Aspire Week in Review - Week Ended October 10, 2008

Oct 10, 2008
Author: Administrator

Jim Rogers was on Bloomberg this morning commenting about the markets. The reason we see this as noteworthy is because he has been consistently right about the direction the economy is headed, and, like Marc Faber and Nouriel Roubini, who have also been right about the predicament of the global economy well before the mainstream of Wall Street and its media were willing to admit, he should be paid attention to more now than ever. One of the things that struck us as particularly poignant about his commentary this morning was that when asked about where he is investing he described as attractive, asset classes whose fundamentals have not been impaired. These are the classes that, ultimately, will lead us out of this crisis in the markets.

We couldn't agree more with this line of reasoning, and think that no sector better fits this bill than the renewable energy and clean tech sector. Think about it - the global financial crisis isn't going to have any impact on global warming issues. Sure, oil prices will decline amidst expectations for declining global demand, but the supply situation remains the same. We haven't seen any significant new oil fields discovered lately. And all of Washington's actions of late only point to longer term inflationary issues which will ultimately buoy oil and energy prices. So rising energy prices will likely continue to be thematic in our economy and on a global basis.

The recent passage in Congress of legislation to extend renewable energy tax credits provides longer term visibility for solar, wind and geothermal. It provides incentives for companies to adopt smart-grid and smart-metering technologies. At the state level, 26 states have renewable portfolio standards which are driving adoption of renewable energy and clean technologies.

The private sector continues to support the development of renewable energy and clean technologies. Cleantech reported that third quarter venture investments into renewable energy and clean technologies were $2.6 billion, up 37% over the same period last year. Year-to-date, $6.6 billion has been invested, up from $6 billion in 2007. International organizations are calling for hundreds of billions, and as much as $45 trillion through 2050 to address climate issues.

So, in our opinion, the underlying fundamentals of the renewable energy and clean tech asset class are compelling, and exactly fit the criterion Rogers is looking for. Knowing that this sector is attracting and will continue to attract so much investment and support in the private and government sectors, on a global level for the next 20 to 30 years, it has been remarkable to see so many renewable energy and clean tech leaders in their respective segments selling off to the levels which they have of late.

The U.S. isn't the only market that has benefitted lately from legislation on renewable energy. This week, the Philippines passed the Renewable Energy Act of 2008. At present, 26% of its power comes from burnings imported coal, and 23% comes from burning oil. Chairman of its Committee on Energy, Mikey Arroyo said that the legislation will help the government achieve its goal to increase energy independence from 56.6 percent to 60% by 2010.

But the nagging question is whether the global financial crisis is going to ultimately curb all of this government support for investments into renewable energy, clean technology and emissions cutting programs. In our DOE Watch section of this newsletter, we are always careful to point out that the DOE awards and grants are always "subject to appropriations" and with the burgeoning national debt here in the U.S., and other global economies facing their own headwinds, available cash for investment is increasingly scarce.

This week, Polish Prime Minister Donald Tusk said that "The international financial crisis makes it necessary to revise the energy and climate package to take into account the new circumstances," adding that "The nations of the EU cannot adopt decisions today that will contribute to an increase in the price of energy." To be fair, Poland has never exactly been a proponent of the EU's commitment to CO2 emissions quotas, inasmuch as almost all of its electricity is generated by coal. The Polish government is currently lobbying other member states to form a blocking minority on the current CO2 emissions proposals.


The industry took more criticism this week from the FAO's report on the State of Food and Agriculture (see "Research and Reports" below for the complete report). One of the positive conclusions of the report, is that

"There seems to be a case for directing expenditures on biofuels more towards research and development, especially on second-generation technologies, which hold more promise in terms of reductions in greenhouse gas emissions with less pressure on the natural resource base."

And also that,

"The future of biofuels and the role they will play for agriculture and food security remain uncertain. There are many concerns and challenges to be overcome if biofuels are to contribute positively to an improved environment as well as to agricultural and rural development. But just as hasty decisions to promote biofuels may have adverse unintended consequences on food security and the environment, so might hasty decisions to restrict biofuels limit opportunities for sustainable agricultural growth that could benefit the poor."

While the Department of Energy released a "National Biofuels Action Plan" to accelerate the development of a sustainable biofuels industry.

Tough Times for Biofuels

The latest round of companies to stop plans for building ethanol facilities or to just shut the doors altogether:

  • Bioenergy Development Company stopped plans to build a $62 million ethanol plant in Indiana.
  • Gateway Ethanol LLC has filed for Chapter 11, with an estimated $50 to $100 million in debt. 
  • Aventine (NYSE:AVR) is delaying the construction of a 113 million gallon ethanol plant in Nebraska in order to let its other ethanol facility under construction begin producing ethanol and operating cash flow. 

