Sensus’ smart meters were sidelined in PECO’s territory just weeks before Hurricane Sandy slammed into the East Coast. But a Sensus communication network connecting the 186,000 smart meters that had been installed up to that point was already up and running.
Even though the meter deployment is only about 10 percent complete, PECO saw notable advantages to its advanced metering deployment, compared to its advanced meter reading, or AMR, system that has been in place for years.
During the storm, PECO lost visibility to about one-third of its AMR meters, according to Barry Cole, director of IT for PECO, which is an Exelon company. For the smart meter network, connections went down on about 3 percent of the meters. “Because of the redundancy, that’s a huge difference,” Cole said of the Sensus network.
The utility was not quick to tout the benefits from its technology after a public relations uproar when a handful of its smart meters overheated, resulting in a few fires earlier in the year. But the one-way AMR system, which has been in place for years, relies on thousands of message communication concentrators (MCC), which collect signals for the mesh radio metering system.
The Sensus communication layer, on the other hand, relies on about 160 tower gateway systems, which work like cell towers and connect to smart meters via point-to-point communication over licensed spectrum, versus a mesh topology over unlicensed 900 MHz that most other meter communications use. The result is that if meters don’t rely on each other to move signals around and if a tower goes out, restoring that one tower will restore more meters. In comparison, PECO saw 500 of its MCCs go down, which means 500 different truck rolls, versus 30 tower gateways.
With AMR, PECO could ping a meter to verify if it had power. But in reality, it wasn’t the meter it was talking to, but rather the MCC. With two-way digital smart meters, utilities can communicate with individual meters for more visibility into real-time outages.
Of course, smart meters don’t stop downed trees and flooded equipment. About 850,000 lost power in PECO’s territory during Sandy, accounting for more than half its 1.6-million customer base. During Hurricane Irene, about 500,000 PECO customers lost power.
However, in the days after Sandy, the utility calculated that there were 50,000 customers who had a far shorter outage due to the utility's smart grid deployment, which include upgrades to the OMS to better communicate with AMR meters and the AMI technology.
With the two-way meters, the utility can determine if its a single home going out versus a transformer that might have taken down part of an entire neighborhood. It can also confirm momentary outages, versus power that has gone out entirely.
Before AMI, the utility could pull information from non-responding AMR meters into its outage system then send a crew out to verify if power has come back on. During Sandy, the utility saw more than 4,257 cases of using the meters -- instead of a crew -- to determine if power was back on. That figure is nearly double the figure from Hurricane Irene, where just AMR was linked into the OMS. “That’s 4,257 crews we didn’t need to dispatch,” said Cole. Those are crews that can then go somewhere else, such as to a transformer to restore power to various homes. The utility could also tell more quickly which outages were primary events, involving transformers or feeders, rather than single outages.
In total, PECO estimated it had more than 6,000 avoided or more effective truck rolls after Hurricane Sandy. At Baltimore Gas & Electric, the utility noted in its blog that its partial smart meter deployment (also about 10 percent) also allowed for more targeted truck rolls. Jeanette Mills, chief customer officer at BGE, noted that when a feeder has been fixed, they still have to check with individual customers, and traditionally about two-thirds of customers do not pick up the phone to confirm if their power is back. With smart meters, the utility can check without needing someone to be home or sending a truck out.
PECO still has the bulk of its smart meters to deploy, and it will be making upgrades to its decade-old OMS as those meters come on-line. The utility is also installing GIS, which should help with more accurate storm forecasting. Because PECO has been using AMR for so long, “For us, it’s continuing to refine and extend for the numbers you’re looking at,” said Cole, who will be crunching data to find lessons learned for the next storm.
Although no one hopes for a storm that brings the devastation of Sandy, politicians and customers will be asking hard questions about how utilities can be better prepared next time. “We’re still recovering,” Cole admitted. “But we’re pretty excited to realize the benefits with the availability of AMI.”
Twin Creeks Technologies' CEO Siva Sivaram spoke in wildly aspirational terms about the firm's ion-implant machine and the ability to produce super-thin photovoltaic cells from crystalline silicon in the company's public debut earlier this year.
Today the company sold its assets for approximately $10 million to GT Advanced Technologies (Nasdaq: GTAT), according to the GT website. The firm had raised more than $80 million from Crosslink Capital, Benchmark Capital, Artis, and DAG Ventures. The deal also includes royalties from future sales.
GT will pursue substrates for power semiconductors, solar wafers, and thin sapphire laminates for touch screens with the ion-implant equipment.
As for Twin Creeks, the firm picked a bad time to enter a ruthless solar market. Today's over-capacity solar industry is not hungry for innovation or capital expense -- and Twin Creeks was heavy on both.
GT aims for commercialization of the technology in late 2014. The good news is that the innovative work at Twin Creeks lives on at GT.
Sivaram wrote in an email that "about 20 people in Boston are part of the transfer" and also emitted the obligatory phrase: "The management of Twin Creeks supported the private sale and feels confident that GT is in an excellent position to commercialize this innovative technology."
Here is some background on the Twin Creeks technology:
Twin Creeks Technologies looks to help solar module makers reduce the amount of silicon used -- by allowing them to make extremely thin solar cells. (Silicon accounts for about 20 percent to 25 percent of the cost of a PV module.)
Current silicon wafer thickness is in the 150-micron range. Traditionally, wafers are freed from blocks of silicon using wire saws in a process that is messy, complex and reaching its limits. It's an obvious weak link and cost target in the solar value chain. Manufacturers spend a great deal of time and energy to fabricate blocks of polysilicon, only to see up to half of that hard-earned material turned into sawdust in the wafer production step.
In fact, according to Twin Creek's CEO Siva Sivaram, you only need wafers that are 20 to 30 microns thick to get the charge carrier out while still getting good conversion efficiencies.
Twin Creeks allows vendors to dispense with saws, furnaces, and cell finishing equipment from the likes of Applied Materials HCT and Meyer Burger as well as slurry and thick wafers. Twin Creeks replaces that production chain with a beast of an ion implant machine (see picture below).
Twin Creek's process is known as Proton-Induced Exfoliation (or PIE). A hydrogen ion or proton is accelerated to 1.2 million electron-volts and shot into a crystal material -- in this case, silicon -- where it settles at a finite depth. The hydrogen ions line up at that finite depth, where they are then heated, resulting in a wafer that cleaves right off the substrate along the crystalline plane.
The proton energy determines how deep the protons go and therefore sets the thickness of the wafer.
An ion implanter is a big piece of equipment emitting protons and must be shielded for safety. Other firms performing this process have told GTM that surface roughness is better than sawn wafers, and some use an etch-and-anneal step to preserve lifetime once the wafers are cleaved.
The ion-implant process produces a wafer which uses a tenth of the material, and 20-micron wafers don't crack, according to the Twin Creeks CEO, who said, "At 20 microns, silicon is completely flexible."
The following is an excerpt from the November issue of PVNews, which is available as a free download:
Latin America will be a key emerging market for solar development over the next few years, and no country in the region has a larger planned pipeline than Chile. The country’s northern Atacama Desert is an ideal location for utility-scale solar for a number of reasons. Most notably, it has one of the highest levels of solar irradiation in the world and is home to a large proportion of Chile’s growing mining industry. With limited electricity generating resources and a highly volatile spot market, solar is becoming an increasingly competitive solution despite the lack of subsidies.
In light of the growing demand for new generation, Chile’s National Energy Strategy estimates that 8,000 megawatts of additional capacity needs to come on-line by 2020. Furthermore, with a 10 percent renewable energy requirement by 2024, local companies as well as large international developers are eager to cash in on what seems to be a likely solar boom. Up to this point, however, very little solar been connected to the grid. A number of smaller facilities were brought on-line this year, including a 1-megawatt project developed by Solarpack to power a mine owned by Codelco and a 1.4-megawatt plant developed by saferay.
Source: GTM Research
Unlike neighboring markets such as Brazil, which is dominated by local players, or Argentina, which has an unstable government, Chile has attracted significant attention from foreign developers, EPC providers, and investors. Of the more than 4 gigawatts of Chilean projects currently tracked by GTM Research, less than one-third of this capacity has been proposed by domestic companies. One explanation for this trend is the simple fact that as an emerging market, Chile lacks established solar firms. Of the top developers listed in Figure 1, only Poch Corporation is Chilean. The company’s extensive experience, both as a hydroelectric developer and heavy construction firm, should allow it to transition into solar with relative ease. Other Chilean firms that have applied for environmental permitting include startups such as Solar Chile and Atacama Solar. Independent power producers, such as AES Gener, have also thrown their hat in the solar ring in order to comply with renewable energy generation requirements.
