Cleantech

I have long had a respect for GE (NYSE:GE), and how it runs its business. In cleantech, I am very, very jealous. They have made themselves into the company to beat. Whether by plan, luck, or simply applying sound business discipline, GE has made itself into a top 3 global cleantech player no matter happens. And they did it for a fraction of the price, and a lot less risk than anyone in Silicon Valley or the energy sector. Venture capitalists beware, in cleantech, the behemoths have beat you to the punch, have done it cheaper, faster, and with more grit than you realize. (Read an interview with GE's vice president of Ecomagination.)

5 step Cleantech Program by GE

Wind - In 2002, GE bought Enron Wind out of Enron's bankruptcy for about $300 mm, making GE one of the top 5 wind players overnight (it's now well in excess of a billion in revenue). It was their first cleantech steal, right before the wind industry got amazingly tight (and huge).

Power - In 2003, GE acquired one of the leading gas engine manufacturers in Jenbacher, making GE an overnight leader in small, clean power systems, and powering their way into everything from distributed generation to landfill gas markets.

Solar - In 2004, just before the solar boom, GE acquired Astropower, one of the top 5 solar energy companies in the US, for less than $20 million out of bankrupcty, after the company was delisted following accounting irregularities. You cannot even build a single solar manufacturing line for $20 mm. Only the subsequent silicon supply shortages, and a lack of the needed investment in the business and next generation technology kept GE from making a homerun out of it. But despite that, there will never be another steal in solar quite like this.

Water - In 2005, GE acquired one of the largest water technology businesses in the US, Ionics, to complement its previous acqusitions in the water sector. Paying a full price of $1.1 Billion, it virtually guaranteed GE a top 5 position in the reverse osmosis, desalination, and water purification markets going forwrad, right after Ionics was shored up through a merger with Ecolochem.

Ecomagination Brand - Then on the back of these deals, in 2005 GE launched its Ecomagination initiative, and anchored the entire company's image around its new cleantech empire.

That, my friends, is the way you make money in cleantech venture capital. I would venture to guess that GE has made 10x its money, no matter how you spin it. Or put another way, an IPO of the GE cleantech business would be the hottest thing in years.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of Cleantech.org, and a blogger for CNET's Cleantech blog.

I was thinking today, in cleantech we often talk a lot about energy efficiency. Californians often cite that this state has grown its economy for the last 20 years without a significant increase in energy usage per capita, compared to the rest of the country, where GDP per capita goes up, and energy usage goes up just as much. But of course, California has lost much of its manufacturing sector over that same 20 year period, too. Perhaps no coincidence?

But if we wanted to actually do it, where could we actually save energy without impacting GDP growth, make a serious difference in our power bill, and do it in a big way - targeting say, 50% of our total power usage on a per capita basis?

CFLs & LEDs - We are already moving aggressively towards compact flourescent light bulbs, and the penetration rates are still low. As that trend continues, and LEDs come into the mix for more and more applications, our lighting bills should trend straight downward for the next decade. Now if we can just stop cringing at the thought of a $3 lightbulb!

Heating and Air Conditioning - I know whenever my power bill goes higher than I like, I just watch how often I turn the heater on, and adjust the thermoset a bit. The answer here has always been some combination of improved technology, smart metering and more transparency in billing and usage, and energy prices rising high enough for consumers to feel the pinch. Oh, and did I mention insulation, California?

Hotwater heaters - Can anybody say, "tankless"?

Power generation -If every power plant was upgraded to the latest generation of technology - in the power generation world - newer tends to equal more efficient all else being equal - the impact could be staggering. But bottom line, this means our regulators would have to approve the increase in utility capital expenditures and pass those costs on through to us in the short term. That's about as likely as George W announcing a plan to tax every SUV Detroit makes and give the money to the poor to buy solar systems.

