SAUSALITO, Calif. -- Computer companies initially made everything they needed – chips, software, chassis, cooling systems. Gradually, the business went horizontal: some made chips, others went into software and others just concentrated on equipment. The same is going to happen in biofuels, Neal Gutterson, CEO of Mendel Biotechnology told me during a break at the GoingGreen conference taking place in Sausalito. Right now, a lot of biofuel startups are growing their own feedstocks, genetically optimizing microbes for their feedstocks into oil, harvesting oil, and even refining it. You can't be an expert at everything. Thus, the biotechnologists who know how to optimize bacteria will likely get out of the feedstock and refining part of the business as time goes on. It's something to watch out for. This, admittedly, also suits Mendel's plans. The company specializes in optimizing feedstocks like grasses for fuel consumption. In a sense, the company is the farm of the 21st Century, specializing in raising inedible grasses for industrial use. (Great name too. Just think if they every merged with Gregor Technologies.) The company right now concentrates on making feedstock for the liquid biofuels for transportation but will soon move into the market for making fuel for stationary biogas digesters and biofuel pellet stoves. How come they didn't start with stationary biofuel furnaces? Approximately 20,000 biofuel burners get sold in Europe a year. It's because the stationary applications didn't look as appealing a few years ago as they do now, he explained. Coal and natural gas cost less than it does now and there was tremendous buzz around biofuels. I also asked him whether modern farmers like Mendel need to adjust their crops to suit the microbes or whether the microbe breeders have to adjust the genetic code of their bugs to suit the feedstock. There will likely be some variation in feedstocks to suit different breeds of bugs, but most of the genetic experimentation will take place in the microbes. It's easier to concoct new generations of genetically distinct microbes.

Microbes have been enlisted to make cheese, alcohol, medicine and fuel. Genomatica is exploiting them to make industrial chemicals. The San Diego-based company, which for years sold molecular modeling software, has devised a way to feed raw glucose to genetically-enhanced microbes and get a chemical substance out the other end that is a precursor to BDO, an industrial substance used in Spandex, air bags, bumpers, etc. "Three billion pounds of BDO are sold a year," said Christopher Gann, CEO of the company. The biologically produced BDO is chemically identical to regular BDO, but it costs far less to produce and far less energy gets consumed in the manufacturing process, he added. Making regular BDO involves cooking up several different chemical intermediates at high temperatures. Biological BDO requires genetically enhanced microbes (E. coli by the way) and an environment that allows them to grow and breed. The reaction takes place at normal air pressures and requires only slightly higher-than-normal room temperatures. Even if oil falls to $50 a barrel, he says Genomatica can be competitive with traditional BDO. Gann added that Genomatica has identified seven other chemicals as potential markets. He wouldn't tell me what they are, but said if it's a molecule that has nitrogen, oxygen, carbon, or hydrogen and no metals like sodium, the company might be able to devise a bug to make it. The company first finds a chemical to replicate biologically, and then concocts a genetic pathway in a microbe to make it. Industrial microbiology began to gain momentum a few years ago. Historically, microbiologists concentrated on food or pharmaceuticals. Exploiting bugs for other purposes, though, makes a lot of sense. For one thing, you don't have to worry about FDA testing. The metabolic process is also quite complex, allowing a company to build complex molecules comparatively quickly and with little energy. There are a whole slew of companies (Mascoma, Amyris) out there trying to harness the power of microbes to make ethanol, synthetic petroleum, butanol, biodiesel or other fuels. At the University of College Dublin, scientists are going to spin out a company in which microbes make biodegradable plastic. Others interesting companies include Cambrios (industrial chemicals) and Microgy (microbes for turning manure into fuel.) Genomatica is particularly interesting in what it is not doing. First, it doesn't break down plant matter into sugar with microbes. It just feeds them sugar. That takes a major task off of the company's plate. Second, it isn't aiming for fuel. It is looking only at industrial chemicals, which is a broad, and often under served, market. Third, it is skipping synthetic biology. Some companies are coming up with interesting metabolic pathways and then reproducing that pathway synthetically in the lab. It's biology without the critters. Amyris specializes in this. While there are advantages to this process, it also adds a layer of complexity. We shall see which method works best as the years go on. But here's something to watch out for. Genomatica won't make and sell chemical intermediates. Instead, it will license the process. Licensing allows a company to avoid building plants and massive sales units. However, large companies are often reluctant to license. In the chip industry, the rule of thumb is that you can't license your product until you win a huge, multimillion dollar verdict in court. Then everyone will stop copying you. Pharma companies will license, but it's a bit of an exception. Gann said that chemical companies with experience in biotech will likely be amenable to licensing. By the end of next year, Genomatica – which has received money from Draper, FIsher Jurvetson and Mohr Davidow Ventures – hopes to have a prototyping lab and some licensing deals. Gann will also speak this week at Going Green, a green conference taking place in the Bay Area.

