Posts

Will Crystalline Solar Kill Thin Film? A Conversation with Applied Material’s Solar Head Charlie Gay

By Neal Dikeman

I had a chance to chat today with Dr. Charlie Gay, the President of Applied Material’s solar division.  You may recall, we broke the story in the blogosphere 5 years ago about Applied’s entry into solar, which was anchored with a highly touted and very aggressive strategy for turnkey large format amorphous silicon and tandem cell plants called SunFab.

Charlie reminded me that when they began 5 years ago, they did so along two major thrusts:  The acquisition of Applied Films in June 2006 getting an inline coating system for deposition of silicon nitride passivation layers on crystalline and in parallel an internal project to adapt their large flat panel display manufacturing technology for photovoltaics.

They still like the large module format, for a simple reason, cost in the field for large scale solar farms is heavily about getting area costs down relative to power output.  I was excited for another simple reason, when major capital equipment developers get involved, manufacturing maturity is not far behind, it forces everyone to rethink scale in different ways.

After a huge initial splash outselling everyone’s expectations in that SunFab concept, many industry analysts later kind of wrote them off as flash in the pan when they were reported having problems as implementations came in slower and smaller and harder than expected on their SunFab lines a couple of years ago, and a saw a major restructuring in 2009. But they’ve had success with that product anyways, EVERYONE saw a major restructuring in 2009, and more importantly the original vision of leading solar into mass manufacturing is still going strong, now across a range of products and technologies in thin film and crystalline manufacturing equipment.  Let’s put it this way, in their annual report they call themselves the largest equipment manufacturer to the solar sector, they have $1.5 Billion in annual revenues in the Energy & Environmental division, which is heavily PV, and there are like 120 mentions of the word solar in their annual report, almost once per page.

So what I really wanted to talk to Charlie about was the future of PV manufacturing. He frames the future by drawing a mirrored parallel between photovoltaics and integrated circuit manufacturing, beyond just semiconductors:

  • In IC, dozens to hundreds of device architectures exist, but basically one material, silicon.
  • In PV, there is essentially one architecture: the diode, but dozens to hundreds of material choices.

But silicon has been the mainstay material of PV for a number of reasons.  So we got into one of my favorite topics, the manufacturing improvement potential in crystalline silicon.

His version of Moore’s law for solar runs like this:  the thickness of the solar cell decreases by half every 10 years.  Today it’s 180 microns thick.  The practical possibility exists to get down to about 40 microns, with some performance improvement by making it thinner, but we can’t go much below 40 without being too thin to absorb enough light.  This fits with other conversations I’ve had suggesting that over the past couple of years most of the major crystalline solar manufacturers were working on paths to take an order of magnitude out of cell thickness.

If this comes to fruition, crystalline can literally wipe the floor with the existing thin film technologies.  Basically think sub $1 per watt modules with the performance of high grade crystalline modules today.  And as cost per watt equalizes, that higher efficiency starts to really tell, as since Balance of Systems costs have fallen at 10-12% per doubling of installed fleet, compared to module costs falling at 18-20%, in a world where BOS increasingly matters, the old saw about lower area cost per unit of power installed starts to actually bite for once.  Think ultra thin high performance low cost large format x-Si modules with fancy anti reflective coatings and snazzy high grade modules with on module inverters or DC optimizers mounted on highly automated, low cost durable trackers.  Think solar farms approaching effective relative capacity factors of 2.5-3 mm kW Hours per year per MW on 25 year systems at $2-3 per Watt installed.  Possibly the only thing on the planet that could match shale gas.

In fact, the entire thesis of thin film as a business and venture capital prospect has been built on the premise that crystalline material costs were just too high to get to grid parity. I’ve got scads of early thin film business plans touting that.  That thesis is under extreme pressure these days. I’d submit that if the industry 7 years ago had really understood how much improvement could be had, we’d have saved billions in potentially stranded thin film development.

Charlie says there are about a dozen different paths for enabling 40 micron cells.  The most interesting approach to him is an epitaxial growth process on reusable silicon templates.  A process which grows a thin layer of silicon on top of a reusable layer of silicon, using perhaps one mm thick silicon templates, etching the surface, and directly depositing silicon from trichlorosilane gas.  The idea would be to rack templates into a module array, grow the cells in an oven to your 40 micron level, then glue the glass module to the back side, and then separate it off to form a “ready to go assemble” module.  The challenge is basically oven and materials handling designs that get it cost efficient in high volume.

In essence, all you’d be doing is integrating a silicon ingot growth process directly into a module. Instead of growing ingots, cutting thick wafers, forming cells, then building modules from them, you grow cells racked into their own module personally instead of growing ingots first.

Hella cool.  A process like that means using fairly manageable capital equipment and materials handling technology development in known device and module technologies we could literally rip the ever living guts out of crystalline manufacturing costs.  And there are 11 more paths to play with???

The way he thinks about it, on a broader perspective more people are working in photovoltaic solar R&D today, by his estimate some 70,000 researchers and $3 billion per year, than in all of the prior PV history.   And that means whereas perhaps five main innovations over 35 years drove almost all of crystalline PV manufacturing costs (screen printing, glass tedlar modules, adapting steel from tires for cutting wafers, silicon nitride processes, and fast metrology tools), in today’s world, Charlie thinks we see 5 equivalent innovations in PV manufacturing technology every 2 years.

So I asked him to comment on whether there were parallel cost-down opportunities for thin films or whether it is an also ran waiting to happen.  He thinks there are.  He mentioned organics.  I pushed back hard, as organics have been written off by almost everyone for never seeing yield or performance, so where does he see the opportunity?  He responded that he picked organics to keep me from narrowing the materials field prematurely to just A-Si, CdTe, CIGS, and GaAS.  Silicon just like carbon can surprise us, e.g. bucky balls, carbon nanotubes, and just because early materials had stability and process issues, doesn’t mean we’ve exhausted the opportunities.

He says what he wants us to recall is that we are currently operating in PV manufacturing today with the materials that were on the radar in the energy crisis from 1974-1980.  That is changing in the lab and universities these days.  And given time the results will surprise us.

He draws a parallel between photography and photovoltaics, both invented in 1839, both rely on sunlight acting on materials. In photography, people started off putting films on glass, then putting films on mylar, and running things continuously.  Implying that in solar, we’re still on glass c. 1890.

He said to think about the original Ovonics/Unisolar vision in thinking about how you get to high speed continuous processing with thin film (think paper manufacturing, where done roll to roll it’s far more consistent than one-offs can be done).  If that is still our ultimate thin film paradigm (got to love the chance to use the word “paradigm”), the stars are still in front of us with what thin film COULD do.  And while roll to roll has had significant materials technology and process control challenges for the current class of materials, let’s go back to the mirror parallel to integrated circuits, in photovoltaics, one main device, scads of material options.  Just a matter of R&D hours and time.

He markedly did NOT suppose that the current state of thin film devices could beat 40 micron crystalline silicon by themselves.  It’s worth considering that we may look back and find that thin film, CdTe and First Solar were the stepping stones to 40 micron crystalline, not the other way around.  Maybe my next question to Charlie is whether he and I should set up Neal and Charlie’s 40 Micron Solar Company of America yet. 😉

 

Cleantech Blog’s Parameters for a Workable Energy Policy

Energy is life, the rest runs on it.

Since the 70s through every presidential administration and every Congress, we have had an energy policy that boiled down to fighting the cold war through oil and getting lucky on locally sourced coal and gas.  It’s not a zero planning energy policy, we’ve spent money, defined policies, written rules, set goals, etc.  We’ve just done our planning with 50 year old assumptions and zig zagged our way to idiocy.

One of my first ever blogs over five years ago touched on this topic:

My comments at the time after the 2005 energy bill:

We need to achieve low oil prices, and ensure that no one country is able to control our fuel supply. We have just passed a new Energy Bill. It does not do so. What we do need to do: Drop the ANWR fight and instead break the back of OPEC, slash consumption, and work closely with China.

But first things first.  This time I’d like to simply lay out the parameters of what ought to be in a workable, comprehensive, energy policy for the US in a post cold war era, where economic powers are shifting, where the war on terror is real, where environment matters, and where energy supply sources are changing and maybe getting more expensive.

Cleantech Blog has defined 20 parameters needed in a good energy plan.

