Gregoire's CleanTech Blog

More capital markets stories for CleanTech on Ethanol

Ethanol stories, along with solar, continue to drive the cleantech market upwards, securing aggressive valuations. Unlike the solar industry, with many of its major IPOs overseas, ethanol still has big appeal as a homegrown US industry. Check out some of the numerous ethanol posts on Cleantech Investing blog, investor debate, ethanol IPOs.

Last week Pacific Ethanol, Inc. (Nasdaq:PEIX) announced a $145 mm PIPE.

VeraSun, which had filed for an IPO in March for $150 mm, has announced it has upped its IPO proceeds to $300 mm. It is anticipating pricing at $18-20/share. See my previous blog on an analysis of VeraSun's IPO. I still think this one and most the others are priced on the high side.

Also, check out the Energy Blog's article on Goldman Sach's investment in Iogen. Iogen is a fully-integrated cellulosic ethanol play.

Interestingly enough, I had an opportunity to review the ethanol case investment model being developed by scientists at NREL last week. They are looking to model the way investors analyze investment into ethanol technology and plants to evaluate future supply of ethanol and the ability of the private sector to meet the DOE's 30/30 target for ethanol production (30% of current gas use by 2030). The discussion gave me a great overview of the issues surrounding the growth of the ethanol industry. The NREL team has obviously done a lot of homework. A couple of interesting concepts we discussed made me come away from the discussion with a greater respect for corn-based ethanol, and a healthy skepticsm for cellulosic ethanol.

Item 1: The DOE (and others) are pushing cellulosic ethanol because of a concern that corn supplies available for ethanol production will top out at c. 10 to 20 billion gallons per year based on on current corn supplies available without signficant increase in food costs.

Item 2. The logic runs that therefore, cellulosic ethanol will be needed to fill the gap, not withstanding the fact that while corn ethanol currently is somewhat on par with gas prices based on c. $50 /bbl of oil, cellulosic is still well out of the money. This alone made me ask why we are even bothering with cellulosic ethanol, when corn-based is working economically today.

Item 3. Part of my comfort with corn is that I do not buy the limit on corn-based supplies that are driving the push for cellulosic ethanol. We produce something on the order of 11 billion bushels of corn per year. Currently about 80+% of that goes to animal feed - cows and sheep predominantly. According to NREL's model, to meet the 30 billion gallon per year target, we would need on the order of 50+% of that 11 billion bushels per year. However, animal feed is a very price sensitive market, and while we do not import corn today, we do import beef. My feeling is that the market is quite able to substitute a reduction in corn for animal feed to support corn as a fuel feedstock, with a price rise of well less than 50%+ increase the NREL models say would force us towards cellulosic. Basically, instead of importing foreign oil, we'd import foreign beef (or export less), or run more cows on winter grass and hay, and switch that corn supply to feedstocks. Having grown up with a family cow-calf operation, I can tell you that substitution happens at a much lower price increase than NREL is concerned about.

Item 4. The NREL team pointed out a few facts that I consider serious threats to cellulosic (though NREL does not currently consider them as critical as I do). While we think of corn as a regional commodity, corn is a very transportable feedstock relative to things like switchgrass and residual biomass that are expected to be the major feedstocks for cellulosic ethanol. The cellulosic feedstocks are extremely costly and difficult to transport. The general rule of thumb is 50-75 miles. And in that 50-75 mile radius, even a small scale plant (well less than the size of the corn ethanol plants today), will need c. 10-20%+ of the total productive land planted in its feedstock to maintain its supply. That's a lot of risk for an operator of a cellulosic plant. Imagine a 3 year drought wiping out the economics on your plant. And keep in mind, we are still talking plants on the scale of 5-10% of the size of typical oil refinery. Unless feedstock transport becomes a lot cheaper, all ethanol plants, but cellulosic ethanol in particular, will have a very hard time reaching economies of scale at any given plant.

The parallel is biomass power. Today biomass is the largest non-hydro renewable power source in the US. Like cellulosic ethanol plants, biomass power plants are out of the money on cost, and have signficant feedstock transportation issues (limited to a similar size range). The industry's answer? Virtually all of the biomass power plants in the US are captive. They are built adjacent to a pulp mill or carpet mill or other facility with its own long-term supply of fuel, eliminating fuel and transport risk.