In their quest to create the next First Solar, VC investors are making enormous bets on new solar technologies, including the difficult Cadmium Telluride (CdTe) materials system. I've just learned from a very reliable investor source that AVA Solar, a CdTe photovoltaics manufacturer in Colorado, has received a term sheet for a $100 million round at a $750 million pre-money valuation, with $50 million of that round coming from DCM. A contact at AVA Solar declined to comment. Valuations in these stratospheric ranges are becoming the norm for solar startups with very high expectations and very low revenues such as Solyndra, Nanosolar and Miasolé. My source's investment firm chose not to invest in AVA as the valuation was too rich for their blood. Another VC told Greentech Media's Mike Kanellos that AVA Solar was a tough call, calling it somewhat of a copycat of First Solar and asserting that AVA's success depends on execution while First Solar has shown time and time again that it is great at executing and manufacturing. First Solar looks to shortly enter the realm of Gigawatt capacity solar suppliers, joining a group of four or five vendors expecting to reach that volume by 2010. AVA is targeting a very low cost per watt based on a continuous manufacturing process with technology developed at Colorado State University's Material Engineering Laboratory. According to a source close to the company, AVA can show costs below First Solar and the ability to maintain that advantage with a very low risk ramp to the 200 MW level that they are targeting for 2010 (First Solar boasts costs nearing $1/W). According to this contact, "The ramp from 5MW to 200MW is the simplest and most obvious process you can imagine, a touch of genius." Pascal Noronha, AVA's CEO, is an investor and entrepreneur with ties to Warburg Pincus and the Reliance Group in India. AVA closed its second round of financing in 2007, led by The Invus Group, a New York-based investment firm. There is a toxicity risk to Cadmium Telluride that First Solar has confronted with a 100 percent take back program bonded by Swiss Re in the event that First Solar is not around in 20 to 30 years. There is also an availability risk in the Tellurium market so firms may need to buy old lead or gold mines and set up recovery systems. There are some reliable and not-so-reliable voices on the Web that speculate that First Solar and other CdTe PV firms will see price increases and material shortages in their raw material feedstocks. Armed with their new funds, all AVA Solar has to do is flawlessly execute and ramp to 200-MW volume. In addition to AVA and First Solar there are a few other firms working with CdTe. Here's a list: Antec: A German CdTe PV firm that has had its share of financial fits and starts over the last few years. Bloo Solar: According to Kanellos' interviews, this early stage firm wants to use CdTe-coated nanorods to harvest sunlight, although Bloo can use other chemistries. Calyxo: A subsidiary of Q-Cells founded in 2005 (acquired CdTe PV maker Solar Fields for $5M, forming Calyxo USA). This year, Calyxo is expanding its pilot plant to a capacity of 25MW and looking to construct a 60MW line. PrimeStar Solar: With GE as their majority shareholder and NREL roots, PrimeStar is setting up parallel CdTe fabs in Colorado and New York. Solexant: A next-generation CdTe manufacturer using nanoparticles. Funded by X/Seed Capital, Firelake Capital, Medley Partners, and Trident Capital. Sunovia: Single-crystalline, CdTe on Si tandem solar cells. ZiaWatt Solar: Very early stage CdTe supplier working on improved back contacts.

Approximately 300 million tires get tossed out every year in America and each tire contains about 10 gallons of oil, according to Patrick George, CFO of new age rubber recycler Lehigh Technologies. That comes to 3 billion gallons. The U.S. consumes about 145 billion gallons of oil. Thus, the amount thrown out in tires comes to around two percent of the annual total. Lehigh doesn't sell recovered oil-it has a process for making rubber powder out of things like tires that can then be reused for making new tires or other products--and it's not realistic that discarded tires can all be recycled. Still, the number gives you a sense of the gas consumption that could be avoided through better recycling. Recycling 30 million tires means 300 million gallons not consumed, which can also be viewed as 300 million gallons taken out of the ground. Just think: Tracy, California can call itself the Saudi Arabia of old tires. Lehigh has a plant that churn out 100 million pounds of recycled rubber powder a year. Two-thirds of the rubber in the world, by the way, is synthetic. One-third is the real stuff. Lehigh, which has raised $34.5 million, is one of the standouts in the green chemistry field. Like many other green chem companies, Lehigh has come up with a way to make a conventional product that a) relies on a cheap feedstock and/or b ) requires less fossil fuel to produce. Other standouts in the category include Serious Materials (wallboard that doesn't require much energy to manufacture), Hycrete (waterproof concrete) and Cereplast (bioplastics). Buyers of green chemistry products can also qualify, depending on the jurisidiction, for carbon credits, so there is a third advantage. Several companies have tried recycled rubber in the past, but found it tough to take the rubber powder and make something useful again. As a result, most old tires are burnt or put into monofills, said George. Some old rubber gets ground down into pellet-sized particles and refashioned into flooring or asphalt. But Lehigh is taking on a bigger market and a tougher assignment. It breaks down old rubber into an ultrafine powder, which can be used in a variety of products. Lehigh did not come up with the process itself. It started in Germany as a way to grind up, and dispose of, old pharmaceuticals. Lehigh is also not from Pennslyvania, George stated. The company is based in Florida. The founders, however, had another company with the Lehigh designation. "We needed a name quickly and we didn't want to pay a naming consultant," he said.

