Why Smaller Venture Funds Do Better

Guest Blog - Max Branzburg, Clean Pacific Ventures

Despite cries to the contrary, the venture capital industry is not broken. The poor performance over the past decade leading critics to write VC off as “fun while it lasted” has been driven by an isolated segment of the industry: large funds. The red flags are ubiquitous, but LPs today insist on investing in underperforming, oversized funds. Small VC funds – as they have throughout the industry’s existence – continue to deliver superior returns to their investors. The successful small-fund model has been readopted by some VCs, but too many LPs, VCs, and entrepreneurs remain unaware of its historically exceptional performance and its present advantages.

Today’s best-known top tier VCs – Kleiner Perkins, Accel, Sequoia, Venrock – began their careers with double- and single-digit fund sizes (Gupta, Done Deals). Limited partners – impressed by those funds’ returns – sought to invest more in the asset class, and fund sizes grew. The average venture fund grew from $54M in the 1980s to $95M in the 1990s and to $180 in the 2000s. Today, there are more than 400 funds of $250M or more (Thomson Reuters). Limited partners – perhaps ignorant of discrepancies in fund performances – have driven up demand for large funds, and VCs have happily complied, earning hefty management fees on excessively large pools of capital.

Excluding Internet bubble-effected funds, the historical increase in fund size has been accompanied by a highly correlated decline in returns.

Figure 1: Historical VC performance as a function of fund size (funds raised in 1990s excluded)

While exogenous factors may have played a role in the asset class’s decaying performance, a closer look reveals that a shifting dynamic within the VC industry towards large funds is a leading culprit.

By recognizing the important differences between small-fund ($50M - $150M) and large-fund (>$150M) investment patterns, we can better discern which segment of the venture industry is broken. As it turns out, only 7% of the large funds raised between 1981 and 2003 achieved returns for their investors at or greater than 3x. By contrast, 24% of the small funds raised during that time achieved >3x returns. More than three times as many small funds as large funds achieved those successful multiples. Four times as many small funds as large funds achieved multiples at or greater than 5x (Preqin, as reported by SVB Capital). The portion of returns achieved by each fund size from 1981 to 2003 is shown below:

Figure 2: Distribution of VC performance by fund size (data from Preqin, as reported by SVB Capital; chart by author)

As large funds become more common, the advantages of the small-fund model become more overt. Smaller funds – like those upon which the industry was initially built – are inherently better positioned to achieve superior returns. Some reasons why:

1. Smaller exits can return the fund

The smallest “large fund” ($150M) that owns 10% of its portfolio companies and charges 20% carry must generate $5.4B of market cap to achieve a 3x fund-level net return.

If that portfolio includes 10 companies, each company must generate, on average, $540M. Consider that from 2000 to 2008, 83% of the venture-backed exits were M&As, at an average valuation of $110M (the 17% of exits that were IPOs averaged $407.1M). Every portfolio would need to be populated by a handful of YouTubes and Facebooks to make the math work.

Smaller funds make more capital efficient deals, own larger equity stakes, and are able to return their funds with more modest exits.

2. GPs profit by performing

A typical $500M fund charging 2% management fees earns $10M/year before making a single deal. Carry from a couple of successful exits might sweeten the pot, but management fees already do significantly more than just keep the lights on for large funds.

Smaller funds cannot survive on 2% management fees; their livelihood depends upon making good deals and taking a piece of what is returned to the investor. Their incentives are better aligned with those of their LPs, and exceptional performance is the mutual goal.

3. Specialized sector knowledge

Smaller funds tend to focus on particular industry sectors. A small cleantech fund might have 3 GPs with expertise in 6 different cleantech segments. A larger fund is less likely to have multiple GPs with similar or overlapping specialties and, consequently, more likely to make bad deals. Small, sector-focused funds can make better investment decisions and add more value as board members.

4. Flexible follow-on financing

Large funds like to control the financing of the companies they invest in. One way to attain control is to seed a company alone, essentially taking that company off the market for future financing rounds. Large funds may also make small (proportionate to the fund) investments in the seed round within a syndicate led by another firm, and – as a company matures – add much more capital, thus taking a much larger equity stake. By getting involved early, they essentially buy an option to load up on equity later. LPs can consult historical performance data to discover that this strategy has not given large funds an advantage over small funds.

Small funds are happy (and well-positioned) to lead deals, but they tend to invest alongside other funds, and they offer market valuations. The ensuing flexibility is highly desirable by entrepreneurs. Capital efficient companies can avoid the “load up” problem; by requiring less capital, they are less susceptible to large funds’ equity-grab.

The recent increase in fund sizes is likely attributable to an information lag in the wake of the Internet bubble, and we should expect funds to downsize as historical performance discrepancies become evident. While the advantages of the small-fund model seem especially applicable to the clean technology sector (in which too many companies are capital inefficient), a dearth of realized returns leaves LPs unsure of how to allocate their funds. Many of the most visible clean technologies require significant capital to reach profitability and do not fit into the venture model; those technologies will play an important role in our future, but they will not offer high quality venture performance. It seems clear that small cleantech funds are better situated to deliver exceptional returns to their investors.

Max Branzburg is an Analyst at Clean Pacific Ventures, a pure play venture capital fund focused on capital efficient cleantech companies.

Solar Energy’s 33 Percent Annual Growth will Accelerate

By John Addison (7/26/10)

Solar energy growth continues its strong growth. For the 30 years from 1979 to 2009, solar energy has grown 33 % CAGR (compound average growth rate). For this decade, over 40 percent is forecast. Although 2009 was hurt by a sever recession and difficulty in financing large projects, most additional power brought online in the United States, Europe, and much of Asia was renewables. 32 GW of solar power is installed globally; 7.2 GW was installed last year.

Yes, it is discouraging that U.S. electricity generation is dominated by coal and natural gas, and 97 percent of our transportation is from petroleum. The U.S. continues to spend over a trillion dollars of tax payer money each year subsidizing fossil fuels, covering health bills from pollution, and fighting wars to secure our oil supply. We suffer from our policies that support flattening mountains for coal, dangerously drilling our oceans for oil, and expanding highways instead of public transportation. Yet help is on the way as renewable energy continues to cleanly power more homes, workplaces, and rail transit. Public Transportation Renewable Energy Report

I joined 2,500 conference attendees at Intersolar North America, a premier exhibition for solar professionals. The co-located Intersolar North America and SEMICON West events, which took place this week in San Francisco, presented over 700 solar exhibitors to more than 20,000 trade visitors.

The exhibition took place at the Moscone Center, LEED certified conference center with 675 kW of solar on the roof (yes, I climbed on the roof and saw the acres of Sanyo and Shell solar panels). Equally impressive is the 80% improvement in energy efficient lighting at the conference center.

The Future is Europe buying U.S. innovation manufactured in Asia

Germany leads the world in buying most of each year’s solar production. German businesses and homeowners make money installing solar and then selling excess kilowatts with guaranteed feed-in tariffs (FIT). Although Germany is now reducing FIT rates, the cost of installing solar is dropping even faster. Germany will continue to lead in adding solar. With help from Italy and other countries, Europe will buy over 80% of solar PV in 2010. Only 6% of solar will be installed in the U.S., even though we have enough sunlight to power the entire nation.

An excellent summary of the solar market is Renewable Energy World’s Solar PV Market Analysis by Paula Mints, Navigant Consulting.

U.S. innovation has been a key driver for solar. First Solar’s CdTe thin film has brought manufacturing cost below $1.00 per watt. SunPower has achieved record 24% commercial efficiency. Key inventions of PV and semiconductors are from the U.S. Innovation continues everywhere from universities to venture backed start-ups. Optimistic presenters predicted that their technology would reach 50 cents per watt to make. Balance of system and installation costs could double or triple that number. A major issue for start-ups is difficulty in getting projects financed. Risk aversive lenders often prefer established companies who can back 20-year warranties, to start-ups with the perceived risk of staying in business 20 months. Installed PV is expected to drop from around $3 per watt today to $2 per watt in 2014.

Despite all the innovation taking place in the U.S., it is less expensive to manufacture in Asia. Navigant estimated that 77% of solar PV is made in Asia; only 5% in the U.S. Asia’s lead is likely to grow, with companies with integrated supply chains like Suntech and Sharp playing major roles.

PV growth is likely to be over 40% annually this decade. Solar is now 100X less than in the 1970s. The learning curve continues with costs falling 20% each time volume doubles. Industry leaders are squeezing out costs in everything from panels to paperwork, from inverters to mounting. Now, 95% of PV is grid connected, by 2014 it will be 97 to 99%.

By 2015, several researchers expect thin-film solar to reach about 30% of the market, but they expect silicon to continue to dominate. c-SI costs more per watt to make, but it is less expensive to install. Importantly, more efficient SI takes less space on roofs and in open areas. GTM also offers free summaries of a number of excellent solar research reports about silicon and thin-film PV. http://www.gtmresearch.com/list

Solar Growth Accelerates in Middle Markets

Several conference presenters examined the solar market in 4 categories:

• Residential <>
• C&I (commercial, industrial) 100 kW to 2MW
• Utility DG (distributed e.g. commercial rooftops) 500 kW to 20 MW
• Utility CG (central) > 20MW

Several forecast that the highest U.S. growth in the middle categories of 100 kW to 20 MW. These segments appeal to electric utilities that face RPS requirements in 30 states. Commercial distributed solar is often well matched with the location of electricity demand, minimizing transmission and distribution investment. Transit operators including LA Metro, New Jersey Transit, and MARTA are among the dozens of agencies heavily investing in solar in the 100kW to MW category. Public Transportation Renewable Energy Report

Smaller residential solar in the U.S. has been seriously injured by the wonderful companies in the middle of the recent mortgage crisis, namely Fannie Mae and Freddie Mac, who have stopped city PACE programs around the country that made residential solar affordable. If you want to laugh or cry about how the U.S. is giving the solar industry to Asia, take a look at PACE NOW.

Utilities will also continue to invest in large scale solar PV and concentrating solar power. In much of the U.S. large solar cannot compete with large-scale wind. There is 20 times as much wind power installed in the U.S. Utility-scale projects also face years of delays due to NIMBY (not-in-my-backyard) opposition to the renewable projects and the high-voltage lines needed to transmit power to major residential and industrial centers.

Intersolar Exhibitions and Conferences will take place in several locations over the next 12 months and return to San Francisco next July. In 2011, we are likely to see that solar grew strongly from rooftops to utility scale projects.

Truly impressive is solar energy’s decades of growth that exceeds 30 percent annually. Efficiency continues to improve and cost continues to fall. Energy is more secure as generation moves closer to consumption in homes, commercial centers, and transportation.

By John Addison. Publisher of the Clean Fleet Report and conference speaker.

Resource Recovery from wastewater - the new paradigm

Everywhere you look people are trying to do more with less. Reduce costs, increase efficiency, reduce energy use, recover resources. There are strong economic drivers to do all of these things, they also happen to be sustainable.

Keeping Cool

Richard T. Stuebi

As pretty much everyone knows, it's been a hot summer -- here in the Northeastern U.S. and across the globe -- as 2010 is shaping up to be the hottest year on record. This weekend was brutally so, and to capitalize on it, the Plain-Dealer here in Cleveland ran a couple of articles on air conditioning in yesterday's paper.

The more interesting article (which obviously was syndicated nationally, as here is the version from the Los Angeles Times) was a piece by Stan Cox entitled "AC: It's Not as Cool as You Think". Cox is promoting his new book Losing Our Cool, which profiles the utterly pivotal role of air conditioning in shaping today's world.

