Category: News

Is it a bail-out or a build-up? That’s the question being put to federal lawmakers right now as they try to grapple with the nation’s economic woes and with how to allocate its depleting resources.

President-elect Barack Obama says that while his administration will insist on financial prudence, it must address the current recession head-on. In January, he is expected to introduce an economic stimulus package that is reported to be in the $500 billion range. An estimated $15 billion would be targeted toward green energy initiatives to create or preserve millions of jobs.

To skeptics, it sounds like a giant make-work program — one that would spend billions on rebuilding the nation’s infrastructure and create a massive budget shortfall in the process. But to the president-elect and most Democrats, it is a necessary step to not just avoid falling off the precipice but to also generate the next-generation of jobs and those predicated on the green economy.

“My presidency will mark a new chapter in America’s leadership on climate change that will strengthen our security and create millions of new jobs in the process,” Obama said in a video. “We will invest in solar power, wind power, and next generation bio-fuels. We will tap nuclear power, while making sure it’s safe. And we will develop clean coal technologies.”

News stories are replete with inside scoops on where else the billions would be channeled. Pouring money into the smart grid is one place while weatherization programs that seek to make homes more energy efficient is another. Meanwhile, mass transit groups say that they have at least $8 billion in projects ready to go.

Obama said on numerous campaign stops that addressing global warming would become a national priority under his administration. To reduce the associated heat trapping emissions, a cap-and-trade program would be implemented. Under such a regime, the government would set emissions limits and then auction “credits” to those companies unable to meet the thresholds. That money — pegged at $150 billion — would then go to the creation of green energy technologies.

But many of his comments were made prior to economy’s precipitous fall in October. At that point, American industry became more concerned with weathering the storm than investing in expensive technologies. The incoming administration has subsequently acknowledged that its attention must focus initially on getting the economy healthy and secondarily on reducing greenhouse gas emissions to 80 percent below 1990 levels by 2050 — the amount that some climate scientists said is necessary to avoid catastrophic consequences. Hence, the nation’s budget deficit will expand in the short run.

“The primary focus of the new administration will be on improving the conditions of the domestic economy, which makes energy policy a secondary concern,” says Andrew Watt, managing director of Standard & Poor’s Ratings Services. “Moreover, funding of the plan will be problematic in this deteriorating economy that has also seen a rapid decline in crude oil and natural gas prices.”

New Possibilities

Needless-to-say, the rejuvenation of the economy and the creation of clean technology jobs dovetail with one another. And with billions about to be doled out for those purposes, energy-related interest groups are converging on Washington.

The Western Governor’s Association, which is a non-partisan group representing 19 states, just penned a letter to President-elect Obama that says energy efficiency and the development of alternative fuel sources must become a main concern. That’s because the U.S. Energy Information Administration projects that by 2030 the domestic demand for electricity will rise by at least 20 percent while the demand for petroleum and other liquid fuels will increase by 10 percent.

The ultimate goal is a low-carbon society. As such, the effort will require bi-partisan and public-private partnerships to build more wind, solar, geothermal, biomass and hydro facilities, the governors say. At the same time, they caution the new administration not to neglect traditional fuel sources that are prevalent today.

“There is no getting around it — if we want to ‘keep the lights on’ in America, we are going to need to build new base-load power plants, erect new high-voltage transmission lines, and increase our production of all forms of American energy,” adds Colorado State Senator Bill Cadman, a Republican. “Modernizing our energy infrastructure is critical to our security, and that means taking immediate action. The new Congress and President-elect Obama have a great opportunity to get it right this year.”

Obama understands that crafting energy policy is an urgent but delicate matter. The sheer complexity means that he must prioritize his time and efforts. And he’s made it clear that the promotion of green energy and next generation jobs will garner his attention.

While government may provide stimulus packages and safety nets during these hard times, it will be the private sector that finishes the job. For their part, many utilities are waiting until conditions improve. Others, though, are searching for new possibilities that involve investing in new forms of generation to meet tomorrow’s needs.

“We believe there remains significant investment opportunities for the industry to implement public energy policy as renewable energy resources are built and smart grid technology is evaluated and deployed,” says David Parker, a utility analyst with Baird & Co. “There remains opportunity to develop a more efficient generating fleet as older generating resources are retired and replaced with more advanced technologies.”

The federal government is leveraging its goodwill. But its current and future involvement are meant to resurrect the ailing economy and to create the foundation for a green energy uprising. It’s an issue that gets to the heart of Obama’s platform and one that will not just determine his political success but also the nation’s economic and energy futures.

From Solid State Technology

A panel discussion at Thin Film Solar Summit (San Francisco, CA, Dec. 2-3) gave attendees a dose of reality: financing in the world of thin-film PV isn’t a short-term play. The reality, according to Neal Dikeman, partner with VC firm Jane Capital Partners, is that only one or two thin-film projects have brought product to market in 30 years, and it’s a $100M-$200M dollar up-front investment “just to play the game and see if your product really works.”