Here's a fun stat: it takes about three tons of pellets to heat a 3,600 square foot home and provide the residents with hot water for the winter. With pellets going for $325 a ton, that puts the home heating bills at around $1,000, or far less than if the homeowner used an oil-based system. That's from Ger Cross, CEO of the somewhat eponymous Gerkros, an Irish company that builds pellet stoves for home heating. Gerkros is bringing its Woodpecker stoves, which it has sold in Europe for 30 years, to the U.S. Fans of pellet stoves, such as CNET reporter Martin Lamonica, swear by them. Like most other pellet stove makers, the company will target the Northeast where oil burners, and cold winters are more common. Some models will be standard, while fancier versions will have scrapers that automatically clean off any baked-on crud. Cross says his stoves differ from competitors by overall performance and efficiency. In recent tests conducted in the U.K. Gerkros stoves achieved a heat-to-water heat transfer rate of around 86.7 percent. The stoves also burn clean. It's not like heating your home with an old wood stove or a dung fire. Cross also adds that you don't have to worry about running out of pellets. A lot of stores like Sam's Club carry them. Canada also produces a lot of pellets. Now, they ship a large percentage of the output to Europe.

The concept of rechargeable zinc batteries have been around since Thomas Edison. It's too bad the batteries themselves haven't worked very well. Start-up PowerGenix, however, says the picture is changing and to prove its point, the company announced that its nickel zinc rechargeables have passed two crucial milestones. Underwriters Laboratory said that the company's batteries have passed safety and reliability tests. During the examination, the batteries were subjected to shock, vibration, crush, projectile, impact and discharge tests under extreme temperatures. Oh, and short circuiting tests. The company's batteries have also been certified for recycling by the Rechargeable Battery Recycling Corp., a nonprofit that organizes recycling standards for batteries. So what's it all mean? That PowerGenix's nickel-zinc batteries can be sold in largely the same channels as other rechargeable batteries, such as lithium-ion and nickel metal hydride batteries. PowerGenix says its batteries can provide 30 percent more power than regular nickel batteries while weighing less. And they won't burst into flames like lithium ion batteries (or Super Bowl halftime performers.) The company is designing batteries for both the portable market (i.e cell phones and power tools) and plug-in hybrids. Plus, zinc is a just a fun element all the way around. It's been a long, hard road. PowerGenix has touted its batteries for years, but only started shipping commercially this Spring. Another company, ZPower (formerly Zinc Matrix Power) has similarly had to work tinker with its chemistry for years.

Planktos, everyone's favorite group of angry scientists that sketched out plans to sequester carbon dioxide in the world's oceans, is back in a new form. Planktos Science, a new company, plans to work on "ecoforestation" of new ecosystems on land and sea, according to a posting on the company's web site. The company will be headed up by Russ George, who also headed up the old Planktos. A few years ago, Planktos gained publicity by announcing a plan to exploit plankton to sequester carbon dioxide. It worked as follows: iron would be planted for miles in select parts of the ocean and act as fertilizer for plankton. The resulting plankton blooms would suck up atmospheric carbon dioxide and, when the plankton died, take it down with them to the bottom of the sea where the greenhouse gases would stay for centuries. The company would then earn money by selling carbon credits, similar to how Ecuador and a few other tropical nations are readying plans to sell forest preservation rights for carbon sequestration. While the idea intrigued many, several environmental groups, along with some marine and climate scientists, raised questions and objections about the impact to the marine environment. As novel as the idea sounded, the company wasn't alone. Climos, which has raised money from serial entrepreneur Elon Musk, sketched out similar plans. Planktos associated itself with a company called Solar Energy and set out trying to raise money. In February 2008, however, Planktos called it quits, blaming its problems largely on misinformation campaigns targeted against it. (Climos is still in business and is the middle of raising $10 million to $12 million in a funding round.) The new company is no longer associated with Solar Energy. Nonetheless, George still seems angry. He writes on the company's web site: "Tragically some environmental organizations have attacked this field of ecorestoration science in an attempt to prohibit further ocean research. Their reasons for this cynical attack seem complex but in reality boil down to their determination to oppose all ecological and biotechnological solutions to climate change. As these methods act immediately to reduce the crisis, in doing so these effective eoctech solutions undermine the political platform of the green groups who demand a radical reduction of energy use. They have chosen to engage in a classical 'strawman attack' demonizing their opposition through the publication and spreading of 'spin doctored' press releases replete with obvious lies and propaganda suggesting that there is no scientific basis and that there are no laws governing this field. It is all, in their words, like some sort of "wild west" arena. Nothing could be farther from the truth but in this age of instant Internet blogging, gossip mongering, and mudslinging, truth is something that takes a little time and effort to learn." There is more on the site.