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The DoE Does Something Right, For a Change

Daniel Englander: April 30, 2008, 7:55 AM
About a year ago, the Department of Energy's Office of Electricity Delivery and Energy Reliability put out a notice seeking applications from companies developing smart grid technologies.The grant program is part of a larger initiative at DoE - Smart Grid 2030 - aimed at building up the nation's ailing power grid. A major component of this program is support for physical infrastructure. Just today, the Long Island Power Authority announced it had deployed the country's first commercial high tension superconducting transmission cable, backed by $27.5 million from the DoE's ED/ER group. But now DoE wants to move into some of the softer, backend technology, which it calls Renewable and Distributed Systems Integration (RSDI). We know it's really just a fancy way for consumers to TiVo their Netflix queue through their JDate profile on Twitter using wind turbines. Kevin Kolevar, assistant secretary for ED/ER, announced recently the DoE will invest $50 million over the next five years in smart grid and grid efficiency technologies, with the aim of reducing peak demand load by 15 percent at key distribution points. The DoE program will fund - subject to approval by Congress - research projects in New York, California, West Virginia, Illinois, Nevada, Hawaii, and Colorado backed by private sector, university, and public groups like San Diego Gas & Electric, GE, the University of Hawaii, NREL, Rocky Mountain Power, and Exelon, among others. Interesting to note, though, that none of the projects involve recent VC big money earners like GridPoint, Silver Spring Networks, eMeter or Ambient.

The Morning Feedstock

Daniel Englander: April 30, 2008, 1:25 AM
China's coal reserves have dwindled in recent months to 46.7 million tons, enough to last the country 12 days. Following a crushing winter that saw millions of travelers tied up for days during the Lunar New Year and the country's push to become a net exporter of coal, China may in fact be bleeding itself dry. State officials report China exported 8.75 million tons during the first two months of 2008, up 13.5 percent year-on-year, at a price of $630 million, or $72.2 per ton. During that same period, the country's imports declined 18.2 percent to 7.06 million tons at a cost of $450 million - up 13.1 percent year-on-year - with average costs reaching $63.3 per ton. Particularly worrisome here is that "China is importing a smaller volume of Coal than last year, but actually spending more money doing it." Mining and transportation are having a hard time keeping up with the coal demand from factories and power plants. Continuing industrial and energy production at the pace it's moving at now may just break the bank. At least all those plants will get turned off during the Olympics. From one poorly thought out energy policy to another. The European Biodiesel Board has lodged a anti-dumping and anti-subsidy complaint with the European Competition authorities against the United States for a practice known as splash-and-dash. This is like the biodiesel equivalent of a one night stand. Under the U.S. subsidization policy adopted in 2004, biodiesel producers become eligible for the $300/ton subsidy if their product is blended in the U.S. As a result, biodiesel produced in Asia and the E.U. is increasingly being shipped to the U.S., blended with a drop of mineral diesel and re-exported to the E.U. to take advantage of their subsidy packages. It is estimated that 10 percent of all biodiesel in Europe is involved in this practice. In it's complaint, the EBB stated splash-and-dash is "threatening the very concept of international trade in biodiesel." The U.S.-based National Biodiesel Board promptly told the EBB to "cut your hair and get a job." In lighter news today, a California judge has ruled in favor of polar bears, forcing the Bush Administration to decide within the next 16 days if the bears are an endangered species. The administration apparently missed its January 9 deadline, and was pushing for a June 30 extension when Judge Claudia Wilken made her decision. 16 days isn't a whole lot of time to straighten out those exploration contracts.

It’s Not The Size of the Fund in the Fight, It’s the Size of the Fight in Fund

Daniel Englander: April 29, 2008, 5:26 PM
Big time greentech funds are popping up faster than mushrooms after a spring rain. Last week the John and Al Show announced they were raising a $400 million "Green Growth" fund aimed at late-stage "private and public investments as well as . . . carve outs and spinouts." Other $400 million+ funds include the soon-to-close RockPort kitty ($450 million), the second coming of Element Partners ($400 million), and a $500 million piggy bank from NGEN Partners. Today's Wall Street Journal calls out Russell Read, the soon-to-be former chief investment officer of the $244 billion CalPERS fund, as the new face in the greentech investment jungle. Read will depart CalPERS on June 30 to begin raising capital for his own fund, which "will cover investments ranging from early stage deals to project-development-stage companies." And there's more... The same WSJ article has Riverstone Holdings LLC picking up $500 million for its mammoth $4 billion greentech fund and Hudson Clean Energy Partners grabbing $300 billion for its own $1 billion fund. Maybe I should say "fund" one more time. Fund. If all these high rollers make good on their targets, we can expect $6.75 billion moving into the greentech space over the next few years from six individual funds.

