Aspire Week in Review – Week Ended January 30, 2009
Feb 02, 2009
Author: Administrator
Last weekend in his firstweekly radio and video address as President, Obama reiterated his call todouble renewable power capacity in three years and urged Congress to pass his$800+billion bill which will carry significant commitments to support thatgoal.
And Germany hasset a goal to triple its renewable power generation from its current rate of15.1% to 47% by 2020. Dietmar Scheutz, President of the German Renewable EnergyFederation said renewable energy could provide 278TWh of electricity by 2020(compared to 93TWh in 2008).
Early in theweek Obama signed off on a review that could allow states to impose their ownstandards for fuel efficiency, as well as to begin finalizing rules to requirecars and light trucks to be more energy efficient. Look for automakers tooppose the new rules, while states may be look for waivers as well as they maynot be quick to embrace any new potential expense at this point, given theircurrent budget considerations.
On Tuesday, theSenate Finance Committee approved about $31 billion in tax credits andfinancial incentives to support alternative energy and energy efficiency. Andon Wednesday, the House approved an $819 billion stimulus bill, sending it onto the Senate for debate.
In one of themore interesting editorials we read this week, aNigerian author contemplated the implications of a U.S. energy policy focusedon alternative energy and moving away from Nigeria’s oil:
“because Nigeria depends on revenue from crude oilfor virtually all activities in the country, it is undeniable that theimplications of the U.S. alternative energy policy would be very devastating onthe country.”
The author ofthe editorial urged Nigeria’s leaders to begin diversifying its economic base.If the U.S. does remain committed to an alternative energy policy, the shift inenergy priorities around the world will be inevitable.
The InternationalRenewable Energy Agency was established on Monday to promote the development ofrenewable energy.
Biofuels & Biomass
With a steady stream ofplants shutting down, reports released this week were that U.S. ethanolproduction capacity declined by 5% since the end of October to about 10.6billion gallons per year (based on production from 175 distilleries, down from181). The 2009 U.S. mandate is for 10.5 billion gallons, and it calls for 15 billiongallons by 2015.
USDA SecretaryTom Vilsack said this week that his department will work to help the ethanolindustry find more efficient ways to produce alternative fuel, and make surethe biofuels industry has sufficient support.
The MinnesotaDepartment of Agriculture reported this week that the state’s corn and ethanolindustries support more than 70,000 jobs and contribute $12 billion to thestate’s economy. Minnesota is the 5th largest producer of ethanol inthe U.S., as of 2007, producing 670 million gallons.
AllGreenEnergyis planning 65MW of biomass-based energy projects in the next two to threeyears in India, leveraging biomass gasification technology. It estimates theprojects will cost Rs 500 crore ($102.2 million) to build.
Innovation Fuelsand Tanco Milwaukee LLC are partnering to operate a 312,000 barrel capacityterminal dedicated to biofuels in the Port of Milwaukee.
NewGen Fuel(owned by Cresent Oil Co., ICM Inc. and Poet) announced plans to installgas-ethanol blending pumps at 1,000 gas stations in the U.S. It is going tostart selling in a few weeks starting with a couple Shell stations.
SAIC announced adefense contract worth up to $25 million from the Defense Advanced ResearchProjects Agency to develop jet fuel from algae at a cost-target of $3 pergallon.
Another airlinehas entered the mix in terms of testing biofuel blends. This time JapanAirlines ran a test flight of a 747-300 powered by a blend of jet fuel,camelina, jatophra and algae. Virgin Atlantic was the first to hit the air witha biofuel blend, followed by Continental Airlines and Air New Zealand. Not tobe left out the U.A. Air Force plans to acquired more than 300,000 gallons ofbiofuels. It is working on plans to certify a 50-50 mix with jet kerosene by2013. Note: every $10 rise in oil costs the Air Force $600 million.
Husker AGreportedly has restarted production after shutting down amidst financialchallenges. The plant is trying to raise additional capital.
In India,Mission Biofuel has requested the government for approval to build thecountry’s first biodiesel refinery. It plans to invest 350 crore ($71.6million) to build the first phase of the project. India has a national policyon biofuels mandating a 20% blend in gasoline and diesel by 2017.
Indonesia’sgovernment said it will subsidize biofuel producers starting this year, whichshould help support its previously announced biofuel mandate. Under its plan,if biofuel prices are more expensive than crude oil-based diesel, thegovernment will pay a subsidy of 1,000 rupiah ($0.08) per liter on average. Thecountry’s mandate issued in November requires a blend of 1% palm-basedbiodiesel and 99% diesel oil while power plants use a blend containing 2.5% and0.25% palm-based biodiesel, respectively. By 2010, palm-biodiesel content willbe increased to a range of 2.5% to 3% for transportation, 5% for industry and1% for power plants.
Chapter 11
Panda’s Herefordsubsidiary filed Chapter 11. Reports surfaced this week that Poet may bid onVeraSun’s ethanol plants at the auction in March.
Renew Energy isreportedly filing for Chapter 11 protection. It owns a 130 million gallon peryear plant in Wisconsin. And Cascade Grain Products LLC, an Oregon-basedethanol producer with 113 million gallons per year of production capacity alsofiled this week.
Brazil
President Lula’sspokesperson said on Monday that Obama has pledged to advance trade talks withBrazil and will work with its on biofuels. Lula and Obama will be meeting inMarch in Washington.
