Aspire Week in Review - Week Ended October 3, 2008

Oct 03, 2008
Author: Administrator

In a week chalked with drama, where it looked like the $18 billion renewable tax credit scheme hit an impasse between the Senate and the House, and where all focus turned to the $700 bailout plan for Wall Street, the Senate attached the renewable tax credit legislation to the bailout plan - adding to the immense pressure already on the House not to repeat Monday's thumbs down to the bailout plan, which in turn, would sneak the renewable tax credit extension across the finish line in the 12th hour - literally. And it passed - in the form of an $850 billion bill.

The legislation extends the production tax credit for wind energy for one year, and eight years for businesses and home-owners to install solar systems. Purchasers of plug-in electric cars will receive credits ranging from $2,500 to $7,500, and biodiesel will get a $1 per gallon production tax credit through 2009. Some industry experts project that the passage of the bill will literally triple the sales of solar over the period of the extension.

The International Energy Agency (IEA) released a report this week that estimates nearly 50% of global electricity supplies will have to come from renewable energy sources if we want to halve CO2 emissions by 2050 in order to minimize significant and irreversible climate change impacts.

In terms of investments into renewable energy, Greentech Media said this week that VC investment into green energy technologies exceeded $2.8 billion in the Q3, up from $998 million and $1.3 billion in Q1 and Q2, respectively. Solar attracted $1.5 billion from VC for the quarter spanning 26 deals, while energy efficiency/demand response/and smart grid technologies followed up in second, with $272 million invested across 14 deals.

Meanwhile, Google unveiled a $4.4 trillion energy plan that it says would result in net savings over $1 trillion over its 22-year span. The key three fronts of the plan include (1) reducing demand by doing more with less - reducing energy demand through energy efficiency; (2) developing renewable energy that is cheaper than coal; and (3) electrifying transportation and re-inventing the electric grid.

And World Bank funding for renewable energy is up 87% this year to about $2.7 billion. Funding for FY 2008, ending June 30, was almost double the prior year's $1.4 billion, which was up 67% over FY 2006. This year investments were $1.1 billion for energy efficiency, $1 billion for hydro projects greater than 10MW and $476 million for other renewables.

Biofuels

An SRI Consulting report released this week said that the U.S. is positioned to become the single largest biodiesel market in the world, reaching 19% of consumption by 2012. The report says that key to the overall success of the U.S. biodiesel industry is political support and incentives.

The EIA said that total U.S. stocks for ethanol rose by 822,000 bbl, or 6.6 percent, to 13.2 million bbl in July from 12.3 million bbl for June. The EIA data also shows U.S. domestic ethanol production rising 1.5 million bbl to 19 million bbl in July, up from 17.5 million bbl for June.

POET held a grand opening for POET Biorefining - Fostoria this week. It is scheduled to open two more ethanol plans in Ohio in the next four weeks, bringing its total number of plants to 26 with a total capacity of 1.54 billion gallons per year.
Pacific Ethanol (Nasdaq:PEIX) announced the start-up of its Stockton, California production facility, which will process 21 million bushels of corn each year, with a capacity of 60 million gallons per year. Management said the business now has met its goal of 220 million gallons of annual production capacity.

The Energy & Environmental Research Center at the University of North Dakota announced that its 100% renewable biojet fuel has met seven key JP-8 specification parameters and it has been submitted to the U.S. Air Force Research Labs for testing. Production of the EERC fuel was funded by a $4.7 million U.S. Department of Defense Advanced Research Project Agency (DARPA) biofuel program.

Liberty Energy suspended plans to build a $192 million plant in Banning that would burn treated sewage sludge and green waste to generated electricity. It said the market crisis it the reason for the delay. Vision Fuels also shut down plans this week citing turmoil in the financial markets. It had plans for a 110 million gallon ethanol plant in Iowa, and it reportedly had assembled LOIs for $200 million out of a target $300 million. It is walking away from signed contracts to purchase 164 acres of city-owned land in the Des Moines area, and a $948 thousand deposit.

Research

The USDA reported this week that researchers in the U.S. Gulf Coast region are making progress custom-breeding new varieties of "energy sugarcane" whose sugar-and-fiber rich stalks would be better sources of feedstocks than are currently available in the U.S.

Focus on Brazil

Brazil is threatening to issue a formal complaint to the WTO regarding the U.S. tariff of $0.54 per gallon on Brazilian sugar cane ethanol. There are several pieces of legislation already in circulation in Congress which aim to either remove or lower the tariff.

Brazil is one of the largest producers of ethanol in the world and is the largest exporter of the fuel. In 2007, Brazil produced 390,000 bbl/d of ethanol, up from 306,000 in 2006. The EIA forecasts that Brazil's ethanol production will reach 440,000 bbl/d in 2008 and 530,000 bbl/d in 2009. Over half of all cars in the country are of the flex-fuel variety, meaning that they can run on 100 percent ethanol or an ethanol-gasoline mixture. Eight in ten new cars sold in Brazil are flex-fuel vehicles. All gasoline in Brazil contains ethanol, with blending levels varying from 20-25 percent. Ethanol in Brazil comes from sugar cane, which prospers in the country's tropical climate.

