Viewing posts tagged: "Finance"

The Problem With EV Range Figures

Darryl Siry: May 14, 2009, 5:41 PM

I see a troubling pattern emerging in how the most critical aspect of EVs – range – is discussed by companies and the media alike. These are problems that could have a significant negative effect on the way the public responds to electric vehicles if manufacturers don’t change the way they communicate expectations about range.

The basic problem is that when an EV is described, it usually has a single “range” number associated with it. For example, the Tesla Roadster has a range of 244 miles. When people talk about the range of a car that is planned in the future, they also offer a single number. For example, the media has reported that several car companies plan to come to market with EVs that have “100 mile range.”

Every time a single range figure is given, it should have about three asterisks next to it.

The biggest one is fairly well known, and is the EV equivalent of “your mileage may vary.” Using the Tesla Roadster as an example, the car can indeed achieve a range of 244 miles (which is the “EPA combined” number). In fact, one Roadster was driven as far as 275 miles before it was fully depleted. But under aggressive driving the actual range from a full charge to completely dead can be dramatically lower.

That is all well and good, but the problem is that the EPA driving cycle numbers systematically overstate what the typical driver is going to see in their daily driving. It wouldn’t be so bad if the EPA number was close to the average and depending on your driving you might see less or you might see more. But it doesn’t work that way. In reality, the EPA number is essentially an upper limit number. The actual range you will get from a complete charge depends on a lot of factors, but I would say that as a general rule of thumb, if a company quotes an EPA range, you should apply a factor of 70 percent to that to get a realistic average range for a full charge.

Which brings us to asterisk #2, which is how “full charge” is defined. Seems like it should be straightforward but it’s not. Nothing in the land of EV marketing and communications is. In general, a battery pack should not always be charged to its peak nor should it be drained to completely (or even nearly) empty. This is generally bad for the longevity of the pack. However, when the EPA test is done, the battery can be charged to its absolute maximum and the car is run until the wheels literally stop moving. This is not how a typical customer will experience a “full charge.” The typical charge settings for a car will charge a battery to some point, perhaps 85 percent or 90 percent, and will consider the pack “depleted” somewhere above 0 percent. Lets call it 10 percent. It may even limit performance or go into “limp home mode” at some level above it, perhaps with 20 percent charge remaining. These are all important factors to consider when you assess the realistic range of an EV. Depending on how the manufacturer has designed the battery management system, and depending on how the EPA test was conducted, you may have to apply another 70 percent to 80 percent factor to the range that the manufacturer states. 

Combine factors one and two above, and you are talking about average usable range of the car potentially being half of what is quoted as the EPA range. That is a very big gap in expectations that will come home to roost with consumers. If you think “range anxiety” is a big issue, wait until the average consumer buys the car and on day one the average usable range is about 50 percent to 75 percent of what they were told in the marketing material (depending, of course, on how aggressive the marketing claims are.) 

But wait! We aren’t done yet. Asterisk #3: The EPA range that is quoted to you is the “beginning of life” range, or “BOL.” The problem is that the maximum capacity of a battery pack gets lower over time. There are a lot of factors that affect how rapidly this reduction in capacity occurs, including number of cycles (roughly this can be expressed as miles driven/total miles per full charge), absolute temperature, variability of temperature over the life of the pack, average depth of discharge. This can also be a complicated discussion, but suffice it to say that the effects can be significant. It isn’t an exaggeration to say that you should expect that the range of your EV could be 20 percent less after five years of use. In fact, that’s being charitable.

This is especially true for certain chemistries or cell types, like high-energy cobalt oxide cells used in laptops or cellphones. The “End of Life” (EOL) range of these types of packs could be significantly lower and the reduction much more dramatic. This is one reason that almost all manufacturers are moving toward chemistries that exhibit better cycle life qualities, like NMC, Iron Phosphate and Manganese.

So building on the example above, the realistic EOL range of the EV you will buy may be well below half of what was advertised when you bought it. The good news is it will charge to full in less than half the time!

This is a serious issue because the general public is not going to easily understand all the mental gymnastics that go into having a good understanding of what to expect from your EV. This is also an issue that gets more serious as EVs go mainstream and are no longer purchased mostly by wealthy early adopters willing to forgive these quirks and inconveniences.

