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Boa Tarde de São Paulo

Daniel Englander: March 24, 2008, 8:37 AM
As I travel around Brazil this week I thought I could use this opportunity to bring in some energy and greentech issues from other parts of the world into our ongoing dialogue about the development of the greentech market. Few countries face the dual pressures of environmental conservation and economic development like Brazil. Deforestation in the Amazon surged in 2007 following three years of significant declines. Increasing deforestation is problematic both because of the corruption it engenders and because of the obvious negative environmental effects. In addition to fines, the Brazilian government has ordered the federal police to raid illegal logging operations, shutting down and arresting lumber poachers. Dr. Tom Lovejoy, president of the Heinz Center, has another idea. He's leading a proposal to give non-commodity valuations to Amazon tree stands, which would allow them to be traded for credits on the growing number of global and regional emissions exchanges. Though not at risk from deforestation from logging, Cubatão - the heart of Brazil's ethanol and petroleum refining industry - has had it share of environmental disasters. Until the 1990s Cubatão was nicknamed "Vale de Morte" (Valley of Death) for the ongoing public health disasters and environmental degradation caused by the area's pollution. I had a chance to take some photos of Cubatão's cleaned-up landscape on my way to São Paulo yesterday. A Petrobas refining facility More photos after the jump

The Morning Feedstock

Daniel Englander: March 24, 2008, 3:51 AM
Commodities are trading down this morning on declining consumption and a short rise in the dollar against the Euro and Yen. May contracts for crude oil are down 1.8 percent since the weekend, opening this morning at $100.02 after a 7.6 percent decline at the end of last week. A Goldman Sachs report released on Thursday has crude oil falling to $90 a barrel by April on the same downward pressures that have moved the price over the last five days. Agricultural contracts follow the same deflationary pattern, with May corn falling 9.3 percent to $5.07 per bushel and May soya dropping 10.8 percent to $12.07 per bushel. This weekend's drop in corn prices is likely a small blip in their upward march, which has pushed the value of farmland up 88 percent since the beginning of the ethanol boom. A recent study from the Nebraska Farm Real Estate Market Survey found Nebraska farmland jumped 23 percent per acre 2007, and is up 88 percent from 2003. On February 1, Nebraska farmland was selling for $1,425 an acre, a price supported almost entirely by ethanol subsidies. The same can be said of U.S. biodiesel makers who, despite a $1 per gallon subsidy, have largely failed to deliver. Case in point is Kreido Biofuels, which announced a third construction delay on their 50 million gallon North Carolina plant, now slated to open in the fourth quarter. Kreido CEO Ben Binninger pegged the delays to "current adverse biodiesel market conditions" and the need to raise $25 million in additional financing. Market conditions aren't the only constraining factor for greentech these days. "Nevada is not even close to meeting its RPS," says Mark Johnson, CEO of Golden Sierra Power. That state is now reconsidering the legality of third party ownership of renewable energy systems. PPA's in Nevada have come under pressure recently from utilities in the state, who claim PPA providers are illegally competing with them for electricity sales. They have received support from the Nevada PUC. Looks like federal policy may not be the only thing throwing dirt onto a possible PPA downturn. Scottish First Minister Alex Salmond has raised competition concerns over the EdF bid for Iberdrola. EdF already has 5.1 million customers in the UK, and an Iberdrola takeover would make EdF the UK's second largest energy provider through Iberdrola's Scottish Power subsidiary. The nearly $140 billion deal is facing competition from E.On, as noted last week, with the German company planning to break up Iberdrola's assets. In other ongoing Iberdrola news, the New York Public Service Commission has again delayed consideration of the Spanish utility's deal for Energy East, citing the need to consider "whether that acquisition is in the public interest."