Bottom line: the corn market is extremely liquid, has lots of ability to hedge price, ability to secure supply in a spot market, and is much, much more weather proof than the cellulosic feedstock will become anytime soon. And its cheaper.

My Predictions on the Ethanol Market:

The corn market will likely be able to handle significantly more corn based ethanol production through substituting corn from the animal feed market than is currently anticipated.

Cellulosic ethanol will come on line to replace a lot slower than anticipated - even when the technology arrives.

The early cellulosic plants will likely be residual based, perhaps corn stover from fields already producing for corn ethanol - NOT purpose planted fuel crops.

Cellulosic technologies that allow fuel switching and co-firing will have an advantage.

Because of the transport issues - cellulosic ethanol will be relegated primarily to vertically integrated plants like the biomass power industry for the near future (where the operator owns its own fuel supply). They will struggle to compete on price with corn based ethanol.

And if ethanol succeeds like DOE expects, our beef prices are headed up.

Source : www.cleantechblog.com

Holographic Solar : a novel approach to concentrating sunlight could cut solar panel costs.

Rows of silicon solar cells alternate with rows of transparent holograms in Prism Solar's concentrators. (Courtesy of Prism Solar)

The main limitation of solar power right now is cost, because the crystalline silicon used to make most solar photovoltaic (PV) cells is very expensive. One approach to overcoming this cost factor is to concentrate light from the sun using mirrors or lenses, thereby reducing the total area of silicon needed to produce a given amount of electricity. But traditional light concentrators are bulky and unattractive -- less than ideal for use on suburban rooftops.

Now Prism Solar Technologies of Stone Ridge, NY, has developed a proof-of-concept solar module that uses holograms to concentrate light, possibly cutting the cost of solar modules by as much as 75 percent, making them competitive with electricity generated from fossil fuels.

The new technology replaces unsightly concentrators with sleek flat panels laminated with holograms. The panels, says Rick Lewandowski, the company's president and CEO, are a "more elegant solution" to traditional concentrators, and can be installed on rooftops -- or even incorporated into windows and glass doors.

The system needs 25 to 85 percent less silicon than a crystalline silicon panel of comparable wattage, Lewandowski says, because the photovoltaic material need not cover the entire surface of a solar panel. Instead, the PV material is arranged in several rows. A layer of holograms -- laser-created patterns that diffract light -- directs light into a layer of glass where it continues to reflect off the inside surface of the glass until it finds its way to one of the strips of PV silicon. Reducing the PV material needed could bring down costs from about $4 per watt to $1.50 for crystalline silicon panels, he says.

The company is expecting to pull in another $6 million from interested venture capitalists and start manufacturing its first-generation modules by the end of the year, selling them at about $2.40 per watt. Next-generation modules with more advanced technology should bring down the cost further.

In their ability to concentrate light, holograms are not as powerful as conventional concentrators. They can multiply the amount of light falling on the cells only by as much as a factor of 10, whereas lens-based systems can increase light by a factor of 100, and some even up to 1,000.

But traditional concentrators are complicated. Since the lenses or mirrors that focus light need to face the sun directly, they have to mechanically track the sun. They also heat up the solar cells, and so require a cooling system. As a result, although they redirect light with more intensity than the hologram device, "they're unwieldy...and not as practical for residential uses," says National Renewable Energy Laboratory spokesperson George Douglas.

Holograms have advantages that make up for their relatively weak concentration power. They can select certain frequencies and focus them on solar cells that work best at those frequencies, converting the maximum possible light into electricity. They also can be made to direct heat-generating frequencies away from the cells, so the system does not need to be cooled. "In this way, you are efficiently using only that part of the sunlight that really matters," says Selim Shahriar, director of the atomic and photonic technology laboratory at Northwestern University in Evanston, IL.

Also, different holograms in a concentrator module can be designed to focus light from different angles -- so they don't need moving parts to track the sun.

Prism Solar's system incorporates these advantages. Nevertheless, to be competitive with other solar technologies available today, the company might need to reduce its price below $2.40 a watt, says Christo Stojanoff, professor emeritus of engineering at the Aachen University of Technology in Germany.

