Renewable Energy – What Education Is Required?

March 10, 2010

PhotobucketThe producers of a television show called “Going Green” interviewed me yesterday to determine if they would like to feature me on an upcoming program. As part of the conversation, the associate producer asked me what areas of education are most required to get people up to speed in this area.

“It depends on what ‘people’ you mean,” I explained. “There are several diffferent constituencies that have markedly different needs with respect to knowledge.”

In discussing renewables, I’m amazed how people conflate the many different groups (consumers, corporations, utilities, government agencies, etc.) that, in fact, have completely dissimilar needs for information.  I gave the interviewer a few good examples off the top of my head, but after I hung up the phone, I realized that it might be a good idea to list the various segments and the topics which, in an ideal world, each would understand.  Here’s the list I put together:

Consumers

  • “Electric vehicle 101.” Pure EVs vs. plug-in hybrids. Trade-offs between EVs and internal combustion engines, for a each family’s unique driving habits. Considering NEVs (neighborhood EV), given the local driving conditions and traffic laws. State and federal incentives.
  • Recycling
  • Energy-efficient lighting, HVAC, and appliances

Corporate America

  • Intelligent building management. Light harvesting, integrated energy management.
  • Demand response, i.e., managing consumption of electricity in response to supply conditions, e.g., reducing consumption at critical times or in response to market prices
  • Incentives for carpooling and mass transit
  • E-commuting
  • High-efficiency vehicles (preferably electric transportation) on campus and in corporate fleets

Government Policy Makers

  • MSEV (medium-speed EVs) laws that foster use
  • Encouraging mass transit, bicycling, etc.
  • Eco-friendly community planning
  • Making use of the research performed by NGOs (e.g., World Resources Institute, Wilderness Society, etc.)
  • Incentives to consumers and businesses to reduce carbon footprint
  • Creating corridors for power transmission, using eminent domain law as necessary
  • Allocating stimulus money to organizations with demonstrable capability to deliver transformative change in energy generation and consumption
  • Stipulations to power utilities to increase purchase of energy from renewable sources
  • CAFE standards that drive increases in overall fuel efficiency
  • Intelligent placement of charging stations
  • Alternative fuelled vehicles in the government fleets
  • Laws mandating sustainable agricultural practices
  • “Internalizing the externalities,” i.e., forcing everyone to pay the complete costs of generating and consuming energy
  • Changing subsidies to create a level playing field for renewable energy

Power Utilities

  • Smart grid, i.e., delivering electricity from suppliers to consumers using two-way digital technology
  • Time of use metering, encouraging off-peak consumption (e.g., charging EVs at night)
  • Building out the grid in sync with increased demand for electric transportation
  • Efficient, long-distance power transmission using HVDC (high-voltage direct current)
  • Vehicle-to-grid (V2G), using energy stored in EV batteries to enhance delivery of electric power

Renewable Energy and Electric Transportation Companies

  • Making use of market research to gauge demand, establish the most appeal product/service features, set maximum set price points, develop effective positioning and branding, etc.
  • Writing clear and compelling business plans
  • Raising investment capital
  • Protecting intellectual property
  • Using public relations to generate large volumes of positive publicity

It sure will be a great day on Planet Earth when the majority of folks at all of these levels get their wits wrapped around each of the major issues.

By Craig Shields | Posted in Renewables - Business | Tagged , , , | Comments (0)

On Corruption

March 9, 2010

PhotobucketI’m back on the East Coast for a few days.  When I come here I normally stay with my parents (they’re in their mid-late 80s) at their home in Philadelphia — which happens to be an apartment in a very nice retirement community.  As it often does, the conversation this evening turned to politics.  But unlike many political discussions between parents and their children, it was not at all rancorous.   Through our talks, we try to understand why the US as a nation is having so much difficulty in gaining traction in solving its most obvious problems: wars, healthcare, financial reform — and, of course, creating a level playing field for renewable energy.

