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The Energy Policy Act of 2008

by Richard T. Stuebi

Betcha didn’t know that there was an Energy Policy Act of 2008, did you? Well, you won’t find any bill of that name. But, the passage of last week’s appropriately titled “Emergency Economic Stabilization Act of 2008” is almost tantamount to an energy bill.

The Senate prepared a nice summary of the energy-related provisions that were stuffed into the bill during the chaotic process to get something passed promptly that would reassure the financial markets. I have yet to review all of the provisions, but it’s clear that many of them have favorable implications for a variety of clean energy technologies, inluding wind, solar, energy efficiency, hybrid vehicles, biofuels, and smart grid.

It’s nice that there has been at least one small silver lining to the dark cloud of financial implosions in the past few weeks.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

Breakthrough in solar energy storage

The hydrogen economy is heralded in certain quarters as the green alternative to oil as an energy carrier. At present the vast majority of hydrogen generated is generated from natural gas. So right now a hydrogen fuel cell car, is most likely still ultimately reliant on a fossil fuel source, natural gas, to provide the hydrogen required. In the future of course the thesis is that we could use renewable energy sources to split water into hydrogen and oxygen and generate our hydrogen in that way, thus getting away entirely from fossil fuels.

There was an interesting development on this front reported in the media last week. Scientists at the Massachusetts Institute of Technology University have developed an efficient method of using solar energy solar energy to produce hydrogen from water. Nothing new there I hear you say. But the breakthrough appears to be the use of some specific catalysts which make the process of splitting the water into hydrogen and oxygen much more efficient and therefore viable.
There is no doubt catalysts can work some magic and if they have identified something that can do this here, they may well be on to something.

Daniel Nocera of the Massachusetts Institute of Technology in Boston, said the discovery could remove one of the major obstacles that has prevented solar power from being taken up widely as a viable alternative to fossil fuels such as oil and gas.
“The discovery has enormous implications for the large-scale deployment of solar since it puts us on the doorstep of a cheap and easily manufactured storage mechanism. The ease of implementation means that this discovery will have legs,” Dr. Nocera said.

So will solar panels and water solve our energy problems? Dr. Nocera thinks so stating that ‘sunlight has the greatest potential of any power source to solve the world’s energy problems given that in one hour enough energy from the Sun strikes the Earth to provide the entire planet’s energy needs for a year’.

Now there is another group out there, more of a fringe element perhaps, which is proposing the idea that you run your car on water. There is some interesting discourse and commentary on this in the green tech gazette. If you really want the hyperbola and sales pitch on this, check out ‘Run Your Car with Water

The basic premise is that you can use electrical current from the alternator in your car to split water into hydrogen and oxygen. The hydrogen is then burned along with the gasoline which helps increase fuel efficiency. I have to say I am very skeptical about this. I am inclined to think there is no such thing as a free lunch. The First Law of Thermodynamics states that: In any reaction, energy cannot be created or destroyed. The energy to split the water has to come from somewhere and in your car the energy source is your gasoline. If you use the alternator in your car to run your A/C it consumes fuel, so too would running your alternator to generate hydrogen. In fact the new Toyota Prius will have solar panels on the roof to power the A/C for this very reason.
However ….. a caveat to this, may be if there is a synergistic or catalytic effect of co-burning hydrogen with gasoline which makes the whole process more efficient (at present your typical car is about 20% efficient, i.e. 20% of the energy in your gasoline tank goes into moving the vehicle, the rest is lost mostly as waste heat).

Also if you were able to use say for example the braking energy of the car to generate electricity and use this electricity to split hydrogen, THEN you would be taking advantage of wasted mechanical energy to produce that hydrogen fuel. Again, the Toyota Prius already takes advantage of this phenomenon to power the battery.

Paul O’Callaghan is the founding CEO of the Clean Tech development consultancy O2 Environmental. Paul is the author of numerous papers on environmental technologies and lectures on Environmental Protection technology at Kwantlen University College. He is chair of a technical committee on decentralized wastewater management in British Columbia, is a Director with Ionic Water Technologies and an industry expert reviewer for Sustainable Development Technology Canada.

Separating Reality from Myth in Mass-Market PV

by Richard T. Stuebi

Rarely have I encountered a subject so widely misunderstood as the retail application of solar photovoltaics (PV).

So many people are terribly excited about PV, and are dying to install it on their house or building as a way to cut their ever-rising energy bills (not to mention the eco-friendly statement a PV system makes). I guess people tend to think that solar energy should be very inexpensive, just because we don’t pay anything to be hit by the sun’s rays every day.

It’s true that, once installed, PV systems cost virtually nothing to operate or maintain. And, it’s true that, once installed, PV systems will reduce energy bills. But it’s the cost of acquiring and installing the PV system that people somehow don’t compute.

In fact, the costs of the equipment to convert solar radiation to electricity are quite high. On top of this, the conversion process is not particularly efficient (less than 20% of the sun’s energy comes out as electricity), and the amount of energy in a given footprint of sunlight is not that great. As a result of all these factors, on a per-kilowatt-hour basis, without any form of subsidy, PV is just about the most expensive way presently available to generate electricity.

Exhibit 1 in a recent paper entitled “The Economics of Solar Power” by the management consulting firm McKinsey & Company neatly frames the interrelationship between installed cost of PV ($/watt), annual solar energy yield (in other words, how sunny it is at your location), and the implied cost of electricity from the PV system.

For a place like Cleveland — where we get about 1000 kWh per peak kW of PV installed, and where we are likely to face grid electricity prices of less than $0.20/kWh for the foreseeable future (due to our region’s reliance on already-installed coal and nuclear power) — PV economics only become compelling when the installed cost of a PV system (net of any subsidies) is on the order of $2.50/watt. Absent subsidies (and they are not plentiful here or in most other areas of the country), current PV economics of about $8-10/watt installed are simply not attractive, with investment paybacks of typically more than 20 years.