Petrobras saidit plans to double sales of ethanol to industrial customers in Japan this yearand ultimately it intends to penetrate the gasoline sector – pending Japan’srelaxation on restrictions on ethanol blending. Petrobras officials haveestimated that Japan’s ethanol consumption could eventually grow to a range of6 to 7 billion liters/year by 2010/11 if it adopted a 6% to 10% blend.
Santelisa ValeSA, the second largest sugar-cane processor in Brazil, is working on anarrangement to exchange 2 billion reais ($859 million) of debt held by banksfor equity.
Carbon, Clean Tech and Climate Change
Secretary of State HillaryClinton has appointed Todd Stern the special envoy for climate change, actingas the Obama administration’s chief climate negotiator at the UN and other sessions.
Researchers fromthe National Oceanic and Atmospheric Administration’s Earth System ResearchLaboratory said this week that many of the damaging effects of climate changeare, at this point, basically irreversible – where “irreversible” is defined astaking 1,000 years of no human impact until a change were possible.
An EU proposalfor curbing climate change was announced this week, with a goal of reducingGHGs by 30% of 1990 levels by 2020. To achieve this goal would require an estimated$71.1 billion in annual investment.
Five coal-firedplants are joining the Electric Power Research Institute to study feasibilityof CCS technology and retrofits. The study is being performed at the 1,100MWGreat River Energy Coal Creek Station in Underwood. $4.6 billion in federalfunds is earmarked presently for CCS projects.
And geochemistGary Schaffer of the University of Copenhagen weighed in separately with areport that says failure to dramatically cut GHGs could choke the Earth’soceans for the next 100,000 years.
Fuel Tech(Nasdaq:FTEK) received orders totaling $3.5 million for NOxOUT® SelectiveNon-Catalytic Reduction (SNCR) systems, from a Canadian electric utility and aFrench customer for installation on three municipal solid waste systems. Also,it said it secured contracts from a Korean client for modeling and relatedservices, a British customer for modeling of a Selective Catalytic Reduction(SCR) system and a U.S. glass manufacturer.
The U.S. isfollowing Japan into space to track CO2 emissions, planning to launch asatellite of its own into space to measure CO2 in the atmosphere. The satellitewill circle the earth every 16 days, taking 8 million measurements of CO2.
Indeck Energyhas is suing Governor David Paterson (NY), the NY State Department ofEnvironmental Conservation, the NY State Energy and Development Authority andthe NY State Public Service commission, challenging the legal authority of theagencies to create the cap-and-trade systems known as the Regional Greenhouse GasInitiative.
Energy Efficiency and Management
Comverge(Nasdaq:COMV) announced that its future contracted revenues for its demandresponse and energy efficiency solutions have surpassed $500 million, and itexpects more than $350 million of that revenue to be earned by the end of 2012.Earlier in the week it announced an agreement with Progress Energy Carolinas toprovide demand response hardware, software, hosting services and projectsupport in connection with PEC’s EnergyWise™ residential demand response andenergy efficiency program. The initial term of the exclusive agreement with PECis for five years.
Echelon(Nasdaq:ELON) and Wonderware announced a partnership for energy and facilitymanagement solutions that will integrate Echelon’s iLON® SmartServer intoWonderware’s facility management software – which is in use presently in morethan 125,000 installations around the world.
Xcel Energyselected EnerNOC (Nasdaq:ENOC) to provide up to 44MW of demand responsecapacity in its Colorado service territory. It also announced rebates forenergy efficiency appliances and projects including: heating rebates (for highefficiency natural gas furnaces and boilers); water heater rebates; andinsulation rebates.
Jersey CentralPower & Light said it is going to spend about $98 million on infrastructureand energy efficiency projects in 2009: $40 million in infrastructure upgrades;$34 million on demand response programs; $23.7 million on energy efficiencyprograms.
South Jersey Gasproposed an energy efficiency program which would offer rebates for highefficiency heating equipment, financing to help homeowners pay for “wholehouse” energy efficiency, energy assessments and related installations forsmall businesses, and incentives for large commercial and industrial customersto installs combined heat and power systems.
Sun Microsystemsannounced the completion of its Broomfield, Colorado data center facility whichit says will save the company more than $1 million in electricity costs andreduce its carbon footprint by 6%.
Energy Storage
Fuel Cell Today reported that cell shipments will exceed 5 million unitsper year by 2013 , and that 2008 saw shipments of 18,000 units mainly in theportable and stationary sectors.
On Thursday, Toshiba confirmed that it would meet an earlier promiseand launch a Direct Methanol Fuel Cell (DMFC) battery charger before March'send. DMFCs deliver power continuously, and can becompletely replenished in a matter of seconds just by adding a new methanolcartridge. They use a chemical process to produce electricity via a reactionbetween methanol, water and air. The byproducts are small amounts of carbondioxide and water vapor.
Scientists working for the U.S. Department ofEnergy's (DOE) Brookhaven National Laboratory say they've developed a newcatalyst which could make feasible ethanol-powered fuel cells.
NanoDynamics Energy received a one-year, $1.78 million grant from theOffice of Naval Research (ONR) to develop an innovative solid oxide fuel cell(SOFC) system that will be used as a main power source for tactical unmannedaerial vehicles (UAVs). Last September it received a15-month, $2.4 million contract from the U.S. Department of Energy (DOE) forthe development of a 400-watt solid oxide fuel cell (SOFC). The SOFC willbe designed to operate on a variety of fuels, including hydrogen and methanegas.
