Wednesday, 23 January 2008

European masterplan

The European Commission has officially unveiled its much-anticipated (and much-leaked) energy package, containing cross-continental proposals on how to reach the targets agreed last year. The headline figures are to cut CO2 emissions by at least 20% by 2020 (rising to 30% if global targets can be agreed), and to source 20% of energy supply from renewable generation.

The primary mechanism is the extension of the EU Emissions Trading System (ETS). The first phase of this programme was a less than spectacular success, with too many permits doled out by compliant national governments to favoured power generators. The extended scheme, beginning in 2013, will include full auctioning of permits to the power sector which (economists say) will help maintain a realistic price and thus achieve genuine emission reductions. Auctions will be phased in for other sectors including refineries and aviation.

Revenues from the permit auctions will partly go towards supporting innovation in renewables, carbon capture and storage, and other relevant R&D. This will be managed on a national basis - in the UK, distribution is likely to be managed by the Carbon Trust. As pan-European revenues from the ETS are projected to reach up to Euro50bn a year, this clearly has the potential to give European cleantech industry a huge funding boost.

The extended ETS should also be good news for companies supplying renewable energy or renewables installations to industry, and those offering the gamut of efficiency-improving products and services. Not forgetting the permit trading houses, of course.

The ETS will also be extended to cover greenhouse gases other than CO2 and involve all major industrial emitters. Year-on-year reductions will aim to reduce total emissions under the scheme by 21% from 2005 levels.

Net emission reductions of 10% are meanwhile mandated for industries not covered by the ETS, including buildings, transport, agriculture and waste. National targets vary, depending on the state of economic development, with rich countries facing tougher targets - the UK has a legally binding 16% target while Poland, for instance, is allowed an increase of up to 14% in non-ETS emissions.

The binding target for the share of renewables in energy supply also varies depending on national circumstance - the UK has a 15% target, while Sweden aims for 49%. Trading between nations is allowed - and nuclear doesn't count.

Controversially, the overall renewables target also includes a 10% biofuels target in each member state. The UK Environmental Audit Committee this week called for a moratorium on increasing the biofuel allocation until robust sustainability standards can be put in place. Most crop-based biofuels will have a tough time proving their sustainable credentials - cellulosic and algal fuels have a much stronger case, but are as yet some way from commercialisation.

Another point that may prove key for innovative cleantech companies is that state aid for renewable power generation schemes will be allowed, so long as it just covers the difference between production costs and market prices. That should help any national government which wants to boost its renewables industry.

It's a decent enough set of proposals, offering plenty of opportunities for cleantech companies. It's questionable whether the targets are tough enough - the stated aim is to cap the mean global temperature increase at 2°C. According to the latest science, that's probably rather naive. But the main thing now is to get the international mechanisms in place, and to develop the cleantech industries, that will allow further necessary reductions to be achieved.

Monday, 21 January 2008

Clean Sweep 29

A round-up of recent news in clean technology and cleantech investment.

In a potentially important non-VC deal for a major market, AIM-listed fuel cell business Ceres Power secured a £20m investment from utility group Centrica (trading as British Gas). The investment is part of a development and supply agreement following trials of Ceres' residential CHP unit, with British Gas placing a forward order for at least 37,500 units over four years. A new share issue gives Centrica a 10% stake in Ceres. The Crawley-based business was founded in 2001 to commercialise fuel cell technology developed at Imperial College, London.
Another AIM-listed CHP developer, Chester-based Energetix, has meanwhile signed a development deal with power and gas supplier E.ON. The deal covers development of a domestic CHP unit based on Energetix's Genlec technology, which uses simple thermal cycle (like a fridge, but in reverse) to generate electricity from the boiler's heat.

In the US, the Detroit Auto Show meant it was a busy week for clean motoring deals, and for VC legends Khosla Ventures. Khosla announced an unspecified investment in next-gen engine developer EcoMotors (no website, it seems) - the firm's diesel motors aim to deliver 100mpg by 2011, with an opposed-cylinder design similar to that used by Junkers in the 1930s.
The same VC also announced undisclosed funding for engine tech developer Transonic Combustion. The California firm is developing fuel injection systems which promise dramatic efficiency improvements in gasoline and biofuel engines.
Khosla portfolio company Coskata meanwhile announced a strategic partnership with General Motors. The auto giant takes an undisclosed but 'significant' stake in the Illinois-based biofuels firm, which uses microbial bioreactors to produce ethanol from waste.
Finally, Vinod Khosla's old partners at Kleiner Perkins Caulfield & Byers led a second round in Fisker Automotive. California-based Fisker, a subsidiary of Quantum Technologies is developing a range of luxury cars using Quantum's plug-in hybrid electric tech.