To continue reading about the Chilean solar market, please download the free November issue of PVNews.
Now in its 30th year of publication, PVNews continues its tradition as the solar industry's premier periodical. Focusing exclusively on the global PV industry and drawing on the expertise of the GTM Research solar analyst team, at only $395/year, PVNews is undoubtedly the industry's best value for in-depth market research. The newsletter includes the following key components in each issue:
· A hand-picked news digest from the solar and related industries, following key developments that are shaping the future of PV
· Market research data, insights, and analysis, drawn from the GTM Research annual solar research program
· Exclusive market trackers: Monthly SREC Prices, Monthly North American and European Feed-In Tariffs, Monthly U.S. Utility Pipeline, Annual Cell and Module Capacity and Production, Module Supply Agreements, Quarterly Company Financial Updates, and Monthly Large-Scale Project Announcements
· Market commentary from analysts and industry leaders
Subscribers around the world agree that PVNews is the best value in market monitoring, and that it's essential reading for decision-makers in the evolving global renewable energy market. Subscribe today at http://www.greentechmedia.com/research/report/pv-news.
Here’s a U.S. Department of Energy renewable energy loan guarantee story unlikely to gain heavy play on Fox News. It doesn’t fit the narrative over there, where I do believe Karl Rove is still making the case for Romney carrying Ohio.
This is another story of government assistance leading to the production of clean energy, which, along with job creation, was the intent of the stimulus-spawned 1703 program, and much more often than not -- Solyndra notwithstanding -- has been the result.
U.S. Geothermal reported last week that two of three power plant modules at the Neal Hot Springs project in Malheur County, Ore. are producing up to 16.8 megawatts of power, putting the project on track for beginning commercial operation before the end of the year.
Neal Hot Springs is supported by a $97 million loan guarantee that closed in February 2011. That was intended to represent two-thirds of the price tag for the project, but additional drilling costs and modifications in plant controls and the cooling mechanism bumped the tab up $14.6 million to reach a total of $143.6 million, according to U.S. Geothermal. An equity partner in the project, Enbridge of Canada, came forth with the needed funding, boosting its stake in the project to 27 percent.
The DOE says the project is expected to put out about 180,000 megawatt-hours of power annually, which will go to Idaho Power (the plant is in east Oregon, just 85 miles west of Boise, Idaho).
To get the power flowing to Idaho, U.S. Geothermal says there are just a few more steps it needs to take: “Additional minor adjustments will continue to bring the two modules offline intermittently for various periods before they are deemed ready for commercial operation,” the company said. In addition, “The contractor is also performing final system checks of Module 3 in preparation for starting and synchronizing its output to the grid.”
There’s a bit of an interesting story behind Neal Hot Springs: Back in the 1970s, Chevron took a stab at developing it, but after putting some holes in the ground and seeing what was what, the company determined that it just wasn’t hot enough to pay off. U.S. Geothermal says an advanced technology -- binary cycle supercritical power production -- makes the project viable.
The key difference over conventional methods is that instead of driving a generator by simply using the underground heat to vaporize an organic working fluid (causing it to expand as vapor), the fluid goes into a heat exchanger above its critical pressure. In this supercritical state, the working fluid expands gradually, extracting more heat than simple vaporization. The result is increased energy output from a given amount of heat compared to conventional systems.
The use of this supercritical binary cycle technology points to another benefit of the loan guarantee program, at least in this case: By demonstrating the technology’s viability on a commercial scale, the DOE and the geothermal industry hope the door will be opened to private financing of such ventures.
By the way, to see how the Neal Hot Springs project fits into the DOE’s loan guarantee profile, check out its roster of projects. You can see why despite the Solyndra debacle, an independent analysis of the loan guarantee program determined that it actually “holds less than the amount of risk envisioned by Congress when it created and funded the program.” Also, a Bloomberg Government analysis found that since nearly 90 percent of the loan program was invested in energy projects that had buyers for the power they will produce -- like Neal Hot Springs -- the risk of big losses was minimal.
Americans, thousands of which are still suffering in the dark two weeks after Hurricane Sandy, are painfully aware of how much they rely on electricity – once it goes out.
But for the rest of the year, Americans are still painfully unaware of what drives their home energy bills or what it takes to cut it, according to the eighth annual Energy Pulse survey by Shelton Group, a marketing firm that focuses on the energy efficiency space.
Home energy continues to rise, mostly due to more gadgets and bigger homes, even though appliance efficiencies have improved significantly in recent years. Eighty percent of Americans think they’re using less energy or the same than they used to.
Up until 2009, that was pretty much true. More efficient appliances offset increasing number of gadgets, and newer homes also use less energy. But increasingly hot summers have pushed up energy use – and therefor energy bills – in more recent years.
When it comes to increased bills, consumers seemed to have no idea whether that was from higher utility charges or using more energy. Increasing access to energy information, something championed by the White House and becoming more available with initiatives such as Green Button, could lessen this information gap.
And while everyone complains about increasing energy bills, the study of more than 1,000 people suggested there is actually a high threshold for price hikes. The average person said the bill would have to go up about $10 per month, or $120 per year, before he would spend money on energy-efficient retrofits.
Logic ended there however. When it came to significant retrofits, such as spending $4,000, people said they would need to save nearly $140 per month, which would be an 85 percent reduction of the average utility bill.
But there is a silver lining. Homeowners responded that more than half prioritized making their home more efficient over more comfortable or more beautiful. In reality, however, that doesn’t pan out. The good news is that energy efficiency can often come as part of the comfort package, whether it’s home security or home automation.
Although many Americans don’t really know what saves significant energy and what doesn’t (the Shelton survey echoed other studies where people say they unplug their rechargeable electronics – yet most cellphones and computers made in the past few years do not use a lot of energy on standby), there is more good news from the survey. As Energy Star appliances become a larger swath of what’s in the store, they have increasingly become what people are buying. High-efficiency heating and cooling have particularly grown in popularity.
That is where the good news ends.
“We know that self-control is a finite resource, and many people are simply tired of being vigilant. We also know that it’s difficult to see the finish line when it comes to home energy efficiency and conservation,” the study states. “It takes multiple updates, renovations and behavior changes to see marked improvement in home energy consumption (to say nothing of noticeable bill reductions), and many folks give up before they’ve done enough to reap the rewards.”
The survey echoes the calls of the American Council for an Energy-Efficient Economy and calls for more systematic approaches to energy retrofits. For homeowners, they suggest tiered incentives so that customers can actually make enough improvements to see real savings. For instance, this survey always finds people prioritizing new windows to save energy, even though more efficient weather stripping and insulation can be far more cost effective.
For utilities, working with a range of third-party companies that can walk customers through the cost-benefit ratio of different upgrades is a critical place to start. If utilities don’t, others – like big box stores – will fill that space in coming years. Another study found that nearly two-thirds of residents are unaware of utility rebate programs.
Installing solar, which is one of the ways that people can see a significant drop in utility bills, saw a significant jump in interest from just one year ago – up 8 points to 32 percent.
Short of putting solar PV on the rooftop, however, there are technologies – both simple and more complex – that can reap serious savings. Some of the newest Energy Star hot water heaters on the market can save two-thirds of the energy of a standard, new electric water heater.
The United Kingdom has opened up hundreds of millions of dollars for on-bill financing through its Green Deal, which will mostly go to low-cost retrofits like insulation.
Even with all the insulation in the world, there will continue to be an onslaught of one more cable box (a surprising energy hog), another iPad or an additional laptop in the house.
A combination of energy efficiency, aggressive energy standards for new products and some good, old-fashioned turning off the lights will be the only way forward in the future. It will all have to come with a healthy dose of automation and embedded intelligence to turn itself off when we forget to – which we will – even if we know the cost of every plug load in the house.
First, a quick update on the list of profitable fuel cell companies. Here's the updated list:
But now, finally, Bloom Energy is actually threatening to add its name to this long-vacant list in 2013.
Dan Primack of Fortune has revealed the financials of fuel cell vendor Bloom Energy with information culled from confidential documents shared with Bloom's "significant investors." (Primack is on a roll this week. He broke the story of Advanced Equities closing shop a few days ago, as well.)
