Eric Wesoff 12 17 09, 12:01 AM

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More on Nuclear: Back at EPRI

I'm on a bit of a nuclear binge of late (and possibly at odds with the editors at Greentech Media regarding the topic). 

Questions that pop up around here are:

• Does nuclear even belong on a "greentech" site?
• Is nuclear power green power?
• Is nuclear a low carbon emission energy generation source?

Clearly a nuclear plant doesn't emit carbon during operation. But studies looking at the Life Cycle Analysis (LCA) of nuclear plants – examining the carbon footprint of uranium extraction and enrichment, plant construction, and spent fuel disposal make the carbon footprint picture a little murky. Here are a few links to nuclear power LCA studies.

Jeffrey Hamel and Tom Mulford of EPRI's Nuclear Program presented at EPRI headquarters on Wednesday. EPRI is essentially a research arm of U.S. utilities, is a nuclear supporter and their viewpoints have to be viewed from that perspective.

Here's a guide to EPRI's 2010 nuclear research. The other research referenced at this event was EPRI's Integrated Generation Technology Options – good LCOE data on a variety of energy generation technologies  

EPRI's Mr. Hamel gave a succinct presentation covering the state of the nuclear industry to a room of engaged attendees. He had a bit of trouble sticking with the presentation amidst a constant barrage of probing audience questions.

Pressures to lower carbon dioxide emissions from coal and natural gas power plants have provided the opportunity to reboot the U.S. nuclear industry. Operating nuclear reactors have zero carbon emissions and the technology has grown more reliable and more efficient. In the U.S., reactors now run more than 91 percent of the hours in a year, the highest capacity factor of any energy source (vs. less than 60 percent in 1979).

Quick set of nuclear factoids:

• Currently the U.S. gets more electricity from nuclear than any other country. 
• The U.S. has 104 nuclear power plants in 31 states 
• Fuel represents 25 percent of nuclear's production costs

Hamel said that electrical power from existing nuclear power plants is "very competitive" while new plants "are absolutely expensive and capital intensive."  He maintained that economic performance continues to improve.

Random energy factoids:

• In California today the load will max at 32 GW at about 7:00 p.m. at and drop to its minimum of 20 GW at 3 a.m.
• Peak peak in summer is about 60 GW
• Production cost determines dispatch order and market price of electricity
• The last plant to be dispatched sets the price

In determining levelized cost of energy (LCOE) for nuclear, EPRI uses a plant construction cost of $4860/kW which yields an LCOE of 8.3 cents per kW/hr. (That $4,860 is termed an "all-in-number). Note that the LCOE of parabolic trough-based solar is $22.5 to $29 cents per kWh (!).

The U.S. has 32 new nuclear units proposed at 21 sites. Four sites have been downselected for the Federal loan guarantee program. With $18.5 billion available "The DOE loan guarantee program is very important for providing access to competitive capital to make these projects a reality," according to Hamel.

Two last points from Hamel:

• "Standardization is at the core – if something is going to happen in the U.S. nuclear power market – it will center on standardization."

• "Permitting construction time is the elephant in the room."

Details on Small Modular Reactors (SMRs) in this report. Plus here's a panel discussion at EPRI on SMRs on Jan 21.

Eric Wesoff 12 15 09, 12:59 PM

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Former KP EIR, Joel Serface, Joins CyberCity 3D

In the early days of the greentech wave, about six years ago, I met with Joel Serface when he was a partner at Eastman Ventures. We discussed the state of the then early renewable energy field.

Since then Joel Serface has started, invested in, or advised a score of greentech firms in his role as director of the Austin Clean Energy Incubator and his stint at Kleiner Perkins Caufield & Byers, where he served as the first Entrepreneur in Residence at NREL. He always seems to be on a plane or a mountain or at a cleantech event judging by his tweet history.      

Joel has just now surfaced (sorry) in the role of Chief Strategy Officer at CyberCity 3D, A 3D geospatial service platform. 

In Joel's words, "This is a culmination of ideas that we started developing in Austin with Austin Energy – using the city as a laboratory and delivering advanced engagement tools to involve the community in energy decisions – that became obvious when I was at NREL and is best delivered through an open 3D/geospatial application service platform."

CyberCity 3D aims to help massively scale energy efficiency, to help reduce energy use and carbon footprint in buildings, the main energy user in our society. 

According to Joel, CC3D is a "combination of the world’s best energy analysis tools coupled with the first 3D/geospatial application services platform... to massively scale energy efficiency and renewable energy deployment while providing an engaging platform for collaboration between cities, citizens, and utilities."