Cox points out some staggering numbers. Only 50 years ago, just 12% of U.S. homes were air conditioned; today, that's up to 85%. Of course, AC enabled the massive migration from the U.S. Northeast to the South and the Southwest -- which would be pretty uninhabitable without air conditioning -- and the development of suburbs and commuting patterns that will prevail for a long time to come. According to statistics cited by Cox, air conditioning in the U.S. is responsible for half a billion metric tons of carbon emissions annually -- more than the total emissions of Australia, France, Brazil or Indonesia.

To the extent there's good news here, it's that substantial opportunities exist for improving air conditioning technologies. For instance, geothermal heat pump systems have long been proven to be a far more efficient method of cooling buildings than conventional AC -- if only more architects, engineers and building owners would become aware of this option and consider making a modest additional investment to reduce their future energy bills. And, as noted in the article "Keeping Cool and Green" in the July 17 issue of the Economist, a plethora of innovative approaches on the drawing board promise the potential for further reducing energy consumption requirements associated with air conditioning.

Given that about 40% of U.S. energy requirements are associated with buildings, and about 40% of building energy consumption is associated with climate control, it behooves us to get much more serious about getting cool. Especially if climate change over the next few decades makes summers like this one seem mild.

Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

GE Bets 10 Billion on Digital Energy

By John Addison

GE Smart Charging Stations for Electric Cars

General Electric intends to be the leader in smart grid charging of electric vehicles. GE’s Watt Station EV Charger was personally unveiled today by CEO Jeff Immelt. Globally, GE already helps thousands of electric utilities be more efficient in generating power and in distributing power. With a growing family of smart grid solutions including smart charging of vehicles, GE will help utilities lead in the intelligent generation, management, distribution, and use of energy. Mr. Immelt refers to this as Digital Energy.

After attending the presentation by Jeff Immelt and other luminaries, I was able to talk with Michael Mahan, GE’s Global Product Manager of EVSE.

The GE Watt Station is the first in a family of vehicle smart charging products and services from GE. It will be piloted this year at commercial sites and universities such as Purdue and the University of California San Diego. Within a couple of months we will see the announcement of a GE home plug-in car charger. These products will be made available commercially in 2011 simultaneously in all markets including the Americas, Europe, and Asia.

Although GE’s press release positioned the Watt Station as having a faster charging rate than some competitive offerings, this Level 2 220 volt / 32 amp smart charger delivers electrons at the same speed as other Level 2 chargers such as Coulomb Technologies, Aerovironment, and Ecotality. These competitors have the early lead in installing 15,000 charging stations in the United States. GE is taking a fast-follower strategy with the intent of being the market leader.
The Watt Station complies with J1772 smart charging standards. Its attractive design will appeal to consumers, with a simply friendly interface and retractable cord protected inside the supporting pole. The Watt Station is modular and upgradeable. It can be purchased with an optional credit card reader, or that can be added later. Watt Stations also have optional smart suite communications to utilize smart metering and wireless AMI.

Where GE does have competitive advantage is in its long-term relationship with utilities, its family of end-to-end system solutions, its partnerships, and its financial prowess. Communities littered with last decades charging stations, some no longer working from bankrupt companies will find comfort in the GE brand.

GE Provides Digital Energy End-to-End

As global electric utilities modernize and embrace the added opportunity of transportation that depends less of petroleum and inefficient engines, and more on electricity and efficient electric drive systems, GE can be a major partner. Electric vehicles can be smart charged with GE charging stations, managed with GE software services. Areas with high concentration of electric vehicles can turn to GE for new substations and distribution equipment. Power plants can be upgraded with the latest GE turbines, and supplemented with GE wind turbines, solar power, and grid storage. With a digital energy demand can be shaped off-peak.

GE Unveils Nucleus™ and Brillion Home Energy Management

GE also unveiled Nucleus™, an affordable, innovative communication and data storage device that provides consumers with secure information about their household electricity use and costs so they can make more informed choices about how and when to use power. Nucleus is expected to be available for consumer purchase in early 2011 at an estimated retail price of $149-$199.
GE’s Nucleus brings the promise of the smart grid into consumers’ homes. As utilities deploy smart meters, the Nucleus will collect and store a consumer’s household electricity use and cost data for up to three years and present it to consumers in real-time using simple, intuitive PC and smart phone applications, helping consumers monitor and control their energy use.
Nucleus is the first product in GE’s Brillion™ suite of smart home energy management solutions that will help consumers control their energy use and costs. In addition to Nucleus, GE’s Brillion suite will include a programmable thermostat, in-home display, a smart phone application and smart appliances for the entire home.

By 2012, US utilities are expected to install more than 40 million smart meters. These digital meters enable utilities to charge “time-of-use” rates for electricity throughout the day. When demand is low, electricity will cost less, and when demand is at its “peak,” utilities will charge more to encourage off-peak consumption.

Future Brillion options will also include alerts to assist consumers with daily tasks, such as when to change the refrigerator’s water filter or when the dryer cycle ends. Software upgrades will further enable Nucleus to monitor water, natural gas, and renewable energy sources, as well as plug-in electric vehicle charging.

$10 Billion Ecomagination R&D

GE is driving a global energy transformation with a focus on innovation and R&D investment to accelerate the development and deployment of clean energy technology. Since its inception in 2005, 92 ecomagination products have been brought to market with revenues reaching $18 billion in 2009. With $5 billion invested in R&D its first five years, GE committed to doubling its ecomagination investment and collaborate with partners to accelerate a new era of energy innovation. The company will invest $10 billion in R&D over five years and double operational energy efficiency while reducing greenhouse gas emissions and water consumption.
CEO Immelt expects over 30 new ecoimagination product announcements in the next 24 months, including the GE Watt Station EV charger.

Electric Car Charging and Smart Grid Reports

By John Addison. Publisher of the Clean Fleet Report and conference speaker.

Nuclear Energy: Threat or Opportunity?

by Richard T. Stuebi

Several months ago, I was asked by the Chagrin Foundation for Arts & Culture, in my lovely home town of Chagrin Falls OH, to speak on the topic of nuclear energy at their Chautauqua-at-Chagrin lecture series this summer.

I agreed, and proposed the title of my talk "Nuclear Energy: Threat or Opportunity?" I thought that it would be kinda catchy, and that I could figure out something interesting to say under that heading.

Well, the talk is tomorrow (Tuesday July 20 at 6 pm ET), so this past weekend, I forced myself to organize my thoughts on what to say. It was more challenging than I had anticipated.

This is because the title of my talk actually turned out to be truly apt: nuclear energy is both a threat and opportunity. There are huge advantages and substantial risks associated with nuclear energy. It's easy to see one side of the coin or the other, but it's hard to see and accept both sides of the coin at the same time.

Among the points I intend to make in my lecture:

There is no easy, cheap, one-size-fits-all answer for powering our economy in a way that provides the standards of living we’re accustomed to, at the costs we’re accustomed to paying, in avoiding the bad future to which continued status quo will drive us. Nuclear energy can be a major part of the total solution, but only if we’re willing to accept the costs and risks.

Many people tend to think that nuclear powerplants are inherently dangerous, thinking of Chernobyl. Chernobyl was truly an aberration – all safety systems were intentionally disabled and the plant was pushed to limits as an experiment. (Hey, that's a really good idea!) Three Mile Island was a more plausible worst-case scenario -- and its environmental impact of was/is small relative to the long-term impact of coal mining or burning, or petroleum extraction or refining. The BP Gulf oil spill is far worse of an ecological catastrophe than Three Mile Island, but no-one’s talking about banning oil. Instead of environmental risks, the real risks of nuclear energy are about fuel security and fuel disposal.

The U.S. taxpayer has long heavily subsidized, and continues to subsidize, nuclear energy. With maybe a hundred billion dollars of cumulative R&D funding over the decades, plus substantial tax credits and loan guarantees, the U.S. government has been and remains the biggest benefactor of the nuclear industry. Private industry sure isn’t: there hasn’t been an order for a new nuclear reactor in over 30 years. When opponents discredit renewable energy due to subsidies (which they admittedly do receive), it’s pretty hypocritical: nuclear (and fossil) energy has gotten and still gets far more subsidy dollars than renewable energy has and does.

If we shut down all the nuclear powerplants in operation today, the risk associated with spent fuels would still exist, and emissions would likely go up – at least unless/until enormous amounts of new wind/solar installation were to backfill nuclear retirements. For the time being, the economics of new wind and solar energy (indeed, any new powerplants) are considerably higher than the costs of running existing nuclear plants, so electricity prices would go up if nuclear were to go away. So, shutting down operating nuclear plants doesn’t seem like a promising strategy from either an economic or environmental perspective.

The costs of new nuclear are completely unknown. There hasn’t been a new nuke completed in the U.S. since the 1980's, and no new orders since the late 1970's. New designs are on the drawing board, but none have been implemented. Including earning a fair return on investment in new plants, costs could be as low as 8 cents/kwh or as high as 15 cents/kwh. The range is so wide because it could take 5 years or 15 years to complete a new plant – based upon uncertainties about licensing, approval and permitting processes. The cost of new nuclear is generally more than new wind, and while less than new solar today, the costs of new solar should become competitive with technological advancements in the coming years. So, it would seem that this argues for massive wind and solar installation, rather than new nuclear (or new fossil powerplants).

But, it’s not so easy. Wind and solar are not “round-the-clock” – at least unless/until there’s cost-effective energy storage for the power grid (don’t hold your breath). And other options aren't so appealing either.

New gas-fired powerplants have fairly low emissions and can be approved/built quickly, but price/supply of natural gas is uncertain and highly volatile. New coal powerplants would be an even riskier bet.

Using conventional technology and ignoring greenhouse gas emissions, the cost of energy from new coal powerplants is probably on the order of 6-8 cents/kwh. However, if the U.S. ever becomes serious about dealing with climate change via a carbon policy, then the economics of coal power will deteriorate significantly -- either to capture carbon (largely untested and expensive technology) or to pay for the costs of emissions. In a carbon-constrained world, it’s easy to project the costs of new coal power at > 10 cents/kwh. So, if we don’t care about climate change, coal is likely to be the dominant answer, and few new nukes will be built in the U.S.

On the other hand, if climate change matters, then there’s a potential role for new nuclear in the U.S. This role is amplified if we want to deal seriously with the other energy imperative we face: eliminating our reliance on petroleum for transportation. Clearly, we won’t see nuclear powered vehicles. But, with improvements in battery technologies, we can (and likely will) see more electrification of transportation – through plug-in hybrids and even pure-electric vehicles. If/as that happens, we’ll need much more power generation capability -- especially if a lot of old coal plants are retired in response to climate legislation. But, where will that new power come from? If we want it to be from zero-carbon sources, and if we’ve already installed as much wind/solar as we plausibly can (assuming no effective grid storage technology), nuclear will be a very interesting option.

Summarizing, the more we try to deal with climate change and oil dependence, the more appealing nuclear becomes. Environmentalists are torn: many oppose nuclear on philosophical grounds based on their perceived risks, while other thought-leaders (e.g., James Lovelock) are nuclear proponents based on the practical realities. Which risks are more pressing: climate change and energy insecurity, or radioactive wastes and weapons materials for terrorists? Those are the tradeoffs upon which tilts the balance for nuclear energy. Americans don’t seem to like that answer: they want no risk and low cost, and whine when they don't/can't get it.