CEO Lewandowski says the holographic modules will cost about $1.50 per watt in a few years, using their second-generation technology, which will have solar cells sandwiched between two glass panels containing holograms. At that price, they'll start to compete with fossil fuel-generated electricity, which now costs almost three times less than conventional solar electricity, according to San Francisco, CA-based research and consulting company Solarbuzz.

The modules' intensive use of glass could be adding to their cost, says Douglas. Still, such a novel idea for a concentrator, using holograms, could be a lucrative investment because it needs less silicon than flat-panel modules and therefore saves money. The high demand for solar cells in Germany and other European countries "has now outstripped the supply, which has [led to] a silicon shortage and a shortage of manufacturing in the photovoltaic world," he says.

Although the idea of holographic solar concentrators has been around since the early 1980s, no one has developed them commercially yet, according to Professor Stojanoff, who has investigated the technique extensively. His company, Holotec GmbH in Aachen, Germany, researches and manufactures holographic materials. Also, Northeast Photosciences, a Hollis, NH-based company, came close to manufacture, before it went defunct for reasons unrelated to the technology or to finance, he says.

So, if all goes according to plan, Prism Solar could be the first company to manufacture and sell holographic solar concentrator modules.

By Prachi Patel-Predd

Source : Technology Review

Hydrogen from Biomass

A novel process for squeezing hydrogen out of biomass could mean a cheaper and easier way to make hydrogen for fuel cells.

A small company in Madison, WI has developed a novel way to generate hydrogen cheaply and cleanly from biomass.

In the next couple of weeks, the technology, developed by Virent Energy Systems, will be used for the first time to continuously produce electricity from a small 10-kilowatt generator at the company's facility in Madison. The unit is fueled by corn syrup, similar to the kind used by soft drinks manufacturers, says CEO Eric Apfelbach.

The company is also about to begin work on a $1 million U.S. Navy project to build portable fuel-cell generators. The goal is to make self-contained units capable of producing their own hydrogen from a biomass-derived glycerol solution or even antifreeze.

The vast majority of hydrogen is currently made from fossil fuels -- oil, coal, and, most commonly, natural gas, through a process called steam reforming. In this process, a mixture of steam and methane is heated to temperatures above 800 degrees Celsius, and then reacts with a catalyst to produce hydrogen and carbon monoxide.

Although it's possible to use a similar process to generate hydrogen from biomass-derived ethanol, there are disadvantages in doing so, says Robbie Burch, head of chemistry and chemical engineering at Queen's University Belfast in Northern Ireland. The high temperatures required and use of pressurized steam mean the conversion process only practical on the industrial scale, he says.

Virent's conversion process, which is called aqueous phase reforming (APR), avoids these problems by carrying out the reformation at relatively low temperatures and with liquids rather steam.

Their process is a significant advance, says Dave King at Pacific Northwest National Laboratory in Richland, WA, because it means you don't have to put as much energy into the system to make steam, and at the same time you're working with liquids, which have a higher energy density than gases for a given volume.

Furthermore, the process uses extremely active catalysts, which allow 15 times more hydrogen to be converted per gram of catalyst, compared with steam reforming, says CEO Apfelbach. This efficiency allows 90 percent of the feedstock to be converted in the first cycle, he says, and the rest to be recycled. As a result, Virent claims it's able to produce hydrogen for $2-3 per kilogram -- competitive with natural-gas-derived hydrogen.

The Navy's interest is in powering the increasing number of rechargeable batteries used in military equipment, ranging from night-vision goggles to communication and positioning equipment, says Apfelbach.

They want a unit no bigger than two cubic feet and quieter than a generator, he says. The result will be a device capable of producing about one kilowatt of electricity, enough to power about 20 laptops. Running the generator on antifreeze will be an added bonus, notes Apfelback, since the substance is already in the military supply chain.

By Duncan Graham-Rowe

Source : Technology Review

Making the Power Grid Smarter

A project is networking home appliances and thermostats to electricity grids, decreasing utility costs and electricity loads

n a project launched earlier this year, researchers at the Pacific Northwest National Laboratory (PNNL) in Richland, WA have modified power-hungry appliances -- such as water heaters, thermostats, and dryers -- in hundreds of homes in the state to test how networked technology can both save homeowners money on electricity bills and relieve the strain on power grids.

