Category → Renewable Energy
For many years of its history, Energy Conversion Devices had more cleantech and related business going on than this blog has categories for. The 51 year-old company filed for bankruptcy on Valentine’s Day, after having failed to generate sufficient revenues from its main business, United Solar Ovonics.
Tech writers are focusing on the Solar part of the tale, which is understandable because it neatly fits into a pattern of high-cost solar makers taking a tumble in the face of low-cost Chinese competitors. But what I found fascinating about the firm is the part referred to as Ovonics.
The word Ovonics was coined by ECD’s founder, Stanford R. Ovshinsky. He took the first two letters of his name and added the end of electronics to create a sort-of blanket term describing the way a bit of energy can convert amorphous and disordered materials into structured crystalline materials. It also covers the reverse process. The various energy and information applications that Ovshinksy put his inventive mind to include nickel-metal hydride batteries, LCD screens, read-write CDs, amorphous silicon thin-film solar material (and a nifty machine to make it), hydrogen fuel cells, and phase change electronic memory. It would be hard to imagine American life without many of these technologies – and some are still to come.
He is considered a Hero of Chemistry by the American Chemical Society. At 88 years old, he is still inventing at his new company Ovshinsky Innovations (he left ECD in 2007). The curious part of the tale is that Ovshinsky is self-taught – he didn’t go to college or graduate school. And his inventions began with research on energy and information that he pursued in the 1950s and 60s.
ECD started out as a laboratory – founded in 1960 – before it became a company. Even as a business, it ran more like a stand-alone research laboratory – think Bell Labs or Xerox labs without the rest of the corporation. The company brought in money by doing everything other than making and selling products - it had equity investors, research grants, and many collaborations along with a bit of licensing revenue.
It seemed to be always on the cusp of the big time, but it was ahead of its time. In some ways it was both ahead and behind at the same time. It had already licensed the nickel-metal hydride rechargeable battery years before it powered the Toyota Prius. Now electric cars will have lithium-ion batteries. ECD made thin-film solar that would find a niche in building integrated photovoltaics, but that niche still is not large enough to save the solar business. Yet its cost structure still belongs to the solar industry of five years ago.
Ovshinsky was also ahead of his time when he focused his work on renewable energy to break the world’s dependence on petroleum.
I don’t know ECD intimately but as an outsider, it seems that the company likely lost its driving force when it lost Ovshinsky five years ago. The management wanted to concentrate on making the company profitable – so it focused on solar energy, which was experiencing a boom. That was a bet that did not pay off.
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.”
When a publicly-traded company issues a curt press release – just in advance of a quarterly earnings report – saying “Effective immediately, [insert name] is no longer serving as Chief Executive Officer, and the Board of Directors thanks him for his service to the company,” shareholders may fear that something unfortunate is happening.
If that company is a solar firm, shareholders may even worry that their firm will be the next [insert name of bankrupt solar firm]. But it turns out that is not the case at thin-film solar biggie First Solar. The Arizona firm has replaced recently departed CEO Rob Gillette with interim chief Mike Ahearn. Ahearn, in a conference call with investors and analysts, said it was due only to a lack of fit, and not due to anything improper. Ahearn has been closely connected to the firm for years – serving as CEO from August 2000 to September 2009 and board chairman from October 2009 to December 2010.
The firm even released its earnings statement a few days early to help keep down panic. The results, and the remarks from executives, show that the scary stuff going on at First Solar is the same scary stuff happening across the industry – namely inventory overhang due to subsidy cuts in Europe, and sharply declining prices from crystalline silicon producers in China. First Solar built its business – making thin film cadmium telluride modules – on low cost. But pricing competitiveness is now squeezing the firm’s margins.
First Solar is still making money. In the third quarter it racked up a bit over $1 billion in revenues – up 26% year over year, and it had $197 million in net income, an 11% increase from last year’s third quarter. But, the inventory problems and cost competition has led the firm to lower its EPS outlook for the year by $2.20 to $6.50-$7.50 per share.
More interestingly for solar-watchers was a change of strategy outlined by Ahearn. Previously the firm had been deploying a graph showing how it planned to rapidly expand production – including with a new facility in Vietnam. But now the firm will be redirecting that spending toward R&D (to decrease its modules cost per watt) and toward opening new markets – such as in India, the Middle East, North Africa, and China – and away from a dependence on European markets where changing/shrinking subsidies can make or break a solar company.
