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São Paulo Dispatch: Verde é Verde

Daniel Englander: March 28, 2008, 5:04 AM
Neal Dikeman and I aren't the only ones who think General Electric is the unsung leader of greentech. This week's issue of Exame, a leading Brazilian business magazine, featured a number of stories on A Economia Verde, including one that proclaimed GE CEO Jeff Immelt to be "o executivo mais verde do mundo." According to the article, Immelt's ongoing investments and acquisitions in the sector have started paying off, so that "o green está começando a se transformar em green." What's interesting about GE's approach, compared to the startups and new ventures we tend to cover at GTM, is that GE has largely gone through its greentech transition without reinventing the wheel. Instead, it has invested in efficiency gains in its product lines and acquired a number of greentech companies that fit within its traditional business model. It has taken stakes in some new companies, like A123 batteries, which are closely aligned with its existing technology focus. After the jump, GE no Brasil and some of Neal Dikeman's favorite GE moments.

The Morning Feedstock

Daniel Englander: March 28, 2008, 3:44 AM
The California Air Resources Board has gone ahead with cuts to its zero-emissions vehicle mandate, though the reductions were less than expected. Initially CARB planned to cut its 75,000 ZEV mandate to 27,500 vehicles produced between 2012 and 2017. Under the new mandate, the seven largest automakers were granted a reprieve from producing 25,000 ZEVs between 2012 and 2014, with CARB reducing that target to 7,500 fuel cell vehicles or 12,500 electric vehicles. CARB has also up its mandate for low-emissions plug-in hybrids to 58,000 by 2014. The new mandates are expected to cost automakers $1 billion a year, down from the estimated $2 billion a year under the previous order. In related news, former CIA chief James Woolsey takes the fight to the streets with a bumper sticker that reads "Bin Laden Hates This Car", which clearly displays his commitment to fighting World War IV. Under pressure from the New York Public Service Commission, Iberdrola has agreed to sell all of Energy East's non-wind generation assets to clear the way for an acquisition. The PSC had put the acquisition on hold in recent months over speculation that Iberdrola would increase Energy East's fossil fuel generation capacity while raising customer rates. Following this agreement, the PSC is expected to allow the $4.5 billion merger to go through. San Francisco's Solar Incentive Rebate Program, which was to debut on April 1, has been put on hold following a surprise move by city supervisor Jane McGoldrick. McGoldrick moved yesterday to freeze SIRP's $3 million fund, raising voices of protest from companies that have already committed resources towards the program. Installers like Akeena Solar and Solar City "have put marketing dollars into this, and hired and trained people to get ready," says Akeena CEO Barry Cinnamon. SIRP's aim is to increase solar capacity in SF from 5 MW to 55 MW over the next ten years through $3,000-$6,000 rebates to homeowners. Japan's Sharp Solar will retain its dominance in thin film production with a new $729 million, 480 MW plant that will come online in March 2010. The new plant in Sakai, Japan will help Sharp achieve its goal of 1 GW of thin film production by April 2010.

The Morning Feedstock

Daniel Englander: March 27, 2008, 3:33 AM
A mercantile court in Bilbão has ordered EdF to declare if it has begun or will begin an acquisition of Iberdrola. The court also demanded to know whether EdF plans to carry out the acquisition by itself or with a partner, like Iberdrola's main shareholder ACS, and if it planned to break up the Spanish utility. EdF has five days to answer the court. In a separate action, Iberdrola has asked Spanish energy regulator CNE to reverse its decision allowing ACS to buy a bigger stake in the embattled power producer. If ACS is able to increase its voting stock above 10 percent, Iberdrola would be powerless in fending off a takeover bid from ACS and EdF. Iberdrola isn't the only utility running into problems with regulators. Last year Florida Power & Light had its Manatee landfill gas plant proposal blocked by the Florida Public Service Commission. FPL has now issued another series of RFPs to comply with the state's RPS. Outside of the state, FPL has applied to the California Energy Commission for permission to build a 250 MW solar thermal park in the Mojave Desert. Closer to the Pacific coast, Southern California Edision and Gov. Schwarzenegger will announce today SCE's plan to build an $875 million, 250 MW rooftop solar project. Australian offset company Carbon Conscious is attempting to raise $7.4 million on the Australian Stock Exchange to expand its credit generation operations ahead of the debut of Australia's carbon exchange. The company's model involves planting Malle Eucalypt trees in Western Australia and selling credits created through bio-sequestration. JP Morgan has purchased ClimateCare, the first offset company and one with a much more believable business model than Carbon Conscious. ClimateCare has operations in five countries and focuses on renewable energy project origination, which will help JP Morgan expand its growing offset financing business to nearly 60,000 corporate clients.

São Paulo Dispatch: Ethanol for the Masses

Daniel Englander: March 26, 2008, 10:12 AM
Every taxi in São Paulo runs on alcool (ethanol), and it's got nothing to do with a government mandate. In fact, taxi's are exempted from São Paulo's rodizio - the city's weekly driving ban aimed at fighting congestion and pollution. The cabbies I've talked with have also dispelled any lofty notion about driving on ethanol for the sake of limiting environmental degradation. Their's are the same reasons why taxi drivers in Boston line up at midnight at the gas station on Memorial Drive near the MicroCenter in Cambridge: the fuel is cheap and available compared to other sources. Ethanol in São Paulo (and all over Brazil) is roughly R$1 cheaper than gasoline and is available at every gas station. At some gas stations I've seen, ethanol pumps outnumber gas pumps by two to one. Ethanol here goes for roughly R$1.40 a litre, or close to -$0.30. By way of comparison, only one percent of gas stations in the U.S. sell ethanol at a cost of around $2.70 a gallon (there are roughly 3.8 litres in a gallon). Perhaps even more telling is the fact that nearly every vehicle sold in Brazil is "dual flex" - it can run on either gas or ethanol. This includes almost all cars sold by American manufacturers like GM and Ford, as well those made by Fiat, Renault, Toyota and VW. So, the question remains, what's up with the U.S. ethanol industry?