We spoke with Tom Cauchois this week, Chairman of Brazilian biofuel producer, Comanche Clean Energy: 

Aspire:  Brazilian ethanol firms have come under pressure recently from critics that say producers are exploiting workers, and providing subhuman working conditions. What are your thoughts on this criticism? Is it valid? And how is Comanche forming its policies for worker relations and working conditions?

TC: Brazilian workers in this industry are well paid in Sao Paulo state, so the jobs are considered very good jobs to have.  While any business can be accused of these things, the laws are very protective of workers and we don't see such abuses, which can be criminal in nature. 

But the MST (landless movement) regularly makes such accusations, sometimes to obtain property settlements.

At Comanche, we adhere to the highest standards of worker training and safety.  Our farms are partially mechanized (about 50%), which we feel provides for higher quality jobs and training.  However our manual agricultural workers are given training, protective clothing, meals, transportation, sometimes housing, water and Gatorade while in the fields, and are well taken care of.  Our level of training, amenities and pay are generally at the top of the industry.  We want Comanche to be a better place to work with better opportunity for advancement versus the industry.

Aspire: Cosan recently announced that it has formed a company with U.S. interests, Radar, which will purchase farmland in Brazil with the purpose of building more mills. Do you think this brings the countries any closer to resolving trade and tariff issues for Brazilian imported ethanol into the U.S.?

TC: The trade issue will resolve itself in our view as Congress gets serious about encouraging diversity and quality of energy supply.  We don't doubt that over time there will be a commodization of ethanol with lower barriers reflecting its growing role as a competitive world energy source.  Cosan's strategy certainly helps to form stronger bonds.

Aspire: What are your views on the U.S. tariff on Brazilian ethanol, and to what extent do you think that it will impede Brazil's ethanol production over the longer term?

TC: Brazil's internal market continues to exhibit strong growth making the issue of exports less important.  In addition the demand for industrial alcohol is growing strongly around the world, so this may be a faster growth market than fuel alcohol.

Aspire: Outside of Brazil, where do you think the strongest opportunities for export business for Brazilian ethanol and biodiesel are?

TC: Asia, Europe and the US.

Aspire: Can provide some color on the Brazilian ethanol industry with respect to its growth and consolidation? There are currently thousands of refiners throughout the country. Where do you see the landscape in another three years?

TC: There are about 250 players in Brazil with about 370 plants.  We expect this to consolidate, but more slowly than other types of industries due to the agricultural nature and diversity of shareholdings in private companies.  However longer term the smaller players will be marginalized due to the increasing capex required. 

Aspire: You recently spoke at a Biofuels Summit in India, which is the second largest producer of sugar, behind Brazil. How is their country similar to Brazil on this level, and do you think that it can become a major producer of ethanol as well? Or do you think that the political climate and backlash against biofuels, buttressed by the food versus fuel debate will hinder its ethanol and biofuels development?

TC: India is a major sugar producer and could be a major ethanol producer.  However they are currently caught in a difficult situation where petroleum fuel prices are subsidized and so is the sugar industry.  So India has a lot to do to sort through their policies of subsidy prior to clearing the way for ethanol production.  However they appear to be committed to doing so, but probably after next year's election.

Aspire: Can you weigh in on the food versus fuel debate? It doesn't appear to be an issue in Brazil, but on a global scale, it has created a huge political and public relations challenge for the biofuels industry.

TC: First, this is not a debate over whether to produce food or fuel; it is a debate over appropriate allocation of land use.  Generally, around the world, there is a lot of good surplus land that could be brought into productivity with capital, labor, technology and better seeds.  Higher agricultural prices are signaling that farmers should do this, and without a doubt they are responding throughout the world.  So this will be a great boom in rural income.  Undoubtedly that will create short term problems for urban consumers, but longer term rising rural incomes will support heavy buying of urban goods like tractors, technology and other manufactured goods.  So this could lead to a dramatic reduction in world poverty over the long term. 

Relative to Cane based ethanol, we have seen no impact to date on world sugar prices from a dramatic expansion in supply and demand.  So the problem is clearly not with ethanol.  Moreover we see many countries with excess arable cane land that could put a lot into production and ease their domestic energy gap. 

Aspire: Is Comanche active in terms of developing partners in countries like India and the U.S., and are partnerships going to have any impact on Comanche's development of its own Greenfield projects in Brazil?

TC: Yes we are in active discussions to form strategic partnerships with new plants.

Aspire: Where do you think the largest opportunity for Comanche will be in the next three years in terms of growth and what are your plans for execution?

