Archive | Business & Economics

Hybrid Cars, Cleantech, & $40 a Barrel of Oil – Can They Work in a Slow Economy?

A question of more than passing interest to vehicle owners is at what point the price of gasoline becomes so high that owning an electric vehicle becomes a compelling investment. How that question is answered has implications not only for the emerging EV industry, but cleantech in general. To what extent will low energy prices combined with a slow economy result in entire sectors of cleantech slipping into dormancy, if not oblivion? Here are three factors worth considering:

Hybrids never made sense economically, and probably never will unless they cost virtually the same as conventional automobiles. Even when gasoline cost nearly $5.00 per gallon, a high mileage hybrid vehicle was not an investment that could be justified for economic reasons. Suppose a hybrid vehicle averages 50 miles per gallon and costs $10,000 more than a conventional vehicle that gets 25 miles per gallon. This means the hybrid incurs fuel costs of $.10 per mile, and the conventional vehicle incurs fuel costs of $.20 per mile. In turn, this means at a savings of $.10 per mile in fuel costs through driving the hybrid instead of the conventional vehicle, one would have to drive 100,000 miles before they would break even. At $2.00 per gallon, or even $3.00 per gallon, even moderately higher costs for a hybrid vehicle can never be recovered. In general, cleantech products that require a premium over conventional products are not going to survive in this economy. Now that Americans have belatedly realized that accumulating debt is the same thing as spending money, they are only going to be buying things they really need, at a price or payback they can afford.

The recession is just beginning. For example, a typical Californian household can now expect to pay $250/month for electricity and natural gas, at least $250/month for water & garbage service, $250/month for internet, cable, and telephones, and at least $500/month for health insurance. If they own two cars, they can still expect costs of about $250 per month just for car insurance and registration fees. If they “only” owe $250K on their home, they can expect mortgage, insurance and property taxes to add at least another $2,000 per month to their cost of living. This means with no children, no car payments, and no credit card debt, a household has to gross, before taxes, about $60,000 per year. Add decent instead of minimal health insurance coverage, an overpriced home, dependent children, a car payment, and food, clothing, and other basic necessities, and the average middle-class California household now requires an annual income of at least $120,000 per year to stay even. All of the costs cited here are double what they were 10 years ago (despite private sector worker’s incomes remaining flat by comparison), and the reason they were allowed to get so high is because Americans were encouraged in every manner possible to go deep into debt and spend, spend, spend – and this drove the cost of living so high that even ordinary Americans who didn’t accumulate irresponsible levels of debt can barely survive, let alone those tens of millions who are in debt up to their eyeballs.

Will climate change legislation still happen? Don’t count on it. The elites – big government, big labor, and big business, in that order – who enriched themselves, or empowered themselves, or briefly postponed their accountability, or all of the above, by building an economy on unsustainable debt, now wish to further consolidate their power by imposing “carbon taxes.” Based on what is perhaps the biggest and most regressive fraud in the history of the world, the notion that anthropogenic CO2 is going to cause catastrophic climate change, America is supposedly on the brink of transferring additional wealth out of the hands of the crippled masses of ordinary Americans, so it can trickle upwards into the hands of attorneys, CPAs, corrupt or naive scientists, the public sector, select big businesses, bankers, insurance companies, environmental nonprofits, and the “international community.” Despite relentless propaganda, scare tactics, and demonization of any voice of sanity or moderation, it is quite likely Americans will finally realize who the bad guys and liars and opportunists really are, and rise up to stop this giant scam in its tracks. What will that mean for cleantech? What will it mean for environmentalism?

Bob Lutz, Vice Chairman, General Motors
A man who calls it as he sees it.

Bob Lutz, the outspoken and brilliant Vice Chairman of General Motors, who once quite correctly referred to global warming panic as a “crock of shit,” commented recently on the futility of trying to impose fuel efficiency when the price of gasoline is down to $1.50 per gallon: “If you want to fight national obesity,” he said, “you have to increase the price of fatty foods. But the US won’t do that so they force the clothing manufacturers to produce only small sizes.” Along with Mr. Lutz’s insightful comment we might add the following well worn cliche, namely, “you can’t squeeze blood from a turnip.” If a cleantech product or service can’t offer the consumer tangible benefits despite cheap conventional energy and a depressed economy, it is probably going to go away.

Cleantech is indeed challenged as never before, and perhaps what is most regrettable is that for every cleantech business model dependent on unsustainable debt and unfounded fearmongering, there are cleantech businesses that promise undeniably good things; energy independence, elimination of toxic materials and toxic waste, abundant water and healthier food, cleaner air, and in rare and inspiring cases, actual cost savings and viable paybacks. Hopefully as the cleantech bubble deflates, all of these genuinely innovative enhancements to our way of life and our planet will live on, and acquire sustainable momentum when the global economy inevitably recovers.

