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What the Election Means for Climate, Energy & Cleantech

Update: Here’s a link to C&EN’s election story – including new House & Senate leaders in energy-related roles.

It’s been a quiet time in cleantech news lately, what with Sandy and the election happening in back-to-back weeks. But the election – and the superstorm – are likely to have meaningful long-term impacts on energy policy. I took a tour around the internets to see what analysts and cleantech-ers are saying in their reaction to the election results.

Though it was past my usual bedtime, President Obama’s victory speech caught my ear when he remarked “We want our children to live in an America . . . that isn’t threatened by the destructive power of a warming planet.”

With Congress still divided, most policy wonks suggest that any energy and environmental policy changes will have to be led by the White House. Things to watch include any movement to block the Keystone Pipeline or push forward with EPA regulations on smog that were delayed due to cost concerns.

Environmentalists have signaled that they will be putting pressure on the President to use national policy to address climate change. Look for Bill McKibben, activist, author and co-founder of climate change group 350.org to be very vocal. He was quoted in three articles I read.

Energy and cleantech activists are pressing for a national renewable portfolio standard that would require power generators to obtain 30% of electricity from renewables by 2030. Nearly 30 states and D.C. have such a standard, the most well-known and successful is California’s, which is headed to 33% by 2020. Wind energy backers will work to return the production tax credit.

The Washington Post points out that Obama recently spoke about upgrading energy efficiency standards for buildings – codes are currently set by state and local governments.

And renewables businesses will be looking for government action that might help them gain financing for facilities or adjust subsidies on competing oil and gas producers. On the other hand, Obama has been pursuing an “all of the above” energy strategy that is likely result in further development of domestic oil and gas (including hydrofracking) resources.

Perhaps most fascinating to me, though also the most far-fetched, is discussion about whether the fiscal cliff, tax reform, and the deficit will drive Congress to think about introducing a carbon tax. Hmmmm…

My favorite takes so far on the election and energy policy:

From the Washington Post: Obama to continue efforts to curb greenhouse gases, push energy efficiency

Politico: Obama’s green cred on the line in second term

Marc Gunther: For green business, blue skies ahead. For climate policy, who knows?

Huffington Post: Ron Pernick on Five Cleantech actions for President Obama

The Daily Climate: The “Flat Earth Five” – House Members and Climate Change

For an international take, check out Click Green, which compares the horizon for climate change action in the U.S. versus China. China will have new leadership in Xi Jinping

 

SoloPower, Gevo: Can a capital-light strategy save cleantech?

I wish I could be in Portland, Oregon today to watch SoloPower start up its first production line of thin film CIGS solar panels. The company says it can manufacture in a continuous process to make its solar material in strips as long as one mile.

The company asserts that its thin, flexible modules are a good fit for building-integrated solar, especially in locations where heavier, traditional glass panels cannot be installed such as on warehouse roofs. The modules are certified to an efficiency rate of 9.7 to 12.7%.

But it’s not so much the technology itself that is interesting, but rather SoloPower’s business model and whether it can succeed in selling what it admits is a premium-priced product while the traditional silicon modules continue to drop in price, taking down many efficient producers with them.

SoloPower is already having to bear up under scrutiny because it will be able to tap into almost $200 million in DOE loan guarantees, under the same program that was behind the Solyndra kerfuffle. NPR did a nice job this morning interrogating SoloPower CEO Tim Harris. Read or listen to the short piece here.

NPR rightly points out that Solyndra was backed by $1 billion in private funding and accessed half a billion dollars in its own DOE loan before going bankrupt. But SoloPower doesn’t have a billion bucks to lose, and perhaps that is a good thing.

Instead of comparing SoloPower to Solyndra I’d like to compare it to Gevo, a maker of biobased isobutyl alcohol (what it calls isobutanol). Both firms are pursuing a capital-light strategy.