One dig on First Solar’s products has been that the thin film modules are slightly less efficient than competing cyrstalline silicon. In the past, First Solar’s cost advantage more than made up the difference, but to keep that edge, the company will have to move rapidly to roll out efficiency improvements across all of its production lines. So far in the fourth quarter, the firm says its average efficiency has reached 12%, while its best lines are up to 12.4%. The average cost per watt is creeping down only slowly – to 74 cents per watt. The firm made a bold claim that it would reach the mid 60s by the end of 2012.
Nevertheless, it is clear from listening to First Solar’s plans for 2012 that severe price competition in the solar space will be much like death and taxes for some time to come. One interesting way the firm is capturing growth is by taking on project work for utility-scale solar installations. In fact, its excess inventory in the fourth quarter will likely be totally absorbed by two new projects the firm is working on now.
I haven’t drilled down to try and figure out how much profit is captured in these projects, but on a sales basis, the firm booked $800 million of its $3 billion or so 2011 revenue from project work. Analysts were keen to learn how much revenue projects would bring in 2012, but executives weren’t ready to make any projections. I mentioned this turn in strategy for First Solar in a recent story on the rise in solar installations in the U.S.
Last week the National Academies released a report about the federal Renewable Fuels Standard – and the scientist-authors basically panned it from top to bottom. As a policy tool, the NAS said, the RFS is unlikely to work. They point out that production of cellulosic ethanol – the type of renewable fuel the policy is supposed to spur production and use of – still struggles to get off the ground.
As Jeff Johnson reported in this week’s issue, the government estimates this year’s haul of cellulosic ethanol will be a mere 6.6 million gal, far below the RFS target for 2011 of 250 million gal. The standard mandates a huge upswing in production of cellulosic ethanol – 16 billion gal by 2022 – at which point it would pass the amount of ethanol the country is supposed to get from corn. NAS points out what most folks would likely observe – that this goal would be very difficult to meet.
But NAS goes farther by questioning the green credentials of cellulosic ethanol. As a second-generation or advanced biofuel, cellulosic ethanol was supposed to be much better for the environment than corn ethanol, and certainly a vast improvement over fossil fuels. But, Johnson reports, the authors forecast major downsides from growing crops for biofuels including “the one-time release of greenhouse gases from disturbed biomass and soil may exceed future reductions of greenhouse gases expected as a result of the shift from gasoline to biofuels.”
Meanwhile the solar saga continues. The Washington Post is still digging into government e-mails related to the Obama administration’s dealings with Solyndra – the defunct solar firm that benefited from a $535 million loan guarantee. It looks like there will be plenty of material to keep this topic open for a while – as I predicted – and the issue will continue to cast a shadow over government actions in the green manufacturing sector.
That said, the U.S. will soon become a leading destination for solar installations, as I report in this week’s issue. This is a positive development in terms of the country’s ability to generate renewable power. But it comes at a price – the low, low cost of crystalline silicon solar cells, mainly imported from China, is likely to blast a hole through a portion of the U.S. solar manufacturing base.
If I were to put on my policy hat (first I’d have to dust it off and remove some cobwebs), I’d be pondering a few questions this week. Is it more important for the U.S. to be able to ramp up its capacity to generate renewable solar power by installing cheap solar modules or should the U.S. try to spend more money to spur more solar cells, panels, and modules to be made in this country? Right now, those two goals are not aligned.
And what should the future of cellulosic ethanol be? If there are questions about the environmental benefit of a production system that can generate 16 billion gal of the stuff, how should we begin to answer those questions? Biofuel backers say we should move forward and get facilities and feedstocks going and work to improve the climatic impacts as part of the learning curve. Critics say we should acknowledge the trade-offs up front, which may minimize the role of cellulosic ethanol.
Dow Chemical, maker of the Solar Shingle, has been awarded a $12.8 million, 3-year grant from the Department of Energy to fund building integrated solar products program. The aim of the funding is clear in the name of the DOE program “Extreme Balance-of-System Hardware Cost Reductions.” [note: Maybe not quite clear enough - I added the hyphens to help you figure out what Extreme is supposed to refer to.]
In short, DOE wants to bring down the installed cost of solar power to $2 per watt – without subsidies. Currently, it’s the upfront cost of installing solar panels that puts the breaks on the amount of installed solar in the U.S. Most solar systems are designed to last upwards of 20 years (most experts say you can count on your panels to work for 25 years), but the costs can mean the payback period can stretch out to more than 15 years, depending on where you live.
