Green opportunities for storage-battery production

China Daily reports an interesting story on Energy Storage, aka Batteries, today. (see: Green opportunities for storage-battery production)

According to the paper, China account for about 25% of global lead-acid storage batteries. These batteries are widely used in Electric Vehicles. The export growth has been a staggering 23% p.a. CEEIA estimates that annual growth is likely to continue with a rate of 15% p.a. for the next five years.

As we highlighted in our China’s 12th 5-year plan piece, the government is keen to promote green technologies and has earmarked the renewable sector as part of its Magic-7 industries.

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Liquid Assets – Media Update

We just saw CNBC’s Liquid Assets – Big Business of Water (opens CNBC video, 42:43min). Although very US centric, the overall message is pointing in the right direction. The cost of water is simply too low. As Peter Gleick puts it: “An oil tanker filled up with oil may be worth $200m – $300m. The same tanker filled with water would be worth just $400’000 – $500’000.”

Another CNBC report looks at Water stocks. Debra Coy is giving her views (opens CNBC video: 04:00min). The discussion briefly touches on water rights also. Two companies mentioned are Cadiz Inc. and Pico Holdings.

Top 10 cleantech stories of 2009

In no particular order, here are my top 10 cleantech stories of 2009. Any other interesting stories that you think should be on this list?

1. Copenhagen Accord: From Hopenhagen to Nopenhagen
The widely anticipated UN climate talks at Copenhagen in Dec 2009 ended with a whimper. After spending much time haggling about the main issues, world leaders could only come up with a kind of letter of intent. In fact, it was US President Barack Obama who brokered the final deal with China, India, South Africa and Brazil. Europe, which was left out, was apparently angered with this move. For now, the goalpost has been shifted to Mexico in 2010.

2. Global Cleantech Stimulus
Though we’re facing the toughest financial crisis yet, several governments around the world managed to announce multi-billion dollar stimulus packages for the cleantech sector, underscoring the importance of the sector to deal with climate change and energy supply issues. US, China, South Korea, Japan, EU, Germany, Australia and UK are among the biggest contributors.

3. A123 Systems IPO Soars
Lithium ion battery company A123 Systems was clearly the star of cleantech IPOs this year, with its shares soaring more than 50% on the first day of trading in Sep 2009. A123 Systems has not made any money, yet its stock price is still trading above its offering price with currently $2 billion market cap, even though Chrysler cancelled its electric vehicle plans which included A123 batteries. Doesn’t this remind you of the tech boom in the late 1990s? More IPOs are expected to come with Solyndra already filed for IPO in Dec 2009 while we’ll just have to keep guessing when Tesla Motors, Silver Spring Networks and Codexis will make their debut.

4. Khosla Ventures Raises $1.1 billion Cleantech Funds
Even as VC/PE cleantech investments slumps in 2009, Khosla Ventures raises the bar with its $1.1 billion funds raised in Sep 2009. It was the largest amount raised by a VC firm since 2007 and the largest first-time fund raised since 1999. This was also the first time Khosla Ventures has raised funds from outside investors which included the CalPERS. It was a rare feat to raise a fund of this size and Vinod Khosla has definitely proved it.

5. Cleantech Investments Shift from Solar to Energy Efficiency
Indeed 2009 proved to be tough on solar companies where declining orders, excess inventory and project financing problems were accompanied with massive layoffs. While Spain’s removal of government subsidies and the financial crisis contributed to the solar slump, China continues to provide state funding to the Chinese cleantech firms via low-interest loans from big state banks to fund their growth. It is no surprise that investment is seen shifting from capital-intensive cleantech such as solar and wind to less capital-intensive cleantech such as energy efficiency, storage, transportation and smart grid sector. Have you heard of the Jevons Paradox – the more efficient we become in our use of energy, the more we will use? Ironically, energy efficiency may lead to more energy consumption as the cost of energy resource reduces.

6. Electric Vehicles: Electric Dreams Come True
It’s no doubt that Obama’s stimulus package has jolted the US electric car industry into life. Anything from electric vehicles, fuel cells, battery technologies, hybrid vehicles to charging stations have turned into golden opportunity for investment. Even the Big Three, GM, Ford and Chrysler were pressured by the US government to make electric cars. The stakes are high here, as we look forward to reduce oil dependence. Yet this has caused another “gold” rush, i.e. rare metals which are important components in making the fuel cells and batteries and China is the main producer of rare metals. Meanwhile, expect the Japanese Toyota and Honda to continue to lead in the hybrid car sector.