True, in places like Hawaii (with high grid prices and great solar exposure), PV is pretty attractive. But, for the teeming masses here in the Midwest and Northeast U.S., we need about a 60-80% reduction in installed cost for PV systems to become widely cost-effective (without subsidies) relative to the grid.

Clearly, the PV industry will benefit as grid electricity prices rise with increasing fuel prices and the eventual addition of carbon constraints. Moreover, PV innovators are driving hard for major cost reductions in PV modules, where 75% reductions (from $4/watt to $1/watt) can be foreseen in the next decade or so.

But, the balance of plant — the inverters, the mounting, the wiring harnesses — and the various labor costs — system engineering, distribution, installation — also require similar cost reductions, and are not receiving the same degree of attention. While economies of volume will help, the path to reducing the non-module costs of a PV system is less obvious, and is more a “leap of faith” at present.

Putting aside economics, if not marketed properly, PV systems can set up customers for disappointment in other ways, too. Relative to the size of most buildings, a rooftop PV system will only a small portion of the building’s electricity requirement. Furthermore, unless the system also includes an automatic transfer switch, it will not produce power for the building when the utility grid is down. And, unless the system includes a transfer switch and a battery bank, it won’t be of any help to power your house at night. Many people — even highly educated ones — are unpleasantly surprised when confronted with these facts.

In the long-run, solar energy is likely to be the major player in the energy market. It is, after all, the fundamental source of all the energy on the planet. The improvement of PV over the past few decades is impressive, its future potential is limitless. I just don’t like to see PV misportrayed, today.

With the run-up in energy prices, people are increasingly energy conscious (about time!) — and, worryingly to me, marketers are emerging to exploit widespread customer ignorance about PV.

Just recently, I saw on TV a “K-Tel” caliber advertisement sponsored by a firm called Power-Save Energy. I have to admit, I like their tag-line: “We make renewable doable”. But, I am troubled that their marketing pitches play to some of the fallacies that the mass-market seems to hold about PV. I don’t think this approach best serves the long-term interests of those who endorse a true long-term movement to solar energy.


Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

Is Al Gore Nuts?

In his speech in Constitution Hall this week, former Vice President and renewable energy investor Al Gore extolled a stretch goal challenging America to achieve 100% renewable power within 10 years. The quote: “Today I challenge our nation to commit to producing 100 percent of our electricity from renewable energy and truly clean carbon-free sources within 10 years.” And my favorite part: “When President John F. Kennedy challenged our nation to land a man on the moon and bring him back safely in 10 years, many people doubted we could accomplish that goal. But 8 years and 2 months later, Neil Armstrong and Buzz Aldrin walked on the surface of the moon.”

That statement is about like challenging your 2 year old to finish college by the time she is 12. Not exactly practical, more than a little crazy, and likely to be either ignored, or if you push it, to cause lots of therapy sessions by the time she is 8. I will, however, credit him with getting almost every renewable energy platitude I’ve ever heard into one succinct speech.

He does raise lots of good points about the need for a new energy policy not built around shipping dollars to the MidEast for oil (a definite must), for long term support for renewables (it is critical for us to get off our fits and starts mish mash idea of renewable energy policy), and for moving faster and larger to fight climate change (a topic near and dear to my heart, and one that is only partially helped by making broad statements about how fast the sky is falling, I mean, the glaciers are melting). In fact, there is no better way to give anti renewable energy and climate change naysayers fuel and ammunition than to make statements like these. Any path we go down, I’d still rather challenge that two year old to do something they can achieve, not try and make it through college by age 12 – especially if I’m asking her to pay for it. Slow and steady wins the race.

The core of Al Gore’s argument in his speech on the practicality of a 10 year all renewable energy goal boils down to this quote from his speech on fuels:

“What if we could use fuels that are not expensive, don’t cause pollution and are abundantly available right here at home?

We have such fuels. Scientists have confirmed that enough solar energy falls on the surface of the earth every 40 minutes to meet 100 percent of the entire world’s energy needs for a full year. Tapping just a small portion of this solar energy could provide all of the electricity America uses.

And enough wind power blows through the Midwest corridor every day to also meet 100 percent of US electricity demand. Geothermal energy, similarly, is capable of providing enormous supplies of electricity for America.”

And this one on costs and technology:

“To those who argue that we do not yet have the technology to accomplish these results with renewable energy: I ask them to come with me to meet the entrepreneurs who will drive this revolution. I’ve seen what they are doing and I have no doubt that we can meet this challenge.
To those who say the costs are still too high: I ask them to consider whether the costs of oil and coal will ever stop increasing if we keep relying on quickly depleting energy sources to feed a rapidly growing demand all around the world. When demand for oil and coal increases, their price goes up. When demand for solar cells increases, the price often comes down.”

These quotations, while partially true and very seductive, are highly misleading in this context. The effective conversion rates of that energy to usable electric power or liquid fuel is still horrendously low, and requires lots and lots of capital expenditures, and thousands of miles of new transmission lines to implement. And that’s not taking into account the state of technology – as an industry we really are the two year old in my analogy.

So given those conversion rates and the current high capital expenditures per unit of energy, the cost is still 5-20x (depending on what you count) the cost of conventional electric power generation (yes I know, unless you add in the carbon price and environmental externalities, but that’s still extra cost any way you slice it . . . unless you’d like to subsidize mine). Frankly no serious analyst is suggesting that within 10 years, given the state of technology and the best case forecast capacity, that solar can make up more than a small single digit fraction of even electricity needs or that wind can make up more than a meaningful minority share (let alone after doubling the global power demand by replacing liquid fuels in cars with electricity, which Al Gore also suggests), especially given lead times on power plants and transmission lines.

