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by Craig ShieldsPosted on Posted in Renewables - Business

PhotobucketOne of my most important jobs here at 2GreenEnergy is speaking with the few dozen people who call or write each week looking for help with their clean energy projects. I conduct these interviews with an eye toward helping out in some fashion in any of the wide range of disciplines that is represented by our Associates: engineering, IP protection, raising capital, etc. But in truth, my first thought is to look at the caller’s problem as a marketing challenge. In the words of a friend of mine, “I’ve never seen a business problem for which more sales revenue was not the solution.”

In particular, I find myself repeating the same advice: conduct market research. Whether you do it yourself or outsource it to a team like ours, you need to find a rigorous, disciplined way to develop a profound understanding of your target customer segments.

Establish market demand — by segment. What do various kinds of people want? Why do they want it? How and where do they want to buy it? How are their workstyles and playstyles changing in ways that are most relevant to the matter at hand? What are the gut-wrenching emotional issues that are keeping them up at night – and how does what you’re offering address those topics?

I was looking at an old project database the other day and had a realization that made me feel kind of, well, old. Since I started out in the early 1980s, I’ve done more than 800 market research projects — for clients on five continents: IBM, H-P, Sony, 3M, Xerox, Philips, Pioneer, Magnavox, Mitsubishi, Porsche, AT&T, FedEx – not to mention hundreds of smaller, venture-capitalized start-ups and the like. From those research efforts were sprung some of the most well-known – and (at the risk of appearing immodest) most successful, highest-ROI campaigns the business-to-business marketing world has even seen.

If you’d like to discuss your venture in the context of market research, please don’t hesitate to contact us; we’d love to chat about your specific mission.

In fact, feel free to call right now; just hit “contact.” I’m in the office all this week — on and off the phone — as usual.

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by Craig ShieldsPosted on Posted in Wind Energy

“China missed the first industrial revolution, missed the computer revolution, and the biology revolution – they want to be a leader in the green revolution,” said Steven Chu, Secretary of Energy. (Scientific American, “Is ARPA-E Enough to Keep the U.S. on the Cutting edge of a Clean Energy Revolution?” March 3, 2010).

And indeed they are rushing ahead. From nowhere, they are now the third largest producer in the wind power market and one of the fastest-growing in domestic wind installations. For the fourth consecutive year, says the World Wind Energy Report 2009, China doubled its wind installations, which is no small feat. While the U.S. was number one in world total installed capacity with China number two, China had the most share of new capacity in 2009 (13,800 MW to America’s 9,922 MW). The following chart, courtesy the World Wind Energy Association (WWEA) illustrates new capacity in 2009.
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by Craig ShieldsPosted on Posted in Renewables - Politics

PhotobucketYou may have noticed a few posts on the subject of corruption. And coincidentally, my friend Mike Austin of Blue Planet Almanac wrote earlier today to alert us to a website on the subject. I call your attention to Transparency — a wonderful organization that, for 15 years, has been helping people understand and deal with corrupt regimes. Part of this is the “CPI” – Corruption Perception Index — a quantitative rating of the level of corruption that 180 countries around the world are perceived to suffer under.

Are you curious? Where do you think the United States sits with respect to the others in terms of perceived corruption in the public sector? Check it out.

Of course, this is all about the perception of corruption — as opposed to its reality. People perceive all kinds of yo-yo things — even unaided by a media that is deliberately distorting the picture. Still, I find it interesting.

by Craig ShieldsPosted on Posted in Renewables - Science

PhotobucketBlue Planet Almanac founder and host Mike Austin was gracious enough to have me live on his radio show a few weeks ago. For anyone who would like to hear the podcast, here it is. Click on February 22.

Mike is a fantastic guy with a great mission.  Best of all, he has and a warm and calming on-air demeanor — a good thing to have around, since I’m sometimes not 100% calm on live radio and television.

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by Craig ShieldsPosted on Posted in Wind Energy

Senator Charles Schumer (D-NY) introduced controversial legislation on March 3, 2010 that could affect renewable energy and specifically wind. He says that stimulus money is going abroad and wants to suspend the program; his legislation wants the law fixed so all funds stay in the U.S. If this legislation passes, stimulus funds will have a “Buy American” clause that applies to any government project that is awarded funding.

Schumer specifically took aim at a large wind farm project in Texas. Announced last October, the project is a joint venture between Texas-based Cielo Wind Power, China’s Shenyang Power Group and the U.S. Renewable Energy Group. Cielo and U.S. Renewable Energy Group own 51% of the joint-venture. The project is expected to cost about $1.5 billion, and would be one of the largest wind farms in the U.S. When complete, the 600 MW project could generate enough electricity for 180,000 homes.