Sharp offers an awesome and slightly addicting solar cost/payback/savings calculator on its website. Drop whatever you are doing right now (it’s the Friday before Labor Day, people, no one expects you to do real work anyway) and go here: http://sharpusa.cleanpowerestimator.com/sharpusa.htm
All you need to do is put in your zip code and the amount of your electricity bill and then you can spend a while fiddling with the variables. The default cost per watt of solar power is $7 per watt (or $7,000 per kW as shown in the calculator).
With my particulars, a 3,000 kW system would trim my power bill enough to pay for itself in a bit over 16 years. I’d only pay about 1/3rd the full cost of the system (or over $7,000) due to state and Federal tax rebates. So that shows two things: government subsidies are required to make solar even sort of make sense at current prices, and that $2 per watt sounds like a reasonable price target. If you lived in Arizona your calculation would likely be different.
Give it a try!
A couple of items in today’s scan of cleantech news invite us to compare and contrast the differences in providing renewable power for large, grid-connected energy versus local, off-grid projects.
In China, where the government has a goal to get 170GW of electricity from wind power by 2020, wind power providers are trying to figure out how to cost-effectively connect – and stay connected – to the electric grid. Massachusetts-based A123 Systems, a maker of nanophosphate lithium-ion energy storage systems will supply batteries to a Chinese manufacturer of wind turbines called Dongfang Electric Corporation. The batteries will be capable of storing 500kW. According to the A123 press release, only about 72% of China’s wind power capacity is connected to the grid.
Energy providers in rural India do not face the grid problem. In fact, winning technologies there are designed specifically for communities that do not have access to the grid. A Bloomberg article highlights two renewables firms that received early funding and support from tech firm Cisco Systems and venture capital firm Draper Fisher Jurvetson. Both have moved on from the blackboard stage and are now supplying systems to rural villagers.
Husk Power Systems builds small, 40kW biomass gasifier power plants that run on rice husks. The husks, a waste produce from rice processing is one of the few types of biomass that does not already have another use by villagers. Currently, rice millers use some of their supply, along with diesel, to power their operations. HPS’s plants can light up to 500 households and cost just under $40,000 to install. The company and its partner Shell, have installed 60 mini power plants in the Indian state of Behar.
Meanwhile, Cisco and Draper have also supported D.Light Design, a solar lamp maker that is leasing 120,000 lighting kits in homes in the southwest state of Karnataka. The price per family is the equivalent of $5-$8 a month. The lighting replaces light provided by kerosene.
More than half a billion people in India live off the grid or are connected to unreliable service. Right now, they depend mainly on fossil fuel-powered devices. Both China and India are increasing government spending for clean energy. Though technologies like A123 Systems, and creating a reliable and effective electric grid that can handle solar and wind energy have gotten a lot of attention, it’s important to realize the immense size of the market for technologies that serve off-grid populations. The technology – and social – needs for village-scale power are very different.
Over at Earth2Tech, blogger Katie Fehrenbacher gives some reasons why the recent excitement powering Internet IPOs might be a boon for cleantech firms. As she points out, the venture capital game is about making money on an entire portfolio of investments, and if individual investors want to pay big for a piece of a coupon business, then VCs can cash out and cover their exposure to slow-to-grow renewables companies.
In examining the numbers, she looks at New Enterprise Associates, which is backing the Groupon IPO - likely to bring in lots of cash – and is also invested in e-car maker Fisker Automotive, fuel-cell maker Bloom Energy and thin-film solar firm Konarka, among others. A Groupon windfall might come close to the size of the diversified fund in its entirety. This could take the pressure off of those long R&D timelines, she suggests.
It’s no accident that so many Cleantech VCs are headquartered in San Francisco, and have portfolios in tech (of the computer and internet variety) as well as cleantech. It’s because most started up during the software and internet booms and then grew to take on green start-ups. But the latter type of investment is much more industrial, slow to develop, and capital intensive. That’s why some IPO watchers (and Fehrenbacher actually made this point last month) have suggested VCs may retreat from cleantech and flow back into the faster, cleaner world of silicon.
It is probably too early in the days of Internet boom part II to tell what, if any, impact we’ll see on the fundraising abilities of cleantech firms. But it’s good to remember that cleantech firms compete not just with each other, but with other industries for investment dollars.
One small rule of thumb to remember is that a successful IPO for a venture capital fund brings in ten times the amount invested. They are supposed to be high-risk, high-reward bets where one good launch makes up for many failures. That is the yardstick that VCs will use to measure the success of a cleantech company IPO.
