The S-1. Such a troublesome document. Unconfirmed rumors have swirled in recent weeks that Black & Decker, the large power tool maker, wasn't happy with battery maker A123 Systems. Black & Decker is the largest customer for A123 and accounts for over half of the company's revenue. We called the company in July and A123 said that the relationship and contract with Black & Decker was still in place and that the tool maker was buying all the batteries "that we can supply." We have no reason to doubt it and the contract with Black & Decker is clearly still in place. But information about the company's revenue contained in A123's filing with the SEC that may give some people reason to ponder if something is going on between the two companies. On page 57 of the S-1, A123 says that demand has declined from its "most significant customer." An increase in revenue in the first quarter of 2008 to $10.3 million from $8.1 million in the first quarter of 2007 was due to the acquisition. See below: "The increase in product revenue was primarily due to sales of $2.2 million generated by Enerland, which we acquired in August 2007. This increase was partiallly offset by a decrease in demand from our most signficant customer and its affiliates during the three months ended March 31, 2008 compared to the three months ended March 31, 2007." Note. The S-1 doesn't state that revenue from the significant customer has declined as a percentage of the whole because of additional customers. And it doesn't say sales to that customer declined because of product delays or techincal issues. It is because of "a decrease in demand." In other words, A123's significant other bought fewer batteries in the first three months of the year than in the year before. Now, there could easily be a lot of explanations here. The decrease in demand could have been because of a lull in research projects at the customer. "Significant" could also mean something other than the largest customer in terms of revenue: GM is a significant customer for A123 because it will get the company into the automotive space. Economic circumstances beyond anyone's control could have caused this. Or it could be that the toolmaker added some technical requirements to its orders, which A123 needed time to install. A123 could not comment because it's in the quiet period. On page 12, A123 rolls out the laundry list about risks they face, including a loss of a big customer. It's boilerplate language and can't be taken as evidence that the relationship is rocky in any way. Still, it lays out how much the small company depends on the toolmaker for revenue. "Our strategic plan assumes that we will epxand our revenue base through the acquisition of new customers in new and emergin markets; however, Black and Decker and its affiliates have represented 70.7% of our total revenue since inception through March 31, 2008 and represented 55.1% of our total revenue in the quarter ended March 31, 2008. If in the near term we were to lose Black & Dcker as a customer, or if we were to lose revenue due to its inability or refusal to continue to purchase our batteries or pay our invoices, our business, results of operations and financial condition could be harmed."

On other notes, losses are increasing faster than revenues, but that's largely because of expansion. Revenue in 2006 came to $34.3 million and net losses for the year totalled $15.8 million. In 2007, revenue climbed to $41.3 million but net losses nearl ydoubled to $31 million. The number of full-time employees, however went from 227 at the end of 2006 to 904 at the end of last year.

A run-of-the-mill 150 cc scooter can put out more carbon monoxide and nitrous oxide compounds than a high-end car, says Kevin Klein, the automotive microcontroller manager at Freescale. That's one of the reasons the chipmaker has high hopes for a cheap fuel injection system that just started being delivered to emerging nations. The injection system--devised by ElectroJet and based around controllers from Freescale -- cuts down carbon monoxide emissions by 65 percent and nitrous oxide emissions by 35 percent compared to a similar scooter or motorcycle with a carburetor. A scooter equipped with the injection system also gets 12 percent better gas mileage. But even more important, it's cheap. The entire system adds less than $50 to the component budget of a scooter, a key factor in countries where motorized transportation often sells for less than $1,000. The injector is also bolt-compatible, so it can be integrated into existing engines and scooters. "It pays for itself in nine months," said Jesse Beeker, a field application engineer at Freescale. Dayang Motorcycle Co. (the official cycle supplier of the Beijing Olympics) has inserted the injection systems onto bikes being ridden by emergency medical personnel and police agencies at the games. (We were going to speak to ElectroJet's CEO, but he's in Beijing and swamped at the moment.) Although thousands of new cars are added to the streets of Asia's megacities monthly, scooters and motorcycles remain a hugely popular form of transportation. The high-pitched whine of their engines is an omnipresent background noise, and so it the blue smoke from the tailpipe. To curb emissions, some countries and cities have started to pass tougher regulations. In China, for instance, future cycles have to meet Euro III standards. In the U.S. and Europe, cycle manufacturers already sell bikes with injection systems. Those might cost $120 or more, out of range for manufacturers targeting the mass Asian market. So how did they bring the price down? ElectroJet reduced a number of the sensors in the typical injection system by exploiting the processor and a complimentary co-processor (the 16-bit 512XE processor and XGate co-processor, in case you were wondering) more effectively. With fewer sensors, the processor naturally receives less data from fewer sources. However, the processor has a faster-than-average timing loop. This allows it to extrapolate from what data it has and thereby control fuel consumption. The chip, Beeker points out, is popular in the automotive market but mostly is used for other purposes. (That's a picture of the injector, by the way.) Like many chip companies and software outfits, Freescale is examining its product portfolio more closely these days to see what products can be tweaked for fine-tuning energy consumption. Expect to see similar and more announcements from Intel, National Semiconductor, Texas Instruments and others.

Solyndra, one of our favorite not-so-stealthy CIGS solar firms, signed some big supply agreements late last month. Here are some other Solyndra tidbits:

• We’ve covered Solyndra’s valuation story in the past.

• Why would Soyndra spend $60,000 on lobbyists?

• $5 million of Solyndra’s $93.5 million equipment financing facility in late 2007 came from Icon Income Fund Ten; “The equipment is comprised of two fully automated manufacturing lines that combine glass tubes and thin film semiconductors to produce solar panels.â€?

