Renewable Energy Memo

July 31, 2009

DoE Announces $8.5 Billion in Loan Guarantees Available

Filed under: American Recovery and Reinvestment Act, Renewable energy jobs — Tags: , , , — Editor @ 7:23 am

The Department of Energy has announced that it is now ready to accept applications for up to $8.5 billion in renewable energy loan guarantees. 

Energy Secretary Steve Chu said, “These investments will be used to create jobs, spur the development of innovative clean energy technologies, and help ensure a smart, strong and secure grid that will deliver renewable power more effectively and reliably.  This administration has set a goal of doubling renewable electricity generation over the next three years.  To achieve that goal, we need to accelerate renewable project development by ensuring access to capital for advanced technology projects.  We also need a grid that can move clean energy from the places it can be produced to the places where it can be used and that can integrate variable sources of power, like wind and solar.”

Application information from the Department of Energy is available here.

July 30, 2009

Sumitomo Enters U.S. Wind Market

Filed under: wind — Tags: , , , , — Editor @ 11:59 am

Sumitomo recently entered the U.S. wind market by purchasing a 42.5% stake in a wind farm in Stanton, TX. 

Sumitomo purchased the stake from an  American International Group Inc. (AIG). General Electric Co. (GE) holds another 42.5%, with the remaining 15% owned by Invenergy LLC, the fifth-largest wind power company in the U.S.

New Energy Jobs Slow to Bloom

Filed under: American Recovery and Reinvestment Act, Renewable energy jobs — Tags: , , , — Editor @ 8:49 am

The Miami Herald trumpeted in a headline yesterday, “Despite federal aid, new energy jobs slow to bloom.”  The article claims that the recession has hit the renewable energy space just like the rest of the economy, so renewable companies are slow to hire.

That’s true, of course, but it’s not the whole story.  Despite the unprecedented level of support given for renewables through the 2009 Recovery Act, including the Section 48 Investment Tax Credit and the extension of the biofuel excise tax credits, this kind of support is not enough for projects to get off the ground.  Any developer looking to break ground on a new project still needs cash to bring the project online.

The expanded role of the Department of Energy and the Department of Agriculture in issuing guarantees for qualified renewable energy projects was supposed to be the catalyst that would bring renewable projects into fruition faster, but these programs have been painfully slow in coming.  While DoE and DoA grants and guarantees are helpful, a project developer still needs to raise a substantial amount of cash equity to take advantage of them, only to then proceed through the guarantee application process.

July 29, 2009

Does Oil Futures Speculation Affect Oil Prices?

Filed under: Uncategorized — Tags: , , — Editor @ 8:04 am

Today’s Wall Street Journal reports that the CFTC is planning to reverse its earlier position and blame “speculators” in oil futures on the dramatic increase of the price in oil in 2008.  Other business news outlets like CNBC have also piled-on. 

Geoffrey Styles, writing at Energy Outlook, has an excellect overview on how oil futures work and why they have no more than a marginal impact on the price of oil.  He describes a proposal to regulate futures trading as “a fever remedy that works by banning thermometers that read above 99 degrees.”

He continues:

“Of greater significance, I believe, is the psychological effect on our expectation of oil prices in the future. If we convince ourselves that $145 oil and $4 gasoline were mainly the fault of big, bad speculators, and that regulating them will avert such an outcome in the future, we foster a dangerous illusion that supply and demand will somehow always result in prices more congenial to our preferences and lifestyles. That’s arrant nonsense, and you don’t have to be an ardent believer in Peak Oil to see how unrealistic expectations of low future oil prices can stimulate demand and stifle expensive oil projects, with their long inherent time-lags. That would eventually lead to precisely the outcome we wish to avoid: much higher oil prices.”

“Since the summer of 2007 I have been arguing that speculation might have been influencing oil prices around the edges, but that with or without it the narrowing gap between growing demand and straining supply was the main factor behind high prices. The sudden inversion of those forces–the sharp drop in oil demand caused by the recession and the growth of inventory and restoration of adequate spare production capacity–equally and fully explains the price collapse that followed, pummeling exposed speculators and index investors. Whatever the CFTC concludes about last year’s price spike, it shouldn’t distract us from the necessity of investing in expanding oil production and alternative energy sources, while working hard to improve the efficiency with which we use energy, and particularly oil. Blaming it all on Wall St. would be the quickest way to undermine the gathering momentum for improving our real energy security.”

It’s hard to disagree with his conclusion (and we won’t do so here).  The U.S. desperately needs new sources of energy and looking for scapegoats in the form of “Wall Street speculators” does nothing to help us generate new energy and likely distracts the public from the larger mission of growing our nation’s energy supply.

July 28, 2009

Why Algae? Why ExxonMobil?

