Dikeman Spouts Off on New Energy

It's not hard to get Neal Dikeman to say what he really thinks.

The founding partner of Jane Capital Partners, a boutique merchant bank and corporate advisory firm, and chairman of Cleantech.org, regularly airs his views on the Cleantech Blog and Alt Energy Stocks, with recent headlines including "McCain-Palin is the Energy/Cleantech Dream Ticket" and "Is Al Gore Nuts?"

At the 21st Amendment Brewery in San Francisco last week, the founding partner at boutique merchant bank Jane Capital Partners said he was skeptical of the flurry of entrepreneurs claiming they have new technologies that are about to change the world.

"People think new energy [technology] is going to be disrupting the whole industry," he said. "It's not. ... People are lying to themselves if they think their technology is game-changing and it isn't."

As an example of how long change usually takes, he pointed to solar technology. The most effective solar technology today is 25-years old, he said.

The biggest problem still is price, he said.

"Oil companies are making 70 percent margins and ethanol companies are making nothing," he said. "If prices fall, ethanol gets shut out first. Wind also is more expensive to produce - five times more expensive than coal. Solar technology is 20 times more expensive than coal. And subsidies are 100 times higher than oil on a per-unit basis."

Risk is also an issue keeping new technologies from quick and massive rampups, Dikeman said.

"It took wind 15 years," he said. "You can't put new technology on a power plant - it's too expensive. And you've got a fixed price on the contract and you can't make it up on the backside if you're wrong." 

And that's why oil companies – some of which until recently had higher market shares in renewable than they had in oil, because of the relatively puny size of the renewable-energy market - aren't investing more heavily in renewables, he said.

"The reason is very simple – it's not profitable," said Dikeman, who added that he has oil company clients. "It's a no brainer. It's not that they don't want to. They would invest in renewables in a heartbeat. But they take [the idea] to their bosses and they say, ‘Your numbers suck.'"

Jane Capital Partners, which also is a corporate advisory firm, counts oil company ConocoPhillips (NYSE: COP) among its strategic advisory customers. 

Before Jane, Dikeman served as a director of business development at e-commerce company Globalgate and an associate at Doyle & Boissiere, a private-equity firm backed by the California Public Employees Retirement System, also known as CalPERS.