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Updated: 3 years 41 weeks ago

Was Smart Grid Funding Misspent?

Fri, 11/30/2012 - 12:00

A recent report from the National Institute for Science, Law & Public Policy came with a provocative press release title: “Smart Grid Funding Misspent on Obsolete Technologies.”

The press release got plenty of attention from the utility and smart grid news circles, but it’s tough to tell if any of those actually read the report, “Getting Smarter About the Smart Grid,” written by Timothy Schoechle, a consultant in computer engineering and standardization and former faculty member of the University of Colorado's College of Engineering and Applied Science.

The report primarily takes aim at smart meters, which got the lion share of stimulus funding. Schoechle raises many questions and concerns that many others in the industry have identified, including the value of smart meters (although he also does not acknowledge their value when connected to more end-to-end smart grid projects, as many others do); the question of data privacy; and the issue of whether the meters, in and of themselves, will save consumers money.

Schoechle, it could be argued, is thinking big -- maybe too big. Some of his criticisms of the White House’s Smart Grid Policy Framework may be fair, but many of the deeper issues, such as internalizing the cost of carbon-based fuels, are unlikely to be taken up by anyone in office. After all, the government can’t even get comprehensive federal energy efficiency policy in place, and it’s hard to hate efficiency.

Greentech Media recently spoke with Schoechle about the report, and where he thinks the bright spots may be on the path to a new electricity economy.


Greentech Media: Everyone has a different definition of smart grid. One of your criticisms is that smart meters became synonymous with smart grid. How do you define the term?

Timothy Schoechle: At first, we were all excited about smart grid. Originally, the most basic definition is using IT to improve the reliability of the grid. But in the last few years, that morphed into more than just reliability, and included balancing supply and demand, and enabling renewables. I think that’s broadened it a little bit.


GTM: In terms of federal dollars, where would you have liked to see money go to instead of smart meters?

TS: The money that went to distribution automation and distribution reliability was a good idea. I think the main research and development -- in the Pacific Northwest and at NREL -- those I’m very complimentary about. Even Berkeley Lab’s project with electric vehicles and Argonne National Lab -- I think that’s money well spent and should have been expanded. 

What irritated me was that the meters were touted as bringing other benefits, but they did not. I think the money should have gone into development of renewables and the national labs. The thing that bothers me right now is that the Department of Commerce initiated NIST involvement with setting standards. To get the real smart grid, you need to get standards. But what has happened is that Smart Grid Interoperability Panel has about 30 panels under NIST that they funded, but now they’ve pulled all the funding and are privatizing the entire committee. Now they’re expecting those who want to participate to pay up. The basic thing government should do is sponsor standardization.


GTM: In your report, there seems to be plenty of blame to go around, between utilities, regulators and the government. Where do you place the blame for what you see as a lack of willingness to truly tackle moving the electricity industry forward?

TS: I’d say the lack of federal leadership. They had the access to the expertise and they could have set the priorities and could have given the guidance that could have been given to the industry. While the federal labs have done a great job, the leaders have dropped the ball. The other place is the feeding frenzy by the vendor community to the utilities. The people who really pushed it and continue to push it are the third-party vendors. They are the ones who have misrepresented the data.


GTM: You state in the report that “standby power plants need to be engaged, along with renewable energy sources and smart grid technology, to completely eliminate baseload generation.” Can you explain what you mean by that?

TS: One of the most difficult concepts in this whole field is baseload generation. The idea of a baseload system based on coal or nuclear, it’s running at a maximum efficiency. When you use renewables, they’re variable. When you put that on top of a baseload, it’s a solution where you can’t use it all the time.

In Germany, they said they’d curtail the baseload. The baseload generators didn’t like that. So they were in a jam. But they figured out how to do it pretty well. In this country, the utilities make their money off of baseload. But what you have to do, you have to get rid of baseload and rely on renewables and peaker plants with some storage, whether pumped hydro or batteries.

The problem is the huge subsidies to carbon energy are not going to go away. And of course, nuclear couldn’t exist for a minute without heavy subsidies. The future is in community systems. With the decline in stimulus efforts, utilities are losing interest in the smart grid. That’s why I think the smart grid controversy is a good place to start; it draws attention to the issue. It’s like we have to give up on the feds and regulators and take this matter up on a local basis and build community systems. I think if Boulder is successful in doing this [starting its own municipal utility], it will be a model for the whole country.


GTM: Is there any utility in the U.S. -- investor-owned or co-op/muni -- that you think is making good progress on becoming the utility of the future?

TS: As far as municipals go, the best one I know of is Austin Energy. Their project, Pecan Street, has done a lot of good stuff. Gainesville [Regional Utilities] with net metering. Avista Utilities, they’re trying a little of everything.


GTM: You have a variety of regulatory policies you’d like to see changed, if you had to pick one or two in the short term, which do you think are the most important to effect change in the utility industry?

TS: To lighten up on municipalization. […] The PUCs and legislatures need to enable communities to develop community-based systems.

The reason for municipalization in Boulder is not the price of electricity; it’s the access to renewable energy. The citizens are very into renewables and the utility’s basic incentive doesn’t work that way.


GTM: What’s your assessment of Green Button?

TS: What they were trying to do was figure out what to do with this data. Some people said, “At least if we standardize the format, then entrepreneurs will come up with devices and apps that can use it.” They said, “We don’t really know how to use it. But someone will figure it out.” It’s kind of a leap of faith. I think it’s a useless effort. It’s well-intentioned, but it’s not the answer.


GTM: Is there an area of smart grid and clean energy where you’re hopeful?

TS: I’ve heard of a number of projects of combining wind farms and peakers to create a pseudo-baseline system. I’m not a big fan of big transmission, and we should use electricity as close to where it’s generated as possible. But combining wind, hydro and sun in a peaker plant could create a new utility.



Wind Power: China Courts Deliberate While AMSC Scrambles

Fri, 11/30/2012 - 08:00

AMSC (NASDAQ:AMSC), still struggling against international and domestic economic and political headwinds, has taken steps to cut costs and increase liquidity.

China’s Supreme People’s Court heard one of the AMSC copyright infringement cases against Sinovel on October 26. It is one of the smaller of AMSC’s efforts at legal recourse in China following Sinovel’s alleged abrogation of contracts and criminal violations of AMSC intellectual property (IP) rights. That the Chinese court heard the case at all could be a sign the wheels of justice are rolling. However, almost a month later, no decision has been rendered.

AMSC cut its workforce by 25 percent and is consolidating office space to lower operating costs and enhance liquidity. The changes will cut into AMSC's wind and grid business operations and be imposed across all its international locations. AMSC expects the moves to reduce annual expenses by approximately $10 million; total expenses will fall to less than $58 million by the fiscal quarter ending June 30, 2013.

"While the long-term prospects for renewable energy remain bright, conditions in the sector today are challenging," AMSC President/CEO Dan McGahn said. "Financing and cash flow among wind farm developers and wind turbine manufacturers have been constrained, which has impacted growth plans for some of our Windtec™ Solutions partners.”

AMSC will delay shipment to customers of Windtec wind turbine electrical control systems.

The impact of Sinovel’s actions have been profound. AMSC's revenues -- over $180 million in 2008 and over $350 million in 2010 -- fell to just below $80 million for fiscal 2011. At the end of fiscal year 2010, the company had over 800 employees. At the end of fiscal year 2011, there were 400 left. With the layoffs just announced, that number has fallen to 340.

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For Q2 2012, AMSC delivered on its targets, McGahn reported recently. Revenues were $20.9 million, just better than Q2 2011’s $20.8 million. Its net loss was $15.9 million ($0.31 per share), versus a Q2 2011 net loss of $51.7 million ($1.02 per share). Thanks to the new austerity measures imposed to address its Q3 difficulties, AMSC now expects its third-quarter 2012 revenues to exceed $20 million and its net loss to be less than $24 million ($0.46 per share).

Sinovel led China's 2008-to-2010 wind industry explosion. AMSC provided turbine designs and power electronics and controls. With China’s unprecedented growth, AMSC found itself facing, by 2011, the hard job of diversifying away from a customer demanding 70 percent of its business capacity without letting new Sinovel orders go.

In March 2012, AMSC was still working at diversifying when Sinovel unexpectedly refused delivery of contracted shipments of wind turbine core electrical components. Sinovel told the Chinese media it refused the AMSC shipment because of a “failure to perform,” alleging that AMSC had provided “backward technology.”

Subsequently, an Austrian court found a former AMSC employee guilty of taking money from Sinovel for surreptitiously transferring proprietary computer codes for that supposedly “backward technology.” Evidence for conviction of the employee included emails containing the bribe offer, the technology transfer, and the money transfer, as well as proof the stolen technology is being used in a Sinovel customer’s turbines.