The Morning Feedstock

Daniel Englander: March 21, 2008, 5:21 AM
With a special appearance by Eric Wesoff... The re-election of José Luis Rodriguez Zapatero in Spain this month has cleared the way for foreign suitors to starting sizing up potential bids for Iberdrola, Spain's largest utility. Électricité de France SA and Actividades de Construcción y Servicios SA, a French utility and Spanish construction company, have announced plans to launch a simultaneous bid on Iberdrola and Unión Fenosa, Spain's third largest utility. The deal would be worth at least $134 billion, though it may face opposition from French state-controlled EdF. EdF's plans would break up Iberdrola through an acquisition of Unión Fenosa, which would let ACS - another Spanish construction company and UF majority stakeholder - acquire Iberdrola and sell Scottish Power (owned by Iberdrola) to EdF.This deal have some impact across the pond, where Iberdrola owns PPM Energy, the country's third largest wind power producer. Iberdrola is also finalizing its $4.6 billion bid for Energy East, which would give it access to nearly 3 million customers from New York to Maine. However, the Energy East acquisition is facing strong opposition from the New York Public Service Commission and Sen. Charles Schumer. The PSC is concerned the acquisition may drive up rates while having no significant impact on renewable energy capacity. Ultimately, they're concerned about a replay of this deal. New England's GT Solar signed a $200M contract with DC Chemical of South Korea, adding to their recently signed $49M reactor contract with China's Trina Solar. GT, with~$80M in revenue in 2006, filed their S-1 with the SEC in preparation for an IPO almost a year ago. Unlike Ascent Solar, Bear Stearns was not an underwriter. It’s obviously a shaky time for public markets, even for solar IPOs. GT Solar build and sells CVD polysilicon reactors and other PV manufacturing equipment. Solyndra, a stealthy solar company located in Fremont, CA, closed a $79M funding round in April of 2007 for what was rumored to be a variation of CIGS technology (we heard “CIGS on wires???, whatever that is). Investors included CMEA Ventures and Redpoint Ventures. According to CNET scuttlebutt, Solyndra is looking for new funds and proposing, well, ridiculous, valuations for an unproven technology and zero revenues. What did they spend all that money on? They staffed up big-time according to LinkedIn. In addition to hiring shiploads of engineers, they look to have hired or contracted bunches of HR people and recruiters. This makes sense as they had to replace what looks like the core of their founding team. Jonathan Michael, their original CFO, has left the company, as has Ratson Morad, a VP Enginering, and Benny Buller, another VP Engineering, now with DayStar and First Solar respectively. And there are several other former Solyndrites listed. Why would a company worth a billion dollars be shedding employees and especially their core founding team? Inquiries to their investors and other people within Solyndra remain unanswered. John Garamendi, California's Lt. Governor, spoke in Palo Alto at the Silicon Valley offices of Pillsbury Winthrop on the always scintillating subject of Cap and Trade policy for Green House gases. Here are quotes from his talk:
  • “I don't know what it will look like, but I believe we will see a viable Cap and Trade program for GHGs in the next 2 years.???
  • “If we do this right, I think we're going to have a robust financial profit opportunity.???
  • “The politics are dicey. The Governor (Arnold Schwarzenegger) and Lt Governor want to move to cap and trade but there are opponents???
Here, Mr, Garamendi did a little environmentalist bashing – saying that environmentalist organizations were concerned about the losers, with toxic materials being dumped in area of low wealth.
  • “That doesn't have to happen in an auction with real money.??? Said Garamendi (vs. allocations as per the less than successful EU scheme)
  • His message, “it is extremely important for CA to act on this issue and use market inducement to control GHGs. It is a combination of market and regulatory actions - working together to achieve a good goal.???

Mapping Global Ocean Power Projects

Daniel Englander: March 20, 2008, 10:26 AM
Commercial and pre-commercial ocean power projects are being developed at an increasingly fast pace. A handful of wave and tidal energy companies are breaking away from the pack and beginning to sign contracts with utilities, governments and energy companies to develop ocean power capacity. Already in 2008 we should expect to see nearly 19 MW of commercial capacity come online, with an additional 25 MW slated for deployment in 2009. While initially small, global installed capacity will likely hit 800 MW or more by 2015. I've taken some data from an ongoing project I'm working on and put it into a Google Map to show the global distribution of this growing industry. The data here represent confirmed projects in the pre-planning through deployment stages. I've left out cost and pricing data for now, though I can say generally to expect installed costs to fall from around $6000-$5000/kW to around $3000-$2000/kW in the next five or six years. Enjoy.

The Morning Feedstock

Daniel Englander: March 20, 2008, 5:17 AM
Florida is rolling ahead with a set of comprehensive energy and climate-related bills aimed at making sure the peninsular state isn't swallowed up by rising sea levels. The Florida Public Service Commission approved the state's first wide-ranging net metering law on March 5. It covers systems ranging from 10kW to 2MW, and expands coverage from PV to nearly all renewable power sources. Another bill making its way through the Florida legislature calls for a cap-and-trade system in the state, the creation of a seven-member Florida Energy and Climate Commission, a 2.25 percent RPS by 2009 that increases to 5 percent by 2021, and 10 percent renewable fuels standard by 2010. Hoku Scientific finally has some news not related to how badly their factory construction is going. The Hawaii company, whose specialty is digging holes in Idaho, has re-upped their supply contract with GEC, a polysilicon reactor maker. The new contract will give Hoku the equipment to produce as much as 8,000 metric tons a year. Now they're just missing a factory. In other fun solar news, Evergreen Solar is slated to run out of money by mid-2008. With a $400 million CAPEX - $115 million above estimates - the company has been unable to keep pace with an increasingly commoditized sector. It is estimated Evergreen will only be able to raise $200-$300 million on the debt markets in 2009. I've been following this deal for awhile now, but it looks like it might finally happen. Lunar Energy, a British tidal company, has signed a deal with Korean Midland Power to build a 300 MW tidal farm by 2015. I've estimated this deal at around $1 billion dollars, but production scale-up for Lunar and Rotech (Lunar's technology partner) may drive this price down significantly. Regardless, this is the largest announced ocean power farm to date, blowing away the 10.5 MW farm announced last month by Marine Current Turbines and PelamisWave's long-planned 22.5 MW wave plant in Portugal.