  1. Has a clear cut and articulated vision – including acknowledging that energy security is not just  “energy independence”
  2. Deals with both demand and supply issues holistically
  3. Considers least cost path in any change
  4. Is phased in manageable ways
  5. Takes into account our current supply mix, load growth forecasts, and geographic considerations
  6. Includes both transport fuels and electric power
  7. Provides us with least cost or comparative advantage in energy both today and in the future vis a vis our core economic competitors
  8. Provides secure and interchangeable supply of energy resources and flows both domestic and cross-border
  9. Doesn’t destroy our current energy industry
  10. Allows time for energy and industry change
  11. Does the least environmental damage possible, and includes ongoing improvement in environmental impact
  12. Survivable under multiple energy demand growth scenarios and resource supply shocks in a global world
  13. Provides reliable energy to our industry and population
  14. Deals with or changes the current state and federal regulatory and permitting structures
  15. Considers the practicalities of infrastructure change, both lead time, economics, financing, technology, and regulatory
  16. Deals with the political considerations of OPEC and the Middle East
  17. Takes into account supply resources where we do have a comparative advantage
  18. Is fair and equitable during any shift in costs for one region or group
  19. Addresses and capitalizes on technology improvement in the US and globally
  20. Deals with China and India and Brazil as rising consumers and producers of energy resources

The energy policy itself should be simple in concept, and the energy plan hellishly detailed and complex in implementation.  But we desperately need this energy plan.

Energy is life, the rest runs on it.

The Elusive Energy Storage Yeti

Large scale energy has proven almost as elusive a Yeti, and perhaps almost as all world saving juicy as the silver bullet for the werewolf or the Holy Grail itself (and not the Monty Python kind).

Energy storage for nearly 15 years has been the energy tech and cleantech version of the ultimate “but-if”.  I.E., but if we had that, life would be grand.  And untold billions have been expended globally on searching for it, here in the US in the distributed generation and fuel cell boom created in large part by Enron and , and through today’s ARPA-E.  Let alone in corporate and national research centers and universities around the globe, and venture capital backed startups galore.  Flywheels, superconducting energy storage, solid oxide fuel cells with internal batteries, hydrogen in metal hydrides, high pressure tanks, and activated carbon, super capacitors, regenerative PEM fuel cells, and those running on methanol and ethanol, new battery chemistries with lithium, zinc, sodium, etc, new battery topologies – bipolar this and left twisted plate that, varying chemistries and systems for flow batteries which look like fuel cells and act like batteries, new materials for old electrodes with nanomaterials, graphite, silicon, carbon nanotubes, and let’s not forget better power electronics to mimic the results, as well as compressed air, plain old ice and massive thermal sinks.   New and reworked energy storage ideas have proved a dime a dozen. Making them work, let alone scaling them up, costing them down and changing the world?  Well, that’s still Yeti-land.

So far we can’t beat the simple cost and expediency of building more power plants, more lines, and burning more natural gas. Let alone beat simply dialing back the usage.  Gravity and liquids and energy efficiency are still the ultimate crown jewel of energy storage.

The Problem basically boils down to this.  Yes, a myriad of technologies work.  Some work well.  Some look cheap on the surface.  Some even scale up. BUT they don’t get widely deployed.  Why?

Probably because at the spear point – at the application that each is best suited for, the costs are higher, the scale up is trickier, the directly applicable market is smaller, and the substitutes relatively better or cheaper or easier than we thought they were.

I’ve taken an only partially tongue in cheek attempt to describe the problem here, in the hope that a firm description of the problem will find us NOT waxing eloquent about the issue 15 years hence,  but find it solved by sharp minds.  Assuming of course that this is a problem that a better mousetrap can solve.  Better mousetrap of course, defined as better and cheaper than the alternatives, and better and cheaper than the value provided, by enough margin to make us get off the dime.

Energy Storage Adoption Problem

Direct Technology Cost x (1.5 to 2 yielding acceptable manufacturing and distribution margins)

+

Installed Cost x (1 + Service Margin)

= Total Installed Cost

Then where Cost is F(Depr of TIC, O&M Cost, Fuel Cost)

Then TIC / Number of Hours Used Per Unit of Time (Max of Rated Life (Max of Rate Life per Unit of Time)

+ (O&M Cost / Unit of Time) / Number of Hours Used Per Unit of Time

= O&M Cost Per Hour Used

+ Fuel Cost Where Applicable (F of cost of “storing the energy”, e.g. the device literally needs to “buy” and “sell” its energy stored for the time used.

And where Cost /Per Energy Hour Must Be:

Greater than Value of an Energy Hour Used in that Application

AND

Less than the Cost /Per Energy Hour of the Substitutes

On both an LCOE and NPV basis, with adequately large differentials to justify the switching costs

Provided that:

Where DTC is a F(Technology type, Scale of systems, Unit Vol Sold/Unit Time)

Where UVS/Unit Time if F(time and construction and regulatory annoyance for Installed Cost, TC, Rated Life, Actual Field Performance, Availability/performance/cost of substitutes)

And where IC is a F(Scale of systems, Unit Vol Sold/Unit Time) – but a viciously different F than DTC

And where Substitutes can Comprise (Direct energy storage alternatives for that application, Indirect energy storage alternatives at system level that alter the need at that application, downstream energy efficiency projects, downstream demand response projects, downstream production alternatives, infrastructure or capacity expansion and adjustment both at that application and system wide that alters the need at that application, expenditure delays or adjustments in acceptable reliability or reserve margin requirements, and additional energy production both marginal in short term and base load in long term).

And that no subsidies or quotas are factored in.

And if we’ve provided got an articulation and a theoretical formula describing the problem – then it’s time for some to crack it. Peer review requested, fire away.  Provided that, no commentary will be read by the author if it does not either contain reference to one of my acronyms, or introduce a new one.

Geoengineering our Future

The Economist had an article in a recent issue about the “anthropocene” period, our new geologic era, where mankind is the dominant force in the geology of the planet.  A period where our agriculture, cities, dams, etc literally have and will permanently change the face of the earth itself, forever.

The article suggests that we are the driving force on a GEOLOGIC scale, and will never and can never go back to Walden Pond, and that a planet that supports 10 billion of us WILL look vastly different than it used to.  And that it has too.  Or it can’t support 10 billion of us.  And that that may be OK, as long as we worry about how a DIFFERENT look for Earth can be sustainable, even though it is not “pristine” and “natural”.

It got me thinking.

Not too long ago I wrote about some comments by renowned Lawrence Berkeley energy scientist Art Rosenfeld, describing the potential and low cost of white, “cool roofs” both to combat the heat island effect in cities, and to massively and cheaply manage energy use and carbon footprint.  He even commented how coupled with literally changing pavement color could make a massive difference, and called for policies and products to change the game.  Is this not just geoengineering for low impact?

REDD and forestation carbon credits and programs, just coming into their own in a big way, boil down to geoengineering by tree planting – not much different in principle than the geoengineering we’ve done by reworking forests into crop fields and native grasslands into modern hybrids, just optimized for different outcomes.  Is this just sustainable geoengineering optimization?

The Athabasca tar sands from space apparently look like a massive scar on the Earth.  An unmitigated environmental disaster, right? But consider, a few years ago I went back as an adult to the Boy Scout High Adventure camp at Philmont. I’d been there as a boy 15 years before.  When I was first there, the practices were all about low and zero impact backpacking.  Leave no trace was the mantra.  When I went back to a camp handling massively larger volumes of Scouts, that had changed.  You were literally forbidden from leaving the beaten path.  Built in permanent “sumps” for food disposal were in almost EVERY camp site.  Low impact does not mean no impact, and the volumes of people they were handling were much too high, and low impact was becoming high impact, so they’d changed to “concentrated impact” where necessary.  Is Athabasca just another permanent sump?

Are we at the same point as a globe?  Does sustainability need to recognize this?  What if geoengineering for sustainability means low impact needs to also mean concentrated, controllable impact on a global scale?  Does that make the tar sands maybe not quite as bad an environmental disaster as thought?  Because, to paraphrase a statement made to me in one recent conversation, nobody would go there otherwise, so what better place to do it if we have to?

So I ask, what if geoengineering IS our de facto future?  Because we’re just too large a population for anything else.  What if the Economist article is right, and we’re already there and have NO choice?  Does that change our perspective on cleantech, sustainability, and policy?  I think it may.

Cleantech Investing: A View From 21

Ordinarily, I let my fellow blogging colleague Neal Dikeman of Jane Capital take the lead in covering cleantech IPOs and publicly-traded stocks. 