AMSC is pursuing recompense in Chinese courts. The October 26 hearing is about one of four cases, requesting a total of $1.2 billion in losses and damages, working their way through the Chinese legal system. The outcome is likely to set an historical precedent for what intellectual property protections are available to foreign companies in China.

AMSC’s present difficulties are aggravated by setbacks in the wind industry internationally.


Source: The GTM Research-Azure International 3Q 2012 China Wind Market Quarterly

Indicative of troubles in China, described by a new quarterly assessment from GTM Research and Azure International as “the best of times and the worst of times,” are the uniformly discouraging 3Q financials from Goldwind, Ming Yang (NYSE:MY) and Sinovel, its three biggest players.

Goldwind announced a Q3 year-on-year operating revenue drop of 41.73 percent from Q3 2011 and a year-on-year net profit drop of 117.62 percent. In the first three quarters of 2012, company operating revenue dropped 36.88 percent year-on-year and net profit fell 93.74 percent year-on-year.

Ming Yang announced a Q3 year-on-year drop in wind power project output of 58.9 percent from Q3 2011, a year-on-year total revenue drop of 58.6 percent, a gross profit year-on-year drop of 55.1 percent, and a total income drop of 94.4 percent from Q3 2011.

Sinovel will lay off 350 workers following its announced Q3 2012 loss of 280 million yuan as compared to a Q3 2011 242 million yuan profit and an 82 percent drop in Q3 2012 operating income as compared to Q3 2011.

As causes for their difficulties, the Chinese turbine manufacturers cited issues that have impeded growth in the entire Chinese domestic wind market, including the structural obstacle of inadequate transmission and the economic obstacle of undispersed subsidies from the Chinese central government.

The China market slowdown, the collapse of the 2013 U.S. market due to the political impasse preventing renewal of the vital production tax credit (PTC), and the slowing of the European wind market due to the ongoing economic and fiscal downturn combined to impede AMSC’s efforts to grow its business and provoked the new cutbacks.


Source: The GTM Research-Azure International 3Q 2012 China Wind Market Quarterly


Podcast: Innovations in PV Manufacturing Can Help Save the Solar Market

Thu, 11/29/2012 - 19:08

In this podcast, Greentech Media CEO Scott Clavenna talks with Andrew Gabor, solar PV technology expert and author of the GTM Research report Innovations in Crystalline Silicon PV 2013: Markets, Strategies and Leaders in Nine Technology Areas about how innovations all along the PV manufacturing value chain can lower costs, improve efficiency and increase reliability -- all necessary ingredients for struggling solar companies to stay competitive in this challenging market.

Gabor asks whether today's solar manufacturing firms can afford not to invest in advanced solar manufacturing.

Our weekly podcasts let you hear from GTM research analysts, editors, reporters and the occasional special guest. Stay tuned and thanks for listening.

Subscribe to the podcast series through iTunes. Click here to visit the iTunes store.


Smart Grid’s Next Frontiers: DG, Storage, Microgrids

Thu, 11/29/2012 - 17:26

It’s a truism in the smart grid industry that all of the disparate technologies that fall under the categories of smart meters, distribution automation, generation and transmission control systems, high-speed communications networks, and the rest will someday link into a bigger, smarter whole. But to what end?

A new survey, commissioned by IEEE and conducted by Zpryme, takes a crack at answering that question for three key technologies – energy storage, microgrids, and distributed generation technologies like wind, solar and onsite power.

Zpryme surveyed 460 energy industry executives from around the world, and came out with a lot of conclusions (you can download the report here [PDF].) Some are more predictable than others: to no one’s surprise, smart grid executives want to increase public- and private-sector funding for smart grid research and development.

Likewise, each of the three technologies in question will need energy management systems, distribution management systems and communications technologies on the grid to support them -- this constitutes the underlying ICT framework of the smart grid.

But the 32-page report also has a wealth of useful information on just where smart grid executives are focusing their attention when it comes to customers and business models to get these technologies out into the field. Notably, much of this new stuff will be outside the utility’s control and in the hands of the customer, in the form of “distributed energy systems,” to use the report’s parlance.

That doesn’t mean that utilities aren’t customers themselves of these three technologies: survey respondents expect nearly half the growth in distributed generation over the next five years to come from utilities -- more than residential at 46 percent, manufacturing at 42 percent, and government at 41 percent.

Still, that leaves a lot of new technologies in the hands of customers. That’s going to lead to new business models, revenue streams, and third-party arrangements that the monolithic utility industry hasn’t faced before, the report found. Utilities wanting to make it all work to their benefit will have to find ways to serve these new models and markets.

That’s going to make customers a critical part of this stage of development, Andres Carvallo, a member of the Zpryme smart grid advisory board and EVP and chief strategy officer of smart grid network management startup Proximetry, said in a Wednesday interview.

Carvallo noted a few surprises in the report, such as the relative lack of interest seen amongst smart grid executives for their technologies in the retail and construction businesses. He also saw less interest in developing countries and economies than he expected. Broadly speaking, Europe leads the world in distributed generation and microgrids, according to survey respondents -- not surprising, given the continent’s wind and solar resources and goals -- while North America has more energy storage technology.

Microgrids, Storage, Wind and Solar

On the microgrid front, while the military has been a big backer of the technology, it turns out that smart grid execs see hospitals and health care as even bigger future customers, according to the survey. That makes sense, of course -- hospitals have required constant backup power for decades to maintain critical life support systems, making them natural candidates for microgrid-like systems.

At the same time, microgrids also need a lot of work on the standards front (something IEEE has been intimately involved in via its 1547 standard development work) before they can be widely adopted into the grid. In the meantime, real live microgrids are up and running today, whether they’re on military bases, data centers or remote telecommunications sites, but they’re not linked to the smart grid in any standardized way. 

For grid-scale energy storage, the key barrier remains high cost, according to two-thirds of survey respondents. Traditional pumped hydro projects, while efficient, cost billions and are limited to convenient canyons and rivers that can be dammed. Batteries, in the meantime, are still quite expensive compared to just bringing more power to the grid, although they can pencil out in key uses, like relieving stressed-out grid corridors that would otherwise need to be upgraded.

At the same time, utilities face growing challenges in managing intermittent renewables and peak power loads, which, along with falling battery prices, could expand the market. Overall, one-third of executives surveyed said the global grid energy storage market would increase by 1 to 5 gigawatts over the next five years, while another third put the increase in 5.1 to 10 gigawatt range, and smaller numbers predicting even greater growth.

The last category, distributed generation, bears close watching, because it’s a category that’s far less under the sway of utility control. Whether via mandate or free-market forces, utilities are seeing more and more intermittent wind and solar power resources being linked to their grids -- and being asked to handle that unpredictable, potentially destabilizing flow of power.

Survey respondents were all over the map in predicting how much new distributed generation capacity was coming. Just over a quarter predicted global distributed generation capacity would grow by 10.1 to 15 gigawatts over the next five years. Another 22 percent predicted less growth, of 5.1 to 10 gigawatts over the next five years -- but another 21 percent said distributed resources could boom by more than 20 gigawatts by 2017.

ARPA-E Funds 66 Cutting-Edge Energy Technologies With $130M

Thu, 11/29/2012 - 15:00

There are differences in opinion about the wisdom of governments picking winners or losers in an ostensibly free market. There are sound arguments on both sides.

But few would suggest that the government has no place in funding basic research. 

Cheryl Martin, Deputy Director for Commercialization for the Advanced Research Projects Agency – Energy (ARPA-E), spoke at a recent AlwaysOn event in San Francisco and noted that ARPA-E is about "funding things that other people won't fund."

Along those lines, Energy Secretary Steven Chu just announced 66 cutting-edge research projects selected by ARPA-E to garner a total of $130 million in funding through its “OPEN 2012” program. These are potentially disruptive technologies that are too early for private-sector investment. 

The selected projects in twenty-four states span eleven technology areas including:

  • Advanced fuels
  • Advanced vehicle design and materials
  • Building efficiency
  • Grid modernization
  • Carbon capture
  • Renewable power
  • Energy storage


Approximately 47 percent of the projects are led by universities, 29 percent by small businesses, 7.5 percent by national labs, and 1.5 percent by non-profits. ARPA-E’s has funded about 285 projects with approximately $770 million in awards.

We're going to home in on a few of the grant winners over the coming weeks; look for a profile on Dr. Harry Atwater's approach to achieving greater than 50 percent solar efficiency at Caltech. But in the meantime, here's a list of the recipients reprinted from the ARPA-E document (click to enlarge):





























Next Wave of Solar Roofs Built by Electrical Contractors and Roofers

Thu, 11/29/2012 - 14:00

There are two remarkable things about the 25-kilowatt solar system just completed by Frederic Roofing. The first is how unremarkable the 84-year-old roofing company’s first solar installation was and the second is where the company will build its second system.