There are two solutions to this problem, and I propose that both begin immediately. The mass adoption of EVs by the mainstream public depends on it.

First, manufacturers need to communicate honestly and transparently about the realities of range. This may be hard to do because of the complexity of the issue and the fact that it is tempting to just hide behind to rosy EPA figures. In the long run, however, people who actually drive these cars are going to share their real world experience and if expectations aren’t set appropriately up front there is going to be a lot of disappointment.

Second, the EPA must establish new guidelines and standards specifically for EVs that address the issues outlined above. Most importantly, the EPA should develop a standard that includes both BOL range and EOL range with a common definition of the expected life of the vehicle. 

If both of these things happen, we can avoid the consumer backlash I fear we are headed for with regard to range expectations. With so much progress being made on the EV front, I would hate to see the momentum slowed by false promises and disappointed consumers.

Darryl Siry is the Senior Analyst for Cleantech at Peppercom Strategic Communications. He is also the former chief marketing officer for Tesla Motors. You can read more at his blog at http://www.darrylsiry.com or email him at djsiry@gmail.com.

BIPV (vs. BAPV and BSPV)

Eric Wesoff: April 7, 2009, 12:08 PM
I’m writing this from a BIPV Summit in San Diego. There are about 100 people attending, rather scant for a solar event, but it's an interesting group.  Utilities, roofers, architects, and the usual suspects from the PV world -- Suntech, Solyndra, Heliovolt, some startup called Pythagoras Solar. First let’s make the distinction between BAPV and BIPV.  BAPV is Building Applied PV -– it’s a retrofit added to the building long after construction, while BIPV is Building Integrated PV and it means just that -- the architects, building designers, building owners designed the photovoltaics into the skin and roof of the building from day one. And as of now -- it’s a tiny market.  Lots of potential, but tiny.  Nadav Enbar, Research Manager, of Energy Insights, estimates that the total amount of installed BIPV, even with the most aggressive estimates, is about 70 megawatts.  Lux Research says that 97 megawatts was installed last year but they are probably including BAPV as well.  Suntech's Leonard May, Director of BIPV Products, claims to have shipped $80 million in BIPV last year. And that’s a tiny sliver of world PV. But it feels like we’re at the inflection point of this market.  The new format of the U.S. investment tax credit and Europe’s new Energy Performance of Buildings Directive are policy tools that will  serve to accelerate BIPV penetration. Despite the potential, there are very few pure-play BIPV firms, and there are very few VC-funded BIPV firms. Here is a small gallery of examples of BIPV.  More info on BIPV in the next blog post.


U.K. Awards 6GW of Wind Leases: Two Go to Oil-Turned-Turbine Gang

Michael Kanellos: February 17, 2009, 9:36 AM
The Crown Estate, the body in the United Kingdom that dispenses the land rights in the country, has awarded 10 leases to companies to develop offshore wind farms. In all the wind farms will produce 6 gigawatts when completed. And at least two of the wind farms you will see the novel offshore wind turbines touted by SeaEnergy Renewables and Burntisland Fabrication. These turbines essentially are built on four-legged platforms initially devised for the oil industry, rather than the conventional monopile used to hold up turbines now. The platforms require less steel, and hence cost less, than traditional turbines and they can be planted further out to sea. Two were erected earlier in the decade by Talisman to power oil platforms in the Beatrice oil field off the coast from Aberdeen, Scotland. The people who designed the turbines left Talisman to found SeaEnergy. (Burntisland Fabrication makes the platforms. SeaEnergy then buys them, erects the wind turbine on top of them and then sells the energy to utilities.) We saw these turbines last week and got the technical rundown from SeaEnergy's Allan MacAskill last week. Read more here. SeaEnergy is part of a group that won the rights to develop a 920-megawatt turbine off Inch Cape and also in a group that won the righ to build a 905 megawatt farm in the Beatrice field. You will probably see the design pop up in other farms too. Burntisland says it already has orders for 44 platforms and will expand to 100 a year soon. One of the other winners in the Crown Estate was Fred Olsen Renewables. Olsen is an investor in SeaEnergy. They are nuts for wind in scotland, which hopes to get half of its energy from renewable sources by 2020. Twenty-five percent of Europe's wind resources are located offshore. If Scotland votes for indepedence in 2011, it's really going to through of the U.K.'s renewable energy plans.