This Week in Brazil

U.S. Commerce Secretary Carlos M. Gutierrez met with Brazilian representatives this week at the third U.S-Brazil CEO Forum to discuss bilateral trade issues this week. High on the agenda will be the 54 cents tariff on Brazilian ethanol. The U.S. ethanol industry, predictably, continues to lobby Congress to maintain the tariff, but pressure is mounting for the next administration to makes some changes. The U.S. Chamber of Commerce has weighed in stating that "U.S. tariffs are designed to block ethanol imports at a time when the country needs to need to be securing new sources of energy" and that "The Chamber's Blueprint for Securing America's Energy Future highlights the need for free-flowing trade when it comes renewable fuels and stresses the 54-cents-per-gallon tariff is an impediment."

Southridge Enterprises (OTCBB:SRDG) announced that it is acquiring a Brazil ethanol plant from Bronsiacco Industrial Ltd., and said the plant will allow the company to produce 50 million gallons of ethanol per year by next May.

Biofuel Industry Q&A with ThinkPanmure's David Woodburn

The biofuels sector has been a source of significant controversy and debate over the past year or so. But regardless, it remains a significant and growing source of production and consumption in the U.S. and current legislation remains committed to supporting its growth. We had a chance to get some insight from ThinkPanmure Biofuels analyst, David Woodburn on the subject:

SCP: The outlook for the biofuels industry has been largely colored lately in a negative way by the food/fuels debate, as well as higher feedstock pressures on margins, and importantly, by the current financial and credit markets meltdown. Where do you think the industry is, with respect to getting through all of this negative cycle? Are we getting close to bottoming in the biofuels industry, and what will it take for the industry to begin rebounding?

Woodburn: Positive margins are a requirement in my mind.  Without positive margins, it's kind of tough to go to your lender and ask for more money so you can lose it on an operating basis. At this point, we've returned to a positive margin environment for some biodiesel and ethanol, but decreasing oil prices and plenty of supply from new plants are bringing down ethanol prices, keeping margins low.

The potential for existing facilities to use new feedstocks (i.e., corn stover) could provide a nice boost, if the economics and logistics work out.  It might be enough to add a little boost to an existing plant, without inviting in a whole new round of new plant construction.

SCP: An increasing number of biofuels firms are seeking "strategic alternatives." Is this setting up like the financial services industry, where certain firms that failed to find those alternatives had to file bankruptcy?

Woodburn: We've seen some bankruptcies already, projects that never really got off the ground, and even some that stopped mid-construction.  It comes back to margins.  If a facility/firm can make a positive margin on an operating basis, then creditors are more likely to restructure the debt than to take ownership of pipes, tanks, and land.

I think it's important to note the differences in ownership structure, though. For a facility that's financed by what I call "financial only" investors, the investors are typically looking only at the return on their capital, and at some point may be willing to cut their losses. For a  facility that's financed with equity by farmers or co-ops, those investors are probably more willing to accept less return on their capital investment if it means that they get 30 cents more per bushel for their corn because there's a local buyer.

SCP: What is the future of the biofuels industry, and where do you see the greatest opportunities?

Woodburn: We see the greatest opportunity for those technologies that can leverage three areas: scale, existing infrastructure, and attractive economics. We go into much greater detail in our white paper, but we don't see much opportunity for fuels that cost more than petroleum products (it sounds silly, but just being "green" isn't enough, in our view). New fuels that require new engines and distribution will face significant challenges. Lastly, it doesn't matter much if you can develop a new process or fuel if you can't scale it up.

To be clear, we don't expect biofuels to completely replace petroleum, but some examples of ideas that we like include some of the cellulosic technologies and some of the biotechnology-based processes for producing hydrocarbons. For the most part, we're assuming new facilities for these technologies, but as we mentioned before, adding cellulosic or new fermentation capabilities to existing corn ethanol plant could provide a slight boost to today's margins or could potentially be a game-changer.  Stay tuned.

SCP: You recently initiated coverage on Verenium (Nasdaq:VRNM), which seems to be one of the best positioned "pure play" next generation biofuels companies. When do you think cellulosic ethanol will become commercially viable? And on what scale?

Woodburn: That's going to become a timely question, as the RFS (Renewable Fuel Standard) mandates use of 100 million gallons of cellulosic biofuel (most likely ethanol) in 2010. I'm not convinced that we'll be able to meet that 100 million gallon figure in 2010. From the economic standpoint, some companies (like Verenium) are projecting that they'll be cost-competitive with corn ethanol with their first commercial-scale facilities.  I think we'll get more and more data as we get closer to 2010.