On balance, I think the risks associated with climate and oil outweigh the nuclear waste and weapons risks. Accordingly, I tend to think that nuclear needs to be a bigger part of the energy toolkit of the future – at least until ocean-based power generation and/or grid-scale energy storage become economically viable. If nuclear is not to be part of the energy solution of the future, then there will be other costs/risks to bear -- some of which could be very dramatic.

If we get it badly wrong, either way, the future of life on this planet may be seriously jeopardized.

Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Toyota Prius PHV Fights Chevy Volt

By John Addison (from original post in the Clean Fleet Report 7/6/10)

As the world leader in hybrid cars, Toyota is fighting to extend that leadership in both plug-in hybrids and battery electric cars. In plug-in hybrids, GM plans on first mover advantage with the Chevy Volt. In electric cars, the Nissan LEAF has a sizable lead over the Toyota FT-EV. But Toyota has more cars on the road with electric motors, advanced batteries, and electric drive systems than all competitors put together. Toyota does not like second place.

In talking today with Toyota’s Cindy Knight, she assures me that Toyota is on track on all fronts. A number of U.S. fleets are already driving the new 2010 Toyota Prius PHV including the following:

San Diego Gas and Electric
Zipcar Washington DC
Ports of New York and New Jersey
Silicon Valley Leadership Group
Portland State University
Qualcomm
Southern California Air Quality Management District

By year-end, 600 Prius PHV will be on the road including 150 in the United States. A number will be in 18 month lease programs. In one prefecture in Japan, the Prius PHV can be rented by the hour. Ten of the Prius PHV will be part of Xcel Energy’s SmartGridCity program in Boulder, CO. Boulder residents will participate in an interdisciplinary research project coordinated by the University of Colorado at Boulder Renewable and Sustainable Energy Institute (RASEI), a new joint venture between the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) and the University of Colorado at Boulder.

During the test of 600 plug-in hybrids, Toyota will be receiving extensive wireless data from each vehicle, giving a near realtime profile of electric range, frequency and speed of charge, mileage, use, and reliability of the cars. Aggregated data will be posted on Toyota’s EQS Website

By 2012, Toyota will offer customers with a wide-range of vehicles with fuel efficient drive systems. The Prius will be the best seller, but the 2012 Toyota Prius PHV will be in demand from those who want to be greener with a 14 mile electric range. A compact hybrid will help the more price conscious buyers. The Toyota Camry Hybrid will continue to be offered. Lexus hybrids will continue to deliver at least 35 mpg along with their host of luxury appointments.
Ford will also offer customers a wide-range of fuel efficient and electric cars, starting with a Ford Focus that customers can buy as with ecoboost fuel economy, or as a hybrid, or as a plug-in hybrid, or as a pure battery electric. Ford will expand this range of offerings to other lines in the years past 2012.

Toyota’s Transition to Lithium Batteries

The 2010 Prius PHV has three lithium-ion battery packs, one main and two additional packs (pack one and pack two) with a combined weight of 330 pounds. In contrast, the Prius NiMH battery pack weighs 110 pounds. Each battery pack contains 96 individual 3.6 V cells wired in series with a nominal voltage of 345.6 V DC.

When the PHV is fully charged the two additional battery packs supply power to the electric motor. Pack one and pack two operate in tandem with main battery pack but only one at a time on the individual circuit. When pack one’s battery’s charge is depleted, it will disconnect from the circuit and pack two will engage and supply electrical energy to the drive line. When pack two has depleted it will disconnect from the circuit and the vehicle will operate like a regular hybrid. Pack one and pack two will not reengage in tandem with the main battery pack until the vehicle is plugged in and charged.

The Prius PHV’s larger HV battery assembly requires additional cooling. The vehicle is equipped with three battery-cooling blowers, one for each of the three battery packs. Each battery pack also has an exclusive intake air duct. One cooling blower cools the DC/DC converter.

Like all Toyota hybrids, the lithium-ion batteries are built to last for the life of the vehicle. Toyota is using lithium not NiMH batteries in its Auris hybrid. Mercedes, Nissan, Ford and others have announced hybrid plans using lithium. Will 2012 be the year that Toyota offers a hybrid Prius with lithium batteries? Toyota is not yet ready to say.

Toyota has a number of advanced battery R&D programs with nickel-metal, lithium-ion and “beyond lithium” for a wide variety of applications in conventional hybrids, PHVs, BEVs and FCHVs. Toyota uses Panasonic and Sanyo battery cells. When Panasonic acquired Sanyo, Toyota increased its ownership to over 80 percent in the Panasonic EV Energy Company which makes prismatic module nickel metal hydride and lithium-ion battery packs. Toyota also owns about 2 percent of Tesla, a major Panasonic partner.

Toyota FT-EV an Urban Electric Car

In 2012, city drivers will have fun with the Toyota FT-EV, a pure battery-electric car. Currently Smart car drivers are saving $20 per day squeezing into parking spaces too big for other cars. By 2012 Smart will have competition from the Toyota FT-EV which is over 4.5 feet shorter than the Prius. For the microcompact space, Smart is introducing an electric version, as is Mitsubishi with the iMiEV. All these cars can squeeze in four people with skinny waists.

Toyota’s FT-EV is an electric vehicle with a 50-mile range and a maximum speed of 70 mpg. The lithium battery pack can be charged in 2.5 hours with a 220/240 volt charge and in less time if not fully discharged.

By John Addison. Publisher of the Clean Fleet Report and conference speaker.

Water Water Everywhere

by Richard T. Stuebi



One of the fastest growing "themes" of the cleantech sector is water. While clean energy gets the most attention, clean water is also becoming a high priority. According to Richard Smalley, the late Nobel laureate and nanotech pioneer from Rice University, water trailed only energy on the list of humanity's top challenges over the coming decades.


Like all things cleantech, a major difficulty has been trying to earn good investment returns from innovations in the water sector. And so it is that the Water Innovations Alliance was formed, to serve as an industry association to promote the emergence of a vibrant entrepreneurial sector in water technologies.


In May, the Alliance held its annual conference in Dayton Ohio. I attended, and heard a number of good presentations providing some interesting tidbits on the water sector.


In his overview, Mark Modzelewski (the Executive Director of the Alliance) gave some eye-opening statistics. Only 3% of the water on earth is freshwater, and little of that small sliver is accessible for human use, with 1.5 billion people globally not having access. By his measures, water is the third largest industry on earth, representing $550 billion of revenues. Modzelewski cited data indicating that 75% of U.S. water infrastructure will need to be replaced, at a cost of "hundreds of billions of dollars." Soberly, he noted that "the way we move, treat and filter water has changed little since the time of Julius Caesar: we move water through trenches and tubes, we force water through tiny holes to clean it, and we put poisons in water to kill other poisonous things." Unfortunately, innovation is not happening at the required pace: only $130 million in venture capital was placed in 33 water deals in 2009, with minimal corporate, academic and public sector resources and centers for water R&D.


Paul Gagligardo of American Water (NYSE: AWK) noted in his presentation the huge size of the water technology market: $172 billion of water-related capital expenditures in 2009, with $30-60 billion per year expected in North America over the next several years. Alas, he also noted how balkanized the demand-side of the market is, with 52,000 community water systems and 155,000 non-community water systems in the U.S.


Notwithstanding the difficulties facing companies trying to profit from water technology innovation, a number of presentations from leading firms hinted at the opportunities.


Peter Williams, the CTO of Big Green Innovations at IBM (NYSE: IBM), described IBM's activities to parallel the smart grid in the water sector. In his presentation, Williams noted that 20-25% of all treated water is lost through leaks, and moving/treating water consumes 3-5% of all energy in the U.S. -- implying that smarter water management represents an enormous economic and energy opportunity area.


In his presentation, Ed Hackney of United Water -- a subsidiary of Suez Environnement (Paris: SEV, Brussels: SEVB) -- took the smart water grid theme further, by noting the need to push intelligence from already-sophisticated treatment centers through the relatively-dumb network.


Probably the biggest splash made at the conference was by Veolia (Paris: VIE, NYSE: VE), a major sponsor with a significant presence, including several speakers. It's clear that Veolia is trying to show itself as the leader in the water technology field. As profiled in a presentation made by Finn Nielsen, the Chairman of VWS (Veolia Water Systems) North America, Veolia has created the Veolia Innovation Accelerator to work closely with start-up companies on their water treatment technologies to speed up the pace of commercial adoption, by helping such companies validate/improve their technologies and introduce them more rapidly to the marketplace through Veolia's vast channels in the water industry.


Other presentations from the conference are available, and are worth perusing to gain a better handle on this important but often-overlooked segment of the cleantech universe.



Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

A Few Conversations on the State of Cleantech

I've had a number of conversations in the past couple of weeks about the state of cleantech and the various sectors that make it up.

No real answers, just food for discussion.

The IPO market - a few threads that keep perking up.  A need for the IPO market in cleantech to get healthy.  A general sesne of relief that Solyndra did not get out.  Massive skepticism over Tesla's prospects.  All hopes pinned to Silver Spring.

Carbon / Climate change - determination that the oil spill shall not go in vain, so to speak.  Jaded lack of awareness about cap and trade and carbon globally replacing the pre-Copenhagen hype, despite that the underlying policies are getting more an more rational, and more and more real work and debate is occuring.  Bifurcated Over $1 Billion in smart money acquisitions in carbon in the last 9 months (JP Morgan, Barclays, Reuters, ICE, Bloomberg), the summer solider and sunshine patriots have bailed for now.

Venture capital - growing unease that the 2 and 20 managed money model is broken, and especially broken in cleantech.  Growing disbelief at the "picking winners" strategy and the massive hundreds of millions per company from the DOE in its loan guarantee program - inflation comes to cleantech?

A strengthening sense that like CNG was crowded out of the transport discussion by PHEV and ethanol a few years ago, EV and PHEVs are crowding out a market very jaded with the always over the horizon promise of biofuels to replace corn and sugar cane ethanol.

More discussions on water use and technology than I have had in years.  But still no answers.

A sense from those who know, that the US shale gas and the BP Horizon spill have the potential to shift the whole debate.

Or maybe it's just me projecting my feelings on everyone I talk to, or ignoring those saying stupid things!  Since I didn't do a real poll, the world will never now.

Neal Dikeman is a partner at Jane Capital Partners LLC, and the Chairman of Carbonflow.  He is the longtime chief blogger of CleantechBlog.com

Clean Technology Venture Investment Increases 65 Percent in First Half of 2010

Matches 2008 Investment Record

The Cleantech Group and Deloitte released preliminary 2Q 2010 results for clean technology venture investments in North America, Europe, China and India, totaling $2.02 billion across 140 companies.

Cleantech venture investment was up 43 percent from the same period a year ago. The number of deals recorded in 2Q10 was down from a record high of 192 in 1Q10, but still represents a strong quarter by historic standards. This completes 1H10, up 65 percent on 1H09.

Corporate activity around cleantech innovation has continued to play an important role in maintaining the levels of investment activity. Corporations are becoming key participants in many of the largest venture and growth capital investment rounds. Strong corporate involvement was evident again in the quarter’s top ten deals: Intel Capital, GE Capital, Shell, Votorantim, Alstom, and Cargill Ventures all contributed, the latter two making their first publicly disclosed venture-stage investments in cleantech.

