metrics.

In all, based on what we learned writing this report, we forecast a continued recovery in cleantech. Not an exuberant one—we’re betting those days are over—but look for a clear upward trend in many things cleantech in 2014, i.e. corporate, private equity and family office investment, venture debt, project finance, M&A, interesting new innovation, new product announcements, etc. But don’t hold your breath for classic venture investment to increase appreciably.

Term cleantech to stay alive and well
There’s been speculation about whether the term ‘cleantech’ that my previous firm is credited with coining will, or should, persist. My colleagues sometimes suggested the phrase should quietly go away—that our job was to ensure that clean and green propositions are eventually added to all products, that all forms of energy become clean, that all synthetic chemistry and toxins be replaced with natural, biological solutions because these are ultimately the less expensive and potentially only real ways to accommodate more people on the planet.

My current cleantech research & consulting firm Kachan & Co. worried further about the future of the term cleantech this summer. I, myself, had something of a crisis of confidence after a set of cleantech power players I interviewed in Silicon Valley shared the extent to which they’ve been distancing themselves from the phrase. It seemed this summer that many of the investors, lawyers and global multinationals I’d worked shoulder-to-shoulder with for years had started considering cleantech a dirty word.

But today, at the end of 2013, we now predict the term cleantech to persist through 2014 and beyond. We have come to appreciate how our datapoints from the summer were very regional, and how the rest of the world is still enthusiastically embracing the term as shorthand for environmental and efficiency-related technology innovation.

We also now suspect that investors and service providers who recently distanced themselves from the phrase may have been too quick to do so, and anticipate a restoration of the cleantech-related teams at many of these firms. Why? Call it what we will in the future, the fundamental drivers of resource scarcity, energy independence and climate change aren’t going away. The largest companies in the world are demanding more and better clean and green products and services than ever before. And that’s driving a recovery.

Cleantech term search history

The peak in global search traffic for the term cleantech and its subsequent decrease and stabilization mirrors the Gartner hype cycle. Is a gradual climb up again in the cards, as the hype cycle suggests? We predict yes. Source: Google Trends.

Realistically, cleantech teams at private equity investors, law and consulting firms may rebuild in 2014 under the auspices of “energy,” “advanced materials,” or other related monikers drawn from the taxonomy of cleantech. But massive funds earmarked for this space are being raised again (e.g. just this week: Tata/IFC: $400 millionIndustry Ventures: $625 millionthe UN’s Green Climate Fund: $TBD, expected to be massive) and these sort of numbers are representative of opportunity. And we think it’ll still mostly be called cleantech.

Crowdfunding emerges as viable in unexpected ways
Forget what you know about Kickstarter and Indiegogo. Donation-based crowdfunding only has limited usefulness for companies seeking seed or other early stage funding in cleantech.

In 2014, look for equity and debt-based crowdfunding platforms to catch their stride and serve as legitimate ways for cleantech vendors and project developers seeking to raise relatively modest amounts of capital. (Which isn’t to say we expect the U.S. SEC to sort out all regulations in 2014 around Title III raises under the country’s Jobs Act. We expect that equity and debt-based crowdfunding plays in cleantech will leverage Reg D in the U.S. and other similar regional constructs worldwide in the short term to help companies raise money.)

In 2014, expect selected efficiency, “cleanweb”-style big data, collaborative consumption and other capital efficient plays to be able to raise hundreds of thousands of dollars for themselves in equity or debt via horizontal crowdfunding platforms like AngelList or FundersClub, or industry-specific debt and equity portals like MosaicSunFunder or a host of other emerging platforms. Under current regulations, such crowdfunded raises may ultimately be feasible up to $1 million per company per year in the U.S.

Which will likely make crowdfunding less attractive in 2014 for big, capital-intensive cleantech plays.

Underperformance in EV sales, and risks to growth rates
Betting that the future of transportation will be all-electric, and that 2014 will be THE year of the electric car, finally? Think again.

Enthusiastic bloggers breathlessly paint the picture that electric vehicles (EVs) are flying out of the showrooms (as in here and here), but they’re selling slower than expected by analysts, with only 150,000 expected sold worldwide in 2013.

Most industry watchers believe EV adoption will be spurred by governmental support in the form of subsidies, infrastructure funding and concessions such as free parking, access to high-occupancy vehicle (HOV) lanes and congestion-zone toll exemptions, along with broader adoption of wireless charging and smart-grid innovations. But, in our analysis, there are other forces causing risk to the growth rates of electric vehicles.

As we forecast last year (read “The internal combustion engine strikes back”), there have been innovations taking place in internal combustion engines (ICE) that could forestall the timing of an all-electric vehicle future. Even more surprising to us have been the substance and volume of fuel cell vehicle announcements this year from the world’s leading automakers—which are likely at least partially responsible for the quiet doubling of certain fuel cell companies’ share prices in 2013. Yes, you read that right: Automotive fuel cell companies’ shares are UP!

In 2010, my line to journalists that “the jury was in, and the future of transportation was to be all-electric.” In 2012, my talking point was that the near-term future of transportation was to be all-electric. In 2013, I started talking about fuel cells possibly succeeding all-electric in the far future of transportation, once costs come down. In 2014, fuel cell approaches may get even more ink and undermine the aggressive uptake expected for electric vehicles.