After raising almost $1 billion in venture capital over a decade from GSV Capital, Apex Venture Partners, DAG Ventures, Kleiner Perkins Caufield & Byers, Mobius Venture Capital, Madrone Capital, New Enterprise Associates, SunBridge Partners, and Goldman Sachs, Bloom is suggesting that it will turn a profit in 2013.
According to the investor letter cited by Primack, Bloom had $101 million in pro forma Q3 revenue, while cost of goods was $106 million, along with $26 million in operating expenses. That's a loss of $42 million on a GAAP basis, along with a net cash loss of $80 million in the quarter. However, those Q3 numbers are hobbled by an inventory and timing issue, and cash burn dropped 56 percent between Q2 and Q3, according to Primack. The firm had a 26 percent quarter-over-quarter revenue increase.
Bloom CFO Bill Kurtz told Fortune in an official statement:
"Bloom Energy is pleased with the substantial progress we have made in 2012. On a pro-forma basis, Bloom has become gross-margin-positive in 2012 and is on track with our goal to be profitable in 2013."
The claim from Bloom's CFO suggests that Bloom is finally making money on every fuel cell it ships.
Bloom builds fuel cells of the solid-oxide variety with natural gas as the fuel. The units, which produce less pollution than burning natural gas, are intended for commercial and industrial applications, and the firm boasts an all-star list of customers, including Adobe, FedEx, Google, Coca-Cola, and Wal-Mart.
Bloom’s biggest single project, a 30-megawatt installation with Delaware utility Delmarva Light & Power, remains under attack in the courts. Nonprofit legal advocacy group Cause of Action filed a lawsuit accusing Delaware Governor Jack Markell and the Delaware Public Service Commission of unconstitutionally setting up a deal in which Bloom agreed to build its fuel cells in the state, and got exclusive financial and regulatory benefits in return. The lawsuit (PDF) also included competing fuel cell maker FuelCell Energy as a plaintiff.
Bloom also has a power purchase agreement arm to its business plan in which the firm sells kilowatt-hours rather than fuel cells.
Bloom still faces some risk, as does any cutting-edge technology company. Bloom's fuel -- natural gas -- is a commodity and subject to price increases. Bloom's business has relied on state subsidies for distributed energy, and subsidies expire. The long-term reliability of the fuel cell stack remains a risk. But in today's difficult cleantech business climate, it's grounds for cautious optimism. Bloom could demonstrate the viability of capital-intensive, VC-funded cleaner energy breakthroughs.
We’ve been covering a flurry of technology partnerships on the smart grid-smart buildings front as of late -- demand response from Schneider Electric and IPKeys, building energy efficiency from EnerNOC and SCIenergy, and building data analytics from IBM, Honeywell and SkyFoundry among them. Indeed, pretty much every big building controls vendor has a cloud-based platform to back up their service-based energy services contracting (ESCO) work, with names like Schneider’s StruxureWare, Honeywell’s Attune, Siemens’ Apogee, and the like venturing into the space.
Milwaukee-based Johnson Controls rolled out its own platform last year, called Panoptix, which mirrored its competitors’ platforms in tying together the heterogeneous, largely legacy technology of lots and lots of building control systems into an enterprise management and controls architecture of some kind.
But Johnson Controls has also opened up its Panoptix platform in some interesting ways. The latest this month is a new applications developer program, aimed at inviting third-party software into the fold, with noteworthy building efficiency technology players like BuildingIQ, FirstFuel and Lucid Design Group already on board.
Integration can run as deep as direct, real-time control of building management systems. On Tuesday, Johnson Controls announced that BuildingIQ’s HVAC optimization software is now up and running for subscribers to the cloud-based Panoptix service. That makes it one of the first cloud-based software platforms to “enable real-time control of the BMS in order to directly reduce energy use and peak loads” within buildings -- that is, to turn over direct building-system control to the cloud.
But Panoptix is as much about managing data -- and customer service -- as it is about managing building energy. As part of Johnson Controls’ broader energy services business, Panoptix helps connect big corporate and government clients to the company’s on-site staff, normalize disparate building and energy data into portfolio or business planning categories, and manage efficiency programs and retrofit projects from inception to reporting and continuous commissioning -- essentially, all the things any big energy services giant does in a day's work.
“It’s hard to get data from multiple sources and put it in a format that’s useful. We did that with our Panoptix platform and our APIs,” Laura Farnham, vice president of building technology and services for Johnson Controls, said in an interview last week. (Johnson Controls will have the latest from Panoptix at its booth alongside hundreds of other companies at this week’s GreenBuild conference in San Francisco.)
From last year’s launch, Johnson Controls has grown the number of apps that Panoptix provides from six to seventeen, with five of the new ones coming from third parties -- utility efficiency data analytics startup FirstFuel, meter data-mining and trending software startup EnergyAi, building energy dashboard company Lucid Design Group, hospital energy-efficiency expert TG4 and resource management software vendor EnergyPoints.
Panoptix has also added an interesting social media angle to its platform via the “Connected Community” section of its website, Farnham said. The idea is to offer customers a place to share efficiency ideas, leads, experiences and the like, complete with a discussion board that’s currently featuring such early-stage posts as “Is there a Demo Site? If not, when will one be available?”
This kind of community approach isn’t unique to Panoptix -- startups like Honest Buildings, SPARC and others are collecting data from the people inside buildings, whether facility managers or temperature-sensitive tenants, to try to balance efficiency with the task of running a building for its suited purpose. Of course, startups don't have the deep integration that JCI has in building systems. But does Johnson Controls (or Siemens, or Schneider Electric, or Eaton/Cooper, or Honeywell, or etc.) do software well? That’s been a key question from industry experts, and one that the Panoptix push into third-party software is likely to help answer.
The U.S. economy continued to produce new green job possibilities in the third quarter of 2012, but at a slower rate than earlier in the year, according to the latest report [PDF] from the advocacy group Environmental Entrepreneurs. The culprit in the slowdown: the expiring production tax credit for wind energy.
Environmental Entrepreneurs -- or E2, as it likes to call itself -- uses an interesting metric for gauging employment dynamics in the green jobs sector: It tracks “projects across the United States that will create new jobs in manufacturing, public transportation, power generation and energy efficiency.”
The group says that if all the jobs announced among 66 projects it tracked in the third quarter became reality, 10,819 new jobs would be created. That sounds pretty solid, but it’s actually a steep decline from the 37,000 clean energy jobs announced in the second quarter and the 46,000 announced in the first quarter. Making the trend even more striking was the fact that this decline in growth came while the overall economy was beginning to pick up some steam.
“Against a backdrop of rising employment in the overall economy, the decline in clean energy job growth is attributable to Congress’ failure to extend the Production Tax Credit and uncertainty created by some campaign proposals to end or dramatically scale back federal support for renewable energy,” the group said.
Image via Environmental Entrepreneurs
Without the key 2.2 cents per kilowatt-hour subsidy in place, companies are putting off plans to build new wind farms, and that’s having a ripple effect through the industry supply chain, which has been beset by layoffs for months.
E2 said it doesn’t typically track layoffs, but the looming PTC expiration has been such a powerful factor that the group couldn’t ignore the pink slips going out. Here’s its assessment of the situation:
“Since January, E2 has tracked at least twenty job layoff announcements spanning seventeen states, totaling a minimum of 3,240 jobs lost. Eighteen of these announcements occurred in Q3 2012. A majority of these announcements came from wind energy manufacturers, who are experiencing a significant drop in orders for parts and components. We anticipate seeing a steady increase in job layoff announcements from manufacturers, developers, and other companies throughout the wind energy supply chain if Congress lets the PTC expire.”
The good news -- or, at least, hopeful news -- is that advocates for a PTC extension believe there is a good chance that the recently concluded election cycle showed Congress that there is strong nationwide support for wind energy. That, they hope, will inspire the lame-duck Congress to deliver a PTC bill to the president, who strongly backs an extension.
Advanced Equities, the controversial and troubled money-raiser for high-profile Silicon Valley green startups like Fisker Automotive and Bloom Energy, is closing up shop, according to a Monday report from Fortune’s Dan Primack.
Advanced Equities paid a $1 million settlement to the Securities and Exchange Commission and sacked CEO Dwight Badger this summer over charges of misleading investors by, among other things, hugely overstating the sales backlog of fuel cell vendor Bloom Energy. The company has neither denied nor admitted the charges.
