Renewable Energy Memo

December 29, 2009

Codexis Files for IPO

Filed under: Biofuels, CleanTech investing — Tags: , — Jonathan B. Wilson @ 9:42 am

Bioproducts company Codexis yesterday filed papers with the SEC to proceed with an initial public offering of its shares. 

Credit Suisse Securities and Goldman Sachs will be acting as joint book-running managers, with RBC Capital Markets Corporation and Pacific Crest Securities LLC acting as co-managers for the offering.

Codexis produces what it calls “optimized biocatalysts” (essentially, engineered biochemicals and enzymes) that have applications in process for biofuels, pharmaceuticals, recycling and other industrial processes.  The stock offering seeks to raise up to $100 million.

December 28, 2009

Tax Extenders Act Omits Alternative Fuel Mixture Credit

Filed under: Biofuels, CleanTech investing — Tags: , , — Jonathan B. Wilson @ 7:29 am

The House of Representatives on December 9th passed a bill (H.R. 4213) that extends many of the tax credits and incentive programs that expire at the end of this year.  The bill was referred to the Senate Finance Committee.

While the bill extends for one year the biodiesel tax credit and the biodiesel mixture credits under Section 40A of the Internal Revenue Code, the bill does not extend the alternative fuel mixture credit under IRC Section 6426(e).  The alternative fuel mixture credit currently applies to alternative fuel producers who produce a liquid fuel from biomass that does not meet the requirements for biodiesel and that is mixed with diesel (or other taxable fuel) for use in a business. 

Unless the Senate passes a version of the bill that extends the alternative fuel mixture credit and that measure is included in the bill when it emerges from the conference committee, the alternative fuel mixture credit will expire on December 31, 2009.

December 21, 2009

Renewable Energy Around the Web: December 21, 2009

Filed under: American Bar Association Renewable Energy Committee, Around the Web, Energy Blog, Uncategorized, wind — Tags: , , , , , — Jonathan B. Wilson @ 8:58 am

Our weekly compilation of renewable energy news and information from around the Web. 

Renewable Energy in Scotland

A report from the Scottish National Heritage organization claims that Scotland is on target to exceeds its renewable energy goals and could achieve 300% of its goals by 2020 if pending programs are approved.  The report claims that 2,834 MW of renewable power is operational and another 3,739 MW of power has been approved with another 19,500 MW in the planning stages.  The combined output is more than three times the 8 GW need to meet Scotland’s 2020 target of 50% of electricity from renewables. 

Utilities Building Long Distance Transmission Lines

The California PUC gave its final approval for Southern California Edison to construct the last 173 miles of its 250-mile Tehachapi transmission project in Kern County.  The line is expected to transmit as much as 4,500 megawatts of electricity produced from wind, enough power for nearly 3 million homes.

The capital cost of high-capacity long distance transmission is often seen as a barrier to the development of renewable energy production because the cost can be so high and the time to delivery can take years.

In a related development, LS Power announced that it would build the LaSalle Transmission Project (“LaSalle”), a new 345 kilovolt (kV) transmission project connecting Illinois and Indiana. The project is intended to facilitate renewable energy development within the region.

LaSalle is expected to be an approximately 160-mile transmission line to connect three existing 345-kV substations operated by the PJM Regional Transmission Operator. These three substations are the Pontiac-Midpoint substation near Pontiac, Illinois; the Reynolds substation near Reynolds, Indiana; and the Dumont substation near North Liberty, Indiana. New substations may also be constructed along the transmission line to serve as points where additional wind could interconnect to the transmission system.

“LaSalle will be routed through some of the most promising areas in Illinois and Indiana for wind development – areas that currently have limited access to the high-voltage transmission system,” stated Sharon K. Segner, Director – Project Development with LS Power. “LaSalle will provide both a means for wind generation to connect to the transmission system and an outlet for the wind generation to be delivered to load.”