“Probably the hardest part of the job was getting everything up on the roof,” VP Gene Frederic said of the installation on the AJ Adhesives distribution warehouse. “Once that was done, it wasn’t that big a deal.”

AJ Adhesives requested Lightway solar panels. St. Louis solar developer Clean Power Design selected Renusol America’s ballasted non-penetrating racking and Fronius inverters.

Before the first installation was complete, the roofer contracted to install almost the same system, using Sharp panels, on its own headquarters.

“We kicked around the idea of getting into solar for three or four years,” Frederic said. “The utility rebates were there, but what they were getting paid and what they were paying didn’t make sense” -- especially because of Missouri's low-priced, coal-generated electricity. “Now that the price of panels and racking has gone down, it makes sense.”

Both AJ Adhesives and Frederic Roofing will get a $2.00-per-watt rebate from Ameren Missouri (NYSE:AEE) and will max out the 25-kilowatt limit for their flat-roof systems, Frederic said.

“That is the next wave in our industry,” said Clean Power Design founder Jason Loyet. “Frederic Roofing has built thousands of roofs. It is now going up the solar learning curve. We are now doing a project on their headquarters. In Tennessee, we have done projects across the state and our first wave was installs on contractors’ roofs.”

Loyet has been in solar in the Midwest and the Mid-South since a 2005. “I saw an opportunity in the solar industry in focusing on the last mile of solar development, in distribution, and on empowering local electrical contractors and roofers to be the solar installers of the future.”

Those contractors in Tennessee, Loyet said “have gone way up the learning curve. They now have experience at installation and at servicing inverters and seeing what a solar system’s production is on their own property.”

Solar, Loyet said, “is a natural fit for roofing and electrical contractors. It is not far outside what they already do. Now they are putting the pieces together. That is what the next wave is.”

Sun is not a problem in the Midwest, Loyet said. “The DOE maps show there is as much insolation in Missouri as in parts of Florida. Look at the Midwest compared to Germany. In Illinois, people ask if solar will work there. One answer we give is, ‘Look how tall the corn grows.’ There is an enormous amount of sun in the Midwest. "

The challenge, Loyet said, is that “we are coal-reliant states. We are competing with coal and very low electricity rates.”

Those low rates have also prevented third-party ownership (TPO) programs like those operated by Sunrun, SolarCity and Clean Power Finance from growing. “Those programs have matured where the cost per kilowatt-hour is higher than in the Midwest,” Loyet said. “Power may be eight to ten cents in the Midwest and sixteen to twenty cents in California.”

But, Loyet said, the Midwest will likely see the highest electricity price inflation in the U.S. "You are already seeing year-on-year double-digit electric inflation. That is where solar is going to make an impact. It will level out the cost of energy and offer a locked-in price.”

A recent report documenting state-by-state delivered costs of coal from advocacy group Clean Energy Action showed significant inflation over the last eight years. As examples, Missouri went from $0.92 per MMBTU in 2004 to $1.72 per MMBTU in 2011, Illinois went from $1.16 to $2.01, Arkansas went from $1.23 to $1.91, and Tennessee went from $1.33 to $2.82.

“It used to be,” Loyet said, “that if you put 3.5 percent inflation in front of a conservative CFO, he would balk. Not anymore. The shift has taken less than five years. People accept that the next twenty years of energy is not going to look anything like the last twenty years.”

Loyet talked about two inter-related challenges to Midwest solar growth. First, he said, “is the learning curve. It is still an early market. There are not a lot of pure-play solar companies.” Second, he said, “there are not a lot of incentives and utility programs. So there hasn’t been an uprising of solar installers at the grassroots level who can go out and educate the market.”

The way forward, he said, “is electrical contractors and roofers.” They know the markets and don’t yet have competition from pure-play solar companies. “You will have more electrical contractors and roofers offer solar as a service under their umbrella. They have every tool in their tool belt. Together, they have the core competency to compete.”

A lot of contractors have learned solar working as sub-contractors to pure-play solar companies, Loyet said. They are ready to go out and educate the market, do the marketing and sell systems.

“What you are seeing with Frederic Roofing is the future. There are thousands of roofing contractors and electrical contractors across the nation taking this first step. That is how we are going to build out the next generation of power.”

Wind Power in China Sees Enormous Growth, Immense Challenges

Thu, 11/29/2012 - 13:30

“For the Chinese wind industry as a whole, 2012 appears to be another year combining elements of the best of times and the worst of times,” reports a new quarterly assessment from GTM Research and Azure International.

Though 3Q financials from China’s biggest turbine manufacturers like Sinovel, Goldwind, and Mingyang (NYSE:MY) confirm a sharp fall in revenues, the Chinese wind industry installed 2.9 gigawatts of grid-connected and non-grid-connected capacity, bringing China to a cumulative 71 gigawatts at the end of the quarter. It is on track to pass the 50-gigawatt cumulative grid-connected capacity mark in 2012 and reach its highest annual installation number, approaching eighteen gigawatts for the year.

According to the GTM Research-Azure International report, China's wind industry is on track for a cumulative 80 gigawatts by the end of 2012 and 150 gigawatts of installed capacity by the end of 2015. That would dramatically exceed the 100-gigawatt 2015 target set by China’s 12th Five-Year Plan in 2011.

China wind, however, faces “immense challenges,” according to the report, “from ongoing problems with grid connection, ever-growing amounts of curtailed wind generation, new restrictions from State Grid on who can connect, and, perhaps most importantly, uncertainty about whether policymakers will do as they have done in the past to ensure the sector continues its rapid growth.”

Source: GTM Research-Azure International China Wind Market Quarterly

The 3Q 2012 numbers show that “more rational allocation of capital toward projects with the largest potential to supply needed energy at low cost is still some ways off: curtailment is still a huge problem, and industry profits are in a nosedive," according to the report.

“China’s wind industry retains its leadership position worldwide, whether looking at policy targets, overall installation numbers or innovation,” said Anders Hove, one of the report’s authors. “Fully understanding the world’s largest wind energy market requires an in-depth understanding of complex issues, and that’s why this report is timely. We need to understand the reasons for interconnection delays, develop an expectation for future curtailment, and look province by province at the cash flow issues created by slow disbursement of renewable energy surcharge funds.”

“China represents the world’s largest and in many ways most important wind power market today,” said Scott Clavenna, CEO of Greentech Media. “By launching a new quarterly report series with Azure International, GTM is aligning with a respected consultancy in the Chinese cleantech market, with a particular focus on wind power.”

The 70-page report includes analyses of wind capacity by manufacturer, wind capacity by developer, wind capacity by geography, curtailed wind power in China by geography, China’s wind policies, and major wind company financial trends.

Source: GTM Research-Azure International China Wind Market Quarterly

Is Philadelphia the Next Center for Building Energy Efficiency?

Thu, 11/29/2012 - 12:00

Philadelphia is not exactly a hotbed of clean energy and green buildings activity compared to San Francisco or even New York. That’s what makes it the perfect place to instigate real change when it comes how buildings are operated and retrofitted.

The Energy Efficient Buildings Hub, a U.S. Department of Energy innovation cluster, was opened in early 2011 to push for energy efficiency in the greater Philadelphia area, where it is located. The Hub has already had some early successes. It served as a technical advisor to the city to pass an energy-benchmarking ordinance that is similar to what some other large cities have on the books. In the New Year, the Hub will start a deep retrofit of a building in the Navy Yard to use as its headquarters.

“Our relationships with our utility and our regulator are growing and we’re becoming a point of innovative ideas,” said Laurie Actman, deputy director of EEB Hub. The Hub is also part of the negotiations as the state’s public utility commission looks at on-bill financing.

Ultimately, however, the Hub’s impact is meant to be national and not just regional. But making significant impacts in Philadelphia could give a framework for how to improve buildings in other cities.

Energy efficiency makes so much sense, but there is a complexity to deep retrofits and a lack of motivation by building owners, said Actman. The Hub is interested in tackling those complexities and finding ways to make it easier for the average building owner. As studies have shown, benchmarking can make notable improvements in energy use, and then “it will be a catalyst for engagement in market activity,” said Actman. Like New York, Philadelphia buildings 50,000 square feet and bigger will have their energy scores disclosed on a public website.

Along with a retrofit of its own building, the Hub currently has an RFP out for ten to twenty demonstration projects that will highlight different strategies to get to 20 percent energy savings. The Hub is not looking to develop new technologies or compete with the market; rather, “we want to enable it,” said Actman. Each retrofit will get up to $150,000 to help it move along.

Financing is just one hurdle, but the larger roadblock is awareness and time. The Hub is also launching building operator training to teach facility managers how to self-commission their own building using basic building management system data, “Right now you have to hire a commissioning firm to test systems to find the proverbial low-hanging fruit,” noted Actman. Of course, that is changing with more and more data analytics firms joining the market. Many software companies offer basic energy management data for free with the hopes that buildings will take that information to make decisions on retrofits.

