Friday, September 29, 2006

Renewable fuels are coming of age

By Under Secretary Thomas C. Door
United States Department of Agriculture
Renewable fuels are coming of age and that’s great for rural America. As the nation works to reduce our dependence on foreign sources of oil, the potential for renewable fuels on the agricultural economy can be summed up in three words: positive, significant and imminent.

The road to energy independence runs through the farm, and USDA Rural Development is playing a key role in encouraging the new agriculture economy represented by the renewable fuels industry.

Since the beginning of the Bush Administration, USDA Rural Development has invested $420.6 million in renewable energy and energy efficiency projects and in doing so has leveraged over $1.3 billion in private investment. We’re not alone in this effort. Other USDA agencies are also working to increase America’s renewable fuel output. In 2006 alone, USDA’s outlay for bioenergy and biobased product development will total an estimated $272 million. The Department of Energy is also a key player in this effort.

This emergence of renewable fuels has been long in the making. Renewable energy is not new: Rudolf Diesel ran some of his early engines on peanut oil, and as far back as the 1920s Henry Ford thought ethanol would be the fuel of the future.

For most of the last century, however, abundant and cheap petroleum dominated the transportation fuel market. But thanks to soaring oil costs, that era is coming to an end.

Ethanol and biodiesel production in the U.S. is skyrocketing. America last year produced 4 billion gallons of ethanol, and that figure is expected to rise to 10 billion gallons by 2010. Biodiesel production has risen from an insignificant 500,000 gallons per year in 1999 to 245 million gallons this year. Demand for these fuels is having a positive impact on corn and soybean prices.

While the future for biofuels — and other renewable energy sources including wind, solar and geothermal — is bright, much is still to be done in the area of research and development. With that in mind, the Department of Energy and USDA will co-host an important conference “Advancing Renewable Energy, An American Rural Renaissance.” This event, which will be held in St. Louis, Mo., from Oct. 10-12, will bring together leaders from across the spectrum of government and the renewable fuels industry to promote clean, domestically produced renewable energy. I encourage you to attend and hope you will visit for details.

This gathering furthers the objectives outlined in President Bush’s Advanced Energy Initiative (AEI). Even before he took office, the President was a leader in the effort to increase energy production here at home. He advanced a comprehensive energy strategy in 2001, led the fight to enact the Energy Policy Act of 2005, and outlined an accelerated strategy for new energy technologies — the AEI — in his most recent State of the Union Address.

As the President has emphasized, America is clearly awash in energy potential. The challenge is funding the research and development needed to unlock these resources and get them to market. This is urgent: some studies have shown that America’s energy demand could increase by 30 percent by the year 2030. While America’s energy output is also expected to increase, demand is projected to outstrip supply.

The drive for energy independence will therefore continue. While high energy costs pose a challenge for farm economies (the cost of energy for farms has doubled since 2003) rural America is also poised to reap substantial benefits from energy production.

Renewable energy is rural energy. Through the construction of wind farms, fuel production facilities and even geothermal sites, many locally owned, new sources of jobs and wealth are being created. This wealth will help renew rural America, creating a renaissance that will not only boost rural America, but will benefit our nation for generations to come.

Thursday, September 28, 2006

SolarCity Acquires Palo Alto Solar and Declination Solar

FOSTER CITY, Calif., Sept. 28 /PRNewswire/ -- SolarCity, a comprehensive provider of solar power solutions, today announced the acquisition of Declination Solar and Palo Alto Solar, Inc to expand the combined companies market share and breadth of offerings.

The acquisitions reinforce SolarCity's aggressive growth plans to scale fast to improve and set new standards for solar power installations. The newly-acquired companies have served the San Francisco Bay Area for more than a decade and add experience, a reputation for quality, and a passion for renewable energy to SolarCity's established offerings. Additionally, new customers now have access to SolarCity's unique monitoring service, which alerts them if their solar system is not performing at optimum levels.

Credit: SolarCity

The future of energy

When air-conditioners kick into overdrive on a hot afternoon, the price of electricity rises dramatically. Heavy air-conditioning usage can also prompt brownouts and blackouts. To get around it, companies such as Comverge, of East Hanover, N.J., and EnerNoc, based in Boston, have created systems that effectively redistribute electricity between buildings and appliances on a grid. If a brownout is looming, swimming pool heaters might be turned down so that air-conditioners can go full throttle. The systems save money too by cutting back on power usage in the afternoon, when rates peak. Utilities in Utah, Florida and other states have begun to install these systems.