7. Biofuel Flights Sizzle
With biofuels craze fizzling out this year, a good news from the industry appeared. Biofuel flights were tested successfully by 3 different airlines this year. In Jan 2009, Continental Airlines tested flight with 50% jet fuel, 47% jatropha, 3% algae in 1 engine (the first to use algae). In the same month, Japan Airlines tested flight with 50% jet fuel, 50% biofuel (of which 84% is camelina, 16% jatropha, less than 1% algae; the first to use camelina). In Nov 2009, KLM demonstrated the first passenger flight with 50% jet fuel, 50% camelina. Previously, Virgin Atlantic was the first to test flight with biofuel mix with 50% jet fuel, 20% mix of coconut and babassu oil in Feb 2008 (some people were mocking Richard Branson at that time!) while Air New Zealand tested flight in Dec 2008 with 50% jet fuel, 50% jatropha (the first to use jatropha). No doubt, we will see more of these biofuel flights realizing in the future.

8. Algae is Oil’s Best Friend
It seems like algae is the new biofuel. Exxon Mobil invested $600 million in Synthetic Genomics, a biotechnology company founded by none other than the genomics pioneer J. Craig Venter, in July 2009 to produce fuel from algae. BP, already an early investor in Synthetic Genomics, invested $10 million in Martek Biosciences in Aug 2009. Though it is applauding to see oil companies to look at alternative energy sources, Exxon Mobil’s latest $31 billion acquisition of XTO Energy, the largest natural gas producer in US, in Dec 2009 is a bet that alternative energy is not viable enough to meet US energy needs for the next few decades while hoping that the cleaner fossil fuel will reduce possible carbon tax in the future.

9. Smart Grid Gets Smarter
The smart grid has been hailed as the electricity Internet and it is such a big play that even the big IT players IBM (via its IBM Venture Capital Group) and Cisco are eyeing for a piece of it. In Obama’s stimulus plan, it calls for the creation of a smart grid and 40 million smart meters to be deployed in American homes. Smart grid may be the largest cloud (computing) and expensive but it will be lucrative for smart grid players. Silver Spring Networks, GridPoint, Trilliant, eMeter, Grid Net and SmartSynch are just some of the players that should benefit from the stimulus.

10. Water Splashes With Osmotic Power and Reverse Osmosis Desalination
In Nov 2009, Norway’s state-owned power company, Statkraft opened a prototype osmotic power plant which is the world’s first that generates energy by mixing fresh water with sea water. The idea of generating power from osmotic pressure gradients is actually an extension of reverse osmosis (RO) desalination. RO desal is used for water and wastewater purification, and such large plants are usually found in Middle East nearby power plants where they can easily get their electricity needs from oil. While the Middle Eastern plants consume oil to generate power for its desal process, Norway’s plant generates power from its desal process. I wish I could say much more for the water space but it is noteworthy that Kleiner Perkins has made its first water-related cleantech investment in APT. Hopefully we will see more VC investments in water-related cleantech next year.

Denmark leads the world in CleanTech

Using both wind and efficiency plays, Denmark leads the world in CleanTech on a GDP weighted ranking according to a recent report commissioned from the World Wildlife Fund and written by Roland Berger.  The ability to produce and sell products and services that reduce CO2 emissions is the key metric used to rank all 27 EU member states, BRIC and G7 countries.

Clean Technology recently passed pharmaceuticals for industry size, and is expected to be the third largest in the world by 2020 at (EUR 1,600 billion.) Between 2000 and 2008, wind grew at 24% and solar at 53%. It is this growth rate, and related demographic factors that form the backbone of the CleanTech investment thesis that this blog strongly supports.

Other notables: 2nd Brazil, 3rd Germany, 6th China, 10th Israel, 19th USA, 20th UK

Brightsource announces new Partnership with Bechtel

Source: Company

Source: Company

Brightsource announced that they selected Bechtel as their Engineering firm of choice for their 2010 Ivanpah Solar Electricity Generating System. The press release claims that the economic value of the Contract (and presumably the Plant itself) is some US$3bn. Only in December 2008, Brightsource announced that they contracted with Siemens (Siemens builds the largest Power Steam Turbine). The 123MW turbine is first large scale project of its kind.

Brightsource continues to impress with their execution. It appears that the Management Team is determined to prove its execution capabilities. Its Investor must be proud that this flagship project is continuuing to demonstrate momentum.

Ramco Energy: Paradigm Shift – transforming to Wind Energy Pure Play

Source: Company

Source: Company

Ramco Energy (or soon to be SeaEnergy Renewables) provided an interesting news item. Per BBC Report, Ramco plans to sell off its Oil & Gas business to focus exclusively on Wind energy. Nothing to special here but Stephen Remp (Executive Chairman) laid out the rationale: “cleantech and green-focused investment funds were reluctant to invest in the group while it retained its focus on oil and gas”.

This provides an interesting case study for many ‘traditional’ energy companies. In principal, CEOs are likely to come under more scrutiny to make a commitment either or. Although Investment Dollars clearly sit with CleanTech funds today, and this is likely to increase rather than decrease, the choice is not easy.

As I mentioned in my last post, IDC Report on Electric Utilities, today is more about long-term strategy and Organizational Change than short-term Shareholder concerns around near-term profitability. The question is are market forces agreeing with the change? I guess the future share price will tell us.