And that’s not necessarily a bad thing, for if their fuel (hydrogen, methanol, or in some cases formic acid or others) can be created in low-cost, sustainable ways, fuel cell vehicles could ultimately have less of an impact on the planet, given that the power required to drive EVs often comes from dirty sources.

Rare earth profits to be made in unexpected places
Fortunes will not be made in 2014 in rare earth element mining companies. Reconsider buying into rare earth element mining companies or associated funds. If holding rare earth mining investments hoping they’ll return to stratospheric levels of yore, consider getting out of them.

Why? In the short term, we think recycling will be one of the few rare earth plays with upward motion. Much of the industry has been focused on new mines to meet growing demand for rare earths. But recycling of rare earths is gaining momentum quietly, and stands to accelerate in 2014 given the increasing costs of mining and cost and schedule overruns at high profile sites like Molycorp’s Mountain Pass California mine.

  • Brussels-based company Umicore is at the forefront of recycling technologies for critical metals. At its site in Hoboken, Belgium, the company recycles about 350,000 tons of e-waste every year, including photovoltaic cells and computer circuit boards, to recover metals like tellurium. In 2011, it started a venture to recycle rare earths from rechargeable metal hydride batteries (there’s about a gram of rare earths in a AAA battery) at its Antwerp site, in partnership with the French company Solvay.
  • Japanese car company Honda announced this March that it has developed its own in-house recycling program for metal hydride batteries, which the company plans to test using cars damaged by Japan’s 2011 quake and tsunami.
  • The Critical Materials Institute of the U.S. Department of Energy is developing a method that involves melting old magnets in liquid magnesium to tease rare earths out.

Watch for more and more companies to be introducing rare earth recycling plays. And watch for a near future trend encouraging electronics manufacturers to design their products to be easier to break apart for rare earth element recovery in the first place.

Getting rare earth metals out of modern technology is hard, since they’re incorporated in tiny amounts into increasingly complex devices. A circa-2000 cell phone used about two dozen elements; a modern smart phone uses more than 60. Despite the relatively high concentrations of rare earths in technology, it’s traditionally been easier to chemically separate them from the surrounding material in simple rocks than in complicated phones.

Recycling is perhaps the best route forward for elements where demand is expected to level off in the long run. Expect demand for terbium and europium, for example, to fade as fluorescent bulbs are eventually replaced with much smaller LEDs. But for other elements, like neodymium, new supply is needed. Currently only tiny amounts of neodymium are required for ear-buds of smartphones—but high-performance wind turbines need about two tons each. But it’s only these sort of large quantity applications that are expected to drive the need for new mines.

Other potentially appealing rare earth plays in 2014 include new processes at existing mines to improve processing yields, and the development of alternative materials to obviate the need for rare earth elements.

More on the subject in a brief on rare earths to our analysis service subscribers.

And so concludes our predictions for cleantech in 2014. What do you agree with? What do you disagree with? Leave a comment on the original version of this post on Kachan’s website.

This post is reproduced by permission and was originally published here.

 

A former managing director of the Cleantech Group, Dallas Kachan is now managing partner of Kachan & Co., a cleantech research and advisory firm that does business worldwide from San Francisco, Toronto and Vancouver. The company publishes research on clean technology companies and future trends, offers cleantech data and analysis via its Cleantech Watch™ service and offers consulting services to large corporations, governments, service providers and cleantech vendors. Kachan staff have been covering, publishing about and helping propel clean technology since 2006. Details at www.kachan.com.

Skyonic, It’s Not Your Parent’s Carbon Capture Technology

It should come as no surprise to those of us who follow environmental issues vis-à-vis climate and pollution that Norway this week walked away from the longest-running and most disappointing carbon capture plant in the world.

Norway, sadly, is not the first, but its abandonment of Mongstad follows a familiar pattern of enormous hope and dismal acceptance: carbon capture and sequestration, or CCS, is an unachievable ideal at this time given the current technology.

Or, to put it more bluntly (as global energy/carbon capture firm Aker Solutions does), “The carbon sequestration market is dead.” A sentiment reiterated by Environmental News Network (ENN), which as recently as 2012 wrote: There are several ways to remove CO2 from a stack gas. None have reached a commercial basis yet due to the expense of the processing.

And nowhere is it more dead than in the United States, where the 2003 Bush brainchild called FutureGen – built on the hopes and limited success of NexGen, among others – was abruptly canceled in January of 2008 because of concern about cost overruns.

The definition of insanity is repeating a consistent failure in expectation of success. CCS currently falls under that definition. Unfortunately, it will be close to impossible for any new coal power plants to meet the climate regulations proposed by the Obama administration without using carbon-capturing technology. And, putting money where its mouth is, Energy Secretary Ernest Moniz has announced $84 million in grants to make CCS technology a reality.

The technology behind Austin, Texas-based Skyonic is already well ahead of the pack. Plants called Skymine pull carbon dioxide and other elements from flue gas in a patented technique called Carbon Capture and Utilization (CCU) or, alternatively, Carbon Capture and Mineralization.