PG&E: Solar Is Important, But Not as Important as Energy Efficiency

Eric Wesoff: February 12, 2009, 10:31 AM
A quick summary of a talk by PG&E: Utilities tend to be portrayed as Mr. Burns rather than Mother Theresa. People often display a knee-jerk reaction to the idea of a utility -- distrust and suspicion. And that reputation might have some root in reality; most people think of a blackout or a rate hike or a poor customer service experience.  But U.S. utilities manage to keep the grid up and running 99.8 percent of the time. The electrical grid has been called one of mankind’s greatest inventions, akin to stuff like the transistor or space travel and deservedly so -- it animates our society just as the Web connects our world. Without being too obsequious or sycophantic here -- the utility-people I encounter, admittedly most of them on the renewable side, are good people motivated to change the world for the better. Which brings us to Chuck Hornbrook of Pacific Gas & Electric (PG&E) and the talk he gave at PARC last night for the Silicon Valley Photovoltaic Society.  Hornbrook is the Senior Manager, Solar and Customer Generation at this renewable energy-friendly Northern California utility. Hornbrook understands PG&E’s mission.  The key thing it has to do is to: “Make sure that beer stays cold, and homes stay warm in the winter and cool in the summer.� PG&E provides electrical and gas services to 15 million Californians and while doing that it has also managed to connect more solar customers than any other utility in the country.  It is expecting 500 MW of cumulative installed solar by early 2011 and is responsible for something like 50 percent of the grid-tied solar in the U.S. But reality intrudes here. “Even thought solar exists, the peak in the PG&E service territory is between 4 p.m. and 6 p.m.," Hornbrook said. " Solar helps but it doesn’t meet the peak. And those last few megawatts are really expensive.� And that’s why energy efficiency is at the top of PG&E’s loading order. While energy usage has steadily climbed in the U.S, California’s energy per capita has remained flat over the last 30 years.  What that means, and it’s important, is that California has avoided building 20 natural gas plants. This has been achieved through policies like “de-coupling� (giving utilities a fixed rate of return on equity and not allowing them to profit by selling more power or building more plants), and through regulations, codes and standards. “Energy Efficiency is the thing to do first,� according to Hornbrook and that’s why an energy audit is required before PG&E provides incentives for a solar roof.  Duct work, insulation, efficient furnaces have to be installed and are the low hanging fruit in the energy equation. PG&E is easily one of the more progressive utilities with regards to renewable energy.  In solar alone it is working with almost every available solar technology -- crystalline silicon from SunPower, amorphous silicon from Optisolar (maybe), CdTe from First Solar, and solar thermal in a variety of formats from Brightsource  Energy, Greenvolts, and Ausra (maybe). Definitely more Mother Teresa than Mr. Burns.

Comverge Lands Another Deal, But Lowers Estimates

Jeff St. John: January 26, 2009, 12:56 PM
Chalk up one more utility deal for Comverge Inc. (NSDQ: COMV) — and delays in others that might see the demand-response company earn less than it hoped to in the fourth quarter of 2008. Comverge said Monday it had landed a five-year deal with Progress Energy to provide its demand response hardware and software to the utility's EnergyWise residential energy efficiency program in North Carolina and South Carolina. Comverge is aiming to save the utility 170 megawatts on its peak load by installing and managing in-home energy displays, smart thermostats and digital controls to curtail power consumption when it's in greatest demand. It's similar to a deal the East Hanover, N.J.-based company announced Friday with utility Pepco, which is doing a residential energy efficiency project in Maryland and Washington, D.C. With more than 500 utility customers and 2.2 gigawatts under management, Comverge is a big name in the demand-response business. But Friday also saw Comverge report that installation delays and deferred settlements in some of its its "pay-for-performance" contracts would lead it to lower its fourth-quarter 2008 earnings estimates to $75 million to $79 million, down from previous estimates of $80 million to $90 million, according to a research note from Thomas Weisel Partners. The note's authors did revise downward their forecasts for the company's 2009 earnings, from $110.4 million to $98.2 million, on concerns about the ongoing recession and a slowing of smart meter deployments. Similar concerns caused analysts to downgrade smart meter maker Itron Inc. (NSDQ: ITRI) in late October, even after it posted third-quarter revenues that beat expectations. Still, Thomas Weisel Partners didn't appear too worried about Comverge's reduced fourth-quarter expectations, saying that the company is looking at "breakout years" ahead as utilities push forward in a big way with smart grid-related projects (see For 2009, It's All About Smart Grid and Storage). The inclusion of billions of dollars for smart grid efforts in the draft stimulus bill making its way through Congress could bolster the fortunes of companies with equipment, software and services aimed at bringing two-way communication and enhanced utility control to the nation's transmission grid.