TC: We see three great Greenfield opportunities in other areas of Brazil and we are looking for partners for them.  We are also looking at acquiring existing Mills, at the right price.

Note: Comanche Clean Energy recently has filed a registration statement with the Securities and Exchange Commission and intends to trade on the Over-the-Counter Bulletin Board under the ticker symbol (OTCBB:CGYYF). For more information about Comanche, please contact Aspire at 760-798-4938. 

Carbon Markets and Clean Technology

The first U.S. carbon auction, instituted by the Regional Greenhouse Gas Initiative, raised almost $39 million. Permits sold for $3.07 per ton, lower than carbon prices are getting in the EU, where they are getting about $34 dollar per ton. But all of the permits offered in the RGGI auction sold to 59 participants. The money raised by the auction will go to Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont, and will be invested in energy efficiency and renewable energy technologies.

In China, the first comprehensive emissions trading exchange has been set up by CNPC Assets Management Co., Tianjin Property Rights Exchange and the Chicago Climate Exchange. The Exchange will principally trade sulfur dioxide emission permits and chemical oxygen demand permits initially.

Japan proposed a framework on Tuesday for energy saving and reduction of greenhouse gas emissions after the Kyoto Protocol expires in 2013. The framework would address emerging nations including China and India, creating three categories that require different ranges of cuts in emissions due to economic development, and those emitting relatively less but that suffer from the impact of global warming. The proposal includes binding numerical targets on GHGs and energy consumption in particular industries, as well as overall and emissions per unit of GDP. Binding targets will not be imposed on developing nations with relatively little emissions. A meeting will be held in Poland in December amongst member nations of the U.N. will discuss the proposal further.

Energy Management

EnerNOC (Nasdaq:ENOC) was selected by the State of Vermont as its preferred demand response provider. Under the terms of the contract, individual government buildings will be paid for participating to remove load from the grid during peak hours of demand, and will gain access to EnerNOC's PowerTrak energy management platform.

Lime Energy (Nasdaq:LIME) said its subsidiary, Applied Energy Management won a contract to provide energy efficiency services for the New York Power Authority (NYPA) under a five-year term. AEM will provide energy efficiency upgrades including the implementation of energy efficiency lighting, lighting occupancy controls and energy efficient motors for selected facilities.

Odyne Corporation received a patent for its Battery Energy Management and Monitoring System, its third, for battery energy and thermal management technology.

Energy Storage

EnerSys (NYSE:ENS) announced the launch of its EcoSafe product line of batteries developed specifically for renewable energy storage applications, including solar and wind.
Hydrogenics (Nasdaq:HYGS) received orders from customers in Asia, Eastern Europe and South America with an aggregate value of $6.8 million for its HySTAT hydrogen generation systems.

Geothermal

The U.S. Geological Survey released a study showing that the U.S. has an estimated 9.057MWe of power generation potential from domestic, conventional, identified geothermal systems, 30,033MWe of power generation potential from domestic, conventional, undiscovered geothermal resources, and 517,800MWe of power generation from unconventional (high temperature, low permeability) Enhanced Geothermal Systems resources.

The Shoshane tribe has broken ground on a 100MW geothermal power plant in Box Elder Country, Utah. The power (64MW) will be sold to Riverside accounting for about 20% of its renewable energy. , California, under a 30-year contract.

Hydropower

The Bureau of Reclamation awarded a $48.8 million contract to Oregon Mt. Construction Co. to help build a new auxiliary spillway for 198.72-MW Folsom Dam, on California's American River.
Hawkeye Energy Corp. proposes to develop 12 run-of-river hydroelectric projects totaling 180 MW, all on the southwest coast of British Columbia.

Developer Coca Codo Sinclair S.A. seeks bids to build the 1,500-MW Coca Codo Sinclair hydroelectric project on the Coca River in Ecuador's Napo Province. And Suez Energy Central America announced it will begin construction of three hydropower projects in Panama totaling 118.2 MW as a result of a September 9 electricity auction. Colombia utility Empresas Publicas de Medellin announced it received a US$200 million loan from Japanese banks to advance construction of the 660-MW Porce 3 hydroelectric project on Colombia's Porce River.

Italy's Astaldi Group announced that its contract to build El Salvador's 65.7-MW El Chaparral hydroelectric project is valued at US$220 million.

Pakistan's Water and Power Development Authority extended for a fifth time the deadline for pre-qualification in three solicitations to build and equip the 4,500-MW Basha hydroelectric project on Pakistan's Indus River. India's Himachal Pradesh Power Corp. Ltd. has invited expressions of interest from consultants to assist in selection of an engineering-procurement-construction contractor to build the 402-MW Shongtong Karcham hydroelectric project on the Satluj River. And India hydro developer NHPC Ltd. seeks bids from consultants to assist in carbon credits marketing for five hydroelectric projects totaling 4,165 MW.

