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No happy new year for the solar industry

Posted in alternative energy, climate change, energy, environment, First Solar, global warming, PG&E, renewable energy, solar energy, solar power plants, Southern California Edison, Sungevity, SunPower, Suntech, tagged , , , , , , on December 8, 2008| 9 Comments »

solarcells

photo: Southern California Edison

While demand for solar panels is expected to continue to grow by double-digits in the years ahead, 2009 could be a make-or-break year for some companies, according to an analysis from HSBC Global Research.

After grappling with a shortage of polysilicon – the base material of conventional solar cells – for the past couple years, the industry now faces falling prices. The spot market for polysilicon has plummeted 35% since October, writes HSBC alternative energy analyst Christine Wang, who predicts prices will fall 30% next year.

That’s bad news for solar module makers who locked in long-term contracts at higher prices – which looked like a smart move when polysilicon was in short supply and prices rising rapidly. “The winners will likely be the companies with competitive cost structures, scale, good product  quality, strong balance sheets, and strong customer relationships,” according to Wang. “We believe that new entrants and small players will suffer the most as they lack brand recognition.”

The culprits are the usual suspects – the global financial crisis as well as some cutbacks in subsidies from countries like Spain. Solar cell companies that have rapidly ramped up production over the past two years now may be saddled with too many high-priced products.

Wang downgraded Chinese solar giant Suntech (STP) and set a price target of $4.50 – down sharply from HSBC’s earlier target of $55. Suntech was trading at near $10 Monday afternoon but still nearly 90% off its 2008 high.  (SunPower (SPWRA), First Solar (FSLR) and other solar cell makers have also seen their share prices nose-dive.) “High portion of polysilicon based on contract prices will hurt Suntech,” writes Wang, who estimated that 80% of Suntech’s polysilicon supply is locked into contracts “on less favorable fixed prices.”

Falling panel prices is good news for solar system installers like Sungevity and Akeena Solar (AKNS) and their residential and commercial customers. When Green Wombat ran into Akeena CEO Barry Cinnamon in San Francisco at the announcement of Better Place’s Bay Area electric car project, he said he was in no rush to enter into long-term contracts with solar cell suppliers as he expects prices will continue to fall in 2009.

Still, not all the news is gloomy for the industry. Wang expects that the financial crisis won’t derail government support for solar, given climate change pressures and state mandates to increase the use of renewable energy. The move by utilities like PG&E (PCG) and Southern California Edison (EIX) to sign long-term contracts for electricity from photovoltaic power plants will also keep demand high in coming years.

Wang projects solar cell demand will grow 45% between 2008 and 2012. “Developed countries are increasingly focused on environmental protection and curtailing the causes of climate change, and we do not believe this trend will shift just because of a (hopefully) short-term financial crisis,” she wrote.

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Credit crunch burning solar industry

Posted in alternative energy, climate change, energy, First Solar, global warming, green collar jobs, green financing, green policy, green tech, investment tax credit, renewable energy, solar energy, solar power plants, SunPower, Suntech, Uncategorized, tagged , , , , , , , , on December 3, 2008| 2 Comments »

solana1The credit crunch is taking a toll on the United States’ nascent solar industry, scuttling big renewable energy projects and curtailing expansion plans, solar executives said Wednesday as they proposed the inclusion of green incentives in the Obama economic stimulus plan.

Spanish energy giant Abengoa, for instance, has put on hold plans to build its 280-megawatt Solana solar power plant outside Phoenix to supply electricity to utility Arizona Public Service (PNW) in a $4 billion deal, said Fred Morse, senior advisor to Abengoa Solar.

“We have serious issues getting financing,” said Morse during a conference call held by the Solar Energy Industries Association. Congress in October passed a 30% investment tax credit crucial to the solar industry. But Wall Street’s meltdown has scared off investors that normally would finance large solar projects in exchange for the tax credits.

“The investment tax credit was passed but unfortunately there was no ‘I’ in the ITC,” Morse added. “We have trouble finding tax-equity investors, the financing is gone.”

Suntech America president Roger Efird said that after Congress passed the investment tax credit, the Chinese solar cell maker immediately doubled its sales force in the U.S. That expansion has now hit a wall.