Primack reported Monday that he’s heard rumors of another round of subpoenas for the Chicago-based investment firm, related to fundraising for another well-known green technology company, though he said he hadn’t confirmed those rumors at the time. Calls to the company were transferred to a voicemail account that would not accept messages.
Advanced Equities has provided hundreds of millions of dollars in private equity for Silicon Valley venture capital firms such as Apex Venture Partners, Benchmark Capital, Khosla Ventures, New Enterprise Associates, and Kleiner Perkins Caufield & Byers, primarily to fill out large capital-heavy rounds for startups like Fisker, Serious Materials, Bloom Energy, and SolFocus. But it has also had a long-time reputation for troubling business practices, as Greentech Media has been reporting since 2009 or so.
Fisker representatives told GigaOm the company expects “minimal impact” on the funds AE ran for it, which include its latest $100 million round. Fisker has raised more than $1.2 billion, but has struggled with recalls and reports of fires from its plug-in hybrid Karma sports cars. It has also halted work on its Delaware factory, meant to produce its mid-priced plug-in Project Nina sedans, amidst a halt to further access to its Department of Energy loan guarantee for the project.
As for Bloom Energy, the Silicon Valley fuel cell startup turned to Advanced Equities for help with a portion of its approximately $800 million in investment raised to date. Advanced Equities also set a value for its latest Bloom offering at $25.76 per share, which would add up to a $2.7 billion market value for the company -- significantly higher than the $1.8 billion valuation pegged to a June 2011 investment, as well as other reported values for Bloom shares that have changed hands in the past 12 months.
Here's a link to an SEC filing for a targeted $150 million private offering from Advanced Equities for a fund called GreenTech Investments III, and here's the filing on GreenTech Investment IV, also for a targeted $150 million, dating from March 2009.
GTM Research and SRECTrade today publish the SREC Market Monitor: Q3 2012 report; this quarterly report series is the industry's best source of strategic data and analysis on SREC market in the U.S. To learn more, click here.
Solar Renewable Energy Certificate (SREC) programs first appeared in New Jersey in 2005. Today, there are seven U.S. states with active, open SREC markets: Delaware, Maryland, Massachusetts, New Jersey, Ohio, Pennsylvania and Washington, D.C. Since then, these seven states have seen significant solar development activity. In early 2012, driven by its SREC program, New Jersey surpassed California as the largest retail solar market in the U.S.
No two markets are the same. Most SREC states have a solar carve-out within renewable portfolio standard (RPS) laws that requires that a percentage of electricity in the state be derived from solar. SRECs are purchased by utilities to meet these compliance obligations. In most states, the RPS adheres to a schedule set several years into the future that defines the demand for SRECs. In Massachusetts, the requirement each year is set by a formula designed to adapt to market conditions. It also has a price support mechanism in place that promotes spot market trading.
FIGURE: SREC Info Map, Q3 2012
Source: SREC Market Monitor: Q3 2012
Other states like Delaware and, to a lesser extent, New Jersey have moved toward long-term SREC procurement programs. These programs can reduce the cost of capital in solar by providing long-term guaranteed SREC revenues, which in turn can reduce the cost of solar to the ratepayers. Delaware has developed a statewide program that competitively sets long-term SREC contracts, while New Jersey has taken a similar approach with a portion of the market. Finally, a few states utilize SRECs to help utilities meet their requirements, but those programs are not covered in this report due to a lack of an open market mechanism.
Over the past few years, the expansion of SREC markets into new states across the eastern U.S. has subsided, mostly due to unfavorable legislative conditions. Despite this trend, many states that have already implemented SREC programs have found ways to provide continued support through legislative improvements. Combined with the significant growth driven by these programs, it is clear that the SREC model as a mechanism to promote solar growth has become a major part of solar finance in the United States and will continue to have a significant impact on development in the years to come.
FIGURE: SREC Market Status Overview
Source: SREC Market Monitor: Q3 2012
New Jersey pricing continues to decline
- Following the passage of legislation in July, New Jersey SREC prices for the 2012 and 2013 vintage periods continued to decline, falling below $100 per SREC. The decline in price has been a result of substantial oversupply for both the 2012 and 2013 compliance periods. Forward contracts have declined in price as a result of the expectations that current oversupply and install rates will further impact 2014 and future periods.
Massachusetts 2012 oversupplied, 2013 requirements announced
- Massachusetts 2012 vintage SRECs continued to trade in the low $200s. Although traded volumes have been limited, buyers have not been actively bidding price up as there is plenty of time left in the compliance period until obligations have to be finalized in June 2013. At the end of August, the Department of Energy Resources (DOER) announced the 2013 SREC requirement. While the existing formula derived the number of SRECs needed in 2013, the DOER also announced its intention to make an adjustment to the equation that will increase the 2013 SREC target.
Maryland 2012 pricing slips as large projects come on-line
- The quarter started off steady with the 2012 vintage pricing at $200 per SREC. Constellation’s 16.1-megawatt project came on-line in August, causing a dip in pricing for the current year vintage, which recently traded at $150. Although the 2012 market will see oversupply, the long-term outlook is positive given the renewable portfolio standard (RPS) amendment passed in Q2 2012.
Delaware sees minimal activity as the market waits for next solicitation
- Minimal transaction activity took place for the DE2012 vintage. SRECTrade’s September auction saw some volume trade at $40 per SREC. Development has been minimal as market participants are waiting in anticipation of the next DE Sustainable Energy Utility solicitation program; it is currently expected in early 2013.
D.C. market continues to see undersupply
- The Washington, D.C. market continues to see undersupply in the current compliance period. Pricing remains around $300 with the expectation that there may be an increase as obligations are finalized towards the end of 2012 and beginning of 2013. Project development continues at a slow rate given the geographic constraints of the District.
Pennsylvania sees no light at the end of the tunnel
- SRECs continue to trade in the $20s, with older vintages trading lower. There has been no movement from the legislature on the possibility of an amendment to the state’s Solar RPS goals and installation rates have slowed significantly. System owners should expect low SREC values for the next few years.
Ohio sees little demand for both sited and adjacent markets
Both the over-the-counter market and the SRECTrade auction have seen little demand for the 2012 vintage. A lack of demand has put downward pressure on pricing throughout the quarter. Given oversupply in the current vintage and the expectation that some of the state’s largest natural buyers have filled their SREC needs, it is likely the market continues to see little activity for the rest of the year. FirstEnergy issued a request for proposal (RFP) for 7,500 OH-eligible SRECs at the end of the quarter.
Want to hear more on SREC markets in the U.S.? Get GTM Research and SRECTrade's latest research at www.greentechmedia.com/research/srec-market-monitor.
When Carbon Lighthouse first launched two years ago, it focused on the cost savings of energy-efficiency analytics, followed by retrofits. Even though everyone likes saving money, the message fell relatively flat.
“We used to just talk about the money. We thought we should hide our environmental ethos,” said Brenden Millstein, CEO of Carbon Lighthouse. “It worked terribly.”
The problem was not that the executives Carbon Lighthouse met with were spendthrifts, but rather that they were always bombarded by new companies promising huge savings by using the latest technology.
Carbon Lighthouse does promise technology that can save money, but algorithms are not all it offers. The San Francisco-based startup has a two-step process that begins with engineers that take deep measurements of a building, then follow that up with sophisticated analytics that optimize performance and produce a roadmap for retrofits that will make the building as close to carbon neutral as possible. “Our goal is not just energy efficiency,” said Millstein, “but to reduce energy use on site as much as possible.”
Engineers first install data loggers all over the building, collecting data on light, temperature, humidity, currents, fan speeds, carbon dioxide levels and much more. All of the information -- usually more than a million data points -- is distilled into a thermodynamic model that looks at a building at both a micro and macro scale.
“Our goal is not analytics,” Millstein added, “it’s project development.” Carbon Lighthouse does not rely on interval meter data, although the firm will take that into account if it’s available. Instead, the data analytics are free to clients, and the real aim is to produce significant savings. Millstein claims his company can often deliver that at half the market rate of other energy retrofit firms.
As for the cost efficiency, he said that the level of data, down to a valve position at a compressor, is one key. “We can see in color when everyone else is in black and white.” Also, data in and of itself is not enough. He noted that one million data points might be too much if you’re not getting what’s valuable and what’s not. But most companies rely too much on interval data and are still collecting too little data, according to Millstein. “There’s a sweet spot that lets you figure out what’s important and what’s not.”