The project is being developed by Central Transmission, LLC, a new transmission company and member of the LS Power Group. The LS Power Group has active transmission development across the country representing over 1,000 miles of transmission planned to help deliver renewable resources to load. This includes Great Basin Transmission, a new transmission company in Idaho and Nevada developing a “shovel ready” 500+ mile 500-kV transmission line; and Cross Texas Transmission, a new transmission company in Texas developing over 200 miles of double circuit 345 kV as part of the Competitive Renewable Energy Zone Transmission Plan.

Renewable Energy Committee Studies State Incentives

The Renewable Energy Committee of the American Bar Association’s Public Utility Section is conducting a study of state-level incentives for renewable energy.  The Committee’s Fall 2009 Report outlined the key federal incentives and for its Spring 2010 Report the Committee will dig deeper into the incentives available at the state level.  Created by the Public Utility Section in 2009, the Renewable Energy Committee has nearly 100 members and brings together legal practicioners to study developments in the sector.

New Landfill Methane Plant in North Carolina

Methane Power announced the opening of a new landfill gas-to-energy plant in Durham, NC, the state’s fourth largest city.  Electricity generated by the Durham landfill energy plant is being sold to Duke Energy Carolinas under a power purchase agreement.

Methane Power Inc., the project developer, said the energy plant is powered by three of GE’s containerized JGC 320 Jenbacher landfill gas engines. GE’s Jenbacher landfill gas engines are generating 3.17 megawatts of renewable electricity for the regional grid by using the landfill’s methane gas, which is created by the decomposition of municipal solid waste. The facility is generating enough energy to support about 1,800 North Carolina homes.

North Carolina is one of 27 states with a renewable portfolio standard (RPS), which requires utilities to produce a certain percentage of electricity from renewable sources, including biogas. North Carolina’s RPS requires that by 2021, utilities must meet 12.5 percent of customers’ energy needs through energy efficiency savings or renewable energy production.

Copenhagen’s Effect on Renewable Energy

Will the recently-announced climate change deal at Copenhagen have an effect on the market for renewable power?  The popular investing blog, SeekingAlpha, things so.  SeekingAlpha writes:

“The result from Copenhagen boosted the renewable energy outlook; India’s Suzlon sees wind turbines shortfall in 2010 and in the coming years. The $53B wind turbine market means the current global capacity cannot meet the demand.”

“The wind energy market is heating up in China as well. Ealier this year General Electric set a joint venture with A-Power Energy Generation with an annual 2GW capacity in 2010. According to the CEO, GE sees China as leading the green energy trend already, and this will continue if the U.S. does not come up with a green energy policy. A-Power Energy Generation announced Wednesday that the company has signed a definitive agreement with US-REG and Cielo wind for a Texas 600MW wind farm project. ”

“Before this announcement, some investors were still skeptical. What makes this project golden is that A-Power has agreed to deliver wind turbines beginning in March 2010. In other words, revenue on wind turbines will starts to flow in Q1 of 2010. Of course, the company has already realized revenue from Chinese wind farms in Q4 2009, however this marks the first revenue in-flow from a Mega wind farm project that A-Power has signed. The company has many huge alternative energy projects from various countries and is ramping up its turbine projects quickly through a Joint venture with General Electric.”

On the other hand, most environmental activists have viewed Copenhagen as a bust, so any boost for renewables is likely less than would have been the result if world leaders had adopted a wider-reaching or more robust agreement. 

In that same vein, on the first tradng day after the Copenhagen announcement, the price of carbon trading permits in Europe fell, reflecting the decreased likelihood of restrictions on carbon emissions.  Bloomberg reported that the “nations attending the two-week Copenhagen summit that ended at the weekend agreed to voluntary, rather than binding, targets to reduce emissions. The accord isn’t enough to boost demand for permits, said Trevor Sikorski, an emissions analyst at Barclays Capital in London.”