Turkish hydropower developer EnerjiSA Enerji Uretim A.S. seeks bids to build three hydroelectric projects totaling 409.92 MW on Turkey's Seyhan River.

The government of Newfoundland and Labrador and the Innu Nation have reached a land claims settlement that could speed development of the 2,824-MW Lower Churchill hydroelectric project. Austrian utilities Verbund and EVN signed a concession agreement September 30 to build the 48-MW Ashta hydropower plant on Albania's Drin River in Shkoder District.

The European Investment Bank is seeking expressions of interest from consultants to perform technical and organizational studies in support of hydropower development in the Great Lakes Region of East Africa.

Ocean Power

ScottishPower Renewables announced September 29 it is evaluating two tidal power sites in Scotland and a third in Northern Ireland totaling 60 MW. On the same day that Scottish Power made its announcement to invest £100m in three tidal energy farms off the costs of Scotland and Northern Ireland, Pulse Tidal has successfully deployed a test version of its tidal generator, which is capable of providing enough energy to power 70 homes. Pulse Tidal's device operates in shallow water (about 5 meters in depth) where tidal streams are generally the fastest. The Company intends to develop a commercial scale generator capable of producing more than 1MW of power which will be ready for installation in two years.

Ocean Power Technologies received a $2 million award from the U.S. DOE in support of its wave power project in Reedsport Oregon. The grant will be used to fund the development of a 150kw-rated PB150 PowerBuoy.

Solar

The solar segment got hammered on Monday in the midst of a failure of the Congress to come together to pass the bailout bill, and aided by comments from Kyocera (NYSE:KYO) CEO Tatsumi Maeda who said that the solar power sector is in a bubble, and that he expects a flurry of failures as solar panel prices fall below the cost of producing them. Kyocera is the world's number 4 solar cell manufacturer.

In order for the market to continue to grow without subsidies Maeda said that the cost of production needs to decline by more than 50%. In addition to increasing pricing pressure from PV producers, the increasing adoption of thin-film in the market is creating further pricing pressure. Maeda forecasted that an astonishing 80% of solar makers will fail.

And Renewable Energy Corp (REC.OL) said that it expects fewer players in the solar sector due to consolidation. Chief Executive Erik Thorston told Reuters that REC has considered a number of acquisition candidates but hasn't pulled the trigger because they believe they can do it better themselves.

Lux Research reported that in 2013, the market for solar systems - consisting of modules, the balance of system components, and installations - will exceed $100 billion in annual revenue, reaching over 23 GW. While volumes will grow by 48% annually, up from 4.9 GW in 2008, revenue will grow at a compound annual rate of 33% from $33 billion in 2008 Jersey Central Power & Light filed a proposal with the New Jersey Board of Public Utilities to help increase the pace of solar project development in the state, wherein JCP&L would into enter into long-term agreements to purchase and sell Solar Renewable Energy Certificates (SRECs). An SREC would represent solar renewable energy attributes of 1MWh of generation from a solar generation facility that has been certified by the BPU Office of Clean Energy. JCP&L would solicit SCECs to satisfy approximately 60% of incremental SREC purchases needed in its service territory to meet the RPS through the end of 2010. SRECs would equal 50% of the incremental purchases to meet the RPS in 2011, and 40% in 2012.

BrightSource Energy and NextLight Renewable Power each signed five-year option agreements with State Land Commissioner for almost 21,400 acres of New Mexico state trust lands in Luna, Hidalgo and Valencia counties. BrightSource paid $60,374 and Next Light paid $35,206 for the options that will give the businesses two years to measure solar radiation, conduct environmental surveys, perform soil analysis and negotiate PPAs and acquire transmission agreements.
Moser Baer signed thin-film module supply contracts (fixed prices, take-or-pay) worth more than $500 million through 2012 with PV systems integrators, including Ralos Vertriebs and Colexon Energy.

Neo Solar Power placed a $450 million multi-crystalline silicon wafer supply take-or-pay contact with REC (REC.OL) that will start in the second half of 2009 and extend through 2015. NSP said its total capacity for 2008 is 210MW, and it plans to have 300MW of capacity in 2009.

SolarPower Restoration Systems announced a non-binding LOI with SBM Solar, Inc. for the supply of a minimum of 10MW of solar modules per year, for a term of three years starting in 2009. 

Sanyo Electric is investing $80 million to build a manufacturing facility in Salem, Oregon for the production of solar wafers. The facility is expected to open in October, 2009. Sanyo is also partnering with Nippon Oil Corporation on a deal to form a thin-film solar cell manufacturing JV. And Sharp (6753.T) said it wants to capture 50% of the thin-film solar cell market share by 2012. Sharp's management said it plans to spend $680 million on a new solar plan in Japan by early 2010, boosting total thin-film solar cell output capacity to 640MW from 160MW. It intends to raise annual solar cell production capacity to 6GW by 2015.