Cielo President Walt Hornaday said the company has not applied for stimulus funds, and that at least 70 percent of each turbine will be manufactured in the U.S. Vice Mayor Yang Yazhou oversees environmental protection and economic growth in the city of Shenyang. He said in a press release on October 29th, 2009 that the project would demonstrate “…how the two countries can share both  the risks and the benefits in a huge wind power project.” (Reuters, Washington D.C., October 29, 2009).

On the morning of March 12th, plans were announced that two of the players Schumer has targeted, U.S. Renewable Energy Group and A-Power Energy Generation Systems, Ltd. (a shareholder in Shenyang Power and China’s leading provider of power generation systems) are to build a large wind turbine plant in Nevada along with America Nevada Group. The 320,000 +/- square foot property would employ about 1,000 Nevada workers. It would supply turbines for the Texas Cielo joint venture project as well as supply customers in North and South America. (Las Vegas Sun, “Plant to Bring Green-job Windfall”, by Stephanie Tavares. March 12, 2010). Will this news dampen the firestorm started by Schumer?
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by Craig ShieldsPosted on Posted in Renewables - Politics

I appreciate all the comments to my recent article “On Corruption.” If my schedule permitted me time to respond to them all, I certainly would.  

For some perverse reason, I am more apt to pry loose a few mintues to reply to comments that put me on the defensive – especially astute ones, like this one from Andrew, who asks some very good questions, including:

“You seem to be against a profit motive in health care. If so, you are on the wrong side of history. Whenever the profit motive is removed, innovation is also greatly diminished (if not eliminated). Do we want that in our health care?”

And …

“Would you argue that the profit motive should also be removed from your own industry?”

Whenever I wax philosophic, I know I’m doing so at the risk of alienating large groups of people. And insofar as I’m primarily a businessman and not a philosopher, I should probably keep my utopian ideas to myself. But as long as it’s come up, I may as well say that, in an ideal world, I think that certain human pursuits should be not a part of our for-profit world.  I would start with criminal justice — but right behind that I would put healthcare. I believe professionals in this arena should be well very paid, but I think it’s clear that a profit motive works directly against the health and wellbeing of everyone in our society – except, of course, shareholders.

Again, I hesitate to mix political philosophy with business, but if you want to know more about my ideas here – including how I believe that the pharmaceutical industry should be reined in against its attempt to completely rape our people, please see this essay.

Thanks again for the honest communication, Andrew. And please keep up the counter-argument. It’s only by questioning our beliefs that we grow.

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by Craig ShieldsPosted on Posted in Renewables - Business

PhotobucketHere’s more about shale natural gas:

Pundits in the US natural gas industry have revised supply estimates in last few years. In effect, some companies claim to be able to increase sustainable production over the long term.

Exxon is a big player in energy by any standards and the company’s halo effect is likely to bring about the positive change for the market participants including natural gas explorers, producers and transporters. The deal has overnight changed the sentiments for shale natural gas. In a recent deal, Carrizo Oil & Gas sold some of its stake in a Texas shale project to Sumitomo Corporation for US$15.7 million.
Onshore produced shale gas with lower transportation costs is likely to be used in electricity generating plants (replacing coal), heating and cooling our homes and power automobiles. However, it would be wrong to conclude that natural gas is the sure shot remedy to all our energy issues. ExxonMobil has some synergies to justify a 25 percent premium on XTO Energy. Besides being an oil giant, ExxonMobil has a chemical business and thus can use the feedstock in any of its chemical facilities.

In the US, shale gas resources are very large and relatively evenly distributed over several states unlike oil. Some analysts claim that the shale gas could contribute up to half of the US total gas production by 2020. Such a scenario would be highly satisfying for US with reduced dependence on not just foreign oil, but also from greener sources which are highly dependent on specific countries for key components (Read rare earth metals in China and lithium supplies in Bolivia).

A recent run-up in the stock prices of shale gas companies warrants for a caution. Like other times, it appears that Wall Street has underestimated the real cost of shale gas, and overestimated how fast its production can be expanded. Some studies point towards the overestimation of shale gas supplies by some companies. Also, there are some concerns regarding the long term viability of shale gas extraction in a lucrative manner.

Empirical data tells us that the production in shale formations drops off rapidly after two to three years of high production. However, it will be too early to write off this option only on the basis of high price, that also when a lot of other energy sources are getting federal grants for relatively expensive technologies. The competitive landscape is expected to become clear in next two to five years after the production of shale gas starts on a mass scale. In due course of time, we’ll come to know if all this hype is real or just fizz.

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by Craig ShieldsPosted on Posted in Electric Vehicles

PhotobucketEvery so often, I like to write a short article that gets us thinking about the rate at which electric vehicles will be assilimated into our culture and brought onto our roads, replacing internal combustion engines. Here are a few ideas to consider.