However, I recently received the May 2011 newsletter from 21Ventures, and found the commentary by David Anthony on cleantech public equities an interesting complement to Neal’s most current take — sufficiently so to expound upon it herein.

According to David, “by the end of Q1 2011, we will have seen the bottom of cleantech investing and valuations”, with three key subpoints:

1.  “Oil seems stuck above $100/barrel.”

2.  “Nuclear energy may be too ‘radioactive’ as a source for baseload grid power.”

3.  “Renewables will fill the void left by dwindling nuclear capacity.”

It’s a nice newsletter, well worth reading, though I think David’s analysis is a bit too sanguine.  Oil prices will remain volatile, and each time they go down somewhat, the rank-and-file will think (again) that our energy crisis has passed, thus reducing the pressure for change or action in moving towards cleantech.  David overlooks the growing sense of many that natural gas from shale will represent the answer to most if not all of our future energy supply challenges for years to come, thereby mitigating the need for renewables and/or energy efficiency.  And, David neglects to discuss the future role of coal, which I believe will hang on for a long time to come, and whose benefactors will rain on the parade of cleantech as much as possible whenever possible to elevate coal’s relative position in the energy scene. 

All of these factors will mean that cleantech investing will still experience more than its fair share of bumps along the road.  It will be a tough and choppy market to navigate, and I don’t think the public markets lend themselves well to companies unless and until they have very sizable and stable earnings — which most purely cleantech firms (including publicly-traded ones) do NOT have.  Thus, cleantech is an industry that, for awhile, will mainly be capitalized through private equity and venture capital markets, with liquidity events through sales to major corporate acquirers that have sufficient scale to float well on public markets, rather than IPOs for the most part.

But, I do share David’s closing summation:  “We have always believed that dwindling low-cost fossil fuel reserves, climate change, growing middle classes in emerging markets, and urbanization will converge to create some of the best investment opportunities in our lifetime.”  I think Neal would share this conclusion too.

Ag-gag?

Food, food wars, and ag-tech are a growing area of interest in cleantech.  So I’m on a bunch of ag and food related mailing lists. But when I first read the one email I got yesterday – texted post below – I thought I was reading a really bad version of The Onion.

Ag-gag?

Farmarazzi?

What the hell are people doing on someone’s farm with their cameras that convinces an ag company to spend lobbying dollars getting an ag-gag bill passed?

Has no one heard of trespassing?  I have to say, if random people started stopping and wandering across my land without asking snapping pictures, I’d be mildly annoyed.  And if they then were taking pictures so they could use them to cause me some sort of economic losses.  Damn I’d be calling the police and using those pictures as evidence of the trespassing.

1) Doesn’t trespassing already cover most of this?

2) How bad have you been ticking people off that they want laws passed for photographs?

3) Why are you emailing me this crap from the SLOW FOOD USA list? I barely tolerate your normal emails.

4) Are you really emailing me asking me to go trespass?

5) Do you not think small farmers and ranchers would be as ticked about you trespassing just as much as large ones?

 

– – – – – – – – – – – – – – – – – – – –

 

Dear Supporter,

Last week 22,000 people told legislators that taking photos of farms should not be a crime. Since then, one of these “ag-gag” bills failed in Florida. But Iowa votes today, and Minnesota isn’t far behind.

Now is a critical time to voice our opposition to the legislators in those states.

Sign our petition and stand up for transparency and the right to take pictures of farms. »

You can read more about it below.


Imagine if taking photos of farms were illegal — and the photographer was subject to fines and possibly jail time. If Big Ag got its way, that’s exactly what would happen. Right now they’re pushing legislators in Minnesota, Florida, and Iowa to criminalize taking photos or videos of their facilities.[1]

I guess industrial agriculture has something to hide. Maybe it’s the way factory farms mistreat workers, animals, and the environment.

The clock is ticking — Iowa’s legislation could pass an important hurdle as soon as next week. If we can raise a big enough stink, we can stop this state-based legislation from spreading nationwide.

Sign our petition and stand up for transparency and the right to take pictures of farms. »

But that’s not all. We don’t just want to stop Big Ag’s attempt to restrict consumers’ right to know — we also want to use this as an opportunity to lift up the good, clean and fair farmers who like consumers to come and see exactly how their food is produced.

So join the farmarazzi! In the next few days we’ll be calling on you for help. Plan a visit to a nearby farm (or just step outside, farmers) because we’ll be holding a contest for the best farm photos, and sending a flipbook of the winning photos to the legislators in question. Can’t wait to get started? Share your favorite farm photos by uploading and posting them on our Facebook wall here: http://www.facebook.com/SlowFoodUSA.

Thanks,
Jerusha Klemperer
Slow Food USA

Young Cleantech IPOs = Venture Paradise Found?

It struck me the other day that I may have been looking at the recent spate of cleantech IPOs backwards.  Perhaps instead of lamenting the dearth of profitable healthy companies going public on major exchanges  in our sector, what we should be considering is whether early and still risky IPOs mean cleantech venture capitalists are finally finding a capital path and exit model that works, akin to the IT and biotech venture models that delivered such terrific returns up until the internet crash.  And the question then is, can these IPOs continue, and perform and validate the broad strategy that our tech venture capital sector has been following in cleantech?

Our American institutional venture capital sector largely missed the cleantech AIM boom in Europe.  Missed the Carbon trading boom in Europe and Asia.  Missed the Chinese solar manufacturing boom.  And missed the corn ethanol boom in the US, the wind project developer boom in the US and Europe, and the sugar cane ethanol boom in Brazil.  Oh, and missed the shale gas boom in the US.  Each of which were tens to hundred billion + dollar booms. All the money in those sectors was made largely by investors and players outside the traditional venture arena – though some exceptions in each prove the rule.

Instead the American venture capital and tech sector eschewed what proved to be a huge number of highly profitable investment areas in cleantech as “not venturable bets”, and has poured c. $15 -$20 billion + into thin film /advanced solar, cellulosic biofuels, solar finance, smart grid, automotive/energy storage technology.  One cynical argument is that in a hubristic attempt to avoid the “low tech”, policy driven and capital intensive sectors in cleantech, our venture sector overreached into technology risk, and then once they found the policy risk and capital intensity waiting for them on the other side busily moving the bar, they started clamoring for M&A, IPOs, and government funding and policies to bail them out. In any case, the cleantech deals are hurting for a lot more cash and likely need early IPOs to make the sector viable long term, but the first generation of cleantech VCs have learned lots of lessons.

BUT, are we now on the cusp of a model capable of anchoring returns for these last few years of the 2nd and 3rd waves of cleantech venture capital investment anyway –  a model perhaps described as 1) raise larger funds, 2) take more concentration early in technology risk curves, 3) stack on capital fast 4) take heavy leverage with government dollars, 5) IPO early leaving money on the table in terms of tech boom style multiples, but leaving a lot of technology and scale up risk for the public markets.  Time will tell.

Critical to this model would be 1) the aftermarket performance of the the first wave of these IPOs, and 2) willingness of policy makers to continue to fund.  So a quick look at the Big 4 of US venture backed cleantech IPOs to date hopefully tells us something.  Excluding for this analysis earlier US cleantech powerhouse deals SunPower and First Solar, which came up a different financing paths and well before the policy and FIT booms that drove most of the first generation of solar profits.

A123 – Went IPO on the back of having neat batteries for EVs.  Still losing money.

Amyris –  Not sure what it went IPO on.  Still losing money.

Codexis – Went IPO on the back of a strong R&D partnership and contract with Shell.  Still losing money.

Tesla – Went IPO without the product it needs to breakeven built on the back of DOE money and car sex appeal. Still losing money.

 

 

 

 

 

Aftermarket performance, key to the actual returns of the LPs who usually aren’t out at the IPO and even more critical to willingness of the public markets to underwrite more deals, hasn’t been awful.  Three of the four doubled from the IPO price before peaking and giving back one to three quarters of value from their peak.  Two of them are still above listing, mean 90 day post IPO performance is a positive 27%, only one struggled to see a strong pop, and the mean performance to date since IPO price is+9%.

Of course, the largest, most mature, and earliest bellwhether, A123, has been on a long slow slide.  Meaning overall dollar weighted average performance would be a -6%.  And 90 day performance is only 3% with performance to date a -8% if calculated on the 1st day close not the IPO price, meaning it may be more underwriters managing issuance price than true aftermarket performance.  If benchmarked against the S&P 500, foreign cleantech IPOs and other non cleantech US IPOs it might not look so good.  But time will tell.