Carbon Lighthouse makes its money from project completion, usually based on the percentage of savings. To get from identifying problems to solving them takes a team of partners, including large building control firms such as Johnson Controls or Trane, solar firms, investors, LED companies and demand response providers.
The reams of data produced by Carbon Lighthouse’s approach allow them to find efficiencies where others do not. A chiller could be up to 30 percent more efficient just by changing the settings, said Millstein, and then those savings can be used to fund other projects or to compete for allowances in carbon markets.
Funding can be a challenge, but it has never been a barrier. “We really couldn’t care less what the issue is,” said Millstein. “If there’s a barrier we need to solve it.” For companies without the upfront capital, Carbon Lighthouse offers an efficiency power purchase agreement. The company also has various capital partners in its network to tap for different projects.
There is no one model to achieve savings. Millstein said that a client can dictate what it needs, whether it’s a payback in a certain amount of years or a particular carbon footprint reduction to meet its sustainability goals.
To deliver on the promise of a completed project at a lower cost than competitors, Carbon Lighthouse is focused on midsize commercial and industrial customers with a median of about 75,000 square feet. About two-thirds are office spaces, and there are also schools, industrial sites and hospitals among the 80 or so projects the company has completed.
Smaller projects, like a 2,000-square-foot restaurant, won’t work for Carbon Lighthouse’s approach. But in most cases, “as long as there’s central HVAC, we have yet to go in and not find worthwhile opportunities,” said Millstein. He noted there are plenty of buildings that are underserved by big companies like Siemens or Honeywell, but are still big enough to reap significant savings.
Competitors abound in every individual part of a project, from optimizing an HVAC system to finding rooftop solar panels. Millstein said that many partners might also be competitors, but added, “there is no other company that makes it profitable and easy to be carbon-neutral.”
As for Carbon Lighthouse, it is employee-owned, and Millstein said his two-year-old company is profitable. Projects are currently in California and Oregon but Millstein got started in this space in New York City, where he worked for a government program that helped high-rise office buildings to increase efficiency in chillers.
From chillers to full buildings, part of the secret sauce isn’t so secret at all: project management.
“That’s 80 percent of the work,” said Millstein. “Our analytics are very good, but it’s only a small component.” Providing a comprehensive approach, which also means that executives have a single retrofit, rather than an endless string of projects, has been a huge selling point. “You only need to think about it once and focus on it once.” Of course, the contract still comes with a measurement and verification component.
As individual equipment grows more efficient, systems-level integration becomes crucial for a far greater level of efficiency, according to a study from the American Council for an Energy-Efficient Economy.
For now, Carbon Lighthouse is focusing on expanding in the West and eventually back to the East Coast, and is not worried about other competitors in the wide market. There are many other startups getting into the small commercial space, such as SCL Elements and EnTouch. There are also retrofit and analytics companies, like Gridium, SCIenergy, SkyFoundry, and Retroficiency, to name a few. Noesis is another company interested in giving away data to spur larger retrofits. But for Carbon Lighthouse, it’s keeping an eye on the much bigger picture, from each kilowatt-hour to the larger energy landscape.
“We’re looking at whole solutions for every cent of energy use in a square foot,” said Millstein. “We have only one competitor, and it’s coal.”
The utility, which has deployed most of its smart meters to its 1.4 million metered sites, has been focusing on the residential side of its smart grid program for years.
EcoFactor’s service will be offered as the NV Energy mPowered brand. The goal is to get at least 20 megawatts of peak load reduction, which would need about 7,500 households to pick up the service before next summer. After the initial 20 megawatts, additional demand response using EcoFactor could be rolled out.
A Las Vegas pilot in 2010 garnered 36 percent better results than traditional residential DR programs, which might raise the temperature up to four degrees -- just enough that people might start to notice and complain. EcoFactor, on the other hand, keeps the temperature within one degree of preferred temps through pre-cooling using weather, air conditioner capacity, and the thermal storage capacity of each individual home. The pilots saved 13 percent of cooling cost for customers, the equivalent of about 3 kilowatts per home of demand response.
Roy Johnson, CEO of EcoFactor, noted his company is also working with Reliant, but the NV Energy expansion is its largest utility deal so far. Still, all of its work with utilities doesn’t hold a candle to a deal EcoFactor inked with cable giant Comcast early in 2012.
Comcast has tens of millions of customers and, even though it has been faulted for its customer service in the past, cable companies overall have a closer relationship with their customers than utilities. For Comcast, adding in home automation -- which includes security and controls, such as EcoFactor’s service -- is just another layered offering, while the move into the home is a first for many utilities.
For some utilities, it is attractive to watch other companies build energy management offerings in the home that can then be leveraged for demand response. San Diego Gas & Electric is working with Alarm.com and EnergyHub to leverage two-way thermostats in its region for its Reduce Your Use program.
EcoFactor said its service will be offered as part of Comcast’s Xfinity offering in early 2013.
--- In other news, EnTouch Controls, which focuses on the small business energy space, has been picked up by energy retailer Green Mountain Energy, which will offer EnTouch’s energy management system to its small business customers by offering an on-bill financing program to help pay for the system. Customers are seeing savings of 10 percent to 20 percent.
The EnTouch energy management system includes a touch-screen wireless thermostat that controls and monitors the HVAC and the ability to control large loads on the circuit level. There is also a web portal for owners to do data reporting and set up alerts.
Although large commercial and industrial customers still make up the bulk of demand response megawatts, creative utilities are looking for new offerings that can improve customer service, such as more energy services -- or they are looking for the long tail of demand response, which means dipping into residential and small business customers.
Last week, utility Southern California Edison quietly launched a program that could push the smart-meter-to-home-energy-device connection into the consumer marketplace in a big new way. Now the question is, will utility residential customers buy into the plan?
The offer, in simple terms, is for a $50 cash-back rebate for a simple, LCD-screen energy display unit from Vancouver-based Rainforest Automation called the Energy Monitoring Unit, or EMU. As of last week, Southern California Edison is making Rainforest’s EMU devices available to select customers, via six Best Buy stores in Southern California, as well as online.
It’s far from the first such utility-sponsored, meter-to-home-device program in the country. But it’s a bit different than most I’ve heard about so far, based on a few key figures. The first is the number of customers it’s targeting. SoCal Edison plans to contact about 100,000 of its customers via email in the next week or so to let them know that they’re eligible for the rebate, Chris Tumpach, president of Rainforest Automation, told me in a Friday interview.
The second is the value of the rebate itself -- $50 cash back, for a device that comes with a suggested retail price of $59.99, Tumpach said. That adds up to a cost of $10 for a device you can take home, plug in, and, after a short setup process with the utility, start getting eight-second updates on your household energy usage, as well as accumulated usage, pricing info, and any other simple messages the utility might care to pass along that can fit on the EMU’s small screen.
It’s all part of a big new push in California to make smart meter available to utility customers. SCE and fellow utilities San Diego Gas & Electric and Pacific Gas & Electric have deployed smart meters through almost all of their territories, and they’ve also been piloting ZigBee meter-to-home technologies for years now. But they’ve been slower to meet the California Public Utilities Commission’s requests to turn those smart meters’ ZigBee radios on en masse.
Beyond the cost and complexity of turning on a whole new communications and control channel for multi-million-endpoint AMI networks, there’s the question of which technologies to sink investment into, and when to do so. PG&E has argued that the industry should wait for a key standard for home automation, Smart Energy Profile 2.0, to be formalized before proceeding with commercial-scale deployments.
Still, the CPUC has kept up the pressure. In October it asked the state’s big three IOUs to start providing meter-to-HAN connectivity on some kind of consistent basis, as well as to make HAN-enabled devices available via third parties. That’s driven the state’s utilities to rush ahead with their plans to get partners’ devices on store shelves, Tumpach noted -- San Diego Gas & Electric is also planning to offer Rainforest’s EMU for subsidized sale in the coming weeks, he said.
Expect a lot more home energy players to get involved in California’s new push for meter-to-home connectivity. Startups like Tendril, EnergyHub, Energate, AlertMe and literally dozens of others, along with demand response providers like Comverge, thermostat giants like Honeywell and Cooper Power (now part of Eaton), networking providers like Digi and a host of other vendors already have millions of energy-smart home devices up and running in the United States. All would no doubt love to get a piece of whatever market emerges in California.