The Hub is working with national organizations, such as ASHRAE, USGBC and the Institute for Market Transformation, as well as vendors and other industry participants -- including policymakers and utilities.

Ultimately, the Hub hopes to deliver a state-of-the-art modeling platform that integrates the entire retrofit process, from design to daily operation. The platform ideally could be used for buildings both small and large, and in places far and wide. “Our intention is to take what we can demonstrate in our footprint and export that nationally,” said Actman.

Cape Wind Power Deal Brings Offshore Wind Closer

Thu, 11/29/2012 - 11:00

Cape Wind, the long-sought and long-fought offshore wind farm planned for Nantucket Sound, got a boost this week when state regulators approved a power purchase agreement for more than a quarter of the project’s energy.

Project developers already have a deal in hand to sell 50 percent of the power to National Grid, so the newly approved PPA with NStar for 27.5 percent of the power puts Cape Wind well on the way to locking up the customers it needs -- a key to unlocking financing to build the controversial wind farm.

“Taken together, these two PPAs provide Cape Wind with the critical mass to continue securing project financing,” Theodore Roosevelt IV, managing director of Barclays and Cape Wind’s financial advisor, said in a statement put out by the developers.

Cape Wind, now fully approved, has had to struggle on multiple fronts to turn the vision of a 130-turbine, 420-megawatt project into reality, waging public relations and legal battles against opponents who have cited environmental, air traffic, cultural and economic concerns.

One of Cape Wind’s biggest fights was over the National Grid PPA. The parties struck a deal in May 2010, and it was approved by regulators in December that year, but it wasn’t until December 2011 that the Massachusetts Supreme Judicial Court upheld the PPA.

Cape Wind had struggled to find a buyer beyond National Grid, but as Offshore Wind Wire reported, it caught a big break earlier this year:

In 2010, utilities NStar Electric Company, NStar Gas Company, and Western Massachusetts Electric Company along with holding company parent Northeast Utilities petitioned the Massachusetts Department of Public Utilities (DPU) for approval of a proposed $17.5 billion merger. After over a year of litigation at the DPU, last week Governor Deval Patrick announced that his administration had negotiated an agreement to settle the merger case. Under the proposed settlement, the utilities would be allowed to merge under a series of specified conditions. These conditions are designed to create enhanced ratepayer benefit, and include a one-time credit to utility customers totaling $21 million.

The settlement conditions would also require the merged utility to enter into a contract to buy 27.5 percent of the electricity to be produced by the Cape Wind offshore wind project, or 129 megawatts, for a 15-year term.

The deal with NStar, like the one with National Grid, initially sets the price per kilowatt-hour of electricity at 18.7 cents, rising by 3.5 percent annually.

“This contract is another step forward in fulfilling the statutory renewable energy and greenhouse gas emissions reduction goals set forth in the Green Communities Act,” DPU Chair Ann Berwick said in a statement. “It is clear that the Cape Wind facility offers significant benefits that are not currently available from other renewables. This contract supports the largest renewable energy project proposed in New England while providing protections to consumers against the volatility of fossil fuel prices.”


Editor's note: This article is reposted in its original form from EarthTechling. Author credit goes to Pete Danko.

Energy Cache CEO on Selling Into Energy Markets, Grid Storage, and Scaling Up

Thu, 11/29/2012 - 09:00

Cleantech marketing isn’t IT marketing. 

There isn’t much of an evangelical early adopter market, there may be few network effects -- but the market size is still phenomenal. The sooner entrepreneurs and investors get this, the better.

At this year’s AlwaysOn Going Green event, both investors and entrepreneurs were tripping over themselves in a rush to declare that they were actually “cleantech IT." This rebranding was due to the challenges that have been experienced when trying to bring cleantech products to market using traditional technology marketing strategies. The hope is that a repositioning to IT-type markets will make customer adoption easier.

However, the biggest problem of some cleantech businesses -- particularly large, utility-scale businesses like power generation -- is that they don’t follow the traditional “early adopters/early majority/late majority” model made famous by Geoffrey Moore, and before that, by Everett Rogers. Instead, with the siren song of the cleantech market being the sheer size of the potential market, most firms position themselves to enter the market by skipping the early-adopters phase, because there is no early-adopters phase.

What happens instead is that a company will build a reasonably sized demonstration -- say, a 5-megawatt solar plant -- and the next attempted step is a utility-scale 200-megawatt plant, with no reasonable path in between. The problem with that step function is that it is nearly impossible to deliver on. A 200-megawatt solar facility requires hundreds of millions of dollars in debt and equity -- financing which won’t come without a well-proven track record of performance (particularly debt financing). As was stated many times at the conference, customers and financiers all want to be first in line to back the third major installation. Ira Ehrenpreis of Technology Partners remarked today that there is still a persistent valley of death between venture capital dollars and project finance dollars, and bridging that gap is essential. The vicious catch-22 of “You can’t get funding until it is proven; you can prove it without funding” is incredibly strong.

Nobody wants to be first.

How can a company address this? Here at Energy Cache, we’ve taken some good-natured ribbing at being that wacky company that lifts gravel on ski-lifts. But in truth, that approach was very calculated -- for two reasons. When I founded the company, I felt that the biggest problem facing clean technology companies was the marketing and financing problem discussed above, not the technology problem. I set out to come up with a solution which used components from proven industries that we could point to, reducing uncertainty about lifetime, performance, and cost. These industries include mining, ski-lifts, cranes, etc. There is an abundance of suppliers and expertise that already exists to reduce development cost and risk. Secondly, I set out to build a modular solution that had a feasible market at the 1-megawatt, 10-megawatt and then 100-megawatt scale, without requiring a huge step function in construction.

Many companies are well adopting the second strategy, by building modular units which can be deployed at variable scales. However, few companies are adopting the first -- which makes sense, given the incentives. While the demands of the market are for proven technology, the implicit demands of the investment community and the government finance community are for cool, breakthrough, technology-focused solutions. And this creates a problem.

So, what’s the solution? First off, businesses that don’t have an early-adopter possibility -- businesses that only work at large scale before they make economic sense? Those are going away.

I spent several years working on fuel-cell development, but one of the reasons I eventually felt that electric vehicles would penetrate the market first is that all of the work on batteries for the parallel industry of laptops and cell phones would benefit the EV industry. There wasn’t an equivalent market driving cost and risk out of the automotive fuel-cell industry.

Secondly, it is important to draw a thick red line around what is the technology risk, and what isn't, for the business. All other risks need to be identified and driven as close to zero as possible. For example, some solar companies are trying to address this problem by reducing their debt financing needs from twenty years to seven years.

Technology and IT market innovators and early adopters love new technology and are willing to take technology risk to adopt new products. Regulated energy and utility markets do not like, and in some cases are forbidden from, taking technology risk. 

To grow a cleantech company without recognizing these facts will result in a very painful impact with a very high brick wall.


Aaron Fyke, PE, is founder and CEO of Energy Cache, an energy storage company in Pasadena, Calif. Here's video of a 50-kilowatt demonstration system from Energy Cache:

Onzo Sells Hardware to SSE, Focuses on Analytics

Wed, 11/28/2012 - 18:00

The push for market space in the wide world of home energy management is squarely in the side of analytics. Onzo, a U.K.-based maker of energy dashboards and devices, has become the latest company to ditch its hardware to focus on analytics.

Scottish & Southern Energy announced on Wednesday that it purchased Onzo’s hardware and digital delivery division for an undisclosed amount. SSE is not a surprising buyer, since it already held the rights to distribute Onzo’s hardware in the U.K. and Ireland and held a significant investment in the startup.

Unlike in the U.S., where almost no one is talking about home energy dashboards anymore, Nick Hunn, CTO of Onzo, noted that the U.K. is mandating in-home displays when smart meters are deployed in the coming years.

But like the U.S., it’s unclear how much of the data collecting functionality of the meters will be turned on as soon as they are installed. The problem for utilities is that, if they are collecting interval data, then they have to secure it, store it, and ideally, do something with it. For many utilities, that is biting off more than they can chew. Other companies, like EnergyHub and Tendril, have also de-emphasized their hardware plays (but not totally ditched them) as they invest in analytics.

Either way, smart meters will be installed across the U.K. The government has required that all households have dual (electricity and gas) smart meters by 2020 -- a figure that will mean about 47 million devices will be put in place in the coming decade. 

Large British utilities, like SSE and BritishGas, have been building partnerships and investing in home energy management companies for years as they prepared for the future (BritishGas has invested in AlertMe). American companies like Trilliant and Opower have also jumped across the pond for a piece of the action.