Corporations have multi-faceted roles in cleantech. Any single utility or multi-national could play any or all of the following roles – investor, partner, customer, acquirer, or competitor. As such, their activity levels are a key indicator of the health and growth of the broader market for clean technology products. The strengthening of corporate commitment to renewable energy and broader cleantech are evident in the strong growth of multi-national corporate and U.S. utility investment for the first half of 2010 :

1H10, total announced capacity additions by U.S. utilities increased 197 percent compared to 2H09, from 1,393MW to 4,134MW, primarily driven by wind and solar. Power purchase agreements (PPAs) rose 148 percent in 1H10, compared to 2H09, from 621MW to 1,539MW, likely due to the pressure of meeting Renewable Portfolio Standards in many U.S. states. Corporate investment announcements from the global corporates tracked reached a new high of $5.1 billion in 1H10, a 325 percent increase from the same period last year.

“The significant strengthening of corporate and utility investment into the cleantech sector, relative to 2009, is very encouraging, given the key role they will play in enabling broader adoption of clean technologies at scale,” said Scott Smith, partner, Deloitte & Touche LLP and Deloitte’s clean tech leader in the United States. “Major U.S. utilities are increasing direct investments in wind and solar due to improving cost scenarios, favorable tax credits and incentives, and evolving pressure to meet Renewable Portfolio Standards. Meanwhile, the largest global companies are seeing the business case for operational cleantech integration, leading to record corporate investment. This uptick was driven by companies looking to improve energy efficiency and reduce carbon emissions in order to reduce operational costs, mitigate energy price volatility risk, drive sustainable growth, and comply with existing and pending regulations around carbon and climate change risk disclosure.”

VENTURE INVESTMENT BY TECHNOLOGY SECTOR

The leading sector in the quarter by amount invested was solar ($811 million), followed by biofuels ($302 million) and smart grid ($256 million). Energy efficiency was the most popular sector measured by number of deals, with 31 funding rounds, ahead of solar (26 deals) and biofuels (13 deals). The largest transactions in these sectors were:

SOLAR – $811 million in 26 deals

Solyndra, a California-based thin film company raised $175 million from existing investors instead of following through with its planned IPO. BrightSource Energy, a California-based developer of utility-scale solar thermal power plants, raised $150 million in Series D funding from new investors Alstom and the California State Teachers Retirement System (CalSTRS) as well as existing investors; the deal followed a conditional commitment from the U.S. Department of Energy for $1.37 billion in loan guarantees that was made in February and Amonix, a California-based developer of concentrated photovoltaic (CPV) solar power systems, raised $129.4 million in a Series B round led by Kleiner, Perkins, Caufield & Byers.

BIOFUELS – $302 million in 13 deals

Amyris Biotechnologies, a California-based developer of technology for the production of renewable fuels and chemicals, closed the final tranche of a $61 million Series C round and also raised a further $47.8 million from Temasek Holdings; Virent Energy Systems, a Wisconsin-based developer of a catalytic bio-refinery platform, raised $46 million from Shell and Cargill Ventures; and Kior, a Texas-based developer of a catalytic cracking technology for turning biomass into bio-crude, raised $40 million.

SMART GRID – $256 million in 11 deals

Landis+Gyr, a Switzerland-based smart metering company, raised an additional $165 million from Credit Suisse to add to the $100 million it raised in mid-2009, while OpenPeak, a Florida-based developer of home energy management products, raised $52 million from Intel Capital and existing investors, and GreenWave Reality a Denmark-based developer of home energy management products, raised $11 million from Craton Equity Partners and other undisclosed investors.

ENERGY EFFICIENCY – $147 million in 31 deals

Nualight, an Ireland-based developer of LED illumination products for refrigerated displays in food retail, raised $11.4 million from Climate Change Capital Private Equity, 4th Level Ventures and ESB Novus Modus. This was the largest deal in the energy efficiency category after OpenPeak ($52million, as above).

VENTURE INVESTMENT BY WORLD REGION

North America accounted for 72 percent of the total, while Europe and Israel accounted for 24 percent, India 3 percent, and China for 2 percent.

NORTH AMERICA: North American companies raised USD $1.46 billion, down 11 percent from 1Q10 but up 47 percent from 2Q09. The total of 76 disclosed rounds was high by historic standards, but down by 41 percent from the record 128 in 1Q10. As the most significant region for VC investment, the sector trends broadly match those described globally. The largest deals were for Solyndra ($175 million), a California-based thin film solar company, BrightSource Energy ($150 million), a California-based developer of utility-scale solar thermal power plants, and Amonix ($129.4 million), a California-based developer of concentrated photovoltaic (CPV) solar power systems. California led the way, with $980 million (67 percent total share) in investment, followed by Massachusetts ($124 million, 8 percent).

EUROPE/ISRAEL: European and Israeli companies raised USD $476 million in 54 disclosed rounds, up 48 percent (by amount) from 1Q10 and up 100 percent from 2Q09. The largest deals were for Swiss smart grid company Landis+Gyr ($165 million) and French solar plant developer Fonroche ($66.1 million). The large growth capital deal for Landis+Gyr places Switzerland ($165 million, 1 deal) at the top of the country league table, followed by France ($82 million, 11 deals), and Norway ($59 million, 4 deals). The UK had the most deals (17) with investment totaling $59 million.

CHINA: Chinese companies raised USD $30 million in 5 disclosed rounds. The largest deal was for Prudent Energy, a developer of flow batteries, which raised $10 million from JAFCO Investment Asia, Mitsui Ventures and CEL Partners.
INDIA: Indian companies raised USD $59 million in 4 disclosed rounds. The largest deal was for Krishidhan Seeds, a producer and distributor of hybrid seeds for the farming industry, which raised $30 million from Summit Partners.

GLOBAL M&As AND IPOs

There were 19 clean technology IPOs during the quarter, totaling $2.31 billion, up slightly from 18 IPOs in 4Q09, also totaling $2.31 billion. China accounted for the majority of transactions, with 12 offerings, which raised a combined $1.73 billion (75 percent of the overall total). There were three North American cleantech IPOs in 1Q 2010, which raised a total of $304 million, the lion share netted by the high-profile $226m IPO of Tesla Motors on June 29, 2010.
However, the largest global cleantech IPO recorded during the quarter was Origin Water, a China-based developer of membrane filtration systems for municipal and industrial sewage treatment and recycling, which raised $370 million from an offering on the Shenzhen Stock Exchange. The company’s share price more than doubled during the first day of trading, valuing the company at about $3.3 billion.

Clean technology M&A totaled an estimated 160 transactions in 2Q10, of which totals were disclosed for 45 transactions totaling $6 billion. Two of the most significant deals were in smart grid: Swiss engineering company ABB acquired U.S.-based software maker Ventyx for more than $1 billion to provide it with broader access to the utility enterprise management market; and Maxim Integrated Products acquired U.S.-based smart meter semiconductor company Teridian Semiconductor for about $315 million in cash.

TOP GLOBAL VC INVESTORS

2Q10 Most Active Cleantech Venture Investors (# investments)
Carbon Trust Investment Partners 6 = Helveta, Green Biologics, Intamac Systems, ACAL Energy, Arieso, Concurrent Thinking,
Kleiner Perkins Caufield & Byers 4 = Amonix, Amyris Biotechnologies, Fisker Automotive, EdeniQ
Angeleno Group 3 = Amonix, Coda Automotive, EdeniQ
Draper Fisher Jurvetson 3 = BrightSource Energy, EdeniQ, Scientific Conservation
Khosla Ventures 3 = Coskata, Amyris Biotechnologies, Sakti3

The Cleantech GroupT, providers of leading global market research, events and advisory services for the cleantech industry, along with Deloitte, which provides audit, tax, consulting and financial advisory services to cleantech companies, released these preliminary 2Q 2010 results for clean technology venture investments in North America, Europe, China and India, totaling $2.02 billion across 140 companies.

The Petroleum Industry: Past the Tipping Point?

by Richard T. Stuebi

as posted to Huffington Post

As Jon Stewart so beautifully satired a couple of weeks ago, American political leaders have long said "enough is enough" about the lack of a coherent national strategy regarding oil.

In the wake of the BP oil spill in the Gulf, is this time different? Will the U.S. finally be able to change its stance on petroleum? Will the petroleum industry itself be irrevocably altered?

Though I don't always agree with its perspectives, one of the better (i.e., more well-informed and reasoned) weekly energy newsletters I receive is "Musings from the Oil Patch", written by Allen Brooks, Managing Director of the boutique investment banking firm of Parks Paton Hoepfl & Brown.

In the June 8 issue, Brooks provides an excellent analysis of the future of the petroleum sector, entitled “BP Oil Spill Pushes Industry Beyond Tipping Point”. The main conclusion of the essay is that the oil industry will never be the same – and all of the ways in which it will change should drive up the price of oil. His summary:


"Onshore oil and gas resources will become more valuable than offshore ones. Shallow-water petroleum resources may be worth more than deepwater ones. International markets will be more active and attractive for energy and oilfield service companies than the U.S. market. The domestic oil and gas industry will be less profitable in the future. New U.S. offshore drilling and operating procedures will become more onerous and expensive and likely require different, more capable equipment."




Some news outlets are portraying the calamity in the Gulf as Obama’s Katrina, or perhaps more astutely as his Iranian hostage crisis – either of which would imply a dragging down of his Presidency. Brooks instead sees the Obama Administration somewhat more sympathetically: as “family members outside a hospital operating room following a severe auto accident. While the surgeons work their magic on the victim with techniques beyond the understanding of ordinary people to fully comprehend the knowledge and skills being applied, the family members remain powerless to influence the outcome. Rather, they stand around praying or crying as emotions overwhelm them. Soon they become angry and demand immediate justice or retribution against those responsible for the accident.”

And, of course, that’s what happened when President Obama determined "whose ass to kick" and exacted his pound of flesh from BP in securing their agreement for contributing $20 billion into a clean-up fund. This, in turn, raised vocal objections from Obama's opponents -- including those formerly arguing that Obama hadn't done enough about the oil spill -- about undue executive privilege. The infamous "apology" by Rep. Joe Barton (R-TX) to BP, and Barton's subsequent apology about the apology, was the zenith/nadir of the political grandstanding about this spill from all sides.


The ineffective posturing and inane bickering in Washington has contributed nothing towards stemming the flow of oil from the sea bottom, nor to clean up the waters and the beaches in the Gulf of Mexico. But does the venom being spewed over the airwaves from all parts of the spectrum indicate that the petroleum industry is now approaching a tipping point?


In terms of energy policy, I think not. Call me a cynic, but when it comes to national energy policy, I will always take the under on what our Federal leaders will accomplish to improve our long-term prospects.


Why am I so negative? Just like our economy is fueled by energy, our political system is fueled by money. And, there is hardly anything in the economy as wealthy as the energy sector. The industry as a whole and its leading companies are both extremely cash-rich (certainly much more so than the principal advocates of change) and willing to spend money in Washington to support/defend their entrenched interests.


For the big oil companies, it's not surprising that their primary objective is to protect the status quo, as opposed to making any transition. This point is well articulated by Deborah Gordon and Daniel Sperling in "Big Oil Can't Get Beyond Petroleum" (a clever play on BP's slogan "Beyond Petroleum"), as run June 13 in the Washington Post.


Kevin Leahy, Managing Director of Climate Policy at Duke Energy, recently gave a presentation in Columbus in which he opined that "Moderates are the new endangered species in Washington", adding that sane national energy policy requires tradeoffs and compromises that can only be achieved by crossing party lines -- which is traitorous anethema in the current political environment.