December 16, 2009

Taylor English Duma Assists Client with $17 Million Renewable Energy Grant

Filed under: Biofuels, CleanTech investing — Tags: , , , , , — Jonathan B. Wilson @ 7:02 am

Taylor English Duma LLP attorney Greg Sanderson recently advised a Washington state-based manufacturer in successfully obtaining a Treasury §1603 cash grant in excess of $17 million for a 55 megawatt biomass power plant. Sanderson is part of the Renewable Energy Finance team at the firm. 

The client manufactures bleached and unbleached kraft pulp and linerboard at its mill in the Tacoma, Washington area. The mill employs some of the most advanced paper recycling techniques available, and recycles some 500 tons of waste paper and boxes every day, turning it into high-quality packaging paper while improving the environment. The new power plant is fueled with biomass residues from mill operations and other regional sources. The plant co-generates green power that is sold into the public electrical power grid and steam that is used for paper manufacturing.

For the last two years, Sanderson has worked to obtain incentives for this biomass power project. The grant will cover 30 percent of the cost of the project. “Biomass” is any organic material obtained from terrestrial and aquatic crops, including wood and paper residue. The biomass material is a renewable fuel used by the power plant as an alternative to coal or petroleum products.

“The 2009 Recovery Act has made billions available to companies trying to build renewable energy facilities,” Sanderson says. “The policy is to promote domestic and renewable sources of energy.”

Sanderson is a member of the Taylor English Duma LLP renewable energy team. Taylor English lawyers represent renewable energy developers and investors to help them qualify for tax incentives and obtain project financing in debt and capital markets. Sanderson has been involved in more than 100 similar tax credit transactions supporting renewable energy. He has also served as a co-owner and financial officer of Power Management, Inc. and of W-T-E Development, LLC, private alternative energy firms that developed and financed over 30 energy projects in 14 states from 1995 to 2004.

“It is great to be able to complete a project like this and see it work,” Sanderson says. “It is rewarding because we are helping to produce electricity from renewable resources. Renewable biomass energy is produced locally, carbon neutral, and environmentally friendly. Our nation needs to develop more renewable sources to reduce our dependence on fossil fuels and imported oil.”

December 14, 2009

Renewable Energy Around the Web: December 14, 2009

Filed under: American Bar Association Renewable Energy Committee, American Recovery and Reinvestment Act, Around the Web, Biofuels, Emissions Cap and Trade — Tags: , , , , — Jonathan B. Wilson @ 8:13 am

Our weekly compilation of renewable energy news and information from around the web.

$600 Million for Biofuels

U.S. DOE Secretary Steven Chu and Agriculture Secretary Tom Vilsack last week announced the selection of 19 biorefinery projects to receive up to $564 million from the American Recovery and Reinvestment Act to accelerate the construction and operation of pilot, demonstration, and commercial scale facilities. The projects – in 15 states - should validate refining technologies and help lay the foundation for full commercial-scale development of a biomass industry in the United States. The projects should produce advanced biofuels, biopower, and bioproducts using biomass feedstocks at the pilot, demonstration, and full commercial scale.

Our friends at Biofuels Digest published a lengthy analysis of the awards and the process followed by the DOE.  It makes for interesting reading.  According to the analysis, the DOE published a Funding Opportunity Announcement in May of 2009.  After submitting lengthy written applications, there was a first cut and those who survived were invited to participate in a “GoToMeeting.com” online chat and presentation session.  DOE participants were never identified in the process, and never spoke directly on the conference call, but submitted questions online as they were identified as “Review #1″ and so on. 

As one successful recipient CEO was quoted to say, “what you win is the right to negotiate.”  Winning companies will now be able to negotiate the terms of their grants for a period of several months with the hopes of actually receiving cash in mid-2010.  While the ARRA intended for funds to get put to use in 2009, in this instance it wil have taken more like 1.5 years for the cash to actually be put to use.