Most likely even if the technologies were already cost comparative, which they are not – if you need evidence, just look at our wind and solar industries in their current tizzy because their biggest subsidy programs are up for renewal this year – most analysts wouldn’t project a fabled grid parity on cost for renewables for at least the next decade, and certainly not at scale. So Mr. Gore’s statements on cost and technology are in part true, but imply a maturity level in these industries that just doesn’t exist yet. Given manufacturing scale up issues on the technology, transmission infrastructure requirements at least as large as the new generation requirements, and long lead times on building projects of this size (industry executives point to seven year time frames just to build a single transmission line), probably reaching even significant low double digit percentages of carbon free power within ten years is a stretch (excluding large hydro and nuclear which we already have but are hesitating to expand) across the whole nation. Notwithstanding that California has managed to come close to its target 20% number over the last decade, that’s one state leaning on the resources of many states, using the best available sites, federal subsidies paid for from all of our pockets, and that took a decade. When it comes to carbon capture and storage for coal fired generation, a concept with lots of legs – if it works – 10 years just isn’t enough time to achieve scale. The first big pilots are scheduled over the next several years, and there are too many unknowns to bet the farm on, without the lead time and capital cost issue. Though still definitely worth trying.

And as far as paying for it, there was an article in the San Francisco Chronicle today calculating our Federal government long term liabilities at $450,000 per American already mainly for Medicare and Social Security. Actually trying to replace our entire fossil fuel infrastructure within 10 years would push that to how much? Somebody please do the math before we launch a government funded mission to the moon, or legislate that our citizens pay for it instead. On costs, Mr. Gore made the statement in his speech “Our families cannot stand 10 more years of gas price increases.” I agree, but Mr. Gore, your 10 year, hell for leather, man to moon race for 100% renewable energy would guarantee just that.

So while extolling stretch goals for a two year old is probably a good idea, let’s keep it within the realm of possibility, and not just make grandiose statements for media effect. Now if Al Gore’s silly challenge on renewable energy was simply a trojan horse to get people talking about how to move forward on fighting climate change and addressing our long standing energy policy issues, I’m all for that and am happy to help. After all, the words Al Gore and climate change make for very searchble blog articles! But personally when I make outlandish statements, I do like to bring an modicum of practicality to the discussion.

I will leave you with one final note, and please remember, I am actually a proponent of the ideals in Al Gore’s speech, I just prefer to get there in one piece. One theory on the effect of the history of the man on the moon driven space race that Mr. Gore challenges us to copy basically says that we pushed for a single high profile goal so fast and furious that we effectively skipped ahead and outran our infrastructure and capabilities to get a nonscalable shot at the moon in the target time frame. The theory goes on to suggest that’s why after reaching the moon so fast we haven’t progressed at the same rate in space since, and had we taken it slower, we would have gotten there a few years behind, but might be on Mars by know. Akin in a military campaign to outrunning your supply chain, and then getting your army surrounded and destroyed – or perhaps invading a country half way around the world, winning the war in weeks and forgetting to prepare for the peace. And just to show that I can deliver as many platitudes in one article as Mr. Gore, that’s why you never get involved in a land war in Asia.

Energy and environment are the two pillars of everything in our lives. Mr. Gore and I want the same thing, but he thinks we can’t afford not to swing for the fences – I think we can’t afford to mess it up.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding CEO of Carbonflow, founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of Cleantech.org, and a blogger for CNET’s Greentech blog.

Aloha

by Richard T. Stuebi

I have the pleasure of writing this posting from one of the most beautiful places on the planet, Hawaii, where I am lucky enough to travel regularly to visit family.

In 1995, while lounging on the Big Island, I decided to shift my career away from conventional energy towards alternative energy. I saw what was then considered a big windfarm at South Point — 37 Mitsubishi 250 kw turbines. Many of the hulking machines were not turning, even though the wind was consistently strong, no doubt because of mechanical difficulties. Still, I was intrigued, and foresaw the need and possibilities for renewable energy — especially in places like Hawaii that rely upon imported oil for virtually all of its energy needs. I had just been reading The Prize, Daniel Yergin’s awesome history of the oil industry, and it wasn’t hard to conclude that we as a society needed to move off of oil for a variety of environmental, economic, and geopolitical reasons.

Every time I return to Hawaii, I take measure of how much renewable energy has been installed. Solar, wind and bioenergy technology and economics have improved considerably, and of course oil prices have skyrocketed. The local utility companies, owned by Hawaiian Electric Industries (NYSE: HE), have actively pursued collaborative integrated resource planning efforts to engage the public in shifting to a more diversified and cleaner energy supply.

And yet, 13 years after I first took note of the situation and opportunity, oil still dominates Hawaii energy supply, even though there’s been significant additions of renewable energy. Solar panels are nowhere near ubiquitous. A few new windfarms have been installed, but considerable potential remains untapped, stymied presumably by aesthetic issues. With its history of sugar production, biofuels should do well here — but they aren’t much of a factor so far. Even the geothermal resources associated with the volcanic activity is not fully exploited.

If renewable energy can’t make massive/rapid inroads in Hawaii, where can it do so? It seems to me that the Aloha State represents an excellent laboratory for CleanTech Revolutionaries to study the barriers to widescale advanced energy technology/infrastructure adoption — and more importantly, how to overcome them. At minimum, Hawaii represents a cautionary tale of how hard and slow it will be for CleanTech to change our world.

Richard T. Stuebi the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

Here Comes The Sun

by Cristina Foung

My favorite green product of the week: Solio Classic Universal Hybrid Charger

What is it?
Since summer is right around the corner, you may be spending more time outdoors. But what happens if you get caught with a low cell phone or iPod charge? Oh no! Have no fear. That’s where the Solio hybrid solar charger comes in. This charger can accept power from either the sun or the wall. The energy is stored in its internal rechargeable battery.

Why is it better?
As you well know, standard chargers plug into the wall and suck up electricity. And most grids are tied to some coal burning plants. But the Solio, with it’s 3 petal solar panel design, harnesses the energy of the sun to charger all of your smaller electronic gadgets, including cell phones and PDAs, iPods (or other MP3 players), game players, GPS devices, and even digital cameras. A fully charged Solio Classic will charge the average cell phone more than twice or let your rock out with your iPod for 20 hours. But iPhone users be warned – I hear they only charge iPhones about 50%.