We don’t have too many rules here in C&EN blogville, but we do try to maintain a chemistry connection. I was worried that would be at risk if I were to post about BrightSource Energy, a mega solar tech firm that has filed for a $250 million IPO.
To generate energy from the sun, BrightSource puts thousands of big mirrors in the desert that track the sun and focus light on a tower with a boiler full of water. The steam generated cranks a turbine to create electricity. It sounds like what a technology firm would think up if someone forgot to invite a chemist or chemical engineer to the concept meeting. [Note that in contrast, other solar thermal companies use nifty heat-transfer fluids like biphenyl and diphenyl oxide, as described by my colleague Alex Tullo.]
But there are at least two innovative uses of chemistry in the BrightSource system, one is basic CRC handbook stuff and one is rather mysterious. To extend the hours during which the water can be turned into steam, BrightSource is working to store some of the sun’s heat in a blend of molten nitrate salts (sodium nitrate and potassium nitrate). To save you the Googling, the melting point of sodium nitrate is 308 C and potassium nitrate is 334 C. For some reason this nice detail is in the firm’s S1 filing but I did not see it on the website.
The more mysterious chemistry is alluded to on the company’s website. As you can imagine, the boiler tower has to withstand some unusual conditions. But worry not, because, “The boiler is designed to withstand the rigors of the daily cycling required in a solar power plant over the course of its lifetime, and is treated with a proprietary solar-absorptive coating to ensure that maximum solar energy is absorbed in the steam. [emphasis mine]. Hmmmmm…. I wonder what is in that coating? Tell me what you think.
Even after we’ve reduced, re-used, recycled, and composted everything we can, we are still faced with some odd items that are just trash. But on an elemental level, there is nothing that can’t be recycled if one is willing to put in a little extra effort and capital.
Canadian waste-to-fuels start-up Enerkem is willing, and this week it has been helped along with $59 million in venture funds from current investors including Waste Management and new investor Valero Energy. Enerkem has three plants in the works where, as the company is fond of saying, carbon can be recycled into fuels and chemicals.
Enerkem takes municipal solid waste (and other end-of-life wastes) and gasifies it at about 700 C. It then cleans up the resulting syngas and uses catalysts to convert the gas into products such as methanol. The products can be used to make ethanol, synthetic diesel, dimethyl ether, and even synthetic gasoline, says the firm.
It’s a bit more sophisticated than just burning trash for energy, but it similarly keeps materials out of landfills. The technology helped the company secure $130 million from USDA and DOE for a plant in Pontotoc, Miss. expected to break ground later this year. Meanwhile, Enerkem is building a plant in Edmonton, Alberta. The firm also has two plants in Quebec, including a demonstration facility.
According to a recent report from Pike Research (or at least a summary of the report that happened to appear as I was reading about Enerkem’s haul), both mainstream incineration for energy and new fangled gasification and biological technologies are on a growth trajectory. Why? Because the world produces a lot of trash, that’s why. Here’s some numbers on current operations from the summary:
“Today, more than 900 thermal [waste-to-energy] plants operate around the world and treat an estimated 0.2 billion tons of [municipal solid waste] with an output of approximately 130 terawatt hours (TWh) of electricity.”
While the U.S. reviews its nuclear energy policy, countries that turn away from nuclear will have to deal with an uptick in CO2 emissions.
Japanese Prime Minister Naoto Kan said earlier this month that the country will promote renewable energy rather than bring more nuclear reactors online. And Germany has placed a moratorium on nuclear power generation. Today’s Wall Street Journal has a useful summary of an International Energy Agency report that has quantified the increase in CO2 emissions that will result in Germany.
The story explains that “the shutdown of Germany’s nuclear plants will take out about 50 terawatt hours of low-carbon electricity a year” and says that the country will likely replace it with fossil fuel-derived power that will produce 25 million metric tons a year of CO2 emissions. Germany is subject to the EU’s emissions trading scheme, so it will have to offset those emissions. One way to do so, says the report, is for the country to substitute electricity from natural gas plants for those that use coal (or trade for permits with another country that does so).
But it’ll take a lot of swapping, the Journal finds. “An extra 90 terawatt hours of gas-fired power would be needed, replacing 40 terawatt hours of power from coal plants to offset the entire 25 million tons of CO2.”
Of course countries that want to replace nuclear power – either a little or a lot – will be looking to renewables. It’s not clear yet whether – and how much – governments will spend on incentives to increase the renewables infrastructure if nuclear is less a part of the portfolio. In January, for example, Germany started to cut back on feed-in tariffs for solar power.