EPA Issues GHG Endangerment Finding

Coming on the heels of the ClimateGate scandal, EPA Administrator Lisa Jackson last week finalized the EPA’s GHG endangerment finding, ruling that greenhouse gas emissions are an air pollutant under the Clean Air Act and are a threat to public health.   The endangerment finding is an outgrowth of the U.S. Supreme Court decision in EPA v. Massachusetts in which the Supreme Court held that the EPA’s authority to regulate air pollutants under the Clean Air Act extended to greenhouse gas emissions.

Speaking on Fox News Sunday, Oklahoma Senator James Inhofe suggested that the EPA would use the endangerment finding as a means of accomplishing through administrative ruling what it could not accomplish through legislation.  He reasoned that climate change legislation (whether in the form of the Waxman Markey bill or some other form) was unlikely to pass Congress during 2009 and that the Obama administration needed the legal support provided by the endangerment finding in order to make commitments at the Copenhagen talks on climate change.

EPA Delays Decision on E15 Waiver

On Dec. 1 the U.S. EPA announced that it will not make a final determination of the E15 fuel waiver until mid-2010. In March 2009, Growth Energy submitted a waiver to allow for the use of up to 15 percent ethanol in gasoline. Under the Clean Air Act, EPA was required to respond to the waiver request by Dec. 1, 2009.

The EPA has been working to evaluate the waiver request and has received a broad range of public comments as part of the administrative rulemaking process. In a letter sent to Growth Energy on Dec. 1, the agency said that to-date testing has indicated that the engines of newer cars will likely be able to handle ethanol blends higher than the current 10 percent limit. However, the agency will delay making a final decision on the fuel waiver until more testing data is available. On a positive note, the EPA also announced that it has begun the process to craft the labeling requirements that will be necessary if the blending limit is raised.

“As we are evaluating [the] E15 fuel waiver petition, we want to make sure we have all necessary science to make the right decision,” said the EPA in a letter addressed to Growth Energy Co-Chairmen Gen. Wesley Clark and Jeff Broin. “Although all the studies have not been completed, our engineering assessment to date indicates that the robust fuel, engine and emissions control systems on newer vehicles (likely 2001 and newer model years) will likely be able to accommodate higher ethanol blends, such as E15. However, we continue to evaluate the question of component durability when E15 is used over many thousands of miles and there is ongoing study being conducted by [the U.S. DOE] that will provide critical data on this issue.”

New DOE Loan Guarantee Rules

The DOE published its new rules for loan guarantee applications.  The new rules incorporate comments from industry participants and are intended to accelerate the loan guarantee process.   The new rules were effective December 4, 2009. 

American Bar Association Renewable Energy Committee

Our Renewable Energy Committee of the ABA’s Public Utility Section is meeting for the first time today on a conference call.  We’ll be charting a course for the coming year and planning some webinars and other projects.  Membership on the Committee is free to members of both the ABA and the Public Utility Section.  Check with the ABA website for more details.

December 7, 2009

Renewable Energy Around the Web: December 7, 2009

Filed under: Around the Web, Biofuels, CleanTech investing — Tags: , , , — Jonathan B. Wilson @ 7:56 am

Our weekly compilation of renewable energy news and information from around the web.

Synth Pop?

Our friends are BiofuelsDigest wonder if synthetic fuels will overtake biofuels in the future?  Several of the 50 Hottest Companies in Bioenergy this year are involved in generating fuels from synthetic means (or synethetic organisms) as an alternative to liquid fuels derived from organic matter (like ethanol).

ClimateGate or the CRUtape Letters?

Allegations of falsified science and bias have hounded climate researches over the past week as a hacked trove of emails from the University of East Anglia have demonstrated how some climate scienties falsified (or at least embellished) their findings on climate data in order to make global warming from anthropogenic carbon dioxide appear more sinister.  After a week even the New York Times managed to cover the story, but one casualty of the brouhaha may be the biofuels industry.

