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Predictions For Cleantech in 2014

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

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

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

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

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

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

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

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

Venture capital playing a lesser role

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

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

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

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

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

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

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

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

Cleantech term search history

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

Plugin Electrics vs All Electric Battery EVs, Epic Throwdown?

I get this every time I discuss EVs.  Something along the lines of oh, you shouldn’t be including PHEVs in with EVs, they don’t count, or are not real EVs, just a stopgap etc.

I tend to think PHEVs may be better product.  At least for now.  And I follow the GM’s Chevy Volt vs the Nissan Leaf with interest.

The main arguments on each:

Plug in Hybrids

  • No range anxiety
  • Still need gasoline
  • Can fuel up at either electric charging station, your home or gas station
  • Depending on driving patterns, may not need MUCH gasoline at all
  • Expensive because:  need both gasoline and electric systems, and batteries are still pretty expensive, even with a fraction of the amount that’s in an EV
  • Get all the torque and quiet and acceleration punch of an EV without the short range hassle
  • But not really an EV, after a few miles it’s “just a hybrid”
  • Future is just a stop gap until EV batteries get cheap? Or just a better car with all the benes and no cons?

 

Electric Vehicles

  • No gasoline at all (fueled by a mix of 50% coal,20% gas, and the rest nuke and hydro with a little wind :) )
  • Amazing torque and acceleration
  • Dead quiet no emissions
  • Fairly slow to charge compared to gas
  • Lack of charging stations is getting solved, but still somewhat an issue
  • Switching one fuel for another, no extra flexibility on fuel
  • Expensive because lithium ion batteries are still pricey and way a lot
  • Future is cheaper better batteries?  Or they never get there and the future never arrives?

I tend to think the combination of plugins and EVs has actually worked together solved range anxiety.  As a consumer, I get to pick from a full basket when I buy, Leaf, Volt, Prius, Model S, lots of pricey batteries to deal with range anxiety, a plug in that gets me almost there with zero range issues, or a Leaf in between.  Whatever range anxiety I had disappears into consumer choice, just like it should.  I don’t think pure EV is any better or worse than a plugin, just a different choice.  They work together in the fleet, too, plug ins help drive demand for EV charging stations that are critical to electric car success, and EVs drive the cost down on the batteries that brings the plugin costs into line.  Unlike with the Prius over a decade ago, it’s not a single car changing the world, it’s the combination that’s working well for us.

Worlds of Differences

I’ve always known that Americans hold a pretty different view about the state of the energy sector than elsewhere in the world, but never really knew how to characterize those variances.

Today, I write in gratitude, thanking the efforts of Sonal Patel, senior writer at Power magazine.  Patel developed this helpful visual framework summarizing the recent issuance of the World Energy Issues Monitor, a a global survey undertaken annually by the World Energy Council posing the question “what keeps energy leaders awake at night?”

For each of three regions — North America, Europe and Asia — Patel has drawn circles for each major issue area of potential concern to the energy sector and placed them on a two-dimensional chart, where higher indicates more impact and right represents more certainty.   The size of the circles is proportional to the urgency of an issue.

Perusing Patel’s graphic is an illuminating exercise.  Of note:

Only in North America is the topic of “unconventionals” — meaning producing oil and gas from unconventional sources such as shale and oil sands — viewed as a particularly big deal.  In Europe, unconventionals are somewhat lower on the radar screen, and in Asia barely on the screen at all.

Conversely, energy prices are a critical topic in Europe and Asia, but deemed only of modest importance in North America.

Similarly, energy efficiency is high on the agenda in Europe and Asia, not so much in North America.  Even more starkly, renewables are seen as only a low-impact issue in North America, and a more significant issue elsewhere.

Perhaps because of the high penetration of renewables there, energy storage is of most interest in Europe, but of less interest in North America, and of hardly any interest in Asia.

Nuclear energy is viewed as a high-impact issue in North America, moderate impact in Europe, and (perhaps surprisingly) low-impact in Asia.  So, for that matter, are electric vehicles.

The so-called “hydrogen economy” — involving the use of fuel cells for power generation and transportation — retains a bit of interest in North America (though with low urgency), but has fallen off the map elsewhere.  Carbon capture and storage (CCS) follows somewhat of the same pattern, although Europe does hold it in higher esteem than hydrogen.

True, there are some commonalities to acknowledge:  the smart grid and policies to deal with climate change and energy subsidies are seen in approximately the same light globally.

However,  more than anything else, Patel’s framework shows that leaders in the energy industry live in very different worlds, depending upon which part of the world they live and work in.

Contrarian Wisdom Isn’t Necessarily Better Than Conventional Wisdom

For years, many observers (including myself) have argued that — from an environmental perspective — it is preferable for energy prices to be higher, so as to (1) discourage consumption of energy, mostly from fossil fuels which generates significant environmental impact, and (2) make various forms of energy efficiency and cleaner (if not zero-emission) alternative sources of energy more economically attractive to customers, which in turn will produce a virtuous cycle of further improvement in energy efficiency and alternative energy to penetrate markets in an ever-increasing fashion.

Recently, Carl Pope (formerly CEO and Chairman of the Sierra Club) penned an article that aims to turn this wisdom on its head.  In “The Road To Climate Heaven Is Paved With Ever Cheaper Oil”, Pope makes the point that the most environmentally-damaging forms of oil — such as the oil sands in Alberta — are intrinsically the most expensive to produce.  As a consequence, if oil prices were consistently at $70/barrel or less, production from these resources would be unprofitable and would relatively quickly cease, which in turn would (paraphrasing here) save the planet from future horrible devastation.

Pope notes that — of world oil demand at levels around 85 million barrels per day — about 80 million barrels per day can be sourced from relatively-clean conventional oil resources that are economically recoverable at much lower prices, rather than the dirty stuff which are economically viable only at higher prices.  In other words, the world supply curve for oil is pretty flat and low up to about 80 million barrels per day, and then goes vertical beyond that.

Assuming that his analysis of global oil supply is approximately accurate, Pope asserts that we just need the largest consumers of the world to somehow reduce demand levels by about 5 million barrels per day — permanently — and then the dangerous sources of marginal supply will be shut out of business.

It’s an interesting argument.  But I am not persuaded.

First of all, let’s consider how we got here:  World oil prices have consistently been hovering in the $80-120/barrel range since mid-2007 (except for a brief period in 2009 during the absolute trough of the global economic meltdown).  Why is this?  Except during the economic standstill, global oil demand has been robust at (as Pope says) around 85 million barrels per day — even in the face of high (and generally increasing) prices.  Note that U.S. demand has essentially been declining, so the rest of the world (especially China) has been picking up the slack.  (Imagine for a moment how much more demand there would have been had prices not increased so substantially!)

Put aside for a moment the question of how to achieve a demand reduction of 5 million barrels a day from the developed economies.  (Pope himself fudges on this point by stating that the developed economies could “encourage transportation efficiency and fuel diversity” in some unstated way.)  What would happen if Pope’s dream were somehow to be achieved?

At first, as Pope would hope, world oil prices would no doubt fall.  I don’t know if they’d fall by tens of dollars of barrel, but it’s possible.  If that were to happen, it almost certainly would cause a significant increase in demand within not-too-much time, which in turn would spur prices upward again.  Eventually, this force of increased demand would push prices back into the range that again makes viable production from the dreaded dirty marginal resources.

This is the notion of an equilibrium, central to free-market economic thought:  that any exogenous shock to the system will produce a response from the market that will tend to bring the system back into balance.

For Pope’s fantasy to play out, there would have to be not only an immediate reduction in developed-world demand for oil on the order of 5 million barrels per day (thus dropping oil prices to a significantly lower level), but an ongoing reduction from the developed-world to offset the faster growth in oil demand that would be generated by much lower oil prices that would somehow need to be maintained by ever-shrinking demands from the developed world.

I simply don’t see this happening.  Efficiency won’t be enough; it requires a massive shift off of oil for transportation — the “fuel diversity” for which Pope argues.  Low-cost natural gas (largely due to fracking, another environmental bete noire) for compressed natural gas vehicles and better (higher performance and lower cost) batteries for electric vehicles will help, but daunting investments in fueling/recharging infrastructure would be required for either (or especially both) to achieve mass-penetration — and I don’t see the money for these laying around.