Of course, if you’re looking for a rapid speed charge, the Solio probably won’t do it for you. It takes about 8 to 10 hours to charge fully in the sun. But if you’re headed for a relaxed day at the beach or going for a weekend camping trip and you just can’t shake that mobile connection, the Solio is a great portable device and it only weighs 5.6 ounces. And it comes in silver, black, pink, and white, which is fun!

Where can you find it?
You can order a Solio Classic directly through the Solio website. It retails for $99.95 (you can also look into their other models including the Solio Magnesium Edition or the H1000 hybrid charger).

Or! You can be a grand prize winner in Huddler.com’s Green Goodies Contest and win a Solio as well as $250 worth of other green goodness.

Besides her green products column on Cleantech Blog, Cristina is a passionate advocate for green living at the Green Home Huddle at Huddler.com, which focuses on electric cars, energy efficient appliances, and other green products.

The Other Solar Energy

by Richard T. Stuebi

Ten days ago, I attended a one-day symposium on climate change solutions at Oberlin College. Speaking at the symposium was John O’Donnell of Ausra.

Ausra is a leading player in the field of concentrating solar power (CSP), which utilizes mirrors to focus sunlight on a heating element containing a fluid to produce a steam that drives a turbine to generate electricity. In other words, solar thermal electricity – a field that was highly active in the 1980’s only to experience a 15+ year hiatus – is now coming back with a vengeance. Ausra claims that its CSP technology will soon be able to enable electricity production (in sunny desert climates, such as the southwestern U.S.) for about 8-10 cents/kwh.

Moreover, Mr. O’Donnell discussed how Ausra was working on integrating its CSP generation technology with thermal energy storage approaches, so that Ausra’s powerplants would be able to produce electricity not just when the sun is high in the sky — from 7 am to 6 pm — but over a time window more closely aligned to utility peak loads, which stretch from about 10 am to 8 pm. He made the interesting observation that thermal energy storage, using oils and molten salts, is many times more efficient and cost-effective than large-scale energy storage with batteries.

With all of the hype (much of which deserved) for solar photovoltaics (PV), it’s easy to forget about solar thermal approaches, and CSP particularly. Although not as universally applicable as PV, CSP can make a big dent in national energy supply, exploiting only a relatively small fraction of otherwise unusable desert land. In many cases, the gating factor for CSP deployment — just as has been the case for wind energy — will be the availability (or lack thereof) of transmission capacity to electricity load centers.

Mr. O’Donnell made the point that building roads in the U.S. was a local phenomenon subject to a patchwork of regulations and constraints — until President Eisenhower broke down the barriers with the creation of the Interstate Highway System in the 1950’s. He further noted that high-voltage DC technologies now readily available — such as those offered by ABB (NYSE: ABB) — could transmit large blocks of power across the whole continent with losses of only about 11% (excluding the conversion facilities at each terminal).

We in the cleantech community haven’t talked much about it, instead focusing on the sexy/cool generation/storage/consumption technologies, but maybe it’s time to ratchet the discussion about the so-called “smart grid” up to another level.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

Cutting the Cost of Solar the Unsexy Way

Most of Silicon Valley focuses on the cost of the photovoltaic module, and how to bring that down. In fact, most of Silicon Valley focuses on how to fundamentally change the basic technology of the module – from crystalline silicon based to thin film deposition. Very sexy. And very risky. And currently breaking the back of more than one company and investor who is trying. What’s worse, the module is only 30-50% of the per kwh cost anyway.

In the meantime, the cost of solar on a per kwh basis has continued to improve, primarily on the back of unsexy work on the integration and installation side, as well as the growing size of the average photovoltaic installation. This is despite the increase in average module prices in recent years, driven by the silicon shortage.

Cleantech Blog has written about the concern that the real make or break for solar economics is how much power you get out of the system, not just the cost per watt of the panels. We believe that installation and design decisions are the make or break for that variable, not the technology choice. We have also written on the topic of integration and installation, and the need for better data and monitoring on the back end, like our friends at Fat Spaniel are improving, to inform the analysis.

But what about the analysis on the front end of the installation process? Everyone in the industry knows that installation is a large portion of the upfront costs, and everyone knows that how well you design your solar system has large implications for the economics of your installation.

So how do we actually streamline solar from the front end? Well, it’s happening. The solar decision making software tools are slowly developing. There are a number of products available now to streamline the modeling and estimation of solar installation costs and performance, and make the end user and installer’s life easier: including products like CPF Tools, OnGrid, and PVOptimize, which range from spreadsheets to on demand services. My favorite is CPF Tools, by Clean Power Finance, and I had a chance to meet with a couple of their executives, including Joseph Brakohiapa, the other day to discuss what they are doing. For one, they have married solar estimation and modeling tools with an on-demand MRP system for solar installers. I certainly believe in on demand software, and it’s hard to see how modeling tools without links into your inventory and proposal systems can actually take much cost out. And second, they are working to integrate those tools into the financing model for small scale solar loans. When coupled with backend monitoring like Fat Spaniel’s, I can see the path for real progress – and possibly more importantly, I can see a way for both the installer and the end customer to finally begin to manage risk and cut costs.

From monitoring, to ERP, to decision support and business intelligence. No industry in today’s world can scale without it. It’s time the solar sector grows up.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, a blogger for CNET’s Cleantech blog, and the Chairman of Cleantech.org.

The Increasing Ubiquity of Cleantech

by Richard T. Stuebi

I have subscribed to Forbes for over a decade because, unlike many other popular business journals, it seems to have a genuine voice — even if I sometimes disagree with it.

On a plane flight from Cleveland to L.A. last Thursday night, I read the March 10, 2008 issue, and was amazed at how pervasive cleantech has become — even in its stoutly conservative pages:

It was the SKF ad that really floored me, making me take notice just how ubiquitous cleantech is truly becoming. I’ve never seen SFK advertise anywhere before. Just which decision-makers is SKF trying to reach with this placement in a mass-market magazine?

Cleantech is seemingly everywhere. True, some of it may be “greenwash”, but a lot of it is real, and it is growing.

