If you are tight on time jump over to 1:50; President-Elect Obama sees upgrades to the US’ infrastructure, the development of alternative energy and the implementation of alternative energy projects as critical components to the country’s economic recovery.
Over breakfast with Clint Wilder this morning we had a good discussion about the interest and excitement of young and more ‘seasoned’ professionals in the CleanTech space. We launched into a discussion of his and Ron Pernick’s book, a great resource for career changers interested in transitioning into the CleanTech space. It is now updated and out in paperback.
Like so many in the CleanTech space he and Ron are “high tech refugees”, and as longtime reporters they speak the language of communicating complicated stuff to the lay person. As a recruiter I’ve seen it to be a great resource for interested candidates as the first real step in the long journey that is learning about Clean Technologies. To be fair what we term as CleanTech is terrifically broad and investors, entrepreneurs and job seekers need to do some real homework before attacking markets.
CleanTechies blogger Nat Kreamer (COO and co-founder of SunRun) had some big news this morning for us. Hopefully the announcement of $105M in loan financing for SunRun customers by U.S. Bancorp is a sign of credit houses freeing up some of the liquidity that the department of treasury has passed along to them.
This is big news because while it indicates some thawing of the credit freeze, it also indicates some serious innovation. This kind of financing is as sexy as any of the new technologies you see coming out of Silicon Valley.
I recently reconnected with an old friend from high school; over lunch today we discussed the pessimism of yesterday’s International Energy Agency report. We both saw the human race as a deft and resourceful bunch, and agreed that humans, like cockroaches, would manage to survive most of the impacts of climate change. What that world might look like should we survive could be a far cry from what we know now. I think that the mature approach is to do what we can to make the transition to sustainable energy and transportation solutions before our backs are against the wall.
Here is the CleanTechies five line synopsis of the report:
Welcome to the era of declining oil supply, volatile energy prices, and increased emission of green house gases. We are sorry to report that the economy is not doing well, which will put a pinch on investing in both alternative and conventional energy sources. Unfortunately, the resulting higher energy prices will further negatively impact the economy.
A small shred of good news is that, collectively, modern renewables (as a source of electricity generated) are slated to grow the most and are poised to become the second-largest source of electricity soon after 2010. Unfortunately the IEA projects energy demand growth of 45% in the next 25 years with a 20% increase in the demand for oil.
The Economist, a weekly newspaper, wrote an article entitled “Green,easy and wrong” – and I think it is preposterous. I realize I am taking a big stab here, and might well destroy any shred of credibility by coming out against such a well regarded publication. Yet, I’m surprised that the Economist came out so strongly, and frankly, inarticulately against what is a critical investment by the United States’ government.
Please read the article and come back to get my thoughts.
It is precisely because the United States has two huge problems – an economy that is sickly at best (doomed at worst) and an environmental (and energy) predicament that should be disconcerting if not alarming – that this country’s government should do everything in its power to align a pathway to success for both issues.
Last night was the CleanTech Open‘s gala evening; great food, super people, and some terrific companies selected for six $100K prizes (start-ups in a box). If the past is any indication, the winners and runners up are likely going to find their way into the line up of venture backed CleanTech companies.
There were a few keynote speakers, including San Jose Mayor Chuck Reed and David Rodgers, the deputy assistant secretary of the DOE’s Energy Efficiency and Renewable Energy Group. You might not agree with me that a night only needs one, if not a max of two key note speakers – but the best speaker of the night, was Steve Vassallo, a principal at Foundation Capital. He gave CleanTech entrepreneurs hope and guidance.
Gordon Brown’s trip to the Middle East was a clear example that non oil exporting states are still very much affected by OPEC’s decisions. While OPEC nations continue to brazenly collude consumers have passed the tipping point and have made concerted efforts to cut OPEC’s impact out of the equation. Consumers have seen the impact on their economy and environment. Politicians have now realized that we will vote for them if they highlight their green credentials, and we know that by supporting locally sourced energy we are developing local employment and business opportunities.
The reality is that it will be hard to finance projects that are purely based on predictions for increasing prices. What green investments need are the foresight of people and entities that believe that their technology will yield considerable margins even under low oil prices – in the future if not immediately. These investors are out there; BP (formerly British Petroleum and now “Beyond Petroleum”) and Chevron have already shown a push towards becoming broader energy companies by investing in solar, geothermal and biofuel concerns. Companies like Monsanto beginning to play in the BioFuels game. Cynics might tout that this is good for marketing, and it is – but these companies understand investment in research and development. They have an appetite for risk, exploration is not cheap, and investing in exploration of different technologies as opposed to new oil wells has a similar cash flow profile.
That was the question posed to me by a smart man yesterday. It is a valid point given the lack of commitment to all the energy independence rhetoric during the early 1970’s. America’s initiatives to reduce its dependency on foreign oil made great sense, yet as the price of oil plunged so went the country’s resolve to develop electric vehicles and alternative fuel sources. Call me overly optimistic, but this time around I feel we might be able to maintain our “eye on the prize” and continue to invest in renewable energy because of environmental and geo-political pressures and despite economic pressure and uncertainty.