Posted in Business & Economics, Cars, Electricity, Energy, History, Natural Gas, Other0 Comments

The Top 9 Greentech Predictions for 2009

On nearly the eve of the new year, a couple of noted industry observers have already gone public with their greentech predictions for 2009. On December 4th, Cleantech Group Executive Chairman Nicholas Parker published their “Nine clean technology predictions for 2009,” which, briefly stated, are the following:

  1. Energy efficiency infrastructure boom initiated
  2. Global climate talks bog down—no serious deal until 2011/12
  3. U.S. passes national RPS, but cap & trade bill only in 2010
  4. Wind stocks come back; thin film PV shakeout
  5. Clean technology VC stabilizes at $7B globally; Private Equity more active
  6. Failure rate of cleantech startups doubles
  7. IT turns to the energy opportunity
  8. R&D stagnates; corporates acquire green growth assets
  9. Energy-water-food nexus emerges

One day earlier, on December 3rd, Lightspeed Venture Partners Managing Director Peter Nieh published their “2009 Cleantech Predictions,” which are:

  1. Cleantech funding will slow significantly, forcing startups to seek alternative growth strategies,
  2. Companies will come under increased pressure to achieve competitive cost economics,
  3. Investor interest in energy storage, especially for automotive and grid-scale applications, to grow strongly,
  4. Government will play larger role in cleantech, as policymakers around the country increase their support,
  5. Cleantech comes of age in China.

Shortly after Nieh’s predictions went public, I had the opportunity to talk with him. The prevailing question underlying all of these predictions, for me, is fairly simple – to what extent is greentech a bubble, and to what extent does reaching the limits of leverage combined with low prices for conventional energy wipe out entire sectors of greentech?

As Nieh put it, “there is the financing chasm where many of the capital intensive cleantech companies will really suffer. The pilot stage, up to about $30 million [invested] is about as far as most VCs want to go – once you go into full scale production you may need $50 million or more, this is where hedge and private equity funds drop in to fill that gap, and those sources are gone. We always knew that was the toughest part of cleantech; the credit crisis has really opened up this chasm again.”

So what is left? Where will serious funding come from, and what greentech sectors are going to win or lose with cheap conventional energy? Nieh had several observations:

On cheap conventional energy: “Our investments never assumed oil staying over $100 per barrel. For example, LS9 claims they can produce diesel fuel from sugar at a cost without subsidies that is competitive with crude oil as low as $45 per barrel.”

On funding: “There will need to be stronger syndicates forming to make bigger initial investments. There will have to be more government support, such as stronger DOE loan guarantees. There may be more interest from corporate partners looking for technology to comply with RPS mandates.”

With oil at $35 a barrel, which greentech schemes will soar
onward, and which will become carrion for Cathartes aura?
(Photo: EcoWorld)

On what sectors may show continued growth: “There are water treatment technologies that are ‘capital light;’ utility scale solar will yield better economics sooner, because half the installed cost for [distributed] solar is balance of system, but at the utility scale the balance of system as a percent of total cost goes way down; thin film PV has a low cost per watt, but at the utility scale this lower efficiency is not a constraint; energy efficiency technologies will be more interesting, but they are not bringing as much upside and don’t have as much proprietary technology; there is a lot of innovation on the installation side of distributed PV, such as distributed inverters that will get more efficiency out of the panels; there is a real opportunity on the efficiency side since greater panel efficiency means less racking, less glass, and less wiring.”

On energy storage: “Sodium sulpher batteries are still very expensive, we need to get storage down to about $100 per kWh for it to get really interesting. The vanadium redox flow batteries have promise.”

On China: “The Chinese are able to create capital intensive technologies with far less investment, everything is less expensive, parts, machines, labor. The Chinese are pumping money into urbanization, they will continue to promote and drive this. You can apply energy efficiency in a new city or a new building, you can build them in. In China most development is new instead of retrofit, it is a petri dish of innovation where you have the opportunity to leapfrog what went in place in the west.”

From Lightspeed and from the Cleantech Group we see predictions all grappling with the question of where greentech goes in a capital constrained global economy that has returned to the days of cheap energy. In both sets of predictions a greater role for government and corporate partners is envisioned. In both it isn’t perfectly clear which sectors will continue to thrive, if any. Perhaps the worst possible outcome would be if R&D truly does stagnate (Cleantech Group #8). A second gotcha will be if government involvement results in money pouring into sectors and technologies that aren’t necessarily the best solutions.

The momentum greentech has acquired, the innovations that have been accelerated, the awareness that has been awakened and heightened, guarantee the contributions of greentech are already destined to be lasting. But greentech is undoubtedly at a crossroads. How greentech and the larger environmental movement adapt and evolve as the global economy resets over the next few years is a question of more than passing interest to investors – along with the rest of humanity. Nieh summed it up quite well when he said “predictions are hard to make, in our business we try to profit from the unknown. If it were known everybody would be doing it.”