Canadian Solar (Nasdaq:CSIQ) has completed its ingot & wafer plant brining annual ingot and wafer capacity to 60MW and reiterated 2008 revenue guidance of $850 to $970 million. It also reiterated 2008 revenue guidance in a range of $850 to $970 million, with gross margins between 13% and 15%.

Constellation Energy Group said a subsidiary will construct a $2 million solar system at Maryland Environmental Service in Millersville. Its Projects and Services Group will own the energy assets and sell the generated electricity to the state agency as part of a 15-year agreement.

SunPower's (Nasdaq:SPRWA) common stock now trades under the ticker symbol "SPWRA" and "regular way" trading for its class B common stock is trading under the symbol "SPWRB". The class B common stock was spun off from Cypress Semiconductor.

Suntech (NYSE:STP) announced three initiatives to expand its share of the U.S. solar market which include the establishment of a joint venture with MMW Renewable Ventures, forming Gemini Solar Development Co which targets 10MW+ projects, acquisition of El Solutions, a commercial solar system integration company; and expansion of its U.S. dealer network to increase penetration into the residential roof-top and small commercial system solar market building brand recognition with downstream integrators. This strategy is intended to increase Suntech's sales in 2009 three-fold.

Trina Solar (NYSE:TSL) said its monocrystalline PV modules were ranked in the top three PV modules tested on yield from TUV Energy Rating Comparison Measurement tests in 2008. Tests were based on a total of 14 international brands of PV modules.

Yingli Green Energy (NYSE:YGE) signed a 28MW PV module sales contract with GeckoLogic for 2009, with an option to sell an additional 7MW of PV modules; and a 30MW PV module sales contract with Sinosol with delivery terms yet to be determined.

Energy Conversion Devices (Nasdaq:ENER) announced a JV agreement to develop roofing-integrated PV products for the residential market with CertainTeed roofing products. Their JV products are expected to be commercially available in 2010.

Downstream

Carmanah Tech (CMH.TO) received a follow-on order through GESOLAR to supply additional solar-powered airfield lights for civilian airfield applications. The order is valued at more than $1.2 million.
Suntech (STP) announced that it was selected to supply 1.6MW of solar panels to Sun Devil Solar LLC, for a project that will be installed on two parking structures on Arizona State University's main campus. The system will generate more than 3 million kw hours. Suntech said that ASU has long-term plans to install 7MW of solar capacity at its campus.

JC Penney engaged SunPower to install solar power systems on 10 JC Penney stores in California and New Jersey. The systems will produce a combined 4MW of power, and will be financed, owned and operated by a third-party financier under a PPA. The systems are expected to be complete in November. SunPower is also installing a 1MW system on AT&T's facility in San Ramon. The system, which will generate more than 1.6 million kWh annually, is being partially funded by incentives provided by PG&E under the California Solar Initiative (CSI). AT&T will purchase electricity for the facility from an entity that Morgan Stanley owns a major interest in under SunPower Access, a PPA program. SunPower also dedicated a 1MW solar tracking system at Agilent's Santa Rosa, California, campus. Agilent owns the renewable energy credits, while GE Energy Financial Service owns the system. Agilent will purchase the electricity from GE Financial Services under the SunPower Access PPA program.

Hoku Scientific (Nasdaq:HOKU) has been selected by Xcel International to install a 34kw PV system that will generate more than 53,000kWh of electricity each year. It also announced that it has been selected to design, engineer and install PV power systems at airports across the state of Hawaii. The systems installed will generate up to an aggregate of 779kw.

Premier Power (OTCBB:PPRW) installed large-scale bidirectional solar trackers for the Delano Irrigation district. Management said it is the first, in a series of large scale trackers being engineered and integrated by Premier Power by year-end.

Sunrise Solar said it is "advanced negotiations" to design and install a solar project in a major foreign capital that could be worth $30 million.

Thermovolt has begun installation of solar panels at the Vatican's papel audience hall. A total of 2700 panels will be used to complete the 300,000kw system.

Equipment

SatCon announced the sale of its Electronics and Motors divisions for $5.6 as part of an overall strategic restructuring plan. The buyers, Spectrum Microwave (buying electronics division) and US Hybrid Corporation (buying motors division), also assumed $1.8 million of other accrued expenses as part of the sale.

Wind

CPV Renewable Energy Company (CPV) sold rights to the initial 101.2MW phase of the CPV Keenan wind farm to Oklahoma Gas & Electric Company. The wind farm, which will be renamed OU Spirit, will supply energy to the University of Oklahoma through a wind power agreement between OU and OG&E.

GE is manufacturing a new, larger class of wind turbine targeting the European market. It is investing more than $100 million in adding capacity at its German factory.