The AMI-to-HAN Connection
But there’s a catch to that emerging California market -- it has to be enabled via smart meter ZigBee radios. Most of today’s utility-to-home energy control networks, on the other hand, run either via one-way paging or radio systems, which offer the utility direct control over household loads, or broadband to the home, which enables the real-time communications and data capture that next-generation smart grid pilot projects are after.
Even smart meter data is coming via internet to the home. In Texas, where big IOUs like Oncor and CenterPoint Energy have deployed millions of ZigBee-enabled smart meters, customers can log onto the Smart Meter Texas portal and check their household energy data. But that’s day-old data, collected via the 15-minute to hourly AMI backhauls to the utility, then (usually) run through a back-office batch process overnight before being posted for customers to check out.
Smart meter-to-home connections are much rarer, despite a statewide ZigBee device registration program, and a number of programs from Texas retail electricity providers like Reliant Energy and TXU. Reliant gave away 10,000 Tendril IHDs last year to promote the Smart Meter Texas web portal, and has been connecting customers to smart thermostat services from Nest and Ecofactor this year. In Oklahoma and Canada’s Ontario province, utilities have signed up tens of thousands of customers for smart meter-to-home energy pricing and demand response programs.
As for third-party sales of HAN gear, Rainforest has been selling its EMUs into the Texas market for about a year, Tumpach said. But so far, those sales have lingered in the single-digit thousands range, Tumpach said. The SCE $50 rebate offer, available through the end of this year, could add up to about as many customers as Rainforest already has in Texas in one fell swoop, he noted, assuming that about 5 percent to 10 percent of the 100,000 customers receiving the offer follow through with it -- a pretty typical response rate for utility offers of this kind.
Smoothing the Move to Smart Meter Connectivity
All these HAN devices are using a previous version of Smart Energy Profile, known as 1.0 (or 1.1, or 1.x, depending on the latest update), which is specific to ZigBee. SEP 2.0, on the other hand, will include Wi-Fi and the wireline HomePlug communications standard as well. That opens up a new world of connectivity once SEP 2.0 is made an official standard some time next year.
For example, Tumpach noted that today’s Rainforest’s EMUs are simple, display-only energy devices, which have to come preprogrammed to respond appropriately to commands from their “master” utility. But in the future, Rainforest is planning to include Ethernet connectivity in its EMUs, to allow them to connect to home broadband networks, he said.
While ZigBee is the radio of choice for most of North America’s smart meter deployments, there’s no reason that these communications have to run through the meter, instead of, say, home broadband or cellular networks. Canada’s Ontario province is one example of a market where multiple channels are being explored -- while every utility in the province has deployed smart meters, about half have chosen meters without ZigBee HAN radios. There’s a small but growing number of homeowners investing in their own home automation and energy-saving devices that run on good old-fashioned Wi-Fi networks, from the high-end $250 Nest learning thermostat to the simpler $99 models on sale from Radio Thermostat of America at Home Depot.
In the case of California’s big three utilities, however, the CPUC has made it pretty clear that they’re going to have to “push” a lot of consumer data through their AMI networks to their millions of residential customers. Utilities face technical, economic and regulatory issues in turning on their meter-to-HAN systems, Tumpach noted. For example, SCE and Best Buy had originally intended to link activation of the devices to Best Buy’s network, but found the IT integration behind the idea hard to handle, he said.
As of today, SCE has settled on a different method, which involves tagging each EMU device sold with a unique identifying number, then asking homeowners to log into a utility web portal (or call an 800 number) and provide that code to have their device synched up to their home’s smart meter.
Tumpach estimated that about 1 in 10 homes has trouble linking their in-home display to the smart meter via ZigBee, usually because the meters in those cases are behind walls, in basements, or otherwise located in places where the low-power mesh wireless networking technology has trouble reaching. Often, moving the in-home device to a room closer to the meter fixes those problem, he said -- but in cases like apartments with meters in the basement, sometimes wireless has to be replaced with powerline communications, broadband or some other form of connection, he noted.
While different technologies contend to network smart meters to customers, efforts are also underway to standardize the data flowing to utility customers as well, in the form of standards like SEP 2.0 and OpenADR, or public-private partnerships like the White House-backed Green Button initiative. We’re already seeing startups and coders writing apps to take advantage of smart meter data to allow utility customers to do things like share home energy scores via social networks, or analyze household power usage to find out which appliances are ripe for replacement with the latest energy-efficient models.
It’s a stew of data and ideas for using it, in other words. Utility residential customer management and efficiency experts like Opower and Efficiency 2.0 (bought by startup C3 this year) are tackling the twin challenges of managing the data behind multi-million-customer programs and actually getting homeowners to care more about energy efficiency. Big data startups like AutoGrid and Bidgely are deploying technology built to analyze data from Google and Facebook-sized customer bases for utility purposes. Smart-meter-to-home connectivity is one piece of the puzzle, but it’s far from the only one.
President Obama’s reelection is only the first step in undoing the layoffs, shuttered plants and disappearing supply chain caused by Congress’ refusal to extend wind’s vital production tax credit (PTC).
Because wind manufacturing and development takes twelve months to twenty-four months to get geared up and producing, consultants predict it will drop from this year’s likely ten-plus gigawatts to, at best, three gigawatts.
This is the fourth time since 1999 that congressional conservatives, many of whom state that they are ideologically opposed to federal incentives, put U.S. wind through a boom-halting bust cycle.
"The oil depletion allowance has been in the tax code for 86 years,” observed Jonathan Weisgall, Legislative & Regulatory Affairs Vice President at MidAmerican Energy Holdings, a subsidiary of Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A). “Oil hasn’t exactly been on a boom-and-bust cycle.”
Weisgall said the PTC will be altered and extended, most likely for one year, in a tax extenders package. “The year-to-year cycle,” he said, “is what we are stuck with.”
But extension of the PTC is “no small thing,” Terra-Gen Power Governmental Affairs VP Gregory Wetstone said recently, “given the general atmosphere of hostility [on the part of] a portion of the House to such incentives and the larger problems requiring compromise to avoid the fiscal cliff.”
“Not having a PTC would be disastrous in the short term for the wind industry,” said Bracewell & Giuliani energy specialist Frank Maisano. It is “built into the economics” of projects in development and the pipeline and of manufacturing and its supply chain. “It would be disastrous to pull the rug out from under all that. It would also be hugely unfair, given the investments people have made, to suddenly not just move the goal posts but take them away all together.”
But that won’t happen, Maisano said, “because 80 percent of wind projects and manufacturing are in Republican districts, so there is widespread support both on the Democratic and Republican sides.”
Weisgall, Maisano, Wetstone and several other Washington insiders said a version of the PTC will most likely be passed early next year, after the lame-duck session is used up on “kick the can down the road” legislation to avoid the tax cut, spending and debt ceiling issues that comprise the fiscal cliff.
But opposition from House ideologues will make a revised PTC necessary. “It gets renewed in the short term under the caveat of addressing it over the long haul,” Maisano said. Doing that “must include some principles like a phase out or something similar” that will “tee up the future deal.”
Weisgall, Maisano, and another D.C. lobbyist who did not want to be named all said the deal could involve language introduced last fall by the Senate Finance Committee.
The present PTC provides $0.022 per kilowatt-hour produced by a wind project over its first ten years if it is in service by the last day of its mandated term.
In exchange for cutting the $0.022 or the ten-year period, Maisano said, the Senate Finance Committee language changing “in service” to “start of construction” might be substituted, “which would in essence give you an extra year.”
To get an extension past opponents, Weisgall said, the PTC must be revised “to justify it against tax reform, to justify it against deficit reduction, to justify it against the charge of corporate welfare and to justify it against the charge of being a special interest carve-out.”
He listed five possible revisions: (1) An extension that freezes the $0.022; (2) an extension that cuts the $0.022 to $0.011; (3) an extension that cuts the eligible period in half; (4) an extension that ratchets down the eligible period by two years each year to reach three years by 2016; or (5) an extension that institutes a domestic content requirement and ratchets that up.
The eligibility period is the most likely target, Maisano said. It can’t be so short it threatens projects’ viability, but if it is too long it won’t be politically viable. “If you’re a big development company, like a NextEra (NYSE:NEE), you may have more flexibility. If you are a one-off developer and without the PTC you can’t finance the project, it’s a much bigger deal.”