1) What does Big Auto think (or, at least, claim that they think) about EV production rates? Considering there are 230 million cars on the road in the US alone, the needle will not be moving in the short-term:

Nissan: Has pre-orders for 56,000 LEAF all-electric cars.

GM: Last year, had 50,000 expressions of interest in the Chevy Volt, though presumably that figure is somewhat larger now.

Mitsubishi: Bumped up its 2011 production schedule of the i-MiEV from 8,500 units to 9,000.

Better Place: Placed an order with Renault for 100,000 electric vehicles based on the Fluence ZE for its deal with Israel.

2) But is there any reason to believe anything coming out of Detroit?

Today, the population of Detroit is about half of what it was in 1950. The city has 33,500 empty homes and 91,000 vacant lots. A recent AP article asserts that vacant property totals 40 square miles. But Big Auto is not at all apologetic for the meltdown, and points out they couldn’t have foreseen the dynamics of oil prices that created sharp inflection points in the demand for fuel-efficient vehicles in favor of the Hummer and other gas-guzzlers. If this is false, they’re disingenuous; if it’s true, they’re incredibly obtuse. Either way, it’s hard to trust what they’re saying.

One thing for sure: there is nothing good in EVs for the big OEMs. They are happy to drag this transition out for decades, selling gas- and diesel-based cars and trucks as long as possible.

3) The Department of Energy apparently is not bullish on pure (battery) EVs.

Check out this report on the future of the automobile. Although the author sees lots of hybrids in our future, he really doesn’t see any pure EVs. Remarkable. I have to think this is simply a mistake.

4) Industry analysts are hedging their bets.

As reported in EV World, Accenture recently performed a survey that showed that six out of 10 consumers are more likely to buy a hybrid or electric vehicle “only when it is superior to gasoline-only models in every way.”

I understand that merely “being green” isn’t good enough for the vast majority of car buyers. But this report strikes me as the usual MBA malarky — a consultant who reads your watch and then tells you what time it is.  What about the other 40%? Isn’t that a substantial market? And what exactly does “superior in every way” mean, exactly? How will the typical consumer react to a value proposition that includes dramatically lower fuel cost and huge reductions of other pieces of his total cost of ownership?

My belief: Give me a freeway-speed battery EV with comparable fit and finish to a garden-variety 5-passenger sedan, a 75-mile range, and price tag under $25,000 after rebate, and you won’t be able to manufacture enough of them.

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by Craig ShieldsPosted on Posted in Renewables - Business

Whether it is head scratching politicians in Copenhagen or industry analysts predicting that peak oil has already happened in one of the past decades, the pointers aim towards a fundamental shift – the process of doing away with carbon-based fuels and looking for renewable sources of energy. The changes are partly triggered by environment concerns and largely by fear of all industrial progress achieved so far coming to a grinding halt.

Needless to say, renewables aren’t trouble-free. Two of the major renewable sources, wind and solar both cost more than gas or coal. Prices are coming down with advances in technology, but intermittent nature of the energy production from renewable sources adds another dimension to the problem and puts the total cost of generating one unit of energy way compared with the fossil fuels. Wind speed becomes optimum for operating turbines at the height of around 800 meters, but creating a tower that high isn’t feasible. Furthermore, current wind turbine installations require around ten times concrete and steel that is required for generating the same amount of nuclear power.

Similarly, solar energy isn’t always available and the solar energy to electricity conversion ratio is just around 25 percent in most efficient crystalline silicon technology. Thus, instead of just focusing on renewables, options including a blend of fossil fuels with renewable sources or less polluting fossil fuels are being considered.

And good-old fossils aren’t letting us down. Although considered most benign of the pack, natural gas only emits around half as much as coal. On a grid level, probably it makes more sense to promote natural gas instead of counting on renewable as instruments to knock coal. Natural gas turbines can accommodate round the clock electricity generation unlike renewable thus helping in bridging the supply and demand gaps.
Last year witnessed a rare confluence of triggers resulting in a year with one of the lowest economic activity since Second World War. Quite predictably (in the hindsight), manufacturers ran high inventory levels with significantly less demand. As it turned out, Solar panel prices nosedived and so did the prices of natural gas. Natural gas prices are still depressed with futures currently trading at around 60 percent below last year’s high in US.

However, looks like the sector is in for a makeover. Apparently, ExxonMobil is betting big on natural gas. The oil giant has made a US$31 billion bid to acquire US natural gas player XTO Energy in an all stock deal. In addition, the company will assume debts amounting to US$10 billion. XTO Energy is an unconventional natural gas play. XTO has rights to large reserves of natural gas in shale, coal bed methane and tightly compressed sands. Shale gas is natural gas contained in shales, a type of sedimentary rock with low porosities and permeability.
But the extraction of gas is both difficult and costly. The extraction process includes drilling of several thousand feet and horizontally drilling through the shale. The process also involves large quantities of water up to 2 -4 million gallon along with sand and chemicals to break open the rock and release the gas.