Keep in mind that scaling up corn ethanol was simply a question of capital, as the feedstock and the processes were abundant and well-known, respectively.  Therefore, the growth in cellulosic ethanol isn't likely to happen as quickly as it did with corn ethanol, because the feedstocks and production processes today are still not developed to the point of corn ethanol. In addition, most cellulosic plants are more likely to be of the 25-30 million gallons-per-year scale than the 100 MGY scale for many corn ethanol plants.

SCP: What is your take on some of these "wonder" feedstocks that are being touted, like Jatropha and Energy Cane?

Woodburn: I'm surprised you didn't include algae in that category.  All appear promising. Energy cane is low risk, in my mind, because it's really not much different than sugarcane, which has been grown for centuries. Jatropha and algae, however, have not been grown as a crop, so there's still a lot to be learned about productivity, harvesting, disease tolerance, etc.  Again, I think both can work as feedstock sources in the long term, but I'm not counting on them to save the day for biodiesel producers in the next 3 years.

SCP: Brazil has managed to develop a healthy and thriving biofuels industry. Do you think that its model is one that lends itself to being emulated in other countries, or is it the benefactor of unique geographic and political circumstances?

Woodburn: Geography certainly helps, but there are other countries that have similar climates.  The key is that Brazilian government focused on energy independence years ago, subsidized non-petroleum energy sources, and stuck with it.  It's probably that last component that's the most difficult to maintain.

SCP: What is your take on the current tariff on Brazilian ethanol? Do you think that Congress under the next administration will eliminate that tariff?

Woodburn: The people that I hear speak most confidently on this issue seem to not fully understand some of the technicalities behind the current ethanol subsidies and tariff.  The way I view it, the main purpose of the tariff is to prevent Brazilian ethanol from capturing the 51-cent per gallon incentive on ethanol. To me, I don't see the need to subsidize Brazilian ethanol-the Brazilian producers seem to be doing just fine without a U.S. subsidy.  What we have seen enacted is a reduction in the incentive from 51-cents to 45-cents, starting in 2009.

The really interesting thing about the tariff, however, is that the way it's written into the legislation, it serves as a revenue source for alternative energy programs.  Therefore, if Congress wants to cut the subsidy, they need to come up with another source of revenue or cut existing programs.  That is not impossible, of course, but I think the legislative aspect is more complex than many people realize.

SCP: If you had any recommendations to make for the U.S. biofuels industry to get back on track, what would they be? And what are your top picks in the biofuels sector for investors to consider?
The first is pretty simple, and has already taken hold: stop building more corn ethanol and soy biodiesel plants until demand increases and you can afford the feedstock.  The second is to recognize the economics of the market-it's a case of commodities in and commodities out. The plants that have been producing corn ethanol since the 1980's didn't survive because of large executive staffs or catchy brands and logos.

There are several private companies that I think are pretty exciting-many applying biotechnology to fuel production, but they're still kind of early stage.  From a public company standpoint (and we've already mentioned it), I like the approach that Verenium is taking with cellulosic ethanol.  From a process perspective, they're developing and propagating their own enzymes to convert C5 and C6 sugars into ethanol, they're taking control of their own feedstock supply, and they've brought in help via a partner (BP) that can help them commercialize their approach in the U.S. and elsewhere.

Clean Technology and Carbon Markets

European Union auto makers called for $40 billion euros of loans to help develop cleaner cars, on the heels of last week's passage in the U.S. Congress for $25 billion in low-cost loans to help revive the U.S. industry and authorization of a 2007 energy law that requires the industry to improve fuel efficiency standards by 40% by 2020. European auto industry group ACEA said the current economic crisis is making it harder for companies to achieve EU targets for curbing emissions from cars by 18% by 2012. But the group was rebuffed by the European Commission.

Norway said it is going to invest 1.9 billion crowns ($308.7 million) on carbon capture and storage (CCS) in 2009. It will allocate 920 million crowns to a CCS test center at the Mongstad power plant on the North Sea coast. It will also spend 190 million crowns to plan another CCS project at the Kaarstoe gas-processing unit. And a budget of 570 million crowns for planning and preparations of the transportation and storage of captured CO2. 

Energy Efficiency

Research firm IDC said that the amount of energy required from European servers and data centers has grown Y/Y by more than 13% between 2006 and 2007, driven by increasing numbers of servers and by the electricity requirement on the machines. In 2007, servers in Western Europe consumed more than 16.3TWh. IDC estimates the consumption levels at the datacenter level in Western Europe to have exceeded 40TWh and will grow more than 42TWh in 2008.