I pointed out that each of these is rooted in what I label generally as corruption, which I define as the supremacy of money and power over common sense and decency in creating and enforcing our laws.  I acknowledged that corruption is a harsh word, and that it applies more accurately in some cases than in others.  But I do think that if our leaders were kind and sensible people, uninfluenced by the power of money, we would have immediate workable answers for these and many other pressing issues.

Since we’ve so often discussed this idea of corruption as it applies to energy policy, and since healthcare is so omnipresent in a retirement community, let me use this latter as an example.  The 94-year-old lady living across the beautifully carpeted hallway from my parents’ place recently had a knee replacement, which was, of course, 100% paid for by Medicare.  We encountered her in the hallway; she still struggles to walk — which shouldn’t come as a surprise considering her age — and so they’re in the process of scheduling a second such operation.

Meanwhile, our nation has millions of people 60 years younger who happen to be uninsured and face untended illness or financial ruination — or both — because they can’t get health insurance.

While my heart goes out to the old lady, I point out a simple, if ugly truth: the only reason she’s receiving serial knee replacements is that they are profitable. She’s thin as a toothpick, horribly frail, and quite obviously has no prognosis under which she’ll ever be able to walk more than a few slow steps without terrible pain — regardless of how many times her knee is replaced.  Yet I caution you not to expect a change in healthcare legislation that might damage the profit stream generated by those surgeries she’ll be receiving — even if making such a change would free up huge amounts of cash that would more than pay the cost of insuring those who presently can’t find coverage.  The power of that money is so intense that such change simply will not happen — regardless of how compelling the argument — or how enormous the benefit to the public.

Do you have a better word to describe such a system than corrupt?  Can you introduce me to one honest, reasonably intelligent person who thinks that spending a fortune on knee replacements for 94-year-olds is a good, fair-minded idea while others who happen not to be able to get health insurance face catastrophic health conditions to which their pitiable complaints will be turned a deaf ear?

I know that the vast majority of the many millions of people working in healthcare are honest, decent, and incredibly talented.  I know dozens of them personally, and I respect them deeply.  But the fact remains that the medical industry is in place to make money.  And if you happen to be one of the lucky ones (like our friend above) who benefits from that profit motive, I urge you to consider it a bonus for which you should be profoundly thankful — because not everyone is so lucky.

So as not to ignore the energy industry entirely in this post, it’s clear that a similar argument could be made here.  As I’ve pointed out, the oil industry alone employs seven lobbyists for each of the 535 members of Congress.  Do you think Big Oil would be spending those hundreds of millions of dollars if they weren’t buying something of far greater value in exchange ? Sorry to appear cynical, but I’m convinced that the level playing field we’ve discussed here so frequently will come about when and only when we’ve found a way to disconnect our lawmakers from the powerful interests that buy their votes.

Corporate lobbying is an institution that is causing more harm to more innocent people with each passing month.  What’s the matter with simply abolishing it?  The framers of the Constitution wisely built in the right of the people to redress their government, but I think it’s pretty clear that they didn’t intend this patent dishonesty that’s ripping our civilization and its people slowly and painfully apart.  What’s the harm in simply saying that money should not buy legislative influence?

By Craig Shields | Posted in Renewables - Politics | Tagged , , , , , | Comments (0)

“Core Competence” and the Clean Energy Business

January 6, 2010

PhotobucketEach week, many people write into us at 2GreenEnergy from all around the globe wanting some sort of assistance with renewable energy ideas. Normally, “assistance” means “funding.” It’s certainly true that we are connected with a small team of carefully chosen boutique investment bankers in NY City, and that we routinely pass along the business plans that seem most solid to them.

But I have to admit that I have a morbid fascination with those business plans that don’t pass muster – that I consider to be fatally flawed (plans that, of course, I do not pass along). I’ve even developed a set of categories for them in my own mind.

First are those that are clearly specious in terms of basic engineering and physics, e.g., a wind turbine that supposedly captures two or three times more energy than the conventional three blades. Wrong. This is impossible, since the existing system already harvests about 60% of wind “flux,” i.e., the wind that passes through the circle defined by the tips of the turning blades.