Horizon Wind Energy commenced operations at the Rattlesnake Road Wind Farm in Oregon. The wind farm has an installed capacity of 103MW and will be fully operational by the end of this year. Horizon Wind Energy now has 13 wind farms operational in seven U.S. states with more than 11,000MW under development.

Golden State Offshore Energy, a joint venture of PSEG Renewable Generation and Deepwater Wind, won a bid to develop a 350MW wind farm off the coast of New Jersey. The proposed wind farm will have 96 wind turbines located 16 to 20 miles of the coast of Cape May.

Boone Watch

Sarah Palin met with Mr. Pickens today to discuss Pickens plan, and no doubt to try and establish more credibility as an energy expert. And Utah Governor, Jon Huntsman, has signed onto the Pickens plan. Huntsman chairs the Western Governors Association and is involved in creating an energy policy framework for the group to present to the next administration.

This week he also presented to students at the University of Michigan.

DOE Watch

The Department of Energy announced up to $17.4 million (subject to appropriations) for six early stage PV module incubator projects that focus on the initial manufacturing of advanced solar PV technologies. The grant will be increased by a cost share from the industry or at least 20%, and could reach up to $35.4 million. Six companies were selected:

• 1366 Technologies - developing cell architecture and related processes for low-cost multi-crystalline cells, and project is expected to enhance cell performance by light-trapping texturing and grooves for self-aligned metallization fingers. (up to $3 million)
• Innovalight - developing high-efficiency, low-cost solar cells and modules by ink-jet printing proprietary "silicon ink" onto thin-crystalline silicon wafers. (up to $3 million)
• Skyline Solar - developed an integrated lightweight, single-axis tracked system that has been demonstrated to reflect and concentrate sunlight over 10x onto silicon cells. (up to $3 million)
• Solasta - using a novel cell design based on an amorphous-silicon "nanocoax" structure that increases current and lowers materials cost by shortening the path charge carriers must travel to the cell's conducting wires. (up to $2.6 million)
• Solexel - plans to commercialize a disruptive, 3D, high-efficiency mono-crystalline silicon cell technology while dramatically reducing cost per watt. (up to $3 million)
• Spire Semiconductor - plans on opening up the design space for three-junction tandem solar cells by growing differentiated bi-facial cells on a Gallium Arsenide substrate. (up to $2.97 million)

Politics

To put some levity into the current political environment click here.

California Governor Arnold Schwarzenegger vetoed legislation that would have imposed a pollution fee on cargo ships at California's ports, and would have paid for clean air programs. VP Candidate Sarah Palin had written to Schwarzenegger asking him to veto the bill. This week he also vetoed three bills (SB 1056, AB 2032 and AB 2547) that would have required quicker response to oil spills and increase a fee to help fund oil spill oversight.  On the positive side, he signed AB 1451, AB 2466, AB 2267, SB 1754 and AB 2863 which all promote renewable energy.

• AB 1451 - continues a property tax exclusion for projects utilizing solar energy and expands the exclusion to builders-installed solar energy systems in new homes.
• AB 2267 - requires California Public Utilities Commission to grant incentives to eligible California technology manufacturers, and has language to attract more clean-tech and green-tech companies to the state
• AB 2466 - authorizes local governments to receive a utility bill  credit for surplus renewable electricity generated at one site against electricity consumption at another site
• SB 1754 - authorizes the California Alternative Energy and Advanced Transportation Financing Authority to enter into PPAs with public and private entities for the purchase and sale of alternative source energy
• AB 2863 - allows for purchase agreements in residential solar power generation and designates companies that sell solar electricity generated at the location where it is used as independent solar energy producers

 

Financing and M&A

Solar Power Partners closed a $100 million round of private equity and debt financing, and it expects to close on another $60 million in the near term. Its investors include United Commercial Bank, Globespan Capital Partners, The Enlightened World Foundation, Carrelton Asset Management, Dry Creek Ventures, Silicon Valley Technology Group and Energy Investors Funds.

Xantrex (TSX:XTX) completed its plan of arrangement with Schneider Electric, wherein a Schneider Electric affiliate acquired all outstanding common shares of Xantrex for a cash price of CAD$15.00 per share.

South Africa's first clean technology investment fund, the Evolution One Fund, was launched this week, having raised about R400 million and with goals to grow to R1-billion by mid-2009. International investors in the fund include the

International Finance Corporation. The fund will make ten to fifteen investments over a three to five year period in the Southern Africa Development Community region.

Fotowatio announced the purchase of four PV power plants, totaling 32MW, in Murcia, Spain, bringing its power output portfolio to 90MW. The sum paid to GA Solar was not disclosed.

Ausra raised $60.6 million from investors including KERN Partners, Starfish Ventures and Generation Investment Management. Previous investors include Khosla Ventures and Kleiner Perkins Caufield & Byers. Ausra is building a 5MW solar thermal plant near Bakersfield, CA.