Credit: Comverge

General Motors Displays The ’Green’ Future Of Transportation At Wired Nextfest

2006-09-28 - NEW YORK – GM will showcase its vast portfolio of “green” advanced propulsion technologies and how they will help increase fuel economy, reduce emissions and help eliminate dependence on petroleum at WIRED NextFest, today through Oct. 1 at Javits Center in New York.
An official pavilion sponsor, GM’s 4,000-square-foot exhibit will focus on three areas, including: alternative fuels; hybrids and fuel cells; and demonstrating the company’s commitment to improving the environmental performance of both its vehicles and its operations. Source: General Motors

Next Generation Battery Technologies: Nanoexa

SOUTH SAN FRANCISCO, Calif., Sept. 27 -- Nanoexa, a leading nanotechnology-based clean energy company, and Decktron (KOSDAQ:053070), a lithium battery and display company, today jointly announced a definitive agreement to develop and transfer into commercial use new lithium battery technology originally developed at the U.S. Department of Energy's Argonne National Laboratory.

The goal of this agreement is to commercialize next generation rechargeable lithium battery technologies from Argonne's Battery Technology Department. Together, the organizations will introduce into the marketplace batteries with increased power output, storage capacity, safety and lifetime that will be utilized in high-rate applications such as hybrid/electric vehicles, power tools, and radio control devices.

"The recent news about laptop battery safety has exposed the limitations of current rechargeable battery technologies. One of the primary goals of Argonne's battery technology is to dramatically improve lithium battery safety," said Michael Pak, CEO of Nanoexa. "Argonne's R&D expertise in developing lithium battery materials as well as their deep relationships with the world's automotive makers will create a powerful opportunity for our company. We look forward to expanding our strategic relationship with Argonne even further."

Source: Press release

GridPoint Raises $21 Million in Strategic Financing

WASHINGTON - GridPoint, Inc., a provider of intelligent energy management (IEM) products, announced the completion of a $21 million strategic financing, with significant participation from the Goldman Sachs Group, Inc. (NYSE: GS) and the execution of an agreement with Goldman Sachs’ wholly-owned subsidiary Cogentrix Energy, Inc., a leading independent power producer, to market an innovative and superior set of demand response and energy conservation solutions to electric utility companies nationwide.

GridPoint products will enable utilities to meet the rising demand for power while lowering costs and curtailing the need to build new power plants, providing significant economic and environmental benefits. For example, during periods of peak demand for electricity, a single utility that has deployed 100,000 GridPoint products across its service territory can draw upon 500 megawatts of stored capacity, equivalent to the amount of electricity generated by an $800 million coal-fired power plant.

GridPoint’s integrated demand response, conservation, and load-shaping solutions will provide utilities the opportunity to create powerful residential and commercial programs that will lower the cost of supplying electricity, reduce consumption, and increase the reliability of the electric grid. GridPoint products are equipped with utility-controlled intelligence to provide advanced power systems management capabilities.

“We look forward to working with Goldman Sachs’ Cogentrix subsidiary to deliver valuable solutions to the utility market,” said Peter L. Corsell, President and CEO of GridPoint. “The combination of Cogentrix’s deep knowledge of the utility industry and GridPoint’s advanced technology will introduce a measure of network elasticity into the electric power grid.”

The solution’s demand-side management capabilities include load control: the ability for utilities to modulate air conditioners, water heaters, and other appliances for those customers who wish to participate in exchange for a reduction in their utility bills. Additionally, unlike any other solution, GridPoint will provide utilities with supply-side management: the ability during peak demand periods to access energy stored at a customer’s site from either batteries or a distributed generation source such as solar panels, wind turbines, or fuel cells.

California Clean Tech Open Announces Inaugural Winners

SAN FRANCISCO--(BUSINESS WIRE)--Organizers of the California Clean Tech Open gathered at City Hall yesterday to unveil the five winners of the inaugural competition. Each winner received more than $100,000 worth of prizes in a "start-up in a box" prize package comprised of $50,000 cash, legal services, accounting services, public relations consulting, office space and executive search services. The winners are: Adura Technologies in the Energy Efficiency Category, GreenVolts in the Renewable Energy Category, KiteShip in the Transportation Category, EDC Technologies Inc. in the Smart Power Category, and Crystal Clear Technologies in the Water Management Category.

The response from entrepreneurs to the California Clean Tech Open has been overwhelming and has exceeded our expectations, said competition co-chairs Laurent Pacalin and Michael Santullo. The judges decisions were difficult, but were confident that the competitions winners offer the best combination of sound business model and innovative technology in their respective categories. These five companies exemplify the competitions mission to encourage economic growth and environmental sustainability by creating a clean technology cluster in California.