Along these lines we have the perpetual motions machines, which seem to arrive here at a more-less constant pace. This category is composed, again – in the privacy of my own mind — of two sub-groups: “crackpots” (that is, people who seem to believe their story) and “charlatans” (people who don’t).   I’m never nasty or condescending with anyone, but I DO ask to see a working model.  Strangely, I get this response (uniformly):  No, I don’t have a working model; I just need another few hundred thousand dollars, and I can produce one quickly.  “Gosh, sorry,” I say, “I’m afraid I can’t help.” 

The other broad category of “non-starter” plans are those who have obviously bitten off more than they can chew. Here we have inventors who seem to lack a sense for the idea that the hard work is just beginning – maybe a fellow with a legitimate breakthrough who somehow believes that all the R&D, manufacturing marketing, and distribution are simply unimportant afterthoughts.

I sometimes find myself explaining something to someone that I’m quite certain he’d rather not hear, for example, “Your idea could change the world — but there’s a problem. You have a vision …. but you’re neither a seasoned businessman, a financier, a patent attorney, a human resources executive, a manufacturer, nor a distributor. I ask you to consider a basic solution, one that has been employed by smart people all over the world: sell or license your idea. I can help you sell this concept to a fully funded corporate entity that wants to bolster its position technologically and gain an additional competitive advantage. Or maybe we could talk about setting up a meticulously protected licensing relationship with an enterprise that has already established manufacturing practices — along with existing distribution channels.”

In essence, it’s the concept of core competency that became fashionable in the 1980s. Simply do what you’re good at. Don’t rein in your success by converting a personal weakness into a stumbling block toward your company’s progress.

And this rule is even more applicable in the world of clean energy than it is elsewhere, as this industry is destined to soon be measured in the trillions of dollars annually. Cut a licensing deal for your technology that captures a millionth of that market. You’ll be doing just fine.

By Craig Shields | Posted in Renewables - Business | Tagged , , | Comments (7)

Clean Energy Business Plans – More

October 31, 2009

I was just advising a friend on the development of a cogent business plan by which his energy storage invention can for monetized, emphasized in my 25 Tips for Renewable Energy Businesses.  I reminded him of these five central points:

  • Demonstrate an ironclad understanding of key industry trends.
  • Lay out an effective and efficient marketing plan.
  • Articulate your precise positioning statement vis-à-vis your most important competitors.
  • Present a credible cash flow projection based on realistic sales projections and cash burn-rates.
  • Show investors a full ROI analysis and exit strategy.

It’s funny to me how often I encounter the “build it and they will come” approach to business.  As a marketing guy, I’ve been vigorously recommending against this tack for decades – and nowadays, of course, I feel even more strongly about the matter.  Investors want to see a clear and compelling business strategy by which an idea can fill a gaping unmet need in a well identified target market — and do so profitably. 

Again, I’m happy to review any cleantech business plan with no cost or obligation, and provide high-level comment.

By Craig Shields | Posted in Renewables - Business | Tagged , , | Comments (0)

Guest Blogger Mike Brace on Clean Energy Scalability

October 2, 2009

PhotobucketInvesting in Green Energy  

- Mike Brace

 

I think that one of the hardest questions we face when considering the technology paths of tomorrow is which one we chose.  There are many great, novel and truly workable ideas for new ways to harness the natural energy flow of this planet and generate energy, motion and work from it. With this many choices the question then becomes which one we chose to pursue en masse.  

The answer will be based on a myriad of inputs: conversion factors, collection means, cost-effectiveness, environmental impact, energy source and availability, and so on. The one input that many people miss is that of scalability. In terms of green energy I define scalability as “the technology’s ability to meet a significant percentage of the demand for the energy (or work) in which it produces.” It is a combination of power density, affordability and durability. Think of it as the formula for global acceptance. All of the grants I have worked on considered ‘scalability’ to be a major factor in their decision making process as to which technology to invest in.