The experiments are done under an umbrella project called GridWise, a U.S. Department of Energy-supported initiative to modernize the country's power grids by installing telecommunication, sensor, and computer technology into the existing power infrastructure. By networking major appliances to the Internet in order to monitor real-time electricity prices, and equipping others with specialized chips to track grid stability, the researchers hope to overhaul the antiquated electricity infrastructure and harness the power of real-time tracking to optimize energy use.

"GridWise is the notion that information technology will revolutionize the way power grids work," says Robert Pratt, manager of the program at PNNL.

The GridWise project consists of two parts: one gives customers the option to set appliance electricity consumption, to either optimize cost savings or comfort, and the other helps to automate electrical activity on a grid by monitoring use across a region. While consumers have more direct control over electricity use in their homes with the first project, Pratt says that both are aimed at creating a more cost-effective and reliable network.

The first portion of the project, which gives control over electrical use to individual homeowners, is the most ambitious, since it attempts to cull real-time date from households while load balancing the strain on the power grid. So far, 200 homes on Washington's Olympic Peninsula have water heaters and thermostats wirelessly communicating with an Internet-capable "gateway" box that contains specialized software. The networked box, Pratt explains, monitors the cost of electricity every five minutes, a feature that depends on the overall supply and demand in the region. Then, according to the homeowner's preference -- for cost saving, comfort, or a combination of the two, registered through a website -- the software automatically adjusts the thermostat and turns the water heater on or off, depending on the current price of electricity in the region, which is updated every five minutes.

Moderating electricity use based on real-time price is a radical departure from current utility fee structure. Today, most people buy electricity from utilities using a flat-rate structure, which can lead to higher charges per kilowatt-hour during certain times of day and days of the year, says Greg Bartolomei, vice president of engineering at GridPoint. For instance, the Pacific Gas & Electricity Company charges more than three times the amount during peak time in the summer than during off-peak times. Therefore, having a system that tracks these price changes in real time can save customers a significant amount of money, he says.

The second portion of GridWise, dubbed the Grid Friendly Appliance Project, is much simpler in design, allowing Northwest utilities to automatically monitor the energy needs of appliances and regulate power distribution more uniformly.

Currently, the testing involves placing Whirlpool dryers in 150 homes, with a chip in each one that monitors the amount of power coming into it. When the chip in the grid-friendly dryer registers a frequency drop below what the grid considers normal -- the current entering the home usually oscillates at 60 cycles per second -- the heating element on the dryers across the grid will randomly turn off, then turn back on when the grid is stabilized. It only takes a few extra minutes for clothes to dry, Pratt says, but when those appliances drop off the grid, he says, "it's the equivalent of turning power stations on."

Pratt explains that since there is virtually no battery storage within the grid, if a power station goes off line, there is a sudden decrease in the frequency of power that's sent to each home, which creates a strain on the grid. While these strains don't necessarily lead to blackouts, grid-friendly appliances could potentially offset the grid strain that caused the 2003 blackout in the Northeastern U.S. and Canada. By allowing the dryer to monitor electricity load, Pratt says, the researchers have "put a brain on board an appliance that was previously dumb as a stone."

He admits, however, that there is some skepticism about the Grid Friendly Appliance project. Since the power grid relies on a balance of supply and demand, some people question whether dropping appliances off the grid will add further instability. While the chip has been designed to minimize shocking the grid, by delaying the shutting off a dryer's heating element and turning it back on randomly across a region, the "jury's still out" on how well it will work, says Carl Hauser, associate professor of electrical engineering and computer science at Washington State University in Pullman, who's a researcher on a project called GridStat.

Despite the skepticism, Pratt says that so far the results are encouraging, although the final results will be available only sometime next year. Ideally, he says, both PNNL projects would be combined so that the Grid Friendly Appliance Project could be networked to the Internet and take advantage of real-time pricing of electricity.