“Plans to double our sales force by the end of 2009 are currently on hold, primarily because business has slowed in fourth quarter because of the credit crunch,” he said. “We had been considering establishing manufacturing in the U.S. The timing of those plans depend on the growth of the market in the U.S. and how long it takes to get through this downturn.”  Suntech’s (STP) stock – like those of rivals SunPower (SPWRA) and First Solar (FSLR) – has been walloped by the market chaos and is down 94% from its 52-week high.

Ron Kenedi of Sharp Solar said the dealers and installers who buy the Japanese solar module maker’s products have had a hard time securing credit to finance their operations.

In response, the solar industry’s trade group on Wednesday proposed that the federal government cut through the credit crunch by adopting tax and investment policies to stimulate the solar sector and create 1 million jobs.

The centerpiece of the plan is a $10 billion program to install 4,000 megawatts of solar energy on federal buildings and at military installations. “The Department of Defense alone could jump start this industry and it could have widespread impact on the use of solar, similar to what it did for the Internet,” said Nancy Bacon, an executive with Michigan thin-film solar cell maker Energy Conversion Devices (ENER).

Bacon noted that the federal government is the world’s largest utility customer, spending $5.6 billion annually on electricity. “This would create 350,000 sustainable jobs,” she said. “The solar industry is ready to deploy these systems immediately.”

The Solar Energy Industries Association also wants Congress to enact a 30% tax refundable tax credit for the purchase of solar manufacturing equipment to encourage solar companies to build their factories in the U.S. That would result in an estimated 315,000 new jobs. Making the current investment tax credit refundable would also help loosen up financing for solar projects, the association said.

Other policies on the SEIA agenda:

  • Establishment of a national Renewable Portfolio Standard that would require states to obtain a minimum of 10% of their electricity from green sources by 2012 and 25% by 2025, with 30% of the total coming from solar.
  • Rapid deployment of new transmission lines to connect cities to remote areas where wind and solar power is typically produced.
  • Expedited approval of solar power plant projects on federal land in the Southwest.
  • Creation of an Office of Renewable Energy in President-elect Obama’s office to coordinate the procurement and permitting of solar power and transmission lines.

“We are working closely with the Obama energy transition team and have been in contact with Congress,” said SEIA president Rhone Resch. “These polices are exactly the kind of shot in the arm our economy needs today.”

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Better Place to build Hawaiian electric car network

Posted in alternative energy, Australia, Better Place, climate change, electric cars, energy, enviro startups, environment, global warming, green cars, green policy, green tech, tagged , , , , , , , on December 2, 2008| 44 Comments »

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photo: Better Place

Silicon Valley startup Better Place on Tuesday announced a deal with Hawaii’s governor and the state’s biggest utility to build an electric car charging network throughout the islands.

The agreement comes less than two weeks after Better Place CEO Shai Agassi and the mayors of Northern California’s three largest cities unveiled a plan to build an electric car infrastructure for the San Francisco Bay Area. Better Place also has signed similar deals with governments in Australia, Denmark and Israel.

Agassi said the network of charging posts and battery swapping stations will be ready by 2012. That’s roughly the target date for Better Place’s other projects, which means the year-old startup will be simultaneously building electric car networks in four countries while raising billions of dollars in project finance.

Renault-Nissan will supply electric cars for the network. Better Place will own the car batteries and charge drivers for the miles (or kilometers) driven. By removing the battery from the purchase price of electric cars – the most expensive component – Better Place hopes to sell vehicles at prices competitive with their fossil-fueled counterparts.

Appearing with Agassi at a press conference at the capitol in Honolulu, Hawaii Governor Linda Lingle said the Better Place partnership offers the state the opportunity to slash the $7 billion it spends annually on imported oil and provide a market for renewable energy. Hawaiians pay some of the highest gasoline prices in the U.S. and the state has set a goal of obtaining 70% of its energy from solar, wind and other renewable sources by 2030.

“It’s not a simple goal – we’re looking to end our dependence on oil,” said Agassi, who shed his customary dark suit for a gray polo shirt and wore a lei. “Any form of renewable energy – wind, solar, geothermal – is here in Hawaii.”

“This will be the blueprint where six or seven million visitors will come and experience first-hand what it’s like to drive an electric car,” added Agassi, 40, a former top executive at business software giant SAP. “You couldn’t ask for a better advertisement.”