Will these first Big 4 hold out for solid returns, or slide like A123?  What portion of their businesses will get built and eventually become profitable?  Will they be able to raise more capital?  Will the next crop of rumored and planned cleantech venture backed IPO candidates from BrightSource to KiOR to Silver Spring to Opower to Bloom Energy make it through?  How much cash will they need before they do/what kinds of aggregate cash on cash returns multiples will we see, and will they too hold up when the public markets are asked to support billions of capital into dozens of these deals needed to anchor the cleantech venture sector?

Cleantech Parasites

It dawned on me today, that after buying green ecommerce store Greenhome.com 8 months ago, we put up links to the site on CleantechBlog.com, and included special coupons for all our Cleantech Blog readers and Cleantech.org members in the monthly emailings.  Here I thought people who were making a living off cleantech might *gasp* care about walking the walk and might appreciate it.

I think Greenhome.com saw a total of 3 coupon downloads out of that, and two were spam.  Worse, I’ve gotten more than that many personal comments asking why I’d clutter up the cleantech site with blog columns about green products.  On Saturdays no less, when the weekend traffic falls off 75%.  For the record we pulled those columns a few months ago

Fine save your money or buy somewhere else, but that rate is so abysmally low, it made me wonder if the entire of my audience is completely hypocritic.  And yes, it’s the web.  And yes, I DO pay attention.   I can see what pages y’all click on, and where you comment, I moderate every single one. And several times a week I read every Yahoo, Facebook and LinkedIN comment, and systematically delete and block anyone I find that spams, no appeals.  When I ignore you, it’s because you’re being annoying, I mean err, “that comment does not meet our unpublished comment policy or is not conducive to the health of the CleantechBlog.com and Cleantech.org community”.

So I’m pretty sure this group likes to read and talk and b*%&h about cleantech and a greener better world.  But do you actually care?

 

Do you actually think about cleantech, green products, and energy or water use when you’re not at work?

How many of you actually have a solar system?

How many of your light bulbs are now CFLs or LEDs?

How many have done an energy audit?

What green/ecofriendly versions of a product have you actually bought?

Do you know what makes that product green?

Do you actually recycle/compost?  Do you do the minimum required, or make an extra effort? At your home?  At your office?  Do you even know?

Do you have a clue what your energy bill is?  How many kW hours you use per square foot?  How that compares to the average? – For the record, when I asked a number of people that question at the last Cleantech Forum, I got a bunch of very polite laughs.

 

Or, and please excuse the language, are you just a cleantech parasite sucking off the teat of the government subsidies in cleantech?  Warren Buffett literally eats the food from the restaurants he owns, right?  Do you even bother to turn your lights off? 😉  What’s the phrase?  Oh yeah, “the choice is yours”.

Clean Energy Patent Growth Index 2010 Year End & 4th Quarter Results

FOR IMMEDIATE RELEASE
March 29, 2011

Contact: (518) 452-5600
Victor A. Cardona, Esq.
Jeff Rothenberg, Esq.
Alana M. Fuierer, Esq.
Email: vac@hrfmlaw.com

HESLIN ROTHENBERG FARLEY & MESITI P.C. ANNOUNCES
CLEAN ENERGY PATENT GROWTH INDEX
2010 YEAR END AND 4TH QUARTER RESULTS
GRANTED PATENTS HIT RECORD IN 2010
GM TAKES CROWN FROM HONDA
SOLAR, WIND, FUEL CELLS UP
US LEADS WORLD AND CA TAKES STATE LEAD FROM MI

ALBANY, NY—Heslin Rothenberg Farley & Mesiti P.C. is pleased to announce the 2010 year end, and 4th quarter, results for the Clean Energy Patent Growth Index (CEPGI) by the firm’s Cleantech Group.

The CEPGI tracks the granting of patents in the Clean Energy sector and monitors important technological breakthroughs in this field. Victor Cardona, Co-chair of the firm’s Cleantech Group stated, “we are pleased to announce that results for the Clean Energy Patent Growth Index indicate that Clean Energy Patents hit a record high in 2010, up over 700 patents relative to 2009. GM took the yearly Clean Energy Patent Crown from Honda in 2010 while U.S. patent owners hold more U.S. patents than any other country. Also, solar patents passed wind patents in 2010 while fuel cells continued to lead.”

The Clean Energy Patent Growth Index (CEPGI) provides an indication of the trend of innovative activity in the Clean Energy sector since 2002 in the U.S., along with Leading Patent Owners and Leading Country and State information. Results through the fourth quarter of 2010 reveal the CEPGI for 2010 to be at its highest level ever at 1181 granted patents, up over 170 percent, as depicted below. This is the largest year to year jump since we began tracking clean energy patents by over three times the previous year to year difference. This compares to a 31 percent increase generally for all patents from 2009 to 2010 – which was the best showing ever for patents generally. Clean energy innovation is clearly far outpacing technology in general.

As depicted in the below breakdown of the CEPGI by its sub-components, patents in fuel cells and wind were each up over fifty seven percent over 2009. Solar patents were up an astounding 134 percent while hybrid/electric vehicles were up sixty percent. Tidal energy and biomass/biofuel energy patents were up twenty eight and forty one percent, respectively, at fourteen patents each. Hydroelectric patents were up sixteen patents, an over five hundred percent increase. Geothermal patents was the only sector that decreased at five less patents than 2009, a fifty percent decrease. All of the technology sectors, except geothermal, were at all time highs in 2010, surpassing all previous records.

GM took the annual clean energy patent crown from last year’s winner Honda. Samsung jumped to second place, largely on the strength of its fuel cell patents, overtaking Honda and Toyota relative to 2009. Toyota increased its annual total by 20 patents to get fourth place while GE increased by thirty to place in fifth. Nissan (6th), Ford (8th) and Hyundai (9th) rounded out the automobile competitors for 2010. GE placed fifth predominantly on the strength of its wind patents which was over twice the number of patents of its nearest wind patent competitor in 2010, Vestas Wind Systems. Panasonic came in 7th in 2010 to tie its 2009 showing on the strength of its fuel cell patents and exceeded the 29 patents from 2009 by five patents, after having had only 6 in all the prior years. Hitachi rounded out the top 10 with 23 patents which were predominantly in the fuel cell and wind areas. Canon, far and away the solar photovoltaic patent leader since 2002, missed the top ten with a 12th place showing in 2010 at 15 patents.

Geographically, US patent owners held far more US clean energy patents than any other individual country in 2010. Japan, Korea and the US appear to be on an upward trajectory with the US taking a huge leap in 2010 after being on a slight uptrend from the time tracking began until 2009. South Korea surpassed Canada in 2008 and Germany in 2010. Germany trends slightly upwardly while the others are holding steady and the number of Canadian clean energy patents slightly decreasing. Looking at 2010 in more detail, Denmark (33) and France (29) fall between Canada (24) and Taiwan (40). China made a showing at 15 clean energy patents which far surpassed its previous high of 6 in 2009. Great Britain followed with 13 patents while Israel and Switzerland had nine clean energy patents in 2010.

Looking at the U.S. data in more detail, California overtook Michigan as the leading US state for clean energy patents in 2010 despite huge increases from both states of over 90 patents each. New York also had a big jump of 40 patents over the prior year. Smaller increases were found for Illinois, Connecticut and Texas while Massachusetts declined by two patents. Connecticut and Massachusetts tied at 30 in 2010 while Ohio (25) and Pennsylvania (tying Texas at 24) weren’t far behind. Florida at 23 rounded out the states having over 20 clean energy patents in 2010. Others had big increases including Oregon up 10, Virginia up 13, Delaware up 12, and New Mexico up 14.

Further information regarding the CEPGI is available at www.cleanenergypatentgrowthindex.com. Heslin Rothenberg Farley & Mesiti P.C. is dedicated exclusively to representing clients in the protection and commercialization of intellectual property, both domestic and foreign, including patents, trademarks, copyrights and trade secrets. The firm has gained national recognition in the area of Intellectual Property Law and was listed among the “Top Patent Firms” and “Top Trademark Firms” in Intellectual Property Law Today.

Email inquiries at vac@hrfmlaw.com.