The company also has some recently published patents.

The patent for “Elongated PV Cells in Casings� is authored by two former employees, Ratson Morad, now with Daystar, and Benny Buller, now with CdTe thin film leader First Solar (First Solar, incidentally, projects annual production of 1GW in 2009). The other listed inventors are Christian Gronet and Markus Beck, Chief Scientist at Solyndra. (Question: Why do patent holders and early employees leave a company like Solyndra?)

Here’s the abstract from one of the Solyndra patents:

A solar cell unit comprising a solar cell and a transparent casing circumferentially disposed onto the cylindrical shaped solar cell is provided. The solar cell comprises a substrate, where at least a portion of the substrate is rigid and nonplanar. A back- electrode is circumferentially disposed on the substrate. A semiconductor junction layer is circumferentially disposed on the back-electrode. A transparent conductive layer is circumferentially disposed on the semiconductor junction.

Here’s a link to a drawing of the cylindrical form factor from the patent document. Solyndra also has some patent action in interconnecting and securing these very innovative and seriously non-standard solar units.

This is a spectacularly audacious VC bet by CMEA (Tom Baruch, CMEA partner on the Solyndra board), Redpoint (John Walecka of Redpoint on the Solyndra board), and the rest of Solyndra’s investors.

They’re betting:

• That the CIGS materials system beast can be tamed.

• That all that specialized manufacturing and process tooling can be engineered to spec, replicated, and scaled.

• That the non-standard panels can be easily handled and installed.

• That the installations can be financed by risk-adverse and still-smarting financiers.

According to some rumors in the VC community, we’ve also heard that a “non-standard� financing event is soon to be revealed. More on that as it breaks.

The possibility of Congress granting oil companies rights to develop offshore reserves in previously protected areas is one of the hottest topics going these days. The U.S. Energy Information Administration estimates there may be as much as 18 billion barrels lying under protected areas and 80 billion barrels total offshore, though the EIA isn't exactly known for its accuracy. While there's virtually no potential for oil drilled offshore in the U.S. to have both a direct or immediate impact on domestic prices - the government can't tell oil companies where to sell, how much, or at what price - both presidential candidates support it. John McCain was against it before he was for it, and even Obama is saying Yes We Can to some limited proposals. And then there are these jokers, whose press conferences have replaced the Daily Show as my daily fix of political humor. For the energy majors, increased access to offshore sites represents a far greater prize than any good PR associated with low gas prices. Proved and probable reserves are a widely accepted way of determining an oil company's value and expanding access for these companies will benefit their share prices and revenue forecasts. This is good for companies like BP who are finding it harder to do business in places like Russia and Nigeria these days and risk losing booked reserves in those areas. It's likely, however, that much of the newly granted reserves won't be developed or produced - American companies currently produce from about 15 percent of their offshore sites. While this controversy rages in the U.S., an offshore oil boom in Brazil and India may create some problems for the development of the offshore renewables industry in Europe and North America. Supply chain conflicts may prove a significant limiting factor for growth in that sector and may have ramifications for the evolution of the energy sector generally. The wind industry, ocean power industry, and offshore oil and gas industry draw their installation, monitoring, and maintenance vessels from the same companies and same limited inventory. Anchor handling vessels, jack-up barges, and seismographic monitoring are in particularly high demand these days. According to Baker Hughers, in the last few months Brazil has deployed 29 additional offshore rights, while India has deployed two and ordered another 28, drawing much of the world's installation vessels to those projects. Competition for inventory among these industries isn't strong however, with the well-capitalized oil projects winning out nearly every time and low return renewables project often getting shuttered as a result. The high risk and low returns of installing wind turbines and ocean power devices offshore oftentimes do not justify the cost of hiring these vessels at market rates. The surge in offshore drilling has been a boon for the relatively small offshore oil services industry. In a market where vessel charters go for a minimum of $60,000 per day, an onset of new entrants is not unexpected. India's Varun Shipping recently raised $300 million to expand into the business with a focus on deep-water and ultra-deep water operations. But the rush to serve the expanding offshore oil industry may put a crimp on construction of offshore wind farms and the development of the nascent ocean power industry. Larger service opportunities in the offshore oil industry will draw installation vessels to oil faster than they'll go to wind and ocean power, while wind and ocean power installers may not be willing to pay the high rates the installation vessels command. Lower installation costs and higher margins may keep wind turbines on dry land for longer than most expected, while the shortage of installations vessels may make it difficult to keep the ocean power industry afloat. Already, one major marine turbine installation was delayed by several months because the jack-up barge intended for the installation was called away to service an oil rig. European offshore wind installers were expecting to soak up surplus capacity from depleted North Sea natural gas fields, but those vessels are now in service in India and Brazil. Short supply and high prices add to the already outsize installation costs for offshore wind, which have caused a number of major developers to put some big projects on hold. This has sent investment return opportunities tumbling, making offshore renewables projects even less attractive than before. Shell stepped out of the 1 GW London Array, citing equipment shortages and spiraling construction costs. Both Vestas and General Electric have slowed production of their offshore units because of shrinking sales. Vestas, for example, hasn't sold an offshore turbine since late 2006. There are currently $120 billion of offshore wind projects in Europe that are stalled because of high construction costs and installation vessel shortages. As long as costs remain high and vessel availability remains uncertain, it is unlikely most offshore renewables projects will get built. This will certainly impact the EU's goal of meeting 20 percent of its electricity demand from renewables by 2020. However, lessons from Europe should give American renewables developers and drilling opponents another kind of ammunition in their fight to expand renewables capacity and limit the future development of fossil fuels.