“The odds of at least a one-year extension are pretty good,” Weisgall said, “but it really [highlights] the larger question of what the fate of it will be.”
Most Washington watchers expect comprehensive tax reform in the 2013-14 period. It will be designed to level all energies’ tax credits and incentives, a 30-year Hill veteran said. “They will try to harmonize the energy sector incentives so nobody gets favored or disfavored.”
Such tax reform, most observers agree, could make Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs) available to renewable energy developers.
“It will certainly be part of the discussion,” Maisano said, “But people in the oil and gas and pipeline industries who use MLPs and people in the real estate business who use REITs won’t want to share their products.”
Without a PTC, Weisgall said, “the wind development cycle may well correlate to the price of natural gas, which I think will remain volatile. I think the domestic manufacturing industry will have to consolidate to survive and renewable technologies will have to compete on an unsubsidized basis."
Mohr Davidow, once a leading cleantech investment firm, has narrowly channeled its cleantech scope.
Instead of the full spectrum of greentech, Mohr Davidow is now focused on the convergence of greentech with IT, the firm's traditional sector. According to Josh Green, General Partner at Mohr Davidow, cleantech IT is now a vertical within the broader IT spread. Green noted that vetting a company of this nature often takes both the greentech and the IT sides of the house. Green also said that the firm is "emphatically" committed to its portfolio and believes "that there are important winners in this portfolio. Our commitment and support of them is unwavering."
That said, of the thirteen companies in the VC firm's portfolio, which ranges from solar (Nanosolar) to lighting (Xeralux, Xicato) to green chemicals (Genomatica), few, if any, would meet the new IT-green convergence requirement.
It appears as if the firm changed its personnel structure as well -- dividing its staff into General Partners and Investment Professionals. Most of the cleantech folks, Erik Straser and Marianne Wu, are now Investment Professionals. Will Coleman has moved on to other things.
This shift at Mohr Davidow is emblematic of the larger dynamic in cleantech VC. Few home-run exits and a sluggish IPO market have generalist VC practices letting go of dedicated cleantech partners and moving away from cleantech. We saw this happen at Battery Ventures after Jason Matlof and others departed. Ullas Naik departed and left Globespan Capital with a reduced cleantech practice. Behind closed doors at the larger VC firms, there is also a "de-emphasis" away from cleantech. Publicly, these firms claim to be cleantech investors -- but try going to them with an early-stage solar or biofuels startup pitch.
Green VC investment stood at $1.6 billion in the third quarter, which is level with the second quarter’s tally. That isn’t much consolation, however, given that $1.6 billion represents a 30 percent decline from the $2.23 billion invested in the same quarter last year. Deal count also fell to 148, compared to 169 in the same quarter last year.
Overall, Cleantech Group is projecting 2012 will end up seeing only $6.8 billion in green VC, a 28-percent decline from $9.4 billion last year.
While module prices plummet, the soft (non-hardware) costs of installing solar systems remain a stubborn barrier to affordability. The difference between the U.S. $4.44 per watt average installed cost for a typical residential rooftop system and the $2.24 per watt figure for comparable German systems, GTM recently reported, is in soft costs like customer acquisition, permitting, inspection and interconnection.
Red tape is also the likely culprit responsible for putting average U.S. system installation time at 75 days versus 7.5 days in Germany.
A solar installer in one Southern California city can take a set of plans to the proper authority and get a permit to build within 48 hours, Paramount Solar VP and twelve-year solar industry veteran Todd Lindstrom recently said. But in a virtually indistinguishable city of the same size that is immediately adjacent, “If I get it done in under three weeks, it’s a miracle.”
NREL Solar Analyst Kristen Ardani and VoteSolar’s Adam Browning previewed a forthcoming U.S. soft cost update from NREL and LBNL researchers. The final data will be published by the U.S. Department of Energy (DOE) later this month. And DOE's SunShot program opened a new $10 million competition in September for “innovative, sustainable, and verifiable business practices that reduce these soft costs to $1 per watt.”
GTM asked Ardani and Browning for their observations on the two main industry-wide efforts underway to attack the complexities of permitting, inspection and interconnection that have U.S. installers tangled up in red.
One approach, led by third-party-finance leader Clean Power Finance (CPF), would create a national permitting database. The other, the Solar Freedom Now (SFN) movement co-founded by industry pioneer Barry Cinnamon, would gather political momentum to drive Congress to standardize procedures at the federal level.
In its winning bid for a $3 million DOE grant to create an online database of local permitting standards, CPF estimated it could cut the balance-of-system (BOS) soft costs of installing a five-kilowatt (DC) residential rooftop solar system by more than $0.22 per watt.
“Getting a permit is the choke point in the process,” CPF CEO Nat Kreamer said, "[and it is] driving solar companies crazy today. It’s time-consuming, it’s costly and it makes for a bad end-consumer experience.”
“We have to solve this problem,” SFN’s Cinnamon, a 30-plus-year solar veteran who has done everything from rooftop installs to running Westinghouse Solar (PINK: WEST), said. “The way we are going to solve it is on the national level because 18,000 cities, 3,000 utilities, 50 states, you’re never going to fix it everywhere."
There is, Cinnamon said, “a quicksand of stupid regulations and requirements and we need a policy standard to bring to lawmakers in Washington, D.C., which has two million people who want it.”
“Clean Power Finance has some great efforts under way with their permitting database that will disclose different requirements across jurisdictions,” Ardani said. “What we are hearing from installers is that something like a database, where you can go on and look at all the different requirements, could be a huge time-saving measure.”
Even knowing about increased paperwork could cut soft costs, she added. “Just deciphering and investigating what each jurisdiction is asking for is a huge time and cost expense.”
A database could also generate action from the bottom up that leads to more rationalized fee structures, Ardani suggested. “A lot of times what you see are fees that seem arbitrary. Why is this fee $300 and this fee $800?”
Browning’s VoteSolar group is planning to incorporate the CPF metrics on time, process, and cost into its own web tool that will allow installers “to click on a state and drill down to local jurisdictions.”
The website will be part of a VoteSolar effort to identify “best practices on eight different data points.” The objective, Browning said, is to get jurisdictions involved in setting “that gold standard of simplified and cost rational permitting.”
SFN’s drive for federal legislation should be pursued and could be successful, Browning said, but “given Congress’s complexity, and the fact that states and local jurisdictions fiercely guard their prerogative of local control, nobody should count on it.”
The good news, Browning said, “is there will be efforts from the top down and from the bottom up,” so the group says it “will get at it one way or the other.”
“The best thing,” Ardani said, “is to have best practices and drive toward them at the local jurisdiction level.”
"I wish we could get it done in one fell swoop at the federal level,” Browning said, “but our line around the office is, ‘If your plan involves Congress, it’s a bad plan.’”
Is Enphase destined to be acquired?
Enphase (Nasdaq: ENPH), the Petaluma-based solar microinverter firm, announced solid third-quarter financial results with a record revenue of $60.8 million, up 36 percent year-over-year, at a record gross margin of 26.8 percent.
Despite record highs in quarterly revenue and margin, the price of Enphase shares has dropped to historic lows. The stock is trading at $2.66 per share today, down from highs earlier this year of $9.57. The market cap of the company is a bit above $100 million -- which gives the company a ratio of market cap to annual sales (~$200 million in 2012) of roughly 0.5.
Enphase has done most everything a VC-funded startup is supposed to do. The company innovated and essentially created the microinverter market, ramped fast and sharply gained market share along with growing margins, counter to the rest of the solar industry. The firm was able to make it to public markets (albeit at a lower than expected price), unlike other solar firms which have had to pull their IPOs, go bankrupt or sell themselves to Asian conglomerates at fire-sale prices (BrightSource, Solyndra, Q.Cells, MiaSole, HelioVolt, Ascent, Solibro, etc.).
Central inverter firms like SMA and Power-One have announced layoffs, while SatCon, one of the North American market leaders, just declared bankruptcy. Microinverter aspirant Enecsys just had some layoffs, according to comments yesterday from the firm's CEO.
Despite Enphase being more electronics company than solar cell firm, despite having some Moore's law forces on its side -- the market treats it like any other solar firm (brutally) and leaves it weighed down by the current malaise of the over-capacity solar industry.