###

Sunetric Offers Free Solar PV Systems to Raise Money for Japan

HONOLULU— www.hawaiiredcross.org, www.withaloha.org and www.Sunetric.com — Sunetric, Hawaii’s largest locally owned and operated solar installer, has donated two solar photovoltaic systems to raise funds for two local charities assisting Japan. The first is the American Red Cross Hawaii State Chapter and the second is the “With Aloha” Foundation. Donations raised through the website www.solarforjapan.com will go directly to the American Red Cross Hawaii State Chapter and the “With Aloha” Foundation to aid in the relief efforts. Donors of $10 or more will automatically be entered to win one of the solar arrays. Winners for both PV systems will be drawn live on ESPN radio’s Bobby Curran Show on Monday, May 2.

More than 12,100 people have been confirmed dead and nearly a half million people are homeless in the wake of the earthquake and subsequent tsunami that hit north-east Japan on March 11. Funds are urgently needed for food, water, medicine, shelter and clothing. The first donation benefits American Red Cross relief efforts in Japan. The American Red Cross has been a primary source of support for the residents in the wake of the disasters in Japan. “We are so grateful to Sunetric for their compassion in this time of great tragedy. Their efforts in raising much needed funds for the American Red Cross Japan Earthquake & Pacific Tsunami relief effort will help us save lives and give hope to those in need. We cannot thank them enough for their wonderful contribution to the cause of humanity,” said Coralie Matayoshi, CEO of the American Red Cross, Hawaii State Chapter.

The second donated PV system supports the “With Aloha” Foundation which is holding a fundraiser on April 9 at the Pagoda Hotel. Presented by aio, the fundraiser is a block party, benefit concert, and food tasting featuring 24 local restaurants and entertainers from around the world. Proceeds from this event, along with donations raised by the solar giveaway, will be sent to Tohoku University Hospital in Sendai, Japan, where many of the earthquake and tsunami victims are receiving care.

“We are so thankful for Sunetric’s generosity in donating not one, but two, photovoltaic systems to help raise funds for the victims of Japan’s earthquake and tsunami,” said Susan Eichor, aio President & COO. “With Aloha is a community inspired movement of Hawaii organizations coming together and helping those in need. We are humbled to partner with companies like Sunetric to support Japan …With Aloha.”

The $15,000 solar arrays are projected to save an average household more than $100 per month. Both donated systems are identical and offer ten Trina PV panels of 230 Watts per panel. They come with 3000W Centralized Inverters and 25-year production warranties. The systems must be installed on the island of Oahu, but winners can transfer their prizes to a friend or family member. Donors to the Japan relief efforts will automatically be entered to win. To register, go to www.SolarForJapan.com. For every $10 donation, one entry to the drawing will be given. For $20, two entries will be given and so on. No purchase or donation is necessary.

“As a local company, Sunetric is proud to be involved in the effort to provide help and kokua for Japan,” said Sunetric Founder Sean Mullen. “Through this partnership, Oahu residents can make a difference for Japan’s people, while also getting an opportunity to switch to solar.”

About the American Red Cross:

The American Red Cross, a humanitarian organization led by volunteers and guided by its Congressional Charter and the Fundamental Principles of the International Red Cross Movement, provides relief to victims of disaster and helps people prevent, prepare for, and respond to emergencies.

About aio:

aio is a family of businesses specializing in media, technology, sports and food. Media include: Hawaii Business, Island Family, Honolulu, Hawaii Home + Remodeling, Hawai‘i, Hawaii-Ai, Ala Moana and Whalers Village magazines; Hawaii Buyer’s Guide and Lei Chic (online newsletter)and ESPN 1400 and 1500 AM (radio). Other aio companies include: Watermark Publishing (books), Obun Hawaii Group (printing), Upspring Media (software and websites), Talisman LBS (mobile marketing), B. Hayman Co. (commercial turf), Punalu‘u Bake Shop, Hukilau Honolulu Restaurant, Nutricopia (food) and HWB Foundation.

About Sunetric:

Founded in 2004 by Sean and Beth-Ann Mullen, Sunetric is Hawaii’s largest locally owned and operated solar installer. Since its inception, Sunetric has designed and installed more PV than any other company in the state and is responsible for nearly 60,000 solar panels and 12.5 megawatts of solar installed across all islands, providing the equivalent greenhouse gas benefit of taking 3,000 vehicles off Hawaii roads each year. Hawaii’s first SunPower Elite dealer, Sunetric has installed several of the largest photovoltaic systems in Hawaii, including Kona Commons shopping center on the Big Island, Wilcox Memorial Hospital on Kauai, and Y. Hata on Oahu. Visit www.sunetric.com for more information.


FACT SHEET
Sunetric’s Solar PV giveaways benefit American Red Cross and “With Aloha” Foundation

Who: American Red Cross Hawaii State Chapter, “With Aloha” Foundation and Sunetric.

What: Online Giveaway of two (2) donated $15,000 solar photovoltaic systems ($30,000 total).

Why: To support the victims of Japan’s disasters through the American Red Cross Hawaii State Chapter and “With Aloha” Foundation.

How: Register at www.SolarForJapan.com. No purchase or donation necessary. Every $10 donation automatically gets one entry to the drawing; every $20 gets two entries, and so on.

When: Register online now through May 1. Winners will be drawn live on ESPN radio’s Bobby Curran Show on Monday, May 2.

SYSTEM DETAILS
• Value: $15,000
• Ten 230W Modules
• Brand of Panel: TRINA
• Unirac Sunframe Compression Racking System
• 3000W Centralized Inverter
• $105.28 per month savings
• $1,263.36 per year savings
• Installation and permitting included for the island of Oahu
• Giveaway transferrable on the island of Oahu
• Installation must begin on or before May 1, 2012

WARRANTIES
• 5 Years for the module
• 25 Years for production

FOR MEDIA ONLY: For an electronic version of these documents or images, please contact Julie Ford at (808) 593-2890 or Julie@schweitzerconsulting.com.

Intelligent Energy Raises £7 Million to Accelerate Commercialisation Plans in Further Material Up Round

Loughborough UK, 14th April, 2011 – Intelligent Energy, the global clean power systems company, today announced it has recently completed a fundraising round of approximately £7 million ($11 million) from existing and new institutional shareholders. This investment, achieved through a placement at £1.70 per share, enables Intelligent Energy to accelerate the commercialisation of its advanced fuel cell power systems.

“This material up round helps us to further accelerate the commercialisation of our clean power systems,” commented Dr. Mark Lawson-Statham, Director of Corporate Finance at Intelligent Energy. “We are experiencing real customer pull for our fuel cell power systems across our market segments. This is not surprising, as like us, a number of our partners and customers are seeing major commercial tipping points across the automotive, consumer electronic, backup power and combined heat and power markets.”

Late last year, the company announced its joint venture with Scottish and Southern Energy, IECHP (UK and Eire) Ltd., had received a £3.7 million investment from Scottish and Southern Energy, Scottish Enterprise and Intelligent Energy, to continue the development of fuel cell combined heat and power (CHP) systems for residential, commercial and light industrial markets in the UK and Ireland.

“Volatile oil prices and the fragility of our current energy infrastructure, further highlights the need for clean and reliable energy technologies,” said Dr. Henri Winand, Chief Executive of Intelligent Energy. “This investment allows us to continue the commercialisation of our fuel cell technology, some of which is already undergoing public road testing. Our Fuel Cell Black Cabs have debuted on the streets of London, while the Suzuki Burgman Fuel Cell Scooter recently obtained European Whole Vehicle Type Approval – a first for any fuel cell vehicle.”

About Intelligent Energy

Intelligent Energy is a global clean power systems company, with a range of leading fuel cell and hydrogen generation technologies. The company partners with leading global companies in the transportation, oil and gas, aerospace, defence, distributed generation and portable power markets. Current partners and customers include Scottish & Southern Energy plc and The Suzuki Motor Corporation, with whom Intelligent Energy built the Burgman Fuel Cell Scooter, a recent recipient of European Whole Vehicle Type Approval, which qualifies the scooter as safe to use on EU public roads. Other successes include developing the world’s first hydrogen fuel cell motorbike and supplying the fuel cell system to Boeing which powered the world’s first manned fuel cell aircraft.

Earth Day is coming: How do you rate on the Societal Responsibility Scale?

Dutch Environmental Policy expert, Hans van Zigst, recently spoke on Societal Responsibility, specifically that society has an obligation to change behavior, the way we produce and the way we consume goods. This theme appears timely as we approach Earth Day on April 22, a date designated to demonstrate our commitment to environmental protection and sustainability.

If you are reading this blog, the assumption is that you are a follower of the cleantech space. By definition, while you expect to benefit from market opportunities and financial upside derived from clean technologies, you are also intent to provide ecological solutions primarily attributed to human impact on the earth.