Posted in Business & Economics, Energy, Energy Efficiency, Science, Space, & Technology, Solar, Urbanization, Wind0 Comments

Funding

We represent a large group of companies that specializes in arranging Capital and Funding for large viable projects and companies that are requiring funding. We specilize in equity funding.
We have Several Private Trusts that have funds available to invest in many varied and diverse projects and companies and operations World wide. We look seriously at any proposal or project that can show viability and sustainability. Projects and Companies that have been funded range from as low as ten million dollars to over one and a half billion dollars. We have many experts World wide that we have under our World wide Group of Companies that analyze your requirements.
The following represent what is needed in order to submit or make inquires for this funding process:
1. Viable and sustainable projects. This would include a well though out and reasonable income and expense breakdown that is supported, documented and well thought through.
2. A reasonable business plan along with accompanying executive summary.
3. Rounded and qualified management team and strategy in place or available.
4. Ability to travel to the appropriate location world wide in order to present this plan by someone who has the ability to make the decisions for the company or group and who would be responsible for signing of The Contracts and the funding.. This person or persons must be ale to make decisions and sign on behalf of the project at the time of meeting with the appropriate Trust.
5.Please forward everything to us now and we will come back to you promptly to arrange your meeting and funding .
If you are interested then you can direct your inquiries to and we will arrange for a metting to discuss your needs:
projectscebu@yahoo.com
or phone 639-283-870-324

Posted in Business & Economics0 Comments

Sustainable Fragrances for Cleaning Products Dates and Venue Announced

PORTLAND, Maine, December 15, 2008 – IntertechPira is pleased to announce the global launch of Sustainable Fragrances for Cleaning Products set for June 3 – 5, 2009 at the Marriott Washington in Washington, DC, US.

Co-Chaired by Lauren Heine, Senior Science Advisor, Clean Production Action, Marian Marshall, Director of Government Relations, The Roberts Group and Ladd Smith, President, Research Institute for Fragrance Materials (RIFM), this year’s program will bring together cleaning products industry experts, fragrance manufacturers and suppliers of raw materials to learn about changes to existing standards and discuss ways to untangle the intricate fragrance supply chain.

“Because cleaning products formulators often rely on fragrance manufacturers to develop and deliver the fragrance for their products, fragrance manufacturers are required to provide an end product that meets the customer’s specifications for sustainable, “said Senior Conference Producer Jessica Johnson. “With hundreds of chemicals that comprise a fragrance formulation and fragrance developers relying on several suppliers, the supply chain has become a complex logistical web.”

Currently, truly green cleaners account for only 2% to 5% of the products sold in the $17.5 billion U.S. cleaning products market for household, janitorial, food service, and laundry chemicals. Due to increased consumer misperceptions regarding the terms ‘green,’ ‘sustainable,’ and ‘natural,’ government regulatory agencies and NGOs have developed programs to certify consumer products that meet stringent standards for sustainable formulations. Sustainable Fragrances for Cleaning Products will address these programs and additional salient issues facing this market.

Key topics will include:

  • Creating a definition of ‘green’ or ‘sustainable’ that is meaningful for all constituent industries
  • Understanding the criteria for green fragrances developed by EPA’s DfE program and RIFM
  • A comprehensive review of current technology and where its heading
  • The science behind determining allergic response and sensitization to fragrance

One pre-conference seminar will be held prior to the conference on Wednesday, June 3. Several networking opportunities will also be provided.

At a time when the market continues to experience tremendous technological growth, IntertechPira’s Sustainable Fragrances for Cleaning Products is both timely and practical, providing a unique advantage to gain the necessary knowledge to define sustainability and secure development for the fragrance industry.

For the most up-to-date program details visit the Sustainable Fragrances 2009 website.

Members of the press interested in attending, to find out if you qualify for a complimentary press pass, please contact Press Officer Sheri Bonnell at sheri.bonnell@pira-international.com or +1 (2070 781-9637

Posted in Business & Economics, Chemicals, Consumer Products, Science, Space, & Technology1 Comment

Quantitative Environmentalism: Solar Energy, Wind Energy, & Desalnisation Calculators

Absent a rigorous examination of statistics, meaningful dialogue about environmental issues is impossible. This is particularly challenging now that environmentalism is generally recognized to be inextricably linked not only with the endlessly complex science of ecology, but with the dismal science of economics as well. To try to quantify the rational basis for a legitimate ideology of environmentalism is not easy.

One way to productively further the dialogue of rational environmentalism is to publish online interactive calculator of hopefully instructive simplicity, quantitatively presenting options in terms of costs and benefits for environmental issues management. To this end, we have recently added two new online interactive calculators, Wind Energy per Area and Solar Energy per Area.

In both cases the user may calculate the area required to set up solar fields or wind farms that will generate meaningful quantities of electricity – power sufficient to electricify entire cities, if not the entire world – in this dawning electric age. Because solar and wind power are intermittant, users are provided the input “yield” (constant percent of maximum output) in order to come up with the unit termed “constant gigawatts,” which refers to the average continuous output into the grid from a solar or wind generating source. For example, an entire year of 1.0 constant gigawatt output would constitute one gigawatt-year, or 8.8 billion kilowatt-hours.

What is quite interesting in the case of wind and solar energy is that using these calculators, wind farms and solar fields appear to require about the same amount of area to produce a given amount of electricity. If you assume a wind farm consists of 2.5 megawatt, 25% yield turbines on towers 125 meters high and 250 meters apart, you will find, using our spreadsheet, that a constant output of 1.0 gigawatts of wind energy will require a wind farm 100 square kilometers in area. Similarly, our solar calculator indicates that for a solar field to generate a constant energy output of 1.0 gigawatts, an area of 99 square kilometers would be required. This virtually equivalent area is based on assuming a 1.0 square mile solar field putting out 150 megawatts in full sun – a reasonable expectation – with a yield of 17.5%.