Utility Hawaiian Electric (HE), which supplies 95% of the state’s power, will generate renewable electricity equal to what the Better Place network consumes and work with the company on developing the charging infrastructure.

“The price of oil is irrelevant to us – we have to reach a clean and secure energy future,” Lingle said.

Better Place’s latest deal came on the same day that General Motors (GM) and Ford, which have asked for a multi billion-dollar bailout from Congress, (F) announced plans ramp up production of hybrid and electric cars.

“It’s a win-win-win – the only loser in the equation is oil and that’s ok,” said Hawaiian Electric executive vice president Robbie Alm. “Green cars will provide the market for renewable energy.”

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A smart energy grid inside your home

Posted in climate change, corporate green, energy, energy efficiency, enviro startups, environment, global warming, green buildings, green startups, green tech, PG&E, tagged , , , , on November 25, 2008| Leave a Comment »

tendril

In case you missed it, this Green Wombat story appears in the current issue of Fortune.

A house that thinks

The high-tech networks that Reliant Energy is installing in the homes of its 1.8 million customers will help them save electricity.

By Todd Woody, senior editor

(Fortune Magazine) — Inside a white-brick house nestled in Houston’s leafy Montrose neighborhood, a gray handheld video display sits on the living room coffee table. But this is no ordinary remote control. Called the Insight and made by Tendril, a Boulder startup, the device communicates wirelessly with the home’s utility meter, letting you track real-time information about the cost of the electricity you consume.

The house is actually a demonstration project set up by Reliant Energy (RRI), a reseller of electricity with $12 billion a year in sales. Glen Stancil, Reliant’s vice president for smart energy R&D, taps the Insight’s screen. “Right now we’re spending $1.40 per hour,” he says, noting that the electricity prices and usage are updated every ten seconds. (Customers can also access the same data on the web or their iPhones.)

Stancil presses another button. “The bill so far is $86, and for the month it looks like it’s headed to $367,” he says. The Insight system also warns that you’ll fork over another $100 this month if you crank up the air conditioner a couple of notches. So keep your hands off the thermostat.

That’s just the kind of behavior that Reliant Energy CEO Mark Jacobs would like to see. Until now, Reliant has made its money by entering contracts with utilities for a fixed amount of power at a fixed price and then reselling it to its 1.8 million customers. If demand unexpectedly soars on a hot afternoon as everyone turns up the air conditioning, Reliant often must buy extra power on the spot market, where prices can spike as much as 60%.

That cuts into profits. “It’s like running a beachfront hotel, charging the same room rate all year round, and then building more rooms to guarantee that everyone has a room on the busiest weekends,” says Jacobs.

In November, Reliant started installing the Insight in homes, which means it will be able to pass along those high spot prices to its customers, or better yet, in sweltering Texas, let customers buy a month’s worth of cool at a set price – say, 72 degrees for $200 or 74 degrees for $160.

The Insight offers another advantage – Jacobs believes it will encourage his customers to cut back on electric use and save money. “What if you knew you could run your clothes dryer at five o’clock, and it would cost $3,” says Jacobs, “or you could wait until eight o’clock at night, and it would be only a dollar?”

PG&E (PCG), Southern Edison International (EIX) and other utilities are rolling out smart meters but have yet to to integrate them with smart energy systems for the home. But Reliant operates in a competitive, deregulated electricity market. If homeowners get cool technology that helps them avoid the unpleasant surprise of a big electric bill, Jacobs believes Reliant will retain more customers. And then there’s the green angle. “We as an industry are the single largest emitter of greenhouse gas, and our goal is to help our customers use less, spend less, and emit less,” says Jacobs.

For Jacobs, a 46-year-old Goldman Sachs (GS) veteran, smart energy technology is just the wedge to shake up what he calls “an industry in the Dark Ages” while opening new markets for his company, whose stock has been walloped by the one-two punch of Houston’s Hurricane Ike and the credit crunch.

Hurdles, however, remain. Will consumers already suffering from information overload want to obsessively monitor their electricity habit? Will a sweating Houstonite on a 104-degree day say to hell with the cost and crank up the AC anyway? Jacobs isn’t worried. He believes nothing influences behavior better than knowing the true price of what you’re buying.

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The electric car economy

Posted in Better Place, electric cars, energy, environment, green cars, green policy, PG&E, solar energy, Southern California Edison, tagged , , , , on November 24, 2008| 47 Comments »

betterplaceplugElectric cars are as good for the economy as the environment and could put $80 billion in consumers’ pockets by 2030, according to a new study from the University of California.