SoloPower’s first production line will have a small eventual annual capacity of 100 MW. So far, it has spent only its own investors’ dollars. Gevo, a now public company, is spending somewhere around 25% to one-third the cost of a new fermentation plant by converting existing corn ethanol plants.

When a company that has a technology without a track record wants to build its first large plant, it faces financing risk on top of technology risk. Range Fuels built a shiny new plant in Georgia to make ethanol from wood chips. But since the technology did not work upon start-up, Range could not pay its monthly loan overhead, and the factory was repossessed by its financing bank and sold at auction (Range also had a DOE loan guarantee).

Early this week, Gevo told investors that it had stopped making isobutyl alcohol at its facility in Luverne, Minnesota. Instead, it turned the switch back to ethanol. Gevo’s plan to convert an ethanol plant in Redmond, South Dakota is on hold. The company said though it successfully made isobutyl alcohol in Luverne, to reach its target run rate would require more work. Meanwhile, both locations can still produce ethanol.

Though Gevo’s investors weren’t happy with this news, Gevo has given itself plenty of time to fix its problems, saying it would reach its target run rate in 2013 (it could take a year and still make this deadline).

Reducing a company’s financing risk doesn’t do much to reduce its technology risk – or in SoloPower’s case, its market risk – in either the short or long term. But it may help a company last beyond just the short term. Given the pitfalls of technology scale-up, that could make all the difference.

Battery Start-up Gets New Name

Liquid Metal Battery Corporation now has a new name – Ambri. I have to admit, since I track a number of cleantech start-ups, I had a fondness for LMBC partly because the name was so descriptive of the technology. It helps when my memory gets a little faulty.

The researcher and founder of Ambri, Donald Sadoway, is profiled in C&EN’s very recent cover package about Entrepreneurs in Chemistry. I enjoyed Sadoway’s story very much. As C&EN’s Amanda Yarnell points out in the story, though he is an expert in materials, Sadoway and his team are not experts in the battery industry. Their outside perspective helped the team come up with a cheaper method to store intermittent, renewable energy.

But I will miss the old name. The press release says Ambri comes from a snippet of Cambridge, home of MIT. Maybe Liquid Metal Battery Corp was considered too long, or perhaps too, er, sloshy?

Switchgrass Bait and Switch

Sometimes when you dig a little on Google News you find fascinating nuggets in local news of the topics that we cover here at C&EN. A great example is in Knoxville’s alternative newsweekly Metro Pulse.*

They grew the switchgrass. Now what? Credit: University of Tennessee

Newshound Joe Sullivan digs into what ever became of $70 million that the state of Tennessee spent in the flush days of 2007 to start up a switchgrass and cellulosic ethanol industry in the state.

The good news on the project is that the promised 250,000 gal per year cellulosic ethanol plant did open, in Vonore, Tennessee. The bad news is that it has not been using any of the switchgrass grown on 5,000 surrounding acres. The switchgrass part of the project involved the University of Tennessee Institute of Agriculture. The state figured switchgrass would grow great there. And it seems to have been correct.

Sullivan reports that more than half of the $70 million project money went to build the pilot plant. But corporate partner DuPont (now DuPont Cellulosic Ethanol) has used the pilot plant to test and demonstrate its ability to make ethanol from corn stover. Corn stover is a feedstock that is available in huge quantities…. in Iowa. As it happens, DuPont’s first commercial-scale cellulosic ethanol plant is in Nevada, Iowa, and is set to come online soon.

C&EN has mentioned the Vonore plant a half dozen times (including in a previous post on this blog). The move away from switchgrass escaped our attention, but it is an important development for the UT folks and the farmers they have been working with.

So what will happen to the 50,000 tons of switchgrass that were harvested by Vonore-area farmers? Read the story to find out.

* Edited 8/28 to correct reference to Metro Pulse

The Money in Dirt

Cleantech firms are sometimes criticized for pie in the sky thinking. Harvest Power, though, looks like a pretty down to earth company. It makes dirt*. Mind you, this is high quality dirt*.