With his recent article, Pope reaches for a similar conclusion, but coming from a different angle, as those who are seeking to forestall the construction of the Keystone XL pipeline to thwart access to markets for oil sands from Alberta and thereby prevent their development as a means of protecting the planet.  They share a supply-oriented mindset:  curtail supply by whatever means necessary (in Pope’s case, taking actions to depress market prices; for pipeline opponents, fighting legal/regulatory battles) to prevent consumption of a particular source of oil.

In my mind, this is not the way the modern economic world works.  In the market-oriented economy that generally prevails around the world, it is demand — not supply — that drives all the mechanisms.  World oil markets are fungible:  pushing down in one place will cause counterbalancing forces elsewhere, mostly negating the initial restriction.  Trying to control markets by somehow altering supply is futile, as the forces of demand will insidiously work around any inhibitions.

To see an example of this, look at the ineffectiveness of the so-called war on drugs:  demand may be lowered from unfettered levels but nevertheless remains abundant, against all social wishes.  The market is not destroyed; be assured, the market remains — it’s just been driven underground to all sorts of illegal and nefarious suppliers.

Similarly, the lack of a Keystone XL pipeline will not prevent the tapping of the Alberta oil sands (as long as oil prices are high enough).  Participants in the market are too nimble and inventive.  Oil sands output is already being shipped to the U.S. not only over existing pipelines, but as they approach capacity, by an increasing number of rail cars.  In addition, the Canadians may build their own pipelines to the Atlantic or the Pacific Coasts, allowing oil sands to reach world markets even with constrained access to the U.S. if Keystone XL is never built.  So the opposition to the pipeline will mainly have ended up being for naught — other than to drive up oil prices a little bit, due to the extra costs introduced into the market by denying an economically-attractive project from being built.

I respect Pope for all he has done in his career for the environment, building awareness of the critical issues our planet faces and generating urgency for action.  But, at least in his most recent writing, his unconventional economic wisdom does not ring true to me.  I’m often a contrarian myself, but in this case, I believe that Pope’s out-of-the-box thinking should probably be put back in the box.

A Tale of Two EVs

Albert Einstein once said:  “Make everything as simple as possible, but no simpler.”  Pundits always pursue the former, but often fail to uphold the latter.

Such has been the case recently in regards to the prospects for electric vehicles.  Will electric vehicles be commercially successful or won’t they?  As often happens, there is superficial evidence supporting both sides of the argument.

On one hand, you have Tesla Motors (NASDAQ:  TSLA).  Tesla recently announced that it had achieved its first quarterly profit, on the back of better-than-forecasted sales of its new Model S sedan.

On the other hand, you have Fisker Automotive.  At the same time that Tesla was releasing good news, Fisker was making waves with its drastic downsizing, laying off 75% of its workforce.  Fisker’s main model, the Karma, is probably unfortunately named, as the company is certainly beset with misfortune these days.

Fisker’s bad news made more headlines than Tesla’s good news, in part because Fisker has received financial support from the U.S. government, and was thus being lambasted by some as the “next Solyndra”.  (In part, also, because bad news seems to get more attention than good news.)

So, why is Tesla doing fairly well while Fisker is definitely not?  This comparison between the two makes a strong case that Tesla simply has a better all-around product at a more attractive price than Fisker.

Moreover, it is said by many observers that Tesla has pursued a different fundamental approach to business than Fisker.  Fisker started by designing a wholly-new electric vehicle that looks cool — and the Karma is by all accounts beautiful — but only much later turned to considering how to actually manufacture it.  As a result, the costs and complexity of the car ballooned.  It’s a big challenge to source and manage thousands of parts from many vendors.  (It didn’t help Fisker when their main battery supplier, A123 Systems, had performance issues with their products and then went belly-up.)

In contrast, Tesla focused solely on developing an electric vehicle drivetrain, including the battery packs, and then outsourcing design as much as possible to other companies expert in the car business, and then focusing on making the integration/assembly of all the relevant systems as low-cost as possible.  (However, it’s an been documented to be an oversimplification to say, as some have, that Tesla’s initial model, the Roadster, is simply a Lotus Elise with an electric drivetrain.)

Time will tell if Tesla will be a long-term survivor.  No question:  succeeding as a start-up car company is very difficult.  However, Tesla may have turned the corner.

Clearly, though, there’s a long way to go and plenty of opportunities for critics to pile on.  In the wake of some bad press in February, when a New York Times reporter wrote a famously negative review of the Model S, Tesla still must fight the headwinds of skepticism about electric vehicles as a major automotive force.

Fisker’s woes don’t help.  For the too-populous segment of oversimplifiers out there, it’s easy to extrapolate Fisker’s plight to other electric vehicle companies, particularly if they have a reason to want to make the sector look bad.  To illustrate, Sarah Palin piled on by lumping Tesla with Fisker and calling them both as “losers”.

Tesla will do well to distance itself from Fisker as much and as quickly as possible, as they really do have a different tale to tell.

Batteries Are Hot! (Just Ask Boeing)

Boeing (NYSE: BA) may soon be on the verge of renaming its new 787 the Nightmareliner…

After a prolonged development program and costly production delays, Boeing started delivering its latest state-of-the-art airplane just 15 months ago, three years behind schedule.  Although the company has a lucrative backlog of nearly 800 787s on order, worth roughly $200 billion in revenues, production rates have been limited, as only 50 units have been delivered in a little over a year.

Alas, opening the production floodgates is not likely to happen just now.  In early limited service with a few airlines, the 787 is causing Boeing and its customers major headaches.  Thankfully, no-one has been injured, but a number of high-profile malfunctions have caused significant operational issues.

None has been worse than last week’s emergency landing in Japan, prompted by a burning smell in the cockpit.  This followed closely on the heels of an on-the-ground fire in Boston the previous week, upon which one aviation observer noted:  “Onboard fires on airplanes are as bad as it gets.”

These two incidents in close sequence produced a “That’s It!” moment, wherein all the aviation authorities worldwide put their collective feet down and issued orders to ground all 787s until the deficiencies have been identified and resolved.  There hasn’t been any similar draconian action in over 30 years, since the grounding of all DC-10s after the disastrous American Airlines 191 crash on takeoff at O’Hare in May 1979.

The most critical problems for the 787 all seem to relate to the batteries on board the plane.  The 787 design uses lithium-ion batteries made by GS Yuasa (6674) for many more functions than most airliners in order to maximize fuel efficiency.

Used in consumer electronics and electric vehicles, lithium-ion batteries are desirable because of their high energy/power density.  Simply put, they are very powerful for their size and weight — and in an airplane, size and weight matter a lot, especially when fuel efficiency is the goal.

Unfortunately, directly related to their high energy/power density, lithium-ion batteries are known to get hot.  Thermal management is critical, or else lithium-ion batteries start bulging and leaking electrolyte, which is highly corrosive.  Moreover, if the batteries don’t start bulging and leaking in response to increasing temperatures, a far worse fate could potentially arise:  explosions and/or fires.

This is not news.   A few years ago, Hewlett-Packard (NYSE: HPQ) settled a class action lawsuit involving burning laptops caused by lithium-ion battery fires.  Indeed, these experiences with lithium-ion batteries caused some to wonder if their use should be banned from airplanes for safety reasons.

Given this history of potential concern, you would think that Boeing would have moved heaven-and-earth to ensure that any lithium-ion battery on the 787 couldn’t experience a comparable problem.  Indeed, according to this article, Boeing engineers attest that the battery design now in use in the 787 was tested for a cumulative 1.3 million hours without failure.

It may not be easy to diagnose and solve a problem that hadn’t surfaced in 1.3 million previous hours.  Worryingly for all involved, GS Yuasa thinks it may take months to get to the bottom of the issues.

Two dissimilar reports over the weekend offer some hope for the principals that the solution will be sooner rather than later.  One story hinted that the battery problems may be confined to one batch of production.  Another story indicated that the two toasted batteries had been fed excessive voltage by their power supply system — a problem that perhaps could be resolved more easily.

Even if it’s a short hiccup, this is exceptionally costly to Boeing.  Not only is Boeing likely to have to cease new 787 production causing further delivery delays, face compensatory payments to airlines for their hardships, and incur increased costs in implementing whatever fixes are necessary on completed and already-in-the-queue units, but the potential credibility damage is enormous, even if unquantifiable.

For a company rooted in commercial aviation, nothing is more important than its safety reputation, which Boeing has built so superbly for nearly a century.   (“If it ain’t Boeing, I ain’t going.”)