150 Solar Startups Revisited

Eric Wesoff: January 17, 2009, 6:41 PM

Would you believe 200 Solar Startups?

A few months ago, I told the Greentech Media Braintrust that I had a list of about 100 solar startups.  Their response, not surprisingly, was “blog it."

So I started categorizing the list and the list kept growing until I was able to publish a six-part blog piece called “150 Solar Startups."

But the thing took on a life of its’ own -- a Google search yields a thousand hits for “150 Solar Startups" and all of a sudden I started hearing from people I didn’t know -- they’d ask, “Did you know there were more than 150 solar startups?

Of course I know -- I wrote the flipping article.

Anyway, I’ve spent the last few weeks updating the list and updating it again and we’re up to more than 200 solar startups.  Note that this list is devoted to VC funded and pre-VC firms, not OTC firms, not publicly traded firms.  Of course the list will never be complete -- there are stealth firms and science projects being liberated from labs every day

The good news is -- there are enormous amounts of innovation, entrepreneurship, commitment and eager investors to back these companies.  The not-so-good news is that very few of these firms will survive to reach commercial scale.  And as tragic as that can be for some of these firms and people -- this is the innovation engine of creation and destruction that makes venture capital in the U.S. and Silicon Valley work.

Here are some firms recently added to the master list:

CSP

Menova Energy: Canadian CSP firm with at least $3.6 million in VC funding and Canadian government funding.

Sundrop Fuels: Solar thermal systems that produce hydrogen and electricity via Solar Reduction of Carbon Dioxide, or Solarec. According to Venture Beat, Sundrop received a $20 million investment from KPCB in early 2008 and is also backed by Sun Mountain Capital and Oak Investment Partners.

Solar & Environmental Technologies: China-based CSP startup reportedly with $3 million from Hong Kong’s Entropy Ventures.

Solar Financiers and Installers 

SoCore Energy: With $1.5 million in private funding, SoCore is a solar system developer promoting PPAs focused on commercial, low-rise buildings.

c-Si

21-Century Silicon: Low cost solar-grade polysilicon manufacture via a proprietary furnace design. The firm raised $1 million from Solar EnerTech in September 2008.  

Solar Cell Repower: Improving solar cell efficiency -- “repowering non-prime solar cells" with a $1.5 million Round A from NorthZone Venture in December 2008.  Based in Norway.

CHP and Solar Water Heating

BrightPhase Energy: Privately held firm combines skylights, CPV and, thermal solar -- planning to offer the product via a PPA model.  According to its website, the company is seeking $6 million in funding.

ThermaSun: Self-funded startup now seeking outside funding builds solar thermal systems that supply hot water and heating for commercial, corporate and residential applications. Its target market is green home architects and builders.

Next-Generation Solar

eQsolaris: Micro-concentrator solar cells using Kyosemi’s free-fall droplet photodiode “Sphelar" cells with an optical and electrical connection from Energy Related Devices.  eQsolaris is seeking capital for a pilot production plant.

Quantum PV: Affiliated with Desert Silicon, Quantum PV is developing high efficiency PV cells based on porous silicon.  Seeking funding.

Solaroad: Solar power generation from a-Si and thermionic temperature-activated materials.

StarSolar: Pre-VC startup, winner of MIT competitions, working on photonic crystals in solar cells.