And The American Council for an Energy-Efficient Economy issued a report rating U.S. states on energy efficiency with California, Oregon and Connecticut ranking in the top three.

Energy Management

The recent legislation passed in Congress includes $915 million in tax treatment over 10 years for companies to depreciate investments in smart-meters and other smart-grid equipment.

Comverge (Nasdaq:COMV) has partnered with TransCanada Power Marketing Ltd. to provide energy management services for reduction of energy consumption and related costs. TransCanada owns and operates or has under development 3,739MW of energy assets in the U.S. Northeast, including 567MW of hydroelectric generation along the Connecticut and Deerfield Rivers, and the 132MW Kibby Wind Power project under construction in Maine.

Energy Storage

Ballard Power (Nasdaq:BLDP) announced a development and supply agreement with IdaTech to supply 5kW natural gas fuel cell products. The systems will be deployed by ACME for telecom backup power applications in India. The agreement provides for a binding commitment purchase of about 1,000 units in 2009 and 9,000 units in 2010, subject to meeting certain design and acceptance specifications. In addition, Ballard granted ACME exclusive rights for the sale and use of its fuel cells for stationary power applications in India and for telecom backup power in the Middle East and Africa (excluding South Africa) through 2011. The agreement also has options for extension based on additional orders.

Reuters reported that the president of Johnson Controls (NYSE:JCI) hybrid battery business said it will be profitable within five years, assuming that PHEVs make up 6% of the U.S. and Western European markets by 2020.


Kenya's energy minister, Kiraitu Murungi, said it intends to develop 630MW of geothermal power between 2012 and 2019. The country will invest 4.5 billion Kenyan shillings ($61 million) into 12 geothermal wells.

Chili's national oil company, ENAP, announced the creation of a geothermal joint venture with Antofagasta Minerals,  one of the world's largest copper mining groups. ENAP will hold 40% of the JV and Antofagasta will hold the other 60%. The JV will develop 400MW of geothermal power in Chile over the next ten years.

Hybrid and PHEVs

The Renault-Nissan alliance announced a deal with electric utility EDF to bring zero emission cars to France in 2011. The alliance is partnering with EDF to develop an infrastructure with Paris-based EDF to recharge electric vehicles and to manage the range of the cars.

And French President Nicolas Sarkozy pledged 400 million euros ($549 million) for France's support of the development of electric and hybrid cars. The money will be used exclusively for the R&D of nonpolluting vehicles over the next four years. 

ZAP (ZAAP.OB) announced its best sales quarter since its launched its Xebra sedan and pick-up truck vehicle line in 2006. For the quarter ended September 30, 2008, it shipped 240 Xebra vehicles, compared with 80 for the same period last year.


Voith Siemens Hydro Power Generation announced Oct. 8 it won contracts totaling more than $26.2 million for equipment to refurbish the 120-MW Lookout Point hydroelectric project in Oregon and the 198.72-MW Folsom project in California.

Brazil's Goias State and its utility, CELG Geracao e Transmissao, have signed an agreement with 12 companies to begin construction of hydroelectric projects in Goais and Tocantins states totaling at least 807 MW.

Finshyttan Hydro Power AB has received an order from Andritz Hydro Inepar AB for renovation and conversion of a hydro turbine at the 440-MW Letsi hydroelectric project on Sweden's Lilla Lule River.

The Democratic Republic of Congo announced an invitation of expressions of interest from consultants to perform a detailed inspection and diagnosis of 2,400 kilometers of transmission lines serving the hydropower-based Southern Africa Power Market Project.

The Asian Development Bank signed a US$196.5 million loan agreement with the Vietnam government October 6 for construction of the 156-MW Song Bung 4 hydroelectric project on the Song Bung River in Vietnam's Quang Nam Province.

Ocean Power

Ocean Power Technologies (Nasdaq:OPTT) is deploying a specialized, autonomous PowerBuoy for the U.S. Navy, which will be used to provide clean, renewable power for oceanographic sensor systems to gather and transmit information collected at sea.

Lockheed Martin (NYSE:LMT) was awarded a cooperative contract worth $1.2 million by the U.S. DOE to demonstrate innovative technologies to enable ocean thermal energy power generation. Under the terms of the agreement Lockheed will demonstrate a cold water pipe fabrication approach using modern fiberglass technology and composite material manufacturing methods at prototype and pilot plant scales.


Canadian Solar (Nasdaq:CSIQ) signed two sales contracts with Lliotec Solar GmbH and Lliotec Solar International to sell 28MW of solar modules and an option for another 20MW for delivery in 2009. Module prices will be fixed for the first six months. And it signed a deal to sell 60MW of regular solar modules to Systaic AG in 2009.