Here's a video that hints at what the company is doing.   

We'll hear more from Joel and this firm soon.

Eric Wesoff 12 14 09, 10:18 PM

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Is There a Role for Venture Capital in Nuclear Power?

A Survey of VC Attitudes Towards Investing in Nuclear Power

Is there a role for Venture Capital in the nuclear industry? Despite the term “Venture” in their asset class, VCs tend to want to minimize risk as much as possible. And nuclear is full of risk.

Market risk. Technical risk. Regulatory risk. Finance risk.

Most of the investors we spoke with were supporters of nuclear as citizens. But they had difficulty rationalizing the timeframes and scale inherent in nuclear with the goals of their limited partners and the dictates of their funds.

We spoke with a number of cleantech investors about their investing attitudes towards nuclear:

Maurice Gunderson, CMEA

The reason that most VCs are scared of nuclear is “because they have no experience” and “are listening to anecdotes in the popular press,” said CMEA partner Maurice
Gunderson.

“You have to dig into the details,” said Gunderson, one of the few brave VC investors to make the nuclear bet (He is a lead investor in NuScale.) He has said that NuScale’s model of focusing on modular nuclear power would shift development away from the “cathedral model” of large-scale, over-budget, ten-year power projects.

Gunderson has claimed that the NuScale process – manufacturing modular reactors on a factory assembly line – can cut the time to develop a nuclear plant in half. He argues that incremental modularity eliminates the “single shaft risk” of a conventional plant that must be shut down for repair and refueling.

“The NRC processes have become streamlined in the last few years and can accommodate this model,” he said.

“Jose Reyes Jr. NuScale’s CTO is from the NRC, and he and the team know what is doable and what is not,” said Gunderson, adding that one needed to know the difference between “incremental and revolutionary technology, and technology that was licensable or not.”

Gunderson verified that NuScale was raising more money.

“Nuclear is necessary, doable, and the markets are gargantuan,” he said.

The other VCs we spoke with, although they had taken a look at a number of nuclear startups, were less enthusiastic about investing in this sector.

Accel Partners, Peter Wagner

“We need more nuclear power in this country – the obstacles for the industry and investors are time and regulation. There’s been an unspoken recognition that there was going to be a nuclear comeback and it’s happened – the licensing process has been streamlined. Now there are approved technologies and a positive change in the regulatory climate. A first derivative investment thesis might be successful – fill in spaces adjacent to the platform. Examples: project development – run the licensing processes or in the waste area or in the fuel enrichment process.”

BCC, Rob Day

“There’s a role [for VC in nuclear], but it’s narrow. Most nuclear efforts I’ve seen are early stage and are looking at a likely gestation period longer than the typical VC holding period. I’ve seen discussion of funds with longer investment periods, specifically aimed at opportunities like this. And some VCs are hoping to be able to get early exits after proof of concept, instead of waiting all the way to revenue. For me, I see nuclear as being one of those long-path-to-market sectors where the investors will need to be very patient, and VCs are not known for being very patient.”

DFJ, Raj Atlaru

“The regulatory risk and timeline are discouraging for the standard VC model. Something needs to change for VC’s to engage. [The deals we’ve seen are] mostly small/modular: 25 MW to 75 MW. We are intrigued, but remain at the sidelines due to regulatory hurdles, capital intensity/timeline and public perception. We do continue to be intrigued with new generation sources.”

Globespan Capital, Ullas Naik

“The key question is still whether it will happen through startups or through federal agencies. Seems to me like there are still too many questions around regulations for private, non-regulated industries.”

Lightspeed Venture Partners, Peter Nieh

“Issues beyond regulatory and public perception are the long time frames and high capital requirements (even by cleantech standards).”

Nth Power, Brian Walsh

“Bigger funds will find it easier to rationalize the unique risk of new nuclear reactor bets. The investment time horizon and required dollars are sure to be long and high, but the pay back could also be very big...in other words, the financing risk is pretty big. “The way I understand the regulatory process is that way nuclear reactors are scrutinized and approved or rejected as safe in concept and then approved or rejected per location (by the NRC). This limits the number of technology bets available to investors – it has to be a whole nuclear reactor system or nothing at all."
 
"NuScale, for example, has a novel cooling technology, but it can’t sell that sub system anywhere. It has to commercialize it as an entire system from soup to nuts rather than selling the subsystem into the existing industry. That’s baseload power plants for you... Very unlike automotive/cooling/heating/IT/smart grid/etc. where subsystems can be sold to enhance existing systems. This makes the risk big, but also the potential reward big."