China’s Ministry of Finance said the government will subsidize the use of energy-efficient vehicles in 13cities, offering a one-off subsidy for purchase of electric, fuel-cell andmixed-power vehicles. The subsidy will be decided by the price premium ofthe energy-efficient vehicles over conventional vehicles.
The subsidy program will be trialed in public transport, the taxi industry,and postal and urban sanitary vehicles in 13 cities including Beijing andShanghai.
Earnings& Outlook
Ballard Power(Nasdaq:BLDP) provided operational updates and outlook for 2009 this week.Management said it expects to grow total product shipments to 4,000, more thandouble the 1,855 shipped in 2008, growing revenue 15% to 30% Y/Y to a range of$68 to $78 million.
Active Power(Nasdaq:ACPW) reported a 59% Y/Y increase in Q4 revenue to $16.2 million, andthe net loss for the quarter was $431,000, or $0.01 per share, compared to anet loss of $5.9 million, or $0.10 per share last year. Gross margin increasedto 32% for the quarter from a negative 2% last year. Management guided for Q1revenues in a range of $11 to $14 million, and earnings per share in a range of$0.02 to $0.04 per share. Cash and investments are expected to remain flat overthe year end.
EVs, Hybrids and PHEVs
Ford announcedthat consumers that order or purchase its new Ford Fusion 2010 hybrid vehicleby the end of March will be eligible for a $3,400 tax credit on their 2009 taxreturns. Fusions purchased between April 1 and September 31 will be eligiblefor a $1,700 tax credit, and then it drops to $850 between October 1 and March31, 2010.
Reports thisweek surfaced that Tesla hasn’t been able to raise the money needed ($100million) to build its manufacturing plant in San Jose.
The Army’sSecretary of State announced plans to lease 4,000 thousand “NeighborhoodElectric Vehicles” which are part of the Army’s strategy to reduce costs anddependence on fossil fuels.
Last week wewrote that:
“Shelby Super Cars (SSC) announced plans toproduce the Ultimate Aero EV, which will be the fastest EV on the road. TheAero will be driven by SSC’s electric powertrain package – the AESP – which canscale from 200bhp to 500bhp, and up to 1200bhp. SSC’s nanotechnologyrechargeable lithium battery pack will recharge in 10 minutes on a standard110V outlet and has a 150-200 mile range on a single charge.”
The commentarydrew comments from Kaufman Green Tech analyst Theo O’neil, who wrote me that“Shelby says it has a car that can be recharged at home in 10-15 minutes isutter nonsense. Don’t know why they even print it.” After asking O’neilwhat his thoughts on Shelby were, he said “Shelby has been aroundforever. Issue is that standard 110v outlet has a 15 amp fuse on itmeaning top power draw is the same as an electric hairdryer. The energyput into the battery can’t exceed the amount that comes out. Cannot seehow car could run 1 mile let alone 150 miles on same power used to run a hairdryer for 10 minutes. It is physically impossible.” O’neil gave mepermission to print.
Well, SSC will debut the technologylater this year in the Ultimate Aero EV, an all-electric version of itsUltimate Aero supercar, so we’ll have to wait and see if it can put up.
Earnings
ZENN MotorCompany (TSX Venture:ZNN) reported FY08 revenue of $3.5 million, a Y/Y increaseof 52%. Unit sales increase from 160 in 2007 to 246 last year. Net loss for theyear was $7.7 million, or $0.25 per share, compared with a net loss of $6.9million, or $0.27 per share in FY07.
Hydropower & Tidal Power
AtlantisResources Corporation signed a development partnership with Internet VillagesInternational to build a tidal powered data center that will be connected to aplanned two 10MW tidal current turbines in the Pentland Firth.
Brazil utilityCPFL Energia S.A. announced the commercial operation of the first 50-MW unit ofthe 100-MW Catorze de Julho hydroelectric project on the estuary of the AntasRiver. The developer of Brazil's3,300-MW Jirau hydroelectric project has awarded a US$410 million contract toChina's Dong Fang Electric for supply of 18 turbine-generators.
Iberdrolawon a concession to build and operate four hydroelectric plants totaling 1,134MW on Portugal’s Alto Tamega River.
Indiahydro developer NHPC Ltd. has awarded a contract to the HCC-Halcrow Consortiumfor turnkey construction of the 330-MW Kishanganga hydroelectric project onIndia’s Kishanganga River.
Marine CurrentTurbines, Minas Basin Pulp and Power Co. are partnering to demonstrate tidalpower technology at the Bay of Fundy, Novia Scotia.
The ScottishGovernment granted consent January 22 for development of the 4-MW Siadar WaveEnergy Project on Lewis Island in the Hebrides Islands of Scotland.
The U.K. hasnarrowed its short list for proposals to develop tidal power on the Severnriver which is estimated to have the capability of providing at least 5% of thecountry’s electricity. The largest project is the 8.6GW Cardiff Weston barrageat a cost of 15 billion pounds.
French-basedengineering firm Cegelec has created a Brazilian renewable energy subsidiary,Cegelec Renewable, which has formed a strategic partnership with Brazilianhydropower engineer Energ Power.