The question is: as we build and/or invest in the next solar, EV or biofuels technology invention, are we acting as role models for the industry we represent? We’re betting on or promoting energy savings and efficiency, reduction of gas emissions and less reliance on foreign oil, but is our everyday behavior reflective of our professional pursuits? Driving a hybrid or swimming in a solar-powered pool is a beginning but not an end.

So with Earth Day approaching, we could start by asking ourselves:

o Am I actively supporting regulatory policy efforts that will help encourage socially responsible behavior? Can I play a role in helping craft policies that make sense to the general population?

o Does my household diligently recycle and compost? If my area doesn’t have composting facilities, have I pursued solutions?

o Is minimizing gas consumption and emissions a top priority in the selection of my vehicles? Is walking, cycling or public transportation available?

o Do I buy compostable consumables and organic food and textiles when options are available?

o Do I consider the environmental consequences before printing reams of paper, purchasing plastic water bottles, or accepting plastic bags at the checkout?

o Am I setting a good example for my children to protect and promote a healthier environment?

Signs that entrepreneurs and investors are starting to materially benefit from cleantech opportunities are evidence that the industry is sustainable. Earth Day is a reminder that preserving healthy ecosystems and environments are an integral part of sustainability. We should show our support for cleantech by making behavioral decisions for all the right reasons and not just some of them.

Let’s celebrate Earth Day!

Where Be the Debt in Cleantech?

A large portion of the energy and ag sectors cleantech targets are strongly backed by liquid and well developed debt markets and lending practices.  But in cleantech, basic nuts and bolts debt has been scarce or weird.

  • We have cleantech companies, venture capitalists and pundits babbling self servingly about a “gap in the capital markets” that we need project finance to fill.  (Why because since it’s a bad deal for you it’s a great one for a lender?)
  • We have government loan guarantees in the US crowding out venture capital.
  • We have cheap loans in China creating accusations of “venture capital dumping” in cleantech causing analysts to ask how a US firm can compete.
  • We have project financing, which began with tax equity crowding out project debt in US.
  • We have debt structures behind FITs in Europe.

But where is the basic stuff?  Term debt, mezzanine debt, credit facilities?  For example I know of no significant mezzanine lenders with a focus in cleantech.

Is it scarce because it’s been crowded out?  Have the capital markets failed, despite being awash in cash and yield hungry?  Are lenders just too wary still post GTC – an argument I just don’t buy?  Do the companies and their venture capital sponsors not understand it? 

Perhaps the good lending deals aren’t so good.  Perhaps cashflows are too weak, and projects too early and risky.  Perhaps the policy risks are higher than we believe.

It’s not a simple question, but one worth exploring without jumping to the knee jerk reaction that the lending markets don’t get it and have failed.  They generally get risk very well.  And the fact that venture markets have such a high percentage of capital allocated to such capital intensive industries, yet the debt markets have yet to follow – suggests that risk is getting mispriced on at least one side of the equation.  And that spells danger and opportunity.

The Two Names in Cleantech You Have to Know

Cleantech has a very short history, and an even shorter memory.  I’ve written over and over again about how it’s all about policy, and that there is no disruptive technology in cleantech.  Now I’m telling you that’s not quite true, the exception proves the rule.

I’d like to ask you to do some reading on two men from very different worlds.  One recently passed away, the second in his 90s.  Both passionate about the earth and people in it.  Both lightening rods for criticism.  And for the record, one taught at Texas A&M, the other graduated from there.

Both drove the development of technology that changed the world in profound ways.  Doing so in part with deep connections to both technology and policy.  They are household names in the worlds they lived in.  They are largely unknown in the cleantech world.

If we are to survive and thrive in a world with a lot more population and a lot more demand on our natural resources that it had when Norman Borlaug and George Mitchell started, we’re going to need to mint more of these guys like water.  It’s good to know it can be done.

Norman Borlaug

Father of the green revolution.  Nobel peace prize winner, credited with saving 1 billion people through better food production.  American agscientist, working all over the world from Latin America to Asia, responsible for the development and proliferation of high yield, resistant wheat.

“More than any other single person of this age, he has helped provide bread for a hungry world,” the Nobel committee said in presenting him with the Peace Prize.

His obituaries tell it all.  He taught and researched at Texas A&M from 1984 on.

The green revolution has often been slammed for causing severe environmental damage.  But tell that to the masses of people around world who are alive today because of it.

“Gary H. Toenniessen, director of agricultural programs for the Rockefeller Foundation, said in an interview that Dr. Borlaug’s great achievement was to prove that intensive, modern agriculture could be made to work in the fast-growing developing countries where it was needed most, even on the small farms predominating there.

By Mr. Toenniessen’s calculation, about half the world’s population goes to bed every night after consuming grain descended from one of the high-yield varieties developed by Dr. Borlaug and his colleagues of the Green Revolution.” – Italics from the NYT obituary.

George P Mitchell

Texas oil man and sustainability?  George Mitchell can lay claim to doing both, in a big way.

He developed the fabulously successful Texas community The Woodlands, the only successful development of the original HUD funded communities of the 1970s.  Now The Woodlands is a thriving energy, biotech and technology economy founded on sustainable and environmental best practices, showing the world what can be done.  

But his big contribution to cleantech was way beyond one town. It was in pioneering the shale gas revolution through combining horizontal drillling and fracking at Mitchell Energy.  But don’t believe me.  Ask the Times Online and Forbes who the father of shale gas is.

And for those of you who missed the shale gas buzz, try this Wall Street Journal Article called Shale Gas Will Rock the World.

Like Dr. Borlaug and the Green Revoluation, shale gas and fracking have been ripped apart in the press for their environmental impact.  And like in the Green Revolution, I’d suggest you ask those whose houses are heated, and whose bills manageable because of shale gas.  Or ask just where you think we’d be without gas post nuclear accidents in Japan and food strikes in the Middle East forcing us to rethink our fuel supply chain?  Gas:  that compromise fuel of the future that everyone loves to hate, but makes up a critical part of every low carbon energy plan.

And then remember who these innovations helped the most, and who will benefit the greatest from cheap abundant food and fuel?  Not the rich in Manhattan or London.  The poorest of the poor in every corner of the world.

As I said before, if we are going to continue growing our economy and not destroying the world while we do it, we’re going to need to mint a lot of guys like these, and realize that every decision big enough to matter in food and energy involves real trade-offs taht we’ll have to face.

PS One final note:  notice that neither of these guys ever took a lick of venture capital 😉

Brightsource, Fisker and Solyndra – Soul Crushingly Bad Numbers Make up 17% of Near Record 1Q11 Venture Investment

GreentechMedia and Cleantech Group this quarter reported near record levels of cleantech venture capital investment. Nearly $2.6 Billion in deals.  No, quantitative easing hasn’t made the dollar slide that much yet, the numbers are real – mainly as the solar and transport  deals vintage 2004-07 are getting deep into their capital intensive cycles.  But a near record $2.6 billion, so everybody’s happy, right?

Personally, a quick scan of Greentech Media’s summary of the top deals sent cold shivers up my spine. The deals may be getting done, but are we sure investors are making money?  Let’s take three of the big ones and the only ones where Greentech Media quoted valuation numbers:  BrightSource, Fisker, and Solyndra.  Between the three of them that’s 17% of the announced Q1 deal total by dollars.


BrightSource Energy (Oakland, Calif.) raised a $201 million Round E for its concentrated solar power (CSP) technology and deployment, bringing its total funding to more than $530 million in private equity. That funding is in addition to a federal loan guarantee of $1.3 billion. The investors include Alstom, a French power plant player, as well as the usual suspects — Vantage Point Venture Partners, Alstom, CalSTRS, DFJ, DBL Investors, Chevron Technology Ventures, and BP Technology Ventures, together with new investors with assistance from Advanced Equities.  VentureWire reports that the latest round values the company in excess of $700 million.

Brightsource has been a darling for a long, long time.  It is easily the farthest along, most experienced and most ambitious of the solar thermal developers.  So what about the numbers?   Well it’s announced 2.6 GigaWatts of PPAs with SoCal Edison and PG&E.  And they’ve started construction on the first phases of the 392 MW Ivanpah development in the Mojave desert.  That’s the good news.

Here’s the bad news: $700 mm pre-money valuation + $201 mm in round 5 means only a 1.7x TOTAL valuation for investors on the $530 mm that has gone in.  Or the previous round investors are now in aggregate up 2.1x on their money for a 7 year old company after the 5th equity round is in.  Not sure who, but a few of those rounds got rocked, and not in a good way, or else we just did four wonderfully exciting 15% uptick rounds in a row.  But it gets worse.