Filed under: Uncategorized — admin @ 8:43 am

Geoffrey Styles, writing in the Energy Tribune, writes:

“In spare moments during the last week I’ve been mulling over the implications of ExxonMobil’s announcement of a very large investment in research and development on producing biofuels from algae, in collaboration with a leading biotech firm, Synthetic Genomics, Inc. While the reported figure of $600 million wouldn’t buy much in the way of actual deployment, it could sure pay for a heck of a lot of R&D. The joint conference call about the announcement emphasized that the companies will be pursuing several possible technological pathways, though all appear to be focused on producing biofuel from algae continuously, rather than in a batch mode more analogous to farming. That would certainly increase the attractiveness for Exxon, which after all operates some of the world’s biggest continuous production processes, in the form of its oil & gas fields, refineries, and chemical plants. The timing of this announcement is also interesting, coming just a few weeks after the US House of Representatives passed the first cap & trade bill to make it through either chamber of Congress.”

Styles is right on with his analysis.  There are lots of other renewable energy methodologies that hold the prospect of more immediate revenues than algae-based biofuels, but none of them have the potential economics of scale offered by algae.

In addition to the economies of scale offered by algae, though, is the scale required for an investment by ExxonMobil (NYSE: XOM) to be meaningful.  $600 million might mean alot to you and me but it’s nearly a rounding error to ExxonMobil.  Consider, for example, that in the quarter ended March 31, 2009 XOM generated top line revenues of $64 billion, with a bottom line of roughly $4.7 billion.  And that was a bad quarter, nearly 50% less on both the top and bottom lines in comparison to the quarter ended June 30, 2008 (revenue of $138 billion and earnings of $11.4 billion). 

Algae not only has the potential to produce the quantities of fuel that ExxonMobil would need to keep pace with its production, but its investment was only 1% of its revenue for the most recent quarter.  At that scale, ExxonMobil puts itself on the Algae-fuels map in a very big way but without making a material dent in its quarterly bottom line.  If it pays off, great.  If it doesn’t, no one will remember.

July 27, 2009

Renewable Energy Around the Web: July 27, 2009

Filed under: Around the Web — Tags: , , , — Editor @ 6:39 am

Our weekly compilation of renewable energy news covers the globe:

Hydrogen in the UK

Researchers at the University of Leeds are working on a method of generating hydrogen from municipal solid waste.  Hydrogen is a valued feedstock because its combustion produces no emissions (only water). Primary researcher Dr Valerie Dupont explains that his process uses a catalytic reactor to mix a hydrocarbon-based fueld with plant or waste resources.  The combination is mixed with steam to produce hydrogen and carbon dioxide, which are then separated.

Wind in Texas

Baryonyx claims to be building the largest offshore wind farm in the U.S.  The Texas General Land Office says that it awarded the contract to Baryonyx to use Texas state lands to develop the wind farms, providing electric power for Texas schools, prisons and other public offices.  Much seems uncertain about the project, however, as Baryonyx’s CEO, Douwe Fransens, was quoted in the Dallas Morning News to say that he “had no estimate” as to how many turbines would be involved in the project but that construction “could begin in two or three years.”

Feed in Tariffs in Arizona

Brian Coppa writes on some ongoing work by the Natioanl Renewable Energy Laboratory on the adoption of feed-in tariffs.  He explains:

“A feed-in tariff is a revenue-neutral way of making the installation of renewable energy at the residential, commercial or utility level more appealing. The electricity that is generated is bought by the utility at above market prices. In some instances, the retail price of electricity purchased from this power source might be 40¢/kWh, which is not competitive with a conventional fossil fuel plant at 10¢/kWh; so the difference is distributed to all of the customers of the utility. For example, if $100,000 worth of green power is bought in a year by a utility that has 1,000,000 customers, then each of those customers will have 10¢ added on to their bill annually.”

The most recent of the NREL studies, released in June, concluded that, “The success of FIT (feed-in-tariff) policies around the world, notably in Europe, suggests that they will continue to grow in importance in the United States, as evidence mounts that they provide an effective framework for the promotion of RE development and job creation.” 

RECS in Ohio

Dayton Power & Light in Dayton, Ohio, issued a request for proposals for the sale of renewable energy certificates (or RECs) that would satisfy the requirements of Ohio Amended Substitute Senate Bill 221. 

Canadians Invest in Iceland

Magma Energy Corp., a publicly-traded company in Canada, announced that it would invest $40 million in HS Orka, a privately-held company in Iceland that develops geothermal power.  Analysts said that the investment was intended, in part, to act as a hedge against the possible implementation of a cap and trade system. 

Solar Power in Africa

The NY Times reported on an effort by the Desertec Industrial Initiative to bring together a consortium of investors to develop a massive solar power system in the sun-baked deserts of North Africa.  Desertec is financing in part by a number of German companies, including Siemens and Munich Re.  Desertec’s ambitious plan calls for a network of solar, hydropower and other renewable resources to be developed through North Africa and the Mediterranean region.