Earnings
NorskHydro warned that is Q4 profit is going to be hit by a 3.5 billion kroner ($515million) write-off of assets and inventories.
Solar
NanoMarkets isforecasting CIGS (copper-indium-gallium-selenium) thin-film sales to reach $2.1billion in 2016, up from $402.1 million in 2011. While Greentech Media and thePrometheus Institute projected that global module capacity is going to grow to27.6GW by 2012 and manufacturing costs per watt will decline to below $1.50 –thin film production is expected to drop below $0.70 per watt.
The ElectricPower Research Institute is launching its second project to help electric powercompanies add solar energy to fossil-fueled power plants. Tri-State Generation & Transmission Association, Inc.,Progress Energy and Southern Company are participating in the project. The casestudy analyses will be performed by WorleyParsons Group, Inc.
EnergyConversion Devices (Nasdaq:ENER) announced a multi-year agreement with CarlisleConstruction to supply its UNI-SOLAR® laminates.
Korea AdvancedMaterials announced a $600 million poly supply deal with Hyundai HeavyIndustries Co. from 2010 through 2015. Shikoku Electric Power said it is increasing capacity at itssolar plant by 4MW at a cost of about ¥3 to ¥4 billion ($33 to $44 million). Itcurrently has 0.3MW capacity and is planning to ramp to 1.7MW by 2011.
Suntech(NYSE:STP) announced a 5MW panel supply agreement with Maryland integratorStandard Solar.
Tokyo ElectricPower announced plans to build a 10MW solar plant in central Japan, withoperations schedule to begin in 2011.
Trina Solar(NYSE:TSL) signed a supply agreement for 20MW to 36MW of PV module with GASolar, a Spanish integrator. Shipments have already begun.
Downstream &Equipment
Ausra said this week it ispulling back on plans to build utility scale solar plants and is going to focuson smaller facilities, calling into question the viability of the solar thermalmarket because the finance market will not support the larger plants. So thecompany is now planning 12MW to 50MW projects instead of 600MW projects.
BrightSource’sCEO John Woolard commented this week at the Davos summit that if the industrydoesn’t get enough help from the U.S. government in terms of incentives, itssolar thermal project with PG&E may be put on hold.
And Duke EnergyCarolinas said it may not be able to proceed with its $50 million rooftop solarprogram unless state regulators remove restrictions for recovering costs fromcustomers.
ConstellationEnergy completed a 1MW power plant in Maryland utilizing SolarWorld panels.
COLEXON hasentered into a strategic agreement with investment company TNP to cooperate onthe development and construction of turnkey thin-film PV plants.
In an interviewwith Bloomberg, Phoenix Solar (PS4G.DE) CEO Andreas Hänel said German banks are resumingfinancing for solar plants, and Centrotherm (CTNG.DE) CFO Oliver Albrecht saidhe is confident about his company’s outlook based on its backlog, which, as of September, was more than €1billion. SolarWorld’s (SWVG.DE) CFO Philipp Koecke told Reuters that thecompany wouldn’t need refinancing until 2013, and he expects sales in FY09 tobe greater than €1 billion.
DuPont completedinstallation of a solar array at its Pioneer Hi-Bred Waimea Research Center inKauai using 1,500 Evergreen Solar (Nasdaq:ESLR) panels.
enXco signed a25-year PPA with Carrier Clinic, out of New Jersey which is helping to fund aPV array of up to 1.9MW capacity. enXco will own and operate the system andwill supply energy to Carrier Clinic. First Solar’s (Nasdaq:FLSR) modules willbe utilized for the project. Clean Energy Holdings and Trinity Solar aredeveloping the project.
Solar Power(SOPW.OB) introduced its Peaq™ solar shade structure for parking lot areas.Solar Power will be manufacturing and pre-assembling the subsystems at itsfactory. It also announced a $1.7 million follow-on order from an un-namedGerman integrator for its 200-watt solar modules.
Earnings
Phoenix Solarsaid it expects revenues of about €520 million and a group EBIT of about €31million for FY09.
Wacker Chemiesaid sales in 2008 increased 14% Y/Y to €4.3 billion, with EBITDA of €1.05billion.
SunPower(Nasdaq:SPWRA) reported Q4 revenue of $401 million, up 79% Y/Y and net incomeof $29.5 million, or $0.70 per share (beating Street). Gross margin rose to29.9%. FY08 revenue came in at $1.43 billion, an 85% Y/Y increase, and FY netincome of $92.2 million. For FY09 it expects revenue of $1.6 billion to $2billion and net income per diluted share of $2.20 to $2.80 with productioncapacity of more than 450MW.
Transmission & Electricity
AmericanSuperconductor (Nasdaq:AMSC) announced a D-VAR order for the Long Island PowerGrid. It said in its release that its D-VAR Static Compensator customersinclude more than 20 electric utilities and 40 wind farms. Earlier this monthit announced a sale to Basin Electric Power Cooperative, and its first D-VARorder for China’s power grid.
Wind
The American Wind EnergyAssociation reported this week that wind energy grew by 8,358MW in 2008. In the Q4, 4,112MW of wind energy cameonline. Total U.S. wind energy now stands at 25,170MW. Denise Bode of the AWEA said, however,that the wind industry is being negatively impacted in the midst of thefinancial downturn and urged Congress to move forward on the stimulus bill –which includes a three-year extension of the tax credit for wind energyproduction.