Then I went back to reading the magazine, and realized we still have a ways to go: on p. 19, Steve Forbes writes yet another editorial continuing to stoutly deny climate change. I laugh and shake my head: some things never change.

Maybe Mr. Forbes should take better note of what the major corporations showing up in the pages of his magazine are actually doing to make money. After all, isn’t Forbes the paragon of capitalism? If companies are rushing to cleantech in droves, shouldn’t Forbes take heed of what the market is leading these companies to do to increase their profitable growth?

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

Powering the Planet

by Richard T. Stuebi

“Powering the Planet” is the title of an extraordinary speech that is regularly given by Nate Lewis, Professor of Chemistry at CalTech. It is a bit long and detailed, but very much worth reading, as it elegantly frames the scale of the worldwide energy/environmental challenges to be faced in the coming decades.

The gist of the presentation is that aggressive pursuit of energy efficiency is critical — but we still need to supply the remaining human energy requirement in some carbon-free fashion, which leaves us relatively few viable options:

  • Nuclear power, which concerns Lewis not for safety/security reasons but because of inability to expand nuclear utilization quickly/sufficiently to meet the world’s needs
  • Carbon sequestration of fossil fuel burning, which Lewis says may not be available in time or at the volumes necessary to have significant beneficial impact on climate change
  • Hydro, geothermal, wind and ocean energy, which are all fine in Lewis’ view, but inadequate in scope to supply global energy demands
  • Bio-based energy, which Lewis finds to be highly inefficient and therefore unlikely to be able to provide more than a small fraction of worldwide energy requirements

This leaves solar energy, which Lewis concludes is the best hope for the planet — technologically known to work, scalable with no binding supply limitations, at potentially reasonable economics with continued advancement. Then Lewis closes with the clincher: if we’re going to succeed with solar energy, our priorities need to change:

“In the United States, we spend $28 billion on health, but only about $28 million on basic solar research. Currently, we spend more money buying gas at the pump in one hour than we spend funding basic solar research in our country over an entire year. Yet, in that same hour, more energy from the sun is hitting the Earth than all of the energy consumed on our planet in that year. The same cannot be said of any other energy source.”

‘Nuf sed.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

2007 Roundup

by Richard T. Stuebi

As has become my custom, with the year drawing to a close, I now look in the rear-view mirror and try to distill what I see. In no particular order, here are my top ten reflections on 2007:

1. Popping of the ethanol bubble. Not long ago, it seemed like anyone could get an ethanol plant financed. Now, no-one will touch them. Why? Corn prices have roughly doubled, and producers can’t make money selling ethanol into the fuel markets when having to pay so much for feedstock. Along with the increasing realization that public policies so far to build ethanol markets has largely been for the financial benefit of big agri-businesses such as Arthur Daniels Midland (NYSE: ADM), ethanol has now become a dirty word to many. Progress on cellulosic ethanol technologies may not happen fast enough to redeem seriously diminished public perceptions about ethanol generally.

2. Continuing photovoltaics bubble. For illustration of this phenomenon, let’s take a look at First Solar (NASDAQ: FSLR). Nothing whatsoever against the company; indeed, they make a very fine product. It’s just that their share price has increased by a factor of 10 — from $27 to nearly $280 — in one year. At current levels, the company’s market cap is $20 billion, at a P/E ratio of over 200. I know the solar market is hot, but geez, c’mon. A 10x return in one year on a publicly-traded stock is simply not supposed to happen.

3. Increasing costs for wind energy. For many years, wind energy has become more competitive, as the industry matured and production efficiencies were tained. However, with increasing prices for virtually all commodities (e.g., steel, copper, plastics) and a weakening dollar against the Euro (note that most turbines are made in Europe), the economics of wind are unfortunately moving in the wrong direction right now.

4. Gore as rock star. First, an Oscar for An Inconvenient Truth. Then, the Nobel Peace Prize. To top it off, becoming a partner at top-notch venture capital firm Kleiner Perkins. What next for the what-could-have-been 43rd President? Whatever it is, at least the cleantech sector now has its iconic poster-child.

5. Cheers to Google. Google (NASDAQ: GOOG) has gotten into the cleantech game in a big way by creating an initiative with the mission to develop and launch renewable energy technologies that produce electricity more cheaply than coal. Once that aim is achieved, renewable energy will rapidly become ubiquitous, and we really will start getting on a path of serious carbon emission reductions.

6. Death of the incandescent lightbulb. Early in 2007, Australia led the way to ban incandescents, to force a shift to more energy efficient lighting technologies (fluorescents for now, perhaps eventually LEDs). Amazingly quickly, the U.S. followed suit, passing an energy bill by year-end that effectively phases out incandescents by 2014. This should have a major energy efficiency impact, and yield a big cut in greenhouse gas emissions, in a relatively short amount of time.

7. Tightening CAFE — finally! After decades without change, the U.S. Congress finally acted to impose more stringent corporate average fuel economy (CAFE) standards for auto/truck manufacturers. The main milestone is a 35 mpg combined car/light-truck standard by 2020. For the first time, trucks are now part of the CAFE equation, closing the loophole that helped propel SUVs to prominence. Strengthening CAFE is probably the most important thing that American politicians could do to actually make a meaningful dent in reducing dependence on Middle Eastern oil.

8. Uncertain future for coal. On the one hand, MIT released a major study entitled “The Future of Coal” that compels a radical R&D push to commercialize technologies for carbon capture and sequestration (CCS), underscoring the reality that coal-fired electricity generation is going to be a major factor for a long time. On the other hand, I don’t see any such coal R&D push actually happening, nor even that much progress on CCS. A recent statement by the U.S. Department of Energy concerning its oft-touted FutureGen program for piloting CCS technology indicates a possible retrenchment. Meanwhile, Pacificorp — which is owned by Warren Buffett’s legendary holding company Berkshire Hathaway (NYSE: BRKA and BRKB) — recently cancelled a coal CCS project in Wyoming, with a spokesman quoted as saying that “coal projects are no longer viable.” Ouch.

