CleanWeb: The Intersection of IT and CleanTech

For many observers, the bloom is off cleantech venture investing.  The challenges are numerous and increasingly well-known:  capital requirements are too large, the non-market (i.e., regulatory/political) forces are too influential, the incumbents are too strong, the sales cycles among risk-averse customers are too long, the technological issues are too profound. 

As reported in this posting, this negative view of cleantech venture capital is held especially strongly by Peter Thiel, one of the early principals of PayPal and a highly-influential voice within the capital markets and financial community — especially in Silicon Valley.

Oh, for the glory days of venture investing!  Where in cleantech is the next Google, Yahoo, Facebook, Microsoft, LinkedIn, Amazon?  Anyone, anyone?  Bueller?  Bueller?

A nascent movement is growing in response to this queasy inquiry.  At the center of this movement is “CleanWeb”, which focuses on the ability to harness the ever-expanding powers of intelligence for greater efficiency in physical resource management.  At the center of the CleanWeb phenomenon is Sunil Paul, the founder of Spring Ventures and a co-founder of the IT company Brightmail, which was eventually acquired by Symantec for the tidy sum of $370 million.

As Sunil and his Spring Ventures partner Nick Allen argue in this article from a recent issue of Technology Review, many of the enabling physical sciences discoveries to significantly change for the better our energy production and consumption have already been achieved.  “What hampers [them] now is poor sales channels, complex financing and incentives, and a failure to communicate with customers.  That makes them ripe for disruption by the application of IT, which will drive the next phase of cost reduction and implementation.”

More good news:  as Stanford Professor Jonathan Koomey argues in another article in the same issue of Technology Review, there’s a lot of remaining untapped upside potential in the CleanWeb.  Koomey writes that, according to some calculations by the crazy-genius physicist Richard Feynman, the energy efficiency of computing theoretically could improve by at least four more orders of magnitude from today’s levels, and it appears that the trajectory of improvement is a factor of 100 every decade.  So, we’ve got a long way to go. 

Or, put another way, as Koomey does:  today, the world’s most powerful computer (the 10.5 petaflop Fujitsu K) consumes a whopping 12.7 megawatts — an entire town’s worth of power — but a similarly capable machine two decades from now would consume as much electricity as a standard household toaster.  If you doubt that this degree of improvement can be achieved in 20 years, Koomey notes that today’s MacBook Air — if operated at the efficiency of 1991 computers — would fully discharge its battery in merely 2.5 seconds.

Sunil, Nick and their confederates have been organizing a series of regional CleanWeb Hackathons, bringing together information technology professionals to develop new code for “optimizing resource use and accelerating cleantech development.”  The first hackathon in (you guessed it) San Francisco last September was said in this article by GigaOM to have drawn 100 participants and resulted in 14 cleanweb applications.

The space of CleanWeb is pretty broad.  In our venture capital firm, Early Stage Partners, we’re seeing an increasing number of software-based business plans that – whether directly or tangentially – result in lower consumption of energy, and correspondingly lower emissions.  You could call any of these “CleanWeb”. 

One of ESP’s portfolio companies — Cleveland-based LineStream Technologies, spun-out from Cleveland State University by licensing the control systems innovations developed by Professor Zhiqiang Gao — clearly fits the CleanWeb category, as its proprietary algorithms enable much better management of both industrial and consumer applications.  This improved management usually results in lower energy consumption, and the reduction in energy consumption translates to lower costs, which is virtually always a good thing for prospective users.  The environmental benefits of lower energy consumption are nice, but incidental.

These CleanWeb business models often aren’t subject to the litany of challenges listed at the outset of this posting:  capital-intensity, regulatory impediments, incumbent opposition, long sales-cycles, or challenging physical innovations.  Accordingly, they may be relatively well-suited to venture capital investment approaches – more so than pushing for the next breakthrough in batteries, solar energy, fuel cells, wind, biofuels, nuclear or other cleantech sector involving a physical discipline.

A complaint leveled by some observers — such as in the closing paragraphs of this report by one of my favorite cleantech writers, Eric Wesoff of GreenTechMedia, on Thiel’s diatribe against cleantech venture capital — implies that CleanWeb investors are too wimpy.  The thinking seems to go that venture capital practices developed from investing in software start-ups just can’t handle the big/tough but necessary challenges of cleantech.  The CleanWeb innovations on which such investors are focusing, while nice, may be just “cherry-picking”, and not truly transformative.

Perhaps.  However, I would argue that the primary role of private capital is to make good returns, period.  Most investors don’t place their money in the hands of others (i.e., venture capital firms) to effectuate social change, no matter how desirable such change might be.  Venture capitalists can’t afford to break their picks fighting fights that they can’t win, or would have to spend inordinate amounts of capital in order to win.

Those battles need to be fought not by investors but rather by participants in the arenas of politics and laws.  Those battles set the rules of the game, within which investors and competitive market actors subsequently play.  

In my view, the rules of the game are in many ways stacked against those of us active in cleantech, and it is entirely appropriate to seek — in a fair and just manner — to change those rules.  But, it is unreasonable to expect professional investors to deploy capital imprudently, flying in the face of unfavorable rules. 

And, it is unreasonable to expect professional investors to be able to dedicate more than a modest portion of their time or effort in the public debates.  Their investments, and their investors, properly demand the majority of their attention.

In contrast to many investment opportunities in energy supply or storage technologies, CleanWeb faces minimal headwinds.  It may well be lamentable that renewable energy faces stiff headwinds, some of which may stem from outdated or inequitable rules, but that sentiment doesn’t change the harsh realities.

Virtuality does have its virtues.

Going With The Flow

In recent months, I’ve come across more work being done in flow batteries than I’ve seen in the prior decade.

I’ve been known in the past to say that fuel cells are kinda like fueled batteries.  Well, flow batteries really are fueled-batteries.  A traditional chemical battery is one sealed system that charges and discharges chemical elements through a set of electrodes, and the amount of charge/discharge is dictated by the type and volume of chemistry within the battery.  In contrast, a flow battery separates the electrodes from the chemistry, which is stored externally from the electrodes in tanks.  In so doing, a flow battery delinks the relationship between power (an instantaneous concept) and energy (power over time) that is essentially hard-wired within a chemical battery.  In a flow battery, it’s straightforward to expand the energy of a system by adding more to the storage tanks.  And, it’s straightforward to add more “fuel” by injecting more of the reactants into the storage tanks.

Because of this, it is natural to think about how flow batteries can improve the range of electric vehicles, which is the focus of this 2009 article from The Economist.  However, energy density remains a challenge that could limit the utility of flow batteries for vehicular purposes. 

Several flow battery concepts involving different chemistries are being worked on by a number of academic researchers.  DOE’s advanced energy R&D shop ARPA-E awarded a team from Lawrence Berkeley Labs to pursue flow batteries.  Commercially, perhaps the three most well-known flow battery technology development companies are ZBB (NYSE MKT: ZBB), RedFlow and Primus Power.

Most of these efforts are targeting to apply flow batteries in grid-scale electricity storage at the substation level.  This could be an even more impactful role for flow batteries than their use in vehicles:  if flow batteries can provide an economic solution for grid-storage, the implications for expanded renewable energy deployment — enabling intermittent wind and solar energy to achieve more than 15% share of power generation — are possibly massive.

A Tribute to our Blogger and Cleantech Venture Capitalist, David Anthony

As previously reported by GigaOm and others, one of our bloggers, cleantech venture capital investor, David Anthony, of VC firm 21 Ventures, took his own life last month.  We are saddened he is no longer with us.

For those who are able to attend, there is a Facebook announcement of his memorial service on the May 31.

Details:

Thursday, May 31, 2012, 5:00pm in EDT

First Christian Church at 4954 Valleydale Road, Birmingham, Al 35242

RSVP to Holly Wagner 68holly at gmail dot com

 

A couple of the articles he wrote for Cleantech Blog:

Billion Dollar Opportunities in Cleantech

On grid energy storage

Residential solar

David’s own blog is DavidAnthonyVC.com

 

 

Separation Anxiety

When Home Performance with Energy Star launched in Maine in 2006, we defined the energy improvement process as test-in, upgrade, test-out. The parenthetical testing was part and parcel of the process, similar to a physician talking with a patient and running diagnostics to glean what’s going on – before prescribing remedies or lifting a scalpel.