At least three implications emerge from this escapade for the cleantech world:

  • Early adopters of new technologies in mission-critical application with large attached liabilities will be highly risk-averse.  The economic advantages afforded by improvement have to far outweigh the possible consequences of failure.
  • Lithium-ion batteries take another kick in the stomach.  As this posting by John Voelcker suggests, it will also hit the cause of electric vehicles, rightly or wrongly.
  • Battery technology still needs a lot of work — either to improve lithium-ion batteries or to develop commercially-viable substitutes with similar energy/power density.  Here is a recent posting by GigaOM blogger Katie Fehrenbacher entitled “13 Battery Startups to Watch in 2013.”

A Crystal Ball for 2013

Happy new year everyone.  As we reflect upon the year now past us, it’s also that time of year to look ahead.

For the cleantech sector, Dallas Kachan from Kachan & Co. recently put his neck on the line with his “Predictions for Cleantech in 2013”.  It’s a good read, well-reasoned.  The sound-bite version:

  • Cleantech venture capital may never again reach the heights (at least in terms of dollars invested) of 2011.  As Kachan notes, and I concur, that’s not necessarily a bad thing.  It just means that capital-inefficient deals that used to attract VC dollars won’t so much in the future.  And, it means that a lot of ineffective cleantech VCs will be washed out of the sector.  Moreover, other sources of private finance – especially corporates, but also family offices and sovereign wealth funds – will step in.
  • The solar and wind sectors face increasing challenges because grid-scale energy storage technologies aren’t coming to the fore as expected.  Dispatchable power sources with lower emissions will gain ground.  This is especially the case for natural gas, but Kachan controversially also sees a growing role for new nuclear technologies.
  • Clean-coal technologies become less oxymoronic.  Great quote here:  “No, clean coal doesn’t exist today.  But that doesn’t mean it shouldn’t.”  Kachan claims to have visibility on some promising new technologies in this realm.  Personally, I’m a little skeptical – I’ve heard such things many times before – but I’d be glad to be wrong.
  • Significant improvements are afoot for internal combustion engines, further stifling the advent of electric vehicles (EVs).  I agree with Kachan that a lot is being undertaken to improve the old piston engine.  Those innovations being pursued by tier one auto suppliers have a fair chance of quick adoption.  However, a lot of the potential breakthroughs I’ve heard about are being explored by venture-backed start-ups or garage-tinkerers, and I am less optimistic than Kachan appears to be that these companies can make large inroads into the incredibly demanding automotive supply chains within a year.
  • Mining and agriculture will become more important segments of the cleantech sector.  Especially with respect to agriculture, I agree with Kachan wholeheartedly, as increased corporate venture activity is beginning to burble in such stalwarts as Monsanto (NYSE: MON), Syngenta (NYSE: SYT), and Cargill.

Though I haven’t gone back to review his track record, Kachan claims a good history of prognostication from recent years.  I think many of his views for the near-future are justified and hence likely (if not for 2013 then more generally for the next couple of years), but he’s thrown in enough unconventional wisdom to make things interesting.

Let’s make 2013 a good one, shall we?

A Dose of Lithium

For those who want an overview of the current state of the lithium-ion (Li-ion) battery sector, the fall 2012 issue of Batteries International is just the thing.

It’s not a pretty picture that’s painted.  Beyond the well-publicized bankruptcies of A123 and Ener1, the general sentiment espoused is that players in the Li-ion sector face tough days ahead.  The technology is not improving rapidly enough, its costs are not coming down fast enough, and markets for its adoption are not growing as robustly as expected.  Meanwhile, too much capital has been invested in too much manufacturing capacity.  Inevitably, one must conclude that further shakeout is ahead.

The most data-laden article in the issue concerns the prospects for Li-ion batteries in electric vehicles (EVs).  In “The Battery Revolution That Stalled”, author Lynnda Greene summarizes four recent research reports – from McKinsey & Company, Pike Research, Lux Research, and Bloomberg New Energy Finance – that all provide projections for a long and slow (rather than short and steep) glide path of cost declines.  For EVs to make good economic sense, it is generally held that batteries need to be in the $150/kWh range.  It had been hoped that Li-ion would reach those levels by 2020, fed in part by the considerable funding frenzy the Li-ion sector received from private investors and government subsidies in recent years.  Alas, the shared perspective of the four research reports is that those cost levels won’t be achieved for well more than a decade, and perhaps two.

The near-term prospects for Li-ion in grid-scale power storage are not much more promising.  This is partly also because of costs, but also because of reliability – some of the Li-ion grid-scale test programs have resulted in fires, and risk-averse utilities are not keen on adopting a technology until it’s been thoroughly proven to work well under almost every conceivable set of conditions.

The challenges facing Li-ion cause some observers to wonder whether too much attention is being paid to Li-ion and not enough on other battery chemistries – including the old-fashioned lead-acid battery extensively used over the past century.  Some of the commentators that Battery International quoted are more subdued in their criticisms, offering modest glimmers of optimism here and there.  But, the inescapable sense from the issue in its totality is that li-ion won’t see happy days for quite awhile – if ever.

In a lengthy profile of his views, battery blogger John Petersen compares lithium-ion batteries to centerfold models:  “They’re glamorous, sleek, sexy and hot; the building blocks of pubescent dreams and mid-life crises.  But they’re expensive, temperamental, potentially dangerous and scarce.”  As several pages more of his analysis and quips indicate, Petersen is very pessimistic about li-ion – and about EVs in general, for that matter.  He thinks that the case for EVs based on li-ion technology has consistently been oversold, and never had the chance of achieving the naïve promises that were made.

MIT Professor Donald Sadoway may sum up the long-term fate of li-ion best:  ”It shocks me that 99% of the active battery community is working on lithium-ion improvements.  We’re not getting there though.  It’s like looking for your car keys underneath the street lamp because that where the light is shining.  But you didn’t drop your car keys there!  What’s next is beyond lithium; in fact, it’s a lithium-free chemistry, which has to date received almost no attention.”

It used to be that “lithium” was known primarily as a treatment for depression.  For those in the cleantech sector, lithium may be coming to be known better as a cause of depression.

Cleantech to “Backtrack” in 2013?

Our firm, Kachan & Co., has just published its latest annual set of predictions for the cleantech sector for the year ahead.

To our analysis, 2013 is shaping up to be something of a year of backtracking for the cleantech industry, a year that calls into question some of its traditional leading indicators of health, and one that surfaces long term risk to such cleantech stalwarts as solar, wind and electric vehicles.

Do we think cleantech is finished? Not at all. But much like young Skywalker learned in Episode V, cleantech is about to find out that the Empire sometimes gets its revenge.

In brief, (click here for long version) our predictions include:

Cleantech venture investment to decline –  Expect worldwide cleantech venture capital investment in 2013 to decline even further than it did in 2012, never to return to the previous highs it achieved before the financial crisis of 2007-2008, we believe. Among the factors: the departure of many venture investors from the sector because of disappointing returns, poor policy support worldwide and a lag time in the pullback of equity and debt investment.

But this doesn’t mean the sky is falling in cleantech. Family offices, sovereign wealth and corporate capital are now having more significant roles, filling gaps where traditional VC has played in recent years. It’s a sign the sector has matured, we believe. Fewer VC cooks in the kitchen may indeed impede innovation, but deep pocketed corporate capital should help clean technologies that are already de-risked reach more meaningful levels of scale.

Long term risk emerges for solar and wind – The solar and wind markets suffer today from margin erosion, allegations of corruption, international trade impropriety and other challenges. In 2013, we think poor progress in grid-scale power storage technology will also start to put downward pressure on solar and wind growth figures. Prices per kilowatt hour are falling, yes, but the cost of flow batteries, molten salt, compressed air, pumped hydro, moving mass or other storage technology needs to be factored in to make intermittent clean energies reliable and available 24/7. When also considering continued progress in cleaner baseload power from new, emerging nuclear technologies, natural gas and cleaner coal power, the growth rates for solar and wind appear increasingly at risk.

Clean coal technologies gain respect – We predict 2013 will be the year a new set of technologies will emerge aimed at capturing particulate and CO2 emissions from coal fired power plants and help clean coal technologies begin to overcome their negative positioning. The barrier to capturing coal emissions has been cost and power plant output penalties. Our research has identified encouraging new technologies without such drawbacks, and we think the world will begin to see them in 2013. China is expected to target domination of the clean coal equipment market, like it does already in many other cleantech equipment categories.