Compost. Black Gold? Credit: Harvest Power

Late last week, Harvest Power said it had raised $110 million in a third round of venture capital funding. That’s a tidy sum for a messy business. Harvest is an industry that some call “organics management.” According to the firm’s website, it works at a community level to gather and re-use organic materials (food waste, lawn clippings, pieces of lumber). It produces mulches, organic fertilizer, and soil products using composting and anareobic digestion.

These technologies are not exactly new. But it seems that the value is in its system approach and its facilities. Harvest ties into local communities where organic materials are separated from the waste stream. In addition to recyling the waste into soil-related products – which it sells to local farmers and gardeners - its digestors produce renewable energy from biogas.

The biogas is used in combined heat and power plants, exported as pipeline-grade (i.e. purified methane) natural gas, or compressed gas to be used for transportation. High heat content materials like wood chips are also processed into fuel for use in industrial boilers.

According to PrivCo, a firm that tracks the finances of privately-held companies, Harvest can boast significant revenues (this contrasts the firm with some cleantech plays that go public before making any money from sales). Founded in 2008, it made close to $50 million last year and is expected to rake in $75-$100 million in 2012.

The financing will be used by the company to expand its reach. PrivCo reports Harvest is finishing two Canadian energy plants and has plans for waste to energy facilities in New Jersey and Florida.

* [update] Harvest actually produces soil, as The Phytophactor points out in his comment.

 

 

Trending in Liquid Fuels

I’ve never had an automobile that ran on anything other than gasoline. Sure, sometimes I buy the high-octane stuff, and nowadays my go-to fuel has 10% ethanol in it. Someday soon it may have 15%. But I’m old school. If I were more cool, I’d be filling up on trendier stuff – perhaps some home-brewed diesel from vegetable oil, for example.

Actually, french fry grease drivers are also getting to be passe these days – its so hard to keep up! According to former Pennsylvania Governor (and our first Homeland Security head) Tom Ridge, methanol is the way cool fuel. Or so he contends in an OpEd in today’s New York Times.

Sprint car drivers run on methanol. Maybe you will to. Credit: Ted Van Pelt (cc)

This idea is pretty timely for me, as I was thinking of trading in my Mazda for a sprint car. If Ridge’s idea gets traction, I won’t have to – I’ll be able to fill up with the way high octane stuff without needing to upgrade my ride. He points out that just as a normal car can run on ethanol (or be cheaply converted to run on ethanol) the same is essentially true for any alcohol fuel. It takes way more methanol to go the same miles as on the same amount of gasoline, but worry not, it’s cheap. The bottom line? Methanol can be made from (say it with me)  clean-burning, domestic natural gas.

This thread continues neatly over at the Department of Energy, where $30 million in grants will go to projects to make it possible to fuel a car on compressed natural gas (those tanks are too big, bulky, and pricey to use now, but can be improved).

And in the same press release, DOE says it will make available $14 million to explore making transportation fuels from algae.

Meanwhile, on a recent drive through Eastern Pennsylvania I again pondered the meaning behind a billboard on Interstate 81. “Future Site of the Nation’s First Waste Coal to Clean Transporation Fuels Plant.” Questions that came to mind were “what is waste coal? how do you make transporation fuels from it? that sounds like it would be expensive? and are my tax dollars paying for this?”

Anyway, that pilot plant, which was originally slated for operation in 2006, was never built. Cost over-runs and difficulty arranging the neccesary financing (at last count the cost was around $1 billion) seem to have made that idea a trend of the past.

 

Energy Conversion Devices: the other story

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.

Why FedEx is an Early Adopter of Transportation Tech

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.

A FedEx all-electric vehicle pauses at the Oklahoma City airport in front of a FedEx Airbus A310. Credit: FedEx

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.”

First Solar Explains Itself

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.

Bad Biofuels Vibes, but no Break for Solar

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.