And that, says Skyonic Director of Communications Stacy MacDiarmid, is precisely what happens. Carbon dioxide, or CO2, becomes sodium bicarbonate, or baking soda (NaHCO3), an almost ubiquitous chemical used in medicine, in personal hygiene, as a household cleaning agent, in baking and cooking, in  industry (as an amine or nitrogen-based hydrocarbon neutralizer), a corrosion inhibitor and rust preventative, for hydrolysis (hydration) of concrete, in water treatment plants to balance water pH, in the manufacture of fabrics, leather, glass, and plastic, as the suppressant in fire extinguishers, to control air pollution from burning waste, as well as in foundries, aluminum production, ethanol production, brick making and in drilling operations, where it keeps drilling fluids and the like within the proper pH range. In effect, Skyonic is talking millions in consumer and industry spending for a very basic but widely useful chemical. To say nothing of other chemicals like sulfur and nitrous oxides, which can also be drawn off flue gases.

Skyonic, which is currently operating its test plant, broke ground on a commercial-scale plant this summer. It will, according to MacDiarmid, begin operations in the last quarter of 2014, “…at full production of all anticipated products and byproducts.”

Skyonic Skymine plants, each roughly the size of a dual-axle semi-trailer truck, cost about $125 million for a 75,000-ton direct capture plant, which also delivers 225 tons of carbon offsets for a yearly total of 300,000 tons of offsets. This includes all construction and equipment, and the immediate prospect of capturing chemicals to sell to the marketplace.

For those firms wanting to capture more than 75,000 tons, the Skymine plant is also scalable. Not infinitely scalable, of course, but enough so that factories and power plants can capture enough to more than meet their mandates under the Environmental Protection Agency’s, or EPA’s, Acid Rain Program.

Moving forward thanks to U.S. Department of Energy (DOE) loans – $3 million for the R&D phase, another $25 million to bring the venture to commercial scale – Skyonic is also funded by major energy industry players to the tune of $128 million.

Skyonic’s advantage over CCS plants is that its operation is monetized. All the byproducts extracted from flue gases via slipstream operations have an immediately tangible value, including the sulfur and nitrous oxides already regulated by the EPA.

Thus, while the commercial cost per ton of flue gas “cleaned” via CCU is $45, the cost to utilities and other carbon emitters for CCS is, according to a Harvard study, $150 per ton in 2008 dollars. Other estimates put CCS costs as high as $300 per ton.

It would be nearly impossible for any new coal power plants to meet stringent climate regulations as proposed by the Obama administration without using carbon-capturing technology. And, putting money where its mouth is, Energy Secretary Ernest Moniz has announced $84 million in DOE grants to make CCS technology a reality. Really.

Unlike CCS, Skymine costs include transportation. In fact, according to the DOE, CCS increases coal-fired electricity costs by 70 percent, and that’s before the additional cost of building pipelines and establishing reservoirs. For consumers, this means a doubling (or more) of current energy costs.

Are there any future limits to CCU efficiency? Yes, says MacDairmid. “Our process is most efficient at 90 percent. Thus, even in a complete carbon capture and conversion, we would probably never get more than 90 percent of carbon and other emissions.”

CCS can’t do that well, even at best estimates. In fact, in what sounds like a final death knell for CCS, SmartPlanet puts the cost of carbon capture via fossil fuel plants (coal, oil and natural gas) so high that consumers will end up paying more for coal-fired electricity  than they will for renewables, which are already approaching parity.

To MacDiarmid, who detoured from a professorship in her post-grad world to working for Skyonic because it offered her an actual mission – what she cheerfully describes as ‘something impactful’, the one takeaway she wants people to remember is that Skyonic carbon capture and utilization is profitable, retrofittable and scalable.

Which sounds to this writer like a recipe for success. Baking powder biscuits, anyone?

Smart Cities

Two events I attended this month brought home the importance of cities as centers of solutions for urban sustainability and climate change. In the absence of a global agreement to limit greenhouse gas emissions, cities around the world have already made efforts to decarbonize their economies. Global networks like the C40 include energy and climate as major issues that cities need to tackle if they are to be responsible stakeholders.
LockeMy colleagues at Cypress Rivers invited me to attend the China 2.0 Forum at Stanford University. The keynote speaker was one other than US Ambassador to the PRC, Gary Locke. While the focus of his talk was on the need for financial reforms in China, Ambassador Locke made note of country’s crucial role in the climate problem and how local governments were already taking the initiative there. Every week, the US embassy in Beijing is being contacted by city and country officials who are finding a wide variety of technologies from waste management to transportation solutions.

Indeed, the opportunities are enormous for win-win as American companies can provide the necessary know-how to help these cities find appropriate solutions for their energy and environmental challenges.

SCWOver in Asia, the concept of smart cities have been promoted for several years. Although there is no standard definition, a smart city is characterized as one that uses well designed planning and advanced ITC to create conditions that are conducive to economic growth comfortable lifestyles, and responsibility for the environment.  As a technology driven country, Japan has made enormous efforts in this area with several model cities. Among them, Yokohama is considered one of the “smartest” and has been the host of the annual Smart City Week. These include innovations for local energy production and delivery, water procurement and distribution, and waste management and recycling.

Another highly touted model in Japan is the Kitakyushu Model, which offers know-hows in urban development by integrating waste management, energy management, water management, and environment conservation. Case studies include Kitakyushu Ecotown which has high concentration of recycling plants. In a toolkit in the package, it also has a checklist for making a master plan. They are available on the web.