The internal combustion engine strikes back, putting EVs at risk – Important innovations quietly taking place in internal combustion engines (ICE) could further delay the timing of an all-electric vehicle future, we think. In 2013, unheard-of fuel economy innovations in ICEs will enter the market, including novel new natural gas conversion and heat exchange retrofits of existing engines aimed at dramatically lessening fuel needs. Some of these technologies, when combined, claim to be able to reduce fuel costs by 90%. That could push out the timing of EV adoption.

Cleantech adoption in mining – Notoriously conservative mining companies and their shareholders are starting to realize that the capital expenses of new clean technologies can be offset by reduced operating costs and the potential for new revenues. In 2013, we predict more adoption of cleantech innovation in mining, in areas such as tailings remediation, membrane-based water purification, sensors and telematics, route optimization software intended to lower fuel and equipment maintenance costs, and low water and power hydrometallurgical and other novel processes for mineral separation.

Big ag steps up and cleans up – We estimate that 2013 will be the year the world’s leading agricultural companies embrace new innovation in significant ways. Expect accelerated corporate investment, strategic partnership and agricultural M&A in 2013, as agricultural leaders race to meet consumer demand for cleaner, greener ways of producing food, having weathered intense consumer GMO-related and other backlash.

Want more rationale & data? Read our predictions for cleantech/greentech in 2013 in their entirety.

Agree? Disagree? Weigh in on our original article here.

A123 Goes 3,2,1,0

On October 12, the lithium-ion battery maker A123 (NASDAQ: AONE) essentially ran the white flag up the pole:  filing for Chapter 11 bankruptcy, agreeing to sell its automotive-related assets to Johnson Controls (NYSE: JCI), and fielding bids for its grid-storage business.

This is a big come-down from a company that not long ago had a market capitalization of over $2 billion, and was viewed as a high-flyer in the cleantech sector, having been one of the few VC-backed cleantech companies to achieve an IPO.

Alas, the markets for A123’s batteries — both in electric vehicles and on the electricity grid — didn’t grow as rapidly as many had anticipated.  Frankly, that isn’t terribly surprising, given how risk-averse and conservative the automotive and electricity industries are in adopting new technologies.  Not to mention, the economics just aren’t there yet, and while battery costs have come down and battery performance has gone up, continuing subsidies on fossil fuels makes the breakeven point challenging.

A few months ago, A123 had announced plans to obtain financing from Wanxiang, a Chinese manufacturer of auto parts, that would have kept A123 afloat (although may have only postponed the inevitable).  The proposed deal produced a din of objections that American-funded battery technology shouldn’t end up in foreign (especially Chinese) hands.  So, now it won’t, though I’m sure that holders of A123 equity aren’t particularly happy about the consequences.

As noted in this reportage by Forbes, the demise of A123 as a company doesn’t mean the demise of its technology — or of the benefits to American customers from using its technology or American employees in making products based on its technology.  This point is no doubt lost on those who bitterly complain about A123 having received U.S. government financial support as yet another bad investment and more evidence that the public sector is lousy at and therefore ill-advised to “picking winners and losers”.

As is often the case, only time will tell.  It will be interesting to report in a few years on how much value Johnson Controls will have been able to generate with A123’s technology.  And only then can a true reckoning be made of the cost-benefit of U.S. public financial support for this technology.

San Diego’s Smart Grid

I have to admit:  it’s hard for me to be terribly enthusiastic about electric utilities.  I know a fair bit about them; by my count, I’ve served about ten utilities in various consulting roles during my career.

While generalizations are always dangerous, for the most part, I think it’s safe to say that electric utilities can be characterized as highly protective of the status quo.  Utility executives and employees are typically competent, and take their mission for “keeping the lights on” very seriously, but they tend to be averse to change — the opposite of visionary.

For those of us who are trying to forge a new and better future, who see the eventual emergence of new and more environmentally-friendly technologies as natural and unstoppable as water flowing downstream, utilities can be large boulders in the river.

So it was with some skepticism that I began reading a couple of recent articles about the technology deployment efforts of San Diego Gas & Electric (SDG&E), an operating unit of the utility holding company Sempra Energy (NYSE: SRE).

In August, Power presented its 2012 Smart Grid Award to SDG&E, largely for its smart grid deployment plan (SGDP), which (in its own words) “empowers customers, increases renewable generation, integrates plug-in electric vehicles (PEVs) and reduces greenhouse gas emissions while maintaining and improving system reliability, operational efficiency, security and customer privacy.”

With this plan, SDG&E is aiming to enable a “smart customer” that is able to make more choices and have more control over energy decisions, a “smart utility” that manages a host of ever-advancing supply- and demand-side resources and the grid that integrates the two, and a “smart market” for customers and energy suppliers that preserves power quality and reliability on the grid while increasing price transparency.

In a separate article in EnergyBiz, a Q&A with SDG&E’s President & COO Michael Niggli reveals how extensive the SGDP roll-out has already been in San Diego.  All customer meters — 1.4 million electric, 850,000 gas — have been upgraded.  18,000 rooftop solar units totaling 138 megawatts (3% of peak demand) have been installed.  1600 PEVs are driving around town and plugging-in at various charging stations, bringing new meaning to the phrase “San Diego chargers”.

On top of this, a host of other less-visible advancements — extensive deployment of updated SCADA systems, weather sensors, wireless communications infrastructure — are bringing the grid in San Diego out of the 20th Century to the 21st Century.

All of this will help SDG&E meet the goal of supplying 33% electricity of its electricity from renewable (mostly intermittent) sources while also accommodating potentially 200,000 PEVs by 2020 — which would be difficult if not impossible to achieve without advanced technologies such as those being deployed as part of the SGDP.

As impressive as this all is — and kudos to SDG&E for their accomplishments — it should be noted that San Diego citizens and California regulators were critical to this outcome.  SDG&E may have rolled out the SGDP effectively, but they may not have developed the plan at all unless there was strong push and pull from outside forces.

San Diego residents have been very proactive in installing new renewable and efficiency technologies in their homes, and have been actively seeking engagement with SDG&E on how to get the most benefit from them.  In Sacramento, California”s ambitious set of energy policies — a renewable portfolio standard (RPS), greenhouse gas reduction legislation (AB32), distributed generation goals, demand response mandates, and improved building and appliance efficiency standards — made it untenable for SDG&E to stand still with aging equipment based on decades-old technologies.

Lacking these external forces, I doubt that SDG&E would have made anywhere near as much progress in the smart grid and wouldn’t be far ahead of most other U.S. utilities, who do generally lack these forces.

The moral of the story is that electric utilities, as regulated companies, are reactive rather than proactive.  SDG&E should be applauded for being highly responsive, but let’s not confuse that with being visionary.  Indeed, it’s naive and maybe even unreasonable to expect utilities to be visionary.  All we, as cleantech advocates can do, to “get” utilities to “get it” is to ensure that there’s enough outside pressure for them to “get it”.

If more places across the U.S. were more like San Diego, the transition to the cleantech economy would probably be further along than it is.

Bettering Batteries

I recently got an email entitled “Trojan Tips”.  Hmmmm, wonder what that could be about?  Alas, upon scrolling down from the subject line, I found the message provided advice from the battery manufacturer Trojan about proper battery management practices.

The more you get into cleantech, the more you realize how central a role is played by battery technology

Really, more broadly, energy storage technology is the central player in the cleantech drama.  Energy storage is not technically synonymous with batteries:  there are other non-battery storage technologies such as flywheels that exist.  Sandia National Laboratories has recently developed a modeling tool, called ES-Select, to help in determining which energy storage technology is most well-suited to a particular application need.

However, most of the major technology and commercial issues associated with energy storage are battery-related.  In other words, for the most part, talking about energy storage means talking about batteries, and vice versa.

Of course, everyone has used batteries for decades in portable electronics — beginning with transistor radios (remember them?) and flashlights, and now to smartphones and computers. 

Less obviously, batteries are making an increased push for stationary applications.  

Though generally invisible, banks of batteries have been in use for decades in telecommunications systems — ever notice how you get a dial tone on your landline when there’s a power outage? — and also in large computer and data centers in uninterruptible power supply (UPS) systems, such as those from the APC division of Schneider Electric (Euronext:  SU).  Since computers have become a consumer item in the past twenty years, UPS systems have gotten substantially smaller, to the point where many households now have them to prevent brief disruptions in power from the grid from affecting sensitive electronics. 