The most appealing part of the action is that the U.K. is a deregulated market where energy retailers compete for customers. Increasingly, having energy services and energy management options are becoming the norm. By shedding its hardware division, Onzo will be able to double its analytics staff.

“When Onzo was first founded, its goal was to become the leading provider of insight to the utility industry,” Joel Hagan, CEO of Onzo, said in a statement.  “In the early years we struggled to obtain data, which is why we diversified to develop our own range of sensors and displays. With the progress in smart metering, which is starting to produce a real flow of user energy data, this is the ideal time to refocus on that original goal.”

Although smart meters are coming, the speed of markets between utilities installing smart meters and retailers expanding energy services is vastly different. “What we discovered was there was a lot of smoke and mirrors and not a lot of real data coming out of smart meters yet,” said Hunn.

Onzo’s analytics can take a single stream of information off of meters (that don’t have to be smart) and get information about appliance use by disaggregating the different electronic signatures of various appliances. Onzo is not the only company picking up on the unique fingerprints of individual appliances: everyone from AlertMe to Intel is working on similar technologies. Hunn said that the data is fully encrypted and secured.

It needs to be secure, because by understanding the use of individual appliances, the technology can learn a lot about living patterns. That information can be used so that utilities can better target households that could shift usage to different time-of-use plans, rather than those that are on set schedules that aren’t as flexible.

Customers of Onzo are already delivering bills that break down energy use by different tasks, such as laundry, cooking and heating. “We haven’t found a single customer that doesn’t want more data,” Hunn said.

By becoming hardware-agnostic, Onzo is now not a competitor to other companies it might want to partner with, such as thermostat makers. Onzo is also imagining a world beyond the U.K. borders, and beyond energy all together.

Other deregulated European countries and Australia are attractive markets for advanced analytics that allow retailers to build novel applications and services to get -- and keep -- customers. Additionally, granular information about people’s daily lives could be of use completely outside of the energy sphere.

Hunn noted that families with elderly relatives in assisted living could opt to get alerts if regular patterns started to change, which could imply that the relative is not well, forgetting things or not taking medications. Again, security issues would be paramount, and any program would have to have customers opt in. But people might like data about their living patterns for a variety of reasons, said Hunn. “We see the derived data going way outside of the utility business.”

The Smart Meter-Home Security Connection

Wed, 11/28/2012 - 17:00

Earlier this month, we reported on the launch of Southern California Edison’s new program to connect customers to the wealth of data in the new smart meters attached to their homes. It’s one of a handful of utilities in the country (outside of Texas, that is) offering real-time smart meter ZigBee radio-to-home gateway connectivity via third-party devices. But with California regulators asking all of its utilities to start turning on their home area network (HAN) capabilities, it won’t be the last.

Last week, SCE launched another smart-meter-to-home program that further tests the boundaries of the smart grid by enlisting home security company ADT as a partner. The utility will use its SmartConnect meter platform, which provides customers a link to its AMI network, to enable its meters to beam data directly to customers of ADT’s Pulse platform -- the security giant’s move into broader home automation and connectivity services.

ADT Pulse uses a broadband-connected gateway in the home that talks wirelessly to door locks, light switches, motion detectors, video cameras and other devices. It also pulls all that data back up to the cloud, where it can provide Web and mobile interfaces to customers -- all moving in pretty close to real time, Don Boerema, ADT’s chief corporate development officer, told me in an interview.

While ADT has 6.4 million customers across the country, the company doesn’t disclose how many Pulse customers it has, or how many are in SCE territory, Boerema said. But for existing Pulse customers, getting real-time home energy usage data from the utility will now be as simple as calling or going online, then having an ADT rep come by and plug a ZigBee radio module into the existing Pulse gateway, he said.

This is far from the first utility program to connect homeowners to their smart meters. We’ve seen lots of smart meters linked up to in-home platforms from startups like Tendril, Opower, EnergyHub, Energate, Onzo and AlertMe (to name a few), with demand response providers like Comverge, thermostat giants like Honeywell and Cooper Power (now part of Eaton) and networking providers like Digi also playing a role.

Some of these projects, such as Ontario province’s time-of-use pricing program, or Oklahoma Gas & Electric’s demand response program with Silver Spring Networks and Energate, are up and running on a commercial basis. But all of these programs involve utilities making deals directly with customers, then delivering them gear that’s been tuned to work with the technology the utility has in place.

Promising that any third-party device will be able to connect to your smart meter is another matter entirely -- in fact, the California Public Utilities Commission has put pretty strict guidelines on how utilities in the state certify its third-party HAN devices. At the same time, the CPUC has been pressing the state’s big three utilities -- SCE, Pacific Gas & Electric and San Diego Gas & Electric -- to open up their smart meters to more third-party technologies

ADT has built its platform in partnership with iControl, the Palo Alto, Calif.-based startup that’s raised more than $100 million, most recently with a $50 million Series D round last summer. Investors include Cisco, Comcast Ventures, Intel Capital, Charles River Ventures, Kleiner Perkins’ iFund, Rogers Communications and Tyco International, the parent company of ADT. (Right now, ADT Pulse uses Z-Wave wireless to connect its in-home devices, although iControl has also bought another startup, uControl, that uses ZigBee.)

As for linking up SCE’s smart meter ZigBee communications, ADT has worked hand-in-hand with the utility using the latest standards available. Right now, that means Smart Energy Profile 1.x, which only works with ZigBee, though it can be bridged to other networks. Utilities in California and across the country are awaiting the release of the next version of the standard, SEP 2.0, which will include Wi-Fi and the powerline carrier HomePlug standard as well, some time next year.

In the meantime, the ADT-iControl collaboration is only one of many taking place between retail and telecommunications providers and startups with technology to manage wireless networks and consumer interfaces in the home. Lowe’s is working with U.K. startup AlertMe, EcoFactor is working with Comcast, and iControl is partnered with Time Warner Cable, while AT&T and Verizon also have their own home automation offerings.

In the meantime, home security as a standalone service appears to be the next hot space for technology investments by VCs and private equity firms alike. Home security startup raised $136 million for its connected home services this summer, marking one of the biggest investments in the smart grid sector so far this year, and home-security-plus-third-party-solar player Vivint was bought by private equity firm Blackstone Group for $2 billion in September.

When it comes to making energy efficiency a part of all this newfangled home automation gear, the big question for all of these players is whether their customers care enough about energy to pay extra for it. Most homeowners have said they’re unwilling to pay much more than $50, if anything at all, to view their home energy use.

Utilities may be ready to foot much of that initial bill, at least at first. Most pilot projects involve giving away devices to customers in exchange for being able to use their data for research. It’s likely that utilities will also rebate a significant portion of the cost of third-party devices, as well -- SCE, for example, offers a $50 rebate for the $60 cost of in-home devices from Rainforest Automation, another third-party HAN partner.  

The cost equation for a standalone home service like ADT’s can get a bit more complicated. The company’s SCE program web page contains a number of special offers for customers of the Pulse service that could reduce their bills, as well as promises of $100 in bill credits via the utility’s “Save Power Day Incentive Plus” program. Pulse customers tend to save energy anyway, Boerema said, just by being able to turn off lights when they’re not home and other such simple automation tasks.

How much more they might save with a full view of the energy consequences of their actions is another question. ADT is working on the issue with other utility partners, Boerema said, including FPL in Florida, Constellation Energy in Illinois, and Consolidated Edison and the New York State Energy Research and Development Authority (NYSERDA) in New York.

Carbon Auction Results Cheer California Regulators, Investors and Markets

Wed, 11/28/2012 - 15:59

California regulators last week claimed a landmark achievement in the implementation of the state's ambitious but controversial AB32 climate legislation with the release of the results from its first carbon auction.

The California Air Resources Board has been developing regulations for the world's second largest cap and trade program to help the state reduce CO2 emissions to 1990 levels by 2020. In the first phase, electric utilities, refiners and heavy industries emitting more than 25,000 tons of CO2 per year will be capped. From 2015, suppliers of liquid fuels and natural gas will be included in the cap of 394.5 million tons of CO2.

CARB's cap-and-trade program has so far withstood repeated challenges by the oil industry, environmentalists and intervention from the Federal Energy Regulatory Commission over concerns about electricity imports.

Mary Nichols, CARB chairwoman, insisted that she was "delighted" with the results of the auction. "The goal was to have a competitive bidding process and get the allowances to the people who needed them, and we were extremely successful in doing that."

Market participants, 97 percent of them among the 300 capped entities, snapped up allowances for 2013 with a 3:1 bid ratio.

A Real-World Test

Celebrations at CARB will be muted as auction bids were settled at $10.09, a mere nine cents above the reserve price. Last week, the Legislative Analysts Office revised down the estimated revenues from the auction of 2015 allowances from $600 million to $100 million. Based on $10 a ton, the real figure ended up being $5 million.

