Category → Jobs
It looks like it’s pretty much all over for A123 Systems. The advanced battery company announced today that it would file for Chapter 11 bankruptcy in order to reorganize its debts. Johnson Controls, which also makes large-format lithium ion batteries for the auto industry, will purchase facilities and other assets for $125 million. A123 was earlier mulling an offer to sell itself to Chinese auto part maker Wanxiang Group.
A123 was one of a host of battery, battery materials, and electric drivetrain companies to receive government money as part of the Recovery Act. The goal was to set up a full manufacturing supply chain to for U.S.-made advanced batteries. Those batteries were intended to go into U.S.-made electric vehicles. A123 received $249 million in government grants. It also has shareholders, who will likely lose their investment in the re-org.
Overall, Recovery Act funding for the advanced battery industry totalled $2 billion. A123 Systems stood out – and was most vulnerable to market forces – because it was a tech-driven, pure-play battery company. Unlike Dow Kokam, or Johnson Controls, it has no deep pocketed parent or additional technologies and markets to sell into. (A123 will license back techology for batteries used for stationary storage).
And the market A123 sells into is the hyper-oversupplied market for electric car batteries. As we’ve mentioned recently in this blog, electric cars are selling very, very slowly. A recent article in MIT’s Technology Review says battery production capacity in 2013 will greatly outpace demand with 3,900 MW hours of capacity to serve 330 MW of demand, based on estimates from Menahem Anderman at the consulting firm Advanced Automotive Batteries. Needless to say, many production lines are sitting idle at the moment.
When A123 was still a young firm, it was selling batteries for power tools to Black & Decker. Indeed, when it went public its S1 filing was based on that partnership. The company certainly had its sights set on what was to be a huge automotive market.
But one has to wonder, what would have happened if A123 hadn’t received the “free” money? What if it hadn’t been swept into the government’s big plans to create a new advanced manufacturing industry from nothing?
Minnesota has long been the heart of ethanol fuel consumption. With plenty of corn and corn ethanol facilites – and a lot of drivers in E85 vehicles – the state was an early and enthusiastic supporter of bio-based fuel. But times have caught up with the northern-Midwesterners.
Now a new ethanol facility, owned by Gevo and being renovated to make isobutanol from corn, has run into an obstacle in state legislation that prevents the company from selling the alcohol to in-state fuel blenders. According to the Star Tribune, the state’s laws only specify that ethanol can be blended with gasoline (at 10% biofuel). Gevo’s Lucerne, Minn. isobutanol plant will have to ship out of state to access the fuel market.
Currently the site is being renovated to switch from making corn-based ethanol to isobutanol. Though the goal is to sell into the higher-margin chemicals market, fuels are usually a key destination to make the capacity/revenue equations work out.
There’s still time to get that settled, though. Gevo won’t be in commercial production until June, and the state can update the regulation to include other bio-based fuels. The Star Tribune points out that the President of the state’s ethanol trade group, Minnesota Bio-Fuels Association, is also CEO of Highwater Ethanol, which is also considering making isobutanol.
Highwater says it is in discussions with Butamax, a joint venture of BP and DuPont and competitor to Gevo. The two firms are been engaged in a major patent dispute. With Gevo poised to be the first in Minnesota to make isobutanol, I’m sure the firm would like to see the law changed sooner, rather than later.
Meanwhile, back in Washington, there are efforts to greatly expand the products that carry the USDA BioPreferred label. The program is a labeling/economic development/domestic bio-based materials promotion vehicle. President Obama gave it a boost last week when he signed a presidential memo requiring government agency purchasers to increase the amount of BioPreferred products they purchase. He also asked USDA to double the number of categories and products that are designated BioPreferred over the next 12 months. In the Senate, Debbie Stabenow (D-Mich.) has introduced the Grow It Here, Make It Here Bio-based Manufacturing Act which would further invigorate the effort.
I’ve been seeing a great deal of support Senator Stabenow’s bill in my in-box, from groups who expect to benefit from a higher profile for bio-based materials. DuPont, Novozymes, and the Biotechnology Industry Association trade group have publicized their support.