Imagine a UPS system so large it can power a whole neighborhood, situated at the local utility substation.  This would not only improve power quality for all the customers in the area, but it would also enable more utilization of intermittent renewable energy resources like wind and solar energy.  As this article discusses, the independent power producer AES (NASDAQ: AES) has established a new business unit to implement battery-based grid storage facilities at grid-scale.

As important as batteries may be in the future for the electricity grid, the really big future opportunity for batteries is in transportation.  For performance and economic reasons, this is also the most challenging application for batteries.

Improvements in batteries are the key enabler for wider market penetration of electric vehicles (EVs) to reduce petroleum consumption and associated emissions.  As noted by David Bello in “What Do We Need From the Battery of the Future?”, “the battery the future requires is cheap, more energy dense and less fragile”, while Joe Fargione of The Nature Conservancy is quoted as saying that EVs “need batteries that last longer, charge quickly and are inexpensive.”

Lower cost, more reliable, higher energy density, faster recharge times, longer lifetimes – all at the same time?  That’s a tall order, indeed.

Well, you can probably build a battery that simultaneously improves all of the above criteria…except the first one.  Alas, a high-performance small and lightweight battery that costs a fortune is of interest only for space and military applications.  Hardly anyone will buy a car where the batteries will cost more than a few thousand dollars.  A recent article by Vince Biancomano in Energy Efficiency & Technology says it all in the title:  “Industry Grapples with EV Battery Economics”.

One of the ways that EV players are “grappling” with battery economics is by considering leasing models, involving “hot-swapping” of discharged batteries with fully-charged batteries at service stations, as Better Place is aiming to offer (about which I’ve blogged in the past).  Alas, it will be difficult for the industry to come up with standards as uniform and widespread as the fueling infrastructure of gasoline pumps, nozzles and tanks that is ubiquitous in today’s developed economies.

Ultimately, however, an expensive battery being leased is insufficient to largely debottleneck the EV marketplace; the cost of higher-performing batteries must also come down significantly. 

According to McKinsey in its recent article entitled “Battery Technology Charges Ahead”, batteries must cost less than $250/kWh to be competitive with automobiles running on $3.50/gallon gasoline.  Alas, batteries currently cost about $500-600/kWh today, but the McKinsey analysis suggest a 60+% cost decline in the next decade, to $200/kWh by 2020.  This is hoped to be achieved by attaining greater manufacturing scale economies, reducing component prices via competitive pressures, and advancing technologies to increase the performance of batteries.

Our venture capital firm, Early Stage Partners, continues to see a robust deal flow of investment opportunities in early-stage companies that are working to develop innovative battery-related technologies – mainly for EVs, but also for other applications. 

Though discovered over 200 years ago by Alessandro Volta (hence, “volt” as the key unit of measurement), batteries remain an active field of invention, though the capital-intensity associated with maturing a physical technology through proof of concept all the way to achieving scale economies of mass production can be daunting.

Report from Energy Innovation Summit

Last week, many of the leading minds of the cleantech world congregated in suburban Washington DC for the 2012 Energy Innovation Summit.

The Summit is mainly oriented as a showcase of some of the most interesting and promising technologies that have surfaced directly or indirectly as a result of ARPA-E:  the Advanced Research Project Agency for Energy, a subgroup of the U.S. Department of Energy that was launched in 2009.

Of all the cleantech conferences I’ve attended in the past 12 years, and there have been far too many, this was one of the best, for several reasons.

First, most of the speakers were excellent (= interesting + informed).  Often at these kinds of events, the roster is populated by some combination of bureaucrats that in actuality are mid-level paper-pushers and geeks that speak in such granular detail about science or engineering topics that no-one can understand.  Either way, the comments are usually delivered in monotone, to overeager junior audience members busily taking notes they’ll never read and dozing or smartphone-checking senior audience members that have heard most of the same boring nonsense before.  (Cynical, much?  Yeah, I know.)

In contrast, we got to hear from Dr. Steven Chu, the Secretary of Energy, who is arguably the most brilliant cabinet member of all time (having won the 1997 Nobel Prize in physics for the cooling and trapping of atoms with laser light).  Dr. Chu reiterated some of his recent stump speech on the need for technological leadership to maintain/enhance U.S. competitiveness in the global economy, and the risks encountered from the need to stay on the frontier (Solyndra, anyone?)

We got to hear from Dr. Arun Majumdar, the Director of ARPA-E, who is just about as smart and knowledgeable, and perhaps more passionate and dynamic, than Dr. Chu.  Just one nugget from Dr. Majumdar:  the design life of a utility transformer is 40 years, yet the average in-service age of transformers on the U.S. utility grid is 42 years.  (Yet another factor in the drive for the “smart grid”.)

We got to hear from Bill Gates – yes, that Bill Gates – who revealed a depth of insight and concern that one would only expect of someone who had been playing in the cleantech game and fighting the good fight for decades.  Sample observation from Gates:  “Energy innovation in the U.S. is underfunded by at least a factor of 2.”  Gates talked at considerable length about the need for more research in carbon sequestration and in nuclear – noting his interest in TerraPower.

We got to hear from the Fred Smith and Ursula Burns, CEO’s of Fortune 100 companies FedEx (NYSE: FDX) and Xerox (NYSE: XRX), along with Lee Scott, the former CEO of WalMart (NYSE: WMT), talking about how energy technology innovation is critical to these goliaths of business.

I couldn’t attend all of the sessions because of various other commitments, and I purposely avoided sitting in on the remarks of the politicos – including Bill Clinton, Senator Lamar Alexander (R-TN), and Representative Nancy Pelosi (D-CA) – because (a) I’m disgusted with the state of the political environment and discourse in the U.S. these days,  (b) I’m confident that these speakers have arbitrarily-close-to-zero to say that would be useful or relevant to someone trying to actually create value with new cleantech innovations entering the commercial marketplace, and (c) I had better things to do when they were talking.  But, what I did hear from the keynotes and panels I did attend was generally pretty interesting and informative.

The networking at the event was impressive.  Many of the leading cleantech venture capitalists were milling around, along with actually-empowered senior executives of leading industrial corporations sponsoring truly novel stuff in energy technologies.  I only wished the name tags were of a larger font, so I could better see the identities of some of the people I was passing by, knowing that I was missing connecting with someone I really wanted to get to know.

But perhaps the most important reason that the Summit was such a positive event for me was the quality of the technology innovations and innovators that exhibited at the show – spanning from university research projects to start-up ventures to large corporations such as General Electric (NYSE: GE), Boeing (NYSE: BA) and Cree (NASDAQ: CREE).

At times over the years, I feel like I’ve seen or heard pretty much everything in cleantech, which sometimes makes me wonder if everything that could be invented or needed to be invented was already being worked on.  An event like this put lie to this misbelief.  People were talking about exotic/crazy stuff like wireless electric vehicle recharging while roaming.

After just the first day, I could see that there were lots of promising technologies being worked on really big opportunities beyond the set I kept seeing over and over again.  Moreover, most of these initiatives were led by entrepreneurs that were not only committed but also much more competent and capable than the tinkerers that represented most of the cleantech innovation realm a decade or so ago.

My overall impressions of the Summit gave me good hope that we are making real progress in the cleantech world, and that there’s a lot more for me to do and be excited about in the decades to come.  I myself was recharged on the fly.

2011 In The Rear-View Mirror: Objects May Be Closer Than They Appear

It’s that time again:  sifting through the detritus of a calendar year to sum up what’s happened over the past 12 months. 

Everybody’s doing it — for news, sports, movies, books, notable deaths…and now even for cleantech:  here’s the scoop from MIT’s Technology Review, and here’s a post on GigaOM.