Coming into home performance, energy auditors, home energy raters, and home inspectors had a predisposition – for different reasons – to distinguish the ‘test-in’ as a separate, billable service.

Now that home performance (HP) programs offer subsidized, or free, ‘test-ins,’ the mindset separating the ‘test-in’ assessment from the actual upgrades is even more pronounced. Problem is, without the upgrades, there are no energy savings to claim, not for the homeowner, the renter or the government agencies that sponsor the programs.

Residential energy efficiency programs – whether administered by utilities or non-profit community-based organization – are contending with the “stuck” factor. That is, homeowners sit on their assessments and do not move ahead with energy improvements (in HP vernacular, conversions).

Call it separation anxiety. And I’m as guilty as anyone. Earlier this spring, Sustainable Structures in Hallowell, Maine conducted an assessment of my home, for a sum; they ran the data through RemRATE to produce a home energy rating, and have mailed me a CD of their findings, including infrareds and digital photos. I have yet to open the envelope. Cite a reason, and you’re probably right … money, other house maintenance and life priorities, fear.

One solution – amidst many – to the ‘stuck’ factor is to teach home performance contractors how to better sell HP. That is, how to sell the upgrade, not just ‘test-in’ assessments.

Enter Dale Carnegie. On Thursday and Friday last, contractors representing 14 weatherization companies attended Dale Carnegie sales training in Stratford, CT. Connecticut’s Neighbor to Neighbor program sponsored the class, aiming to infuse the Dale Carnegie “buyer’s mindset” into the companies’ sales processes.

The class trains contractors to do things a different way, encouraging them to get out of their comfort zone which is, often, to talk about building science (stack effect!) and products (heat pumps, insulation, air sealant!) With lots of role-playing, the class taught contractors how to ask questions, how to engage homeowners about their homes and their true wants. Questions for the homeowner are conversational, situational, and broad. “Ask what wakes up the customer in middle of the night,” said trainer, Scott Laun. “Ask a few questions, and listen. Do not talk, let them talk.”

Daniel Martins, of Santa Energy and a veterinarian in his previous profession, participated in the class, saying, “it trains your brain to behave. What not to do when we are selling. We have to naturally talk about ourselves, and less about selling the product, and know how to relate to customers’ needs.”

These lessons are helpful for conversions, but are also useful once the subsidies have gone away and contractors find themselves in a competitive marketplace.

Danger: Silly Season Ahead

Here’s a musical experiment for you:  play a song such as “Penny Lane” from The Beatles (or, if you prefer classic rock, “Whole Lotta Love” by Led Zeppelin will do nicely) on your sound system…but with the balance set all the way to one side or the other.  There will be enough recognizable content for you to still recognize the song, but you will not be able to hear the whole song, and will miss many important elements.

This is like getting your information on topics of the day from Fox News or MSNBC:  significant portions of the story being reported upon will simply not be heard.

If you play “Penny Lane” (or “Whole Lotta Love”) through an old monophonic transistor radio, you will hear both “sides” (as it were) of the song.  But, the fidelity will be very poor, and you won’t hear the nuances and richness of the song.

This is like getting your information from the USA Today, or most local newspapers:  any deep appreciation of the underlying issues will remain out of reach, because it is inherently lacking from the reporting.

As we move into the so-called “Silly Season” of election politics, in an era of “sound-bites”, incumbents and aspirants — and perhaps more importantly, thanks to the Citizens United decision, the flotsam of PACs and SuperPACs that wallow around the political discourse — are flinging about half-truths about all sorts of important issues. 

Most of these issues — health care, fiscal policy, immigration, “values” — are ones in which I claim no sort of expertise, and accordingly I will not render any public assessments on them. 

However, a large number of polemical skirmishes on the 2012 political battlefield are shaping up to be based on energy and environmental topics.  The list is long:

Keystone XL pipeline.  High gasoline prices.  EPA regulations.  Fracking and shale.  Nuclear energy.  Energy independenceSolyndra.  Extension of the wind production tax creditSubsidies to fossil fuels.  Dumping of solar panels from China.

The airwaves are crackling with a cacophony of messages for and against these issues…and I’m hearing lots of misstatements and oversimplifications.

I’ve been ruminating on the advent of Politifact, that aims to prove or debunk political claims in as unbiased a fashion as possible, and thinking that there ought to be some similar effort focused on the issues of importance to us in the cleantech community.  Maybe someone will take this on…

…But, in the absence of such an effort, and lacking the personal will to tackle it comprehensively on a topic-by-topic basis, I will use the remainder of this post to offer general advice to thoughtful citizens wishing to weigh energy and environmental issues in something other than a knee-jerk or dogmatic fashion. 

First, I am reminded of some advice from mentors upon beginning my career in the late 1980’s, as an economic analyst of various energy and environmental policy issues on behalf of (primarily) Federal clients:  “Be an ‘equal-opportunity offender’.  If you’re pissing off people on both sides of an argument, then you’re probably close to the truth.”

In my experience in the energy sector over the intervening 25 years, this is so much more a truism than can possibly be imagined.

The implication of this insight is that any message you might hear or read from any one source — unless that source is doggedly determined to be unbiased — is likely to in fact be highly biased.

If the only source of information you use to develop a perspective on energy issues is, for example, Americans for Prosperity, you will arrive at a selective and skewed view.  As noted in this articleThe Guardian recently reported on how AFP, and other groups of its ilk, are making a deliberate effort to discredit many policies to promote renewable energy, and so are unlikely to present any evidence that paints renewable energy in any positive light. 

Then again, it should further be noted that The Guardian is pretty well-known to have an agenda it seeks to advance.  Indeed, even most highly-respected newspapers known for excellent reportage — from the Wall Street Journal to the New York Times — have editorial boards that are widely-recognized to have a distinct political philosophy that they aim to espouse.  So, one must always take what information is obtained, even from the most reputable of sources, with a grain of salt. 

Alas, there is little substitute for decades of direct experience in an industry, examining issues from multiple angles, working productively (or at least trying to) with people from across the spectrum of interests.  It could be argued that this is the only professional asset and advantage I have accumulated over the years.

In addition to being slanted and aiming to press forward a position — regardless of whether the facts fully support it or not — most reportage of energy and environmental topics suffers from woeful lack of basic understanding of science and economics.  Publishers and journalists are approximately equally guilty. 

And, with its grave innumeracy — and the consequent inability to make tradeoffs — the electorate is subject to being swayed and stuck to a position only because it sounds right, best “fitting” their pre-existing and fairly unmalleable mental model, coming from a source they unblinkingly accept.

In energy and environmental issues, just about everything involves tradeoffs.  There is no perfect solution, no silver bullet.  There are benefits, but there are also costs, to all possible options.  When confronting a world of this much complexity, it may be comforting for many to resort to idealistic dogma.  However, those positions — which tend to be on the extremes — is not where reality usually lies, and it’s not where the action is.

If you were to limit my intake to one and only one general information source, I would choose (drum roll, please) The Economist.  OK, this is surely no surprise to those who have followed me for awhile.  Sure, I was trained as an economist,  but that’s not why I endorse the publication.  Simply, I find its weighing of all the diverse factors, and its understanding of the underlying facts and evidence, to be more thorough and — yes, actually — fair and balanced than other outlets.

Even so, The Economist can’t cover all energy and environmental matters.  A better approach to developing a healthy and informed perspective on these topics involves more work, accumulating from a variety of sources from across the spectrum.  It is unfortunate but seemingly the case that certain media — and especially, the blogosphere — has joined politics in becoming an adversarial contest of opposing views, where one side or the other will not let certain facts get in the way of telling the story they want told.

In the upcoming Silly Season, I urge conscientious voters to weigh all sides of energy and environmental issues, from multiple sources of information, before coming to any conclusions.  Don’t take what is said by the Democratic or Republican candidate, or their PACs, as gospel.  Don’t blithely assume that what environmental advocates or industry trade groups are reporting is the truth, the whole truth, and nothing but the truth.