EMCORE (Nasdaq:EMKR) announced the closing of a $25 million revolving credit facility with Bank of America.

Calpine (NYSE:CPN) drew $725 million under its $1 billion Senior Secured Revolving Credit Facility under its Exit Financing, which expires on March 29, 2014.

Upgrades and Downgrades

September 30 - Satcon Technology Corporation (Nasdaq:SATC) rated Accumulate at Ardour Capital with price target $2.50.

October 1 - Itron (Nasdaq:ITRI) initiated BUY at Piper Jaffray.

October 2 - Maxwell Technologies (Nasdaq:MXWL) rated HOLD at Stanford Research with $16 price target.

October 3 - Cowen Analyst Rob Stone released an update this morning on Energy Conversion Devices (Nasdaq:ENER) and reiterated his OUTPERFORM rating, the day after attending ENER's analyst day.

October 3 - BTU International (Nasdaq:BTUI) rated BUY at Kaufman Brothers with a price target of $14.

October 3 - FuelCell Energy (Nasdaq:FCEL) rated BUY at Janney Mntgmy Scott with $8 price target.

October 3 - Verenium (Nasdaq:VRNM) initiated BUY at ThinkPanmure with $4 price target.

Reports and Research

Addressing Challenges through Better Plans and Clarifying the Greenhouse Gas Emissions Measure Will Help Meet Long-term Goals for Buildings

The federal government is the nation's single largest energy consumer, spending approximately $17 billion in fiscal year 2007. A number of statutes and executive orders have established and revised goals directing agencies to reduce energy consumption and greenhouse gas emissions-such as carbon dioxide, which results from combustion of fossil fuels and natural processes, among other things-and increase renewable energy use. GAO was asked to determine the extent to which (1) federal agencies met energy efficiency, greenhouse gas emission, and renewable energy goals in fiscal year 2007; (2) federal agencies have made progress in each of these areas in the recent past; and (3) six selected agencies are poised to meet energy goals into the future.

The biofuels segment continues to reel, pressured by the high costs of feedstock and the collapse of the credit markets. Companies are increasingly talking about "strategic alternatives" and each week we are seeing a number of companies terminate plans for operations or expansion. This week, the group closed down 22%. Not even Cosan, (NYSE:CZZ) which should be more immune to these issues due to its geography (Brazil) closed down 15%. Verenium (Nasdaq:VRNM) closed down the most, losing 43%. But if the analysts recently covering this stock are correct, the stock has some significant upside. Today ThinkPanmure's David Woodburn initiated coverage with a $4 stock target. Year-to-date, the group is down 67%. We don't think there is any upside to the U.S. biodiesel and ethanol producers anytime soon. We like Brazilian producers because the market is mature, and ethanol can compete at the pump, in addition to strong internal drivers. We are optimistic about the cellulosic group, but think that we are still a couple years out from any volume here so these companies are going to have to rely on the capital and debt markets to fund operations, which is challenging in the current climate. 

The energy management segment continues to take pressure, down 19% on the week. But we are bullish on the segment for obvious reasons - rising energy consumption, rising prices, aging grid. All of these factors should bode well for companies like Echelon (Nasdaq:ELON) and EnerNOC (Nasdaq:ENOC). Year-to-date, the group is down 58%. No companies in positive territory here either.

The energy storage group shed 14% this week, with only Enersys and Valence closing in positive territory.

Several companies in the energy storage sector had blockbuster performance on Monday, in spite of the fact that the DJIA closed down a record 777.68 and the Nasdaq, which closed down an astonishing 199.61. For example, Ballard Power (Nasdaq:BLDP) gained 18.34%, China Bak Battery (Nasdaq:CBAK) gained 7.14%, Ener1 Inc. (AMEX:HEV) gained 18.55%, Maxwell Technologies (Nasdaq:MXWL) gained 10.86%, Mechanical Technology (Nasdaq:MKTY)  gained 23.01%, Quantum Fuel Systems (Nasdaq:QTWW) gained 35.51% and Valence Technology (Nasdaq:VLNC) gained 36.51%.
We aren't really sure why the group performed so well on such an historically dismal session on Wall Street, but we think it is worth bringing to our readers' attention. In the group, stocks that we like the most are Quantum Fuel and UltraLife Batteries (Nasdaq:ULBI). Interestingly, UltraLife didn't participate in yesterday's rallies by so many of the energy storage group. Its stock fell $1.67, or 17%. The fundamentals for UltraLife remain positive, and at a trailing twelve month P/E of about 10 and a P/E (ttm) of about 0.6x.

Our revenue expectations for Ultralife this year are $270 million, a 97% increase over FY2007 results, and net income of $13.2 million, a 135% increase over FY2007. Based on our forecasts that UltraLife is going to post strong Y/Y growth again this year, and our sense that its business is well-diversified across several segments where secular trends for growth remain strong, we think that UltraLife's stock is significantly oversold. We are forecasting a target stock price for UltraLife in the range of $18.40 to $18.75 based on P/S multiple of 1.25 for FY2008 revenues of $270 million and a P/E multiple of 25 for FY2008 income of $13.2 million.