9. Oil at $100/barrel. Starting the year at about $60/barrel and then promptly falling to near $50, oil prices increased steadily from February to November, reaching the high-90’s. I suspect we’ll see $100/barrel sometime in 2008; I don’t suspect we’ll see oil below $40/barrel very much anymore. Even at prices not long ago considered absolutely stratospheric, it appears that there’s been very little customer/political backlash so far: the world doesn’t seem to be ending for most Americans.

10. Serious dollars betting on energy technology. There’s been a lot written about the big surge in venture capital invested in new energy deals. I find even more intriguing the increasing amount of corporate and public sector investment in new energy R&D. As perhaps the most prominent example, in the U.K., the government has pledged up to $1 billion over the next 10 years in matching support to private investments in the Energy Technologies Institute, which includes the participation of such leading corporate lights as BP (NYSE: BP), Shell (NYSE: RDS.A and RDS.B), Caterpillar (NYSE: CAT), Electricite de France (Euronext: EDF), E.ON (Frankfurt: E.ON), and Rolls-Royce (London: RR.L). That’s a lot of money and corporate weight in the mix. I can’t imagine that such an initiative will produce nothing of use.

Best wishes to you and yours for 2008. Let’s hope it’s a good year, even better than the one wrapping up.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

Solar Power 2007

By John Addison (10/2/07) Like a castle under siege, Solar Power 2007 was such a hot event that registration had to be closed a week prior to the conference opening in Long Beach, California. Over 12,500 people attended last week. There was enthusiasm for high growth and technology advancements in photovoltaics (PV) and in large-scale concentrating solar power (CSP).

In 2006, PV grew over 40% to $20 billion in revenue and over 2,500 MW of new solar power. Renewable Energy World. The European Photovoltaic Industry Association (EPIA), forecasts a €300 billion industry by 2030 which will meet 9.4 per cent of the world’s electricity demand. By 2030, solar is forecasted to be the least expensive source of energy in many sunny regions of the world.

In the last 12 months, over 40% of PV installations were in one country – Germany – where high feed-in tariffs make it financially compelling to sell solar power to the electric utility than to buy power from the utility. Some presenters argued that even in select U.S. markets, such as Hawaii, subsidized solar is at price-parity with grid delivered electricity.

PV prices have fallen 90% in the past twenty years; 40% in the past five. This is good news to counter a hot-climate future as solar prices drop and coal prices increase.

The PV growth rate would be higher, but polysilicon will be scarce through 2010 according to most forecasts from the conference’s CEO panel. Polysilicon supply is expected to triple by 2010 from 2006 capacity. The shortage has also been a driver of technology that delivers the required electricity output with less silicon. These technologies include thin film, high efficiency PV, organic, concentrating PV (CPV), and balance of system improvements.

World leader, Sharp (SHCAY) is participating in all these technologies. Sharp continues with market share leadership, despite little growth due to the polysilicon shortage. Sharp plans to bring online new capacity to maintain leadership. Q-Cells (QCEG.F) and Kyocera (KYO) have taken market share from Sharp with their high growth. Suntech (STP) wants to take advantage of China’s low cost structure and vast market to surpass all.

First Solar (FSLR) has the cost to beat with its cadmium telluride (CdTe) alternative to polysilicon. First Solar’s (FSLR) production costs are $1.25 per watt of generating power vs. $2.80 for traditional solar systems. In the next few years, First Solar plans to be the first to achieve $1 per watt. This year, First Solar did not have an exhibit at Solar Power 2007. It is backlogged for several years, with contracts for $4 billion through 2012. Other cadmium telluride producers are in early-stage mode.

Public utilities had a record presence at Solar Power 2007. Many are mandated to increase their renewable portfolio. For example, the California RPS program requires that by 2010, 20% of their electricity will be from renewables. By 2020, it must be at least 33%. SB1368 closes California to coal produced electricity unless CO2 sequestration is used. This leaves California utilities highly vulnerable to the price of natural gas, providing an added incentive to diversify to renewables.

Utilities are especially interested in large-scale CSP plants delivering 10 to 600 MW. Four GW of CSP is being installed globally. Southern California Edison and San Diego G&E have contracted for 500MW with Stirling Energy Systems. This large-scale plant will include 20,000 curved dish mirrors each concentrating light on a Stirling engine. Other large-scale plants in Europe will also provide hours of thermal storage so that plant output can match the peak load demands of utilities. This counters the utilities’ concerns about intermittency of PV and wind. CSP costs are projected to drop to 8 cents/kWh, making it competitive where coal and natural gas greenhouse gas producers must buy greenhouse emission credits.

By 2010 major utility PG&E will meet its 20% target of delivered electricity from clean renewable energy. This will include 553 MW of concentrating solar power (CSP) from a new Solel project. When fully operational in 2011, the Mojave Solar Park plant will cover up to 6,000 acres, or nine square miles in the Mojave Desert. The project will rely on 1.2 million mirrors and 317 miles of vacuum tubing to capture the desert sun’s heat. It will be the largest CSP project in the world. Solel utilizes parabolic mirrors to concentrate solar energy on to solar thermal receivers. The receivers contain a fluid that is heated and circulated, and the heat is released to generate steam. The steam powers a turbine to produce electricity.

FPL Group announced $2.4 billion investments in CSP and smart-grid technology. The planned investment includes up to $1.5 billion in new solar thermal generating facilities in Florida and California over the next seven years, and up to $500 million to create a smart network for enhanced energy management capabilities. FPL plans to build 300 MW of solar generating capacity in Florida using Ausra http://www.ausra.com/ solar thermal technology. The company recently received a $40 million in funding from Silicon Valley venture capital firms Khosla Ventures and Kleiner, Perkins, Caufield & Byers (KPCB).