GridWise tackles one aspect of modern grid research, says Hauser; there are numerous other projects with similar goals. Each aims to incorporate information technology into the grid in slightly different ways, he says. For instance, Hauser's GridStat research involves developing an Internet-like communication infrastructure between power stations and transmission lines, addressing grid stability from the utility company's side, as opposed to GridWise's customer orientation.

There are businesses looking into ways to reduce the stress on the nation's power grids. One company, GridPoint, recently began selling a product that monitors power consumption on household circuits and, using Internet-based communication, adjusts the amount of electricity they use.

Everyone agrees that projects such as GridWise could help overcome some of the barriers to overhauling the electricity infrastructure in the United States. But it's a challenging task, which will take researchers, technology companies, utility companies, and policy-makers working together for five to ten years to implement, says Don von Dollen, program manager of IntelliGrid, a project with a vision similar to GridWise. "I believe that [PNNL's research] is going to be important," he says. "It's a fundamental change in the way the systems operate and how consumers are integrated into the system."

By Kate Greene

Source : Technology Review

Another Solar Year for China

The China Venture Capital Forum wrapped up over the weekend. One conclusion was that it was a solar year for China, and a dog year for Silicon Valley VCs. Of course, the “solar year” reference is to the successful IPO of Chinese solar company Suntech Power. 2006 is expected to be another solar year for China as clean technologies continue to attract high investment interest, although technically speaking it is a dog year (fire dog, according to the Chinese lunar calendar.)

Among its sustainable initiatives, China was giving green building construction a big push during the conference. Further encouraging foreign investment in eco-friendly building, China has just recognized Otis Elevator’s energy efficient Gen2 elevator as one of the Top 10 Architectural and Technology Achievements in China in 2005. The venture capital forum follows a large green building and energy-saving expo in Beijing where, not surprisingly, solar products were a big attraction.

China Venture News provides this update on the conference and China’s capital market reforms: Red Hot China Venture Capital Forum Strikes Reform Gong

And a clarion call for more sustainable investment in China: VCs Need to Examine China Sustainable Investment Opportunities

Lien: EcoLog :: Another Solar Year for China.

Cleaner coal technology has reached a crossroads.

Cleaner coal technology has reached a crossroads.

It appears to be full steam ahead for the incumbent cleaner coal technology, the supercritical steam engine. Siemens and

India

’s Bharat Heavy Electricals Ltd have just announced a joint venture to develop coal-fired power plants using Siemen’s supercritical steam engine technology. Rapidly populating large coal generating countries like

China

and

India

, supercritical steam engines operate at 45% electrical efficiency, versus 36% for conventional steam engines, while realizing a 20% reduction in emissions. The addition of biomass can reduce emissions by another 20%. Over 400 supercritical plants are in operation worldwide.   

In developing countries such as the

US

, however, state agencies to coal miners are demanding that investments be made in cleaner burning IGCC plants. The Integrated Coal Gasification Combined Cycle Plant (IGCC) converts coal to a syngas to power a turbine, while CO2 is sequestered.

With hundreds of gigawatts in new coal generation planned, should the developing world also be installing the “cleanest” coal technology?  The developing world’s burgeoning electricity demands would have to wait until the advanced clean coal IGCC technology is commercialized, around 2010. It does give the incumbent supercritical steam engine a few more years to catch up on emission reductions. According to the International Energy Agency, both the advanced ultra coal steam cycled and the IGCC plants have the potential to capture carbon dioxide at an 85% efficiency level.

Next generation ultra-supercritical plants will operate at 55% electrical efficiency by reaching operating temperatures of 700°C. The World Bank calculates that for every one percent in electrical efficiency gains there is a corresponding 2% reduction in specific emissions and particulates.  The first generation IGCC clean coal plant is expected to operate at 45-50% electrical conversion efficiency, with no CO2 emissions. A few decades out, it is estimated that IGCC-SOFC plants that use hydrogen to fuel a high efficiency solid oxide fuel will reach 70 percent efficiency.

Both power plant models are placing their money on the same technology to achieve these efficiency gains: superalloys that can provide high performance at temperatures of 700°C and higher.  Sales in these high margin metals are increasing faster than the price of oil. 

Lien: EcoLog :: Will the Steam Engine Chug Along in the Era of Clean Coal?.