This year, the discussion at Smart City Week focused on the concept of public-private partnerships (PPPs). Also known as business to government (B2G), it is a framework at the city and municipal level for facilitating, and in some cases, financing the implementation of infrastructure projects. Not only do technology providers play an important role in these relationships, real estate are often promoting these types of projects from energy efficient buildings to urban restructuring. Moreover, these projects must also look at how to better engage residents as stakeholders in their communities. While technology plays an important role, awareness and behavior play as important of a role.

What makes innovation at the city so important in the global scheme is that successes at this scale can be easily learned from each other. These experiences to share ideas and what works can build the confidence and trust needed towards building a global consensus to limit greenhouse gas emissions. Indeed, smartening our cities will be an ongoing process but meetings like Smart City Week give leaders and implementers to discuss what works, what doesn’t, and why.

 

At Solar Skies, It’s Always Sunny

Randy Hagen, CEO of Solar Skies LLC (Alexandria, MN., in the heart of the Upper Midwest) is justly proud of his company’s newly purchased laser welder.

Not only is it the only one in North America, but it is one of only two on the North American Continent, which spans an area from Panama to the Arctic.

The other laser welder, in Guadalajara, Mexico, was formerly kept quite busy manufacturing the solar panels used to generate hot water. But that production capacity is now coming back home, where it belongs, proudly stamped “Made in America”.

Unlike the biggest ball of twine, another Minnesota highlight, the laser panel welder really is rocket science, and Hagen was only too happy to outline the company’s progress in this area while on his way to Solar Power International (in Chicago this year, from October 22-24).

Solar Skies – manufacturer of world-class solar thermal collectors and mounting hardware – will use the convention to showcase its ability to provide solar hot water collectors, stainless steel hot water storage tanks, and related items to homes, businesses and institutions not merely locally but across the nation, from the Twin Cities to Illinois and even Massachusetts.

Solar thermal, the neglected and often forgotten stepsister of the solar photovoltaic (PV) energy market, shared in the global solar energy nadir reached in the first decade of the 21st Century – before the Chinese blew out the market in 2011 with a glut of cheap solar panels. Fortunately, it didn’t suffer the same crash-and-burn as solar PV, largely because it has always been the most energy- and cost-efficient way to take advantage of the enormous power of sunlight.

As Clean Tech Blog editor Neal Dikeman pointed out back in August, while Canadian Solar remains strong, the U.S. is still working through the solar doldrums, where the backstory continues to be about project development and new financing vehicles in a leaner, meaner market where serious competition has shaken loose all the overripe fruit.

In spite of millions of dollars of stimulus money, solar PV continues to struggle with costs and the Shockley-Queisser limit (the theoretical maximum efficiency of solar cells) in an attempt to reach grid parity, loosely defined as the point at which renewable, alternative energy venues can compete with the price of electricity from traditional fuel sources (coal, natural gas and nuclear, for example).

This continues to be generally true in spite of announcements from Motley Fool that the U.S. is selling green energy below spot prices. Fortunately, solar thermal hot water – not to be confused with utility-scale or high-temperature solar thermal energy – doesn’t have to worry about theoretical efficiency limits (typically 18 percent and theoretically 33.7 percent). It operates at a predictable and praiseworthy 70-80 percent, and never more so than from the carefully designed and manufactured collector panels made at Solar Skies.

Hagen, who got his start in solar PV using thin film to operate a ventilating fan in an aviation application, started Solar Skies in 2006 and a year later launched commercial manufacturing capability.

“Solar thermal costs didn’t plummet with the solar PV glut in 2011; it was already cost efficient. In fact, there never has been much wiggle room.” Hagen noted.

And even though wind is the really big thing in the Upper Midwest, solar thermal hot water stands a good chance of catching up just because of prevailing weather conditions. For example, even in January, when it’s absolutely frigid outside, the skies are clear and the sun shines.

“This means that a couple of 4 by 8 or 4 by 10 panels producing about 40,000 Btu’s per day will deliver about 65 percent of a home’s hot water needs. In the summer, it will be 100 percent.”

At a cost of about 10 grand, with a federal tax credit of 30 percent (which can be built into a mortgage on new homes), the cost is very affordable. Add in any utility, city or state incentives available in some areas of the U.S., and you get an easy 6- to 10-year payback. Coincidentally, this is also about the lifetime of the average hot water heater.

And the best part? There is very little that a homeowner needs to do to maintain a well-made and properly installed solar thermal installation (properly being a 45-degree tilt). Hagen doesn’t even recommend clearing snow.

“I have never cleaned our collectors. I let Mother Nature take care of that. All it takes is a little bit of open space to start the process of melting.”

It’s the kind of carpe diem attitude Minnesotans are familiar with. Life is short; eat dessert first. For Hagen, who has two daughters in grade school and an architect wife who works out of Glenwood, it meant rescheduling an interview to synch up family life and work life, with family coming first.

Which is just the way it should be, right?

New Optimism For a Cleantech Future

If you’ve not been paying much attention to cleantech in the last little while, it’s time to sit up and take notice.

Because post-Solyndra, cleantech has been quietly gaining momentum.

We had the chance to take a close look at the fundamentals of cleantech over the last two months in co-authoring a new (and free!) 38-page research report in conjunction with Oakland, Calif.-based advocacy group As You Sow and the Responsible Endowments Coalition of Brooklyn, New York.