So, my turn [drum roll, please], here’s my top 10 take-aways from 2011:

  1. Solyndra.  The utter failure of Solyndra, and the messy loan guarantee debacle, has been a huge black-eye to the cleantech sector.  It’s a political football that will be kicked around extensively during the 2012 election cycle, further widening the schism of support levels by the two major U.S. political parties for cleantech.  In other words, cleantech is becoming an ever-more polarizing issue — with Solyndra serving as the most visible tar-baby.
  2. Shale gas and fracking.   A chorus of ardent proponents of natural gas development, most vocally Aubrey McClendon, the CEO of Chesapeake Energy (NYSE: CHK) — the largest player in the shale gas game — is repeatedly chanting the mantra that shale gas is so plentiful that it can very cheaply serve as the major U.S. energy source for the next several decades.  And, recovery of this resource will create a bazillion jobs for hard-working Americans in rural areas.  In this view, who needs renewables?  Interestingly, this view also poses increasing threats to coal interests as well.  On the flip side, of course, the concerns about the use of fracking techniques, and the implications on water supplies and quality, are constant fodder for headlines.  Clearly, shale and fracking will continue to be hot topics for 2012.
  3. Keystone XL.  The proposed pipeline to increase capacity for transporting oil from the Athabasca sands of Alberta to the U.S. is the current lightning rod for the American environmental community.  Never mind that denying the pipeline’s construction will do very little to inhibit the development of the oil sands resources — Canadian producers will assuredly build a planned pipeline across British Columbia to ship the stuff to Asia.  Never mind that blocking the pipeline will do nothing to reduce U.S. oil consumption — which is, after all, the source of the greenhouse gas emissions that opponents are so concerned about.  This has become an issue of principle for NRDC and other environmental advocates:  “we must start taking concrete steps to wean ourselves from fossil fuels.”  Nice idea in theory, but this action won’t actually do anything to accomplish the goal, and will only further paint the environmental community in a damaging manner as being anti-business and anti-economics.  In my view, we have to work on reducing demand, not on curtailing supply; if we reduce demand, less development of fossil fuels will follow; the other way around doesn’t work.  The Obama Administration has punted approval for the pipeline past the 2012 election, but Keystone XL — like Solyndra — will be a major framing element in the political debates.
  4. Fukushima.  The terrible earthquake/tsunami in Japan in March killed over 20,000 people — and sent the Fukushima powerplant into meltdown mode in the worst nuclear accident since Chernobyl in 1986.  As costly and devastating as Fukushima was to the local region, it pales compared to the damages caused by the natural disasters themselves.  Even so, the revival of the perceived possibility that radioactive clouds could spew from nuclear powerplants put a severe brake on the “nuclear renaissance” that many observers had been predicting.
  5. Chevy Volt.  Released after much anticipation in 2011, sales of the plug-in electric hybrid Volt have been well below expectations.  Furthermore, as I recently discussed here, a few well-publicized incidents of fires stemming from damaged batteries have been a huge PR blow to gaining widespread consumer acceptance of electric vehicles.  Clearly, Chevy and others in the EV space have their work cut out for them in the months and years ahead.
  6. Challenges for coal.  As I recently wrote about on this page, the EPA has been working on promulgating a whole host of tightened regulations about emissions from coal powerplants.  These continue to move back and forth through the agencies and the courts, and coal interests continue to wage their battles.  But, between this set of pressures and low natural gas prices (see #2 above), these are tough days for old King Coal.  Not that they couldn’t have seen these challenges coming for decades, mind you, and not that some of their advocacy organizations don’t continue to tell their pro-coal messages with some of the most heavy-handed and dubiously factual propaganda outside of the recently-deceased “Dear Leader” Kim Jong Il
  7. Light bulbs.  One of the most absurd and petty dramas of 2011 unfolded over the planned U.S. phase-out of incandescent light bulbs, as provided for in one of the provisions of the Energy Independence and Security Act of 2007Representative Joe Barton (R-TX) led a backlash against this ban, arguing that it was an example of too much government intrusion into consumer choice — and succeeded in having the ban lifted at least for a little while, tucked into one of the meager compromises achieved as part of the ongoing budgetary fights.  This was accomplished against the objections not of consumers, but the objections of light bulb manufacturers themselves, who had already committed themselves to transitioning to manufacturing capacity for the next-generation of light bulbs:  CFLs, LEDs and halogens.  Now, the proactive companies who invested in the future will be subject to being undercut by a possible influx of cheap imported incandescent bulbs.  Way to go, Congress!  No wonder your approval ratings are near 10%.  Is it possible for you guys to focus on the big important stuff rather than on small bad ideas? 
  8. PV market dynamics.  Solyndra (#1 above) failed in large part because the phovoltaics market has become much more intensely competitive over the past year.  Module prices have fallen dramatically — no doubt, in large part because the market is now saturated by supply from Chinese manufacturers, who are sometimes accused of “dumping” (i.e., subsidizing exports of) PV modules into the U.S. marketplace.  This is stressing the financials of many PV manufacturers, including some Chinese firms and other established players.  For instance, BP (NYSE: BP) announced a few weeks ago its exit from the solar business after 40 years.  However, the stresses are falling mainly on companies that employ PV technology that cannot be cost-competitive in a lower pricing regime, whereas some of the new PV entrants — not just Chinese players, but some U.S. venture-backed players like Stion (who just raised $130 million of new investment) — are aiming to be profitable at low price levels.  And, after all, the low prices are what is needed for solar energy to achieve grid-parity, which is what everyone is seeking for PV to be ubiquitous without subsidies. 
  9. Subsidies.  Ah, subsidies.  In an era of increasing fiscal tightness (see #10 below), pro-cleantech policies are under greater scrutiny.  In particular, renewable portfolio standards are being threatened by state legislators of a particular philosophy who are opposed to subsidies in all forms.  The philosophy is understandable, but the lack of understanding or hypocracy is less easy to defend:  the status quo is almost always subsidized too, especially during its early days of development and deployment — and often remains subsidized well after maturity and commercial profitability.  Fortunately, there’s an increasing body of high-quality work that assesses the energy subsidy landscape in a generally objective manner, such as this analysis released by DBL Investors in September.
  10. Europe.  Although not a cleantech issue per se, the vulnerability of the European economy, the European Union, and the Euro in the wake of the various debt crises unfolding across the Continent is a major negative factor for the cleantech sector.  Europe is the biggest cleantech market, and many of the leading cleantech investors and corporate acquirers are European, so a recession (or worse, depression)  in Europe will be a very big and very bad deal for cleantech companies.

In all, 2011 was not a great year for the cleantech sector, and I don’t see 2012 being much better.  But, that’s not to say that good things can’t happen, or won’t happen.  Indeed, there will always be rays of sunshine among the clouds…or, to use another metaphor, you’ll always be able to find a pony in there somewhere.

Happy New Year everyone!

EV Companies Need to Douse the Fire Issue

Long a dream of environmentalists, and long a laughing-stock among car enthusiasts because of lame designs (e.g., GM’s EV1 and a long litany of goofy looking vehicles that look like a cross-breed between golf carts and toys), electric vehicles (EVs) are finally starting to make a real impact in the mass-market auto marketplace. 

Of all the electric vehicles, the most prominent is the Chevy Volt, which is a really good looking car with pretty impressive performance (range, acceleration and fuel economy). 

However, a negative news item about the Volt is starting to gain a little momentum:  that the batteries are prone to fires.  Over the summer, a Volt caught fire at a National Highway Transportation Safety Administration (NHTSA) facility a full three weeks after a crash test.  And, more recently, a Volt being charged in a home garage in North Carolina was involved in a fire.

Notwithstanding the possibility of misinformation — it now seems that the latter fire was not caused by the Volt, but started elsewhere in the garage, according to the local fire marshal — nevertheless there’s high potential for the Volt and all EVs to be stained and tarred with the perception that they are unsafe fire hazards. 

This stems from the use of lithium-ion batteries — which offer high energy and power density as is critical for non-stationary applications, but also have a propensity to burn.  Indeed, this was a serious issue a few years ago for laptop computers — and while that concern largely faded away, it came back into focus last week after an iPhone caught fire on an Australian commercial flight, and now threatens the EV sector before it can gain solid market traction.

Of course, no-one’s claiming that gasoline-powered vehicles aren’t prone to fires either.  Indeed, between the flammability and the toxic nature of the fuel, it’s hard to imagine the gasoline-powered auto we have taken for granted for decades being approved by regulators now if it were just being introduced today. 

However, gasoline vehicles have not been generally known to spontaneously combust when standing still, either.  

The last thing that the EV sector needs is a Hindenburg image.  The car makers and the battery makers in the EV arena need to tend to this issue, immediately.  The quicker-than-normal response of GM, offering loaner cars and the possibility of buy-backs to Volt owners concerned about safety issues, indicates how urgent the situation is.

Assaulting Batteries

A radical breakthrough in energy storage has long been considered the “holy grail” of cleantech.  With ubiquitous, scalable, reliable and (most importantly) low-cost energy storage, two main thrusts of cleantech adoption will be debottlenecked:  much deeper penetration of zero-emitting and limitless but intermittent solar and wind into the electricity generation mix, and significantly reduced needs for fueled internal combustion in vehicles.  Either of these is gargantuan in scope and implications.  As I like to say, whoever solves just one of them in a commercially-attractive way will make Bill Gates look like a pauper.