Silicon Valley investors have mistakenly bet on “really great teams” while the technology is still at a science experiment stage, he argues — investors are beginning to realize this, he thinks, and that the industry is sitting on the back end of about 5-10 years of $100M bets. “We’re going to see a bunch of write-offs coming up,” he warns.

The challenge that has caught startups in this sector time and time again, Dikeman explained, is underestimating the engineering scale-up and production on a tens-of-MW scale. “People always assumed that if the technology worked and the team was good, that the rest was just engineering…and so far, that has never proven to be the case,” he observed, noting that there have been several hundred (thin film) companies that have tried and only two succeeded. “The challenge has been that the engineering scale-up has been much harder than the science experiment.” Citing the “black art” aspect to thin-film projects, he observed that for factories in the 30MW-40MW range, what matters is getting the same yields, distributions, and performance out of the second plant as was achieved in the first. “You can take the same people, same technology, same equipment, same materials, and you’ll get something different between the two plants,” he said. “I don’t think that’s changed.”

Lest he dash the hopes of conference attendees, Dikeman acknowledged that while thin-film PV technology has to come down the cost curve, it is the only hope for making solar more than a niche subsidized business. “We have to deliver $1/Watt at the module level, not the cell level, in order for anyone downstream to have a serious business,” he urged. “Otherwise, we’ll be living off the investment tax credits and rebates over the next few years.”

But don’t hold out hope for a disruptive technology to solve the cost-curve challenge. “There is no disruptive technology in energy, only disruptive policies that make certain technologies look disruptive after the fact,” Dikeman told the audience. He believes that the big cost-changing improvements that will come in the next few years will be manufacturing process improvements, and he’s excited by the entrance of companies such as Oerlikon and Applied Materials, as well as some of the large semiconductor manufacturers. “We need [that] manufacturing scale,” he said.

At the end of the line — what model works?

Analysts at the summit also tackled the question of how utilities will drive the PV industry, and how some clear trends will benefit the industry. “The one technology that the American consumer wants to buy is solar; it’s a ready market,” said Bill Roth, green business coach for Entrepreneur.com and president of NCCT, “but the one thing standing in their way is sticker shock.” So it’s crucial to help move the transaction to the point where these consumers who wants to say “yes” can close, and Roth noted that an integrated model will enable the purchase to take place. He offered up as an example other commodity providers of energy, such as the oil companies, that are vertically integrated. “While the technology and science are critically important and they have to work, integration enables the purchase,” he explained.

Dikeman countered that the PV industry hasn’t been able to figure out exactly the overhead and operating cost of a distributed utility over a wide range of contracts. “It is very unclear to me what the fully loaded cost of solar is at any kind of scale being distributed,” he said. “There are no very large fleets out there from which you can get data, and a lot of costs are hidden due to subsidies and tax equity.”

However, Dikeman noted that Japan was always reasonably vertically integrated, and he’s waiting for vertical integration to come to the US and Europe. For a hundred years in the energy business, the money has been made upstream from owning the asset/the resource — so, solar on a serious scale means owning a piece of very sunny land next to water and right next to a transmission line and a load, he observed. “The guy who owns the land with the best resource is the one that makes the money,” said Dikeman. “Everything else will be commoditized. The person owning the land with the best resources will make the most money.” — D.V.

After its meteoric rise as a major ag industry and world corn price lifter, US ethanol production is experiencing some tough times, according to Jim Jenkins, a cattleman, restaurateur and chairman of the Nebraska Ethanol Board.

While some US ethanol plants are experiencing economic hardships, many plants are still profitable, Mr Jenkins told a Nebraska Farmers Union members convention.

“Every industry, especially those that grow fast, faces some bumps,” he says

Citing a Merrill Lynch analyst, Mr Jenkins says, “Without ethanol in the motor fuels market, gasoline prices would have been about 15pc higher, for most of 2008.”

Nebraska has 22 ethanol plants with a capacity to produce about 1.6 billion gallons of ethanol, Mr Jenkins says.

Ethanol is already a $3-billion a year segment of the Nebraska ag industry, which places it third, behind cattle ($7 billion) and corn ($3-4 billion)

Another speaker, National Farmers Union President Tom Buis, said that ethanol’s detractors blamed corn alcohol for price rises in many products, even products such as beer and toothpaste which don’t contain any corn.

“It’s a public relations war,” he says.

When he was in Washington last summer, a local bagel shop made a big deal about having to raise the cost of a bagel 35 cents—even though there’s just 7 cents of wheat in a bagel.

Wheat prices are now much lower, but bagels stay at the new higher price

Now that energy prices are lower, Mr Buis worries that the fickle American public, and their elected leaders, will slack off on their call for greater energy independence.

Biofuels, solar, wind and geothermal energy need continued support, or the next energy crisis could be more painful than past difficulties

“Congress has failed the American people on energy,” says Rep. Adrian Smith of Gering.

“We need it all – bioenergy, wind, solar, hydro.

“I’m afraid $1.50 gas in the US will push energy aside.”

Mr Smith says the 2008 Farm Bill leaves a lot to be desired, but it took a lot of effort by pro-agriculture members of Congress to obtain for farmers as much protection as they did in the legislation.