The competitions awards ceremony took place from 9:00 a.m. to 1:00 p.m. and features remarks from the winners, competition organizers, San Francisco Mayor Gavin Newsom, leading venture capitalist Vinod Khosla, California Energy Commissioner Art Rosenfeld and Ralph Cavanagh of the Natural Resources Defense Council.

New homeowner moves into North Carolina’s first Zero Energy Home

HICKORY – The public is invited to celebrate with homeowner Frances Thompson Oct. 6 as she prepares to move into North Carolina’s first Zero Energy Home (ZEH), constructed by Catawba Valley Habitat for Humanity with the help of the Appalachian State University Energy Center and N.C. State Energy Office.

The housewarming event at 446 S. Center St. begins at noon, followed by a workshop on Zero Energy Homes at 1 p.m. The public is invited to both events.

Completed in Fall 2005, the home has served as both a research facility and as the local office for Habitat for Humanity. Appalachian students regularly conduct research on the home to monitor its energy usage, and systems performance.

The home combines state-of-the-art, energy-efficient construction and appliances with commercially available, renewable energy systems. With its reduced energy needs and solar energy systems, a ZEH can return as much energy as it takes from the utility grid on an annual basis.

Clean-tech start-ups tout wares for VCs

For a few hours Tuesday, city hall became a microcosm of Silicon Valley. Eager entrepreneurs mingled with venture capitalists, all of them there to find and fund the best ideas in green technology.

What drew many of these people from the valley was the California Clean Tech Open, a competition held for the first time this year to discover the best businesses working to make the earth a cleaner and in some cases more affordable place to live.

The event also had a larger purpose. As with information technology, California is already commercializing more green technologies than anywhere else in the world, according to experts in the field, and it intends to keep that lead.

The potential is enormous. According to venture industry tracker VentureOne, last year venture capital firms invested more than $1.5 billion in clean-tech companies. According to Cleantech Venture Networks, a clean-tech membership organization, venture investment in green technologies is expected to grow to $10 billion in the next three years in North America alone.

Schwarzenegger signs global warming bill

Gov. Arnold Schwarzenegger on Wednesday signed into law a sweeping global warming initiative that imposes the nation's first cap on greenhouse gas emissions, saying the effort kicks off "a bold new era of environmental protection."

Standing on picturesque Treasure Island with San Francisco's skyline in the background, Schwarzenegger called the fight against global warming one of the most important issues of modern times.

"We simply must do everything we can in our power to slow down global warming before it is too late," Schwarzenegger said during an address before signing the bill.

Friday, September 22, 2006

Too Late to Get Into Cleantech?

Reality Check: With more money chasing cleantech investments, it’s getting harder to make money by the minute.

There’s certainly never been a better time to be a cleantech startup.

Virgin’s flamboyant Richard Branson said Thursday he will invest $3 billion in renewable energy technologies over the next 10 years. The Silicon Valley insiders at venture firm Kleiner Perkins, Caufield & Byers said Wednesday that they were doubling their commitment to green technology to $200 million. Even the Bush Administration—not exactly a bastion of eco-warriors—on Wednesday unveiled a plan to spend $3 billion to research carbon-dioxide-reducing technologies. "It's been a very interesting few days." said Michael Liebreich, CEO of research firm New Energy Finance.

Could all the money be bad for investors? Robert Wilder, CEO of WilderShares, which manages two clean-energy indices, said he’s concerned that the growing funds could be bringing hype to the industry, along with the needed capital. Cleantech shares are already down more than 30 percent this year. “We need to be wary of hype because hype leads to real sharp pullbacks, such as the one we’re in now,” Mr. Wilder said. “As soon as people start thinking cleantech is a sure thing, you can be sure it’s a pretty bearish sign of a downturn ahead.”

The math is simple. Add too much money to too few investments and the valuations of cleantech companies are getting bid up quickly. But the higher those valuations rise, the tougher it can be to make money over the long haul.

And the money is certainly there. Other recently announced cleantech funds include US Renewables Group, which raised $80 million and plans to bring the total to $250 million, Expansion Capital Partners, which last year closed a $20-million fund and plans to raise an additional $30 million, and Tsinghua Venture Capital Management, which raised $30 million for a green fund in China. VantagePoint Venture Partners originally closed its fund at $225 million, but could expand it up to $300 million. By June close to $2 billion in Cleantech venture funds had recently been announced, according to research firm Clean Edge.

As a result of all the money, valuations are getting bid up. At a recent investor conference, for example, Mr. Wilder said he saw some technologies that he thought were not ready still getting heavy investor interest. “Clearly, right now, there are some areas that everybody wants to get into, like solar,” said Joel Makower, a principal at research firm Clean Edge. “VCs are throwing money at some solar companies almost without questioning, and in some cases unsolicited by the companies. That’s not a sustainable model.”