And in Canada,the Canadian Wind Energy Association expressed disappointment that the federalgovernment’s failure to expand and extend its ecoENERGY for Renewable PowerProgram (eRPP) in the 2009 federal budget. The federal government announced theeRPP in January 2007 to support the deployment of approximately 4,000MW of newlow-impact, renewable electricity projects by March 31, 2011. The CWEA said theprogram was so successful that all funds were allocated almost two years aheadof schedule.
PJMInterconnection reported a study itperformed which says wind, which represents 40% of all new generation projectsproposed in the PJM region (Delaware, Illinois, Indiana, Kentucky, Maryland,Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia,West Virginia and the District of Columbia), and the addition of 15,000MW by2013 (about a third of the wind generation in its interconnection queue) wouldreduce CO2 emissions by almost 35 million tons and wholesale prices woulddecline by $3.55 billion to $4.74 billion.
InMassachusetts, Governor Patrick’s stated goal of generating 2,000MW of windenergy by 2020 got pushback this week from the Appalachian Mountain Club andthe Nature Conservancy, amongst others. The goal would require as many as 3,000turbines, an increase from 9 currently in operation today.
One of the morehigh profile debates, which Obama is going to have to help decide, is betweenSenator Kennedy, who opposes the $1 billion wind project off of Cape Cod andGovernor Patrick. It is worth noting that Kennedy’s family ocean-side compoundwould have a clear view of the offshore wind farm.
The AberdeenRenewable Energy Group and Vattenfall have formed a joint venture company tobuild a £100 million offshore wind farm, stretching three miles along the coastof Scotland. There will be 23 wind turbines at sea, each up to 490ft high. TheEuropean Commission is reportedly considering investing 40 million into theproject.
Earnings
Suzlon(SUZLON.NS) reported a Q3 loss of 589.7 million rupees ($12 million) for themost recent quarter, compared to a profit of 1.52 billion rupees for the sameperiod last year. The results came in significantly lower than the consensusestimates of 2.45 billion rupees in profit. Management cited payments toreplace bad equipment and a decline in order value as the primary factors. Itsaid it has orders for 1,916MW and is in negotiations for more than 2,000MWthroughout the U.S., Europe, China and Australia. It expects $1 billion insales in the U.S. this year.
DOE Watch
The U.S.Department of Energy announced up to $25 million in funding for R&D ofbiofuel, bioenergy and high-value biobased product production – subject toannual appropriations.
State and Federal Driven News
The U.S.Secretary of the Interior, Dirk Kempthorne issued a Secretarial Orderauthorizing the Bureau of Land Management to establish offices to coordinateand accelerate the development of renewable energy. The goal set by Congress insection 211 of the Energy Policy Act calls for the development of 10,00MW ofnon-hydropower renewable energy projects on public land by 2015.
Obama directedthe EPA to accept California’s request for its emissions reduction program,which would require automakers to reduce GHGs 30% by 2016. Under the Bushadministration, the EPA had been blocking a waiver request from California toimplement its own, stricter, GHG reduction standards for vehicles sold in thestate.
Indiana State Senator SueErrington is co-sponsoring a bill to mandate a ramp of renewable energyproduction to 20% of its power by 2020. Indiana currently does not have aRenewable Portfolio Standard.
Kentucky’sUniversity of Louisville is establishing the state’s Center for RenewableEnergy Research and Environmental Stewardship, which is being funded through a$20 million donation from university alumni Henry and Rebecca Conn.
Missouri’sGovernor Jay Nixon reiterated his support for the state’s ethanol industry thisweek. With six operating ethanol facilities, the University of Missouri’sEconomic and Policy Analysis Research Center projects that the cumulate,present value impact of the state’s ethanol industry is $2.057 billion over 25years.
Montana’s Senatecommittee tabled a bill that would have created a framework for CCS technologyfor coal-fired plants in the state.
In New JerseyAssembly members led by Upendra Chivukula sponsored legislation to promotesolar, biomass and wind energy generation (A-2859), and it is headed to theAssembly Appropriations Committee for further consideration. While Assemblymembers Lampitt and DeAngelo sponsored another piece of legislation (A-3616) topromote solar and wind energy.
In Pennsylvania,Governor Rendell announced that $25 million is available to spur new jobs inthe renewable energy sector. Manufacturers of components for renewable energyare eligible to receive 10-year loans of up to $35,000 for every new jobprojected to be created within three years after approval, and may receivegrants of up to $5,000 for each new job created. The Commonwealth FinancingAuthority is also making guarantees of up to $5 million available in the formof standby letter of credit.
Texas SenateNatural Resources Committee Chairman Kip Averitt introduced legislation to thestate which would require new homes to be at least 15% more efficient in energyuse and new appliances would have to use significantly less energy, as well asproposing a $4,000 rebate for Texans that purchase plug-in hybrid vehicles.
Washington Statehas introduced House Bill 1819 and its Senate companion 5735 which would,starting in 2012 reduce GHGs with a long-term goal of 50% reduction from 1990levels by 2020.
Senate LegislationIntroduced
Senator Maria Cantwell introduced S. 320. A bill to ensure that short-and long-term investment decisions critical to economic stimulus and jobcreation in clean energy are supported by Federal programs and reliable taxincentives; to the Committee on Finance.