It wasn't all motors - nanomaterial developer NanoGram raised a $32m follow-on round to expand its solar activities. New investors include Global Cleantech Capital, Masdar Clean Tech Fund and Mitsui Ventures. The Silicon Valley firm group has developed a laser-based process for depositing polycrystalline silicon nanoparticles, which promises to reduce PV module production costs to under $1/Wp.
Solar thermal developer eSolar meanwhile secured $10m from Google. The search engine giant announced it was working with the firm as part of its Renewable Energy Cheaper Than Coal initiative back in November.
And at the cutting edge, Nanoptek raised a $4.7m first round led by the Quercus Trust. The Massachusetts-based firm is developing a solar-powered electrolysis system that produces hydrogen directly from water. The system relies on a photoactive semiconductor known as titania - let's hope it's no fairy tale.

Fund news
Financial giant Morgan Stanley has taken an unspecified minority stake in US cleantech specialist NGEN Partners. The deal is the first direct investment by a Wall Street major in a cleantech VC, and helps put it further in the mainstream. NGEN investments include concentrated solar groups SolFocus and Solaria, thin-film solar developer Konarka and renewables provider Tioga Energy.
Morgan Stanley also recently closed a $200m solar project fund with commercial installer Recurrent Energy.

Further reading
The latest market stats from Library House showed European cleantech VC topped Euro200m for the first time in the last quarter of 2007, with Euro206m in 37 deals. Over the year, investment reached Euro712m, almost double the figure for 2006.
Initial year-end figures from the US Cleantech Group meanwhile show continued growth in international cleantech VC, with North American and European deals totalling $5.18bn over the year, up from $3.6bn in 2006. European companies received $1.23bn in 105 deals, while North Americans took $3.95bn in 268 deals. Over half the global total went into energy generation, with solar deals dominating. Full details will be released next month, but the basic stats and comment are available here.
Public market investment in clean energy also enjoyed a record year, according to figures from New Energy Finance. Clean energy companies raised $21.5bn of public equity, over double 2006's total. European markets raised the bulk of money ($14.2bn), helped by the $6.6bn IPO of Spanish utility subsidiary Iberdrola Renovables in December.

The Carbon Trust has released interesting research on the impact of the EU emissions trading scheme on UK business competitiveness. The sub-sectoral study finds that competitiveness will not be damaged, apart from potentially in the energy-intensive areas of cement, steel, aluminium, pulp and paper, basic inorganic chemicals and fertiliser. The Trust recommends special consideration in reducing carbon permit allocations for these areas, which represent 0.2% of UK employment but generate around 3% of total CO2 emissions. The full study can be downloaded here.

Friday, 11 January 2008

Clean Sweep 28

A round-up of recent news in clean technology and cleantech investment.

Newcastle-based recycling group Alternative Waste Solutions has secured £2m growth funding. Early-stage tech specialist E-Synergy led the round with £1.4m from its Sustainable Technology Fund. The balance came from NorthStar Equity Investors with £400k, and a private investor.
AWS was formed in 2000 to recycle plastics waste collected by other bodies.
The funding goes towards a £14m expansion of the firm's bottle processing plant in Lincolnshire.

The £25m AIM-listed Ludgate Environmental Fund has announced that it is over 20% invested, following two rapid investments in Dutch emissions trading company STX Services. Ludgate invested Euro192,000 just before Christmas, and a further Euro600,000 this week. STX spun off from its parent brokerage, Wallich & Matthes Holdings, in May last year.

Finnish semiconductor group Braggone has received a 'multi-million dollar' investment from state funding agency TEKES. Braggone recently announced a new product line for solar cell manufacturers, based on a polymer layer which can minimise optical loss and reduce per-watt production costs in both crystalline silicon and thin-film cells.

Across the pond, waste-to-energy group EnerTech Environmental raised a $42m second round led by Citi’s Sustainable Development Investments unit and Masdar Clean Tech Fund.
The SlurryCarb process developed by the Atlanta-based firm converts sewage and other high-moisture wastes into a fuel suitable for cement kilns, pulverised coal boilers and gasifiers.