Solar - As for solar - which is typically sold on a "reduce your energy bill" pitch, not a chance. At $0.15 to $1.00/kwh (depending on who's counting and how they count), if we actually reduced a significant amount of our building load with solar power we'd likely send our GDP plummeting. There are lots of reasons to love solar, but decreasing energy usage per unit of GDP is not one of them. At least, not yet.

These aren't new ideas. But definitely worth repeating until we learn the lesson.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, Chairman of Cleantech.org and a blogger for CNET's Cleantech blog.

People often ask me what I think of a particular piece of energy-related legislation. Unfortunately, it's usually difficult for me to answer with anywhere near the degree of earnestness in which the question is typically asked.

For instance, this past week, I received inquiries to comment upon the action taken by the U.S. Senate to pass an energy bill. (See Washington Post article.) This is a piece of legislation that includes a tightening (finally!) of the corporate average fuel economy (CAFE) standards for new automobile sales, and a move to phase-out inefficient incandescent light bulbs. However, a long-term extension of the production tax credit for renewable energy and a proposed national renewable energy portfolio standard was dropped at the last minute.

While I do support the energy efficiency provisions of the bill, the abdication of any responsibility for pushing the U.S. towards further adoption of renewable energy for power generation--in the face of compelling needs for economic development, enhanced energy security and reduced carbon emissions that can be provided by renewable energy--is quite galling.

I continue to be astonished that many people must have the naïve belief that the public sector is capable of passing good energy legislation. I wish I could say otherwise, but there's not much historical evidence or precedent to suggest that assumption. It would be wiser for people to ask me whether there's anything positive about a particular energy bill, rather than assuming that the bill is generally favorable and inquiring whether there's anything to be worried about.

This weekend, I finally had the chance to watch the documentary film "Who Killed the Electric Car?" If anyone wonders if (or why) U.S. energy policy is on the wrong track, this would be a good entry point. I was forewarned that I would be angry at the end of the film, but I guess I'm simply too experienced (or jaded, or even cynical) to fall into that trap.

As the old adage says, there are two things you don't want to see being made: policy and sausage. My father was in the pork business, so I've seen sausage being made. With my work in D.C. in the late 1980's and in Columbus in the past 18 months, I've also seen energy policy being made. From being a close witness to both professions, I can assure you that comparing energy policy-makers to sausage-makers is a gross insult to sausage-makers.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

Most Americans now agree that something needs to be done to reduce our greenhouse gas emissions. Hopefully most Americans now appreciate that this is not a small, but even more so, not a simple problem. I am a big believer that the playing field for our low carbon future should start level, and the market should be structured to allow our major power and energy companies a chance to lead the way, instead of simply dishing out punishment for our combined historical choices. Carrots and sticks work well together, but sticks alone are not going to solve our global carbon problem. I think it is also important to ensure that our carbon legislation does not result in a higher cost to consumers in middle America, just because the Midwest happens to have been historically coal fired, than the cost to those of us living on the coasts. Jim Rogers of Duke Energy puts this much more eloquently than I do.

Duke Energy (NYSE:DUK), one of the largest power companies in the U.S., has been a long supporter of energy efficiency, and known for being forward looking when it comes to a low carbon future, smart metering, and advanced energy technologies, despite having a generation fleet that is 70 percent coal fired. Cleantech Blog is delighted to welcome Jim Rogers, CEO of Duke Energy, to give us his thoughts on the devil in the details from their perspective. It is heartening to see a major power company take on the carbon issue full force, and like Duke has done, push energy efficiency in a big way.

- Neal Dikeman, Cleantechblog.com

By Jim Rogers Chairman, President and CEO of Duke Energy

As we debate our differences on how to address the challenge of global climate change, surely we can agree on the end-goal--a secure, sustainable and affordable supply of energy now, and for future generations.

Most Americans also agree that we must act now--and begin building a bridge to an energy-efficient, low-carbon economy.

As the third-largest coal consumer in the United States, and one of the largest greenhouse-gas emitters, Duke Energy has a responsibility to be part of the solution. That means looking at not only how climate change affects our business today, but also the implications for the future.