No, I don't think the politicians will have the courage anytime soon to lead us out of our energy challenges. As an economist, I think price signals may be the only way to move us in a different direction.


Absent any rules to change the dynamics of the market, energy prices will move (largely) as a function of supply and demand. (I say "largely" because the petroleum market is a classic oligopoly, controlled by a swing monopolist -- Saudi Arabia -- with the greatest supply at the lowest costs, so pricing doesn't follow pure supply/demand forces as they would in a totally free market. But, close enough.)


That's where the peak oil theory comes in. There are innumerable postings on the Internet about peak oil (see, for instance, the Association for the Study of Peak Oil), so I won't go into detail here. But, suffice it to say: in a world of increasing demand for petroleum (especially from places like China, where oil demand is growing at "astonishing" rates) and a finite planet with ancient organic matter (e.g., dinosaurs) converting to hydrocarbons not anywhere near as rapidly as hydrocarbons are being extracted, the long-term price trend can pretty much only be upward.


In the June 21 issue of ASPO's weekly newsletter "Peak Oil Review", editor Tom Whipple interviewed Jeff Rubin -- formerly the chief economist of CIBC World Markets and author of Why Your World Is About To Get A Whole Lot Smaller: Oil And The End of Globalization. Below is a somewhat lengthy but nonetheless fascinating passage from that interview:


"Depletion does not have to be apocalyptic. It will only be apocalyptic if we continue to consume oil as we have in the past when it was cheap and abundant. Because I'm an economist and believe in the power of prices, I believe that we're going to change. I believe that a global economy, when we move resources all around the world to be assembled by the cheapest labor force and then be shipped to the other end of the world -- that's not a rational way of doing business in a world of $150-a-barrel oil. What we're going to see is a whole reengineering of our economy, and while we're going to make a lot of sacrifices in terms of our past energy consumption, we're going to find that our new smaller world has a lot of silver linings. And in a lot of ways it is going to be more livable and sustainable than the old oily world we're leaving behind. Peak oil will be an agent of change, and much of that change will be positive, not negative. If we continue to commute 60 miles each way in SUVs, we're going to get screwed. All of a sudden, peak oil will equal peak GDP; that's not just an economic recession for a couple of quarters, that's a world of no economic growth. The point of my book is that, while we can't do anything about triple-digit oil prices, they don't have to be so devastating as in the past. We have to reduce, in effect, oil per unit of GDP, and the way we do that is to go from a global economy back to a local economy because a global economy is an extremely oily way of doing business. And that switch isn't something that the Federal Reserve Board or US Treasury or the Bank of Canada or the European Central Bank is going to put in place; that is going to be the aggregate result of all the micro decisions that consumers make about what we eat, where we live and how we get around. I think triple-digit oil prices will lead us to make the right decisions on those fronts, and the result will be a very different economy than the economy we know."


Whew.


I've said to many people that I'm one of a very small (and widely-disliked) minority -- and clearly Mr. Rubin is in this camp -- who believes that high energy prices are and will be a good thing, from an environmental perspective, an energy security perspective, and a technology innovation perspective. And, if Mr. Rubin's thesis bears out, high energy prices can also represent a force for reattracting much of the economic activity that has left the U.S. in recent decades to other parts of the world.


Globalization can continue for virtual things like ideas and communication, but for physical and material goods, an increasing oil price can only mean a reversion towards greater localization of economic activity.


A consistent re-migration of manufacturing back to the U.S. would really be a signal that a tipping point has been achieved. However, the big worry is summed up nicely in a quip by Mr. Leahy during his talk at the workshop "Opportunities for Ohio Businesses in a Clean Energy Economy": "In his 2006 State of the Union speech, President Bush said that 'America is addicted to oil.' To which I say, 'Unfortunately, every time America kicks the habit, the dealer drops the price.'"


While true in previous decades, price-cutting in the oil markets may not be so inevitble in the future. With the insatiable appetite for oil and the increasing challenges of supplying it from more difficult and remote resources, I don't think even manipulative actions by OPEC to "keep America hooked" via lowered oil prices can or will work for very long -- in a future world of ever-tightening supply/demand balances for black gold.


What American politicians can't do via the laws of man, the laws of petroleum engineering and the laws of economics can and will eventually do.

I doubt that there will ever be a discrete tipping point for the petroleum industry, but rather a gradual ebbing. Perhaps the ebbing has begun. If there is a tipping point, as noted petroleum analyst and banker Matthew Simmons likes to say, it will only be obvious in the rear-view mirror.



Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

What do Big Oil and EV Batteries Have in Common?

For those of you interested in the sector under the sector in electric vehicles, the guts of Li Ion battery technology, the week just got more interesting than an overpriced, over hyped Tesla IPO.

Check out a very quiet unnanouncement in A123's SEC filings noting a multi-year supply deal with ConocoPhillips' Cpreme, the emerging leader in anode materials for Li On batteries.  The technology is a processing technology to make high performance graphite based powders out of plain old petroleum coke materials, that has the potential to be very low cost at scale.  A123 has announced supply deals in the past with Navistar, Fisker, Eaton, Think, the Chevrolet Volt and a number of others.

For those interested in the guts of the Cpreme technology, a good summary is here.  And a quick search of the patents includes: 7,618,678, 7,597,999, 7,323,120.

It wasn't too long ago when the only other contender for Tier 1 battery supplier in the US, Johnson Controls-Saft, was announcing their Cleantech Innovation Award win and DOE award with a Cpreme logo quietly slipped into the presentation, though likewise no announcements were ever made.  Johnson-Controls-Saft had announced lithium ion supply wins with Ford, Mercedes, and BMW.  Maybe the liberal view is right, cleantech can bring manufacturing and green jobs back to the US - courtesy of our oil companies?

Or perhaps we should note that Tesla has announced it's buying its batteries from Panasonic in Japan - with our DOE money (about half of its total capital!) and California tax breaks.  So maybe we'll just ship the new cleantech manufacturing jobs to Japan instead.

Neal Dikeman is a partner at Jane Capital Partners LLC, the Chairman of Carbonflow and Cleantech.org, and a long time cleantech advocate and blogger on Cleantechblog.com.

Headhunting in the CleanTech World

by Richard T. Stuebi



It wasn't long ago that most executive recruitment firms didn't know how to spell "cleantech", much less develop specialized practices in the field.

In 2000, when I and my fellow co-founder of a start-up company in the distributed generation space knew that we needed help in hiring a CEO, we contacted a few generalist search firms, but found that they had neither the interest nor the rolodexes to take the assignment. In the end, we retained the energy-focused firm Clarey/Napier International of Houston, and were very satisfied with their work, but it wasn't though they had a lot of competition for our business.

In early 2005, I wrote a white paper called "Leadership in Renewable Energy" (which I was astonished to find still on the web!), in which I vowed "to personally be involved in 'recruiting' one new excellent businessperson into the renewable energy sector each year," and urged others to do likewise -- just to accelerate the pace of talent entry into cleantech.

My how times have changed!

Today, a couple of top-notch boutique search firms -- Hobbs and Towne and ON Search Partners -- are mainly if not solely focused on cleantech placement opportunities. And, after years of ignoring the sector, many of the big retained recruiting firms now have solid cleantech practices.


A few weeks ago, I got an email from Ron Brown, the partner who heads the Alternative & Renewable Energy practice at Heidrick & Struggles, outlining some of their recent cleantech placements at venture-backed firms such as Grid Net, Comverge, Solyndra, Northern Power Systems, and Bloom Energy.


Hardly a month goes by where I don't receive an unsolicited call or email from a recruiter looking to place an executive into some cleantech post. So, my vow from 2005 to help in attracting one person a year into the renewable sector seems like a quaint notion today.


This state of affairs would have been unfathomable to me a few years ago, and is possibly the most compelling evidence supporting long-term optimistic prospects for the cleantech world. As long as a good share of the best talent flows into cleantech, this is a sector with a healthy future.



Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Cleantech Blog "Power 10" Ranking Vol III 2010

This year picking the Top 10 Cleantech companies felt a little more challenging than 2009 and 2008.  The sector is growing (and growing up), and struggling under its first cycles.  Biofuels is a bit smashed up (as we've been predicting), water tech still has not emerged, solar is learning how to play with the big boys, smart grid is growing up fast but still a bit young, carbon is still under a policy uncertainty cloud. And EVs, well "where's the beef?" is still the phrase that comes to mind.

I spend most of my day meeting and talking to companies in the cleantech sector. And those of you who know me know I have opinions on who is doing it right, and who is doing it wrong.


As before this is the Cleantech Blog Power 10 Ranking of cleantech companies doing it right.

Eligibility for inclusion in the ranking requires meeting a 6 point test. Suggestions for inclusions in future volumes are welcome. The 6 point test:

1. The company is energy or environmental technology related
2. I like their products
3. The market needs them
4. The company is smart about building their business
5. I’d like to own the company if I could (for the right price, of course!)
6. It is not already one of mine

So here we go:

1.  First Solar - Still growing, still maligned, still taking market share, still the cost leader by 5,233 miles.  The whole solar category owes them big time.  And it bought Nextlight Renewable Power, which might have made the list in its own right.

2.  A123 - A123 has huge challenges in front of it, and we debated whether they should come anywhere near the list at all.  But to be honest, without their IPO, the last year would have looked really bleak (and the A123 c. 50% downround before that really was bleak).  Thanks guys, we're rooting for you.  Don't make me regret this one.

3.  Nissan -  Is it Leafs or Leaves?  No matter, kudos for rolling dice to make a serious play in EVs.  Fingers crossed that the actual launch keeps you on the list.  Of note, before you ask about Tesla, see below.

4.  Sharp - Still a solar king, so I still won't dethrone them.  But we got close this year to just listing only one PV manufacturer.

5.  JP Morgan - Kudos for snatching up the best asset in the carbon markets at a bargain price.  The first mover in over $1 Billion in M&A in the carbon markets that has announced since the fall (JPM/Ecosecurities, Barclays/Tricorona, ICE/Climate Exchange PLC, Reuters/Point Carbon).  Smart money is buying, and you moved first.

6.  Enphase Energy - I'm very, very curious to see if microinverters finally have real legs.  Kudos for essentially making the category real.

7.  Landis+Gyr - Still my favorite in smart grid.  Until one of the US venture backed players delivers enough to challenge them for market share, they stay the smart grid representative.  Though perhaps Silver Spring can push them this next year?

8.  Walmart - We pushed GE off for Walmart this year.  I expect to get hammered for this one.  But be honest with yourself, their push for greening up their supply chain was serious, was massive, and is and can be the single biggest impact on the cleantech sector ever.  Walmart haters, go home.  The market leader is leading.

9.  Iberdrola Renewables - Keep on trucking.  Wind energy is still our cleantech crown jewel, and you are still the king.

10.  Philips Lumileds - We probably should have had them on last year's list, as LEDs continue to thrive and may be one of the biggest unsung stars in cleantech, and Lumileds is long the key LED powerhouse.

Applied Material's well publicized issues have knocked them off this year's list, but we have hope they'll be back.  And I really really wanted to add both Schott and Solel, the solar thermal receiver kings, but ran out of room.

This Year We Add a Dishonorable Mention to:
 
1.  Any company raising money with Advanced Equities, which would include Bloom Energy, SolFocus, Fisker, Serious Materials et al.  If that statement doesn't make sense to you, just google the words advanced equities scam.  Has the potential to sink major venture firms and the whole cleantech venture sector if we're not careful.  Or read below. 
 