The world’s first 5.0 megawatt wind turbine, operating since
2004 on the southwest coast of Schleswig-Holstein in Germany.
(Photo: RE Power)

Using this reasoning, when you compare the area of the planet required to replace conventional fuels with solar fields vs. wind farms, wind and solar become interchangeable variables. So how much area of solar fields (or wind farms) would be required for their output to fulfill 100% of the world’s current energy requirements? In our online spreadsheet “Global Energy 100% Solar,” we cite as the default assumption a total annual global energy consumption of 500 quad BTU – (500 quadrillion “British Thermal Units,” the amount of energy required to heat one cubic centimeter of water 1.0 degrees centigrade – 1,400 BTUs = 1.0 kilowatt-hour, 125,000 BTUs = 1.0 gallon gasoline). In reality, as within fifty years when human population begins to decline from some maximum total of well fewer than 10.0 billion people, human energy consumption will probably also max at around 1,000 quad BTUs. If you input 1,000 quad BTUs and 5 watts per square foot – (the utility scale wind and solar energy production density), then using wind/solar for 100% of future total world energy production (roughly 2x today’s) would only require an area of about 40,000 square miles (a square area only 200 miles on a side), or 100,000 square kilometers!

When you consider biofuel, using our “Global Energy 100% Biofuel” online spreadsheet, inputting the relatively generous 100,000 BTUs per gallon and 25,000 barrels per square mile per year (42 gallons per barrel), at 1,000 quad BTU (2x current global energy production), you will see that this amount of annual energy harvest will require a land area of 9.5 million square miles (24.6 million square kilometers). Don’t write off biofuel – land is abundant, and biofuel can be plentiful, cost effective, and sustainable. In most cases to-date, far lower capital investment is required for biofuel compared to wind or solar. Nonetheless, we welcome anyone verifying these figures – did we drop three digits again?

Our favorite new online spreadsheet is “Bulk Water Lift – Energy Required,” which assists users to calculate the costs and benefits of interbasin water transfers. We have reported on this in our articles including “Interbasin Water Transfers,” and Refill the Aral Sea. Other areas where interbasin water transfers could be quite environmentally helpful include north from the Ubangi River to Lake Chad in Africa. And of course the fine example of California, struggling to upgrade what is already the biggest and most modernized bulk water transfer system in the world, where, among other things, about 6.0 km3 of fresh water runoff from the north flows 500 miles south and over a 1,500 foot lift to nourish the Los Angeles basin. And along with this new spreadsheet, by all means investigate our already posted “Desalination – Cost per Household.” You will note the energy required to desalinate water is actually less than the energy required to lift it 1,500 feet!

Quantitative Environmentalism, often surprisingly, can help reveal realms of innovative and green possibilities in all their competitive and compelling feasibility. Perhaps the most productive quality of all is the ongoing and consistently credible, plausible, positive and optimistic oeuvre of prognoses that may issue from the perspective of quantitative environmentalism.

Posted in Business & Economics, Consumption, Electricity, Energy, Other, People, Solar, Wind0 Comments

Epic Correction Leads to Depressed Solar Sector

How epic has this correction been? The answer is worse than the 1987 programmatic crash (S&P -32%) but not as bad, to-date, as the 1973 oil crisis (S&P -48%) or the dot-com bubble (S&P -49%). For an excellent graphic of these events and the current housing bubble (S&P -45%) visit Calculated Risk. In this graph each of the indices starts at the same point on the top of the vertical axis, which represents the percentage amount of drop in index value. With the horizontal axis representing time, it can be seen that while the percentage drop of the S&P 500 is not quite as severe as in the case of the corrections of ’73 or ’00, those corrections took 2-3 years to hit bottom. We are less than one year into this correction and the S&P is down 44%.

For sustainable energy the correction to-date has been even more severe. Our graph from the October 7, 2007 S&P 500 peak to the end of October 2008 shows the changes to the four sectors we have been tracking since the S&P peak. At their minimums the four indices were down between 65 – 80%.


CAMINO INDICES VS. S&P 500
Camino Renewable Energy Indices vs. S&P 500 for the period
9-07 through 10-31-08. Camino’s solar index is down 60%.
(Copyright: Camino Energy)

The month of October was particularly bad for sustainable energy where 100% of the companies in our indices had negative returns.


CAMINO’S RENEWABLES INDICES – LAST 30 DAYS THROUGH 10-31-08
Down 32-85% in one month, Camino Renewable Energy Indices
performance for the period Oct. 1st, 2008 through Oct. 31st, 2008
(Copyright: Camino Energy)

So what am I optimistic about? Simple, I’m optimistic the sustainable energy industry will continue to exist and at some point prices get so low that the stocks represent attactive buys. I think this is particularly true for solar as the statistics below show for 10 of the US traded companies I track in the Camino SOLAR index (detail here).