OmniPV: formerly known as UltraDots, funded by Morgenthaler Ventures and InterWest Partners. The firm uses a thin layer of a non-silicon material to harness solar energy.  Ultradots, OmniPV’s predecessor had patents in using nanoparticles and QDs for authentication purposes.

Solar Manufacturing and Processes

Five Star Technologies:  Cavitation technology-based ink formulations for screen-printable solar inks for front surface contacts. VC funding from Morgenthaler Partners, Industrial Technology Ventures, Reservoir Venture Partners et al. for a number of markets including solar.

Balance of Plant / Inverter Technology

Apollo Solar:  Modular inverters, charge controllers and energy management systems, and communications for residential solar electric systems.   Privately held firm with DOE SEGIS funding and a $4.5 million equity round in October 2008.  Apollo is a spin-off of Electronic Design Lab.

Princeton Power Systems:  Inverter and power conversion technology with Round C funding from GHO Ventures in 2008.  PPS also received funding from the DOE Solar Energy Grid Integration Systems (SEGIS) program for a 100kW demand response inverter with integrated control capabilities for dynamic energy storage and demand response through load control.

TerraWatt Power: A solar-inverter startup in the midst of raising a $1.5 million round of funding, President Gary McDaniel told Greentech Media.  The firm claims to have raised $1.5 million in angel funding and $1 million in grants. Their inverter technology, like many other entrants, uses Maximum Power Point Tracking (MPPT). Additionally, their inverter disconnects from the grid during outages and feeds electricity directly into the home.

If I've overlooked your firm, leave a comment and we'll get it added to the list.

A Record Year in Greentech Investing—$7.7B in 2008

Eric Wesoff: January 4, 2009, 11:06 PM

We began tracking venture capital investment in Greentech in 2004 when the sector really didn’t have a name and represented only 1 percent of VC investment totals.

Companies like Nanosolar and Miasolé were just getting started and most VC investors were simply trying to get their heads around this relatively underinvested trillion dollar market.

A few years later, Greentech VC investment represents about 20 percent of the VC asset class -- 2008 finished with a total VC investment of more than $7.7 billion in more than 350 funding rounds, roughly one investment a day, with time off for Christmas and New Years.

Greentech Media just released the most recent quarterly data showing that venture capital investment in green technologies exceeded $2.5 billion in the fourth quarter of 2008, a modest decrease from the previous quarter’s total of $2.9 billion.

We asked Erik Straser, a partner at leading cleantech investor Mohr Davidow Ventures and an insightful analyst of these markets to weigh in on these numbers and here are his comments:

“2008 marks the 'end of the beginning,' an end to the first few years of investment enthusiasm.  In the next period, we’ll see investors focus on strong investor syndicates, management teams that have proven they can execute, and value propositions that can truly deliver differentiated economics to the world’s largest markets.�

Rob Day of @Ventures weighed in on his blog last month with his take on the state of greentech investing. His presentation on the subject is here.

Rob sees cause for worry in the way the VC model tracks greentech startup timelines. No argument there -- it takes a long time and a lot of money to scale a new solar or biofuel technology to meaningful volumes. But he also saw a shortage of early stage investors and I’m not sure the numbers bears that out.

My preliminary data shows that investors continue to fund early-stage deals as well as later-stage deals. At least 30 of the 115 greentech deals this quarter were seed stage or A rounds.

Rob also saw the need for VCs to enlarge their scope and stop focusing on solar and biofuels. And VCs seem to be doing just that -- they are digging deep in the greentech sector and looking outside traditional technologies at previously underinvested areas like energy storage, energy efficiency, recycling, water, cleaner coal and green IT.

Still, the IPO door is closed for now and probably for the next four to six quarters. And although consolidation in this market has already begun -- meaningful, profitable VC-scale acquisitions will also be scarce for the foreseeable future.

“We will continue to see investors allocate capital, albeit more cautiously, to cleantech as the underlying macro forces driving cleantech remain unchanged and cleantech looks well positioned to be a significant part of the new administration,� Straser added.

Startups will need to work harder and smarter and VCs will need to be patient. Look for 2009 to be the year of smart grid, energy storage and energy efficiency.