Biomass Critics in Massachusetts

The Boston Globe carried a piece on critics of biomass in New England.  It describes local community groups and some environmentalists voicing concerns that growth in biomass will spark the need (forgive the pun) for expanded logging. 

Geothermal in Australia

The Australian Academy of Science has posted a fascinating background piece on geothermal opportunities in Australia.  The white paper describes the geologic features of Australia that make geothermal promising and how geothermal power could become a significant part of Australia’s baseload production capacity.

Wind in Antarctica

Professor Matthew Traum describes how a new research site in Antarctica is being powered by wind energy.  He describes how turbines from Proven Energy are being used in a land where the wind can reach 200 mph to power the Princess Elisabeth research station. 

Next Week

Want to get your story in “Renewable Energy Around the Web?”  Send me your links and any background information via email to “Editor” “at” “renewableenergymemo.com” and I’ll do my best.

July 24, 2009

Green Patents for Sale

Filed under: Energy Blog, wind — Tags: , , , — Editor @ 6:55 am

Green Roadway is auctioning its patent portfolio today.  Published accounts describe the project as ”a series of patents from Genedics Clean Energy that will allow developers to build its system of renewable energy projects along highway right-of-ways.”

The auction, which is being managed by Ocean Tomo, invites investors to submit  sealed bids on July 24, 2009 for an exclusive license for a U.S. state.  After paying the license fee, the licensee would then have exclusive license rights to the specified state.

The NYTimes green blog writes that “the project’s patent portfolio includes specifications for small wind turbines – 25 feet high or less – powered by both natural wind and the “dirty wind” generated by passing cars and trucks. Another patent covers the deployment of millions of tiny turbines an inch in length or less that could be attached to median guardrails, road signs or noise-barrier walls.”

Minimum bids are set state by state.  South Dakota is cheap at $125,000 but the minimum price for California is a whopping $1.5 million. 

There are a little more than 20 U.S. patents or patent applications in the portfolio but fewer than 10 have actually been granted.  The claims cover everything from the infrastructure for a roadway energy distribution system to a system and method for water desalinization from renewable energy.

July 23, 2009

Massachusetts Awards $2 Million to Wind Projects

Filed under: wind — Tags: , , , — admin @ 6:57 am

The State of Massachusetts has awarded $2 million to nine wind energy projects around the state.  (Forbes).

July 22, 2009

Biofuels and Biobased Chemicals

Filed under: Biofuels — admin @ 12:00 pm

Paul Winters, writing in RenewableEnergyWorld.com describes the economic intersection between biofuels and biobased chemicals.  In many instances the bio-chemicals may be more valuable than the biofuels.  As Winters notes, however, the Waxman-Markey bill does not provide the biochemicals industry with carbon credits.  In addition, while there are tax credit programs for ethanol, the greatest tax credit incentives are for ethanol producers who mix their product with traditional (i.e. taxable) fuel. 

Is there an underserved market for biobased chemicals that might, perhaps, provide a backdoor for funding ethanol projects?

July 21, 2009

New Texas Legislation Provides Tax Credit for Clean Coal

Filed under: Uncategorized — Editor @ 3:00 pm

A new law in Texas, effective September 1, 2009, will create a new franchise tax credit for corporations that construct “clean coal” power plants in the state. Texas H.B. 469 creates a credit equal to the lesser of 10 percent of the total capital cost of the project, or $100 million, and is targeted to benefit integrated gasification combined cycle (IGCC) plants. The franchise tax credit is one of several incentives included in H.B. 469, according to the Clean Coal Technology Foundation of Texas. “The combination of H.B. 469 and key elements of S.B. 2111 establishes a two-tiered incentive package for clean coal projects in Texas,” the foundation said in a June 2 press release. “Projects that capture at least 50 percent of their carbon dioxide emissions are eligible for sales tax exemptions for the equipment that captures, transports, and stores their CO2 as well as more freedom for local taxing authorities to defer taxes in the early years of a project’s development.” The foundation characterized the franchise tax credit as a “bonus” and noted that another key incentive of H.B. 469 is a “75%, 30-year severance tax exemption for oil recovered using CO2 captured from a man-made emission source.” H.B. 469 sets out certain requirements for the franchise tax credit, which is available only if the project is implemented in connection with the construction of a new facility.  To secure the tax credit, a project must (a) obtain a certificate of compliance from the Texas Railroad Commission, (b) be completed and fully operation, (c) obtain verification from the Bureau of Economic Geology at the University of Texas that the facility is sequestering at least 70 percent of the CO2 being emitted by the facility, and (d) have an interconnection agreement with the Texas Electric Reliability Council.  Credits will not be eligible for issue until September 1, 2013.

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