Scalability is the means by which to gauge a technology’s ability to grow in the marketplace. Take steam for instance. Converting water to steam is still considered one of the most powerful means by which to generate force. When the automobile first hit the road 100 years ago some were actually powered by steam. But it wasn’t very scalable in that application. In other words, the mechanics of generating work through extracting the heat energy from steam wasn’t good in that application.

Yet today steam produces better than 2/3rds of the electricity on this planet, and more so everyday. (Yep, it’s true; all coal and nuclear plants heat up water to make steam to drive turbines.) And even though we don’t use it to drive our cars it is still the power of choice to throw a 30-ton aircraft off the edge of an aircraft carrier (60 years after it was invented!). We discovered that the mechanics by which to generate steam AND convert it to electricity were very scalable. When you look at a coal-fired or nuclear power plant all you really see is a giant steam boiler. There’s no magic going on in there. And because water is an inexhaustible mechanical power source all we need is fuel to make steam.

Now we have come to realize that while the mechanics were very scalable, and that the mechanical power supply (water) was inexhaustible, the fuel to convert it is not scalable because the environment is overwhelmed by our ability to convert it and Mother Nature’s ability to replace it. A clever investor will discover that while carbon-based fuel is lowering the scalability factor [for steam power] efforts in solar power may be doing just the opposite. A good investor is also part soothsayer. Thomas Edison, in conversation with Harvey Firestone and Henry Ford, once remarked “I’d put my money on solar energy. I hope we don’t have to wait till oil and coal run out before we tackle that.”

In order to be scalable in today’s world an ‘energy conversion device’ (e.g. the hydrokinetically-powered electric generator or “HyPEG”) needs to achieve a ‘positive’ balance between the product (in this case electricity) with the mechanics (an underwater paddle wheel) and the energy source (river currents) as well as the environment (aquatic) in which it operates to achieve the desired scalability. Windmills worked great for grinding flour 400 years ago, but when the world needed more flour we had to abandon them because they weren’t scalable for what they were designed to do (grind flour). Here in the US, our forefathers ground flour with mills along streams. Now we no longer use either of those energy sources (wind and hydropower) to make flour but instead we use them to make electricity. When it comes to making a useful amount of electricity, and in a global environment, it is important to understand the scalability of the mechanics. For a layman and/or investor this can be tough to do, especially when you don’t see it in front of you (like you can with coal and nuclear plants). For the average investor this myopic vision becomes a ‘safe’ means to determine if a technology is scalable; the more you see the more we have made, therefore it must be scalable and a safe investment. While it may be a logical means by which to invest, it is not the smartest. I don’t imagine that the last investment banker which held the most stock in buggy whips is still around today, and the case of Ferdinand Graf von Zeppelin also comes to mind here.

Scalability needs to be looked at in a historical perspective to be understood. When we built dams we turned a blind eye to their effects on the river’s eco-system, thinking only about the scalability of large hydro-turbines and the economics of using them to make electricity. Now that the dams are too expensive (compared to other means of generating electricity) and mankind understands the negative impact they have on the environment, very few utility companies want to build them anymore (with the exception of those in China and Africa). But we did like the hydro-turbines; so many companies are designing new energy conversion technologies around them and many investors consider them a safe haven. However, not many are looking closely enough at the scalability of the hydro-turbine design.

Underwater run-of-river and ocean current turbines are a viable means of turning current flow into electricity, but considering that most of the usable current flow that we have access to lies in relatively shallow waters, turbines are not very scalable; to make a lot of power (more than 4 MW in 13 knots of current) you need a very large turbine diameter (30+ ft), so you need ‘deep water’ (more than 60 feet deep). There are not a lot of usable river currents that run that deep. We can put really big turbines along the bottom out in the deep ocean, but there is not much access to the grid along the coast so all of that power doesn’t do us much good. (T. Boone Pickens ran into this problem with his wind-turbine strategy.) Besides, large turbines need to stick up a long way from the bottom thus making them an even larger target for fish, dolphins and whales to run into. Rightfully so, you don’t see a lot of effort being put into those really large turbines because of their ‘scalability’ problems.