But Nichols insisted that low prices of allowances indicate that compliance can be achieved at a lower cost than some participants feared. 

And although all of the 23,126,110 allowances for 2013 were sold, 2015 allowances settled at the $10 reserve price, with only 5,576,000 allowances purchased from a total of 39,450,000 that were offered.

Ashley Lawson, senior analyst at Point Carbon Thomson Reuters in Washington, D.C., said that expectations for the settlement price had been in the range of $12, the price of allowances trading on the secondary market.

"The volumes went mostly as we had forecast in that buyers bought all of the 2013 vintages and very few of the 2015. The price on the 2013 vintage allowances did come as a bit of a surprise and well below what market prices have been for some time now." 

Lawson said that strong market participation in the auction was an indicator of success.

"It's a good sign to the market that the government is taking this very seriously, holding up their end of the bargain and going to provide that stability that you need to create the foundation for a robust carbon market. We've had the first successful auction and now we'll see what the market does with this information."

She said that one possible explanation for the low auction settlement price could have been the launch of the latest in a series of legal challenges. The day before the November 14 auction, the California Chamber of Commerce submitted a petition to prohibit CARB from raising revenues through auction, claiming that the state agency does not have the authority to raise taxes from business.

Legal experts claim that CalChamber's legal argument is weak. But it could have been a deliberate tactic to spook the market, said Lawson.

"All of the lawsuits have increased perceived risk and weighed down prices, and this is just the latest," she said.

The response from the secondary carbon market was bullish, said Samantha Unger Katz, managing director at BGC Environmental Brokerage Services. Within an hour of the results release, 2013 vintage allowances futures traded up from $10.75 to a high of $11.75 per ton, she said.

"The auction clearing price below the current December 2013 vintage 2013 futures contract pricing echoes the sentiments expressed by some market participants regarding the uncertainties and the sheer volume of allowances being auctioned in this round. We do anticipate continued new market entry, trading and price volatility over the next few months. It will be interesting to see what happens between now and February, when the second auction is scheduled to take place." 

Perverse Incentives, Long-Term Success?

The relatively low price of carbon allowances may mean that it will be cheaper to pollute than to invest in energy efficiency and clean energy technologies. But investors welcomed the results of the auction.

Nancy Pfund, managing partner of DBL Investors in San Francisco, said: "A strong carbon market sends clear indicators to investors that California's cleantech economy is open for business. We already see California as an enormously attractive investment, but AB 32 is driving tremendous innovation in exactly the types of companies that venture capitalists like me love to fund."

Rob Day, partner at Black Coral Capital in Boston, said: "Certainty is [more] important, not necessarily price. I'm not relying on a certain price on carbon before I make my investments." 

Black Coral invests exclusively in cleantech through early-stage startups, project finance and funds of funds. Its nine-strong portfolio includes Seattle-based Powerit Solutions, which designs energy management systems in major industrial facilities, and San Diego-based One Roof Energy, a financing firm for residential rooftop solar. 

"Anything that's on the right side of natural resource trends, we consider inbounds for us," he said.

The firm is aiming to put "several hundred million dollars" to work over the next few years, said Day.

"Today's result makes me want to invest more in California. It's an important signal. In this policy environment, being able to point to a working policy is really valuable to an investor like myself. And to see California pull this off -- and especially getting this level of bidder interest -- is a really positive development."

"I'm hopeful that it will be a positive demonstration for the national policy debate, too," he added.

Hurricane Sandy, closely followed by the re-election of President Obama, has revived national discussion about climate change and the potential of a price on carbon to help curb it.

Nathaniel Keohane, vice president at Environmental Defense Fund and a former economic adviser to the Obama administration, said: "California will be a model for the nation. I don't know that it will spur action in the next few months, but as it proceeds with its cap-and-trade program, and as people around the country see it as a concrete thing, a success and something that works," more states may adopt a similar model.

As another round of United Nations climate talks start this week in Doha, even those working in climate policy realize that the process of a global and binding agreement hoped for at Copenhagen in 2008 looks all but defunct. But what has emerged in its place is a patchwork of 33 countries and 18 sub-national jurisdictions with carbon programmes that may one day link together to form a quasi-global market.

Europe's Emissions Trading System has already worked out a memorandum of understanding to link with Australia. California's program will link with Quebec next year, and may link in with Europe in the near future.

"It's an alternative approach," said Keohane. "It's not the global deal that people envisioned in Copenhagen, but it's something that can get us to the same place.

"All the actions other countries are taking is a good first step, but it's a first step on a long road."


Editor's note: This article is reposted in its original form from AOL Energy. Author credit goes to Felicity Carus.

Guest Post: Backup Generators—How Much Are They Worth?

Wed, 11/28/2012 - 13:32

A few months ago, we installed a backup generator for a customer in the food distribution business. Their decision to add the generator was ultimately prompted by yet another New England storm that left them without power.  In the wake of Hurricane Sandy, many folks are wishing they had made the same decision.

The psychology involved as a company considers adding backup generation is curious. No company’s management disputes that having on-site backup is a valuable addition to their operation. But invariably, there is a rational explanation for why they have yet to make the investment.

Some businesses don’t have facilities in geographic areas where power outages are common, so they really haven’t felt the pain. Some manage their risk by pre-arranging flatbed trucks carrying emergency generators which can be delivered to their sites in advance of a weather event. And, most commonly, facility managers have been unsuccessful at winning their company’s annual capital budgeting war.

Let’s be frank. Other than the week immediately following a loss-of-power event, the “let’s add backup generation” conversation is akin to asking your boss to buy more general liability insurance coverage -- not an upbeat topic. Where energy efficiency projects show a measurable financial payback based on energy savings, the financial return for adding backup generation is harder. It requires putting a valuation on safety, assets at risk and “business continuity.”

Safety is usually easier, as businesses already follow federal and local fire and safety codes for what is required. It’s pretty black and white if an elevator needs to be able to operate in a power outage, so in this case, “valuation” has already been defined.

Assets at risk are also pretty straightforward. In the case of our food distribution customer, the value of all perishable food product housed in their warehouse is a large dollar number. Or, for a metals manufacturer running a test on a very sensitive piece of military equipment, a power loss means the entire production run would be compromised -- another easy valuation.

Business continuity is the hardest one. For a commercial office, where the company has a work-from-home alternative for most employees, what is it really worth? How much business would be lost if a company loses power for an hour? For a day? On the IT front, there are wacky stats such as 93 percent of the companies who lost their data center for ten days filed for bankruptcy within a year. Again, can you imagine how excited a manager is who is heading into corporate budget negotiations to present this case?

However, there are some exceptions. Recently, we performed an assessment for adding backup generation at our customer’s facility in Texas. Here ERCOT pays financial incentives for low-emission generators that can be added to their grid and controlled as a resource instantaneously, called “spinning reserves.” The added generation makes the ERCOT grid more reliable, which has a value that they quantify.

The low-emission backup system costs more than a traditional diesel generator ($400,000 versus $200,000), but ERCOT pays $150,000 per year for the system we designed, whereas a dirty diesel generator gets nothing. So our customer gets a better than three-year payback on their purchase of insurance.

In the post-Sandy era, more Northeast U.S. companies may be reassessing how they value backup generators. It’s not hard to see how incentive programs like ERCOT’s could really spur action -- a win for both customers and the utilities. That could make buying insurance a much more engaging conversation.


Jon Guerster is the CEO of Groom Energy Solutions. This piece was first published on Groom's blog.

The Military-Industrial-Sustainability Complex

Wed, 11/28/2012 - 12:29

The military may end up being one of green technology’s biggest customers. The U.S. Department of Defense is spending billions of dollars on everything from advanced battery and biofuel R&D to mass deployment of solar power across bases and military housing. Across the world, militaries are seeking out efficiency and sustainability solutions, both to meet government mandates and to prepare for potential energy shortages.

Green technology also includes information technology, of course. Take the core military function of logistics. Everyone knows that a modern military can’t function without abundant and secure supplies, including energy. But today’s military is being asked to go deeper, into existing buildings, vehicle fleets, supply chains and third-party contracting relationships, and to seek out and destroy inefficiencies wherever they occur -- all while maintaining their core readiness capability.

That’s how Dave Bartlett, vice president of industry solutions at IBM, describes the goals of a massive new project with the U.K.’s Ministry of Defense. Over the next sixteen months or so, IBM will be deploying its Tririga real estate portfolio sustainability management 6software, derived from the startup.

IBM bought Tririga in 2011, and has since built on the San Francisco-based startup’s core real estate portfolio management capabilities. For example, IBM has used its in-house sensor and interval meter data sampling and monitoring technology to create a new application, called Tririga Energy Optimization, that uses data analysis to seek out previously unknown opportunities for efficiency, as well as ranking them against one another in terms of ROI, Bartlett said.