Not surprisingly, the oil industry would take a $175 billion hit under the scenario sketched by UC Berkeley’s Global Venture Lab, while a booming battery business would gain $130 billion as the internal combustion engine sputters out. “There will also be significant changes in the balance of payments among nations as petroleum imports decline,” the authors wrote. “We find the net imports of the U.S. will decline by $20 billion.”

The report makes several assumptions to arrive at its optimistic conclusions: The Cal researchers are counting on 39% of cars on the road to be electric by 2030 and powered by electricity generated from renewable sources like wind and solar.

Electric car owners would save an estimated $7,203 in operating costs, mainly because with no engines to maintain, battery-powered vehicles rarely see the inside of mechanic’s garage.

Left unexplored in the report was the impact of electric cars on the United States auto industry. If General Motors (GM), Ford (F) and Chrysler survive – and that’s a big if these days – they stand to benefit assuming they retool for the electric age and produce cars consumers want to buy before rivals like Toyota (TM), Honda (HMC) and Renault-Nissan beat them to the punch. But their dealer networks are sure to suffer once their lucrative repair and maintenance business evaporates.

Another winner in the electric car economy will be solar and wind companies and utilities, particularly those like PG&E (PCG) and Southern California Edison (EIX) that are making multi billion-dollar investments in renewable energy.

One of the biggest assumption the Cal report makes involves the rise of a U.S. battery industry. “We don’t have a battery industry today,” said Shai Agassi, CEO of electric car infrastructure startup Better Place, on Friday at a panel Green Wombat moderated for the University of California’s Global Technology Leaders Conference. “Either we make them here or they’re going to be made in China.”

Agassi and the mayors of San Francisco, San Jose and Oakland on Friday announced that Better Place would build a $1 billion network of charging stations throughout the Bay Area. Renault-Nissan has agreen to provide Better Place with the hundreds of thousands of electric cars it’ll need to put on the road make its business model profitable.

photo: Better Place

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San Francisco to Detroit: Go electric

Posted in Better Place, climate change, energy, enviro startups, global warming, green cars, green financing, green policy, green tech, tagged , , , on November 21, 2008| 33 Comments »

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Photo: Better Place/Acey Harper

SAN FRANCISCO – It was a day when the shift from the past to the future was almost palpable.

It started Thursday morning in Berkeley where Green Wombat was moderating a panel of tech luminaries gathered at the University of California’s Global Technology Leaders Conference. As Shai Agassi, founder of electric car infrastructure company Better Place, makes the case for harnessing Silicon Valley’s technological innovation to Detroit’s manufacturing might to create a sustainable car industry, dispatches from the automotive apocalypse roll down my BlackBerry: Ford (F) shares sink to $1.01…GM’s (GM) stock falls to its lowest level since World War II…U.S. automakers beg for a bailout…California Congressman Henry Waxman ousts Michigan’s John Dingell — the Duke of Detroit — from his 28-year chairmanship of the powerful House Energy and Commerce Committee.

Agassi slips out of the conference and an hour later I catch up with him across the Bay at San Francisco City Hall where he and representatives of Governor Arnold Schwarzenegger and the mayors of San Francisco, San Jose and Oakland announce a $1 billion project to build a regional network of electric car charging stations. Better Place has signed similar deals with governments in Israel, Denmark and Australia, but California is the company’s first foray into the U.S. market. Planning for the Bay Area network begins in 2009 with construction scheduled to start in 2010 and commercial rollout set for 2012.

better20place202The mood is ebullient. “This is the start of a regional effort to become the capital of electric vehicles in the United States,” proclaims San Francisco Mayor Gavin Newsom before an audience that includes representatives from state and federal environmental agencies, green groups. Silicon Valley business leaders and officials from GM and Toyota (TM).

For his part, Agassi says, ” We believe this is not just a model for California, but a blueprint for the United States.”

The blueprint works like this: The mayors of the Bay Area’s three largest cities agreed to expedite permitting and installation of electric car charging stations, standardize regional regulations to promote an electric car infrastructure and offer incentives to employers to install chargers at workplaces. The mayors also agreed to pool purchases of municipal electric car fleets.