CAMINO’S SOLAR INDEX – TOP TEN AVERAGE RATIOS
Earnings growth would have to fall dramatically
for Caminos’s top ten solar stocks to not be good buys.
(Copyright: Camino Energy)

SOLAR growth rates would have to slow dramatically to make the companies overpriced at current levels. Even if their earnings growth slows by a factor of 4 these ten companies would still be fairly priced. And I don’t see many reasons to expect such a slowing. Modules prices are expected to fall which should boast sales and improve customer ROI. Retail electric prices are virtually unaffected by oil prices in many economies so the basic economic benefit of solar isn’t going away. Subsidies are locked in in the US. Financing should be available with the massive governmental pushes to create liquidity while lowering rates. And the technology continues to improve further driving down costs and improving solar’s competitive position.

There may be other bargins in the sustainable energy sector but the solar sector is a good place to start with plenty of potential investment targets.

Mark Henwood is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks. Disclaimer: Henwood has positions in JASO, SOL, CSIQ, STP, SOLF, and LDK.

Posted in Business & Economics, Energy, Energy Industry, Other, Retail, Science, Space, & Technology, Solar0 Comments

Both Sides of California Proposition 7

It is difficult to put both sides of any initiative into a few words and capture all the nuances, but here are some observations for voters to consider as we go into the last days before the election. The points made here are based on very recent conversations with people intimately involved with the campaigns both for and against Prop 7. While everything revealed here was on the record, sources will not be disclosed. Here is the Legislative Analyst analysis of Proposition 7. If you wish to view for yourself the areas in the bill cited below, click here for full text of Proposition 7 (this is a .pdf and will not accommodate text searches, if you prefer to keyword search the text, please click here for the full text in a format that permits text search):

The question as to whether or not Proposition 7 excludes producers of electricity under 30 megawatts is hotly disputed. The NRDC has put out a talking points memo that states “Prop 7 could exclude smaller renewable energy providers from participating in California’s energy markets; it excludes renewable power facilities smaller than 30 megawatts from counting toward the measure’s new requirements.” And if you read the text of the measure it appears this is true. You can read for yourself section 14, which states “Section 25137 is added to the Public Resources Code, to read: 25137. “Solar and clean energy plant” means any electrical generating facility using wind, solar photovoltaic, solar thermal, biomass, biogas, geothermal, fuel cells using renewable fuels, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current technologies, with a generating capacity of 30 megawatts or more…” But proponents of Prop. 7 claim this is a misinterpretation, noting that the amendments to the Public Resources Code only refer to the projects that are eligible for expedited siting permits. If you skip through each section’s preamble, you will see the amendments to the Public Utilities code only go through Section 11 of the initiative, then beginning with Section 12 the amendments to the Public Resources code begin. According to the proponents, they are not connected, and therefore no change is being made to the existing renewable portfolio standard in terms of what would be a qualifying project.

According to one source, the reasons the big solar companies are against Proposition 7: have more to do with the fact the initiative would require them to use union labor, ref. Section 24 “All solar and clean energy plants receiving certification pursuant to this section shall be considered a public works project subject to the provisions of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code, and the Department of Industrial Relations shall have the same authority and responsibility to enforce those provisions as it has under the Labor Code.” Our position here is unequivocal – the government should normalize taxpayer-supported (or rate-payer supported) benefits so all workers get the same deal, upgraded social security and universal opt-in medicare (available to anyone at any age who wants to buy it and competing with private sector insurance); collective bargaining in America has become an anachronism that preserves special treatment for those folks lucky enough to work in heavily regulated and subsidized, relatively noncompetitive industries such as government and public works. Normalizing taxpayer and rate-payer funded benefits to benefit all workers might reduce some union worker benefits, particularly in the public sector, but would render most unionized workers in the totally competitive private sector better off, make America more competitive, make municipalities and large manufacturers solvent again, and would use our taxes to protect ALL American workers according to one set of rules.

Several reasons were thrown around as to why the environmental groups oppose Proposition 7: those in favor of Prop. 7 have suggested the 30 MW reason is not their true concern. The expedited siting provisions of this bill – which we believe are absolutely necessary if utility scale renewable energy is ever going to get built – will trample many cherished prerogatives of the environmental community. Another reason cited is the environmental community objects to the mandatory 10% cap on the premium the utility will be directed to pay renewable energy producers. But it should be noted this is a cap, not a floor, and if there is sufficient supply of renewable energy, the renewables producers will begin to compete under the cap to win contracts. As for the 10% cap not being sufficient to incentivize renewable energy construction, this is possible but completely dependent on the future price of fossil fuel, natural gas in particular. The notion that environmental groups oppose Prop. 7 because the penalties to the utilities for not achieving RPS targets have been slashed to $.01/kWh vs. the current $.05/kWh don’t really make sense, when you consider the initiative also removes the $25 million cap on these penalties. Under Prop. 7, renewable electricity production will need to increase to about 500 gigawatt-hours per day, more than five times what it is today. At $.01 per kilowatt-hour, you have $10,000 per gigawatt-hour, which implies if the 2030 standards were imposed today, the utilities would be paying about $40 million per day in fines. Not much of an objection there.