It’s a very rough generalization — and as Alexandre Dumas once said, “All generalizations are dangerous, even this one” — but I submit that most pro-environmental positions underweigh economic considerations.  It’s simply naive to argue for tighter environmental control and then dismiss any possibility of negative economic consequences.  And, environmentalists are sometimes prone to “sky-is-falling” hyperbole, which undercuts their credibility in legitimate policy debates.

On the other hand, self-interested messages from the conventional energy sector are often disseminated through the filter of so-called “astroturf” (phony grassroots) organizations, that sound as if they’re representing the views of Bob & Betty Buckeye but instead actually are reciting the scripts of oil, gas, coal and utility companies.  The old adage from Watergate still applies:  “Follow the money.”  It’s incumbent upon the citizen to pierce the fog and see through to who is paying a lot for these media buys so you can hear their opinion.  Also:  don’t forget that the conventional energy sector has a lot more money to throw around than the other side in telling the stories they want you to hear.

And, in the end, to maintain your sanity in the face of inanity, it’s a good thing to fall back on this gem of folk wisdom.

Rethinking the Role of Government in Cleantech

Another year, another wringing of the hands over tax credits and incentives for clean technology.

Lobbyists and vendors in the U.S. are once again singing the blues, calling for continued and expanding government investments in clean technology. At the same time, political challengers continue their Solyndra hootenanny, raking the current administration for how it spent hundreds of millions of taxpayer dollars.

One can’t help but wonder whether it’s time for a different tune when it comes to government involvement in cleantech.

Perhaps conversations about policy support should be less about giving more taxpayer money to prop up the space, and more about elected officials setting long term market stability and enabling the private sector to deploy capital to assume risk in cleantech.

Why? First, some background…

Down with incentives
Every time U.S. tax credits for renewable energy development come up for renewal, the cleantech sector cringes at having to once again “play chicken” with whichever administration is incumbent at the time.

The U.S. Production Tax Credit (PTC), which provides a 2.2-cent per kilowatt-hour benefit for the first ten years of a renewable energy facility’s operation, was born in 1992. But it’s had a hardscrabble life, clinging to life support after seven one and two-year extensions bestowed alternately by Republican and Democratic Congresses. Neither major American party has been willing to show long term incentive support for renewable energy.

The PTC for incremental hydro, wave and tidal energy, geothermal, MSW, and bioenergy was extended until the end of 2013. But the production tax credit for wind expires at the end of 2012. And that’s got wind lobby groups girding up. In a recent statement, American Wind Energy Association (AWEA) CEO Denise Bode cited a study suggesting Congressional inaction on the PTC “will kill 37,000 American jobs, shutter plants and cancel billions of dollars in private investment.” The same study suggested extending the wind PTC could allow the industry to grow to 100,000 jobs in just four years. Expect this battle to simmer all summer.

The unpredictability around cleantech incentives is taking its toll. “The U.S. is hitting a brick wall with the cessation of benefits,” remarked John Carson, CEO of Alterra Power, on the subject at a recent cleantech investment conference I co-chaired in Toronto. He wasn’t happy, and do you blame him? Nobody likes living hand to mouth. But that’s what happens when you rely on credits and incentives like the PTC or its loved and loathed counterpart in the U.S., the Investment Tax Credit (ITC).

And then there are the cleantech subsidies provided by the American Recovery and Reinvestment Act of 2009 (ARRA), which are now winding down.

If it feels that clean technology vendors and lobbyists are spending an undue amount of energy and resources chasing such subsidies worldwide, they likely are.

Up with mandates and standards
Rather than funding and administering subsidies to help the clean and green tech sectors find their footing, a case could be made that governments should focus on passing aggressive policy mandates, standards and codes.

Instead of using taxpayer money to make technology bets, regional and national governments could focus on passing laws, including broad brush stroke ones like the renewable portfolio standards in the U.S. that mandate a certain percentage of power from renewable sources by certain dates, and then step back and let the private sector figure out how to deliver. Or mandate change more granularly—for example, that coal power plants need to meet certain efficiency or emissions standards by certain dates, and, again, let the private sector figure out how. (Ironically, if there were more public support to actually clean up coal power instead of simply disingenuously parroting, beginning in 2008, that “there’s no such thing as clean coal” and throwing up our hands because environmental ads told us “clean coal doesn’t exist today”—and if that translated into political will and a mandate—cleaner coal power could exist today. Yes, there’d be a penalty on the nameplate capacity of plants’ output, but there’d also be billions saved in health care costs. But we digress.)

Taxpayers should take their politicians to task for trying to play venture capitalist, i.e. by investing their money in trying to pick winners (a la Solyndra) in complicated markets. Professional venture capitalists themselves, who focus on their game full-time, barely pick one winner in 10 investments.

Drawbacks of incentives
How could government grants, loans, tax credits and other subsidies possibly be bad in cleantech? Free money is good, right? Here’s a list of drawbacks to these incentives, some of them not as obvious as others:

  • They can go away and cause market disruption – to wit, the points earlier in this article.
  • The existence of loans and grants silences critics – Few speak out against pots of free money, because they might want or need to dip into them in the future.
  • Incentives favor only those willing to apply for them – and therefore are often missed by companies working on disruptive, fast-moving tech, or who are focused on taking care of customers’ needs.
  • Criteria are often too narrowly defined – Criteria for incentives often favor certain technology (solar photovoltaic over other solar, or ethanol over other biofuels), and as a result, lock out other legitimate but different approaches.
  • Picking winners means designating losers – Recipients of government grants or loan guarantees get capital and an associated halo of being an anointed company. Those that don’t are comparatively disadvantaged.
  • Not the best track record – Incentives go to companies best staffed to apply for and lobby for them. And those aren’t necessarily the companies that could use the capital the most effectively, e.g. to compete in world markets, or create the most jobs.

What governments could and should be doing
In the cleantech research and consulting we do worldwide at Kachan & Co., we’ve come to believe that governments are best focused on activities to create large and sustained markets for clean technology products and services.

Doing so gives assurance to private investors that there will be continued demand for their investments—one of the most important prerequisites to get venture capital, limited partners and other institutional investors to write large checks.

Given that objective, governments should, in our opinion, pursue:

  • Setting mandates and standards – e.g. the amount of power generated from renewable sources, new targets for fuel efficiency, green building or other dimensions.
  • Improving codes and other regulations – making building codes more stringent could drive energy efficiency, green building and smart grid investment.
  • Building the talent pool
  • Stabilizing the economy
  • Fostering political stability
  • Commitment to infrastructure projects – including water, transportation and grid.
  • Building showcase projects – regions wanting to foster local cleantech can do as Abu Dhabi has done with itsMasdar initiativeas Saudi Arabia is now doing with solar, or as China has done with hundreds of green development zones; in doing so, all three of these countries have sent strong signals to large corporations and investors that they view clean technology as strategic.
  • Rolling back so-called perverse government subsidy support today of the fossil fuel industry, including direct and indirect subsidies.

Cities as test beds of policy innovation
Interestingly, cities are emerging as petri dishes of progressive cleantech policy, and are increasingly where such innovation is taking place.

For instance, Barcelona has established that large companies need to create as much as 30% of their power from solar thermal technologies. The city of Berkeley, California pioneered what is now known as Property Assessed Clean Energy (PACE) financing, wherein property owners are able to pay for energy efficiency and renewable energy improvements on their property taxes. This month, Phoenix, Arizona introduced what it calls the largest city-sponsored residential solar financing program in the U.S. And New York City is taking the lead in residential demand response by trialing a program to curtail the consumption of 10,000 room air conditioners at times of high demand.

Given the world’s current financial malaise, and especially in light the Occupy momentum globally, I’m surprised more folks aren’t questioning how their governments spend their money in cleantech. Because, as described above, there are other arguably more effective ways elected officials can help usher in a cleaner, greener future than throwing around billions in incentives.

After all, how much fun would a pristine planet be if we’re all destitute because governments have crumbled under crushing debt?