If, however, the broader markets continue to contract, and reel under so much broader economic uncertainty, we think it may be reasonable to trim our target to a range of $14 to $15, which would be beast on a P/S multiple of 1 and a P/E multiple of 20, respectively. Even in this latter case, the upside opportunity that we think is reasonable for UltraLife in light of yesterday's closing price of $7.85 is compelling.

As we noted above, we are also bullish on Quantum Fuel Systems. The business is also well diversified into growth markets, including hybrid automotives, with an ownership of Fisker Automotive, advanced lithium power and recently, with a move into solar through its Asola partnership.

Unlike UltraLife, we don't think that Quantum's stock is trading at a particularly large discount to where it should be. But on the other hand, we think that at a 6x P/S (ttm) multiple the stock price is reflecting so much of the upside opportunity that Quantum is positioned to capitalize on.

In both cases, with Quantum and UltraLife, revenue growth will be driven by surging global demand for energy. Looking at Quantum's opportunity with the hybrid vehicle market, consider this: only 12% of the global population drives a vehicle.
Quantum is working right now on General Motors' Chevrolet Equinox fuel cell vehicles, which are just starting to hit the streets. Note that GM owns 5% of Quantum. Its fuel cell technology broke the world record for mileage w/o refueling - at 357 miles. It is also working with Ford on the hydrogen Ford Escape, displacing the Hummer vehicles which are currently being used on Army bases. It is planning production in 2009 for the Fisker Karma and anticipates introducing 4 new Fisker models by the end of 2011.

Quantum has recently strengthened its balance sheet, with a  $65 million investment from Qatar, so we think it has a demonstrated ability to capitalize its growth even in these challenging markets. As we noted, the 6x P/S multiple reflects, in our opinion, so much of this upside opportunity for growth. Management is projecting $100 million in revenues for FY2009, and profitability. The current market cap of $160 million (based on yesterday's close of $1.72) reflects a forward P/S multiple of 1.6x, which we think is reasonable. As the business gets closer to proving out its strategy and into the 2009 operating year, we think that these multiples should support higher price targets.

Notes: Ardour Capital has a $2 stock target for QTWW and Merriman has a $2 to $2.50 target. RBC Capital Markets as a $13 stock target for ULBI, Broadpoint has an $18 target for ULBI and Ardour has a $17.50 target.

The geothermal segment closed down 9% on the week, led by Ormat (NYSE:ORA) down 23%, which is surprising, given the company's leadership as a pure-play in the segment. Calpine (NYSE:CPN) the other juggernaut in the group, was down 20%. Raser (NYSE:RZ) jumped this week, likely as a result of short-covering. Year-to-date, all of the companies are down, 46% on an average basis.

The upstream solar segment lost 9% this week. These companies have been under pretty consistent pressure as expectations of commoditization increase. Year-to-date, the group is down 39%. 

The selloff in the midstream segment has been remarkable, with the group down another 14% this week. Remarkable from the sense that so many of these companies continue to post strong earnings and revenue growth, amass long-term supply contracts but valuations are getting squeezed nonetheless. To be sure, the group saw no benefit on Friday from the passage of the renewable energy legislation (and neither did the downstream segment). We think that so many of these stocks are way oversold, including First Solar (Nasdaq:FSLR), LDK Solar (NYSE:LDK), JA Solar (NYSE:JASO) and Yingli (NYSE:YGE). Year-to-date, the group is down 44%. 

The downstream segment closed down 13.54% this week. It was surprising to see that the passage of the renewable tax credits didn't spark these stocks today. The implications for the downstream segment of the legislation are probably the most dramatic. Year-to-date the group is down 52%.

The solar equipment/systems group managed to close in positive territory, up 3%, thanks to Spire (Nasdaq:SPIR) which gained 20%. Year-to-date, the group is down 32%. 

The wind energy segment gave up 16% this week, led by more selling in A-Power (Nasdaq:APWR). The selloff makes no sense in this stock, given the fact that it is now trading at about 5x this year's projected earnings, and at fraction of its backlog. The business is posting much stronger Y/Y growth in both wind energy and distributed energy. The only thing we can think of here, is that a couple major shareholders have been getting margin called out of their position, and subsequently killing the market. At 15x this FY2008's earnings the stock is at $30. So at today's close of $6.41, we are pounding the table to our readers at Small Cap Pulse. Year-to-date, the group is down 42%.

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 www.smallcappulse.com.

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.

The Aspire Week in Review is brought to you by Small Cap Pulse the best source on the web for financial and economic commentary, stock recommendations, and a fresh idea. To learn more about Small Cap Pulse, call 858-509-9900.

 

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