Sentator Daniel Inouye introduced S. 336. An original bill makingsupplemental appropriations for job preservation and creation, infrastructureinvestment, energy efficiency and science, assistance to the unemployed, andState and local fiscal stabilization, for the fiscal year ending September 30,2009, and for other purposes; from the Committee on Appropriations; placed onthe calendar.
Finance and M&A
Masdar CleanTech Fund said this week it will continue with plans to invest billions onrenewable energy projects despite the current economic environment.
Coulomb Technologiesannounced a $3.75 million Series A round led by Estag Capital AG which will beused to enable further development and rollout of its smart networked chargingstations (part of the ChargePoint™ Network). To locate available chargingstations go to http://www.mychargepoint.net.
Yingli GreenEnergy (NYSE:YGE) announced a subsidiary (Yingli Energy China Company Limited)executed a three-year loan facility with a fund managed by Asia Debt Managementto fund additional expansion. The facility is for up to $80 million and willaccrue interest at 12% annually.
ReneSola(NYSE:SOL) signed a RMB800 million project loan agreement with ChinaConstruction Bank for the construction of its polysilicon facility in Meishan,Sichuan Province.
BrightViewLtd. raised $6 million in Series Afunding from investors including Israel Cleantech Ventures and Hasso PlattnerVentures.
Ultralife(Nasdaq:ULBI) closed a new $35 million revolving credit facility which will besplit 60/40 between JPMorgan Chase Bank and Manufactures and Traders TrustCompany.
Four RiversBioEnergy is acquiring Kreido Biofuels in a deal worth $2.8 million, with plansto further develop Kreido’s technology for creating better economics forbiodiesel and other processing applications.
ReneSola(NYSE:SOL) signed a RMB800 million ($117 million) 5-year project loan agreementwith China Construction Bank which will help fund construction of a polymanufacturing facility in Meishan, Sichuan province. ReneSola expects to beginthe first phase of poly production in Q2 this year, and the second phase by theend of Q3 this year, bringing capacity to a total 1,500MT.
MOL increasedits 33% stake in Hungarian geothermal company CEGE Zrt., to 50%.
RaserTechnologies (NYSE:RZ) signed a $15 million letter of credit with a syndicateof four lenders, including Kraig Higginson, the company’s Chairman. Advancesmade under the LOC accrue interest at 10% per annum, and each lender willreceive warrants to purchase stock equal to 50% of the total amount funded bythe lender divided by the price of the common stock at the time of the advance.The exercise price is $6.00.
Upgrades & Downgrades
January 27 –SunPower rated MARKET PERFORM at Friedman Billings with $33 price target.Friedman had previously rated SunPower at MARKET PERFORM with a $65 pricetarget (10/14/08).
January 28 –SunPower rated OUTPERFORM at Cowen & Company. Expects lower guidance amidsttougher project financing conditions.
January 29- HOKUrated NEUTRAL at Cowen & Company. FY10/11 estimates cut to loss of $0.50per share on about $83 million in revenue and $0.87 per share on about $241 inrevenue. FY10 expected poly production estimates were cut to 1,150MT (down from1,850).
Research & Reports
California Green Innovation Index
As the country moves quickly to put an economic stimulus package inplace, we release the second annual California Green Innovation Index, whichtracks California’s effort to grow the economy while dramatically reducinggreenhouse gas emissions as mandated by the California Global Warming SolutionsAct (AB 32). The Index provides insight on a California culture that includesthree decades of ambitious state environmental and energy policies, puttingCalifornia on a path to energy independence and one of the lowest per capitacarbon footprints in the nation, all the while growing one of the most vigorouseconomies in the world.
Research included in this 2009 Green InnovationIndex provides further evidence of the powerful economic stimulus clean energypolicy can provide. California’s energy productivity, that is, the amount ofGross Domestic Product (GDP) produced per unit of energy, is 68% moreproductive than the rest of the nation. Energy efficiency policies forged byCalifornia over the last 35 years have saved consumers over $56 billion,creating 1.5 million fulltime jobs and $45 billion in payroll. (Source: Next 10).
California Solar Initiative CPUC Staff Progress Report
In January 2007,the State of California launched the Go Solar California campaign, an unprecedented$3.3 billion ratepayer-funded effort that aims to install 3,000 MW of new grid-connectedsolar over the next decade and to transform the market for solar energy bydramatically reducing the cost of solar. As part of the statewide solar effort,the CPUC initiated the investor-owned utility solar program, known as theCalifornia Solar Initiative (CSI) on January 1, 2007. The CSI Program has generatedenormous new demand for solar in California. This report focuses exclusively onCSI program developments and consumer demand, and does not report on the otherparts of the state’s solar offerings, such as the California EnergyCommission’s (Energy Commission) New Solar Homes Partnership (NSHP) which fundssolar installations on new home construction or the dozens of small solarprograms administered by the state’s 40+ municipal utilities (or publicly ownedutilities, POUs). See Section 2 for additional background information.
Micro-Cap Spotlight: Power Efficiency Corp (OTCBB:PEFF) www.powerefficiencycorp.com.
I recently had the opportunity to talk with Justin Cable, Director of Research at GlobalHunter Securities to talk about the alternative energy markets, geothermal andsolar sectors.