First Solar (Nasdaq:FSLR) broke ground on the expansion of its Ohio facility, where it is expected to increase capacity by 192MW based on Q2 run rates. And BP Solar canceled a $97 million plan to expand its Maryland facility manufacturing capacity, citing increasingly intense global competition.

LDK Solar (NYSE:LDK) which has been battered lately in the midst of the broader market selloff and comments from Goldman Sachs cutting ratings on First Solar (Nasdaq:FSLR) and SunPower (Nasdaq:SPWRA), announced that it is raising its Q3 estimates, saying revenue and shipments exceeded expectations. It is now saying revenue will be between $530 and $540 million and shipments with capacity of 230MW to 240MW. Prior expectations were for revenue in a range of $486 to $496 million in sales with combined capacity of 210MW to 220MW. The company also said it reached 1.2GW of production capacity by the end of the quarter.

Neo Solar Power and Solarday have entered into a 5-year sales contract worth $210 million which adds to an existing 3-year agreement, bringing the total amount to $320 million.

Quantum Fuel (Nasdaq:QTWW) said its solar PV partner Asola has signed a JV agreement in Morocco with Majdaline Holding to implement a solar manufacturing facility in Casablanca with initial capacity of 30MW with potential to generate revenues of more than $100 million per year.

Yingli Green Energy (NYSE:YGE) affirmed that it is increasing production to capacity targets to 600MW in 2009, but it doesn't have plans presently to increase capacity further. Management said it is focusing on maximizing utilization of existing capacity and cost reduction strategies. Its manufacturing capacity for 2008 is 400MW.  Management also said its current line of credit and cash flows are sufficient for the next 200MW expansion phase and it won't need further funds through 2009.

Konarka Technologies has converted a former 250,000 square-foot Polaroid advanced printing plant in New Bedfored, MA., into a roll-to-roll flexible thin-film solar manufacturing facility.

M+W Zander said it has received bookings with more than 1GW peak annual capacity for 2007 in thin-film and wafer-based technologies. Its global order backlog consists of 600MW worth of combined design and construction projects  (480MW in design only and 130MW related to services).

Satcon (Nasdaq:SATC) was awarded a contract worth about $6 million by the Office of Naval Research to design and test an advanced 500kW Energy Storage Module for the DDG-51 Alreigh Burke class ships. The company said the contract is related to a congressionally mandated effort to develop fuel efficiency improvements for all U.S. military branches and runs through October 2010.


Frost & Sullivan reported that the building integrated PV (PIBV) market in Europe is growing at 43.8% annually and is worth €142.6 million in 2007. The research firm said that Germany, France and Italy are the markets currently attracting the most interest in BIPV.
Constellation Energy's Projects & Services Group has signed an agreement with McCormick & Company to construct a 1MW thin-film solar system at its Spice Mill and Distribution Center in Maryland. McCormick will purchase the electricity generated from the system. The system is expected to reduce McCormick's electricity costs by about 30% in the first year.
Pacific Power Management is financing and building a 1.2MW solar system, consisting of 6,385 Mitsubishi Electric 185W solar panels on about 170,000 square feet of Constellation Wines' warehouse roof at its Gonzales Winery in Monterey County. The installation will provide about 60% of the total energy requirement by the winery.

SPG Solar is designing and constructing a 736kW solar system for Sutter Auburn Faith Hospital in Auburn, California, which will meet about 50% of the hospital's power needs. The hospital has partnered with Tioga Energy to remove all up-front costs and ongoing maintenance requirements for the system.
Solyndra Inc. has released a new solar photovoltaic system for the commercial-rooftop market that is designed to generate significantly more solar electricity on an annual basis from typical low-slope commercial rooftops with lower installation costs than conventional flat-panel PV technologies.

Analyst Comments on the Sector

Cowen and Company's Robert Stone issued a comment on Wednesday, asking "How Low Can They Go?" suggesting that several companies in the midstream and upstream sectors are at this point looking pretty cheap. He concluded that a "no-growth scenario" which is being priced into companies' PEG ratios is unlikely; that the presidential debate rhetoric suggests that support will remain in place for solar in particular and renewables in general, and in other countries funding for PV is collected and disbursed via utilities - no through central government budgets; and that short-term debt is less of an issue in China. So Stone "remains bullish on the PV sector, which should be even more attractive on a relative basis in the context of slow or no growth in other sectors."


Governor Jon Corzine of New Jersey said this week that the state is increasing its target for wind energy in the state from 1,000MW to 3,000MW, with 13% of all power in the state coming from wind energy.