Garbage In, Forbes Magazine
 
Advanced Equities Takes Its Investors on a Bad Trip, Venture Beat
 
2.  Solyndra - Tsk, tsk, $3.50/Wp for CIGS is not very exciting after $1 bil in capital, and $500 mm of taxpayer money?  Aren't we supposed to be selling CIGS for $1/Wp these days without subsidies ;)?  No wonder the IPO got pulled.  How happy do you think Barack Obama is with his investment now?
 
3.  Tesla - Selling 10 cars a week?  With $400 mm of my taxpayer money?  Come on people.  Sell to your rich friends without my money.  All Tesla fans should read the Michael Kanellos article with the "selling 10 cars a week" bit. I think there are 10 dealerships within 10 miles of the NUMMI plant alone that outsell that. Is this an EV company or an SNL skit?  Go Nissan!
 
Neal Dikeman is a partner with cleantech merchant bank Jane Capital Partners LLC, and the Chairman of Carbonflow, as well as the editor and creator behind Cleantech Blog and Cleantech.org.

Gates Gets It

by Richard T. Stuebi

A few weeks ago, the American Energy Innovation Council released a report calling for a bipartisan commitment to increased governmental involvement in encouraging more research to spawn the new energy industry of the future.

The five key recommendations of the report are:

1. Create an independent body to propose a national energy strategy
2. Triple federal spending on energy research to $16 billion per year
3. Create centers of excellence in energy research
4. Fund ARPA-E at $1 billion per year
5. Establish a New Energy Challenge Program to drive pilot project deployment

Members of the Council represent a “who’s-who” of American business leadership, and they recently met with President Obama upon the report's release. Quotes from press coverage after the meeting were revealingly strong.

Jeff Immelt, the CEO of General Electric (NYSE: GE): “We have a policy today. Our policy is uncertainty…I’d say status quo for this country is a losing hand.”

Ursula Burns, CEO and Chairwoman of Xerox (NYSE: XRX): “The incident in the Gulf just kind of intensified this discussion – that we have a fragile, brittle system.”

But it is the presence and statements of Bill Gates, the legendary founder and Chairman of Microsoft (NASDAQ: MSFT), that are telling. Until now, Gates has been largely silent on energy and environmental matters. However, as you can see in a posted video, Gates is now beginning to speak up on these issues.

Gates said in a news conference after the meeting with Obama that he and his fellow business leaders hoped “that any energy bill, particularly that’s raising revenue, should be heavily influenced by the Council’s report” to put more revenue into energy research.

To the humanitarian Gates, the world’s poor are “going to be the ones, when there are climate change effects, who suffer by far the most. And they need cheap energy. That’s actually something that unites the rich and poor.”

Note that Gates didn’t waffle by saying “if” about climate change. It’s a matter of when and where climate change will start biting.

Of course, the technoscenti don’t view Gates with the same esteem as, for instance, a Steve Jobs of Apple (NASDAQ: AAPL). While not as exalted as Jobs, as the second wealthiest person in the world (who pals around with the world’s third wealthiest person, Warren Buffett), Gates ought to have a lot more impact with those who control the really big dollars (not just public but private and philanthropic).

So, when someone like Gates starts making noises that our current approach to energy and environmental issues is untenable, perhaps it’s a sign of bigger changes afoot in the cleantech realm.

Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

BP and the Obama Administration – I Blame You for Ruining My Gulf

To start off with, I have to say like many people I’m deeply concerned with the oil spill at Horizon in the Gulf of Mexico. It is a generational environmental hit that cannot be overstated. Perhaps BP deserves more credit than it’s getting for responding fast with a massive amount of resource, no finger pointing, and for putting its whole company on the line, but this is a BP caused problem, so we ought to expect that. However, we should not ignore the role our government had in this debacle.

I’m not a happy camper. We’ve been doing drilling offshore with a very, very good environmental track record for decades. The laws, systems and technologies in place to prevent exactly these problems are known, tried and tested. When this is over we are likely to find that it wasn’t the laws and prevention technology that failed, it was not giving them the proper respect. Or put another way – “operator error” at BP and our government.

BP has been dinged for a number of years now for the dark underbelly of the John Browne era. When John Browne took over, he really turned the entire industry upside down, opening an era of super M&A, and out wheeling and dealing the other oil companies including the acquisitions of Amoco and Arco, pushing the Beyond Petroleum concept leading the way in solar, renewable, and carbon. His and BP’s contributions should not be understated. But industry people will generally tell you that the BP of that generation also built a culture of short term thinking, make your numbers and milestones, cutting maintenance and safety corners if need be, and leave the problems for the next guy. This is the same picture that has been emerging in the media, administration and congressional inquiries into what happened at Horizon just before the explosion, systemically ignoring best practice to save economics on a challenging well. It makes me cringe. I hope it’s not true.

Once it happened, we exposed a bigger systemic problem. BP is throwing everything known at this thing, and making up new technologies every hour racing for a solution. It’s a company defining event and they know it. The systemic problem is that a catastrophe like this in deepwater is new and challenging. The fixit tools just don’t exist. Handling the same situation if the rig had stayed up, or if we were onshore, would likely have seen many of the remediation techniques already work. But no one has EVER dealt with problems like this at depths like these before. The oil drilling and spill containment technology arsenal we’ve built up over the years has never been tried (and maybe really not even planned) to operate subsea in deep water. These are part technology issues and part planning issues. Neither of which are things you want to be trying out for the first time the day the crisis hits. Both industry and government should have seen this one coming.

The US government has culpability here, too. The US government is the landowner here, collects big checks from BP and others from drilling, and was just as culpable in disregarding the risks and just as unprepared for the results. The deepwater risk plans were filed by the oil companies as asked, and apparently never challenged by the regulator. When Congressmen berate ExxonMobil for cookie cutter risk plans almost word for word the same as BP’s that talk about walruses in the Gulf of Mexico, I want to know why the regulator never caught this when it could have mattered. The same regulator who negotiates the deals and collects the checks?   Mr. Congressman, Mr. President, oversight of that is YOUR fault, not BPs.  The are the oversightee, you are the oversightor.

If my pit bull bites a child because I can’t control it, the dog gets put down, but I pay the piper. There’s a saying that there are no bad dogs, just bad owners. If my tenant is breaking laws and someone gets hurt, and I hadn't spoken up or enforced my own lease, don’t I have some responsibility to the victim? Does the term negligence come to mind?

The US government had zero capability of its own in place to deal with a spill of this magnitude, meaning all of the technical heavy lifting was squarely on BP’s shoulders, and to believe the media reports coming out now, the Federal government moved fast but was highly unorganized on its own side failing to coordinate Federal, state and local response (remember the old sarcastic, “Hi, I’m from the government, I’m here to help” line). That’s about like leasing out my building, telling the tenant they’re liability is capped, and then hoping they happen to decide to get insurance for me anyway.

And the government’s reaction seems very political, when I want to see more work. Just shut up and do it.  The moratorium on offshore drilling smacks of egregious kneejerk politics, did nothing for the crisis at hand, and hurt the very communities under economic strain. A recent WSJ article even quoted a number of the technical experts the administration had cited as the justification for the moratorium who publicly slammed the administration for misrepresenting their analysis once they saw the “final, final” report, not the “final” one they signed off on.

Perhaps worse, the Obama administration’s shakedown of BP, like it’s previous shakedown’s of Chrysler to force a firesale and riskless windfall for Fiat, is very, very disturbing. We have the best court system in the world for just this sort of thing, and it makes me shudder to see what we are doing to the rule of law, crisis or no crisis. What, you think a Southern trial lawyer can’t hold his own with BP? Get real. Mississippi by itself mints trial lawyers faster than BP pumps oil. Item number 1, BP should not be able to use Congress and the administration as a shield to try and cap its liabilities (we apparently did that ourselves at a paltry $75 mm), and second, the administration should not be blatantly strong arming a private company to agree to payments above and beyond our own legislated cap, without going through the courts we set up. Hugo Chavez does that. America does not.

We don’t need “down with BP polemics” and finger pointing. We don’t need to wreck the rule of law to CYA the government’s errors. We may not even need new laws. We do need our regulators to actually do their job. We do need BP to pull out all the stops to plug the leak, and to pay the price for its recklessness, and we do need the industry to start working on planning and technology ahead of time when it can do the most good.

Credit where credit is due: I applaud the administration for moving fast, and I applaud BP for not finger pointing and putting their money where their mouth is, now. I apologize to everyone for the long rant, I’m almost done. But I grew up in Houston, and the Gulf of Mexico is home to the beaches, and the wildlife, and the sea food, and the industry, that defined my home town. It’s sickening that part of me is a tiny bit relieved the oil slick is moving East not West. Frankly, I’m not sure whether the Obama Administration or BP deserves to survive this debacle. The Gulf of Mexico and 40 years of track record in the offshore drilling industry deserve better.

Neal Dikeman is a partner at Jane Capital Partners, a cleantech merchant bank. He is the Chairman of Carbonflow, and Cleantech.org, and is Texas Aggie.

A Good Green Story

by Richard T. Stuebi

One of the more promising stories to emerge from Cleveland in recent years is the formation of the Evergreen Cooperatives, a holding company to fund start-up companies that:

• Employ disadvantaged citizens from some of the most poverty-stricken neighborhoods in Cleveland


• Are founded on the principle of being worker-owned cooperatives, to enable employees to participate in the wealth-creation of the business


• Serve the needs of the local community, anchored by the market requirements of major enduring institutions such as the Cleveland Clinic, University Hospitals, and Case Western Reserve University


• Provide a product/service that is truly sustainable and consistent with the green economy of the future

Since Evergreen was formed and seed-funded in late 2009, the first three businesses launched are the Evergreen Cooperative Laundry, Ohio Cooperative Solar, and GreenCity Growers Cooperative. With just a few months of operation, these green economy enterprises are now employing dozens of Clevelanders who otherwise would be challenged in finding meaningful employment opportunities, affording true career-tracks and wealth-creation (as opposed to merely a meager wage).

Admittedly still in its early days, the long-term impact of Evergreen will only be known and felt years from now. But, the prospects are promising. In the late 1950’s, the Mondragon region of Spain suffered from many of the same economic travails now besetting Cleveland, but the formation of the Mondragon Corporation (a similar network of cooperative businesses) has now led to an economic powerhouse of more than 100 firms employing 120,000 people and annual revenues of more than $20 billion.

The world is taking notice of this social experiment: so far in 2010, Evergreen has been reported on in The Economist and Business Week, but perhaps the most thorough story on the Evergreen Cooperative is found in "The Cleveland Model", an article appearing in a recent issue of The Nation. I urge you to read this article to learn more about a truly positive glimmer of hope in the revitalization of the industrial Midwest of the United States -- and in the mainstreaming of cleantech throughout the American economy all the way into its inner cities.

There are too many heroes underlying the birth of Evergreen to list in one place, and I’m sure I don’t know them all, but I cannot complete this posting without special tips of the hat to: Lillian Kuri and India Pierce Lee of the The Cleveland Foundation, Ted Howard of the Democracy Collaborative, Stephen Kiel of Ohio Cooperative Solar, Mary Ann Stropki of ShoreBank Enterprise, and the late and deeply-missed John Logue of the Ohio Employee Ownership Center at Kent State University.

Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

4.7 Million EV Charge Points by 2015

As people start ordering electric cars such as the Nissan Leaf, Tesla Roadster, and Chevy Volt, a vast network of charge points becomes more important. Drivers want to extend their range by hundreds of miles by charging at work, downtown, and on the road. Many who live in cities are interested in electric cars but do not have garages. They want work and public places to charge.

The automotive industry will reach a turning point during 2010, as it begins the gradual transition away from the internal combustion engine and towards electrification. According to a new report from Pike Research, this evolution will require a market-by-market expansion of electric vehicle (EV) charging infrastructure, ranging from residential equipment to public, private and workplace charging stations. The cleantech market intelligence firm forecasts that a total of 4.7 million such charge points will be installed worldwide during the period from 2010 to 2015. Electric Car Charging Articles.

Thousands of new charge points are now being installed. Ford is promoting smart charging as it now takes orders for the Ford Transit Connect, next year for the 2011 Ford Focus EV, and in 2012 the Ford Plug-in Hybrid. Ford is partnering with Coulomb Technologies to provide nearly 5,000 free wall-installed charging stations for some of the automaker’s first electric car and electric delivery van customers.

Pike forecasts that by 2015, more than 3.1 million EVs, including plug-in hybrids and all-electric
vehicles, will be sold worldwide. Pike Research’s indicates that competition from infrastructure providers will intensify by the end of 2011. Leading the first 20,000 U.S. charge point installations are AeroVironment, Better Place, Coulomb Technologies, and ECOtality. GE, Panasonic, Samsung, and Siemens are moving into the space with hardware and network services.

Pike Research’s study, “Electric Vehicle Charging Equipment”, analyzes technology and expansion issues for the EV charging infrastructure in global markets. It examines the market for residential, public, private, and workplace charging stations as well as reviewing the key operational and technological impacts of plug-in hybrid and battery electric vehicles on the grid. Analysis includes an in-depth assessment of market drivers and barriers, along with profiles of charging infrastructure vendors and utilities. Detailed forecasts for EV charging equipment are included through 2015. A free Executive Summary is available online.

Bobby Jindal is Blinded by Money

I was shocked when reading this letter from Governor Bobby Jindal. Now I find him to be over political at times, even though I like his governing style in general. In this case, he is just out of his mind. BP has not even capped the well yet and Governor Jindal is asking for more drilling in Louisiana. I understand the economic output, but given all the gas they have found in the State he would be better off pushing for the Pickens plan which converts heavy trucks to natural gas than letting more drilling occur until they have a failsafe way to prevent future spills.

Top Ten Energy Myths

by Richard T. Stuebi



I get a kick out of trite little lists that I can quickly report on and provoke some thinking and conversation.

And so it is that I recently came across the “Top Ten Energy Myths”, as suggested by Thomas Tanton, a fellow at the Pacific Research Institute.

As listed in the table of contents, the ten myths are:

1. Most of our energy comes from oil.
2. Most of our oil comes from the Middle East.
3. We have no choice but to import vast quantities of oil.
4. Offshore oil production imposes environmental risks.
5. Reducing our peroleum (sic) use through alternative energies like solar and wind will increase U.S. energy security
6. Energy companies will not invest in clean reliable energy.
7. Renewable energies will soon replace most conventional energy sources.
8. The U.S. consumes large amounts of energy and thus emits a disproportionate amount of the world's greenhouse gases.
9. Federal mandates for higher-mileage cars means less energy consumption
10. Forcing drivers to use alternative fuels will help solve global warming.

As Tanton notes in the introduction, Mark Twain is attributed to have said that “it ain’t what you don’t know that gets you into trouble; it’s what you know that just ain’t so.”

And so it is: some facts are myths. But, then again, some facts are factual too, and some claimed facts are myths. For instance, at the conclusion of a brief commentary on these top ten myths in the February issue of Power, Tanton presents as “fact” that “increased oil production can have green results”, with the supporting claim that “new drilling technology, developed by private energy companies, has greatly reduced the risk of oil spills.”

Uhhhh…..

I guess the moral of the story here is that readers have to be pretty discerning when considering the writings of thought-shapers, to not accept commentary as absolute, definitive and permanently correct, but rather to look between the lines in identifying biases and competencies that underlie their arguments. And, if a writer is neither competent to discuss the topic, nor unconflicted in discussing the topic, readers are well-advised to not put a lot of trust in the writer's opinions.

Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Coulomb Technologies Smart-Charging for Ford Electric Vehicles

By John Addison – June 3, 2010

Ford is promoting smart charging as it now takes orders for the Ford Transit Connect, next year for the 2011 Ford Focus EV, and in 2012 the Ford Plug-in Hybrid. Ford is partnering with Coulomb Technologies to provide nearly 5,000 free wall-installed charging stations for some of the automaker’s first electric car and electric delivery van customers.

Under the Ford Blue Oval ChargePoint Program, fleets and residents in nine designated markets could receive a free ChargePoint® Networked Charging Station with the purchase of a Ford Transit Connect Electric vehicle. The nine markets designated by Coulomb Technologies include Austin, Detroit, Los Angeles, New York, Orlando, Sacramento, the San Jose/San Francisco Bay Area, Redmond, Wash., and Washington D.C. The installation of ChargePoint charging stations will begin immediately.

Ford plans to introduce five new electrified vehicles in North America by 2012, providing a range of products to meet a variety of customer needs. These include:

• A Transit Connect Electric small commercial van. Test Drive Report
• A Ford Focus Electric passenger car debuting in 2011. Test Drive Report
• Two next-generation lithium-ion battery hybrid-electric vehicles and a plug-in hybrid by 2012

If 5,000 Transit Connect Electrics are sold in the target cities prior to Focus EV sales, then charging units may all go to those customers. This will help accelerate early adoption of electric vans in fleets such as utilities, universities, goods delivery, and contractors.

New USA Jobs for Plug-in Cars and Advanced Batteries

Ford’s increased use of lithium-ion batteries is also increasing jobs in the United States. Ford will make its own battery packs in Michigan, using Focus EV cells from nearby Compact Power, an LG Chem company. The plug-in hybrid cells will be made in Wisconsin by Johnson-Controls Saft. The U.S. made new lithium-ion batteries will be used instead of the currently Mexican made nickel metal hydride batteries. Over 6,000 new jobs are coming to Michigan just for advanced batteries. “Michigan will be the place where the electric vehicle and battery-powered vehicle will be researched, developed, produced, manufactured and assembled,” said Gov. Jennifer Granholm.

The Ford Blue Oval ChargePoint Program is part of Coulomb Technologies’ $37 million ChargePoint America charging station infrastructure project made possible by a grant funded by the American Recovery and Reinvestment Act through the Transportation Electrification Initiative administered by the Department of Energy.

Coulomb Technologies Leads in Smart Charging Build-Out

Coulomb Technologies is a fast-growing venture capital backed firm headquartered in California. Coulomb’s ChargePoint® Network, is open to all plug-in electric vehicle drivers and provides authentication, management and real-time control for the networked electric vehicle charging stations. The network of electric vehicle charging stations is accessible to all plug-in drivers by making a toll-free call to the 24/7 number on each charging station, or signing up for a ChargePoint Network monthly access plan and obtaining a ChargePass™ smart card. Other future payment options include using any smart (RFID) credit/debit card to authorize a session or using a standard credit or debit card at a remote payment station (RPS) to pay for charging sessions. To locate available charging stations, visit mychargepoint.net and click “Find Stations.”

As electric cars start to ship with the new J1772 smart charging capability, Coulomb has taken the lead in installing a smart charging infrastructure with over 700 networked charging stations worldwide shipped to more than 130 customers in 2009. The ChargePoint Network provides multiple web-based portals for Hosts, Fleet managers, Drivers, and Utilities, and ChargePoint Networked Charging Stations ranging in capability from 120 Volt to 240 Volt AC charging and up to 500 Volt DC charging.

Smart charging will allow customers to save money by charging off-peak when rates are low. Major utilities also plan to inform smart charging station customers that excess renewable energy is available if that is their charging preference. Electric Utilities Facilitate Smart Grid
ChargePoint America will offer home and public charging stations to individuals and businesses. Businesses interested in applying for free public charging stations or consumers exploring an electric vehicle purchase can visit www.chargepointamerica.com for more information.

Three automakers have committed to deliver electric vehicles in designated US regions. The Chevrolet Volt, the Ford Transit Connect Electric and Ford Focus Electric through the “Ford Blue Oval ChargePoint Program”, and the smart fortwo electric drive will be introduced along with this program. ChargePoint America plans to provide 4,600 public and private ChargePoint Networked Charging Stations by October 2011.

Clean Fleet Reports about Electric Cars

Top 10 Electric Car Makers for 2010 & 2011

By John Addison, Publisher of the Clean Fleet Report and conference speaker.

View from the White House on Energy Innovation

by Richard T. Stuebi


On behalf of the President of the Cleveland Foundation Ronn Richard, I was privileged to attend an all-day bull session on May 7 hosted by the White House on energy innovation. With support from the Kauffman Foundation, the White House convened this meeting to spur brainstorming among people who participate across the cleantech spectrum, presumably to surface actions that can dramatically increase the velocity and success of energy innovation.

Alas, I can’t say that I saw evidence of any concrete next steps, but I did hear a number of interesting comments from the morning sessions at the meeting:

Diana Farrell, Deputy Director of the National Economic Council: Throughout U.S. history, major acts can actually spawn and renew markets, rather than thwart them. We are at that point today with energy: energy and environmental debates have grown stale and a new policy paradigm is necessary to cut through them. Oil price spikes have preceded 10 of the last 11 U.S. recessions, so we need to eliminate this vulnerability. The history of great nations shows an ability to anticipate crises before they become too critical. But, as important as policy reforms are, it is not enough for economic robustness: entrepreneurs and innovation are essential.

Dan Reicher, Director of Climate Change and Energy Initiatives at Google (NASDAQ: GOOG): Google is working on all three critical dimensions of cleantech: capital, technology and policy. While Google’s actions on capital and technology for cleantech are well-known, their work on policy is aimed at accumulating and providing more and better information for policy-makers to set better policies.

Desh Deshpande, serial entrepreneur, including Chairman of A123 Systems (NASDAQ: AONE): In cleantech, the center of gravity for innovation is not at the national laboratories, and is reverting away from the private sector, instead focusing in the universities. The big challenge is not so much inadequate amount of funding on cleantech innovation, but rather inefficient commercial capture of the innovation that actually happens.

Carl Schramm, President of the Kauffman Foundation: Lots of challenges ahead for cleantech entrepreneurship. Angel investors as well as venture firms stand to be severely punished by proposed regulations aiming to "reform" hedge funds. Businesses of all sizes are becoming too reliant on the government, blunting their intimacy with actual market needs. The link between university and commercialization is broken and needs to be reset, as the rate of new business spin-outs from universities is plummeting. To help combat these challenges, Kauffman is sponsoring an Energy Innovation Network, which aims to help "connect the dots" in faciliating entrepreneurship in the cleantech sector.

Tom Baruch, Managing Director at CMEA: Universities (not corporations) will be the center of innovation for the foreseeable future. Successful cleantech business models will need to be much more capital efficient than many of the most prominent cases to date. Cleantech entrepreneurs cannot assume any “green premium”: their products/services must stand on their own to deliver real economic value to paying customers.

Dr. Michael Crow, President of Arizona State University: Universities can no longer afford to suffer from the delusion that being smarter is sufficient to be the best. University excellence in the future will be defined by five mantras: (1) local relevance, (2) speed, (3) connectivity, both within university and to outside, (4) entrepreneurship, and (5) intellectual innovation.