“There is some innovation activity around fuel reprocessing and disposal, which may be an area for VCs to play that is not so “swing for the fences” and for funds that are disciplined to capital efficiency… It can be commercialized gradually as an enhancement to the nuclear fuel system of today. Other than system and fuel, I can’t think of another area for VCs to play. I have seen one fuel processing startup. Wish there were more on the fuel side, to be honest, because I think Nth Power, with its political and industry ties, could add great value partnering with a company there.”

VantagePoint Venture Partners, Bernie Bulkin

“We have not been investigating this area for VantagePoint, nor do we have any plans to. There are two reasons: First, I don’t believe that there are opportunities for us in the mainstream of nuclear power, though there could well be venture opportunities in things like waste handling … and in some aspects of the fuel cycle. But the times for development are very long by our time requirements. Second, the limited and strategic partners that invest with us would not consider nuclear power to be a clean tech investment. So while I agree that increased nuclear power is inevitable (though some of our partners do not) our focus is elsewhere and will remain so.”

The December issue of Greentech Innovations offers an analysis of Small Modular Nuclear Reactors and VC in Nuclear Power.

Eric Wesoff 12 14 09, 12:03 AM

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Nanosolar and Creative Start-Up Financing

Brian Sager, the co-founder of thin film solar pioneer Nanosolar made a relatively rare appearance at a sold-out EBC panel I moderated in Mountain View, California last week.  The event ostensibly covered creative financing although we discussed a wide variety of greentech topics.

Other speakers included:

• Sempra's Manager of Technology Development - David Berokoff
• Physic Ventures Director Andrew Williamson
• The CEC's Matt Coldwell, Program Manager Small Grants Program and Norman Bourassa, Buildings End-Use Energy Efficiency Program

Nanosolar's message control and corporate code of omertà makes Karl Rove and the Corleones look like schoolboys.  Sager warned me before the panel that he would not be making any prognostications about Nanosolar's business.  Nor would he be willing to even answer questions about the future of the solar market.  He simply would not answer questions about the future, about things he did not know.  No forward looking questions.

So when it came to Nanosolar - it was all rear-view mirror.  It remains an interesting story.

According to Sager, when Nanosolar won it's initial venture funding - it was the first time Sand Hill Road invested in a solar company.  But before and after that precedent, Nanosolar has used every avenue of funding one could think of to fund their potentially disruptive thin film solar firm, now at about $500 million in funding to date.

• Angel funding - Sergey Brin, Reid Hoffman, Larry Page, Sunil Paul, et al.
• Government Grants - from the California Energy Commission, DOE, DARPA and DoD
• Traditional VC for their Round A - Benchmark Capital, USVP
• Greentech VC for their Round B - MDV
• Corporate Venture Funds - Swiss Re, Mitsui & Co.
• Niche VC - OnPoint Ventures (The US Army's venture fund)
• Private Equity - the Carlyle Group, Lone Pine Capital
• Strategics - Utilities EDF and AES Corporation
• Venture leasing - Western Technology Investment
• Regional subsidies - from San Jose, CA and local German governments

So, other than founder credit cards and bank robbery - that might exhaust the available avenues of start-up financing.

As mentioned - no new info about Nanosolar but a few facts of note:

• The founders and the founding investors weren't investing in the CIGS material system so much as they were investing in the roll-to-roll printing model.  In fact, the founders had looked at a number of other materials systems prior to settling on CIGS.
• Nanosolar has filed more than 350 patents

Eight years or so after their founding, 2010 is the year for Nanosolar to ramp production and prove they can meet their stated goal of low LCOE.

Eric Wesoff 12 10 09, 12:31 AM

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Can Small Modular Reactors Save the US Nuclear Industry?

“Nuclear is necessary, doable, and the markets are gargantuan.”  (Maurice Gunderson of CMEA Ventures)

While the U.S. nuclear industry has been in a holding pattern since the loss-of-cooling accident and partial core meltdown at Three Mile Island in 1979, European and Asian countries have been growing their nuclear reactor fleet and their nuclear workforce. Recently, construction has begun on more than 40 nuclear plants worldwide, predominantly in Asia.

The Three Mile Island nuclear incident was more of a public relations disaster than a nuclear disaster. But the result was that the U.S. lost the global lead in nuclear power technology as well as a generation of nuclear engineers, which left electrical generation in this country a slave to dirty coal.