Better Place will raise the capital to install thousands of charging spots on the streets of San Francisco, San Jose and Oakland as well as stations between California cities where drivers can swap depleted batteries for fresh ones when they make longer trips. The Palo Alto-based company will own the car batteries and charge drivers for the miles driven. Automaker Renault-Nissan is developing electric cars for the Better Place network.

The big idea: Only by building an electric car infrastructure first will automakers produce the tens of millions of electric cars needed to make a significant dent in greenhouse gas emissions and the nation’s dependence on foreign oil.

That business model elicited some skepticism earlier in the day at the Berkeley conference, where Michael Marks, former CEO of electric carmaker Tesla Motors, questioned Agassi’s claim that Better Place would be able to provide electric cars that cost no more than gasoline-powered vehicles. And Jim Davidson, co-founder of Silicon Valley private equity firm Silver Lake, asked if Better Place would essentially be tapping the power grid to create a monopoly. (No, Agassi said, the Better Place network would be open to all electric cars.)

When Green Wombat sat down with Agassi and Newsom in the mayor’s offices Thursday afternoon, I asked Agassi, who brings a charismatic messianism to his mission, how Better Place would raise the billions needed to roll out an electric car infrastructure in California amid a global economic meltdown. He noted that in Australia Better Place signed up investment giant Macquarie Bank to create an infrastructure fund to finance that project while in Denmark a utility will provide financing.

“We will do the same thing here; we’re working with Morgan Stanley (MS) and Goldman Sachs (GS),” Agassi says, recounting a conversation he recently had with investors who he said were eager to put money in Better Place projects.

If anything, Newsom, 41, and Agassi, 40, and their allies regard the confluence of the financial crisis, the great Detroit car crash and the consolidation of green power in the incoming Obama administration and Congress as a once-in-a-lifetime opportunity to launch a disruptive technology on a global scale and transform the U.S. automotive industry.

“We’re uniquely positioned in that our local representative is Speaker of the House,” notes Newsom, referring to his close political ally, San Francisco Democrat Nancy Pelosi, who on Thursday sent a message of support for the Better Place initiative. “That can elevate what we’re trying to achieve out here.”

There’s no doubt that Newsom has a knack for game-changing politics. (He launched the gay marriage movement in these offices.) But the nuts and bolts of getting the bureaucracy to fall in line will be a harder challenge, as anyone who has ever tried to get a permit to do a home renovation in San Francisco can tell you. And not all of San Francisco’s collaborations with Silicon Valley tech companies have gone well — witness the collapse of the citywide Wi-Fi initiative Newsom undertook with Google (GOOG).

Agassi hesitated when I asked about plans to extend the Bay Area electric car network to the rest of California, noting that negotiating agreements with the nearly 100 municipalities that make up Greater Los Angeles poses a challenge. “I got a call the other day from the mayor of L.A. asking where are we,” Agassi says. “We hope to eventually make it an electric charging corridor from California to Seattle to Vancouver.”

On Thursday, Agassi and the politicians took pains to paint the Better Place initiative as not a California versus Michigan thing, or new economy versus old. And they just may be right. For in a strange way, by building an electric car infrastructure, California is offering Detroit a rescue package of its own: Supplying the network lays the groundwork for the mass production of electric cars that could be the auto industry’s salvation.

That may be counter to conventional wisdom, but perhaps Robert F. Kennedy Jr., environmentalist and advisor to Silicon Valley’s VantagePoint Venture Partners – a Better Place investor – put it best on Thursday at the press event when he upended the East Coast view of the Golden State: “When you come to California, you find people in touch with reality.”

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California to build electric car network

Posted in alternative energy, climate change, electric cars, energy, enviro startups, environment, green cars, green policy, green startups, tagged , , , , on November 20, 2008| 19 Comments »

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photo: Todd Woody

SAN FRANCISCO – As Congress considers bailing out a U.S. auto industry damaged by its dependence on fossil fuel-hogging SUVs, San Francisco Bay Area leaders on Thursday unveiled plans for a $1 billion regional network of charging stations for electric cars.

Silicon Valley startup Better Place will construct the network, deploying thousands of chargers for electric cars on the streets of San Francisco, San Jose and Oakland. The cities will be linked by battery swapping stations so drivers can travel longer distances. Better Place, founded by former SAP executive Shai Agassi, previously struck deals with governments in Israel, Denmark and Australia to build electric car networks. This is the well-funded startup’s first move in the U.S. market. Construction on the Bay Area network will begin in 2010 with commercial rollout in 2012.