With gas prices looming around $5/gallon the United States saw a drop in distances driven. There was renewed pressure to resuscitate the efforts surrounding the electric car; and politicians on both sides of the aisle pushed for alternatives because it made financial, environmental and geopolitical sense. Yet, history may well be destined to repeat itself. The price of oil has fallen hard for a number of reasons, including the general economic uncertainty, and automobile drivers have almost obsequiously demonstrated the elasticity of demand and begun to drive again.
A couple weeks ago I asked Mike Lichtenfeld, a deal associate with MMA Renewable Ventures what the impact was on the Project Finance business was after the first bailout package wasn’t approved. Here is a synopsis of his written response:
“Credit contraction, if sustained, will hurt the clean energy sector as much as any other industry – our projects, our manufacturing capacity, our corporate development and expansion all depend on access to debt capital. That much is clear. In addition, we know that the bailout debacle has stalled negotiations on an energy bill that would include extension of critical tax incentives for clean energy. However, even under a scenario in which the credit markets open and tax incentives are extended, the financial distress experienced market-wide to date has probably changed the landscape of tax equity investors for the worse, not only by reducing the numbers of players through outright institutional failure, but also by drastically reducing the tax equity appetite among those players still standing.
Financial institutions large and small that have been active in renewable energy from a tax advantaged equity position have recently underperformed or experienced losses in the economic maelstrom. The outlook for the US economy – even under a bailout scenario – is at best a mild and short-term recession, so a constricted tax equity universe could continue for 12-18 months or more….
That was the question I put to Nat Bullard – Senior Solar Thermal Analyst at New Energy Finance. He brushed off the question as stupid – so in case you feel like asking him here is his response:
A) they require at least 9 months of permitting
B) they have a building time horizon of many years after that, and
C) they sell to Utilities not to consumers.
Unlike Nat, I don’t think that these are necessarily reasons for not presenting – but he did come up with a good point: where was FirstSolar? “If you are established, then you are established,” he said. Well then Nat… what about SunPower’s huge party? Or are they not established enough for your liking? How about Q-Cells’? Was their party just for fun? (it was!)
I don’t know about his analysis on the absence of the big guys in STEG (Solar Thermal Electrical Generation) either – there are more and more companies coming on line, and while I saw some BrightSource executives and at least one former Ausra exec neither of these companies, nor any from the other recognized solar thermal players had a presence on the Expo floor (SkyFuel was there). Why would they skip out on a chance to tell the world what they do? The natural response to my question is, why should they have been there if the whole world already knows about them? I say because there were plenty of utilities there from outside of California and the United States.
… brought to you by CleanTech Human Capital and Renewable Analytics. Since we had such a good time last time, we’re doing it again. Expect the same: great beer and even better company, from 5:30-8:00.
The weather promises to be nice (around 75 degrees) and we should have another nice sunset. Relaxed and casual – we’ll have plenty of beer, some light eats and a good group. Like last time – it is short notice, but it is free beer on a roof deck to punctuate quitting time on a Wednesday – what is there not to like?
605 Market @ 2nd – take the elevator to the 14th floor and follow the signs out to the roof deck. See you starting at 5:30, we’ll be up there until around 8:00. Boont Amber Ale is the beer of choice (it is solar powered!)- if you have a particular preference for something else let us know, I’m telling BevMo what we want at 5 PM on Tuesday.
We’d hate to run out of beer, so if you are planning to come send us a note: RSVP @ this domain (cleantechies.com).
Cheers for now,
-Ian Thomson
PS: CleanTechies LinkedIn Group
SEIA and SEPA‘s event was a tremendous success if measured by attendance. The Expo was full, the displays were exciting and the crowd was expected to be around 15,000. Not too shabby!
The weather was a tribute to the event – San Diego’s sun was blaring down on us between events. Business was coming together everywhere I looked, from big companies taking their conversations to private rooms in adjacent hotels to side bar conversations in the conference rooms and terraces. The big guys were all there, and some new comers were pitching their wares, and of course there was the occasional entrepreneur scribbling an elevator pitch on loose pages to potential investors.
The conference topics and expo presenters ranged from policy discussions to financial concerns to technology, though to be fair – the unveiling of new market entrants and technology was pretty limited. The well attended events revolved around regulation and market expansion concerns, and quite a bit of attention was paid to the international crowd as German and Spanish companies eyed the US market in response to the tightening of the European Feed in Tariffs.
Tim Bond, head of Global Asset Allocation at Barclays, an investment bank, has put forth that the Swedish crisis of the late 80’s and 90’s will be a good model for the current, much wider, global financial crisis likely ensuing economic consequences.
In the Swedish example intervention was resisted, there was a tight downward spiral, there was a recovery, and while the economics caught up with the bailouts there was an extended period of negative growth as credit was tight and earnings declined. Whether the US and Global economy rebounds at the same rate or not, there are certain realities that will likely take shape – and a growing unemployment rate is most certainly one of them.
The G7 is working very hard on addressing our financial turmoil. I’ll leave much more qualified people to address the impact of the bail out packages on investment and more, and I hope to motivate someone to write about those effects here on CleanTechies. I will take a shot at suggesting implementing measures that address at least one aspect of the wide spread panic that is gripping so many these days – how this solution could have an effect on employment, education and the preparation of a grid more adequately equipped to accept electricity from intermittent and distributed renewable sources.