This article was originally published here. Reposted by permission.

 

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 consulting services to large corporations, governments and cleantech vendors, and connects cleantech companies with investors through its Hello Cleantech™ programs. Kachan staff have been covering, publishing about and helping propel clean technology since 2006. Details at www.kachan.com. Dallas is also executive director of the Clean Mining Alliance.

The Geopolitics of Energy

“The Geopolitics of Energy”:  that was the title of a talk given at the Opportunity Crudes conference in Houston last week by Guy Caruso of the Center for Strategic and International Studies.  It’s an endlessly fascinating and urgent topic, as very few sectors of the economy shape the world in which we live as much as energy — and particularly, oil — does.

Highlights of Caruso’s presentation — many of which are not novel or unique, but are worth restating:

Oil is currently inseparable with transportation:  virtually 100% of mobility — whether by car, truck, rail, boat or plane — is fueled by petroleum-based products.  Demand is flat or even shrinking in the U.S. and Europe, but this is more than offset by explosive demand growth in the developing world — especially China, but also India, and the Middle East.  “The center of gravity of the oil industry is moving East.”

Most of the lowest-cost endowment of oil resources on the planet are concentrated in the Middle East, subject to great political instability.  A scary thought:  many leaders, especially in the lynchpin Saudi Arabia, are over 80 years old — what happens when they die?

Reliability of delivery is threatened by geogrpahic chokepoints.  For instance, over 15 million barrels per day — nearly 20% of world oil supply — passes through the Strait of Hormuz.  Although most of the oil passing through goes to Asia, the U.S. military remains the key protector of this vital trade route.

Meeting global demand growth in the face of declining conventional resources means two things:  a shift towards unconventional resources (which are more expensive to produce, and face significant environmental/technical challenges) and an almost insatiable need for ongoing additional capital investment.

Although technological leadership may remain with the “supermajors”,15 of the 20 biggest oil companies in the world (i.e., the ones with the most reserves/resources) are now state-owned enterprises, such as Saudi Aramco and PDVSA.  While some of these companies like Lukoil (LSE:  LKOD), PetroChina (NYSE: PTR) and Petrobras (NYSE: PBR) do have minority stakes that float on stock exchanges, make no mistake:  they are not being managed for the purposes of shareholder value maximization.  These companies trade on stock exchanges solely to access global capital markets so as to finance immense expansion programs.  Otherwise, their motivations are far different than profit-maximization as expressed so effectively by the supermajors:  these organizations are arms of nationalistic pursuits.  In other words, the oil game of the future will be driven less by money and more by geopolitical moves on the global chessboard.

There are more upward pressures on oil prices than downward pressures.  Note that the oil industry is running at over 95% of capacity — there’s almost no spare or excess capacity to cope with any perturbations.  Even so, most companies are using $60-80/bbl as the reference price in determining long-term capital investments:  big bets require conservative assumptions. 

Shale gas is a game-changer — not just in the U.S., but in many parts of the world.  More gas will be used for power generation, which will displace coal.  Indeed, without carbon capture and sequestration, coal will be under threat for both economic and environmental reasons in most places of the world.  (Exception:  China, which is growing so fast that it will build as much as possible in a true “all-of-the-above” energy strategy.)

Caruso closed by noting, humbly, that in his 40 years in forecasting the energy sector, there was a consistent tendency to underestimate the impact of technological advancement, which in turn renders long-term predictions subject to big errors.  Not only will the finer points of his analysis be inaccurate, but some of the overarching conclusions — which seem so obvious today — will no doubt be wildly off a few decades from now.  The key is figuring out which ones will be right and which ones will be wrong.  Black swans are hard to see when they haven’t yet flown to the horizon.

Conducting Home Performance

“Home Performance” used to sound like something musically-inclined parents forced their children to do in living rooms.
It’s catching on, slowly, for what it really is, and that is tightening up houses – with an ear for proper ventilation, humidity controls and other riffs on indoor air quality, and fuel-efficient climate controls. (There are geographic oddities; in Westchester, New York a common refrain of homeowners is to call all heating appliances furnaces, even if they are, in fact, boilers, and builders here have grooved on locating air conditioner handlers in attics.. That’s hot … and not in a good way.)
A long-time friend invited me to a fundraiser Sunday night for Canticorum Virtuosi at the old JP Morgan estate in South Salem which is now home to Le Chateau, a French restaurant. Harold Rosenbaum is the founder and creative director for Canticorum and he conducted two choirs’ performances during dinner.
Two flutes of champagne into the evening, somewhere between Harold’s amateur and youth choirs, a handsome, lighthearted man to my left asked me the difference between closed cell and open cell foam, and did one need to apply a fire retardant to both? His attractive wife sitting between us said nothing, and later, I asked how it was that her husband knew so much about foam. (Of all things? Really?) She said she was as surprised as I was. He said he’d been doing a lot of reading online about making his house more energy efficient, and that he was about to call an insulator to give him an estimate.
I’ve read that musical conductors have different styles, some use ‘point of the stick’ and others a more fluid arm gesture that creates a time lag between conductor and choir or orchestra.
Sitting at Le Chateau in black lace and pumps, it felt, not strangely, that the invisible home performance conductor was using the latter method — that this concept was slowly catching on, with fluid gestures and yes, time lags.
I gave the man to my left my business card, urged him not to call an insulator but to look at the Energize NY website (energizeny.org), where he could fill out an application for an energy assessment by a trained home performance contractor. Energize has just the right contractors to conduct his home energy improvements.

Venturing Into The Future

Last week, I attended a breakfast hosted by the Michigan Venture Capital Association, at which the President of the National Venture Capital Association, Mark Heesen, made some comments and fielded Q&A about the state of the U.S. venture capital sector.

Mark presented a mixed picture.  On the one hand, the VC industry is clearly contracting:  about half of the firms that existed at the peak in the early 2000s have withered away.  Moreover, distressingly, venture capital investment outflow has exceeded capital raised by venture capital firms each year for the past several.  As Mark noted, “this is clearly not sustainable.”

According to Mark, it appears that the venture capital industry is coalescing around two models:  (1) mega-firms with >$500 million funds, multiple offices/geographies, and spanning most vertical segments and stages, or (2) niche firms with <$100 million funds that specialize either in geography, stage, or vertical markets.  The firms that fall between these extremes are the ones that are vanishing, presumably unsuccessful. 

Turning to the cleantech sector specifically, Mark noted that – contrary to what is sometimes alleged by naysayers – cleantech VC activity is holding its own, accounting for roughly 15-20% of all U.S. VC investments.  However, what is changing is the nature of cleantech investments:  whereas big/bold bets in game-changers to save the world were the rage a few years ago, it has become abundantly clear that such possibilities are extremely capital-intensive and subject to very long maturation cycles.  Accordingly, rather than investing in the next electric vehicle, battery, biofuel or photovoltaic technology, cleantech VCs have ratcheted down their aspirations somewhat and are seeking more modest incremental  or enabling technology improvements.

Another trend in VC highlighted by Mark, one that is critically important for cleantech, is the re-emergence of corporate venture groups.  Corporate VC activity seems to come in and out of vogue every few years, and at least for the moment, it’s back on the rise again.  Notably, it is increasingly common for (1) corporates to invest in a technology without having the view of being the eventual acquirer, (2) corporate venture investors to take Board seats, and (3) multiple corporate venture groups to be in the same deal. 

I just reviewed the portfolio of one of the most significant cleantech venture capital firms in the U.S., from which I culled the following roster of corporate co-investors:  GE (NYSE: GE), Intel (NASDAQ: INTC), General Motors (NYSE: GM), DuPont (NYSE: DD), ConocoPhillips (NYSE: COP), Dow (NYSE: DOW), Waste Management (NYSE: WM), Valero (NYSE: VLO)Bunge (NYSE: BG).  And, it’s not just American giants:  also MitsuiUnilever (NYSE: UN), Cenovus (NYSE: CVE).