However, technological advancements such as formation fracturing and horizontal drilling have made it possible to extract gas in an economic manner. The market’s first brush with new technology came in 2004 when natural gas giant Range Resources drilled the first modern well in the Marcellus Shale, spread across Pennsylvania, Ohio and West Virginia.

More on this soon.

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by Craig ShieldsPosted on Posted in Biomass

To continue the discussion on biofuels, there have been a number of oil companies who invested in algae fuel. The major ones are:

Exxon

The big oil firm was looking for projects with high returns to exploit its industry knowledge and infrastructure. Exxon chose bio-fuels and geothermal energy. The company invested US$600 million in the sector through a partnership with Synthetic Genomics. While the company acknowledges that the real challenge is to create economically viable algae bio-fuel in large volumes which will require significant advances in both science and engineering, it remains positive about the investment.

Solazyme

The company is leading in terms of producing algae fuel at scale. Solazyme was founded in 2003 with US$80 million in venture capital backing. The company had one of the first development deals with Chevron. The company now expects to be able to commercialize its technology by 2012-2013, with a production cost target at US$60 to US$80 per barrel.

Chevron

Chevron announced a collaborative research and development agreement with the DOE’s National Renewable Energy Laboratory (NREL) to study and advance technology to produce liquid transportation fuels using algae. Chevron and NREL scientists are trying to identify and develop algae strains that can be economically harvested and processed into finished transportation fuels.

Shell

The company established a joint venture with bio-fuel company HR Bio-Petroleum in 2007. The joint venture, named Cellana is investigating different strains of algae, by cultivating them in ponds and seeks to process the algae into oil that can be used as a raw material for fuel.

ConocoPhillips

In July 2008, ConocoPhillips signed a US$5 million, multi year research agreement with the Colorado Center for Bio-refining and Bio-fuels (CCBB). CCBB is a joint venture of the University of Colorado at Boulder, Colorado State, Colorado School of Mines and NREL. Together they plan to develop new ways to convert biomass into low carbon transportation fuels.

BP

In February 2007, BP joined hands with University of California, Berkeley, the Lawrence Berkeley National Laboratory (LBNL) and the University of Illinois at Urbana-Champaign. The parties are developing technology to produce bio-fuels, including those made from algae. The collaboration formed the Energy Biosciences Institute (EBI), and BP has announced to support the Institute with a ten-year, US$500 million grant.

OriginOil

The objective of OriginOil is to break down the barriers to algae’s development at all the levels, that is, from plant growth to oil separation. The company has developed a novel, patented process for growing algae that introduces all the inputs — carbon dioxide, water, and nutrients — on a micron level. The company uses electric pulses to break down the algae cells and extract the oil using simple gravitational force. This system could save 90% of the energy used by traditional methods.

There are a lot of companies like the ones mentioned above who have already invested or are ready to invest in algae fuel. It is interesting to see big oil funds diverting towards research and development of an upcoming technology.

However, what’s noteworthy is that this is not the first time the oil companies are trying to wash away their much maligned image. For a long time now, oil firms are aware of the need to diversify the business portfolio as the market is likely to bet on renewable energy sources. Conspiracy theorists would be quick to point the possibility of the investments being made with the intention of sabotaging the technology. Chevron is still best known as the killer of the electric car in some circles by taking exclusive control of Nickel Metal Hydride (NiMH) battery licensing rights back in 1990s.

The principles that hold true for big oil firms as investors are equally true for other investors. Since the technology is in development phase and still not prime for applications in real world, investors putting their money into algae stocks might be risking their investment. The companies operating in this space might be garnering some brownie points such as Valcent Products’ vertical farming technology was named one of the best Innovations of 2009 by Time Magazine last month, but when it comes to hardcore financial numbers, companies don’t have anything else to offer except hopes of hitting it big-time. Some eventually might end up making superior returns, but 9 out of 10 companies look set for a shakeout. Who knows, big guys like Bill Gates and Exxon Mobil might be losing out on their investments in algae startups.

The option of perfecting a technology with long gestation periods doesn’t come without the risks. Almost invariably, the markets have managed to figure out replacements for the materials or technologies crossing their fair value. Algae fuel technology is running this risk and the long gestation period is already evident to be irksome for some investors. Vinod Khosla, one of the prominent cleantech investors maintains that he hasn’t found even one viable algae technology plan after looking at many options. “The economics of algae don’t seem to work” Khosla adds. What happened with the corn based ethanol technologies is matter of public knowledge now. These are still hay days for the technology, but the billions pouring into solar and wind energy could prove to be fatal for algae.

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