Tririga already had a long list of corporate and retail clients when IBM bought it, and IBM has since used the software for bigger and bigger projects. This year it landed a contract with the U.S. Air Force to apply the Tririga platform to its 626 million square feet of real estate across 170 sites around the world, and it is also leading a consortium involved in a 50-building energy efficiency project with the U.S. General Services Administration, the federal government’s landlord.

The U.K. Ministry of Defense is close to the U.S. Air Force in terms of scale, Bartlett said. The British Army, Royal Navy and RAF control some 4,000 sites around the world, including about 900 square miles and 45,000 buildings in the U.K., as well as bases and properties in Germany, Cyprus, Norway, Poland, Kenya, Canada, Belize, Nepal, Oman and the Falkland Islands.

That makes for a big, complicated project. IBM and the MOD have until April 2014 to deliver a “number of capability releases,” that is, suites of applications for use in the real world. MOD is also undergoing a £7 billion ($11.2 billion) overhaul of its IT infrastructure over the same timeframe, which could lead to further integration with IBM’s Tririga platform, Bartlett noted.

Stay tuned for more defense contractors and energy services giants to get involved in big military base efficiency projects. The U.S. DOD spent about $15.2 billion on energy in 2010, and while three-quarters of that was spent on transportation (gasoline and jet fuel), facilities still made up the remaining quarter, or about $3.8 billion in annual spend -- a big target to tackle. The Pew Charitable Trusts has projected that U.S. military green spending could reach $10 billion by 2030, including biofuels, batteries, renewable energy and other technologies.

The military has also been a key backer of microgrids, technology that allows buildings or bases to stay running on their own power when the grid goes down. Microgrids are the focus of military projects with partners ranging from big players like General Electric, Boeing, Honeywell and Lockheed Martin to smaller specialty technology firms such as Spirae and Power Analytics (formerly EDSA).

Military microgrids can also connect back to the utility grid as well, as long as readiness isn’t threatened. Philadelphia-based startup Viridity Energy is working with the DOD on demand response, for example, and startup Blue Pillar has installed its building power sensors and software platform for MacDill Air Force Base in Florida, allowing it to fine-tune its energy management to shave peak loads, take advantage of unused backup power systems, and other such tricks of the building-to-grid energy trade.

Topaz and the Top Ten PV Projects Under Construction in the US

Wed, 11/28/2012 - 11:00

Last month, the millionth First Solar (FSLR) solar module was installed at the 550-megawatt (AC) Topaz Solar Farm owned by MidAmerican Solar.

When complete, the largest PV power plant in the world will field nine millions panels across thousands of acres on California's Carrizo Plains. Construction began less than one year ago. Expected to be complete in early 2015, PG&E will purchase the electricity from the Topaz project under a PPA. The solar farm was not the recipient of a loan guarantee.

The project was originated by OptiSolar. Some of the Topaz real estate was once intended for an Ausra CSP solar power plant.

Here's a chart of the Top Ten U.S. PV Power Plants Under Construction in the U.S.:

Source: Utility PV Market Tracker


Check out the GTM Research Utility PV Market Tracker for much more information on utility-scale solar deployment in the U.S.

Solar Balance-of-System: To Track or Not to Track, Part I

Wed, 11/28/2012 - 08:00

“Tracker” is a generic term used to describe devices that orient various payloads toward the sun. In the case of photovoltaic (PV) systems, the payload is the PV module. There is no other single balance-of-system (BOS) component that can increase a PV system’s performance like a tracker.

By maintaining consistent direct exposure from the sun to the module, trackers can improve a PV system’s output by up to 40 percent over a fixed-tilt array. The increment of production improvement over a fixed system depends on the project’s latitude and the type of tracker. The benefits of trackers vary between the different categories of trackers (one-axis, 1.5-axis, and dual-axis).

FIGURE: Tracker Technology Comparison

Source: Solar PV Balance of System (BOS) Markets: Technologies, Costs and Leading Companies, 2013-2016

By virtue of having moving machinery and requiring a less-dense configuration than fixed-tilt systems, trackers virtually always come at an added cost relative to fixed systems. In order for a tracker to make economic sense, the increased energy harvest must exceed the added cost of installing and maintaining trackers over the lifetime of the system. An additional factor to be considered in the decision to use trackers or fixed systems is land use; tracking systems tend to use additional land because they must be spaced out in order to avoid shading one another as they track the sun. This means that panels must be spaced farther apart, thus increasing land use and land costs for the developer.

The other downside to trackers is the operations and maintenance (O&M) cost, which tends to be higher for this category of systems relative to fixed-tilt systems. Given the system’s expected operating life of at least twenty years, O&M costs can add up to a meaningful share of total system costs.

Fixed vs. Tracking: Comparative Metrics

The major selection for developers beyond module technology is racking type (fixed-tilt versus tracking). Historically, selecting First Solar modules has entailed the use of a fixed-tilt system. This will change in 2013 and beyond as First Solar vets and deploys its first tracker systems for projects in its pipeline. However, modules from most c-Si suppliers offer the option to choose between the two tracking types. Factors likely to play a role in this selection include land availability, module cost, and O&M.

Land Availability

Tracking systems have a larger area footprint per megawatt, so space-constrained areas will be less attractive for trackers. Typical land use for fixed PV can be 4 to 5 acres per megawatt, while a single-axis tracking system will use 4 to 7 acres per megawatt, depending mostly on module selection. This is part of the reason why, historically, thin-film modules have rarely been paired with tracking systems, since the land needed by thin-film technologies is already higher compared to crystalline-silicon modules. However, trackers require fewer modules for the same energy output, so the ultimate comparison for evaluating trackers must account for module cost and tracker cost.

FIGURE: Land Requirements by Mounting Structure Type & Module Conversion Efficiency

Source: Solar PV Balance of System (BOS) Markets: Technologies, Costs and Leading Companies, 2013-2016

System Performance and Cost

Since the purpose of trackers is to increase energy harvest, the relative costs of trackers and modules need to be considered carefully. In order to decide which architecture to implement, we need to examine the cost of the system. The figure below illustrates the impact of various module costs on total system costs by assuming the fixed-tilt BOS system costs to be $1.17 per watt and tracker cost to come in at a $0.36-per-watt premium.

FIGURE: Relationship Between Module Cost and System Cost, Fixed vs. Tracking

Source: Solar PV Balance of System (BOS) Markets: Technologies, Costs and Leading Companies, 2013-2016

Comparing two 10-megawatt systems, fixed-tilt will be the cheaper option. However, the recent declines in one-axis tracker costs have helped the economics of one-axis tracking tremendously. If we consider a Bakersfield, California project, we see that in high insolation areas, trackers can increase project performance by 25 percent. To account for this performance difference, we increase the fixed-tilt project size to 12.5 megawatts.

FIGURE: Energy Harvest, Fixed vs. One-Axis Tracking

Source: Solar PV Balance of System (BOS) Markets: Technologies, Costs and Leading Companies, 2013-2016

In comparing the 10-megawatt tracking project to the 12.5-megawatt fixed-tilt system, we see that, at current module prices, the one-axis tracker is more attractive. This sudden shift in project economics is the basis behind the rise of one-axis tracking projects in high-insolation areas. In lower insolation areas, the economic difference between one-axis tracking and fixed-tilt may not be as clear.

The analysis for this article looks only at upfront costs and does not consider the bankability and financing of tracking systems, nor does it consider the O&M differences, which could tilt the analysis to the opposite conclusion.

In Part II of this report snapshot next week, we will compare fixed-tilt and tracking PV systems in terms of O&M costs, end-user considerations and geographical factors. You can purchase the complete Solar PV Balance of System (BOS) Markets report today by clicking here.

VC Investing in Greentech, Installment #139

Tue, 11/27/2012 - 17:58

In cleantech venture capital, there's a new cleantech IT or cleantech 2.0 theme, inspired by VCs that have watched their green investments crater and their LPs sour on the cleantech segment. Generalist VCs are running from cleantech, and cleantech-dedicated firms are re-branding themselves as cleantech IT.

Today at the Going Green event put on by AlwaysOn in San Francisco, Ca., a number of VCs weighed in with their greentech VC worldview.

Nat Goldhaber of Claremont Creek Ventures

  • "It's fantasy to believe in a free market when it comes to energy." 
  • "Everybody, other than us, is manipulating the price of energy."
  • "Energy efficiency is a pure IT play."


Anup Jacob of Virgin Green Fund

  • "What we look a business model that can handle the macro headwinds."
  • Capital-heavy businesses are hard to fund, according to Jacob. You heard it here first.
  • "Show a profitable business plan within the capital constraint of your investor."