Interview byTodd M. Pitcher, Managing Partner of Aspire Clean Tech Communications
Aspire: What surprised you about therenewable energy/clean tech markets in 2008? Were there any significantdevelopments (political, technological, consumer-driven and/or industry-driven)that occurred which you weren’t anticipating?
Cable: There were so many bubbles thatburst in 2008 across many industries worldwide. But within the renewable energy space, it was interesting towatch the downturn of ethanol and solar particularly. Having watched theexplosion of interest and enthusiasm across Wall Street for these sectors overprior years only to see the exact opposite unfold so quickly in 2008 was quitea roller coaster. I must say,however, that especially in the solar sector the amount of competition is stillquite large. It was only a matterof time before price erosion and oversupply would become a concern. Now we have seen valuations come backto earth and even some that have gotten ridiculously low despite theseconcerns.
Aspire: Obama’s administration has seta target of 10% of electricity coming from renewable sources by 2012, and 25%by 2025. In 2007, renewable energy’s contribution to total electricitygeneration in the U.S. was about .962 billion kWh per day, or about 8.4% of thetotal, and the EIA projects that by 2009 it will contribute about 1.039 billionkWh per day, or about 9.1%. Excludinghydropower, renewable electricity in 2007 represents only about 3% of installedelectricity capacity and 2.5% of generation in the U.S. Doyou think the 10% target is realistic by 2012 given the current globalfinancial crisis?
Cable: I do. Although the global financial crisis created a temporarysetback, credit is still flowing, albeit much more slowly than before. But we are starting to see manybusinesses in not-so-stellar situations able to refinance credit lines,restructure debt and/or raise equity even in the past month. Credit is still available and theappetite for risk will come back to the markets over time which should help therenewable energy sector. We also expect to see renewable energy project costscome down, whether it’s a reduction in solar panel costs or building wind,geothermal or biomass plants more efficiently, which should obviously improvethe ROI on such projects.
Aspire: Where do you see the biggestcontribution to reaching this target in terms of renewable energy sources?
Cable: Right now we hear mostly aboutsolar and wind. But when you compare cost/benefit, we think geothermal is thefuture. The technology ischanging, enabling companies to setup a geothermal plant within 1-2 yearsinstead of 4-5 years historically. This is a big change but one that not manycompanies have fully discovered yet. Similarly, we are also keeping an eye on fuel cell technology, as it toocould prove to be cost effective and more efficient.
Aspire: What recommendations would youmake to executives and business managers that are seeking to raise capitalthrough equity, debt or project financing in 2009?
Cable: There are many options availablefor financing, but most importantly there has to be an ROI. We’ve seen several public companiesoperating like Internet companies back in the late 90s when everyone wasfocused on revenues and ignoring the bottom line. Investors need to see a return on invested capital, somanagement teams should operate the business to be sustainable/profitablesooner rather than later. The higherthe need for capital (i.e. to survive), the more expensive that capitalbecomes. Since its management’sfiduciary responsibility to deliver value to shareholders, they need to developa sustainable model that does not require continuous capital calls.
I would also caution companies to be selective with financings and notcomplicate the capital structure. Keep it as simple as possible. From a sell-side perspective, thecleaner the balance sheet, the easier it is to do my job and the more time I canfocus on the real fundamentals of the business.
Aspire: In terms of public companyvaluations, and industry groups – we have seen valuations pull back to, andbelow book value in many instances. We know this is a case by case basis, butgiven the outlook for growth over the long-term, and the positive seculartrends across almost all industry groups, do you think that the risk has beenpriced into stocks at current levels? And how are you approaching valuations inthe current environment? Where do you see “fair value.”
Cable: It’s a case by case basis, butfor any profitable company whose shares have fallen below tangible book value,they should consider what the market is really saying about their equity. Iflosses are expected in the future, then it could justify valuations below bookvalue. But if profits are expected to continue, management teams shouldconsider buying shares personally, initiating a share repurchase program orconsider taking the company private. They should refrain from acquisitions unless they have an opportunity topick up another company at a valuation less than their own.
Some companies might be faced withinstitutional or individual shareholders who are being forced to liquidatetheir positions due to redemptions, margin calls, etc. This sometimes creates“artificial” selling for which fundamentals aren’t applied and thus can begreat buying opportunities – but again, one has to look at it on a case by casebasis. I typically approachinvestments by looking at market value of tangible assets, balance sheets andthen cash flow. “Fair value” of the equity should obviously be a combination ofthe three, such as net asset value plus an enterprise value based on areasonable earnings or cash flow yield.
Aspire: Are there any industry groupsand/or companies that you are particularly bullish on in the currentenvironment, and why?
Cable: We are starting to focus oncompanies with cash-rich balance sheets and whose stocks are trading close totangible book and have good earnings prospects despite any macro concerns. We like to be contrarian and will goafter ideas that tend to be “hated” by the street but we believe could warrantsignificant upside with simple blocking and tackling or through a sale of thecompany. Thus, we look at assetvalue, competitive position, customer base, track record, etc.
Geothermal
The GeothermalEnergy Association reports that as of August, 2008, 2,957.94MW of geothermalpower capacity were on-line in the U.S., and another 3,959.7MW of capacity wasunder development.
Geothermalenergy production costs about 5.5 to 0.10 cents per kWh. On this basis, and inlight of the fact that geothermal is base-load power, it can compete withfossil-fuel energy sources. Yet growth has been pretty modest. Nameplatecapacity for geothermal increased only by 3.7% from 2006 to 2007, whilegeothermal production and consumption actually decreased for the first eightmonths this year by about 0.8% over the same period in 2007.