Of course, the primary energy storage technology in use now, and for the past century, is batteries.  The current state of battery technology has well-known performance characteristics that are generally satisfactory for present applications (e.g., starting automobiles, power quality management in uninterruptible power systems (UPS), portable consumer electronics), but not for the two above-noted game-changing applications.

And so the cleantech innovation and investment world has been searching near and far, high and low, for better energy storage solutions.

Some trailblazers are pushing entirely new technological platforms for energy storage.  About a decade ago, flywheels were especially in vogue.  As the name implies, this is a mechanical device that stores energy in a spinning mass.  However, several issues – notably frictional losses for stationary applications and weight and containment (you do NOT want a flywheel disintegrating into a hail of shrapnel in an accident) for mobile applications – have been difficult to overcome.  The two most well-known flywheel developers:  Active Power (NASDAQ: ACPW) continues to make a go of it, whereas Beacon Power (NASDAQ: BCON) just announced bankruptcy last week after a very long slog.

Supercapacitors and ultracapacitors also horn in on battery territory.  Like batteries, both supercaps and ultracaps are electrochemical devices.  However, unlike batteries, they typically charge/discharge more quickly, thereby allowing rapid surges and refills of power.  In truth, supercaps and ultracaps may be more of a complement than a threat to batteries:  batteries being generally pretty good in slow/long energy flows but not strong in fast/short energy flows (i.e., high energy density and low power density) and super/ultracaps being the opposite (i.e., high power density and low energy density).  Of course, if super/ultracaps can be matured to provide both high power and high energy density at attractive economics while meeting other key performance criteria (reliability, temperature tolerance, weight, etc.), then batteries will truly be under siege.  Indeed, as one recent article on GreenTech Media suggests, Ioxus claims to be developing an ultracap that really begins to intrude on the battery space for electric vehicles.

Even so, don’t underestimate the challenges these upstart technologies face in penetrating the energy storage market.  There’s a reason why batteries, as suboptimal as they may be, dominate the energy storage space:  nothing else has been able to do better, consistently, at low cost.

Accordingly, a lot of attention, effort and money still flows to the battery space – to make improvements to the reigning energy storage technology champion.  Of course, batteries can be improved on just about every possible dimension imaginable:  energy density, power density, weight, cost, depth of discharge, speed of recharge, number of lifecycles.

Battery technology innovations can generally be lumped into two categories.  One is better materials for the electrodes or electrolytes, to improve the performance of individual battery cells.  Second is battery management systems (BMS), which aim to improve the way multiple cells interact and affect overall battery performance. 

Both types of innovations were on display at last month’s unimaginatively-named The Battery Show in suburban Detroit.  It was a modest exhibition, as cleantech shows go. 

With few exceptions – LG comes most to mind, with a demo of its lithium-ion battery-based whole-home UPS that it will be unveiling in the next year or two – most of the booths showed the wares of small little-known companies seeking to get a toehold in the battery space, selling to battery manufacturers or gaining the enthusiasm of battery users who can then apply pressure on the battery manufacturers themselves.

Among manufacturers of batteries, most of the biggest companies such as C&D Technologies (OTC: CHP), East Penn Deka and Exide Technologies (NASDAQ:  XIDE) did not have visible presences.  Although disappointing, it’s not surprising:  the battery industry has consistently been characterized to me as sleepy and resistant to change, focused more on manufacturing and cost-minimization than technology advancement.  The one company probably most shaking up the battery sector – A123 Systems (NASDAQ:  AONE) – was in good force, although perhaps that should be discounted somewhat, since many of their employees are located just a few miles from the show venue.

While the battery sector may have largely been “fat, dumb and happy” for decades, I see that characteristic fading away in the coming years, perhaps quickly.  Many staid management and operating teams of the big guys are nearing retirement, and there’s so much at stake in the future of energy storage that highly-disruptive and well-capitalized global players will no doubt be increasingly entering the market and stirring the pot.  For instance, a recent article in The Economist mentioned the battery ambitions of Samsung (KSE: 005930), a formidable entrant-to-be.  

Increasing dynamism will be uncomfortable for the battery incumbents, but then again, no-one said the cleantech market was easy.

Google’s 70 Charging Stations for Employee’s 100 EVs

Google, Inc. has deployed more than 70 Coulomb Technologies charging stations at its worldwide headquarters in Mountain View, CA. Over 100 employees who own electric cars use the charging stations. The stations (EVSE) are also used by the company’s growing car sharing program for Googlers (GFleet), which includes Chevrolet Volts, Nissan LEAFs and Toyota Prius Plug-in Hybrids.

Many employees bought their own electric cars after using LEAFs and Volts in the GFleet. Employees who use transit get GFleet priority.

With plans for 250 more charging stations on its campus, and a goal to make 5 percent of its campus parking EV-ready, Google’s installation is the largest workplace charging installation for electric vehicles in the country. Much of the charging is done with renewable energy, including Google’s solar covered parking. No coal power is used in charging vehicles. Google has invested over one billion dollars in renewable energy, accelerating development of 1.7 GW of RE.

“By investing in new, green transportation technologies, Google is making a significant contribution to reducing our own greenhouse gas emissions,” said Rolf Schreiber technical program manager, Electric Transportation, at Google. “Our EVs and charging stations are part of our broader green transportation system that includes biodiesel shuttles that Googlers use to commute to work instead of driving their own cars. But we’re only one company among many, so we hope our green transportation initiatives serve as a model for other companies to incorporate sustainability programs into their own workplaces.”

 

Google manages its charging stations via the ChargePoint Network, the world’s largest network of charging stations and EV charging applications. The following workplace charging features are available through Coulomb’s ChargePoint Network:

· Controlled access: Via an online portal and smartcards, customers can control who accesses their charging stations (employees or guests), to control costs, eliminate electricity theft, and optimize station use.

· Measuring performance of green initiatives: Online station management provides tracking and reporting of energy usage, greenhouse gas and gasoline savings data. Reports are displayed by graphs that can be filtered by day, week, month, station attributes and energy usage/GHG range. Customers can also export their station data and combine the data with other system for further corporate sustainability analysis.

· Network Operations: The ChargePoint Network provides 24/7 station network monitoring to ensure network services are always available, Over the Air (OTA) station software upgrades to accommodate future advancements without onsite service, and the ability to tie into energy, building and other business management systems.

· Driver Services: Customers have access to the ChargePoint Network’s 24/7 driver telephone assistance, e-mail or text message driver notification alerts for charging session interruption or charging completed, and individual driver portals to customize notifications, track their energy usage and greenhouse gas savings, view charging history, and have access to the largest network of public charging stations in the world at www.mychargepoint.net

· Cost-saving utility programs and incentives: Charging stations contain utility-grade meters and the ability to communicate with other smart grid systems, enabling demand response, time-of-use pricing, and other smart grid programs provided by local utilities.

The company has been working over the last several years to deploy and experiment with new green transportation technologies.

· In 2007, Google launched RechargeIT, an initiative aimed at accelerating the adoption of electric vehicles.

· Google’s biodiesel campus shuttles use the latest clean diesel technology, reducing emissions 80 percent over engines from just a few years ago.

· Placing solar panels on buses to provide pre-cooling without having to run the engines.

· More than 3000 Googlers ride a shuttle bus to the company’s Mountain View headquarters every day.

· Google’s ChargePoint workplace charging system encourages more and more employees to commute using electric transportation.

Google’s transportation initiatives save 5,400 tons of CO2e emissions this year. Google is just getting started.

Google makes innovative use of electric vehicles and charging stations. For employees, Google took an early lead in converting Toyota Prii (yep that’s the official plural of Prius) to be plug-in hybrids. Then Google installed beautiful solar covered parking including charge stations so that electric cars can be charged with sunlight.

At its headquarters, Google is now showing us how to charge hands-free.  No plug. No cord. Using Evatran Plugless Power’s inductive charging system, one of Google’s maintenance short-range EVs parks in close proximity of the charger and charging begins. The Evatran unit is Level 2 (7.7 kW, 240V at 32A). The light EV was converted to use the inductive charging.