Brenco’s IPO Potential Boosted by Low Average Cost of Labor

Daniel Englander: April 29, 2008, 7:46 AM
Philippe Reichstul, CEO of Brenco, said yesterday his company will seek an IPO worth $3.2 billion by the end of 2008 or beginning of 2009. The IPO proceeds will help the Brazilian ethanol company expand its refining base to 10 ethanol plants by 2015, with an annual production capacity of around 1 billion gallons. Brenco is at work now constructing four ethanol refineries and a 650-mile pipeline at a combined cost of roughly $2 billion, which makes it one of Brazil's leading ethanol companies. That Reichstul was once the CEO of Petrobras probably doesn't hurt the company's chances either. Brenco also benefits from some pretty solid fundamentals. One particularly bright spot that should make investors smile is that the company's average labor cost hovers close to zero. In February 2007, Brenco was the target of a Brazilian Labor Ministry raid, which discovered workers

The Morning Feedstock

Daniel Englander: April 29, 2008, 2:54 AM
Is Miasole sputtering out? Dow Chemical announced Monday the company selected Global Solar as its CIGS module partner, replacing Miasole on the Solar America Initiative BIPV project. The Department of Energy gave Dow $9 million last spring to develop a “full line of cost effective PV Containing Building Products.??? (pdf). Miasole was part of the initial bid team, though this was before the thin-film startup was hit with a few technical and production problems. The company had difficulty producing cells at its target conversion efficiencies – hitting the four to six percent range, but falling far short of its eight to 10 percent target. At the end of last year, Miasole laid off 40 employees and forced out CEO David Pearce (who later went on to work for NuvoSun). Mike Kanellos also has a rumor that Miasole’s $5.8 million direct SAI grant will not be renewed by the DOE, most likely because the company failed to meet technology development targets. A new CPV company will make its debut in the solar cabbage patch today. Sunrgi, a Hollywood-based (really?) CPV startup is making some pretty substantial LCOE claims, pegging its cost to around $0.05-$0.07/kWh. The company claims its “Xtreme Concentrated Photovoltaics??? (you can tell they’re from LA), which is made up of a lens-only tracker, will heat the surface of solar cells to above 3,000º F while a special coating design will keep the cell itself at a chilly 86º - 104º F. Hold onto your seats, though. Sunrgi also claims it will be in production in the next 12 to 15 months, as long as China Sunergy doesn’t bust them for trademark infringement. The company will show off its 14 square inch modules today at the National Energy Marketers Association convention. And so, while we’re at it, today’s third piece of solar news is the SkyFuel funding round. The company has raised a $17 million Series B (maybe not a complete round, though) from Leaf Clean Energy, a VC firm popular with gnomes, fairies, and all manner of woodland creatures. The solar thermal startup is working on three separate technologies: ReflecTec, aimed at producing cheaper mirrors, the SkyTrough parabolic reflector, and a Fresnel-based Linear Power Tower. SkyFuel may also be working on a storage system, but details are sparse.

When Environmentalists Attack: The Assault on Renewable Energy

Daniel Englander: April 28, 2008, 8:44 AM
Greentech has become big business for a variety of reasons: energy is a $6 trillion a year market, national security concerns pushing governments into creating sustainable domestic power supplies, and, of course, the need to develop non-polluting energy sources to stem global warming and climate change. This last reason is regarded as a factor uniting the private sector, environmentalists and NGOs, governments, and just about anyone else who's got a stake in making sure (a) we don't burn to a flaky crisp or (b) Sea World doesn't morph from amusement park to never-ending Kevin Costner movie. But the state of affairs in this unholy alliance are not quite what they seem. In April 2007, Oceanlinx, an Australian ocean power company, filed a preliminary permit with FERC to begin site assessment for a proposed 15 MW wave energy plant off the coast of Florence, OR. The company planned an initial pilot deployment, with a 100 MW scale-up potential following successful grid interconnection and performance tests. The Florence wave farm would have been one of the world's largest, solidifying Oregon's status as an ocean energy leader and pushing Oceanlinx higher in the upper echelon of ocean power developers. The company already has installations and planned projects in Australia, the UK, Rhode Island, Hawaii, and Namibia. Alas, it was not to be. Five months later, the Oregon Surfrider Foundation filed a motion to intervene with FERC to stop Oceanlinx from receiving its permit. The group cited

The Morning Feedstock

Daniel Englander: April 28, 2008, 3:44 AM
In the absence of a sufficient product market to sell into, A123 Systems has decided to go it alone. The company has announced it will begin selling the Hymotion L5 PHEV conversion module into a handful of major U.S. cities, including Boston, D.C., Seattle, and San Francisco. The PHEV conversion module, which A123 picked up in a their acquisiton of Hymotion in 2007, is a 5 kWh, 30-40 mile range extender costing $9,995. Though A123 CEO David Vieau told a Senate committee in 2007, "with 5 million hybrids on the road by 2010, we feel there is a significant opportunity for an interim aftermaket solution," A123's conversion solution beats the Chevy Volt by three years and the official Prius PHEV by at least two. Disruption! Nuclear weapons... Aliens... Drug-induced mind control... Climate change... The U.S. Air Force is working to develop a large-scale program assessing the greenhouse gas emissions of existing and potential fuel sources. William Anderson, assistant secretary for the U.S. Air Force said, "if the world wants to get serious on greenhouse gas emissions, we've got to figure out where they're coming from." As part of the effort, the Air Force has called on government bodies, university researchers, and the private sector to give over billions of dollars towards emissions assessment and research into sustainable, high energy density fuels. The Air Force is also in the process of switching over its entire fleet to liquid syngas from oil, and is working with the French and British air forces to do the same. Every $10 increase in oil prices costs the Air Force $600 million. That being the case, the Air Force must have had a particularly tough weekend. June contracts on the NYMEX hit $119.93 in after-hours trading, rising 1.2 percent over the weekend. The rise is attributed to a strike at a BP refinery, which forced the company to close the Forties Pipeline System that carries nearly 40 percent of the UK's oil supply. Nigeria's oil output dropped 50 percent since April 24, following a strike at the Exxon Mobil operations center and a militant attack on a Royal Dutch Shell pipeline. Between the two strikes and and the pipeline attack, world oil output dropped nearly 2.5 percent. Fundamentals are on track for oil to hit $130 per barrel over the summer.