Biodiesel Brief

Eric Wesoff: March 19, 2008, 9:06 PM
An inquiry came into Greentech Media from the CEO of a large trucking firm with a fleet of 5,000 diesel trucks. This gentleman wanted the short answer on if his firm should consider using biodiesel in his fleet. Here’s a summary of our findings. § Yes, biofuels are ready for limited commercial adoption with important caveats. § It is absolutely feasible for your firm to begin adding biofuels into your fuel mix. § There are issues. Read on. Retrofitting and Temperature Ice crystals can clog fuel filters and retrofits are required if running biodiesel in cold climates. How cold is the operating environment? The Age of the Fleet In older fleets, biodiesel breaks down natural materials in fuel seals - resulting in more clogged fuel filters. Costs Without subsidies, biodiesel will usually be more expensive than petrodiesel. Subsidies can help level the playing field and large users of biodiesel need to be aware and participatory in the legislative aspect of biofuels. Supply and Pricing Although the biodiesel market is experiencing strong growth, access to commercial pumps, global supply issues, and the rising cost of biodiesel fuel stock are impacting biodiesel supply chains and pricing. Other Transportation Companies are Implementing Biodiesel Programs Allied Waste, the US’ 2nd largest solid waste services firm with ~$6B in revenue, converted its 225 heavy-duty truck fleet in San Mateo, CA to biodiesel, making it one of the largest users of B20 biodiesel in California and significantly reducing the company's carbon emissions. Conclusions and Recommendations § Using biodiesel lowers emissions and fosters a secure domestic fuel source. § Using biodiesel positions your firm as a green company and opens new business opportunities. § Keep biodiesel percentage low for now and move up to higher blends when supply and prices stabilize. § Start small; running biofuel on newer trucks with routes in warmer climes. § Use this small-scale foray into biofuels to develop experience and a corporate culture of sustainability. Quick Facts, Figures, Links § Biodiesel is a substitute for petroleum diesel and meets ASTM D6751. It is compatible with the existing petroleum infrastructure. § The US petroleum diesel market is ~62B gallons and growing ~2% per year. § Last year’s 225M gallon US biodiesel production is expected to grow to >1B gallons by 2010.

The Morning Feedstock

Daniel Englander: March 19, 2008, 5:41 AM
Growing export demand for American coal, combined with incrementally slowing domestic production, are responsible for the large increases in spot market prices for benchmark coal products. Central Appalachia coal is up 93 percent on the year, while Power River Basin coal is up 64 percent. But where's it all going? China, South Africa, and Indonesia, once major coal exporters, are cutting exports to fuel domestic growth. U.S. coal is mostly finding its way to Europe and Japan, where a weak dollar and highly subsidized mining make relatively less expensive coal all the more welcome. This is good news for the coal industry, as growing domestic opposition to power plant construction and increasing financial scrutiny may have a limiting effect on U.S. growth. But just because these plants aren't being built doesnt't mean there not a problem. Carbon emissions in the U.S. hit their single biggest one-year increase in nine years during 2007. Emissions were up 2.9 percent over 2006 levels. Not to worry - the RGGI just completed it's first physical trade, a swap between Koch Supply & Trading and Texas Environmental Partners for CO2 valued at $7 per ton. Umm, yeah... Vinod Khosla asks "what is the cheapest way in dollars per ton to reduce carbon emissions from automobiles?" And then answers himself in that highly predictable way that only Vinod knows how to do. He is "confident that cellulosic biofuels, without significant land use impact or biodiversity impact, can achieve costs of $1.25 per gallon in less than three years and below $1.00 per gallon in five to 10 years." Maybe so. But he's got some new material too - "challenging much of the conventional wisdom on internal combustion engines offers significant potential." Hey, that sounds kind of familiar. Washington State is declaring war on its data centers. But for all the wrong reasons. In the past Microsoft and Yahoo have enjoyed a close to $1 billion tax break on data center construction but, in a year of budget shortfalls in the state, the state government has turned its sites on previously exempt revenue sources. A new interpretation of the construction tax states "manufacturing does not include 'the production of computer software if the computer software is delivered from the seller to the purchaser by means other than tangible storage media.'" The cloud is dead in Washington.