The technology exists to build smaller turbines for run-of-river electrical production, but you would have to build [literally] millions of then to even start to make a dent in world’s current demand for electricity. The idea of making millions of them may be appealing (from an investment point of view) but the problem is that they are not very scalable. They are expensive, not very robust, not very fish-friendly, and we would run out of rivers long before we could use enough of them to replace coal. Some states are even doing their best to steer clear of them for all of the reasons mentioned above. However there are other hydropower technologies out there that may not appear to use the latest in technology but do offer a design approach that is far better suited to larger scalability than some of the more familiar efforts. These are factors that need to be considered when investing in hydrokinetics.

Long term investment strategists that desire continuous high-yield results for years to come need to look forward and make decisions based on more factors than just what is popular (or what has been done before). Companies such as Emerson usually shun innovation, and only invest in proven technology regardless of its forecasted future. A shrewd investor can always make 15% on investments by doing this but [like Emerson] you’ll find your market-share dwindling over time. It can be a profitable pattern, but it is not usually a growth pattern; especially in transitional times like these. Companies like the kind that Henry Ford started were successful because he knew that even though the horse was responsible for over 90% of the personal transportation market it was not scalable beyond that market. He also knew the automobile could go beyond personal transportation. When asked “Why the automobile?” he responded “If I had asked them what they wanted they would have said ‘Faster horses’”.

Before you decide on what to invest in (and what not to invest in) first decide how long you are willing to let your investments grow. If the technology has a high scalability factor, then your investments in such will have not only have a high growth rate, but a growth rate that can be maintained for years and years to come. Think of ‘scalability factor’ as an investment potential in not only your children’s future, but your grandkid’s future as well. If that growth pattern is appealing to you, make the smart investment — not necessarily the popular one.

By Craig Shields | Posted in Renewables - Business | Tagged , , | Comments (0)

Investment Banking for Renewables Companies

September 2, 2009

Fresh back from my 36-hour pilgrimage to Manhattan, I have to admit the jolt to the system that a trip like that represents for a 54-year-old guy like me. As a younger man, I did the over-scheduled travel scene for decades (e.g., a trip from the East Coast at dinner to attend all-day meetings in Europe the next day — only to come back to the US that night) – but this one reminded me that I’m not 30 years old any more.

In any case, I’m happy to announce that the trip was more than worthwhile. I spent the day with Adrien Corbett, an extremely senior investment banker who has already begun to play a major role in helping 2GreenEnergy readers achieve their goals — making wise investments in renewables, and raising the investment capital necessary to achieve success.  More on this soon.

 

By Craig Shields | Posted in Renewables - Business | Tagged , , | Comments (0)

Renewable Energy Versus Energy Efficiency

August 27, 2009

PhotobucketAt the risk of stating the obvious, the subject of renewable energy is so much sexier than energy efficiency. I’m always amazed at all the interest on CFL bulbs, energy-efficient appliances – even hybrid electric vehicles. Every joule of energy your sending to the wheels of your Prius is coming from the chemical energy of the gas you’re putting in the tank; you’re just managing the process if bit better. Personally, I fail to see the excitement.

Energy efficiency is like dieting. You find ways to consume less, normally at the expense of some level of deprivation. What I like about renewable energy is that, once we’d gotten a handle on it, we can consume like utter pigs! Drive a Hummer with a 600 hp motor! Heat your swimming pool in February!

Again, a solar thermal farm in the shape of a square 92 miles on a side in the southwest US desert will produce more energy each day than the entire continent of North America can consume. We need this, or any of the other ways to capture and distribute 1/6000th of the energy our planet receives daily from the sun.

I’m convinced that we have the technology at our disposal. Google “solar thermal,” “molten salt,” and “high voltage DC” and see if you don’t become convinced as well.

But do we have the political will to deploy it?

By Craig Shields | Posted in Renewables - Science | Tagged , , , , | Comment (1)