Aspire: What do you think the key reasonsfor the sluggish growth of geothermal are?
Cable: Historically, the hurdles havebeen time to market. The projects under development have historically taken 4-5years to complete, whether it’s the drilling, permitting, installingtransmission lines or obtaining financing that causes the lengthy deploymenttime. The financing costs at say 9%-10% could make up half of the costs for theentire project. What we are seeingtoday is an acceleration of the deployment of projects given some newertechnologies and more renewable energy savvy financing partners.
Aspire: What are the key challenges togetting geothermal on a faster growth track in terms of production andconsumption in the U.S.?
Cable: For an industry that’s over 100years old, moderate growth isn’t surprising. But we do feel that the industryis about to expand considerably because geothermal power can be produced atlower temperatures and thus shallower wells and hence lower drillingcosts. Costs are declining overallas technologies improve and new players enter the market.
Consumption is simply a function of capacity.Any geothermal capacity that comes online will immediately be consumed,especially given that its base-load power and given the renewable energymandates across the U.S.
Aspire: What factors do you think willhelp drive growth?
Cable: Two primary things that coulddrive geothermal: Education and financing. Education related to the newertechnologies emerging, enabling a geothermal plant to produce power at lowertemperatures and thus lower depths in the ground. The technology has beenproven at various locations around the world, but it still seems like there aremany industry participants that just aren’t aware of these technologies – andwe’ve spoken to many of them. Financingis just as much a hurdle for geothermal as it is for any other renewable energyproject. But base-load power fromgeothermal compared to 25%-35% for solar or wind should attract moreinvestments.
Solar/PV
Aspire: Solar/PV costs between 21 and 38cents per kWh to produce. We are still a ways off from reaching grid parity.When do you think that happens? And doyou think this will be the key inflection point that will need to be reached tosee solar production and consumption become a more significant part of the U.S.(and global) energy pie? What are other key factors?
Cable: Certainly ROI is and will be abig driver for solar deployments. Grid parity is important, but if governmentincentives can subsidize the up front costs of a solar installation, thelong-term benefits should provide a very compelling ROI for capablebuyers. We say capable because forany buyer, those up-front costs may not be easy to swallow, especially giventhe uncertainty in the economy. People are fearful of losing their jobs;companies are cautious about business trends. On top of that, many are startingto see a deflationary environment for solar panels and thus might deferpurchases, awaiting a better price.
Aspire: Concentrated solar electricitycosts between 12 and 17 cents to produce. We saw CSP plants coming back onlinebeginning in 2006 (prior to that there was a 17-year lapse in domestic CSPdeployment). Nameplate capacity for CSP increased by 18% in 2007 from 2006. Do you expect it to close the gap goingforward with solar/PV, which increased nameplate capacity by 40.1% over thesame period? What are the factors that make CSP compelling and competitive? Andwhat are the challenges, in your opinion?
Cable: We’ve seen a few new CSPtechnologies emerging but have also heard about numerous flaws in themanufacturing process and the final products. We are not sure if and when CSPwill become mainstream, but obviously the goal for the solar industry issmaller, better, cheaper.
Aspire: Conventional views in the industryexpect polysilicon prices to plunge this next year with all of the newproduction coming online which will help supplies double while demand is onlyexpected to increase about 30% to 40%. As a result, manufacturers of poly willsee margins erode. Meanwhile, expectations are also for module oversupply tocreate ASP erosion in the midstream channel. At some point, shouldn’t all of this price erosion ultimately benefitthe end consumer and stimulate demand?
Cable: Absolutely. As prices comedown, and credit starts flowing again and the economy comes out of this rut,the ROI on solar deployment will be compelling enough to really stimulatedemand.
Aspire: If you can, wewould be interested to know which companies in your coverage sector(s) are bestpositioned to outperform in 2009, and a quick take on them.
Cable: We are currently Neutral on thecompanies that we cover, but we typically focus on cash-rich/asset-richcompanies with good prospects for growth, profitability and cash flow, and ofcourse an attractive valuation. Many renewable energy companies have started to exhibit these metrics,especially the latter. Stay tuned.
Click Here ForMore Info
About Aspire Clean Tech Communications, Inc.
Based in SanDiego, Aspire Clean Tech Communications is dedicated to providing strategicconsulting and communications services to businesses operating in thealternative energy and clean tech industries. Our commentary and outlook on thepublic markets and the alternative energy can be found on a daily basis at www.smallcappulse.com.
For moreinformation about Aspire Clean Tech Communications, Inc., contact Todd M.Pitcher at 858-518-1387.
This Aspire Weekin Review was sponsored by ComancheClean Energy, Inc., a leading Brazilian ethanol and biofuel firm bringingthe lowest cost and most efficient alternative energy solutions to the world,and Hayden Communications, Inc., Wall Street’s leading corporate communicationsfirm. For more information about Hayden Communications, call 646-536-7331, formore information about Comanche Clean Energy, or Power Efficiency; contact ToddM. Pitcher at 760-798-4938.
The Aspire Weekin Review is brought to you by Small CapPulse the best source on the web for financial and economic commentary,stock analysis, and a fresh idea. To learn more about Small Cap Pulse, call858-518-1387.