“This is the start of a regional effort to become the capital of electric vehicles in the United States,” proclaimed San Francisco Mayor Gavin Newsom at a press conferences at city hall attended by the mayors of San Jose and Oakland as well as representatives from state and federal environmental agencies.

California Governor Arnold Schwarzenegger threw his support to the project and the the cities of San Jose, San Francisco and Oakland have pledged to expedite permitting of Better Place charging stations, standardize regulations and offer incentives for employers to install chargers at workplaces.

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The First National Bank of Green

Posted in alternative energy, climate change, corporate green, energy, energy efficiency, environment, geothermal, global warming, green collar jobs, green financing, green policy, investment tax credit, renewable energy, solar energy, wind power, tagged , , on November 19, 2008| Leave a Comment »

deutsche-bank-green-bankPresident-elect Barack Obama may dismiss notions of a New New Deal to stave off a Great Depression 2.0, but signs of a Rooseveltian shift in thinking abound.

Case in point: This week, Deutsche Bank called for the establishment of a “national infrastructure bank” to create “green” jobs, fight global warming and ensure U.S.  energy independence by investing in an array of projects – from energy efficiency to upgrading the Eisenhower-era power grid to large-scale renewable energy power plants.

The idea of a national infrastructure bank is not new – versions have been proposed by Obama and Senators Chris Dodd (D-Conn.) and Chuck Hagel (R-Neb.) to finance the repair of the nation’s crumbling highways, water systems and cities. Deutsche’s twist is to give such an institution a green mission.

“We believe this confluence opens up an historic opportunity for a new U.S. administration and Congress to take a global leadership position on the issue of the environment and energy security, while addressing current financial problems,”  wrote Deutsche Bank’s Climate Change Investment Research team in its report.

“We’re calling for the national infrastructure bank to go green because in the long run it will save us money and create more jobs,” Deutsche senior investment analyst Bruce Kahn told Green Wombat.

He says Deutsche Bank is not putting a dollar figure on the capitalization of such bank, but the report notes others have suggested a $100 billion investment would generate two million green jobs.

Deutsche Bank (DB) recommends a green infrastructure bank focus on energy efficiency, the transmission grid, renewable energy and public transportation. The green bank would dispense federal funding, make grants to states and cities, issue loans to governments and companies, underwrite public and private bonds, and provide tax credits for public and private projects.

In Deutsche Bank’s analysis, the biggest bang for the buck would come from a massive retrofit program to increase the energy efficiency of the nation’s commercial buildings and make sure the 1.8 million new homes constructed every year are green. Buildings consume as much as 50% of the electricity generated in urban areas and emit about 20% of the country’s greenhouse gases. The work of installing energy-efficient heating, lighting and air conditioning systems is labor intensive and would spike demand for green building materials.

Upgrading and digitizing the power grid to create a “transmission super highway” to bring solar and wind energy from the deserts and Great Plains to the cities could generate as many as 500,000 jobs, according to an estimate by the American Wind Energy Association. The price tag to modernize the grid: $450 billion over the next 15 years by New Energy Finance’s estimate.

One area given short shrift by the Deutsche report is how a green infrastructure bank would support large-scale renewable energy power plants. Wind farms and solar power stations typically require billions of dollars in financing to get built and rely on investors buying the tax credits the projects generate. Those investors have been in short supply thanks to the credit crunch and the collapse of the Wall Street banks that often put up the cash for such deals.

“Everyone’s lost money, there’s no tax equity to be had,”  says Kahn. “But we expect that tax credit equity investors will return to the market, not next month, but in the next couple of years.” Kahn says an infrastructure bank could support green energy power plant projects through loans and loan guarantees.

A green bank would also be good business for Deutsche Bank.

“We have large number of investments at stake, current investments in all these sectors,” says Kahn. “It provides an investment opportunity as this infrastructure bank would not be able to exist all on its own. It would need private capital to invest alongside it.”