Consistent with the main message of a recent article in Technology Review called “Can Energy Startups Be Saved?”, it’s becoming apparent that partnering with corporations to gain access to their financial, technical and marketplace heft is virtually essential for cleantech venture success.  Or, put another way, traditional venture capital may be necessary but alone may not be sufficient to build a great cleantech venture.

Interacting with companies that are literally many thousands of times larger than a start-up company can accurately be called “dancing with elephants”:  one must be creative to capture the attention of the big beasts, strong enough to harness their power, and yet deft enough to avoid getting squashed.  It’s pretty clear that this is an important skill to cultivate in the cleantech sector — VC and entrepreneur alike.

Living In A Material World

It’s becoming increasingly clear to me that cleantech, in large part, is actually materials tech.  “Nanotechnology” has some vogue as a term, but fundamentally nanotech is materials technology, and materials technology is broader than nanotech (altering materials at a molecular or atomic scale).

Materials are at the core of most of the required innovations to help solve our most daunting environmental and energy challenges.

New materials to help extract contaminants from gaseous and liquid pollution streams.

New materials to improve the electrochemistries of batteries, solar modules, and fuel cells.

New materials to eliminate the need for rare earth metals in permanent magnet generators and motors.

New materials to lighten and strengthen vehicles and wind turbine blades.

New materials to increase the efficiency of thermal transfer in anything combustion-related.

And on and on and on. 

Alas, materials science and engineering is not a particularly widely-pursued discipline — it’s quite nichey relative to chemical engineering or chemistry. 

It strikes me that we cleantech advocates need to get smarter in and pay more attention to the materials arena as fertile ground for the next big thing.  For young people with good STEM aptitude and strong interest in cleantech, materials science/engineering is a good field in which to start digging.

We in Northeast Ohio are fortunate to have two of the world’s best university programs in materials, at the University of Akron and at Case Western Reserve University.  Also, and not coincidentally, a large ecosystem of companies based on materials innovation is clustered in Northeast Ohio, with some of the most well-known being Goodyear (NYSE: GT), Sherwin-Williams (NYSE: SHW), Lubrizol, Ferro (NYSE: FOE), Materion (NYSE: MTRN), RPM (NYSE: RPM), GrafTech (NYSE: GTI), PolyOne (NYSE: POL)A. Schulman (NASDAQ: SHLM), etc.  Between academia and industry, our region is well-suited to inventing the materials technologies that can make a huge difference in the cleantech world.

Gertie Finds a New Home

Gertie is a camper — a “short” bus with a powerful International engine. In 2006, I drove her from Colorado to Maine while chronicling in this blog a quest for biodiesel fuel.
This week, Gertie found a new home with the Maine Earth Walk Project. Her owner, the organizer and publicist for Maine Earth Walk, reports that her engine purrs, and, but for a handful of minor repairs, she is road-worthy. Participants in the Project are walking this week from Portland to Augusta, and Gertie will be with them.
If you wish to participate in the Walk, in celebration of this amazing earth that sustains us, contact maineearthwalk@gmail. Below is a message from Maine Earth Walk Projet.

Dear Friends,

For too long we have witnessed the tragic neglect and exploitation of our Mother Earth, along with the erosion of the basic Human Rights of people everywhere. It’s an ongoing tragedy that threatens the balance of life and the very existence of all living beings on Earth.

“This we know, the earth does not belong to man, man belongs to the earth. All things are connected like the blood that unites us all. Man did not weave the web of life, he is merely a strand in it. Whatever he does to the web he does to himself.” ~ Chief Seattle,Native American

We must address the problems we face, we must restore the balance and our spiritual relationship with our Mother Earth through mutual cooperation as Human Beings regardless of race, religion, ideology or nationality.

The MAINE EARTH WALK seeks to affirm the dignity of all Human Beings by reaffirming our Human Rights. We must exercise our Civil Rights as Citizens of Planet Earth. It is our duty to Stand Up and Speak Out! To Petition our Governments for Peace!! It is also our responsibility to Preserve and Protect our Planet Earth! We proclaim ‘Earth Day, Every Day !’, encouraging continuous stewardship of our environment. In this way each of us helps to protect, preserve, and restore the delicate balance of Nature that sustains Life on our Planet Earth.

The MAINE EARTH WALK, in solidarity with Occupy Movements both nationally and globally, is a movement by the People and for the People. We invite all the People of Maine to join our cause. To work together for rebuilding our communities for a Sustainable Way of Life.

The MAINE EARTH WALK is a nine day, seventy six mile walk and camping trip from Portland to Augusta, for sharing our ecological and Human Rights messages with all. Everyone is invited to join the walk as a volunteer, whether for just a segment or for the entire journey. We will begin the Walk from Portland’s Lincoln Park at 10AM on Monday, April 23rd, follow Route 1 to Brunswick and then Route 24 to Augusta with an average daily walk of ten miles.

The Walk will culminate on May Day, May 1st. 3 mile Maine Earth Walk from Hallowell to Augusta via River Rail Trail, 12noon Gathering at Capital Park, for our May Day Rally!

Bring signs, banners and messages that help raise Earth awareness and/or consciousness of related causes. Bring your songs and stories, poetry and positive spirit for our Mother Earth. Families, friends, and people from all walks of life are all welcome to Demonstrate our Unity.

There are many ways to participate in MAINE EARTH WALK. We are seeking letters of support; from civic leaders, business owners, and concerned citizens, to be shared with the general public and eachother. Join us along the way, and for our Town Hall Meetups.
We are seeking campsite hosts along the walk route. All support will help ensure the success of this Project ! Food and donations are appreciated for the Maine Earth Walk Project.
The MAINE EARTH WALK thanks you for your support. We are a grass-roots social movement.

If you wish to walk with us, Please contact us ~ maineearthwalk@gmail

As a prayer for Peace on Earth, Justice for All, and a better World for Future Generations!

Stand Up! Walk with Us! Speak Out!

Sincerely,
Maine Earth Walkers

Low Cost Desalination? Call off the hunt, we are there.

For anyone involved in water desalination, the following quote from John F. Kennedy will be very familiar:

If we could produce fresh water from salt water at a low cost, that would indeed be a great service to humanity, and would dwarf any other scientific accomplishment.”

– President John F. Kennedy, 1962

In many ways, we are already there . The ‘best-in-class’ desalination plants now have the same energy footprint as much of the ‘conventional water’ used in major cities like San Diego.

The  mantra that desalination is ‘too energy intensive to be widely adopted‘ has been trotted out so often that it has become self-perpetuating. This used to be the case, but the reality today is somewhat different. Desalination energy costs have been dramatically reduced and are now half what they were ten years ago! Desalination is ready to go mainstream. The market is going to grow and this will drive further innovation as competition increases. New technologies to watch include aquaporin membranes, forward osmosis and capacitive deionization.
Read more

Dark Days for the Solar Industry

With the Solyndra debacle and other bankruptcies (e.g., Evergreen Solar, SpectraWatt), and a 65% decline in the MAC Global Solar Energy Index (SUNIDX), 2011 was a bad year for the solar industry.  Now into 2012, the hits just keep on coming.

Last week, the long-time solar energy poster-child First Solar (NASDAQ: FSLR) announced it was closing its German factory and laying off 2000 employees.  Earlier in April, Solar Trust and Q-Cells filed for bankruptcy, following on the heels of the bankruptcy filing of Energy Conversion Devices in February.  Turning from photovoltaics to solar thermal, BrightSource Energy withdrew at the last-minute its planned initial public offering on April 11, citing “adverse market conditions”. 

Adverse market conditions, indeed!  Quoting the immortal Vince Lombardi, “What the hell is going on out here?”

There are at least four fundamental forces at play that are battering the solar markets: 

First, over the past few years, China has made an astounding push into solar energy.  Whereas China was a non-factor in the solar industry not long ago, today China owns about 50% market share of supply.  Achieving this massive leap-frog was clearly an act of state-driven industrial policy, as it required enormous sums of capital — far beyond what would be justified solely to supply the Chinese domestic market for solar energy.  But, it’s more than merely state-sponsorship:  in March, the U.S. Department of Commerce found that Chinese solar manufacturers had been “dumping” their products into U.S. markets at prices below cost, exploiting unfair subsidies available to them from the Chinese government but not available to non-Chinese players.  Stay tuned to this brewing trade war.