A-Power (Nasdaq:APWR) signed a second sales contract with China National Automation Control System (CACS) for the sale of 50 2.7MW wind turbines, adding to the previously announced contract with CACS for five 2.7MW units. We estimate the deal is worth $150 to $200 million.

American Superconductor (Nasdaq:AMSC) signed a multi-million contract to provide designs for its WT2000df, 2MW wind turbines to China's XJ Group Corporation. XJ Group initially expects to produce wind turbines for the Chinese market, but it has the right to sell the WT2000df worldwide. Its first prototypes will be installed and commissioned by the end of 2009, and will begin shipping to customers in 2010.

Composite Technology (CPTC.OB) announced its subsidiary DeWind has signed agreements with Higher Perpetual Energy LLC for form SWI Wind Farms LLC which will consist of four wind farms in Texas totaling up to 620MW of energy capacity. DeWind will initially be the 51% contributing member of SWI Wind Farms.

Iberdrola Renewables signed a five-year agreement with PECO to purchase 240,000MWh of wind energy credits. PECO will be the first utility in Pennsylvania to purchase and bank renewable energy credits to meet the Pennsylvania Alternative Energy Portfolio Standards (AEPS) requirements in 2011. The AEPS requires that by 2011, 3.5% of energy sold to PECO customers will be through renewable energy sources, and this will grow to 8% by 2020.

Vestas (VWS:DE) received an order for 16 V90 2.0MW mills from Raiffesien Energy & Environment GmbH. The order includes delivery and is expected to be fulfilled by the end of 2008.
The Public Service Commission approved a land-based 20-year wind contract between Delmarva Power and Synergics for a maximum of 100MW of wind power from two wind farms in Maryland, and a land-based 15-year deal with AES for a wind farm in north-central Pennsylvania for up to 70MW.

Pickens Watch

Boone Pickens maintained his high-profile this week taking out ads during and after the presidential debate to invite viewers to participate in a post-debate discussion about energy and the Pickens plan. Meanwhile, he picked up more support in Congress, with Senator Saxby Chambliss (R-GA) pledging to support the plan.

Pickens continues to get criticism, however, from Vinod Khosla, who Reuters reported as remarking that "Running cars on natural gas is a dead-end street." His criticism is not that natural gas isn't better than the status quo; it is based on the fact that he doesn't see natural gas as being enough, "We make all this infrastructure change, and it doesn't get us to 40 percent or 80 percent. You want technologies that get to 20 percent and then keep on going, and that's where the Pickens natural gas cars fail."

DOE Watch

In addition to its National Biofuels Action Plan, the DOE released a Fact Sheet on the effects of intermediate ethanol blends, providing results from testing E15 and E20 on 13 popular late-model vehicles and 28 small non-road engines, including lawn equipment and generators. The full intermediate blend report can be downloaded here. It also announced the selection of five advanced biofuels projects up to $7 million (subject to annual appropriations) that will develop cost-effective, environmentally friendly ways to convert non-food feedstocks into stabilized pyrolysis oils.

Novozymes announced the award of a $12.3 million contract from the DOE to improve the enzymes necessary to produce cellulosic ethanol. Under the terms of the contract, Novozymes has committed to increasing the efficiency of the enzymes used in the conversion of cellulosic biomass to ethanol by two-fold. Novozymes will match the DOE funding dollar-for-dollar, bringing the total investment in the project to $25 million.

And Deputy Assistant Secretary for Renewable Energy, Steve Chalk, announced awards up to $43.1 million over four years to 21 awardees (subject to annual appropriations) for research, development and demonstration of Enhanced Geothermal Systems (EGS). With cost-share by the recipients, the public-private investments will be as much as $78 million.

M&A and Finance

Altair Nanotechnologies (Nasdaq:ALTI) raised $10 million in a private placement offering of common stock to Al Yousuf, and to resolve potential claims associated with Yousuf's 2007 $40 million investment in the company. Altair is issuing 8 million shares, 5,882,353 shares at $1.70 per share and 2,117,647 shares to resolve the claims.

Vattenfall acquired 100% of Amec Wind Energy for GBP126.6 million.

Hydro invested $15 million in Ascent Solar (Nasdaq:ASTI), increasing its ownership in Ascent from 26.5% to 35%.

Aventine Renewable Energy (NYSE:AVR) announced that stockholders of Nebraska Energy Cooperative have approved the previously-announced purchase by Aventine of NECs' 21.58% interest in Nebraska Energy LLC for 1 million shares of AVR common stock.

Silver Spring Networks raised $75 million in a round led by Kleiner Perkins Caufield & Byers, which was joined by Foundation Capital, JVB Properties and Northgate Capital.