Enphase sold 431,000 of its microinverters in the third quarter, but lost $8.9 million. Losses in the second quarter were $11.4 million. Enphase looks for Q4 to be between $52 million and $57 million and for gross margin to be 26.5 percent to 28.0 percent. Enphase also announced that it was accessing new and larger credit facilities.
MJ Shiao, GTM Research's inverter analyst, notes that Enphase continues to push costs down incrementally while keeping its ASP from falling as much as central inverter prices. But Q4 guidance is down from Q3, and Q1 tends to be seasonally low. So timing for profitability is still, optimistically, a few quarters away.
Which means that the stock price may stay in its current range. And it also might make Enphase a potential acquisition target that can be bought below book price and be accruable to the bottom line within a few quarters.
So who has the wallet and will to buy Enphase?
An Asian conglomerate or inverter manufacturer -- such as Chint, Samsung, AUO, SunGrow, or LG -- looking to enter the U.S. market?
Who are we missing as potential acquirer for this young, growing, but beleaguered solar firm?
ABB wouldn't say just how long it had been working on this project, but the company spends about $1 billion annually on R&D, and Schmidt described this as a “flagship” project. ABB is also busy in the Americas, updating the Oklaunion link in American Electric Power's territory and installing a 2,500-kilometer HVDC highway to power São Paulo, which will be the longest in the world. There are also dozens of offshore wind projects being proposed across the U.S. that would likely be linked by HVDC. The next step will be a pilot project, which will take place in about eighteen months.
Big data — the smart grid delivers it, utilities are awash in it, and somebody’s got to step in to collect it, analyze it and start delivering real-world value from it. That’s the touchstone for a lot of the activity in the smart grid nowadays, as utilities with tens of millions of smart meters, hundreds of thousands of distribution grid devices and a confusing array of back-end software systems strive to make the most from their new technology.
IBM is a giant in smart grid big data, with partners around the world using its IT heft to link up power meters, grid sensors, leak detectors for water networks, and other end devices into the back-end systems that make them run. One of its earliest test-beds for its smart grid vision has been Texas, where IBM has been working with utilities like CenterPoint Energy (happily so far) and Austin Energy (less happily).
On Monday, IBM and big Dallas-area utility Oncor announced the latest achievement on this long-running relationship – a big data platform that’s analyzing Oncor’s 118,000-plus miles of power lines, crunching data from its 3 million or so smart meters from Landis+Gyr and meter data management software from Ecologic Analytics (both owned by Toshiba), and rolling out the results for both utility operations staff and to customers via the state’s smart meter web portal.
“To be honest, it’s taken us some time to get here,” Michael Valochi, IBM’s global energy and utilities leader. First, Oncor had to build out the infrastructure – the smart meters, grid sensors and communications networks – to start collecting the data. Then it had to build the big data software and hardware infrastructure to start doing something with it.
But from that point, “What big data allows us to do -- what we’ve announced today -- is using that integration, both at the consumer level and at the optimization layer,” he said. On the grid side, IBM and Oncor are also doing preventative maintenance, asset planning and all sorts of grid operations tasks that bid data analysis helps reveal. “We’re getting to the point where we’re detecting and fixing outages before the consumer knows they happened,” he said -- a far cry from the old-fashioned way of locating outages via customers calling in to complain.
This kind of functionality isn’t brand new to IBM, of course. The company has been working on massive smart grid integration projects around the world, like South Korea’s Jeju Island project, as well as the entire Mediterranean island nation of Malta. IBM, Cisco, Microsoft and other big IT players are also deeply involved in “smart city” projects to link up municipal systems — including utilities in some cases – into intelligent networks.
IBM has also begun to launch software products aimed at commercializing the expertise it’s developed through its utility partnerships, including a smart meter data analytics package last year that offers some of the same capabilities that Valochi described for the Oncor project. Of course, it has a long list of partners involved in each project, from the individual smart meter and grid sensor device makers it’s integrating, to software partner like Schneider Electric’s Telvent for distribution grid management, or OSIsoft for its smart grid-adapted big data management expertise, he said.
Independent power producers (IPPs) have, to date, largely relied on securing power purchase agreements (PPAs) with utilities for the price certainty needed to finance utility-scale solar projects.
Because the levelized cost of electricity (LCOE) of wind has recently been more competitive than that of solar, developers have had another path to price certainty, explained Lincoln Renewable Energy (LRE) COO and former Acciona (PINK:ACXIF) North America CEO Dan Foley.
LRE just announced the finalization of a twenty year PPA with Southern California Edison (NYSE:EIX) for the output of its adjacent twenty-megawatt Marathon and ten-megawatt Agincourt solar power plants, scheduled for 2013 construction in Southern California.
Foley said that soon, as the result of small marketplace changes, it could be possible to build utility-scale solar without a PPA.
“They always talk about plants being 'built merchant',” he said of some wind projects, “that they float with the market. Not all of them. Many projects were able to fix the price through derivatives. It looks merchant,” Foley said, “but it is a synthetic PPA.”
Power projects are required to report details of transactions through Federal Energy Regulatory Commission (FERC) Electronic Quarterly Reports (EQRs), Foley explained. “Wind projects may be labeled 'merchant' because there is no indication at FERC of a PPA,” he explained.
A synthetic PPA, Foley said, is the result of a long-term agreement with a power marketer. “The project sells its power into the market and receives the hourly clearing price, which floats every hour. This hourly clearing price is used as the index for a fixed-for-floating swap.”
The top five power marketers, according to the American Public Power Association’s 2010 rankings, were JP Morgan (NYSE:JPM) (558-million-plus megawatt-hours), Morgan Stanley Capital Group (NYSE:MS) (almost 265 megawatt-hours), Coral Power LLC (242 million-plus), Sempra Energy Trading Corp. (NYSE:SRE) (198 million-plus), and Constellation Energy Commodities (NYSE:CEG) (191 million-plus).
Through the swap, which is made through a long-term contract, an IPP can secure price certainty, Foley said. “The project and the power marketer agree on the price. And every hour the contract is settled, based on the fixed price and the index, for the duration of the contract term -- as opposed to a PPA, where the contract is settled at a fixed price for every megawatt-hour the project produces.”
Foley offered a hypothetical example. Suppose the swap fixes the price at $52 per megawatt-hour for the electricity from a wind project.
The power marketer may also make a long-term deal with a power purchaser, known as a load-serving entity (LSE), at $58 per megawatt-hour. This would give the LSE long-term price stability without the risk of playing the commodity market.
If the hourly market clearing price is $40 per megawatt-hour, the market pays the wind project $40 per megawatt-hour and the power marketer pays the project $12 per megawatt-hour. The load pays the market $40 per megawatt-hour and pays the power marketer $18 per megawatt-hour. The power marketer makes $6 per megawatt-hour.
If the hourly market clearing price is $60 per megawatt-hour, the market pays the wind farm $60 per megawatt-hour and the wind farm pays the power marketer $8 per megawatt-hour. The load pays the market $60 per megawatt-hour and the power marketer pays the load $2 per megawatt-hour. The power marketer makes $6 per megawatt-hour.
“The actual spreads aren’t that wide,” Foley stipulated, “and the actual price depends on what the duration of the contract is: ten, fifteen, or twenty years. That price also depends on the location. Power in New Jersey is a lot more expensive than in Oklahoma. It’s really location-specific.”
This “merchant hedge gives the IPP the price certainty, which allows the project to support more leverage. With that leverage, the IPP can approach a tax equity player like for financing. The top ten providers of tax equity for U.S. renewables in 2010, according to a Mintz Levin white paper, were Bank of America (NYSE:BAC), Credit Suisse (NYSE:CS), MetLife (NYSE:MET), Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C).
Though wind developers have been able to do this, Foley said, “solar is not there because the forward curve for the electricity commodity isn’t quite high enough to support PV solar.”
One of three things could happen, Foley said. “Natural gas prices could come up; solar installation costs could come down; or panel efficiency could increase. But if you look at the trends of those three, they are all trending in the right direction. It’s just not quite there.”
When power marketers provide a guaranteed price, Foley said, solar developers will have “a fixed cash flow” because “in solar, you generally know how many megawatt-hours you are going to generate every year. As a result, “I can tell you exactly what my cash flow is going to be and I can borrow up to some percentage of that.”
Based on his reading of utility-scale PV project installed costs, panel efficiencies and the trend in natural gas prices, Foley said he expects merchant hedges to be play a big role for developers when the investment tax credit expires in 2016.