Second, a ton of capital has been invested over the past several years in next-generation solar technology ventures.  While the technologies have differed widely, all have been premised on significantly reducing the costs of solar energy and enabling the market to expand by orders of magnitude.  Although some of these ventures have crashed-and-burned (e.g., Solyndra), others are still alive and may end up doing very well.  At the very least, these ventures have pushed the boundaries of innovation in the solar industry overall, which in turn has reduced the costs of solar energy in many ways and aspects — which in turn is in fact exponentially expanding the potential market for solar energy.

Third, European demand for new solar installations has fallen off a cliff.  Many of the leading European solar markets — Germany, Spain, Portugal and Greece — all had very aggressive “feed-in tariff” policies, promising very high prices for any electricity generated by solar installations.  These prices had remained high, in fact escalated, while solar costs declined precipitously, enabling solar investors windfall profits:  a classic bubble, which has now largely burst, given the financial straits in which many of the above-noted European countries find themselves.  (Dedicated readers of this blog will recall my long-standing lack of enthusiasm about the feed-in tariff subsidy approach.  Its flaws are now being starkly revealed.)

Fourth, plummeting natural gas prices — due to the surge in supply, associated with the shale gas boom enabled by the broad deployment of advanced fracking approaches — are causing U.S. electricity prices to fall, and solar companies struggle to compete.  A quote from Andrew Beebe of Suntech (leading Chinese manufacturer, widely accused of dumping) in a recent New York Times article called “Clouds on Solar’s Horizon” speaks volumes:  “We’re really not competitive” at current natural gas prices.

The first two forces have dramatically increased supply and reduced costs of solar energy, whereas the second two forces have substantially depressed demand for solar energy.  When combined, the conclusion is simple:  the solar market is experiencing a massive glut.  Solar customers clearly benefit, but solar companies feel the pain acutely.

So, these are dark days for the solar industry.  According to this article in the Washington Post, even the Chinese companies that have come to dominate are hurting. 

But, as they say, it’s always “Darkest Before Dawn”…which in fact is the title of a new white paper by McKinsey & Company that presents the flip-side of this story.  The authors — Krister Aanesen, Stefan Heck and Dickon Pinner — argue that the impending shakeout and consolidation is quite typical of industry at solar’s stage of maturity, and that there will be a bright future for solar energy not that long from now.  That may be more true for customers and the planet, as low-cost and non-emitting solar energy becomes much more widespread, than for industry participants, who will face increasingly intense and relentless competitive pressures to constantly innovate and improve their technologies and business processes. 

From an investment perspective, perhaps the bottom is approaching or is being hit right now for the solar industry.  Earlier this year, Gordon Johnson, solar industry analyst from Axiom Capital Management, reversed his 14-month bearish position on the industry.  However, as of this writing, SUNIDX is still trending downwards — though the decline is shallowing.

For those in the solar sector, the road is bumpy and will be for at least awhile.  Seat belts fastened, please.

Pike’s Peek at CleanTech

At the foot of the Flatirons along the Front Range of the Colorado Rockies, Boulder is one beautiful town.  With the University of Colorado and the region’s unparalleled outdoor activities, Boulder attracts many intellectual environmentalists.  Of course, like everyone else, this set of people needs to make a buck to pay the bills – there are probably more Ph.D.-holding waiters and waitresses in Boulder than anywhere else on the planet – so over the years Boulder has become a center of energy market and technology analysis.

The list of energy consulting and research firms in Boulder active during the past three decades is too long to include here, and most of them are now defunct and have slipped my memory anyway.  Recently, I came across the newest kid from Boulder-town, Pike Research.

Analyzing the clean technology markets, Pike has organized itself into five segments:  “Smart Energy”, “Smart Grid”, “Smart Transportation”, “Smart Industry”, and “Smart Buildings”.  I guess this terminology is to draw a contrast to all the things potentially considered “dumb” that have been and continue to be pursued to power our economy – including the entire realm of fossil fuels, which is not a topic that Pike covers. 

In each of these segments, Pike’s team either has compiled or is compiling information and perspectives on a number of subsegments, ranging from renewable energy to microgrids to electric vehicles to green buildings.  Individual reports can be purchased, or clients can purchase an advisory service that provides access to all of Pike’s research.

Of course, this research isn’t cheap for Pike to develop, and consequently isn’t cheap to acquire from Pike either.  But, if you’re looking to make a big strategic or investment decision in one of these technology fields, it’s good to have some set of data on which to make judgments.  Pike appears to have one of the more extensive catalogues of research, and so is well-positioned to be one of the first one-stop shops you should visit if you have this kind of need.

Great Day

One upside to the economic downturn is the influx of finance and technology professional entering the sustainability sector. They are ubiquitous. (“And they are everywhere, too,” as an old friend used to say.) These professionals bring to programmatic endeavors around slow food, climate change, recycling and the myriad elements of sustainability not only valuable expertise, but alacrity, defined purpose and accountability. It’s refreshing.
Energize New York – a government-funded program that markets residential energy efficiency improvements — is overseen by a local development corporation, Energy Improvement Corporation (EIC). The founder of EIC is Mark Thielking; Mark came out of the finance world (UBS, specifically). He has a focused, data-driven mission to transform the residential and commercial energy improvement market through financing loans to building owners. He draws from a pool of talented corporate, legal, finance and grassroots folk, including the non-profit Bedford2020 which helped write the grant that established Energize for the Town of Bedford in New York’s Westchester County.
EnergizeNY is under the reporting gun to deliver results (as measured in the number of homes that make energy improvements). The program is dependent on infrastructures that have less va-va-voom than corporate finance. There is, for example, the issue of extracting data from government bureaucracies … data that is pivotal to effecting market transformation … data that resides within the orbit of a government contractor.
When things that may take mere weeks to effect in the corporate world, take months to bring about (like data access), it can feel a bit like Andy Samberg’s SNL skit, ‘Great Day’ (drugs aside):
“Any problem is solvable, we can feed the hungry and cure disease
But all of that would be a huge waste of time because we live in the
Matrix.”
You may remember … a business-suited Samberg dances and sings on a cocaine-induced high, and then backbends into a slow-mo Matrix move.
Energize has made, and continues to make, great strides in modernizing the IT systems needed for targeted marketing, with the essential support of a handful of forward-thinking contract managers at the New York State Energy Research and Development Authority (NYSERDA), as we aim to get at the data that resides within the Authority’s orbit. NYSERDA is currently reviewing bids for an RFP to implement its home performance program, including the technology piece.
In effecting market transformation around energy improvements, it can feel like our hearts race along barupa papapam pam! And then we go into the Matrix. And then we’re off to the races again.

When the Sun Goes Bad

In late January, a significant solar storm unleashed enormous amounts of energy into space.  Here on Earth, warnings were issued that the bursts of solar radiation could significantly affect a lot of the things that we 21st Century humans take for granted, such as telecommunications, air travel, and power grid stability.  Alas, in the event, it was mainly a false alarm:  aside from increased aurora borealis displays, there were minimal disruptions to life as we now know it.  And, the world’s attention – diverted for a couple of moments – reverted to more mundane or trivial dramas.

That solar storm turned out to be a non-event, but that doesn’t mean that solar storms are nothing to worry about.  In 1989, a solar flare event plunged most of Quebec into a blackout

For quite awhile, the Earth has been very lucky:  the truly huge solar storms of recent decades flung their energy in a different direction across the universe, missing us.  We haven’t experienced a direct hit by a major solar storm since 1921, which in turn was smaller than the prior big event in 1859.  Of course, in those days, civilization wasn’t very dependent on electricity, telecommunications, and all the things enabled by electronics – so those storms didn’t cause widespread cataclysms.

In the February 2012 issue of IEEE Spectrum, John Kappenman’s article “A Perfect Storm of Planetary Proportions” provides a harrowing description of the probable impact of an epic solar storm, 10 times as powerful as the 1989 storm, but of a magnitude that the Earth has experienced many times over the eons.  As Kappenman says, “the bad news is that it’s likely – certain, even – that such a storm will happen again.  And when it does, it will be one of the worst disasters in recorded history.”