Stephan Dolezalek of VantagePoint Capital Partners

  • "We need to play to win. The government in China clearly intends to pick winners and make losers."
  • "We need to set a direction -- look at Germany." Dolezalek cited Germany achieving 50 percent renewable generation on one particular day earlier this year.  
  • "The only way to address resource shortages is with technology."
  • "We've been through the first part of the curve. Now we're in the steep part of the valley. How do you survive and stay in a position to win when things get better?"
  • When confronted with the sentiment that greentech was no place for venture capital, Dolezalek noted that the same sentiment had come up in "previous battles" in 3G networks, biomedicine, and the internet. He said that in every wave, there has to be an infrastructure buildout. "We have to build the hard stuff first."
  • "We may be in a valley now, but the inevitability [of cleantech] has not gone away."


Tucker Twitmyer of EnerTech Capital

  • "If you get a term sheet, take it."


Smart Grid M&A Watch: Consert in Acquisition Talks

Tue, 11/27/2012 - 15:48

Consert, the San Antonio, Texas-based startup that connects households into blocks of “aggregated load,” is turning from investors to buyers in its search for capital to expand. Chalk it up as another indication that, for startups in the smart grid place, acquisition is by far the most likely exit.

Jeff Ebihara, vice president of sales and marketing for Consert, said in a Monday interview that the company is in advanced talks with unnamed buyers and is likely to be acquired by year’s end. Ebihara wouldn’t provide any details on who the buyer might be, or what kind of prices are being discussed.

But he did say that the acquisition offer at hand came about in the midst of seeking another round of funding. “We were never intending to sell the company, but as we were getting ready for another round of fundraising, and got so many sales inquiries, we started having those discussions,” he said.

Consert, founded in 2008, has raised about $25 million from strategic investors including General Electric, Verizon, Qualcomm and Constellation Energy. That could provide a short list of potential acquirers, although Ebihara noted that the company has also been in talks beyond its strategic investors.

If bought, Consert will grow the long list of smart grid startups that have found their exits in acquisitions, rather than public offerings. Over the past several years, we’ve seen big corporate buyers spend tens of billions of dollars on acquisitions in the space, ranging from multi-billion-dollar deals for grid equipment giants (Eaton and Cooper Industries, ABB and Thomas & Betts, Toshiba and Landis+Gyr, etc.), to multi-million-dollar deals for startups (ABB and Tropos Networks,  Silicon Labs and Ember, Itron and SmartSynch, Siemens and eMeter, etc.).

Meanwhile, the IPO sector is all but closed to the smart grid sector, except for one announced company at the gate. That’s Silver Spring Networks, which has managed to build up a U.S. smart meter networking market share to compete with longstanding meter giants Itron and Sensus, but has yet to hold the IPO it filed plans for last summer. Since then, it has found new investors such as EMC and Hitachi to fill its coffers, but is staying mum on when -- or if -- it might go public. 

Consert, for its part, has installed its home load control technology for customers including San Antonio municipal utility CPS, New York utilities Consolidated Edison and Central Hudson Gas & Electric, and multi-state utility AEP in its Kentucky service territory, as well as other municipal utilities scattered around the country. Its biggest project, with CPS, has seen 7,000 homes connected so far, representing about 15 megawatts of load under Consert’s control, and plans to expand to 140,000 homes over the next several years.

Consert differs from most home energy management technologies out there today, in that it offers real-time, two-way communication between utility control centers and various devices in the home -- air conditioners, pool pumps and water heaters, in the case of CPS. Most other technologies, such as smart thermostats, radio-operated load control switches and the like, can’t verify how much power they’ve reduced when they’re triggered, at least not right away, he noted.

Consert’s in-home wireless controls and cellular backhaul solution, on the other hand, “can measure and verify down to the watt at the device level,” in real time, Ebihara said. That’s a lot faster than most other alternative ways of measuring home power use -- even today’s smart meters usually only update utilities every fifteen minutes to an hour or so, for example, and homes without smart meters have no connection to the utility at all.

Consert’s real-time, device-level system is more expensive than many other home energy management alternatives -- Ebihara said a typical installation costs about $400 to $500 per home. But it also offers a lot more value, he insisted, particularly in being able to verify the loads it’s controlling in a way that allows grid operators to use the resource for various grid balancing tasks.

For example, Consert is working with Texas grid operator ERCOT to qualify its collected homes as a non-spinning reserve -- a kind of grid backup power resource usually provided by “real power” assets like turbines, or maybe batteries, but rarely by demand reduction. While other companies are doing fast-response, grid-balancing demand response in commercial and industrial settings, most home DR programs rely on longer, hour-ahead or day-ahead warning or pricing regimes to work.

Making Wind and Solar Work With the Grid

Tue, 11/27/2012 - 15:00

The two traditional excuses for not adding more wind and solar into grid operations have been that they could not be called on (“dispatched”) when energy was needed and they were too expensive (“uneconomic”). But grid operators around the U.S. have begun to discover that neither is necessarily true.

“The New York ISO was the first to implement dispatchable intermittent resources in allowing wind to participate in economic dispatch and congestion management. It was thought of then as crazy to use wind for grid reliability,” said National Renewable Energy Lab (NREL) Senior Research Engineer Erik Ela. “Now almost every ISO in the U.S. uses wind this way. And we can go further and use more of the flexibility wind has to provide more support to the grid.” Ela said utility-scale solar can eventually do the same.

Researchers at NREL, the Electric Power Research Institute (EPRI) and the University of Colorado are working to demonstrate how the unique characteristics of wind and solar can, much like traditional generation, perform Active Power Control (APC) to support the grid. Researchers are especially focusing, Ela said, on two areas of APC, regulating reserves and primary frequency control.

“APC is control of power output to balance generation and load,” Ela explained. “Providing dispatch is one way of doing that. It can even do that in the faster time scales.” APC can support the grid during specific events such as when a large generator goes offline and the lost supply has to be replaced, Ela said. It can also steady the grid as load and renewables vary and require balancing.

"Grid operators would like to have more support for transmission line overload, voltage drops, and frequency variations,” Ela said, but don’t typically ask that renewables provide it, and regulators have not imposed the requirement to use renewables in that way.

Wind turbine manufacturers say they can provide the capability for renewables to provide APC services but see no demand for it from renewables developers.

Renewables developers don’t see any point in driving up costs by building in the capability to provide a service for which there is no demand from grid operators.

Regulators see no point in requiring grid operators to buy a service from renewables they may get for free from traditional generators.

“We are doing research on ways to connect these perspectives,” Ela said.

Regulating reserves “correct for the energy imbalance within economic dispatch intervals,” Ela explained. “It is a little faster than normal dispatch. It uses a signal that comes directly from the system operator on how a generator’s output should be changed on a minute-to-minute time frame.” All U.S. balancing areas, RTOs/ISOs, and vertically integrated utilities have “a certain amount of capacity they use as regulating reserve,” Ela explained.

Studies have shown wind plants can provide this service “faster and in some ways more accurately on these time scales than conventional generation,” Ela said, because “conventional generation has thermal time constants that slow down this kind of response whereas wind is all power electronics: You need that response, you get it.”

The price for meeting this grid need can be very high in ancillary services markets. Ela noted an example where the market was paying $0.21 per kilowatt-hour ($209.02 per megawatt-hour) for regulation reserves.

“There are often times where the market is paying more for this service than for energy and as more renewables are integrated into the system,” Ela said, “that is going to happen more often.”

A simulation in which wind was allowed to provide regulation, he said, showed “an increase in revenue of $4 million for all the wind plants for a two-month period for the California ISO.” And, he added, “there are a lot of things that can happen that could make that revenue more.”

Primary frequency control is needed, Ela said, when a large generator goes offline and everything connected “will synchronously start to slow down to provide the power compensation. That slows the frequency. If the frequency slows too much, there will be load shedding and brownouts to avoid a major catastrophic blackout.”

Primary frequency response stabilizes frequency slowing.

Studies show that with up to 40 percent wind in a transmission system, the grid’s performance is degraded if there is inadequate frequency response from wind but “in simulations in which wind provided frequency response, it improves performance pretty significantly”

There is a major economic factor separating regulation reserves and frequency response, Ela said. “There is no ancillary service market for frequency response. Operators and generators are doing this without any market incentive.”

But, he said, the supply for frequency response “keeps declining every year, and many believe there should be an incentive for resources to provide this. Otherwise, this decline might continue.”

“We have to ensure this primary frequency response -- this other control -- has incentives,” Ela said, “and you can’t prohibit anybody from providing those.”

The bottom line on using renewables for APC, Ela said, is that additional revenues per generator “could possibly be very high if they choose to participate and if market rules are correctly designed.” And renewables can behave even better than other generators. “Studies may show wind providing the finest scales of active power control capability on a better quality than other generation and being a supporter to the grid, rather than a detriment.”