From a DuPont press release this morning: “The President’s action and the Grow It Here Make It Here bill demonstrate that the administration and policymakers understand the value of U.S. leadership on innovative biobased products in the United States,” said James C. Collins, president, DuPont Industrial Biosciences. “This action is a shot in the arm to America’s bioeconomy – helping support our overarching goals of boosting the U.S. agricultural sector and reducing our reliance on imported petroleum while offering a wealth of
environmental and health benefits. This is U.S. innovation that can help create U.S. jobs for a growing global market for sustainable products.”
Two U.S. manufacturers of thin film solar cells based on cadmium telluride have been having a tough couple of weeks.
Tempe, Arizona-based First Solar put out a sobering fourth quarter earnings report. While sales were up a bit from last year’s quarter – to almost $2.8 billion, the firm reported a net loss of almost $40 million, compared to net income of $664 million for the fourth quarter of 2010. First Solar used the last quarter of the year to take a big goodwill impairment charge of $393 million – residue of acquisitions of OptiSolar and NextLight.
Without the goodwill charge and some restructuring charges, the quarter still brought in less profits than the previous year’s quarter. Going forward, the company cut its 2012 guidance on net sales to $3.5 billion-$3.8 billion from $3.7 billion-$4 billion. First Solar stayed firm on an earnings forecast of $3.75-$4.25 per share.
But other issues are haunting First Solar – the company’s filing with the SEC says that it is spending more than expected on warrantee replacements of solar panels deployed in hot climates. And it has a new head of investor relations after an internal investigation of company leaders who may have improperly disclosed that First Solar would not receive a DOE loan guarantee for a large utility solar installation due to not making a deadline for application. Its SEC filing said that the SEC was now investigating the issue (the loan news negatively affected First Solar’s stock price).
Meanwhile, Abound Solar, which makes solar cells similar to First Solar, but is a smaller firm, recently said it would lay off 180 workers in Colorado. It plans to shift manufacturing to a more efficient production line, and says the workforce action is temporary. House Republicans have already been asking DOE why the company received a $400 million DOE loan guarantee for its manufacturing operations in Indiana.
First Solar and Abound Solar will go on, in spite of these hiccups. But they will continue to struggle to compete against traditional crystalline silicon solar cells because the latter have gone down in price by close to 40% in the last year. Thin film modules are well liked – First Solar is doing well with utility scale projects. But the firms have to move very quickly to increase efficiencies while decreasing production costs. To do so, they will have to stop work on older production lines – and they may have to do so abruptly or they will lose money on each module they sell.
My colleague Steve Ritterrecently attended a conference about electrofuels. Electrofuels are made by using energy from the sun and renewable inorganic feedstocks such as carbon dioxide and water, processes facilitated by nonphotosynthetic microorganisms or by using earth-abundant metal catalysts.
The conference was attended by researchers and at least one early adopter who is ready to give them a try. Cleantech Chemistry is pleased to have Steve’s report on what he learned. [Edit: You can read Steve's story on electrofuels in this week's issue]
FedEx operates more than 680 aircraft and 90,000 motorized vehicles, including delivery vans and airport and warehouse support vehicles such as forklifts. Dennis R. Beal, the company’s vice president for global vehicles gave a talk at the conference explaining why FedEx is open to many new fuel and other transportation technologies that likely would not reach the masses for years, if ever.
Although FedEx is a service company, “what we sell as a product is certainty—if you absolutely positively have to get it there, use FedEx,” said Beal. Beal gave a keynote talk during the Society for Biological Engineering’s inaugural conference on electrofuels research, which was held on Nov. 6–9, in Providence, R.I.
“That means we have a very high standard for our vehicles that pick up and deliver packages,” Beal added. “We have to be very careful in making business decisions to not negatively impact our ability to deliver certainty for our customers.”
With that philosophy, about 20 years ago FedEx starting taking a holistic view at transportation options, including battery and fuel-cell electric, hybrid, biofuel, and natural gas vehicles. “If it relates to fuel in any form, or alternative engines and drive trains, we are keenly interested,” Beal said.