Fast-forward to 2009. Pressures to lower carbon dioxide emissions from coal and natural gas power plants have provided the opportunity to reboot the U.S. nuclear industry. Operating nuclear reactors have zero carbon emissions and the technology has grown more reliable and more efficient. In the U.S., reactors now run more than 91 percent of the hours in a year, the highest capacity factor of any energy source.

Can new technology, policy, and thinking usher in the much-heralded “Nuclear Renaissance” or will still-grim economics and difficult regulatory terrain keep the U.S. nuclear market mired in a post Three Mile Island hangover?

Small modular reactors and standardized designs are the potential disruptors and game-changers for the US nuclear power industry. Under the SMR concept, reactors can be built in factories and shipped to the site instead of being expensively and riskily built on-site. Rather than engineer and build reactors capable of producing over 1 GW of electric power, SMRs can produce 10 MW to 350 MW of electricity (or heat). 

The move towards modularity and standardization has reportedly already lowered the costs of large-scale LWRs such as GE’s Economic Simplified Boiling Water Reactor (ESBWR) and Westinghouse’s AP-1000.  Individual SMRs can deliver power to isolated communities or off-grid industrial sites like mines now served by diesel power. Alternatively, they can be combined to scale to large-scale power production. It is anticipated that SMRs will cost about the same to construct per kW as large plants and will produce electricity at the same cost as a conventional nuclear plant (in the 6 to 8 cent/kWh range).

Most cleantech venture capital firms have taken a look at the nuclear space but have avoided investing for a variety of good reasons - enormous capital intensity and immense regualtory and technical risk.  But a few brave venture investors have taken the plunge.

“You have to dig into the details,” according to CMEA's Maurice Gunderson, one of the few brave VC investors to make the nuclear bet (He is a lead investor in NuScale).  He has said that NuScale's model of focusing on modular nuclear power would shift development away from the “cathedral model” of large-scale, over-budget, ten-year power projects.

He has claimed that the NuScale process, manufacturing modular reactors on a factory assembly line, can cut the time to develop a nuclear plant in half.  He argues that incremental modularity eliminates the “single shaft risk” of a conventional plant that must be shut down for maintenance and refueling.

He adds, “The NRC processes have become streamlined in the last few years  and can accommodate this model.”

Gunderson said that the reason that most VCs are scared of nuclear is “because they have no experience,” and “are listening to anecdotes in the popular press.”  Gunderson verified that NuScale was raising more money and added, “Nuclear is necessary, doable, and the markets are gargantuan.”  

Other VC-funded nuclear firms include Hyperion, TerraPower, and whatever Venrock is cooking up.

The December issue of Greentech Innovations offers an analysis of Small Modular Nuclear Reactors.

                                   NuScale SMR

Eric Wesoff 12 09 09, 4:43 PM

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Ray Lane of Kleiner Perkins on Greentech Investing

I just finished moderating a panel at the Always On Venture Summit in Menlo Park, CA with some heavy-hitter investment pros in the world of Greentech Venture Capital.

• Ray Lane of Kleiner Perkins
• Marianne Wu of Mohr Davidow
• Jennifer Fonstad of Draper Fisher Jurvetson
• Michael Dannaher of WSGR
• Duncan Williams of Wedbush Morgan Securities

In looking for a theme in Greentech VC investing, Ray Lane of KP said the last few years was the "Age of Innocence," this year was the "Battle for Middle Earth" and from now on it's "Back to the Future."  All the panelists seemed hopeful about the future and glad to see 2009 in the rearview mirror.  We are going to see "more rational investment" from VCs going forward according to Lane.

Lane said that every year the partners at KP list areas they'd like to consider investing in and water and algae biofuels always make the list.  The problem is "You have to kiss a lot of frogs" to find the right investment in those sectors .  They continue to look.

Mr. Lane also alluded to their stealth vehicle firm V-Vehicle, covered by GTM here.  He stressed that cars need to be built for specific regions and Americans don't like tiny cars.  V-Vehicle will be building cars directly targeted at the American market.  Lane suggested we take a look at The Electrification Coalition, a not-for-profit group focused on bringing electric vehicles to mass scale in order to combat the economic, environmental, and national security risks caused by our dependence on petroleum.

On the subject of rational investments Lane spoke about how start-ups have begun moving from ambitions of being power suppliers to equipment suppliers.  Ausra might be a good example here, moving from solar thermal energy provider to solar thermal equipment provider.  Ausra actually has a few "strategics chasing them," and in Lane's words, "a lot of liquidity in greentech will happen this way as legacy players look for companies that have removed technical risk, but don't have the balance sheet to scale."