At the end of the day – why would the utilities oppose Proposition 7? They are investor owned, but publicly regulated. They earn a return for their investors according to a strictly managed set of pricing and cost recovery formulas. They will make money with or without renewables – why wouldn’t they be renewable agnostic? Proposition 7 appears to have flaws, but not necessarily the flaws that are being made most public. Actually moving this fast – installing well over 100 gigawatts of renewable energy generating stations (full output) is a logistical challenge that may simply be impossible. It is also important to consider what better technologies may emerge, rather than quickly build large scale projects based on current or near-term technological solutions.


FUEL MIX FOR U.S. ELECTRICITY GENERATION 2006


Can California go from about 10% to 50% renewables in under 20
years? If sunny California can do it, can the rest of the U.S. follow?
(Source: U.S. DOE)

The most significant potential problem with Proposition 7 may be how to facilitate the level of investment necessary to build this much capacity. We stand by our analysis of Prop. 7′s costs as reflected in our posts “Costing California Proposition 7″ and “California Proposition 7″ published earlier this year: It will cost a minimum of $330 billion to install this much renewable generating capacity – that is based on $2.5 billion per gigawatt, a 17.5% yield, and a need to increase renewables output to 500 gigawatt-hours per day (forget about electrification of the car at anything less than this). Adding to amortization of capital the costs for interest, return to investors, operating costs, and transmission infrastructure, it is likely adding this capacity will result in deliverable renewable electricity priced at about $.20 per kilowatt-hour to the consumer. Can renewables deliver electricity for less than this? It is certainly possible, but it would be helpful to see the numbers. Big solar – big wind – can you show us your assumptions? How do you arrive at projections of wholesale prices of $.04/kWh (wind) or $.07/kWh (solar), and what price does that translate into for the retail consumer?

And of course we would need a crystal ball to know the future cost of natural gas. Anyone who doesn’t think the price equilibrium of fossil fuel remains volatile hasn’t been following the news of the past few weeks.

Posted in Business & Economics, Electricity, Energy, Fuel Cells, Geothermal, Infrastructure, Natural Gas, People, Retail, Solar, Tidal, Wind3 Comments

The Worst Kind of Taxes: California Issues Long-Term Bonds to Avoid Raising Taxes

It is always interesting to read the ballot in California when there are a dozen or more citizen’s initiatives. Californians, despite being social liberals, still tend to vote against any new taxes of any sort. During the internet boom and the housing boom there was so much revenue flowing into the state and local governments it didn’t matter – Californians had the best of everything. But as California’s economy, along with the rest of the nation, returns to sustainable rates of economic growth, something’s got to give. California’s state and local governments will either dramatically cut spending, or they will dramatically raise taxes.

Muddling the issue is the issuance of long-term bonds, which is one way policymakers avoid the need to explicitly raise taxes. But bonds are taxes – and they’re the worst kind of taxes – they borrow from the future to pay for current investments. The way governments at the state and local level have justified issuance of bonds is by claiming they are using the money to build or repair infrastructure, something that will have a benefit that lasts as long as the bond is being repaid. The problem with this is if these government entities weren’t overspending on current operations, they wouldn’t have deficits, which means they could build infrastructure without issuing bonds.

On California’s ballot this election are two major bond proposals. Proposition 1A, for a staggering $9.95 billion, is to build a high-speed railway network in California. The other big one is Proposition 10, authorizing another $5.0 billion to “help consumers purchase alternative fuel vehicles, etc.” Two others, Proposition 3 and Proposition 12 authorize a total of about another $2.0 billion in new bond issuances. So how much will nearly $17 billion in new bonds cost the taxpayers each year?

Eurostar and Thalys PBA TGVs side-by-side in the Paris-Gare du Nord.
When you are stuck in traffic, driving your zero-pollution automobile,
remember we could have widened the roads with all that money.
(Photo: Wikipedia)

If you read the fiscal impact statements for these propositions, it appears the analysts agree the cost of servicing these bonds will be 5% per year. It is relevant to mention CALPERS and CALSTRS won’t be purchasing any bonds at a fixed rate of 5%, given they have been claiming for years their funds can earn 5% or more (sometimes much more) annually, after inflation. At 5% per year, issuing another $17 billion in long-term bonds is going to cost California taxpayers another $1.1 billion per year – meaning at 10 million households, every household in California will be paying another $110 per year. And how many of us will gladly pay these taxes, and pay the fare, to ride that bullet train? How many of us will get one of those “alternative fuel vehicles” that lasts for 5 years, but costs the taxpayer for 30 years?

When considering whether or not to add another $17 billion in new bonds to California’s state government debt, note California’s state government is already servicing about $58 billion in debt, which means California’s state government debt is already costing taxpayers – at 30 years, 5% – $3.5 billion per year, or about $350 per household. Excellent information on the growth of California’s state government debt can be found in the post “California’s Exploding Debt,” recently published on the excellent website GeldPress. It is probably not unreasonable to estimate California’s city and county governments already owe at least an equal sum – meaning debt service, nothing but interest payments on bonds, currently cost each California household about $700 per year, and there is no end in sight.