Titled Cleantech Redefined: Why the next wave of cleantech infrastructure, technology and services will thrive in the twenty first century, the paper analyzes the most recent investment research available across a number of industries and major impact areas. It identifies key drivers and market size projections for various cleantech categories. It looks at examples of products and technologies currently on the market. Finally, it highlights a handful of large, mid and small cap firms and funds as possible points of entry for investors within each industry.

The paper does a good job of introducing cleantech and its significance (e.g. even only being a relatively new investment theme, cleantech is still—even today after a downturn—attracting nearly a quarter of global venture capital available.) It re-emphasizes cleantech’s multi-trillion dollar individual addressable markets of power, water, agriculture, transportation and others. And it restates the significance of cleantech’s drivers, and that they’re not going away any time soon.

But to me, one of the most interesting sections of the report compares the cleantech wave to other technology booms of the last 50 years, like the dot com boom, the networking craze, biotech, the PC and the microprocessor. We found a number of parallels and a number of reasons for optimism when you compare the cycles. After 20 years in technology, personally, the more I looked at the data, the more it felt like I’d seen this movie before.

For instance, the downturn in venture capital: Venture capital often spikes early in emerging categories, later to be replaced with more traditional levels of investment and other sources of capital as industries develop. It happened in the Internet era, and this transition has begun in cleantech as shown below; venture capital is playing less of a leading role in driving cutting edge technology, as it’s being being augmented by corporate investors and other sources of funds. More detail in our report.

Venture capital spikes in Internet and cleantech

Actual and estimated venture capital spending in Internet and cleantech. Source: Matthew Nordan

There’s another relevant curve, below, that looks a lot like the one above. We hypothesized in an analysis this summer that cleantech had bottomed out on the Gartner hype cycle. We make the more detailed case in our report that cleantech, as in every one of the previous waves I just mentioned, had experienced the same initial enthusiasm, the same frothiness, the same “irrational exuberance” as Alan Greenspan put it, that these other technologies did as expectations initially exceeded reality.

As the Gartner model below illustrates, in every one of these previous waves, there was a correction, and a gradual equalization of expectations and execution. Our analysis, detailed in our report, is that cleantech is now starting to climb out of what Gartner calls the “trough of disillusionment” and up the “slope of enlightenment” (how very Zen!)

Gartner hype cycle

Hype cycle of expectations over time related to cleantech. Source: Gartner

And cleantech IS climbing out. If you look at broad-based cleantech funds as a proxy for the cleantech theme, there’s been solid growth the last few months. Yes, cleantech returns have been generally poor for investors the last few years. But there HAVE been bright spots in certain sub-sectors such as clean energy generation, solar services and transportation. The lift from high cleantech fliers like SolarCity (NASDAQ: SCTY) and Tesla Motors (NASDAQ: TSA) is pulling up the rest of the category, as shown in the performance of the PowerShares Cleantech Portfolio fund, a mix of public stocks from across the cleantech definition.

Powershares PZD fund performance

PowerShares Cleantech Portfolio fund (PZD) performance, 2007 to 2013. Source: Google Finance

Another reason our report finds optimism for the cleantech space is in looking at cleantech’s various industries through the lens of the technology adoption lifecycle model, a curve popularized by the marketing strategy firm Regis McKenna in Palo Alto, California, where I served as a senior consultant in the mid 90s. I wrote in 2011 about the significance of this model to cleantech, and our new report echoes and expands on this analysis. If the vast majority of clean technologies, services and infrastructure plays have yet to cross the chasm, it means risk and expense getting there, but it also means massively larger market adoption on the other side.

In the widely accepted technology adoption lifecycle model, a market gap exists between early adopters of new technologies and the majority of consumers. This gap is especially treacherous for companies that develop disruptive technologies, as they force a significant change to the markets they target. Only companies nimble enough to transition from the early adopter market (consumers motivated by purchasing the latest technologies for competitive benefit) to the early majority of the vastly larger mainstream market (which prefers to buy established technology) are successful.

Chasm model

The technology adoption lifecycle and chasm model, Regis McKenna. Source: Joe M. Bohlen, George M. Beal and Everett M. Rogers

Different clean technologies have faced their mainstream adoption chasms at different times. For example, wind and solar energy power generation have already bridged the gap. They are now widely understood and increasingly deployed by renewable energy decision makers at power companies, and by individual businesses and homeowners. Algae fuel, for example, is on the far left side of the chart—exciting but yet to scale.

The adoption chasm of new technologies can differ substantially in magnitude. Many cleantech products have been quietly moving the needle on efficiency and waste reduction without fundamentally altering their markets. Lighting is a good example. The transition from incandescent to fluorescents to light emitting diodes (LED) happened without dramatic market disruption. Consumers had a small technology curve to overcome, but the lighting market still requires the purchase of light bulbs. We expect a significant segment of the cleantech transition will happen in this way, with cost and efficiency driving marginal, but resource-significant product changes.

So, in all, our new report finds that cleantech is here, today, now. It observes that efficiency, one of the central tenets of cleantech, is now a theme of almost everything now made, and of how it’s designed and manufactured. Cleantech is becoming ubiquitous—from cheaper, more efficient lighting to advanced metering software. Cleantech in all of its forms is poised for even more rapid expansion, especially now that the largest companies in the world have discovered the opportunity and imperative of cost savings… and now that individual technologies are beginning to cross the chasm to mainstream adoption.