This first plant, the one they’re headed IPO on, still hasn’t come on line let alone finished phase I.  DOE has committed $1.37 Billion in debt to it, and NRG $300 mm in equity, with more equity capital needed.  So once completed, the venture investors after their meager 2.1x uptick in the first 7 years, are between 3-8 years in on their venture investments and now own part of a heavily leveraged state of the art $2 Bil+ highest cost in the market power plant throwing off revenues of say $125 mm/year.  Perhaps $140-$150 mm at the high end (estimates have varied on capacity factor and price).  Right sounds almost passable.  But now let’s build the cashflow statement.  Add in Brightsource’s estimated direct labor at $10-$15 mm/year ($400 mm over 30 years from their website), plus maintenance/repairs at 0.5% of assets per year of another $10 mm (and hope to God it can stay that low – that would be a tremendous success in and of itself), then add on debt service on $1.37 billion assuming an only available by government guarantee 30 year amortization at 5%, and we eat another $80-$90 mm per year.  So we’re at $100 to $120 mm in annual costs, and $125 to $140 mm in annual revenues.  And we haven’t included gas, water, or any contribution to overhead, which are all non trivial. And don’t forget we’re building this out in 3 phases over several years.

So after all that, if it works, and if it works well, those investors MAY see a net of $20 mm-$40 mm /year in cashflow from that plant by 2014/2015 or so that they can use to cover plant overhead, fuel bills, the remainder which is then split between them and NRG to cover corporate overhead and then pay taxes on; or they may be losing money every month.  But we’ll make it up in volume, right?

 

But there is hope:

#1  pray for lots and lots of ITC (30% on the $600 mm in non subsidized capital would shave almost a whole 10% off the total cost!)

#2 pray for an IPO (and think VeraSun, sell fast).

#3 pray for a utility who overpays for the development pipeline

Two good articles with some more history from Greentech Media here and here.

 

Fisker Automotive (Irvine, California), an electric vehicle maker, raised $150 million at a $600 million pre-money valuation (according to VentureWire), from New Enterprise Associates and Kleiner Perkins Caufield & Byers. The firm previously raised $350 million in VC, as well as a $528 million loan from the DOE.

Terrific, another high flyer.  Same analysis, this one’s younger, only 4 years old, and only on investment round 4, which is good, since they’ve now apparently got a total valuation of only 1.5x investors money, or 1.7x total uptick for the prior 3 rounds of  investors.  But since they’re only in so far for 1-4 years not 3-8 like in Brightsource, they’re ahead of the game ;).  But once they take down their $528 mm in DOE debt (which this last tranche was supposed to be the matching funds for), they’ll be at a soul crushing 110% Debt/Equity.  Oh, and did I mention that the real way to calculate Debt/Equity assumes equity is net book value?  And since with these startups we’re using contributed capital, once should think of our debt to equity ratios as very very very very artificially low – but I didn’t want to scare you too much.

But look on the bright side:

#1 If they really hit their 15,000 car per year at $95K/car and typical 5%-10% automotive operating margins, they could be at solidly into junk bond land at 4-7x debt to EBIT!  (Assuming of course you believe they build a $1.5 billion/year automotive company with no more cash).  Of course, they apparently have a whole 3,000 orders placed for the c. $95K car, and are currently planning closer to 1,000 shipments for year 1.  Compare that to the Nissan Leaf and Chevy Volt, which cost closer to $30K each.  Chevy has been planning on shipping 10,000 Volts in 2011, and 45,000 in 2012.  Nissan has targeted first year Leaf production at c. 20,000, and apparently had more than that many orders before they started shipping.

#2 pray for an IPO

#3 Buy Nissan stock

 

Solyndra (Fremont, California), a manufacturer of cylindrical solar PV systems for industrial and commercial rooftops, closed $75 million of a secured credit facility underwritten by existing investors. Solyndra had annual revenues exceeding $140 million in 2010 and has shipped almost 100 megawatts of panels for more than 1,000 installations in 20 countries, according to the CEO.

I’m certainly not the first or only one to cry over Solyndra.  And I’m pretty certain I won’t be the last.

Founded in 2005, with a cool billion in equity venture capital into it now, I believe they were on F series before the IPO was canceled last year? With this $75 mm Q1 deal (in secured debt, of course, their investors are learning) they’ve announced another $250 mm in shareholder loans since the IPO cancellation, and the early round investors have been already been pounded into crumbly little bits.  But it’s worse.

If I followed correctly, the original IPO was to have raised $300 mm, plus pulling down the $535 mm in DOE debt.  Here less than 9 months after that process canceled (could that be right?), they’ve now raised 80% of the cash the IPO was planning, except all in debt, and grown revenues nearly double since starting that process.  My only response to this was OMG.  So they’re at a 26% Debt/Equity Ratio for a money losing company, where debt exceeds revenues by a factor.  Pro Forma for the DOE loan fully drawn they’re at 44%, and something like 6x debt to revenue.  These are crushing numbers for healthy profitable companies.  It gets worse.

Go read their IPO prospectus.  Teasing out who invested how much in each round from each fund, and the size of those investors’ announced funds, plus the number of funds that “crossed-over” and did their follow-ons from a newer fund, and you quickly realize there are several venture funds that literally tapped out on Solyndra, likely either hitting house or contractual maximum commitments to a single deal.  The concentration risk in Solyndra is possibly enough to severely pound multiple fund managers, not just Solyndra.

 

Please somebody please tell me I’ve got the numbers all wrong.

 

Long Live Green Squared Suburbs

I’m watching a CNN special on reinventing Los Angeles, and calling on suburbs as dead, time to move on. 

But I LIKE suburbs.  I like grass.  I like trees.  I like quiet.  I like space – both in my house and between my neighbors.  I don’t like my neighbors waking me up with loud sex at freaking 4 am (which I’ve decided is just par for the course in city environments).

I like my own garage.    Walkable and mixed use can be great.  Done that.  I’m never giving up grass and quiet for walkable and mixed use again.  And well designed suburbs can give you both.

What I don’t understand is why the suburbs have to die – just because of commutes and smog.   Why does being green and sustainable mean I have to live in a hot urban hellhole or drive an hour and half each way?  Why can’t I have a green squared suburb – green with grass AND sustainability.  Why is density good in and of itself?  That’s a false choice.

A large chunk of the professionals I know telecommute and adjust work schedules around commutes, at least sometime.  And still get their jobs done.  Companies need to get this. If I ever got a real job (not that it’s going to happen), I guarantee you lack of flexible working hours and location would be a deal breaker.

Like with most things in economics, it doesn’t even matter if only a portion of the population can do flex and remote.  Just make it possible for 10-20% of the total workforce to adjust, even some of the time, and add that flexibility in.  We’ll likely find that we relieved pressure on house pricing, infrastructure, and everything else, benefiting all of us.  That’s the flip-side benefit of inelasticity in economics.  Small changes in volume can change price fast.

So I submit:

If we have electric vehicles and renewable energy to fight smog.  Especially the continued rise of what I call the one-two auto family – one big car and one small one (which is frankly all the first generation of EVs is good for).  Flex schedules and flex commutes letting the family adjust cars to the right purpose.

If we have the web and skype and mobile everything on our phones.  And cloud computing for all our office stuff.

If ecommerce and on demand continues to grow and change the shopping and entertainment experience.  Read flex travel and random amenities in the smallest town – this is what broadband is delivering us.

If we build flex time and telecommuting into the basic employer – employee contract, with employers paying a premium for the 9 to 5 at the office.  The employer gets more productivity for less money.  And the employee gets their life back and spends less on gas and food.

Then we can have our suburbs and walk them too, or live sustainably, more cheaply, and profitably in small and medium sized cities, and relieve pressure on price and annoyance in the large cities.  And not give up our quiet, space and grass.

These are not big ifs.  Long live the green squared suburb!

Interview with Dr. Frank Ling on Climate Change Mitigation and Adaptation

Our longtime Cleantech.org portal manager, and editor of the weekly Cleantech.org newsletter is a researcher at one of the top climate change research institutes in the world, where among other projects he is editing a book on climate change. He was recently inteviewed by Green Japan on the subject of climate change mitigation and adaptation.

