/* Google Analytics */

Friday, February 25, 2011

Thank you, Mr. President

The retired POTUS on Thursday voiced his own concerns about the effect corn-based ethanol is having on food prices and political stability in the developing world. As the AP reported:
WASHINGTON (AP) — Former President Bill Clinton on Thursday warned farmers that using too much corn for ethanol fuel could lead to higher food prices and riots in poor countries.

He said the United States needs to look at the long term, global effects of its farm policy.

“I think the best thing to say is we have to become energy independent, but we don't want to do it at the cost of food riots,” Clinton said.
In doing so, he was somewhat less decisive than his vice president, Al Gore. (Perhaps Bill’s wife still expects to run for president in Iowa some day.) Still, this is moderating his position clearly in support of ethanol three years ago, as expressed in his book, Giving.

Despite this equivocation, corn ethanol’s most adamant opponent, the Wall Street Journal, offered rare praise for the former president:
America's political addiction to ethanol has consequences, from raising the price of food to lining the pockets of companies like Archer Daniels Midland. So we're delighted to see another prominent booster—Bill Clinton—see the fright.
Actually, the effect of American ethanol consumption on overseas food riots was noted last month by critics on both the left and right, tied to UN statistics showing skyrocketing food prices to record highs over the past six months. The pressure and evidence have been building ever since.

A Princeton researcher, Tim Searchinger, published a thoughtful commentary in the Washington Post two weeks ago, which was followed up by articles in Time and a scathing editorial in the Chicago Tribune entitled “Burning Dinner.” The rebuttal to Searchinger (a former EDF activist) was to call him a “Gasoline Whore.”

While the unrest in the Middle East is new, the opposition to shifting food for use in fuel is not, as 2007 articles in Business Week and Technology Review make clear.

What’s changed in the last four years has been an increasingly wide range of biofuels that can provide a greater quantity of fuel without this impact on food prices. (Some of these alternatives would be very good for California.) Overseas food riots have raised the urgency enough to spark interest in ethanol alternatives across a wide political spectrum.

Given this elevated level of discourse, the time has come for Energy Secretary Steven Chu to re-emphasize that corn-based biofuels are only “a transitional crop” and for the budget-cutting Congress to start the phaseout of subsidies for them. The country has less than a year to forge a new national consensus before the 2012 presidential election prompts a new round of farm state pandering.

Friday, February 18, 2011

Wind: commodity prices, commodity pressures

Last year was not a good year for Denmark’s Vesta, the world’s largest manufacturer of wind turbines. Like the German PV companies, it grew its business based on home country government support, but like the PV companies is facing tougher competition in the global marketplace.

In 2009, publicly traded Vesta announced layoffs of 1900 workers, and last October axed 3000 more, closing four factories.

Now Renewable Energy World has a 2,500 word profile that’s supposed to be an upbeat update on the company’s fortunes, but to me sounds like more bad news. Europe faces overcapacity and 2010 sales were down because government buyers realized they’re broke. The industry’s trade association says their only hope is more aggressive GHG reduction mandates by EU governments.

At the same time, uncertainty in the US — the world’s largest installed base — is increasing.

Meanwhile, the article notes that Vesta faces increasing competition from Europe (Spain's Gamesa, Germany’s Siemens) and the US (GE) which are offering improved products and increasing European production.

If that’s not enough, Vesta — like the German PV companies — faces increasing competition from low cost producers in China and elsewhere in Asia. The money quote of the paper:
"You could say we have been too optimistic for too long," Ditlev Engel, chief executive of Vestas said last October as the company cut its workforce by 15%. He later qualified these words, saying it was right to study the markets before taking "tough decisions" to close four production units in Denmark and another in Sweden, but it was inevitable this phrase would make headlines, sending shockwaves across the industry.

Vestas' move was in response to shifting fortunes, and shifting global markets. "If you can make a turbine in Asia and deliver it to Europe at a comparable price to making it in Europe, we have a problem," said Engel. "So we have to make sure we can always compete with what we call 'Asia plus freight'."
In the comments section, one reader wrote:
He said it all in the beginning...
"Asia + shipping"
The wind folks like to think they’re a tech industry (not really) or a growth industry (depends entirely on subsidies and mandates). The reality is that they make equipment for producing commodity electrons, which makes theirs a commodity industry as well.

Wednesday, February 16, 2011

Thin film on thin ice

Solyndra’s well-publicized annus horribilis was usually explained as being specific to the company: their technology didn’t improve quickly enough, they didn’t execute, they weren’t able to scale commensurate with their sizable capitalization.

Others see it as part of a broader problem of Silicon Valley’s cleantech infatuation, in particular the inability of high-cost American firms to use technology to compete with low-cost Chinese rivals to produce commodity electrons. I think the jury is still out on that point.

A clearer picture is the failure of the thin film experiment. (FirstSolar excepted.) Cheap low-efficiency thin film panels are losing to cheap average efficiency crystalline silicon panel, as the volumes of cSI drives ongoing cost reductions.

DowJones has an (apparently exclusive) report about a cramdown for MiaSolĂ©, the Santa Clara-based maker of CIGS thin film panels. According to DJ’s sources, the $100+m Series F round closed with a pre-money valuation of $550 million, versus $1.2 billion three years earlier.

The article identifies a pattern of troubles for similar companies. Companies seeking a valuation above $350m will find few takers. The price of panels has plummeted since 2008, in part because the temporary spike in polysilicon materials has passed. However, the biggest problem seems to be economies of scale — or lack thereof — in a commodity industry where cost savings are driven by scale.