As our report concludes, we’re just at the beginning of this phenomenon called cleantech. The best and most exciting investment opportunities are yet to come.

This article was originally published here and is republished here by permission.

My LED Saga

For my birthday, I told my wife I want LED light bulbs.  I know, right?  You’re thinking how cool is that!  If you’re thinking anything else, just keep it to yourself.

A bit of history.  I like light.  I hate waiting for CFLs to warm up.  We need floodlight style for recessed lighting, and A bulbs for lots of chandeliers and ceiling fan fixtures.  When we moved in I added 30+ recessed lights in our living room, kitchen, and dining area.  One room on dimmers.    If my whole house was incandescent, I could probably get 5-6 kW of lighting in the sockets for a 2,200 sq ft house, which is an extremely high ratio.  We’ve had a range of incandescent and CFL bulbs, we’ve replaced every one multiple times.   We are getting nowhere near the target hours. Current brands in include EcoSmart.

Ergo, I want LEDs.  Lots of them.  Total price would be a couple of thousand dollars or more to outfit the whole house.  I would need about  50-75 bulbs of varying types.  She has been researching them for two weeks.

As usual, she is looking for the cheapest.  Best price she found was down south of $20/bulb, but the name brands, GE, Philips, Cree etc seem to be almost double the off brand.  I currently have 2 offbrand on test in the living area, both  from Feit Electric, one is 14 and the other 17 watts, a bit below and above 1000 lumens apiece, one with the broad cone footprint, the other the narrow.  So far the light is gorgeous, bright, good color, instant on.

Minor problem, all of the warranties we’ve found say 3 years.  Ok, not so much a big deal, until you get to the fine print.  Apparently while the manufacturer believes these are 3 hours/day, 22 year bulbs, ie 60,000+hours, the warranty is LIMITED to use for 3 hours day.  Mine will be on closer to 14.  That’s why I want the LEDs! Apparently that constitutes misuse.  More details to come as the project progresses.

Enerkem, the Canadian Oil and Waste Rewind

At the intersection of energy and environment, a number of firms are taking on the global challenge of converting various kinds of waste into biofuels and chemicals.

Montreal, Quebec-based Enerkem is not only an example, but an examplar. Operating with 10 years worth of technological validation under its belt in the area of proprietary thermochemical reclamation, Enerkem engages in depolymerization, or the conversion of polymers – usually plastics – back into their integral ingredients, carbon and hydrogen. Simplified, these processes essentially rewind the 20th century, back to the point where fossil fuels were abundant and there was little or no nonbiodegradable trash. (Who said there are no second chances!)

It’s a good place to be when facing the dual challenges of oil dependence and waste disposal, with the former getting harder to find and extract while the latter gets larger in inverse ratio to the former – leading doomsayers to predict that, by the next millennium, there will be no fossil fuels and earth will be buried in old McDonald’s French fry sleeves and plastic water bottles.

Unlike so many biofuel operations, Enerkem does not use “easy” biomass feedstocks like cane or corn stover, and it certainly doesn’t use food, as happened in the global biofuels industry in 2008, when Mexico’s poor saw the cost of corn tortillas tripling overnight.

Instead, and shunning the uncomplicated path to biofuels, Enerkem uses municipal solid waste, producing in four minutes a syngas which can be repurposed into ethanol and chemical intermediates like methanol (used in making acrylic acid, for example).

This, notes Enerkem’s Vice President of Government Affairs and Communications Marie-Hélène Labrie, helps reduce the levels of waste in the city of Edmonton’s landfills.

On its own, this city – located in the heart of Alberta Province due north of Calgary – already recycles a phenomenal 60 percent of waste. Enerkem, using its pilot plant, can recycle another 30 percent, leaving a mere 10 percent to which must be burned, buried or composted. However, once Enerkem completes its first full-scale waste-to-biofuels commercial plant – in mere days, according to Labrie – Edmonton will be well on its way to achieving near-zero waste status. This is like graduating Magna Cum Laude in sustainability terms, and puts Edmonton on track to challenge even ultra “green” San Francisco, which is well on its way to zero waste by 2020.

Enerkem also operates 2 other plants in Quebec, the first a commercial demonstration facility in Westbury, the second another pilot plant in Sherbrooke. Westbury recycles used utility poles into 5 million litres (1.3 million gallons) of biofuel per year. The Sherbrooke facility is a scaled-down version of the new Edmonton commercial plant, and has been used to “sample” the efficacy of 25 different types of feedstocks including recycled plastics, waste, sludge, wood chips, pet coke, and straw.

Working closely with the University of Sherbrooke, the pilot plant is designed to R&D depolymerization processes and chemicals with the aim of one day finding that elusive but highly desirable state where used anything can be reduced to its molecular base. In the interim, researchers work with solids, liquids and everything in between. It doesn’t sound like a very appetizing job, but for those who see waste reduction as the apotheosis of 21st century civilization, it is probably more than a job: it’s a calling.