We support federal legislation to address global climate change by putting a cap-and-trade system in place. The U.S. Senate is in the process of vetting a cap-and-trade bill introduced by Senators Lieberman and Warner in October. This bill is well-intended, contains some good points, and appears to have bipartisan support.

But on closer examination, questions arise. Who really stands to gain, and who stands to lose? What are the real costs to average Americans?

You would expect the bridge to a low-carbon economy to have a cost, just as you might pay a toll to cross any bridge. But should some of us have to pay twice? With the Lieberman/Warner approach, that's exactly what would happen.

Lieberman/Warner proposes to auction a large number of emissions allowances to the highest bidder. In effect, an auction becomes a carbon tax, levied on consumers in the 25 states that depend on coal for electric power--primarily the Midwest, the Great Plains, and the Southeast.

Electric power customers in those regions would have to pay for the auctioned allowances upfront, and then pay again later to upgrade power plants, or build new ones, as carbon-control technologies become available.

A better approach is to allocate allowances at no cost to generators who emit greenhouse gases--and reduce the number of allowances over time, while new carbon-control technologies are being developed and put in place.

Some say that an auction is the only way to take action to reduce emissions, but history tells us otherwise. Allowances were not auctioned under the 1990 Clean Air Act Amendments; nearly 97 percent of them were allocated at no cost. Since then, new technologies to reduce sulfur dioxide and nitrogen oxide emissions have been developed and implemented. Those environmental controls have reduced emissions by more than 40 percent since 1990, and they continue to decrease, without dramatic rate hikes. In fact, the nation's average electric rates have declined.

In contrast, some estimates put the Lieberman/Warner bill's cost to the average family at more than $1,000 per year, while emissions traders would stand to profit greatly from a volatile market for carbon allowances. According to Bloomberg, the Lieberman/Warner bill would create a potential $300 billion annual carbon-trading market by 2020.

So the question comes down to this--are we interested in protecting consumers or enriching emissions traders?

Customers who live in the Midwest, the Great Plains, and the Southeast did not choose to get a large portion of their electricity from coal--it was a matter of economics, geography, and geology. They should not be punished for decisions made decades ago, in good faith, using the best and lowest-cost technology of the time, with regulatory approval--and long before anyone knew about the impact of carbon emissions on climate change.

And before we dismiss coal as a viable energy source for the future, consider this: The U.S. is sitting on more than 250 years of coal reserves, more than any other nation in the world. This rich natural resource has untapped potential for ensuring our country's energy security. The challenge is primarily technological--to find smarter and cleaner ways to use it, such as carbon capture and storage. Until those technologies are available, we must continue to use our existing coal resources and protect the interests of consumers who rely on coal.

The goal for carbon legislation should not be to punish utilities for building coal plants to keep the lights on in the past. It should be to create the incentives to put new clean technologies in place for the future--not just clean coal, but also nuclear and renewable energy, natural gas and the fifth fuel--energy efficiency.

Under the Lieberman/Warner approach, electric power customers in half of our states will carry a disproportionate share of the burden. We need to pass climate legislation that is fair to all consumers and protects the economic interests of all states and regions. Our climate is at stake, and so is our economy. By allocating most allowances, following the precedent set by the successful Clean Air Act, we believe both can be protected.

Jim Rogers is the CEO of Duke Energy, writing as a guest columnist on the Cleantech Blog.

I'm a big fan of solar power. But as with anything, I like to know exactly what I'm getting. One of the big unspoken issues in the solar sector is the difference between the rated or estimated potential output of a solar system--and the actual production of kilowatt-hours. A range of factors from the margin of error in the modules, to temperature, dust and losses from wiring, conversion to AC power and any batteries all can contribute to as much as 30 percent lower actual power production--even in the first year.

Compounding this problem in my mind is that in California only about a third to half of our solar installations are actually independently monitored, according to one of my friends at Fat Spaniel, one of the leading monitors of solar systems.