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The renewable energy industry’s Obama wish list

Posted in alternative energy, energy, environment, First Solar, geothermal, Google, green collar jobs, green policy, green tech, investment tax credit, renewable energy, solar energy, Suntech, the green economy, tagged , , , , , , on November 13, 2008| 26 Comments »

The wind, solar and geothermal industries have wasted no time pressing the incoming Obama administration to implement an alternative energy agenda to spur investment and create jobs.

During a conference call Thursday, the leaders of the Solar Energy Industries Association, American Wind Energy Association and other trade groups lobbied for a plethora of legislation and policy initiatives. None of these proposals are new, but given Barack Obama’s campaign promises to promote alternative energy and the strengthened Democratic majority in Congress, the industry has the best chance in many years of seeing this wish list made real.

  • A five-year extension of the production tax credit for the wind industry (it currently has to be renewed every year) to remove uncertainty for investors.
  • A major infrastructure program to upgrade the transmission grid so wind, solar and geothermal energy can be transmitted from the remote areas where it is produced to major cities. Obama advisor Eric Schmidt, CEO of Google (GOOG), recently joined with General Electric (GE) chief Jeff Immelt to launch a joint initiative to develop such smart grid technology as well as push for policy changes in Washington to allow the widespread deployment of renewable energy by rebuilding the nation’s transmission system.
  • Impose a national “renewable portfolio standard” that would mandate that utilities obtain a minimum 10% of their electricity from green sources by 2012 and at least 25% by 2020. Two-thirds of the states currently impose variations of such requirements.
  • Mandate that the federal government – the nation’s single largest consumer of electricity – obtain more energy from renewable sources.
  • Enact a cap-and-trade carbon market.

“If the administration and Congress can quickly implement these policies, renewable energy growth will help turn around the economic decline while at the same time addressing some of our most pressing national security and environmental problems,” the green energy trade groups said in a joint statement.

No doubt those measures are crucial to spurring development of renewable energy and creating green collar jobs. But the major obstacle confronting the alt energy industry right now is the credit crunch that is choking off financing for big wind and solar projects and scaring away investors from more cutting-edge but potentially promising green technologies.

A focus by President Obama and Congress on restoring confidence in the financial system will most likely do the most for green investment as well as restore luster to battered renewable energy stocks like First Solar (FSLR), SunPower (SPWRA) and Suntech (STP).

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Credit crisis shakes up solar land rush

Posted in alternative energy, Ausra, BrightSource Energy, energy, enviro startups, environment, First Solar, PG&E, renewable energy, solar energy, solar power plants, Solel, tagged , , , , , on November 13, 2008| 5 Comments »

Photo: Todd Woody

The land rush to stake prime sites in the Mojave Desert for solar power plants has moved east from California to a state that knows a thing or two about desert dreaming and scheming — Nevada.

When Green Wombat’s story on the solar land rush was published in the July 21 issue of Fortune (see “The Southwest desert’s real estate boom”), solar energy developers, financiers and speculators had filed lease claims on 226,000 acres of federal land in Nevada. Today, 702,000 acres are in play, largely thanks to Goldman Sachs’ aggressive moves to lock up land. The New York investment giant has put claims on about 300,000 acres of Bureau of Land Management dirt in the Silver State — in one week alone, it filed claims on some 187,000 acres.

Given its financial firepower, Goldman’s designs on the desert have been a matter of intense interest. (The firm also has filed claims on 125,000 acres in California.) Goldman (GS) declined to discuss its solar strategy, but a review of BLM documents and interviews with green energy executives sheds some light on its power plans as the financial crisis triggers a shakeout in the solar land rush.

Over the past two years, scores of companies — from Silicon Valley startups to Chevron (CVX) to utility FPL (FPL) — have scrambled to put lease claims on the nation’s best solar real estate to build massive megawatt solar power plants. In California, where utilities face a state mandate to obtain 20% of their electricity from renewable sources by 2010 with a 33% target by 2020, claims have been filed on nearly 1 million acres. If all those solar stations were built, they would generate a staggering 60,000 megawatts of electricity, or nearly twice the power that California currently consumes.

With most of the prime solar hot spots taken in California, the action is moving to sun-drenched states like Nevada where there’s plenty of wide-open desert land. The BLM has yet to issue any leases and is currently evaluating the applications on a first come, served basis. A key consideration: whether the applicant can deploy a viable solar technology.

