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Take on the Energy Storage Conference – San Francisco

I have spent the last couple of days at the EESAT 2005 Conference in San Francisco, hosted by the Electrical Storage Association with Sandia Labs and the DOE. The forum was focused mainly on large scale storages schemes. It was a long running well run forum, done every two years, 150+ attendance. Frankly, about the presentations themselves, I was disappointed. Very few of the discussions were down to earth where I could relate. I listened to a lot of discussion of the importance of electrical storage to the region, but the discussion was very academic, heavy on the study side, very light on either the technology or products coming to market. And the policy discussion lacked a sense of the reality of what economics were going to be.

A few of the flow battery folks were there: VRB Power and ZBB (an Australian company, I was surprised to learn), as well as other perennial battery developers, Electro Energy some of the flywheel companies: Vicon, Pentadyne, Active Power, Boeing, Beacon. and EPRI and the State of California was well represented, as well as lot of academics, consultants, and a few global firms scouting progress or talking up a pilot they were involved in. There were also a number of papers on concepts like compressed air storage, which have been around for years with no takers.

I felt I was watching the CHP discussion of 5 years ago all over again, except it was on storage. A lot of teams chasing a market that is unlikely to materialize in the way or of the size they are expecting. The bright spots included a realization that integration was the key, but there was very little sense of near term products or projects being brought to market.

The most interesting discussion I thought was by a Japanese firm I had not heard of called Power Systems Co. (Very little of their English language website is finished.) I am not sure why they were giving a paper at this particular conference, but the engineer who presented said they had built a $25 mm plant to manufacture a next generation of supercapacitors, that they termed NanoCaps, product name ECaSS, and were selling an earlier generation now in Japan. Frankly, they were the only credible presentation I saw on a near term commercial business.

Noticeably absent or in short supply across the board were investors, customers, buyers, or other people with non-R&D based budgets. So that’s either opportunity, or perhaps just symptomatic of the state of large scale electrical storage today.

Project Finance for Renewables

Structured energy project finance has been relatively commonplace in supporting the development of new energy facilities over the past 20 years. Central to the concept of project finance is disaggregating risk and parceling it out to specific parties who can accept that risk. As a result, project finance works great for the 30th or 40th deal of the exact same type, but it is typically very hard to use project finance approaches for funding the development of facilities using innovative technologies or commercial arrangements.

Accordingly, project finance has historically been somewhat problematic for renewable energy interests to procure. Financiers central to structuring the deal were either unfamiliar or uncomfortable with the risks posed by renewable energy technologies, most of which have not been in commercial operation for decades. This lack of project finance capacity has thus been a major barrier to the widespread deployment of otherwise viable renewable energy technologies in commercial-scale projects.

The good news is that project finance capacity is increasingly opening its doors to renewable energy opportunities. Financial professionals with deep knowledge of the true abilities of renewable energy are finally beginning to amass capital to deploy in sponsoring the development of renewable energy projects. The recent announcement of the $80 million bankroll behind US Renewables Group is but one indicator of the growth in this pivotal capacity for the future growth of renewables.

Other boutique project financiers specializing in renewable energy opportunities are also emerging, and others will continue to form to capitalize on the rapid growth potential virtually uniquely offered by the renewable energy sector. We will know that renewable technologies and projects are truly mainstream when the big banks like Citi and JPMorgan lead the honor rolls of renewable energy project financiers. With the purchase of Zilkha Renewable Energy by Goldman Sachs earlier this year providing an immense boost to the credibility of renewables on Wall Street, these days cannot be long from now.

Is Bush Still Weakening the Clean Air Act?

Is the Bush Administration continuing to weaken our environmental regulations?
By and large the US has been getting cleaner and more environmentally friendly on a per unit basis for the past 30 years. This is a good thing, though we still have a long way to go.
I think that the future of power in the US includes a significant combination of coal generation (today still 55% of our electric power). Most electric power people would agree these days. So clean coal policies and clean coal technologies are very hot topics for me.
The electric utility industry understandably has concerns about the economic impact on its power plants from new and increased regulation and requirements. I have no desire to see our power prices jump overnight and put the brakes on the economy.
But it really bothers me to see a weakening enforcement of laws already on the books. I want to see measured increases in emissions restrictions year after year across the board. No major jumps, and no backwards steps. That way technology and capital planning can go hand in hand, and the industry can build a culture of long-term improvement. The biggest problem for industry in my mind is not increases in restrictions, but not knowing when and how much those increases will be. Or worse, believing that it can reduce the effect of restrictions currently in the rulebook. That only promotes industry lobbying to game the system.
Does the Bush Administration understand this fact? Check out one article suggesting it does not, or post a comment if you disagree.