The California Energy Commission did some good thumbnail analysis of solar in the real world several years ago.

Here's the punch line from their analysis:

"So the '100-watt module' output, reduced by production tolerance, heat, dust, wiring, AC conversion and other losses will translate into about 68 watts of AC power delivered to the house panel during the middle of a clear day (100 watts x 0.95 x 0.89 x 0.93 x 0.95 x 0.90 = 68 watts)." From A Guide to Photovoltaic System Design and Installation (PDF) by the California Energy Commission. If you are interested in solar, you need to read their report.

But this 68 watts is only part of the story. If you have battery storage on the system they say it could reduce the power another 6-10 percent. They then stated that poor installation layout problems--including shading can take an additional toll. Another big issue is the angle of the roof and the direction it faces (in California, where your roof faces can affect the power output up to another 15 percent for many roofs). And interesting enough, for all the talk about making windows out of solar in what is typically described as Building Integrated Photovoltaics (BIPV), a vertical installation can reduce the power output up to about half all by itself!

Their bottom line: if the system is perfectly installed under perfect conditions the best case scenario for San Francisco would be 1,724 kwh, or electricity per year for each kilowatt installed and for Los Angeles would be about 1,758. But that's before all the "real-world" adjustments. When you make all those real-world adjustments--take another 25-30 percent or more off the top, even for a well designed system. This fits with our best San Francisco benchmark, our major 675 kW rooftop solar facility in the San Francisco at Moscone Center, which produces around 1,200 kilowatt-hours per year per rated kilowatt installed.

So when it comes to solar, let's make the right choice for solar power, but make it with our eyes open to the real world.

Is Microsoft Vista global warming friendly? Could Vista be the best-selling clean-tech product in the world? I was thinking about this question the other day, and started e-mailing the Microsoft press relations folks looking for an answer.

The Microsoft answer--yes, it is. They have a recent release titled "Windows Vista Power Management Features Can Help U.K. Companies Reduce Their Carbon Footprint" on some independent research they had done by PC Pro Labs in the U.K.

Here's their quote:

"Windows Vista is Microsoft's most energy efficient operating system to date with its power management system, functionality, reliability and default settings focused on helping to reduce overall PC energy consumption. The key areas where the Sleep mode in Windows Vista has been improved compared to the equivalent Standby mode in Windows XP include:

• Enter Sleep mode after being inactive for 60 minutes
• In Windows Vista, it is much easier for users to change the power management settings themselves
• The Sleep mode is more reliable than Windows XP's Standby mode, both in terms of entering the mode and safely resuming back into Windows
• Windows Vista is much quicker at resuming from Sleep, now taking two to three seconds compared to five seconds for Windows XP."

They also published a white paper titled "Windows Vista Energy Conservation". Reading through it all, Vista does seem to be an energy efficiency masterpiece.

But I wonder--the description of these tests seemed to quite fairly compare the XP and Vista operating systems running through a series of different scenarios--but it's not a survey of real world conditions.

So I'm probably convinced that if you run the same computer post-Vista the exact same way you ran it on XP, that you'd use less power. Vista itself may actually be the best-selling clean-tech product in the world. But in the real world, we don't work that way. Each year we add a whole lot of new features and programs that suck down power, and buy more powerful PCs to run them on with every upgrade. And part of the promise of Vista is to enable even more such goodies--possibly offsetting the energy savings.

So are Windows users who have upgraded to Vista running the same programs in the same way, and the same (or more energy efficient PCs) and therefore using less power? Or are they actually using more or different features, or on a more powerful energy hog PC, and despite Microsoft's energy efficiency efforts, using more power on a daily basis anyway after the upgrade? That might not be something Microsoft could control--but I'm sure curious as to the answer from a carbon standpoint.

As a matter of full disclosure, I run XP at the office, Vista at home, own a small amount of Microsoft stock (and am a very big fan) and have a very bad habit of leaving my computer and monitor on--but I'm working on that.