Green Plains Renewable Energy (Nasdaq:GPRE)  said that its merger with VBV LLC and its majority owned subsidiaries Indiana Bio-Energy LLC and Ethanol Grain Processors LLC are set to move forward after shareholder meetings held this week.

Cosan Limited (NYSE:CZZ) is acquiring $50 million in outstanding shares of its subsidiary Cosan SA (CSAN3.BR), Brazil's largest sugar and ethanol group. It will buy up to 8 million shares, which represent 3% of the company's outstanding shares. Cosan Limited has a 56% stake in Cosan SA.

Ormat (NYSE:ORA) has established a three-year $100 million line of credit through a commercial bank, bringing its total approved and unused corporate lines of credit at various banks to $260 million.

Philippine power producer First Gen Corp. announced it might sell its 116-MW Pantabangan-Masiway hydroelectric complex as a way to help pay large foreign obligations and reduce foreign exchange losses.

Schott Solar called off its IPO citing deterioration in the international capital markets. It had recently revived its IPO plans after first postponing them in September.  The company intends to raise as much as 656.6 million euro ($894.7 million) through an IPO.

Open Energy (OEGY.OB) closed the final portion of its previously announced $4.7 million financing with the Quercus Trust, consisting of $4.2 million in cash and $500 thousand of forgiveness of accrued interest and restructuring fees related to other obligations to Quercus. Open Energy issued 235,000,000 shares of common stock at an exercise price of $0.02 per warrant and an exercise price of $0.067 per share.

Poet LLC said it is receiving $76.3 million in federal funding for increased cellulosic production at its Emmetsburg plant. It is expanding capacity from 50 million to 125 million gallons per year, with about 25 million gallons being produced from waste typically left behind. The added cellulosic production will increase yield by 11% more ethanol per bushel of corn, and 27% more per acre of corn. The project will cost $200 million in total.

Beacon Power (Nasdaq:BCON) received a commitment for $7.9 million in a round led by Merriman Curhan Ford, and Kaufman Brothers acting as co-placement agent. Beacon will sell 8.7 million units for $0.91 per unit, wherein each unit consists of one share of common stock and one warrant to purchase one share of common stock at a purchase price of $1.20 per share. The next proceeds to the company will be about $7.2 million.

ISE Corp. received $5.5 million of a $25 million Series D round from Siemens Venture Capital, Natural Gas Partners and Rockport Capital Partners.

Standard Solar raised $8.5 million to fund expansion of its solar integration business. Truecast Capital led the round of financing.

Upgrades & Downgrades

October 6  - BTU International (Nasdaq:BTUI) initiated at PERFORM by Oppenheimer
October 6 - MEMC Electronic Materials (NYSE:WFR) added to JP Morgan focus list, reiterated at OVERWEIGHT and price target at $45.
October 7 - Ormat (NYSE:ORA) downgraded to HOLD at UBS.
October 7 - Ascent Solar (Nasdaq:ASTI) initiated at HOLD by Wedbush Morgan with price target of $5.50.
October 7 - Energy Conversion Devices (Nasdaq:ENER) initiated at BUY at Wedbush Morgan with price target of $52.
October 7 - Calpine (NYSE:CPN) initiated at MARKET PERFORM by BMO Capital Markets.
October 8 - Altair Nano (Nasdaq:ALTI) rated NEUTRAL at Merriman Curhan Ford.
October 8 - American Superconductor (Nasdaq:AMSC) rated HOLD at Stanford Research with price target of $15.
October 8 - Andersons (Nasdaq:ANDE) rated OUTPERFORM with price target of $40 by Oppenheimer.
October 8 - EnerNOC (Nasdaq:ENOC) upgraded to BUY from HOLD at Argus with price target of $12.
October 9 - First Solar (Nasdaq:FSLR) rated OVERWEIGHT at Barclays Capital with price target of $180.
October 10 - First Solar (Nasdaq:FSLR) rated BUY at AmTech Research with price target of $170.
October 10 - First Solar (Nasdaq:FSLR) rated BUY at Lazard with price target of $265.
October 10 - Canadian Solar (Nasdaq:CSIQ) rated BUY at AmTech Research with price target of $23.
October 10 - Energy Conversion Devices (Nasdaq:ENER) rated BUY at AmTech Research with price target of $59.

Research & Reports

The State of Food and Agriculture - Biofuels: Prospects, risks and opportunities

The report finds that while biofuels will offset only a modest share of fossil energy use over the next decade, they will have much bigger impacts on agriculture and food security. The emergence of biofuels as a new and significant source of demand for some agricultural commodities - including maize, sugar, oilseeds and palm oil - contributes to higher prices for agricultural commodities in general, and for the resources used to produce them.