That’s been a turnoff for some. Matt Horton, a principal at @Ventures said his firm is coming across interesting companies that had valuations higher than the company was willing to pay. “Obviously, a lot more new capital coming in makes it tougher because there’s a lot more money chasing fewer deals, and valuations are being bid up to levels that may not allow for good returns, and that are pricing some deals out of a range that makes sense,” he said.

Mr. Makower said the cleantech valuations are mirroring the rise in valuations the VC community is seeing across the board of venture deals. “Everybody feels this way when their sector starts to get a lot more attention,” Mr. Horton said. “There’s a lot of new guys with a lot of new money that they have to put to work, and so they’re a lot more aggressive to get into the fewer deals, and are willing to pay a lot more money to get into the deals. It’s a very difficult problem for the venture community.”

In some cases, the competition could result in bad investments, he said. “For the most part, quality firms still do the due diligence, but I have seen firms do less research than they might have otherwise so they could get into these markets,” he said. “And that’s the danger with this market in particular—investors need to be sure they understand the dynamics of the market, because they are quite different than in software or other areas where people might have been investing historically.”

Still, once you dig past the tier of “hyped” companies that everyone else is chasing, there are plenty of good opportunities out there, Mr. Horton said. And as valuations rise, so has the quality of the management teams leading cleantech startups. “I think the standards have risen, such as in management quality and the pathway to execution, for instance,” Mr. Makower said.

Overall, Mr. Wilder agrees. “The growing capital for cleantech is 99 percent a good thing,” he said. “There are a few people who are famously smart, like Branson, Gates, and Buffett, and one thing they have in common is they are all putting money into clean energy.” The only question: when does all that smart money make the next dollar invested dumb money.
Credit: Red Herring

Tuesday, September 12, 2006

Risks And Opportunities In Renewable Energy - VC Buzz

The annual European Energy Venture Fair was a good source of information on where smart investors could be putting their money to relieve some of the bottlenecks and pain points in the renewable energy sector, bulleted below.

Photovoltaics - High market demand for solar cells has led to a shortage of solar silicon worldwide, suggesting factories producing such silicon using alternative means have a golden opportunity, but also thin film, organic and dye-sensitized PPVs could make some inroads;
Wind Energy - two year waiting period to take possession of the large-sized wind turbines currently in vogue suggest room for startups or conversion of factories making smaller turbines to meet demand;
Biofuels - experienced engineering firms able to set up biofuel heat and power generation stations are overbooked;
Distributed Energy Production - computing and software solution required to manage and optimize energy production in increasingly distributed power generation networks;Ocean Energy - possibly at an inflection point - Thomson's Paris bureau chief, Michael Strauss says it's where wind power was about five to seven years ago;
Project Finance - new financing instruments are required to build renewable energy production sites worldwide. Italy alone could use €10B worth or private investment to reach its clean energy goals, according to Roberto Longo, Director of an association of renewable energy firms in Italy and chairman of ATMOS, an Italian private equity firm.

That's the good news. The bad news is that nothing has changed in terms of risks or constraints for investing in alternative energy, namely the effect of the price of oil and the reliance on government policies and regulations, things that experienced cleantech VCs will be familiar with.
But there's a new one to add to the list now: the idea of builiding nuclear power generating stations in Europe is "back from the dead", says Thomson's Paris bureau chief, Michael Strauss, who's been covering energy markets for most of his career.
The availability of relatively cheap nuclear power could cause a problem down the road because renewables are compared to competing methods of producing power - ie. the cost of burning oil or the cost of using nuclear energy.
On a purely economic level, as long the price of oil remains high and there is not a lot of nuclear energy in the market, it makes sense in many cases to use renewables.
Failing that then demand is driven in a large part by government policies, which affect the market in the form of subsidies, grants, and regulations that promote uptake of alt energy.
Businesses in general, as well as VCs, don't like operating in markets where policy-makers and politicians are in the driver's seat. But these are the risks that go with alternative energy investing and always have done. It hasn't kept the diehard specialist cleantech investors out of the market and the large number of them on hand at the event is proof of that.
For more generalist VCs, it's a lot to take on, we hear. The market constraints described above come in addition to the usual risks that they have deal with when investing in early stage tech companies, such as founder skills, market adoption, competition from incumbents, and technical hurdles.
Nevertheless, we think that we'll see some new names from the more generalist tech funds in our future reporting on alternative energy deals, but they will probably be co-investing with the specialized venture funds.