For some time, biofuels advocates have emphasized the positive impact of biofuels on GHG emissions.  If the crisis of confidence in global climate change sparked by the East Anglia emails has blowback, some of it could hit the biofuels industry.

This would be a pity, as biofuels have so many justifications (sustainability, energy independence, and pure efficiency) that the potential link to climate chantge and GHGs just isn’t necessary to make out a case in favor of biofuels.

MSW to Ethanol Plant Planned

Ethanol Producer magazine is reporting that the former Xethanol LLC ethanol production facility in Blairstown, Iowa, has been purchased by Fiberight LLC and will soon be producing cellulosic ethanol at a demonstration scale. The company recently acquired the shuttered plant for a mere $1.65 million and plans to convert it to handle municipal solid waste (MSW), marking another milestone in U.S. cellulosic ethanol achievements.

Fiberight has been operating a pilot-scale cellulosic facility in Virginia for the past three years and has developed a proprietary conversion process to produce cellulosic ethanol and biochemicals from MSW. “We’ve been operating in stealth mode because we don’t want to make claims until we can prove them,” CEO Craig Stuart-Paul said. He told EPM that the technology is now at the point where it can be scaled up to a commercial scale and Fiberight plans to prove that in Blairstown.

There are a few steps in Fiberight’s process that make it unique compared to other MSW-to-ethanol production methods, according to Stuart-Paul. The first is its ability to fractionate the waste stream into its many forms and then create a homogenous feedstock, which he said has been the biggest hold-up thus far in any biochemical project from waste. Secondly, the company created a proprietary process that allows the recycling and re-use of enzymes, thus lowering enzyme costs to a commercially viable level. Fiberight’s process does not involve acid hydrolysis or gasification of any kind, which reduces capital and operating costs and increases the plant’s environmental friendliness. “Even in a reduced oxygen burn environment there are so many potential volatiles in the waste stream…we’re doing everything we can to avoid any kind of heat input to create volatile gases,” he said. “Our goal is to have the least amount of air and water emissions of any of the waste-to-biofuel options. We view the challenges in the future to getting more plants built will be permitting as much as anything else, so we’re trying to keep that in mind moving forward.”

Fiberight says that it plans to spend $30 million on the conversion of the mill. 

DuPont Predicts $1 Billion in Renewable Revenues in 2012

Speaking to a Hong Kong newspaper about an Asian biotechnology deal, representatives from DuPont predicted that their company will generate more than $1 billion from renewable energy in 2012. 

Biodiesel Demand to Double in Five Years

A representative of Hart Energy Consulting predicted that the global demand for biodiesel would double in the next five years.  Speaking at the Canadian Biofuels Summit in Vancouver, B.C., Tammy Klein said that  thirty countries are implementing biofuels targets in 2010 alone, with many of these countries in the developing world encouraging biofuels as a means of building energy security and improving their rural economies.

Not everything is bright in the industry, she said, however.  “Currently there is massive overcapacity on a global basis in the biodiesel industry and utilization rates are generally below 50 percent,” she added. Current global biodiesel capacity is already large enough to supply the demand projected for 2015 of 10 billion gallons per year.

Currently, 30 countries worldwide are blending biodiesel, with the typical B5 beginning to inch upward. Several countries in Europe are moving towards B7, with Brazil moving towards higher blends and Indonesia considering B10. In 2009, developing countries represented 17 percent of biodiesel demand and almost 50 percent of global supply. That is expected to grow to 42.6 percent of biodiesel demand and 59.2 percent of global supply by 2015. Much of that demand among developing countries will be for domestic use, she added. African nations are looking towards biofuels for job creation, economic development and domestic energy supply and are not likely to become international players. In the Asia-Pacific region, the big four—Indonesia, Malaysia, China and the Philippines—represent 74 percent of biodiesel demand in the region. Brazil is likely to produce biodiesel to satisfy its internal markets and continue to raise blending limits to absorb capacity.

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