Google is also conducting other important pilots including testing the new Toyota Prius Plug-in, not a conversion, but the 2012 model from Toyota. Soon, Google will be testing the Honda Fit Electric  and other plug-in cars. Several Google founders drive Tesla Roadsters. Google founders Larry Page and Sergey Brin are Stanford University grad student “drop-outs.” They don’t regret the decision to make changing the world a priority over getting their PhDs.

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!

What Should Cleantech Mean for Vehicle Safety?

Earlier this month, President Obama signed into law the Pedestrian Safety Enhancement Act, which will require quiet electric and hybrid vehicles to emit a sound that allows the car to be detected by blind pedestrians. The interesting part of this law, which received the support of the Alliance of Automobile Manufacturers, was that it did not base its compliance requirements on some measure of quietness, but rather on the propulsion technology used. That significant detail has me wondering: what role should clean technology play in promoting safety, particularly in the auto industry?

Clearly, every car on the road must guarantee some base level of safe operation (example: batteries should not cause their vehicle to explode). But beyond that promise of reliability, the argument could go in two very different directions.

First, the call for more safety: “The future of personal transportation would not be bright with today’s level of danger on the road, so clean technology should assume higher standards of vehicle safety.”

There’s no denying the societal repercussions of auto accidents: according to the National Highway Traffic Safety Administration (NHTSA), in 2009 over 33,000 people died in over 5.5 million crashes in the U.S. at an economic cost of over $230 billion. Though NHTSA did not publish the statistic, the environmental impact related to property loss as well as hazardous material spillage was significant. And 2009 was the safest year on the road in ALMOST 50 YEARS. The safety hawks among us would argue that if today’s electric vehicles represent the mainstream choice for the car of the future, automakers should use them to set the standard for future safety technology. Furthermore, there’s nothing sustainable about scrapping so many crashed vehicles. Given that today’s EVs and hybrids are often more energy-intensive to build than conventional cars, one might argue that automakers have an obligation to incorporate accident avoidance technology if they are going to market their product’s sustainability.

On the other hand, there could be an argument for even less safety: “Electric vehicle technology is not where it needs to be for mainstream acceptance, but our environment needs a solution now. Two of the biggest challenges for today’s EVs are weight and cost. Limiting the safety spec required by law would provide EVs with a competitive advantage to spark market acceptance and fund future development.”

A few years back, NHTSA estimated that federal safety standards added $839 of cost and 125 lbs of weight to the average passenger car. Inflation has turned that cost into over $1,000, and 125 lbs represents the bare minimum safety spec, which greatly underestimates most automakers’ equipment levels. Industry research shows that early adopters of new technology are more risk averse and less concerned with safety than the mainstream. So in the interest of moving the technology along, why not give them what they want? By many estimates, $1,000 will buy an extra 2kWh of battery in the next couple of years, which could add an extra 10 miles of range. That would go a long way toward improving the value proposition of these products.

Looking to the future, Google has presented a vision of the autonomous automobile that could drive itself, coordinate with traffic, and solve both efficiency and safety problems simultaneously – but certainly at some cost and with huge commitments to behavioral changes (we Americans love our independence). In the meantime, what should clean tech mean for vehicle safety? I’d love to hear your thoughts!

Paul Hirsch is a Senior Product Planner at Toyota.

http://www-nrd.nhtsa.dot.gov/Pubs/811402EE.pdf
http://www.nhtsa.gov/cars/rules/regrev/evaluate/809834.html
http://www.insideline.com/chevrolet/volt/2011/comparison-test-2011-chevrolet-volt-vs-2010-toyota-prius-phv.html
http://www.nytimes.com/2010/10/10/science/10google.html?_r=2&partner=rss&emc=rss&pagewanted=all

Toyota Prius PHV Fights Chevy Volt

By John Addison (from original post in the Clean Fleet Report 7/6/10)

As the world leader in hybrid cars, Toyota is fighting to extend that leadership in both plug-in hybrids and battery electric cars. In plug-in hybrids, GM plans on first mover advantage with the Chevy Volt. In electric cars, the Nissan LEAF has a sizable lead over the . But Toyota has more cars on the road with electric motors, advanced batteries, and electric drive systems than all competitors put together. Toyota does not like second place.

In talking today with Toyota’s Cindy Knight, she assures me that Toyota is on track on all fronts. A number of U.S. fleets are already driving the new 2010 Toyota Prius PHV including the following:

San Diego Gas and Electric
Zipcar Washington DC
Ports of New York and New Jersey
Silicon Valley Leadership Group
Portland State University
Qualcomm
Southern California Air Quality Management District

By year-end, 600 Prius PHV will be on the road including 150 in the United States. A number will be in 18 month lease programs. In one prefecture in Japan, the Prius PHV can be rented by the hour. Ten of the Prius PHV will be part of Xcel Energy’s SmartGridCity program in Boulder, CO. Boulder residents will participate in an interdisciplinary research project coordinated by the University of Colorado at Boulder Renewable and Sustainable Energy Institute (RASEI), a new joint venture between the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) and the University of Colorado at Boulder.

During the test of 600 plug-in hybrids, Toyota will be receiving extensive wireless data from each vehicle, giving a near realtime profile of electric range, frequency and speed of charge, mileage, use, and reliability of the cars. Aggregated data will be posted on Toyota’s EQS Website

By 2012, Toyota will offer customers with a wide-range of vehicles with fuel efficient drive systems. The Prius will be the best seller, but the 2012 Toyota Prius PHV will be in demand from those who want to be greener with a 14 mile electric range. A compact hybrid will help the more price conscious buyers. The Toyota Camry Hybrid will continue to be offered. Lexus hybrids will continue to deliver at least 35 mpg along with their host of luxury appointments.
Ford will also offer customers a wide-range of fuel efficient and electric cars, starting with a Ford Focus that customers can buy as with ecoboost fuel economy, or as a hybrid, or as a plug-in hybrid, or as a pure battery electric. Ford will expand this range of offerings to other lines in the years past 2012.

Toyota’s Transition to Lithium Batteries

The 2010 Prius PHV has three lithium-ion battery packs, one main and two additional packs (pack one and pack two) with a combined weight of 330 pounds. In contrast, the Prius NiMH battery pack weighs 110 pounds. Each battery pack contains 96 individual 3.6 V cells wired in series with a nominal voltage of 345.6 V DC.

When the PHV is fully charged the two additional battery packs supply power to the electric motor. Pack one and pack two operate in tandem with main battery pack but only one at a time on the individual circuit. When pack one’s battery’s charge is depleted, it will disconnect from the circuit and pack two will engage and supply electrical energy to the drive line. When pack two has depleted it will disconnect from the circuit and the vehicle will operate like a regular hybrid. Pack one and pack two will not reengage in tandem with the main battery pack until the vehicle is plugged in and charged.

The Prius PHV’s larger HV battery assembly requires additional cooling. The vehicle is equipped with three battery-cooling blowers, one for each of the three battery packs. Each battery pack also has an exclusive intake air duct. One cooling blower cools the DC/DC converter.

Like all Toyota hybrids, the lithium-ion batteries are built to last for the life of the vehicle. Toyota is using lithium not NiMH batteries in its Auris hybrid. Mercedes, Nissan, Ford and others have announced hybrid plans using lithium. Will 2012 be the year that Toyota offers a hybrid Prius with lithium batteries? Toyota is not yet ready to say.

Toyota has a number of advanced battery R&D programs with nickel-metal, lithium-ion and “beyond lithium” for a wide variety of applications in conventional hybrids, PHVs, BEVs and FCHVs. Toyota uses Panasonic and Sanyo battery cells. When Panasonic acquired Sanyo, Toyota increased its ownership to over 80 percent in the Panasonic EV Energy Company which makes prismatic module nickel metal hydride and lithium-ion battery packs. Toyota also owns about 2 percent of Tesla, a major Panasonic partner.

an Urban Electric Car

In 2012, city drivers will have fun with the , a pure battery-electric car. Currently Smart car drivers are saving $20 per day squeezing into parking spaces too big for other cars. By 2012 Smart will have competition from the which is over 4.5 feet shorter than the Prius. For the microcompact space, Smart is introducing an electric version, as is Mitsubishi with the iMiEV. All these cars can squeeze in four people with skinny waists.

Toyota’s FT-EV is an electric vehicle with a 50-mile range and a maximum speed of 70 mpg. The lithium battery pack can be charged in 2.5 hours with a 220/240 volt charge and in less time if not fully discharged.

By John Addison. Publisher of the Clean Fleet Report and conference speaker.