Hybrid of Public/Private Financing for Renewables

March 8, 2010

PhotobucketI wrote not too long ago about the huge, long-term role that the National Renewable Energy Laboratory (NREL), as part of the Department of Energy, plays in supporting the development of clean energy technologies.  Their work with solar energy leader Solyndra is a perfect example of a case in which this public support made it possible for a private company to raise critically important addition capital, by preventing their initial private investors from getting scared away.  At a certain point, new (very large) rounds of cash were required to get the company to its next level.   As I recall, NREL supported this effort to the tune of over $700 million — and this robust commitment showed investors that they weren’t alone in their belief that the company was on the right track. 

But not every company that asks for money receives any at all — let alone $700 million.  So exactly how does this process work?  How fair is it? What criteria are most important?  What types of companies are favored over others, and why?  Are more mature renewables technologies, like photovoltaics (in which Solyndra plays), favored over newer ideas?  (Solyndra has a very well proven breakthrough in deployment of CIGS (copper indium gallium (di) selenide), generating a significant leap in PV efficiencies and reduction in costs).

Unfortunately, it’s not clear.  I suppose it’s not supposed to be.  Take solar thermal/CSP (concentrated solar power) as an example of a new technology.  Technologies like PV and wind have a several-decade head-start over CSP.  When I interviewed industry leader Ausra’s founder Dr. David Mills for my book on renewables, he told me that Ausra had gotten to the second round in one of these mega-contests in which the DoE selects its favorites to back, but that they didn’t make the finals.  When I asked if he resented their decision, he — perhaps simply out of good sportsmanship and professional courtesy — said that he didn’t, and told me that he’ll simply try again another time.

I can’t count all the people who have asked us for our insights at 2GreenEnergy on this matter — and I regret that all I can turn up are anecdotal incidents like these.  I ask readers to share their own experiences with this process so that all my learn.  Thanks.

By Craig Shields | Posted in Renewables - Business | Tagged , , , , , , , , | Comments (4)

Solar Thermal – Ausra Sold! – More Discussion

February 12, 2010

PhotobucketMore on my coversation with John Hugo on solar thermal, who writes:

Craig: I agree, could not have said it better re: nukes.

Re: the capital intensity of solar thermal, I don’t have a cost estimate on the power block from them and turbine procurement appears to be a problem according to them. But the cost of the mirrors etc. is $99 million for 50 MW pls the power block costs. This compares to $4/watt for PV, or $200 million.

Their system also allows for a gas assist that can run after the sun goes down or during low sun periods. That can add another 25% to capacity and which has the fuel costs of gas, but that’s the same as other gas systems in place now. Better than coal or nukes?

To which I replied:

Dr. Mills, Ausra’s founder, declined to talk (to me, at least) about the cost per Watt, even though I fairly well grilled him on the subject. Perhaps he was just being coy, but according to what he said, the price of steel is incredibly important in making this determination, and that this fluctuates greatly.

Personally, here is what I suspect. An extremely important aspect to keep in mind is that, unlike say wind, the efficiencies of solar thermal are improving every month. As you’ll see in my book’s chapter on the subject (scheduled to be published in March), there are four essentially different technologies here. Dr. Mills declined to say too much about exactly what he’s doing, but it was clear that he was pretty excited by it. The only hint he gave me was that it had to do with bringing a high-temperature (thus high-efficiency, per the principles of thermodynamics) solution to a technology that had previously been thought of as low-temperature.

I’m quite confident that Dr. Mills and his colleagues will be continue to be extremely active in the business; his passion for it is obviously sincere. And I, for one, believe he’s barking up the right tree in terms of a true and comprehensive solution for the world’s energy needs.

By Craig Shields | Posted in Solar Thermal | Tagged , , | Comments (0)

Solar Thermal Leader Ausra — Sold!

February 11, 2010

PhotobucketI’m sure many readers are aware of the incredible development in solar thermal / CSP (concentrated solar power). French energy giant Areva, which has a large nuclear portfolio, bought Ausra, and says it will use the acquisition to become “the world leader in concentrated solar power.” Here is a discussion I just had with my colleague John Hugo:

John writes:

It’s interesting that they were able to sell with little installed base and no real history of operation. The water cooling operation uses quite a bit of water and the dry version still uses water but much less and output is reduced. They have good people but they are not professional salespeople. …. I think it’s a hedge vs. nuclear which I don’t think will cut it due to the storage issue which has not been solved.

But despite recent political support re: nuclear why do it if you can do solar at less cost?

… and I reply

John:

Yes, this is quite a development, for sure. Here’s my take for what it’s worth:

CSP is extremely capital intensive. Projects require huge piles of cash, and happen only when the underwriting company is strong enough to present a meaningful warranty. I happen to know (based on my interview with the company’s founder David Mills) that Ausra was hungry to partner with (or, apparently, sell to) a company that could make all this happen.

Everything else you write about CSP is correct, if perhaps overstated. It DOES use water for cooling, and there IS a storage issue. There’s also a transmission issue, as the power is generated in the desert. But IMO, these are challenges that can be — and are being — overcome. First and most obviously, there is a good correlation between the sun’s shining and human activity. But more importantly, advancements that are being made constantly in smart grid, high voltage DC, and molten salt energy storage, in my mind at least, make CSP the top bet for our energy future.

On the other hand, I believe that there is no future whatsoever for the nuclear industry. I know there are people who disagree (and that I’ll be hearing from them any minute). But to me, no amount of money and the lobbying, subterfuge, and disinformation it buys will get that industry past the incredible dangers, outrageous costs overruns, and decade-long delays that are intrinsic to the very nature of what they do.