Although MiaSolĂ© has achieved enviable efficiency for a thin film maker — planning to ship panels with a 13% efficiency later this year — the company and its technology are fighting the scale economies of its mainstream rivals. Or as the final paragraph put it,
By moving into efficiencies in the mid-teens, the company is beginning to compete directly with polysilicon-based modules. But the small scale of production means that costs are still high. Miasole's 22 MW last year is a drop in the global photovoltaics market that was around 18 gigawatts last year, according to Barclays Capital.
I can see one other problem for the go-it-alone, technology-based Silicon Valley thin film startups: there’s no exit strategy.

Companies with capacity aligned to the mainstream silicon market can merge and combine with other companies to increase their scale economies. But the firms building their own processes and technologies and production have no potential mate — and with falling valuations, no IPO options either.

Once the world’s leading solar manufacturer by volume, in 2010 First Solar may have slipped behind China’s Suntech to become number two, but it’s still the first company to ship more than a gigawatt of capacity in two consecutive years. That makes it the only thin film maker to achieve scale on its own, and the latest news continues to suggest that its US rivals will be hard pressed to match that scale.

Monday, February 7, 2011

All biofuels not created equal

Efforts to replace fossil fuels with renewable energy are proceeding on two parallel tracks. Solar, wind and other technologies are being deployed to generate grid-connected electricity (instead of coal or natural gas) while biofuels are being developed to replace petroleum-based transportation fuels.

In addition to concerns about (net) greenhouse gas emissions, biofuels have also attracted support from those who want to reduce U.S. imports of foreign oil.

Biofuels are thus one of the major research areas of the U.S. Department of Energy and its National Renewable Energy Laboratory. A 2006 NREL brochure summarizes the various alternatives.

Two major types of biofuels are being developed — alcohol and biodiesel — to replace petroleum-based gasoline and diesel respectively. (For safety reasons, efforts to test jet fuel replacements have so far used blends of regular jet fuel and biodiesel.)

While next-generation alcohol fuels are under development, the current generation fuels are mainly ethanol. The most widely used (and most controversial) biofuel in the US is corn-based ethanol, which is sold today at many gas stations as a 10% (soon 15%) blend with conventional gasoline.

Ethanol is a grain-based alcohol that has numerous disadvantages when compared to gasoline. It has lower heat content, is miscible with water and highly corrosive. However, for more than a decade, some “FlexFuel” cars have been designed to run with (and resist corrosion from) E85, i.e. 85% ethanol. My 2000 Ford pickup says it is compatible with E85, although I’ve never seen it for sale here in California.

Corn-based ethanol also poses economic challenges. After the U.S., the second largest producer of ethanol is Brazil, which refines its ethanol from sugar cane. Brazil’s ethanol industry is pushing for trade sanctions against the U.S. over our net 99¢ subsidy for use of domestic over imported ethanol. Because ethanol consumes one-third to 40% of American corn, some also blame it for the recent increase in food prices.

Cellulosic ethanol offers a way to overcome these food vs. fuel problems, because it uses crop residue, grasses and other organic material that do not require prime farmland. However, these feedstocks pose greater technological problems in processing to produce fermentable sugars. To overcome these challenges, cellulosic ethanol is attracting hundreds of millions of dollars in government and industry investment to develop commercial-scale bioprocessing facilities.

Broadly, there are also two categories of feedstocks for biodiesel. One category includes the existing oilseed crops — such as canola, jatropha or palm oil — which were used in some of the earliest bio-jet fuel experiments two years ago. Indigenous to the Sonoran Desert, varieties of jatropha have become a popular fuelstock for growing in arid areas such as the U.S. Southwest, Africa or India.

The second category of biodiesels are algal biofuels. Microalgae can be grown in non-arable land — or even saline or brackish water — and produce a higher concentration of oil than more the complex oilseed plants. They also can be genetically engineered (or selected) for characteristics best suited for fuel production.

Both forms of biodiesel still require manufacturing process improvements necessary to build commercial refineries of scale and efficiency comparable to decades-old petroleum-based technologies. The microalgae approach also requires additional research into developing (or screening) and then cultivating the most suitable strains.

In California, San Diego has become the state’s (if not the nation’s) hub for algae-based biofuels, with two major firms as well as the San Diego Center for Algae Biotechnology, a large university-industry research center headquartered at UCSD. Venture investors, the Federal government, and even oil companies like ExxonMobil have bet heavily on the future prospects for algal biofuels.

Wednesday, February 2, 2011

Smart Grid: a primer

So far I've been to one Smart Grid event and read only a few articles that were at all useful. All of the best stuff has been from the IEEE Power and Energy Society, which not surprisingly has a major emphasis on educating society about plans for a 21st century distribution system.

For those not up to speed, there is a good primer in the IEEE December newsletter, The Institute, which I get as an IEEE member. (At the end of the semester I get behind on my mail and journals, so I just caught up today.)

Here are a couple of opening paragraphs from the article:
The electricity grid is made up of four main components: generation, transmission, distribution, and customers. Generation refers to the production of electricity from sources of energy, such as coal and natural gas. The transmission system carries the electric power from the generators over long distances to a distribution system, which brings the power to the customers. Distribution systems can include power stations of their own.

Developing countries often have antiquated systems. But even more modern systems, which in a developed country such as the United States can be 50 years old or more, are typically inefficient, unreliable, polluting, incompatible with renewable energy sources, and vulnerable to cyberattack.
It’s a little rah-rah on the technology, but then what do you expect from a bunch of engineers? At least — unlike GE or PG&E or SDG&E — it’s not peddling a specific product or service.

The Department of Energy has a website and a 2008 report that seem even more rah-rah. The latter is a propaganda piece worthy of a political campaign (or lobbying for increased appropriations) rather than a textbook or scientific article.

Still, the smart grid issues are essential for instituting distributed generation with unpredictable interruptions such as residential rooftop solar and small scale wind. So even if smart grid is not an RE fight, it’s one that RE depends on.