Dr. Yet-Ming Chiang, Founder of A123 Systems and Professor of Materials Science and Engineering at MIT: True freedom to innovate at a university only occurs after professors gain tenure. To dramatically increase innovation, universities must restructure how they evaluate professors for tenure: at MIT, new products/services are now part of the review, but jobs created should also be a criterion. Fast-tracking of green cards for promising talent is also critical: over the past 5 years, 86% of foreign graduate students at MIT indicated a desire to stay in the U.S., but only 56% have stayed – and the 44% that left departed mainly because of an inability to stay, not because they didn't want to stay, in the U.S.

As interesting as these comments from the morning discussions were, the workshop in the afternoon got bogged down in very wonky policy topics that frankly bored me.

And, also interesting was who was NOT at the workshop: little or no representation from big energy companies (petroleum or utilities). Is the White House (along with Kauffman) saying that incumbent energy players are not viewed as part of the cleantech solution?



Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Tesla's Strategic Relationships with Toyota and Daimler

By John Addison (5/27/10)


Toyota agreed to purchase $50 million of Tesla’s common stock subsequent to the closing of Tesla’s currently planned initial public offering, giving Toyota over 2 percent of Tesla. The investment was negotiated with Tesla's purchase of the former NUMMI factory in Fremont, California, that once employed over 4,000 workers in a Toyota-General Motors JV plant. Tesla and Toyota intend to cooperate on the development of electric vehicles, parts, and production system and engineering support. Neal Dikeman reported on Friday the significance of this for Tesla, Toyota, and California jobs.



In 2012, new Tesla S sedan will roll-out of the plant with electric range that remarkably matches the range of many gasoline cars. Tesla is developing a roomy Model S hatchback that starts at $57,400, about half the price of the Roadster. Tesla will start delivering the Model S in 2012 from its new factory in California. The Model S will have up to a 300 mile range, far beyond the Nissan Leaf 100 mile range the Chevy Volt 40-mile electric range, and current ambitions of other electric car makers. Top 10 Electric Car Makers


Tesla will compete with other sedan makers by also offering more passenger space, more cargo space, and a premium cache. With seating for five adults and two children, plus an additional trunk under the hood, Model S has passenger carrying capacity and versatility rivaling SUVs and minivans. Rear seats fold flat, and the hatch gives way to a roomy opening.


With a range up to 300 miles and 45-minute QuickCharge, the Model S can carry five adults and two children in quiet comfort. The roomy electric car starts at a base price of $57,400, before the $7,500 federal EV tax credit and additional tax credits in many states. Yes, it will be more expensive than sedans from Nissan, Ford, and GM but with more battery storage for more range with 3 battery pack options offer a range of 160, 230 or 300 miles per charge.
Don’t pull-up to the Model S in your sedan and try to race. The Model S goes from 0-60 mph in 5.6 seconds with 120 mph top speed, and the promise of sporty handling in the chassis and suspension.


Panasonic Lithium Batteries and Tesla Packs


Tesla touts its expertise and intellectual property in a proprietary electric powertrain that incorporates four key components—an advanced battery pack, power electronics module, high-efficiency motor and extensive control software.

Tesla delivers more range per charge than other electric vehicles by including more lithium batteries. Tesla’s relationship with battery supplier Panasonic is critical. The Roadster uses 6,800 Panasonic lithium-nickel consumer-sized batteries integrated into a Tesla designed battery-pack with unique energy management and thermal management. The new Tesla Model S will use up to 5,500 Panasonic batteries.


Tesla has been skillful in developing strategic partnerships. Tesla also has a relationship with Daimler to supply technology, battery packs and chargers for Daimler’s Smart fortwo electric drive. Daimler holds more than 5% of Tesla’s capital stock. Daimler has orders for Tesla to supply it with up to 1,500 battery packs and chargers to support a trial of the Smart fortwo electric drive in at least five European cities. Tesla delivered the first of these battery packs and chargers in November 2009. Daimler also engaged Tesla to assist with the development and production of a battery pack and charger for a pilot fleet of its A-Class electric vehicles to be introduced in Europe during 2011. Tesla has ambitions to supply other vehicle makers.



By John Addison, Publisher of the Clean Fleet Report and conference speaker.

An Audit That One Can Actually Like

by Richard T. Stuebi



The concept of an "audit" is something that is inherently, well, unsettling. The word itself implies that you might have done something wrong, and someone is coming to catch you and punish you. For sure, no-one wants to face the prospect of an IRS audit.

Of course, that's not the sole or even main reason that I've never undertaken an energy audit for my house. It's not an excuse, but an explanation to say that I've simply been too preoccupied with other matters to go through the effort of finding a qualified firm to perform an energy audit. And, frankly, I had no idea whether an audit would cost $100 (easily acceptable) or $1000 (too much!).

So, it was with a bit of relief actually that a firm called GreenStreet Solutions sent me a mailer offering an energy audit for $199. No longer burdened with finding a firm to do the work, and knowing that the price was one I could afford, I gave them a call to schedule a visit.

I was very pleased. A two-man team from GreenStreet came to my 1978-era house for a 3-hour tour (sing along: "a 3-hour tour"), and found some pretty interesting results. I wasn't surprised to discover that certain of the walls and ceilings were underinsulated. However, I was shocked to see that the biggest source of thermal leakage was out of my basement, through the front stoop.

Armed with a host of data collected from the building envelope, thermal images from scanning, and my prior year's gas and electric bills, the GreenStreet team went off to prepare an assessment . A couple weeks later, the lead analyst returned for an evening debrief with me and my wife, handing us a bound report summarizing the findings and suggesting measures to implement.

The results: at 50 Pascals of pressure, 5135 cubic feet of air per minute were leaking through the building shell of my home, relative to a target of 2299 for a reference home of comparable size. To combat this, GreenStreet proposed three packages of solutions -- Bronze, Silver and Gold -- to reduce the leaks. To my wife and me, the Silver package looked the best -- the most bang for the buck -- entailing $9738 of outlays to save an estimated $2288 annual heating costs (surprisingly, savings on air conditioning expenses are not calculated), for a projected average payback of 4.3 years.

In addition, GreenStreet provided a bag full of goodies to further help reduce energy. For instance, we were given a Kill-A-Watt meter to measure appliance consumption rates and phantom loads. Though I haven't yet gone around the house to develop a list, it sounds like a pretty fun project some rainy afternoon.

Also, GreenStreet gave us a bunch of thermal insulating gaskets for outlets and light switches. I installed these the other day, and in removing the covers, it's really amazing to see how much thermal leakage is likely to occur through these huge uninsulated gaps. Parents: installing these gaskets would be an excellent project to give to your teenager to undertake.

As for implementing the audit results, we were prepared to authorize a go-ahead -- until the GreenStreet salesperson noted that a bill was winding its way through Congress to reimburse up to $8000 (with no ceiling on income levels) for weatherization efforts, and since the bill wouldn't be retroactive, we would be better off waiting for the bill to pass (expected this summer). We thanked him for his divulging this important opportunity, and asked him to have GreenStreet call us when the bill passed.

He further noted that a bill was moving through the Ohio legislature to reimburse the $199 we paid for the energy audit too, and informed us that we would be notified if this were to pass as well.

I was really impressed with the audit by GreenStreet -- very professional, and not pushy. The GreenStreet agent noted that their parent company was Vectren (NYSE: VVC) -- a gas and electric utility based in Southern Indiana -- which leads me to wonder if all energy audits should be performed by companies that have a corporate parent that is a utility possessing sufficient financial wherewithal and expertise on energy-related issues.

However, unless the utility has revenue/profit decoupling mechanisms in place, it's clear in my mind that an audit can't effectively be done by the local utility, who may be subject to conflicts of interest by threatening to cannibalizing their core business from reducing energy consumption.

In all respects, my wife and I actually enjoyed this audit, and recommend a similar type of audit for anyone who wants to make their personal contribution to the cleantech challenge.


Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Go Tesla! EVs just may carry the cleantech sector this year after all

Most of my friends know I’m not a huge fan of EV startups. They take massive amounts of capital, the end customer (i.e. you and I) tends to be very sophisticated, demanding, and a pain in the neck, the technology is extremely challenging and I don’t believe the startups understand their long term costs as well as they think they do. But worse than that, the competition is very, very good and well entrenched. So while I love the concept of EVs and more specifically Plug in Hybrid EVs, I’ve been a huge skeptic of EV venture deals.

But . . .

• Go Tesla! The Toyota tie up is an exciting move. Toyota gets access to the EV business as a hedge against the possibility that GM's Chevrolet Volt and the Nissan Leaf cleaning its clock and take the mantle of most green car company away, plus they get a massive much needed dose of positive PR that’s worth their $50 mm investment all by its lonesome to counteract the legions of recent “Toyota’s quality just went to hell” articles and the latest “let’s grill the Toyota executives” push in Washington. This is good.

• Toyota gets a great use for the recently shut down NUMMI plant in California, making them look like the hero in that story without having to actually operate a high cost union plant again (apparently a large part of the reason they got out of it). For those that missed that story – NUMMI was a GM – Toyota JV in Fremont, the last auto plant west of the Mississippi, and apparently Toyota’s only union facility. When GM went bust (sorry when you and I decided we liked losing money in the car business), Toyota took the opportunity to back out of the JV, leaving a huge hole in the local economy (it was just about the only customer for a number of local manufacturers). California’s political bosses get a brief reprieve from their shellacking by helping with big tax breaks to ink a deal that may bring back 10% of the lost jobs (about 10 of the top legislators and administrators joined the Governator to announce it).  Part of the deal here is that Tesla Motors is buying the plant with heavy tax breaks and plans to build its still to be launched mass market sedan there.

• The venture capitalists who backed Tesla get a new investor to pony up a chunk of the massive cash that will be required at good valuations. Even better, the backing of Toyota in my mind drastically increases the chances that a Tesla IPO can get done, despite the huge questions analysts have had on their near term revenue prospects since they filed the prospectus earlier this year.

• You and I, who are funding a big chunk of Tesla anyway with the massive $400 mm+ DOE loan guarantee, now get a foreign auto company to invest underneath us. (Of note this will be our second multi-hundred million investment into that part of the San Francisco Bay Area, since we are doing the same thing for the solar start-up Solyndra a couple of miles down the road.)

• Tesla gets much needed cash, a cheap ready to go plant without union labor requirements, and access (if they are smart enough to leverage it) to the considerable manufacturing , marketing , and distribution talents of what has been up until recently the best run auto manufacturer in history. With it comes the automotive street cred that they are sorely lacking.

Filed under the “what’s the real story” side – a couple of questions have been raised by various analysts in the press.

1) Why is Toyota not doing this as a JV or operating partner? Which would make even more perfect sense from both parties perspective. There’s been no mention of Toyota helping on marketing/distribution and service, areas that Tesla will sorely need if they get rolling. But maybe it’s just early days.

2) How many of the local jobs are actively coming back? Elon Musk, the CEO of Tesla was quoted as saying 1,000 jobs were planned (there were many, many, many times that many jobs lost when NUMMI shut down), and he was apparently very ambivalent on the subject of union or non-union.
But regardless, there is a lot to like about a Tesla Toyota Tie up.

Neal Dikeman is a partner at Jane Capital Partners LLC, a cleantech merchant bank, and the editor of Cleantechblog.com