But with the credit crunch threatening to derail many of those projects, companies are jockeying to score the best sites – those near transmission lines and water – when the weak are weeded out by a failure to obtain financing or a proven solar technology. Some sites have two or three companies queued up in case the first company in line falters.

For its part, Goldman Sachs has brought in its Cogentrix Energy subsidiary to develop its solar projects, according to BLM records.  Cogentrix is a Charlotte, N.C.-based owner and operator of coal and natural gas-fired power plants that Goldman acquired for $2.4 billion in 2003.

“Cogentrix doesn’t have a solar technology,” says Rob Morgan, executive vice president and chief development officer for Silicon Valley solar startup Ausra. He says Ausra, which is building a solar power plant for utility PG&E and itself has staked claims in Arizona and Nevada, has held discussions with Goldman about its solar technology.

European renewable energy companies are also taking advantage of the market turmoil. State and federal records show that Iberdrola Renewables, a spinoff of Spanish energy giant Iberdrola, has quietly acquired a year-old Henderson, Nev., startup called Pacific Solar Investments — and its claims on about 180,000 acres of desert land in Arizona, California and Nevada. Iberdrola Renewables is the world’s largest wind developer.

The saga of Pacific Solar shows how cutthroat the competition for solar real estate has become. Just ask Avi Brenmiller, CEO of Israeli solar power plant company Solel, which last year inked a 553-megawatt deal with PG&E (PCG). Brenmiller now finds himself up against his former COO, David Saul, who set up Pacific Solar and began filing land claims while still working for Solel, according to BLM  records and Brenmiller. During this time, Saul also was making land claims on behalf of a second solar company, IDIT, where he serves as CEO, according to filings with the Arizona Secretary of State’s office.

Five days after leaving Solel in August 2007, Saul filed a claim on a California site, getting second in line behind Goldman but beating his former employer to the punch by a week. Solel is now behind Pacific Solar and IDIT on two other sites. “So he’s now a competitor in the land rush, which is one of the problems we face,” Brenmiller told me ruefully when we met in San Francisco earlier this year.

Saul did not respond to requests for comment. Iberdrola Renewables also did not return requests for comment.

French energy company EDF’s U.S. subsidiary, enXco, meanwhile has been joined in the land rush by Portuguese utility company EDP and Germany’s Solar Millennium. Spanish renewable energy heavyweight Acciona’s name doesn’t appear on any land claims. But the CEO of Acciona’s U.S. solar operations, Dan Kabel, started a company called Bull Frog Green Energy that has filed claims on 56,000 acres in California and Nevada. Kabel did not respond to a request for comment.

Other new players in the desert solar game include U.S. energy giant Sempra (SRE), which wants to lease 11,000 acres in California’s Imperial County for a 500-megawatt photovoltaic power plant. That could be good news for solar cell maker First Solar (FSLR), which is currently building a smaller solar power plant for Sempra in Nevada. Johnson Controls (JCI), the Fortune 100 automotive and power systems conglomerate, has put in a solar land claim in Nevada. Even former hotel magnate Barry Sternlicht, founder of Starwood Hotels & Resorts, wants a piece of the action through his Starwood Energy Group, which has filed claims in Arizona and Nevada to build solar power plants.

SolarReserve, a Santa Monica, Calif-based solar startup backed by Citigroup and Credit Suisse, has BLM land claims in California and Nevada and is also negotiating with smaller companies that staked claims on prime solar power plants with access to the transmission grid.

“We have done deals with three or four applicants in the BLM queue,” SolarReserve chief operating officer Kevin Smith tells Green Wombat. “The smaller companies with land claims are typically speculators who don’t have their own technology.”

Industry insiders say a shakeout in the land rush is inevitable, given the credit crunch and too many companies in the chase for the best solar power plant sites.

“A drawn-out financial crisis will reshape the renewable sector, most likely forcing a wave of consolidation,” says Reese Tisdale, research director for Emerging Energy Research, a Cambridge, Mass., consultant. “If someone holds land and someone holds a technology, maybe there’s a deal out there.”

That’s Ausra’s thinking. With the financial crisis putting the billions of dollars needed to build big solar projects out of reach, the company is repositioning itself as a supplier of solar technology as well as a builder of solar power plants.

“We see our future as being a technology provider,” says Ausra’s Morgan, who says the company has had discussions with various power plant developers. “And hopefully a lot of these developers in the BLM queue will use Ausra technology.”

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