Ray Lane, a Managing Partner at Kleiner Perkins gave a compelling opening keynote speech at Solar Power 2007. He declared that there is no energy shortage, because there is no shortage of sunlight. Mr. Lane showed a map of 92 x 92 miles of desert in California and Nevada. Using CSP, that unoccupied area could generate enough solar power to meet all power needs in the U.S. Challenges of such a project include multi-billion dollar investment in high-voltage lines to carry the electricity to remote cities. Storage is another major challenge. Although these investments are significant, the potential will drive strong CSP growth.

Expect solar to continue with its historic 35% growth over the next decade. Forecasts for solar supplying over 9% of the world’s energy needs by 2030 are achievable.

John Addison publishes the Clean Fleet Report. For articles describing the use of solar power in transportation.

Blogroll Review: Credits, Charging, Coffee

by Frank Ling

Don’t Leave Home Without It

Many of us use credit cards to collect mileage point and other non-monetary credits. Now, we can use it to reduce greenhouse gas emissions.

GE is introducing the Earth Rewards Credit Card, which will invest 1% of customer purchases into carbon off-setting.

Joel Makower says developing the system was not straightforward. Initially, GE thought of creating credits, which customers could use to buy eco-friendly products. However, it was found that very few people would actually do that.

It remains to be seen whether this current scheme will work but GE is optimistic.

“It’s too early to tell, of course, but Earth Rewards has the potential to catch on with the large middle market increasingly concerned about climate change but willing to make only small, incremental changes, if that. (GE envisions a potential market of 25 million Americans.)”

Priceless! 😉

Charge It

Plug-In hybrids are no longer a hobbyist’s contraption. Toyota has released the first certified PHEV for public road use.

Though it is only limited to Japan, the PHEV can run on household power and uses NiMH battery technology. Jim Fraser at the Energy Blog notes:

“The PHEV is a 5 passenger vehicle with a cruising range of 8 miles (13 km) in the all electric mode with a top speed of 60 mph (100 km/hr). It is equipped with 2 – 6.5Ah nickel-metal hydride batteries powering a 67hp (50kW)/1,200-1,540 rpm synchronous electric motor with a maximum torque of 400N-m(40.8kg-m) @ 0-1,200rpm….Charging time for the battery is 1-1.5hrs @ 200V and 3-4hrs @ 100V.”

Maybe this time, the electric car won’t be killed. 🙂

Sunbucks

Back a couple years ago when I wandered around China, there were many Starbucks ripoffs. One of them was called Sunbucks. If that trademark hasn’t been taken, then this company may still have a chance to take it.

In this week’s EcoGeek, Philip Proefrock writes about a Pueblo, Colorado company that is roasting their coffee with the power of the sun.

“The Solar Roast company uses a 10 foot (3 meter) diameter reflector array to heat its roaster to 600 degrees F (315 degrees C) with nothing more than sunlight.”

Frank Ling is a postdoctoral fellow at the Renewable and Appropriate Energy Laboratory (RAEL) at UC Berkeley. He is also a producer of the Berkeley Groks Science Show.

Big, Green Power is Flowing – But Where Are the Power Lines?

I had the opportunity recently to speak with Stuart Hemphill, the Director of Renewable and Alternative Power for Southern California Edison (SCE), the power company for Los Angeles and Southern California, on SCE’s activities and views of renewable and green power. SoCal Edison is a subsidiary of Edison International (NYSE:EIX). Stuart has a direct team of 40 staff working entirely on developing and managing new renewable generation, not including the teams across the company that support from legal, operations, transmission, and marketing.

One of big challenges for SCE in building its renewables portfolio is that even though they already stand at 17% of total generation from renewables (which Stuart touted as placing SCE the farthest ahead of any US utility), customer demand in SoCal is growing rapidly – 4 of the top 10 fastest growing counties in the country are in SCE service territory.

But SCE is working to do its part. They have been the leading purchaser of renewable power for the last 20 years and don’t intend to relinquish the crown any time soon. In 2006 they purchased 13 Billion kwh of electricity, about 17% of their needs. More than half of this green power is geothermal, with solar and wind making up the rest. 50% of the power was produced locally in Southern California itself, with most of the rest from Northern California, and the remainder from surrounding states.

The geothermal resources that make up the bulk of their green power come from three regions: The Geysers in Northern California – primarily developed by Calpine; The Salton Sea (better known for its status as a massive migratory bird stopping place and an environmental headache) – primarily developed by Ormat (NYSE:ORA) and CalEnergy; and Eastern California/Western Nevada in the Mammoth Lakes region – primarily developed by Caithness Energy. The wind power comes from all over the state.

In Stuart’s mind, the biggest issue is not supply of green power but transmission. He says they have plenty of contracts in the pipeline. But it takes roughly 7 years to permit and build major transmission lines, and the California RPS itself is less than 7 years old.

So even though SCE has several big lines proposed and under review, he considers it a major limitation to rolling out green power plants. This makes sense, as by their nature renewable power plants have to be built where the ground is hot, the wind blows, or the sun shines, not where the people and the transmission lines are. He reiterated, permitting is a real challenge.

As an example, SCE has a $1.8 billion transmission project to Tehachapi just north of L.A. which has finally received initial approval. They have a 1,500 MW wind contract in place in the region with Alta Wind Power, waiting on getting the transmission built. This is the single largest wind power contract ever developed (it was signed in December of 2006). The Tehachapi region already has 800 MW of wind generation (I drove through the pass just a few months ago – and am always awed by the site of spinning wind turbines), but Stuart says SCE believes there is the potential to get 4,500 MW more, if the transmission is built to bring it down to L.A.

He also took pains to mention a recently signed contract with Sempra Energy (NYSE:SRE) for a wind project which Sempra is developing in Baja, Mexico – I believe one of the only, if not the first cross-border Mexico – US wind farm projects.

They are also active in large scale solar – SCE buys 90% of the country’s solar energy now, according to Stuart, and has signed two recent agreements (2005) with Stirling Energy Systems and (2007) with California Sunrise to buy more solar power – both also waiting on transmission according to Stuart.