It certainly is for Labrie. Enerkem, founded by Esteban Chornet, CTO, and Vincent Chornet, a father and son duo, is a private company. Labrie, who sees it as a lateral promotion from the aerospace industry and her position at CAE (a global leader in modeling, simulation and training for civil aviation and defense), says quite frankly that Enerkem is a “part of the future she sees for herself”. So the term “calling” may not be that farfetched after all.

With its facilities in Pontotoc, Mississippi, and Varennes, Quebec, Enerkem clearly feels that it is solidly grounded in its proprietary waste-to-fuels/chemicals process.

“It’s time to reach out.” Says Labrie, who likely has read (and agreed with) the words of English poet Robert Browning.

“A man’s reach should exceed his grasp, or what’s a heaven for.”

On a final note, Enerkem has also conquered the high-temperature requirements of most depolymerization. The plants can, at relatively low temperatures and pressures, reduce greenhouse gases by more than 60 percent when compared to the production of gasoline. That by itself has to be a winner in the race to sustainability.

That the process also meets or exceeds stringent air emissions standards and minimizes water use by reusing it in a closed circuit is merely frosting on the cake when meeting Canada’s 2010 5 percent renewable content in the national gasoline pool. Not to mention the United States’ federal requirement for 16.55 billion gallons of renewable fuels to be blended into fuel supplies in 2014.

Correction: The Edmonton plant is a full-scale recycling plant, and the 10-percent waste that can’t be recycled is either burned or buried, per Enerken Director of Communications Annie Paré.

 

Philips Makes LEDs Affordable

In 2008, it was the Holy Grail of residential lighting, according to off-the-gridder Dan Fink. Fink’s parameters were simple; he wanted an LED that retained (or added to) its inherent efficiency while also delivering the kind of light that homeowners identify with incandescent lighting – and all at a price that could easily nudge both incandescent and compact fluorescent (CFL) bulbs off the shelves.

The Grail can now be found at your nearest hardware store. Philips LED lamps are selling for an unbelievable $5 after utility rebates in Iowa, Pennsylvania, Maine and Vermont. (BTW, the correct terminology for LEDs, according to Philips Director of LED Lamps Todd Manegold, is “lamp”, not bulb.)

For markets that don’t offer utility rebates, the company has lowered the price on its value- priced Philips 10.5-watt A19 from $14.97 to $10.97. Another lamp, the Philips 11-watt A19, the popular 60-watt LED equivalent, will go from $24.97 to $16.97 on Home Depot shelves as Philips works with that global home improvement retailer and utilities all over the nation to bring the price down to $10.

Thus, not only have Philips LED lamps achieved affordability, but they have escaped a somewhat tawdry past in which they were lumped with other manufacturer’s LEDs, all of which were purported to contain lead, arsenic and some other potentially dangerous substances.

Now, according to reports, only the low-intensity reds, used in signage and traffic regulation, contain unwanted chemicals. The rest, from Philips’ soft-white LEDs to “true white” or daylight lamps, easily pass (or exceed) government standards and have even obtained Energy Star certification – a claim that isn’t true for all LED manufacturers, or even for the top 10. In fact, some pricey lamps do not achieve noteworthy lifetimes or efficiencies because the method of manufacture doesn’t protect the lighting element from excessive heat, via a heat sink for example, and this can dramatically shorten a lamp’s lifetime.

Philips lamps, represented by the A19, which won best-in-show earlier this year (for its instant-on feature, crisp bright light, and no mercury), are clearly becoming price-competitive while offering both superb quality lighting and electricity savings. More importantly,  the A19 offers an 80-percent plus energy savings ratio, or 10 percent greater than the CFL, and a six-year warranty which comes standard. Other Philips LED lamps are equally cost-efficient and productive.

As readers may remember, Philips is the company that won the 2011 L Prize – the $10-million government prize to create the light bulb of the future, an LED which could replace the once-ubiquitous 60-watt incandescent bulb.

“The challenge,” says Manegold, “is to balance lumens versus cost.”

As Manegold explains, the psychology of shopping and value suggest a price of around $10 as being the criterion of affordability in the American consumer’s “clean energy” wallet. For example, if the price is $14.99 and a utility rebate pushes it down to $9.99 – or even better, $5.99 – the consumer is at a point where he or she feels comfortable investing in clean energy technology.

” I think that, at $10, most people are willing to try one lamp,” Manegold notes. “But what I’m focused on, what my business is focused on, is not that you buy one, but that you came back and buy 2, 3, 4, perhaps even 10. Because if you don’t like the first one, you never will come back. For example, while it’s important for our company to hit that all-important price point, people also need to view their purchase as a quality product in order to trigger mass conversion.”

And mass conversion, as Manegold acknowledges, is the name of the game. Silvie Casanova, head of Lighting Communications at Philips, points out additional features that homeowners tend to look for, many of them purely aesthetic.

“LEDs lend themselves to the kind of dim-ability and control that CFLs just can’t achieve. Equally as important, LEDs do not achieve the “catastrophic failure” mode common to incandescents. At the end of its very long life (22 years, based on the U.S. Department of Energy’s  2 hours per night at 11 cents per kilowatt hour), the LED will gradually lose its brightness.”

This fade-to-black gives homeowners time to anticipate the lamp’s demise and get a replacement. It also provides some peace of mind to individuals who have, too often, had an incandescent bulb blow at the absolutely worst moment in history.