Ronald Reagan once said “businesses don’t pay taxes, because businesses have to pass their costs onto consumers in order to stay in business. When governments raise taxes, YOU pay taxes.” If only Reagan were alive today to remind us. This fallacy, that if businesses are forced to pay, the consumer avoids being victimized financially, is false to its core. Demonization of corporations is the currency of politicians today, especially in California, and while it sounds good and garners votes in elections, it is pure hogwash. If business costs go up, whatever that business sells must also go up in price.

If Californians were being asked to pay for water projects, or desalination plants, or more nuclear power plants, or more freeways, or even some fast intercity rail using existing track, it might be worth it to issue 30 year bonds, because these projects would lower costs for water and energy for all consumers, and unclog our roads. But instead we are being asked to authorize bonds for a high speed rail network that will serve a relative handful of people, and for “alternative fuel cars” that will wear out decades before the bond is paid off.

And before any new taxes, or bonds, or fees, are imposed on Californians – who endure the highest taxes of any state in the USA – California’s state and local governments need to undergo drastic reforms. Currently California’s state and local public “servants” are the most highly compensated public employees in the United States, making far more on average than the private sector workers whose taxes support them. But this inordinate annual compensation package isn’t enough – California’s state and local public servants also enjoy defined benefit retirement packages that are anywhere from twice as good to ten times better than what the rest of us will get from social security, and they retire on average ten years earlier than private sector workers.

For years, California’s public employee pension funds have overestimated the annual returns they can earn, and they have underestimated the average lifespan of the beneficiaries they will pay. Read Pension Tsunami for daily links to stories around the nation covering this unfolding financial catastrophe. And even with annual funding requirements set far lower than necessary because of unrealistic assumptions, payments to public employee pension funds have been a crippling liability to the state and local governments in California. The reason this travesty hasn’t been brought to light is because public employee unions, using taxpayer’s money (via usually mandatory union dues), have virtually taken over California’s state and local governments. To-date, they have never been seriously challenged.

Recognition that bonds are taxes may help bring about reform of state and local governments in California and around the United States, but it cannot happen too soon. Already in some local jurisdictions, bonds are being authorized to raise cash for ongoing payments on pension fund obligations for public employees. This is shocking fiscal irresponsibility. Hopefully if Barrack Obama is elected President, he will have the courage to spread taxpayer wealth around, and therefore throw all of our public servants onto social security with the rest of us. If anything, that is a slightly leftist, and very equitable notion.

Posted in Business & Economics, Cars, Energy, Infrastructure, Nuclear, Other5 Comments

Environmental Support Solutions Integrates with ERP

If you think about the mission of enterprise resource planning software, in some ways it’s surprising the modules for environmental health and safety compliance weren’t integrated sooner. It is also interesting that at the same time as the major ERP vendors – Oracle, Microsoft, SAP, IBM, and others – were systematically integrating the major business information systems that had evolved, one company, Environmental Support Solutions, a 15 year old company based in Tempe, Arizona, was systematically integrating the environmental health and safety (EH&S) information systems that had similarly evolved as fragmented, tactical solutions.

In both cases, there were compelling reasons why these information systems needed to be welded into one set of compatible, interoperable tools, but while the enterprise vendors knit together software packages for accounting, sales force management, customer service and support, manufacturing logistics, etc., competing to deliver enterprise software products that have been highly visible and delivered explosive growth to their creators, ESS has quietly done the same thing with a host of EH&S systems, and they appear to be the only game in town.


THE INFORMATION CHALLENGE ADDRESSED WITH ESS SOFTWARE


Developing point solutions to regulatory requirements have
left companies with hundreds of small databases containing
data collected manually from multiple sources.
(Source: ESS)

With the 21st century version of the green revolution in full swing, now tempered by a financial sobriety that will make every corporate investment more thoughtful than ever, ESS has put together an enterprise software package to manage EH&S that can be justified financially even in tough financial times. ESS’s integrated EH&S solution has attracted the attention of the major ERP vendors, all of whom now recognize the value of including EH&S modules as part of their comprehensive enterprise software products. Earlier today I had the chance to talk with the CEO of ESS, Robert Johnson, about why they have the right product at the right time.

“We have been doing internal market studies and see five areas of huge growth and interest right now,” said Johnson, “emissions monitoring, compliance assurance, corporate social responsibility, worker health, and safety and environmental performance management. The solutions are currently very fragmented – companies are using spreadsheets for a lot of this and that isn’t going to make it for enterprise reporting.”

Back in 1999 ESS saw this coming, as there was increasing demand from their customers to aggregate the EH&S data they were generating and managing with various ESS modules so they could report and manage the information at the enterprise level. They began development of the “Eco-Hub” which became the core of what is now a completely integrated set of modules. “BP, US Steel, DOW, and others were customers who we developed systems for which eventually led us to evolve this unified system. It takes years of work and millions in investment to develop these systems and to get them validated and tested by customers.”