With all their financial (and thus political) strength, I don’t doubt that you’ll continue to hear claptrap about supporting nuclear. There is a word for this: corruption; it’s a regrettable but deeply entrenched part of our daily lives — whether we recognize it or not. But having said this, I very much doubt that you’ll live to see another new nuke actually put into operation in the US.

By Craig Shields | Posted in Solar Thermal | Tagged , , , , | Comments (7)

Clean Energy in Algiers and Tripoli

January 17, 2010

PhotobucketAs part of my travels to New York City and Bermuda last week I had the pleasure of meeting clean energy stock legend Bill Paul.  There were so many interesting facets to that meeting that I won’t even try to list them.  But one thing that struck me hard was his advice that 2GreenEnergy work harder at “thinking globally.”  The reference here was not the global impact of renewable energy or electric transportation, which is obvious; Bill was saying the the financial world outside the US is much more important to the migration to clean energy than than the workings of Wall Street. 

“Do you know what’s happening in the stock markets of Algiers or Tripoli?” he asked without expectation, as though the answer might be yes.  I wasn’t anxious to appear an ignoramus, but to be honest, I didn’t even know there were stock markets in those places; I guess I thought local commerce was limited to cous-cous, exotic rugs, and trinkets for tourists. 

Bill went on, “Do you realize that the northern Sahara is the site of what will be the largest solar thermal operation on earth?” That actually came as no surprise; I’ve seen numerous presentations in which a tiny square of the desert will someday generate the power for the entire European continent. 

In any case, as I mentioned in an earlier post, 2GreenEnergy is actively developing a tight relationship with Bill which will, if nothing else, provide more insight into the working of renewables outside the confines of the US. Stay tuned.

By Craig Shields | Posted in Renewables - Business | Tagged , , , | Comments (3)

Clean Energy Will Happen — But Not for the Right Reasons

January 16, 2010

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Saddam Hussein was a brutal dictator, and he was removed from power, but it only came to pass because he happened to become the target of the hubris of G.W. Bush.  Just as Hussein’s ouster was a good thing that happened for the wrong reason, I predict that the migration to clean energy will come along similarly. 

Here’s a post to that effect that I put up on Renewable Energy World.

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

Solar Thermal Pioneer – Dr. David Mills

January 4, 2010

PhotobucketDr. David Mills, founder and chief scientist of solar thermal leader Ausra, was generous enough with his time to help me with the chapter on concentrated solar power in my upcoming book on renewables. I happened to be watching this lecture he gave recently in his homeland (Australia) which I heartily recommend. It is entirely non-technical and accessible to anyone, while providing a worthy history of renewable energy – as well as a solid, well-reasoned direction for the future.

In it, he speaks about the safety and overall viability of nuclear energy, and provides essentially the same one that I always do: we already have a huge fusion reactor with an endless supply of fuel, no problems with operational safety, no million-year hazard associated with storing spent fuel, and no open invitations for terrorists or rogue states to attack, or use the technology to build bombs. It’s called the sun. Best of all, it’s separated from the Earth’s surface by a distance of 93 million miles – which is perfect; it’s far enough away to be safe, while close enough to provide us with more than enough clear power — insofar as we need to harvest only one out of every 6000 photons that is received at the Earth’s surface in order to address all the needs of all 7 billion of us.

This may sound like a flippant answer, but I don’t believe it to be. The cost of reaping this power is coming down every month. If we retain our focus on perfecting a few technologies for capturing that energy; we’ll be there very shortly. I urge readers to learn about solar thermal; I know you’ll share in my optimism.

By Craig Shields | Posted in Solar Thermal | Tagged , , , , | Comments (3)

How Much Variety of Renewables Do We Want?

January 1, 2010

PhotobucketA reader points out:

Craig, you seem to think that there should be a single best solution for clean energy. I would agree with you if you qualified your assertion to state that there is a single best solution for a given site. For example, a mountain top with high steady winds may be crying out for a a wind farm, but a wooded valley location with almost no wind would probably benefit from a low head hydro plant…..

I acknowlege that I am in a slim minority of those who do not favor a wide variety of renewables. I’m optimistic that we as a civilization will find our way out of the mess we’ve created for ourselves. But I find it hard to believe that this solution will come in the form of 8 – 10 different renewable technologies.

You raise a good point, of course, in that different sites lend themselves to different renewable energy technologies: the plains support wind, the mountains geothermal, the deserts solar, etc. And if you’re truly a “don’t put all your eggs in one basket” type of guy, maybe you really DO want all of them. But I ask: Why? 

Let’s keep our eye on the ball.  All we need to do is harvest and distribute 1/6000th of the sun’s energy. I grant that this can be done through a variety of means, but if we can choose one or two that meet all our criteria (low-cost, scaleable, safe, clean, etc.) do we really need to develop and support them all?

Of course, all this does presuppose a cost-effective way of distributing power around the continent.  As I’ve written elsewhere, I believe that we have to upgrade our grid — even in the absence of deeper penetration of renewable energy.  As an integral part of this upgrade, I favor high voltage DC power transmission (VHDC), minimizing line losses over long distances. 

I’m not a futurist by trade. But I’ll go on record right now and make a bold prediction. Long before the midpoint of this century, the technology surrounding solar thermal will have matured to such a point that it will represent a clean and bankable path to the end of the world energy conundrum.  At a certain point soon thereafter, 90+% of the Earth’s population will enjoy low-cost and very clean energy brought about by a combination of solar thermal (concentrated solar power), molten salt energy storage and VHDC power transmission.

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