The biggest challenge facing us is that the electromagnetic pulses of a major solar storm will induce enormous electromagnetic fields that will fry high-voltage transformers in utility substations over continental-sized areas.  When these transformers explode, few people will actually be injured much less killed, but the grid will go down – and stay down.  Spare transformers of this size aren’t just sitting on the shelf in inventory.  Replacing one or two wouldn’t be a big deal, but replacing hundreds or perhaps thousands of them?  It could take years to get the grid back to its prior condition, and could take months to restore power in some pretty large areas. 

Consider the social chaos caused about an entire state, or a multi-state region, caused by 10 weeks without power.

Kappenman notes that there are technologies that can mitigate if not entirely eliminate this risk by damping or filtering the effects of electromagnetic pulses on transformers.  Yes, this would be another one of those “smart grid” technologies.  But, deployment requires mass-retrofitting of equipment throughout the utility grid, which in turn would be a public infrastructure project of the highest-degree – and there is substantial public apathy towards any additional expenditure on just about anything worthwhile in energy, much less anything that might not be needed for a few years or decades. 

No:  as with so many other challenges, we prefer to just muddle along, keep our fingers crossed, and hope that we can come up with a good response when confronted with a crisis.  Alas, there are very few human-induced crises comparable to that day when the star in the sky that we utterly rely upon for everything decides to give the Earth a big slap upside the head.

 

Ford to Sell Multiple EV and Hybrids in 2012

excerpt from original post at Clean Fleet Report

With gasoline prices over $4 per gallon in many states, Ford is rolling out a variety of exciting hybrid cars and electric cars.

In April, consumers will start buying the new Ford Focus Electric. Yesterday, I rode in this beautiful compact hatchback. I silently cruised down the streets unless you cranked on the impressive sound system. Ford is pricing the Focus Electric at $39,200, about $4,000 more than the Nissan Leaf. The 23kW Ford battery pack, with LG Chem lithium-ion cells, charges at twice the speed of the LEAF and has about 10 percent more range. By the end of the year however, the 2013 LEAF will charge at the same rate. Ford increasingly believes in customer choice. The gasoline sipping Ford Focus SE gets 40 mpg highway and is not even a hybrid.

Ford C-MAX Energi and Hybrids = Crossover SUVs with Great Mileage

Ford C-MaxIn the fall of 2012, Ford brings unparalleled fuel economy to the 5-seat crossover SUV segment. The C-MAX plug-in hybrid will allow you to drive the first 20 to 30 miles on a garage electric charge before engaging a fuel-efficient engine. It may rate over 100 mpg. The C-MAX lives up to its name. It maximizes the cargo and passenger space that can be fit on the popular “C” sized vehicle platform. For customers that want to pay less up-front, Ford will also offer the C-MAX as a hybrid. It will be as roomy as the C-MAX Energi, but never get plugged-in. With a lithium-battery pack it will have excellent fuel-economy. The C-MAX Hybrid will compete head-on with the new Toyota Prius V, which gets 42 mpg combined and has 40 percent more cargo than the best selling Prius Liftback.

Ford Intends to Take Midsized Market Share from Toyota

When the 2013 Ford Fusion Hybrid goes on sale at the end of this year, it will offer the best fuel economy of any midsized sedan. It is targeted to deliver 46 mpg highway, 44 city, and 46 combined, beating the Toyota Camry Hybrid with its famous Synergy Hybrid Drive System. I have been very impressed with test drives of both hybrids, which are roomy, quiet, and smooth as silk to drive. The Camry uses NiMH batteries; the Fusion Hybrid uses lithium-ion.Outdoing Toyota, Ford will also offer the Fusion Energi, a plug-in version that will deliver the first 20 to 25 miles of driving on a garage charge before engaging the gasoline engine. Pricing has not been announced. Ford will also emphasize customer choice with the Fusion available with a variety of non-hybrid configurations.

Ford’s Strategy to Lower the Cost of Hybrid and electric cars

Ford built 2.5 million “C” platform vehicles last year with many common components. The Focus Electric and C-MAX offerings will be built with over a dozen other vehicles on the same assembly line in Wayne, Michigan. Ford controls cost with flexible manufacturing, where it can quickly adjust to market demand. Over 80 percent of the Fusion Hybrid and Energi components will be the same, allowing Ford to achieve more cost efficiencies.

Ford’s team of more than 1,000 engineers working on hybrid and electrification programs – including Fusion Hybrid and Fusion Energi plug-in hybrid – has grown so fast that the company today is announcing the conversion of its 285,000-square-foot Advanced Engineering Center in Dearborn, Mich., to electrified vehicle development. The new jobs are part of Ford’s plans to add more than 12,000 hourly and salaried jobs by 2015 in the United States. The company also has announced it is tripling production capacity of its hybrid, plug-in hybrid and electric vehicles in the U.S. next year compared with 2011.

Three years ago, lithium battery packs cost about $1,000 per kilowatt. Now the cost is closer to $500. By the end of the decade, costs may only be $250 per kilowatt. Ford makes all of its lithium-packs and works with several lithium cell manufacturers to get the best price and battery chemistries separately optimized for battery-electric, plug-in hybrid and hybrid. Ford’s pack and volume strategy will lower costs of hybrid and electric cars.

 

Ford will only use lithium batteries in all Ford hybrids starting in calendar year 2012 when it announces the new Focus using the Ford global C platform. FWhen I lasted interviewed Nancy Gioia, Director Ford Global Electrification, she said that Ford has a 2020 goal of 10 to 25 percent of its vehicle sales including lithium batteries. Her best guess is that 70% would be hybrids, 20 to 25% plug-in hybrids, and 5 to 10% battery-electric. Everything from technology innovation to oil prices will affect the future mix.

GE Whiz: Vic Abate

On March 1, the Clean Energy Trust of Chicago convened the Clean Energy Challenge, a business plan competition for clean energy ventures from the Midwest.  The lunch speaker was Vic Abate, Vice President of Renewables from General Electric (NYSE:  GE), who provided his perspectives on the growth of the wind energy business at GE.

Abate noted that everyone knew that GE bought the wind business from the detritus of Enron in 2002, 10 years ago, for a little over $250 million.  What most people didn’t know, Abate asserted, was that “GE bought the business again in 2003, and bought the business again in 2004, and bought the business again in 2005.” 

In other words, after actually buying the assets of Enron, GE found itself needing to invest a lot of money in technology development and manufacturing quality for their wind products in order to transform what they acquired into something profitable.  What were machines that experienced significant downtime became wind turbines with availability levels exceeding 98%, on par with conventional powerplant technologies.

Abate was appointed leader of the wind business in 2005 – and was the third leader that GE installed after purchasing Enron Wind.  In other words, it was a challenging turnaround situation.

Now, GE is pretty bullish about the wind business – although it appears that their optimism is more focused on Europe and China than on the U.S.  Last year, GE booked more orders from wind turbines outside the U.S. than domestically, with $2 billion of sales in Brazil alone.  These countries, unlike the U.S., decide on energy policies that support a sustained commitment to wind energy, and allow the private sector to correspondingly commit to making wind energy succeed in those countries.

In contrast, Abate was cautious in his views about the U.S. wind sector.  As the recent past Chair of the American Wind Energy Association (AWEA), he ought to have a pretty informed idea of what’s going on.  He expressed concern about the upcoming lapse (again) of the production tax credit (PTC), which if allowed by Federal inaction before the end of 2012, will turn the $10 billion U.S. wind market into something approaching zero for 2013.  Already, some of the major companies in the supply chain are beginning to throttle down in anticipation of this event.

Since I have long been associated with the efforts in Northeast Ohio to explore offshore wind deployment in Lake Erie – efforts now led by the Lake Erie Energy Development Corporation (LEEDCo) – I asked Abate what his/GE’s perspectives on offshore wind.  He was not especially encouraging. 