The savings that accrue to companies who have standardized, automated environmental health and safety information that they can roll up to report and manage at a corporate level get bigger every year. Johnson summarized four areas where ESS software will deliver immediate savings:

  1. Investment funds now include in their investment criteria reporting on a company’s performance in environmental health and safety. How well companies manage EH&S is a good indication of how well they manage their financial controls as well as risk in general. There is now a direct connection between how a company manages EH&S and their ability to attract investors and capital.
  2. Managing EH&S means reducing events that cause injury and downtime. Unplanned events such as chemical or oil spills, plant explosions; these events can be prevented or reduced by putting in place best practice EH&S systems to lower risk. Accidents create immediate injury and harm but the financial costs continue during the shutdown and cleanup. EH&S systems reduce accidents and reduce downtime.
  3. When developing financial best practices, indirect costs often can only be explicitly evaluated using EH&S systems. For example, companies who buy chemicals for their operations historically evaluated these chemicals based on their raw cost. But by overlaying a toxicity index to this cost analysis, the costs of procedures to track, containerize and dispose of very toxic chemicals can be analyzed and added to the total cost, often delivering a different choice than what would have come out of a more primitive analysis.
  4. Just pure IT savings can be huge. ESS offers 14 different modules that cover the entire gamut of environmental health and safety issues, and they are all integrated. Most companies have addressed these tracking challenges at a tactical level. But there is increasing need for this information to be available not only for regulatory compliance at each plant, but in consolidated formats. Investors and Directors along with countless government agencies now require data that is totally rolled up for the corporation; aggregate emissions, total incident rates, and other corporate social responsibility indicators.

There are plenty of examples of clients purchasing ESS software and making immediate and substantial savings. In the largest installation ESS has done so far in North America, DOW Chemical replaced 160 different systems in 200 production sites with ESS solutions, after evaluating a variety of options to consolidate these systems. DOW saved over $2.0 million in the first year, just in direct IT expenses. They moved everything into ESS’s Eco-Hub; they literally poured all of the data from 160 different legacy systems into this single solution.


INTEGRATING THE ESS ECO-HUB WITH ORACLE’S ERP SYSTEMS


The interoperability of ESS software allows them to work with the
Oracle database, providing relevant data to existing Oracle ERP modules,
as well as integrate their own EH&S modules within Oracle’s ERP solution.
(Source: ESS)

ESS’s largest installation to-date anywhere was for PetroChina, the largest company in China, with vertically integrated petrochemical operations throughout the country, from wells to refineries to retail outlets. As Johnson put it “they are using every module we’ve got, the entire integrated set, air, water, incident, hygiene, chemical inventory, incident tracking, all of them.” ESS’s software is the only application PetroChina has implemented across their entire organization, and they now have over 70,000 users on this system.

As EH&S has moved out of the individual manufacturing plants and onto the corporate center stage over the past few years, ESS has attracted the attention of major enterprise software vendors, and they work closely with most of the major companies, including Oracle, IBM, Microsoft and SAP. ESS software is platform independent and can run on any database.

Commenting on a recent announcement by ESS of “a unified applications platform for environmental sustainability” with Oracle, Johnson explained “we are tying in with their financial data, asset management, resource planning, and equipment monitoring [in addition to ESS providing their own 14 EH&S modules] because it is all related. EH&S is becoming integrated and critical to the overall IT infrastructure of companies.”

Posted in Business & Economics, Chemicals, Other0 Comments

Announcement of IntertechPira's Organic Photovoltaics 2009 conference

PORTLAND, Maine, October 2008 — IntertechPira is pleased to announce that the 3rd annual Organic Photovoltaics 2009 conferences scheduled for April 27 – 29, 2009th at the Doubletree Hotel Philadelphia in Philadelphia, PA, US. Co-Chaired by Russell Gaudiana, of Konarka Technologies Inc. and Dr. Dana Olson of the NREL,this year’s program will provide a unique venue for industry experts, researchers, customers and investors to address the opportunities and most critical challenges for the commercialization of OPV technologies.Drawing in part on key examples from the OLED and printed-electronics industries, this forum will provide a multifaceted examination of what is required to transform today’s laboratory-based technologies into large-scale commercial products. Discussion of technological requirements and manufacturing considerations will be complemented by an analysis of market forces to identify not only when OPVs will be widely commercialized, but what role they will play in the context of a growing PV industry.

The conference will feature approximately 18 expert presentations assessing OPV market trends, technical development and application related advances through presentations, question-and-answer sessions and panel discussions. Keynote presentations will be allocated 35 minutes for the speaker followed by 10-15 minutes for questions and discussion. All other presentations will be allocated 25 minutes for the speaker with 5-10 minutes or questions and discussion. Throughout the conference, there will be a number of hosted luncheons, breaks and receptions, which will be held in and around the exhibit area located outside the main conference room.

Two pre-conference workshops will be held prior to the conference on Monday, April 27.

For more information on Organic Photovoltaics 2009 and related IntertechPira conferences, visit the IntertechPira or the Organic Photovoltaics 2009 websites.

Speaker recruitment is now underway.

To submit a topic for consideration, or to request more details, please contact Jessica Johnson at jessica.johnson@pira-international.com or +1 (207) 781-9626.

Members of the press interested in attending, to find out if you qualify for a complimentary press pass,please contact Sheri Bonnell at sheri.bonnell@pira-international.com or +1 (207) 781-9637

Posted in Business & Economics, Electronics, Other3 Comments

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