The company has retrofitted delivery vans itself and partnered with vehicle manufacturers, electric utilities, electric equipment providers, and federal agencies on other fronts. FedEx even teamed up with the nonprofit group Environmental Defense Fund when pioneering the first hybrid electric delivery vehicles. Beal related that he and his colleagues have had a long climb up the learning curve searching for the most efficient transportation technologies that are safe, user friendly, meet driving range requirements, and offer a secure supply of affordable electricity or alternative fuel.
“We have tried a little bit of everything to see where these different technologies will and won’t work, Beal said. “We share the results with the rest of the delivery industry—the goal is to help advance the technology so that it will be widely adopted, not just for ourselves, but to help build scale to bring the cost down for everyone.”
FedEx has built its fleet to now contain 43 all-electric vehicles, 365 diesel hybrid and gasoline hybrid vehicles, and nearly 380 natural gas vehicles. In addition, the company has some 500 forklifts and 1,600 airport ground support electric and alternative-fuel vehicles in service.
The prototypes have a long way to go to be cost comparative with internal combustion engines, Beal said. For example, a typical all-electric delivery van costs $180,000 compared with $40,000 for a gasoline or diesel version. A consolation is that electric vehicles are 70% less costly to operate. “We believe the cost is going to come down and be economically viable in the long term,” Beal noted. “But given the logistics and needs of different regions—city versus rural and colder versus warmer climates—there is no one solution that fits all.”
FedEx plans to use a collection of approaches—gasoline, diesel, biofuel, hybrid, electric, fuel cell, and natural gas—and choose the right vehicle for each mission, Beal said. “What will drive adoption, once a technology passes the certainty test, is not that it is elegant, but that it also makes economic sense.”
Yesterday, President Obama was at Penn State to press for more federal support of green buildings. In his speech promoting the Better Buildings Initiative, he suggested that many in his audience might not consider green buildings to be “sexy.” But I suspect that chemists have many reasons to find green buildings to be pretty darned appealing.
For one thing, green building materials research – like that conducted by a clean energy hub in Philadelphia headed by Penn State - can earn chemical firms a Presidential shout-out. The hub includes corporate partners Bayer Material Science, which is working on new materials for insulation and facades that save energy, and PPG Industries, whose researchers are creating walls that reflect sun and windows that reflect infrared, according to the President’s remarks.
He pointed out that making buildings (and homes) more energy efficient is a green upgrade that comes with no tradeoffs. The whole point of retrofitting (or building green from the start) is to save on energy costs. The roadblock, though, is the initial upfront cost, which is a cash expenditure. The President’s initiative - through tax credits and financing help – is supposed to minimize the up-front sticker shock. He’d like to pay for the cost of the program by rolling back “subsidies to the oil companies,” saying, “it’s time to stop subsidizing yesterday’s energy.”
The German government will begin to pare back its generous subsidies for solar-generated power with an up to 15% cut in feed-in tariffs. The trimming won’t start until July, and will be dependent on how much solar input is actually being generated by the scores of rooftop panels that have been installed in the most solarific of European countries.
Research and advisory firm CleanEdge has released the 2010 edition of its report Cleantech Job Trends. The company tallies up 3 million jobs in the green sector, including more than 500,000 in wind power (direct and indirect employment) and over 300,000 in solar photovoltaics worldwide.
Overall, the report ranks the leading industries for cleantech employment starting with solar power, followed by biofuels and biomaterials; smart grid and energy efficiency; wind power; and advanced transportation/vehicles.
In the U.S., the biggest metropolitan areas for green jobs are San Francisco, Los Angeles, Boston, New York, Denver, and Washington, DC. But worldwide, the bad news for the U.S. is that of the 10 largest “pure play” cleantech employers in the world, six are in China (one in Hong Kong), two are in the U.S., and there is one each in Denmark and Spain. Denmark is home to Vestas Wind Energy, the largest cleantech employer with 20,730 employees.
The authors also include their assessment of the impact government spending in China and the US has had on creating cleantech jobs, as well as some policy recommendations for domestic job creation (including feed-in tariffs and a carbon tax). Check it out.