GAO Study on Green Affordable Housing

The Department of Housing and Urban Development (HUD) spends about $5 billion on energy costs annual in its affordable housing programs and has recently taken steps to reduce its energy costs. The GAO was asked to review (1) HUD's efforts to promote energy efficiency in its programs and the use of performance measures (2) potential costs and long-term benefits of green building in HUD's affordable housing programs and (3) lessons learned elsewhere that HUD could use to promote green building.

The biofuels segment sold off again this week, closing down 17%, and down 73% year-to-date. Only Nova Biosource (AMEX:NFB) managed to post a gain on the week, but it has been one of the worst performers YTD, down 91%. Even Cosan (NYSE:CZZ) which benefits from the stronger Brazilian biofuels sector, took a hit. In fact, it was the worst performer on the week, down 47%. 

The energy management segment closed down 8% on the week, and is down 62% year-to-date. Power Integrations (Nasdaq:POWI) managed to hold up the best this week, closing down 1%. We continue to think that this segment well positioned, and will only continue to be better positioned going forward with national and state budgets being squeezed in terms of how aggressively they will be able to support cleaner sources of energy. Energy efficiency, on the other hand, which is inter-related with energy management, is likely the lowest hanging fruit in terms of reducing emissions exposure. 

The energy storage segment shed 16% this week. The groups YTD performance continues to be buoyed by Quantum Fuel Systems (Nasdaq:QTWW), which is up 51%, and by Mechanical Technology (Nasdaq:MKTY) which is up 68%. Two very different stories here, and we are bullish on QTWW - especially at current levels. 

The geothermal segment gave up 28% this week, with all companies selling off to double-digits. Year-to-date, the group is down 62%. We think that the segment is probably getting sold off more because of the higher level of cap ex related to getting plants up and going and in the current financial market meltdown, there may be more perceived risk out there. Ormat's (NYSE:ORA) selloff down to the low $20s was particularly remarkable. 

The upstream solar segment closed down on the week 18%, and is down 51% year-to-date. We agree that this segment will only become more commoditized over time, but the stocks at this point, in our opinion have more than factored this in. For example, HOKU (Nasdaq:HOKU) is sitting on a multi-billion backlog and it is fetching a market cap of $82 million, and an enterprise value of less than that. Year-to-date, only DC Chemicals (010060.KS) is in positive territory, up 12%.

The midstream solar segment took a beating this week, closing down 24%. Year-to-date, the group is down 60%. Goldman Sachs' comments on Monday about module supplies and subsequent downgrade of First Solar (Nasdaq:FSLR) and SunPower (Nasdaq:SPWRA) triggered more downward pressure in the group and set the stage for a week of dismal performance. But really, the prospect of oversupply in the modules segment isn't new news, and the commentary from Goldman on that topic should have already been priced into the markets, in our opinion. 

It has been remarkable to see the downstream segment sell off in the manner that is has in the past week, on the heels of the passage of key legislation that provides the downstream sector with more visibility and support than it has ever seen before. Some industry estimates are that the legislation will literally triples sales in terms of commercial and residential sales in the next five to eight years. However, the group sold off by 25% this week anyhow. Only Premier Power (OTCBB:PPRW) managed to post a gain on the week, closing up 9%. But then, Premier is one of the few companies in the segment that has managed to post strong Y/Y revenue growth while remaining profitable. 

The wind segment got hammered as well this week, closing down 26%. Year-to-date the group is down 58%. One of the puzzling stocks in this group is A-Power (Nasdaq:APWR) which has sold off from $21 at the beginning of September to close at $4.17 today. The company has $90 million in cash (more than $2 per share), no debt, expects to earn $35 to $45 million this year, has a backlog of about $1 billion, and a market cap of $136 million. We think the stock is way oversold at current levels. 

About Aspire Clean Tech Communications, Inc.

Based in San Diego, Aspire Clean Tech Communications is dedicated to providing strategic consulting and communications services to businesses operating in the alternative energy and clean tech industries. Our commentary and outlook on the public markets and the alternative energy can be found on a daily basis at

For more information about Aspire Clean Tech Communications, Inc., contact Todd M. Pitcher at 858-518-1387.

This Aspire Week in Review was sponsored by Comanche Clean Energy, Inc., a leading Brazilian ethanol and biofuel firm bringing the lowest cost and most efficient alternative energy solutions to the world, and Hayden Communications, Inc., Wall Street's leading corporate communications firm. For more information about Hayden Communications, call 646-536-7331, for more information about Comanche Clean Energy; contact Todd M. Pitcher at 858-518-1387.

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