Abate admitted that Europe is still pursuing offshore wind with some robustness, probably growing to a market of a gigawatt or two annually by mid-decade.  However, when Abate reviewed the historical data from the past 10 years, onshore wind consistently beat expectations in volumes and economics (which are, of course, related) whereas offshore wind consistently lagged expectations.  According to Abate, this illustrates the significant technical challenges associated with offshore wind.  In his view, driving offshore wind economics to competitive levels is not going to happen by incremental improvement, but will require radical breakthroughs, such as new materials technologies to enable upscaling to 15 megawatt turbines.  

All this tells Abate that offshore wind will be really hard to financially justify in the near-term, and thus will not be a significant focus for GE – especially in the U.S., given the lack of any forces of urgency to drive the emergence of the sector.   This appears to put GE at odds with other multinational conglomerates — such as Siemens (NYSE: SIE), Alstom (Euronext: ALO), Areva (Euronext: CEI), Mitsubishi, Toshiba (LSE: TOS), and Samsung (LSE: SMSN) — who continue to make sizable bets in offshore wind advancement.  (Of note, none of these companies are based in the U.S., and their corporate worldview may not be as heavily shaped by U.S. inaction on offshore wind.)

In contrast, Abate was more confident that onshore wind economics would continue to improve, and remain competitive in the U.S. market even with relatively cheap natural gas, attaining 4 cent/kwh economics in some cases even without the PTC extended.  With this view, and given GE’s aggressively short-term share performance mindset, it’s easy to see why GE might focus exclusively on onshore wind and come up short in offshore wind relative to its global peers.

Returning to the PTC, and the associated business uncertainties, Abate has promoted the view within GE that “you’re either in or out in wind – buy or sell, but don’t hold”, and that GE has committed to ante up further because the electricity future in the U.S. for the next 10 years at least is “natural gas and wind”.  40% of new U.S. generation installations last year were wind, as was the majority of global additions of capacity.  This global market is so sizable – despite U.S. waffling – that GE tells itself it has no choice but to be a major player in it. 

And, Abate makes it clear that only a very few companies like GE – with technological expertise, manufacturing excellence, financial wherewithal, and global reach – can be a long-term winner in wind.

Whether the U.S. itself can be a long-term winner in wind remains to be seen.

Pressure Drop

In residential building science, the standard (accepted) method for determining air leakage is to depressurize the house, and use an infrared, or thermographic, camera to identify temperature differences of surfaces.  The infrared image — you’ve seen it, all yellow and red and green — makes a dramatic, colorful impression, and is a great tool to engage homeowners.  They get a visual impression of all the energy the house wastes which — we in the home performance community — believe can motivate homeowners into taking action to reduce that waste.

Lately, there have been some Twittered articles about companies that claim to be able to gauge that energy waste by taking infared images, and (the secret sauce) running algorithms to estimate potential energy savings. But skepticism can be born out of knowledge, and sometimes we humans get stuck in old world thinking, too much to see the the dawning of a brand new tomorrow, and that knowledge is an impediment to progress.  And sometimes, skepticism is a useful barometer for BS. Infrared imaging is a great marketing tool, but it is only one component of the diagnostics needed to ensure that homes are tightened up properly and safely.  Tom Boothby, a home performance professional, called the house-as-a-system approach, “house ecology.” In a house, there’s the interaction among the people living there (their pets and aquariums and cooking habits), the mechanicals for heating and cooling, and the shell of the structure.    Change one and you impact all the others.

The pressure diagnostics create negative pressure within the house (which in layman’s terms is to “suck the air out of a house”) and it provides lots of data on potential energy savings, but also, and this is really important, determines how tight a house can be and remain healthy … and possibly, how much makeup air may need to be brought into the house after a tightness limit has been reached and surpassed.  This is a critical aspect of home energy upgrades. Best practices are that the pressure diagnostics, as well as the infrared, are used during energy upgrades, as a gauge of tightness and to locate specific spots in need of air sealant and/or insulation.

If the infrared and some algorithms can estimate energy savings, that’s a clever thing.  But it’s only a part of a complex endeavor called residential energy effiiciency.

I say a pressure drop, oh pressure
Oh yeah, pressure drop a drop on you
I say when it drops, oh you gonna feel it
Know that you were doing wrong.

California Gains 10,000 EV Charge Points in NRG Agreement

from original post at Clean Fleet Report

California already has over 10,000 of the new electric vehicles on the road and 2,000 public charge points. Over 10,000 new electric charge points will be added to give EV drivers added range. The charge stations will be built by NRG with private money, not public funds.

This will be the world’s largest electric car charging network and include smart grid technological advancements to level grid load, and energy storage and vehicle-to-grid (V2G).

California needs electric cars. Compared to nations, only two countries use more petroleum than California – the United States and China. The Los Angeles Basin and Central Valley historically had such severe health problems that Governor Ronald Reagan established the California Air Resources Board, which continues to encourage cleaner cars and fuel-efficiency.

California Public Utilities Commission and NRG Energy

The California Public Utilities Commission and NRG Energy (NYSE: NRG) have entered into an agreement where NRG will build a comprehensive electric vehicle (EV) charging network in California, investing approximately $100 million over the next four years.

This fee-based charging network will consist of at least 200 publicly available fast –charging stations—installed in the San Francisco Bay area, the San Joaquin Valley, the Los Angeles Basin and San Diego County—which can add 50 miles of range in less than 15 minutes of charging.

The DC-Fast Charging will especially be helpful for drivers of pure battery-electric cars like the Nissan Leaf and Mitsubishi i, many which were purchased with DC-Fast Charge Ports. Currently many of these electric car drivers are limited to ranges of 60 to 120 miles without access to fast charging.

Additionally, NRG’s EV infrastructure commitment will include the wiring for at least 10,000 individual charging stations located at homes, offices, multifamily communities, schools and hospitals located across the State. The charging locations will be easy for drivers to find with Google Maps, smartphone apps, and electric car navigation systems.

NRG California EV Charging includes Smart Grid and V2G

  • A minimum of 200 direct current (DC) fast chargers to the state.
  • A minimum of 10,000 parking spaces retrofitted with wiring necessary to charge EVs at multifamily buildings, large worksites and civic sites such as universities and hospitals.
  • Training and jobs for the installation and maintenance of these charging stations in
  • California.
  • Smart grid and grid storage services that increase the speed and power of DC fast charging, store electricity to minimize peak-period demand, and enable EV drivers to support electrical grid reliability with needed energy services through vehicle to grid (V2G).
  • Significant additional investment in California’s clean technology economy and hundreds of jobs in construction and EV infrastructure manufacturing, maintenance and management.
  • Approximately $100 million in infrastructure investment over four years, and $20 million in cash to go to the California Public Utility Commission.

Dynegy and Enron were famously accused of manipulating California’s energy markets leading to a crisis 12 years ago. The agreement, pending approvals and finalization, resolves outstanding litigation arising out of a long-term electricity contract entered into over a decade ago by a subsidiary of Dynegy, then a co-owner with NRG of the portfolio of power generating plants currently owned by NRG in California. NRG assumed full responsibility for resolving this matter in 2006 when NRG acquired Dynegy’s 50% interest in the assets.

“California already leads the way in the development of an alternative energy transportation sector and, with the price of gasoline above $4 per gallon and rising, all Americans need to be giving serious consideration to the increasingly attractive electric vehicle alternative to what former President Bush called ‘our national addiction to foreign oil’,” stated NRG CEO Crane. “This network will be built with private funds on a sustainable business model that will allow NRG to maintain and grow the network as EV adoption grows.”

NRG has been making major investments in utility-scale solar and wind. AeroVironment has been one of its charge station suppliers in Texas.

Over 7 Million Charge Points by 2017

California is often the first point of sale for new electric cars, which are then offered in other states, then all 50 states. Other states gaining momentum in electric car sales and public charge points include Oregon, Washington, Florida, Michigan, and Texas where NRG is also developing a charge point network for subscribers.

Clean Fleet Report forecasts 60,000 to 100,000 electric car sales and leases in the United States in 2012 and 200,000 in 2013. Pike Research forecasts 7.7 million charge points installed globally by 2017.