It's been said before, but can't be said enough. This is not a technology problem. When it comes to fighting global warming, it's the little things we do that will make the difference.

The average American consumer is responsible for about 9-10 tons of carbon emissions per year.

The big three culprits for us consumers: 1) Car miles driven and car size; 2) Power used; 3) Airline miles flown

Here are my favorite little things:

1) When you have the option, drive the family car with the best gas mileage and drive together--no more three-car families driving to church in three separate cars. And my favorite, which I will harp on until the consumer gets it: when you buy that next car, don't worry about the hybrid or no-hybrid decision, just buy one size smaller than you were planning. It IS all about the size.

2) Look to your AC and heating bill--whether it's electric or gas, this is a biggie. Shorter (or colder) showers, adjusting the thermostat (or off during the day while you're gone), washing half your laundry in cold water, and for the love of grief, close the blinds during the day in the summer, and open them in the winter. We can make a difference.

The general rule of thumb is that if you just pay attention to your power bills, you can make small changes that save 10-20 percent.

And 3) When planning who's going where for Christmas and vacation, we now generally factor in price. Why not compare all the trips on carbon, too? Shorter is better, and the fewer of us who have to travel, the better off the planet is.

So why not do it? It's not just energy bills anymore; now it's all about the carbon.

I heard an interesting debate the other day on the topic of cities and skyscrapers. In a nutshell, when it comes to cities and buildings, is taller greener or is smaller better? In other words, should environmentally minded people like or dislike skyscrapers?

The Taller Greeners:
• Building up, rather than out, combats urban sprawl, means more concentration of people, means better for mass transit which equals fewer cars and lower emissions.
• Building bigger means more opportunity to use technologies like distributed generation, advanced energy efficiency, lighting and monitoring, which typically are more economic in larger projects.

The Smaller Betters:
• Smaller means more sustainable buildings and lifestyle, more trees and green space.
• Smaller means more neighborhood connectivity for all of us.
• Taller often means more nonsustainable steel, and lots of AC load, which we could avoid with smaller buildings.
• Smaller means less concrete and steel, which are often associated with the increased temperatures in cities.

Perhaps some of the environmentally friendly buildings in progress in places like Dubai or New York can bridge the debate, and make skyscrapers ultra green and ultra cool.

What do you think?

In the interests of full disclosure, I am writing this blog from the second floor of a skyscraper in my office in downtown San Francisco, and because of the lack of good public transport access where I live, I have to drive in to work every day.

The House of Representatives passed the Energy Bill a few days ago. I was quoted in Red Herring on one area that I think is a huge part of the bill, a federal renewable portfolio standard. Now since the 24 state RPSs have been the main driver behind renewable generation growth like wind - I'd look for this bill to underpin growth in the sector for years.

And anything that drives renewable generation growth will tend to drive a need for more transmission. So chalk up getting our transmission grid in order as a new priority number one (this means we've got to both spend the money, and see government, power, and environmental and community groups working together to make it happen, not slow it down).

Think of it as another interstate highway project. So RPS drives renewables (helping on greenhouse gas emissions). Renewables drives expansion of transmission (if we get out of our own way). And expansion of our transmission grid now will underpin everything we do for the next 50 to 100 years - and full circle becomes a critical pre-condition for many new future solutions that can address global warming from EVs and PHEVs to more renewables.

Which brings me to the climate solution. Increase in CAFE fuel efficiency standards were not really in the House bill, but were in the Senate bill. This bill did address commitment by the government to deal with its own carbon footprint. And as stated, a federal RPS standard will go along way towards helping, too.

But we're still short of a comprehensive climate solution. And our *energy* bill didn't really address either oil consumption, or oil supply (just a rollback of oil company tax breaks guaranteed to drive up pump prices at least in some markets).

So where is the comprehensive energy solution, OR climate solution?

But maybe it doesn't matter, because apparently the threat of a presidential veto hangs over this bill.