Manufactured to meet or exceed the Energy Star program’s rigid requirements, Philips LEDs  cut energy use by 85 percent, last 25 times longer, and save about $134 in electricity costs over their lifespan when compared to incandescents. Moreover, LEDs, though slightly smaller than the Edison incandescent bulb, fit into existing fixtures and work with standard dimmers, which means you, the consumer, can find a simple but lasting solution for that porch light, hall light, nursery light, or wherever accurate and unfailing light is a must.

It isn’t just about selling a product, either. As Manegold stresses, “Phillips has been very cognizant of insuring that the experience the user receives from LEDs is less focused on replicating the exact shape of an incandescent lamp or bulb and almost exclusively focused on making the experience (of buying and using our LEDs) 100 percent recognizable. This means that when you put the lamp behind the shade, you don’t know if it’s an incandescent or an LED, you just know it is the light you expect to have.”

(Correction: per Casanova, the reduced price of the A19is $14.97, not $16.97 as stated).

Kleiner-Backed Choose Energy Acquires Power2Switch

On September 30, Plano, Texas-based Choose Energy acquired Power2Switch, a Chicago-based company designed to help energy consumers negotiate their way around deregulated electricity markets in New Jersey, New York, Ohio, Texas and Illinois, where the company had its largest footprint.

Founded in 2008, Choose Energy offers a user-friendly website that matches deregulated energy suppliers with energy consumers in Connecticut, Illinois, Maryland, New Jersey, New York, Ohio, Pennsylvania and Texas – the latter forming Choose Energy’s largest market.

Want a lower rate after the first 1,000 kilowatt hours per month? Choose Energy can help you with that, and you don’t even have to make a phone call. Want only renewable energy? Choose Energy’s site helps you locate it from a “shopping basket” of 28 energy suppliers including Green Mountain Energy (100-percent renewable) and Direct Energy, which offers 99-percent clean, renewable electricity programs.

In fact, according to Choose Energy, 40 percent of customers have elected to go green, frequently at neutral costs when compared to some traditional generation fuels. Equally noteworthy is the fact that, since its inception, Choose Energy has helped more than 150,000 homeowners and small businesses save millions on energy bills thanks to veteran energy industry gurus who are as comfortable in the information technology sector as they are in the electricity trading marketplace.

Power2Switch is right up Choose Energy’s alley. It provides Choose Energy with a synergy that reduces operating costs and financial obligations, and provides even more extensive financial and consumer reach, partly because Power2Switch had already created a very good user experience based on a great brand. And it is this superb customer service reputation, as well as the company’s similar venues, which provides Choose Energy with precisely the kind of business ‘muscle’ that will propel it into the newly deregulated electricity marketplaces of today and tomorrow.

Choose Energy, a private company, recently came away with $4 million in funding from private equity firm Kleiner Perkins Caufield & Byers (KPCB), which it used to enhance its operations. Now, with Power2Switch assets and expertise, Choose Energy may well achieve its next goal, of coverage across all 19 states where the selling of electricity is decoupled from its origin, and across slightly less than half the states in the continental U.S. where natural gas sales and pricing are disengaged from the supplier.

This separation, called deregulation, allows consumers to buy electricity from any energy company offering it under the auspices of the same RTO, or Regional Transmission Organization. These RTOs are usually comprised of ISOs, or Independent System Operators, commonly a group of states (with the exceptions of Texas and California, which are significantly larger than any other state).

Deregulation in effect decouples the source of electricity – the power plants – from sales of electricity, putting ubiquitous and increasingly expensive electricity into the basket of consumer goods whose prices are influenced by demand. This is good news for consumers, and even better news for Choose Energy, which capitalizes on choice to bring savings to electricity users and a larger, recognizable brand for itself – a brand which the company aims to augment using Power2Switch’s enviable reputation and its industry-leading user experience platform.

Choose Energy President Jay Webster does not see any more M&A’s near term, but sees deregulation as inevitable.

“The more people become aware that they have this choice, and the impact it can have on a consumer’s energy bill, the more eager they are to participate.

“I should think that the will of the people, translated through the legislative body of any one state, will cause more (deregulated) markets to open up.”

The impetus for this change, Webster notes, is the proliferation of experience that people and regulators have in currently deregulated markets – an experience that can run to about 200 choices and be completely overwhelming, which is another benefit for Choose Energy and a website that makes complicated energy options simple.

It’s still early days, and a rocky road in those states which have not refined their vision before passing laws. As Forbes notes, distributed generation, or plans that allow electricity consumers to buy energy from micro-generators, presents an existential threat to utilities similar to that which the U.S. Post Office currently faces.

It’s a threat which companies like Choose Energy, and its president, welcome. For the company, opening markets spell additional territory beyond the 14 states where low-cost solar is currently available. These are: California, Hawaii, Oregon, Arizona, Connecticut, Texas, Delaware, New York, Maryland, Massachusetts, New Jersey, Philadelphia, Washington D.C. and Colorado. The company also has a commercial solar program.

For Webster, it’s the challenge of an enterprise “much more intriguing than anything I have done before.”

For consumers, struggling in a lackluster economy and facing the prospect of layoffs, lower energy bills might be just the impetus that Federal Reserve Chairman Ben Bernanke and his “Fed printing press” have failed to produce.