Dr. Frank Ling on Climate Change

Frank Hiroshi Ling is a climate policy researcher. In this part of interview, he talks about what brought him to this area and analyzes the results and solutions of climate change. With the help of policy and technology, what can we and the government do to help solve climate change issue and other issues?

Frank’s bio, for those of you who haven’t met him.

Frank Hiroshi Ling is a climate policy researcher and entrepreneur. He has extensive experience in scientific research, environmental and energy policy, and media. Currently based in Japan, he is a researcher in climate adaptation at Institute for Global Change Adaptation Science (ICAS) at Ibaraki University. He also works with IGES as an editor of the forthcoming book “Transition to Low Carbon, Climate Resilient Asia: Opportunities and Challenges.”

Dr. Ling is also the host and co-creator of the Groks Science Show, a highly humorous and popular radio and podcast program, with Dr. Charles Lee. In addition, Frank oversees Cleantech.Org, a web portal for catalyzing investments in new technologies that promote environmental sustainability.

Dr. Ling received his Ph.D. from the Department of Chemistry at the University of California at Berkeley and was a post-doctoral fellow at the Renewable and Appropriate Energy Laboratory and at Lawrence Berkeley National Laboratory (LBNL). Frank received his Bachelors of Science in Chemical Engineering from Caltech and his MS degree from the University of California at Santa Barbara. He has received numerous awards for his research and contributions to science education. In 2006, he received the Mass Media Fellowship Award from the American Association for the Advancement of Science. He has also been a Mirzayan Science & Technology Policy Graduate Fellow at the National Academy of Sciences in Washington, D.C.

Cleantech Forum Snaps – Affirmative Action, Star Trek, and Starvation

Three comments I really liked from the premier conference on cleantech:

Art Rosenfeld, California Energy Commission – It’s all about cool white roofs to combat climate change.  Art is one of the deans of energy efficiency in California.  It’s been long known that white roofs can cool a building and help reduce the heat island effect in cities (cities are always hotter than the country, basically because they make more heat, and shifting from trees to concrete, asphalt and asphalt shingled roofs both reduces the cooling affects of aspiration and absorbs a larger portion of heat into the phyiscal environment).

So Art is now effectively calling for step by step, low cost and simple geoengineering through policy to combat both energy efficiency demons and climate change.  E.g, not only do cool white roofs reduce heat in the city, they reduce the cooling bill in the building, and reduce GHGs from energy use.  He posits that a shift from black roofs to white roofs and/or shifting roof design to flatter roofs that are more effective in white roofs would save literally billions upon billions of tons of CO2e over time, with no measurable cost difference.

So, call it the affirmative action program for cleantech, but color matters.

Sheeraz Haji, CEO Cleantech Group – It’s all about Data.  The idea is pretty simple – everything in cleantech from here on out – e.g. smart grid, energy efficiency, solar performance, water use, EVs, etc all depends on more, cheaper, faster, more granular, timely and better data and the analysis it can drive.  Sheeraz’s question to define future opportunities in cleantech is, “so what does data need?”

John Denniston, Kleiner Perkins – It’s all about food.  Think food security, food v fuel, water use, fertilizer source and ag run-off, crop yields, etc.  I love this topic.  For those of you who haven’t heard of him, go google Norman Borlaug, the recently passed away sage who made possible our ability to not starve and threw Malthus for a loop for the last few decades with dramatic crop yield improvements from his selective plant breeding and fertilizer intensive ag.  The favorite argument of the day, which John mentioned, is the “in the next x decades of years we’ll need more food than in the last x – thousands of years”.  Right or wrong, the scale is sure changing. 

So, whether your answer to John’s all about food is less people, more GMO, more technology, more water efficiency, or shifting diets, we’re going to need another Norman Borlaug or life is gonna suck.

The Landfill Wars

Guest blog by Don Willis

I have been to recycling conventions all across the country. It never fails that all of them have programs dedicated to landfill operators. Somehow recycling companies have not yet gotten the message. Landfill Operators are NOT recyclers. They may dabble around the edges of recycling so that the various levels of government give them a ‘feel good’ badge for attempting to be green, but the bottom line is that it is clearly becoming an us versus them scenario as we talk about ways of getting to zero waste.

I met with a landfill operator last year, at the request of a community that wanted us to build a recycling center in their city. The city had a seven year agreement with a waste collector. The waste collector also owned the landfill. It was not possible for me to build a facility in their city unless the waste company agreed to work with us on tonnage. I told the city it would never happen, but at their urging I agreed to meet with the Landfill Operator. He was pleasant and polite, but the meeting lasted only a few moments. He very politely stated that, “We’re in the landfill business. We get paid to bury trash, not recycle it.” He was absolutely correct. Landfill Operators are not in the business of recycling. If we ever needed to be hit over the head with that we just were in Florida. Landfill Operators from around the state lobbied tirelessly to get the yard waste ban overturned and they were successful. Yard waste, which prior could not be buried in landfills in Florida, could now be sent there under the guise of increasing methane production at bio-reactor landfills.

In case you don’t know bio-reactor landfills are landfills at which you see the pipes sticking up out of the surface. These pipes collect the methane that is created when organic matter in the landfill breaks down. This material creates methane because there is no oxygen in the landfill. If there were the decomposition process would yield carbon dioxide instead of methane. In the presence of oxygen decomposition yields many beneficial items. In the absence of oxygen, we get dangerous and deadly landfill gases that pollute our air and cause health problems for any nearby residents. The purpose of collecting this gas is an attempt to avoid these problems and make a few bucks selling the gas to a power company.

When a company owns a landfill they own a limited shelf life commodity. A landfill will only hold a certain amount of waste. If you can only hold a specific volume of waste, then the profit mechanism becomes a factor of time. A landfill that will hold X number of tons that takes 30 years to fill, is more profitable if the landfill operator can fill it in 20 years, instead of 30. This paradigm is the antithesis of the desires of the local community. In the example I used above the landfill at one time had belonged to the community. They sold it to the company that now operated it. They spoke to me of how many years of life the landfill had as if to get across the point that they had no concern at where the waste of the city would need to go for the next 50 years. They had no clue that the landfill operator had begun receiving waste from other communities. The landfill operator had reached out and had begun receiving waste from cities as far as 200 miles away. A landfill operator is sitting on a volume of space. The quicker the operator can fill that space the more profitable the space becomes.

As recycling rates continue to rise across the country landfill operators are fighting back. In state after state they are lobbying to remove landfill bans on items so that they can increase the tonnage they receive. They speak of how they are doing it so that they can make their ‘bio-reactors’ more productive but the bottom line is they are in the business of burying trash, not recycling. Landfills need to become a thing of the past. They no longer serve any useful purpose. Much like the buggy whip, they served a purpose in their day, but no longer. We have the ability to recycle 100% of our waste. Why do we still tolerate an industry that pollutes our air, soil, and ground water? It isn’t time to remove bans on items going to landfills. It is time to expand the bans on items going to landfills. It isn’t time to embrace bio-reactor landfills. It is time to see them for what they are, the best that can be made of a bad situation. Don’t let a landfill operator tell you that landfills are safe. They are not, cannot, never have been, and never will be safe. The manufacturers of the liners they use admit that the liners have a limited life and are subject to puncture. That means that every landfill using liners today will pollute our groundwater just as much as the estimated 50,000 closed landfills that dot our country. Every liner will leak, every liner has or will have punctures, and every liner will break down. When they do every drop of rain that falls on them will become contaminated with thousands of chemicals on its way to our ground water.

We are not in the same business. We need to understand that and take it to heart. We need to get as good at lobbying as they are. Recycling may be winning the battle for the hearts and minds, but the landfill operators are winning the lobbying war.

Don Willis CEO
Green USA Recycling, Inc.

It’s NOT the Technologies, Stupid!

Cleantech junkies like myself get seduced by all sorts of neat-o new technological ideas.  But, we need to bear in mind that technology invention is only a part of commercial success — and in fact, arguably not even the most important part.

This perspective is brilliantly put forth in a brief essay called “A History Lesson for the Cleantech Revolution” by Andrew Hargadon, Senior Fellow of the Ewing Marion Kauffman Foundation and Professor of Entrepreneurship and Technology Management at the Graduate School of Management at the University of California Davis.

It’s a short but great read, with three major points:

  1. Business models are more important than inventions.
  2. Innovation is about connecting, not inventing.
  3. Innovation is action:  learning-by-doing, learning by using. 

Important for those of us in the cleantech community to keep reminding ourselves:  it’s not just the technologies, stupid!