The Morning Feedstock

Daniel Englander: March 26, 2008, 3:32 AM
3i, Europe's largest venture capital firm, has announced it will abandon its early stage venture operations. In 2000 3i's venture portfolio covered 750 investments worth $4.8 billion. However, the tech crash later that year forced 3i to write down close to $2 billion. By September 2007 the company's overall venture investment had fallen to roughly $1.4 billion, with new investments totaling $130 million during the first six months of 2007, or five percent of its total investments. A 3i spokeswoman said the company is "recognising the opportunity in growth capital and later stage investing." 3i has previously invested in greentech companies like Konarka, EnOcean, PelamisWave, Nanostellar, and Smart Fuel Cell. Suntech Power has locked in an eight year polysilicon supply from South Korea's DC Chemical. The $631 million deal kicks off in 2009, with specified delivery amounts coming every year until 2016. Suntech has been fairly busy recently, taking a $100 million minority stake in Nitol Solar and an 11.7 percent stake in Hoku Scientific. These moves are largely a response to Suntech's disappointing earnings and guidance report, which forced the company to take a major hit after it disclosed a failure to lock in long term poly supply in the face of rising feedstock costs. In a related deal, DC Chemical has signed a $200 million contract with GT Solar for polysilicon deposition reactors. The deal is GT Solar's largest to date. John Hutton, Britain's business secretary, will make a speech today calling for an ambitious expansion of the UK's nuclear capacity.Hutton will speak in front of the UK's largest union on the economic benefits of this expansion, which will require a nearly $40 billion investment, create 100,000 new jobs, and include the replacement or upgrading of almost all of the UK's nuclear reactors. The speech coincides with a state visit from French president Nicholas Sarkozy, who is expected to sign a nuclear cooperation agreement with British PM Gordon Brown.

Another One (Two?) Bites the Dust

Daniel Englander: March 25, 2008, 9:15 AM
Ethanex Energy, a Kansas-based corn ethanol producer, has "ceased ongoing commercial operations" and fired nearly all of its employees. The company filed an 8-K on Monday stating "in light of its declining liquidity and its inability to obtain interim financing" Ethanex terminated its executive chairman and co-chief operating officers and that it began work "with bankruptcy counsel to prepare for a filing and anticipates filing for bankruptcy protection in the immediate future." Where did it all go wrong for Ethanex? The company formed in 2006 and issued a $20 million private placement shortly thereafter. After a successful public offering, Ethanex's shares were trading at a high of $48 in October 2006. On Monday the company's stock price hit $0.17. It's initial plans called for building three 110 million gallon plants based on a proprietary corn fractionation process, which it claimed would produce corn-based ethanol more efficiently by separating fermentable and non-fermentable parts of the corn kernel. That didn't quite pan out.

The Morning Feedstock

Daniel Englander: March 25, 2008, 4:20 AM
Cellulosic ethanol company Verenium may be on its way out. The company's 10-k, filed on March 17, says the company did not generate sufficient revenue to offset its CAPEX and operations. Verenium's form states "there can no assurance that we will be able to obtain any additional sources of revenue, corporate partnerships, federal and state grant or other financing on acceptable terms, or at all." If the company is "not able to reduce or defer our expenditures, secure additional sources of revenue or otherwise secure additional funding, we will be unable to continue as a going concern, and we may be forced to restructure or significantly curtail our operations, file for bankruptcy or cease operations." As of December 31, 2007 Verenium had accumulated a deficit of $437.1 million. I heard they have nice office furniture... Les Echos is reporting Iberdrola has offered EdF a 20 percent stake in a bid to stem the French company's takeover plan. Though Iberdrola CEO Ignacio Sanchez Galan is denying any such offer, a source close to the deal is also saying Galan demanded a 40 percent premium on the share price. An Iberdrola spokesman went so far as to say "we deny that we have offered EdF a stake. This report is false." EdF has turned down the 20 percent offer, maintaining their plan to buy the entire company in conjunction with ACS. Why is Iberdrola such a big prize? Spain's energy demand has grown faster than the EU average every year for the past ten years, with renewable energy accounting for an increasingly large percentage of this demand. Earlier this month Spain's national grid operator REE clocked 28 percent of electricity supply, 10,032 MW, coming from wind power. Of this record total, Iberdrola provided nearly 4,500 MW. It is also the world's largest wind operator with roughly 7,400 MW under management and an additional 48,000 MW in the pipeline. The California Air Resources Board is expected to reduce the state's zero emissions vehicle mandate by 90 percent from 25,000 to 2,500 cars produced between 2014 and 2017, and a total repeal of the long-term 75,000 vehicle mandate. I feel like we've been here before. CARB is under pressure from auto manufacturers, who claim developing production quality batteries will cost them an additional $2 billion over the next ten years. Instead, car companies are pushing for heavier mandates for hybrids, which have higher margins than ZEVs and rely on existing technology. Tesla CEO Ze'ev Drori has taken CARB chairwoman Mary Nichols to task for this idiocy.