Stuart told me that SCE has $17 Billion in capital to be spent over the next 5 years in transmission and distribution to address these issues, but much of the solution lies in the hands of more aggressive stances by regulators and environmental groups, not just SCE. This isn’t just an SCE problem. The US has invested heavily in generation capacity in recent years, but our T&D investment has lagged – and the regulatory, environmental and political hurdles to get new power lines built may be even steeper than those for new power plants.

I asked why they weren’t building the new renewable power plants themselves. He indicated that they were prepared to, but currently saw no need because developers are really active these days – in the last 5 competitive solicitations they have received excellent response (including the 2007 solicitation). In short, there is plenty of interest and capital to build green power plants for SCE, and they have their hands full getting it to market.

When we got to talking about the future of energy in California, Renewable Portfolio Standards, greenhouse gas emissions and upcoming issues that concerned them, Stuart highlighted a few. SCE feels that while it is working hard to do its part, Energy Service Companies (ESCOs) as a group currently produce virtually zero percent of their eligible power from green sources as defined in the California RPS – but like the major investor owned utilities (SCE, PG&E (NYSE:PCG), and Sempra) ESCOs are also supposed to be generating 20% of their power of renewable sources by 2010. Stuart wasn’t sure where that supply was going to come from given long lead times to develop projects. We did discuss whether Renewable Energy Credits (RECs), which don’t currently qualify under California RPS standards, could play a role. Both he and I are personally fans of RECs and view this as an emerging area for opportunity and debate. If the free market is going to help meet our green power objectives, it needs more regulatory permitted tools to do so (the paradox of that statement notwithstanding).

We both also clearly see renewables as part of the overall solution for reducing greenhouse gases. Stuart quickly highlighted carbon credits, energy efficiency and reforestation as the other legs of that broader solution from a utilities’ perspective. But when I put to him the question of what should we be doing first on greenhouse gas emissions, he stated flat out that energy efficiency is the first area in his mind. “Energy not consumed is the best way of reducing any source of emissions.” Of course, SCE is a leader in energy efficiency, too. They don’t intend to be left behind there either.

I must admit, throughout the conversation I was struck by their insistence on maintaining a leadership position in clean energy for SCE. I guess this is just part of the California ethos about leading the nation in environmental issues.

And before I let him go, Stuart asked me to make sure to mention that they are always looking for new renewable power suppliers, and always looking to hire in renewables, so come find him. Their information is located at www.sce.com/renewables, and he can be reached at stuart.hemphill@sce.com.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Author for Inside Greentech, and a Contributing Editor to Alt Energy Stocks.

Solar Energy…in Cleveland

by Richard T. Stuebi

Last week, the American Solar Energy Society convened their annual national gathering in Cleveland.

Yes, that’s right: Cleveland. [OK, if you must, insert your joke here]

You might say that “Cleveland” and “solar” is an oxymoron. Coincident with an unusually sunny summer, many of us are trying to change that perception — and it seems like there’s at least some successes to report.

The current issue of the ASES magazine Solar Today profiles Cleveland’s growing efforts in a nice cover article. Just in the past two weeks, significant high-profile PV projects in downtown Cleveland were commissioned at Jacobs Field (ballpark for the Cleveland Indians) and at the Great Lakes Science Center.

Perhaps the most encouraging aspect of the ASES solar conference in Cleveland was its attendance. During the annual public day, held on Sunday, over 3200 citizens milled through the exhibit floor (160 booths) and participated in workshops. This was more than double the showing for the public day at the previous year’s ASES conference — in solar-friendly Denver, no less.

No doubt, the great attendance was due in large part to the extensive coverage and promotion of the event by our local daily paper, The Plain-Dealer. Many thanks to them for helping spread the word. And, congratulations to the local organizing chapter of ASES, Green Energy Ohio, for putting on a good show.

Senior ASES staff and conference attendees were reported to be very pleased with their week in Cleveland. Perhaps they can see that Ohio can easily join our neighboring states to the east — Pennsylvania, New Jersey and Maryland — to become part of what is already (as one speaker termed it) “the largest solar market on the planet”.

To be sure, I don’t want to over-hype the situation: with respect to solar energy, Cleveland is a long, long way from where California or Germany is. But, as BP used to say in its advertising, “It’s a start.”

Here in Cleveland, we cleantech advocates can’t rest on the modest accomplishments we’ve achieved so far — we need to keep pushing for more substantial progress. A strong renewable portfolio standard for Ohio, including a solar carve-out as our peers to the east have implemented, is clearly the next step.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

Real Companies Entering Renewable Energy

by Richard T. Stuebi

I reckon that relatively few readers have heard of the company called Preformed Line Products (NASDAQ: PLPC). I know I hadn’t, even though their headquarters is just a few miles from where I live in suburban Cleveland.

A couple of months ago, I came across a press release indicating that PLPC had entered the solar energy sector by acquiring Direct Power & Water of Albuquerque. I decided to investigate further.

PLPC is a real company, not some publicly-traded start-up venture. The company was formed in the late 1940’s, and has steadily grown to a worldwide operation based on core competencies in developing and manufacturing of high-performance cables and connectors for the electric utility and communications industries. PLPC net income in 2006 was $12 million on revenues of $217 million — certainly not anywhere near the size of a Fortune 500 corporation, but nevertheless a nice business.

The letter from the Chairman and CEO (Robert Ruhlman) in the company’s 2006 annual report provided some insight on the impetus for PLPC’s acquisition of Direct Power & Water:

“In addition to multiple opportunities in our traditional markets, there are exciting new opportunities in emerging technologies. One area we are exploring for growth potential is renewable energy. Wind and solar energy are becoming more economically feasible due to improved technologies, rising costs of traditional energy sources and increasing demand for energy independence. We believe PLP can play a significant role in these markets as these technologies develop.”

This kind of statement, and the subsequent follow-up action to make a real bet on solar energy, is exactly what the renewable energy sector needs a lot more of: the interest of mainstream corporate America, especially the small- and medium-sized manufacturing sector, seeing the opportunity to build a business in renewables — truly for profits and not just for PR purposes.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.