Cellulosic biofuels producer BlueFire Ethanol secured $15.5m development funding from Quercus Trust. The Californian firm is developing facilities to produce ethanol from green, wood and municipal waste, thus avoiding many of the problems associated with corn-based ethanol production. BlueFire also received a $40m grant from the Department of Energy in October to fund its first, 17Mgal/a cellulosic ethanol plant at a landfill site in southern California.

Policy news
The UK's new energy bill introduces some necessary measures for rolling out clean energy generation. The bill allows the Renewables Obligation, the mechanism requiring energy suppliers to source a fraction of their energy from renewable sources, to be extended emerging tech such as offshore wind, wave and tidal, as well as supporting microgeneration. Electricity regulator Ofgem is meanwhile given the power to manage the infrastructure connecting offshore generators to the onshore network.
The bill also creates a regulatory framework for private sector investment in carbon capture and storage (CCS) projects - the government has previously announced a competition for the first commercial-scale CCS project.
For legislation wonks, the full energy bill is available as 1Mb PDF here.
The bill was accompanied by the release of the Nuclear White Paper, the government's response to the recent consultations. Energy secretary John Hutton talks of nuclear providing "clean, secure and affordable energy" - sadly, none of those three adjectives are entirely justified. Nuclear seems, at best, to be a stopgap measure with extremely long-term costs.
Reactions from industry and environmental groups were much as expected.

Fund news
US heavyweight VantagePoint Venture Partners is preparing to raise up to $400m for its second cleantech fund. The VC's existing portfolio includes such high-profile firms as Tesla Motors, Miasole and Project Better Place. Although focused on North America, VantagePoint also looks to Europe, with investments in leading UK photovoltaic supplier SolarCentury and Swedish waste-to-energy firm Chemrec.
Houston-based Yellowstone Capital meanwhile announced a $50m target for its second alternative and renewable energy venture fund. Current investments include CPV firm SolFocus and thin-film developer Heliovolt.

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Monday, 7 January 2008

Clean Sweep 27

A round-up of recent news (from either side of the holidays) in clean technology and cleantech investment. Happy new year, everyone!

Germany's Schmack Biogas signed a Euro130m funding deal with mid-market private equity group HgCapital. The 'strategic framework agreement' funds the construction of up to 15 biogas plants with a total capacity of around 30MW over the next two years. The deal helps HgCapital build one of the world's largest biogas portfolios.
Since launching in 1995, Schmack has built just over 200 plants with total nominal output of 61MW.

Across the pond, next-gen battery firm Boston Power raised a $45m third round led by Oak Investment Partners. New money goes to scaling up business development, marketing and R&D, and moving its Sonata Li-ion laptop battery into production. The company is the first US firm to win approval from the Nordic Ecolabel scheme.
Young Californian battery developer Deeya Energy meanwhile raised a $15m second round from New Enterprise Associates and previous investors including DFJ. The firm's 'L-Cell' batteries are designed for industrial back-up applications, using tanks of dissolved electrolyte aspower storage. The tech can potentially be used to smooth output from variable energy sources such as wind and solar.

There's still VC appetite for biofuels, despite the pulled IPO by Imperium Renewables. Massachusetts-based Ethos Energy landed an undisclosed first round from cleantech pioneer Khosla Ventures and GreatPoint Ventures. Ethos however shuns the over-funded (and far from clean) US corn ethanol market in favour of sugarcane-based ethanol projects in South and Central America.

Also in stealthy first rounds, Pyron Solar secured undisclosed funding from Swiss investor New Energies Invest. Pyron is commercialising utility-scale concentrating solar installations, based on tech developed with Boeing's Spectrolab solar subsidiary. The firm currently has a 6.6KW prototype and is planning full-scale pilot projects in the US, Spain and China.

Fund news
Platina Finance has held a Euro74.6m first close on its European Renewable Energy Fund. Final target is Euro205m. Platina invests in renewable energy projects and companies as well as industrial buyouts - renewables investments range from Euro1-3m development funding to Euro50m project finance, with a focus on European wind, biomass and solar. The firm has offices in London and Paris.

Further reading
Global clean energy investment broke the '$100bn barrier' in 2007, according to figures from New Energy Finance. New money topped $117bn, from $83bn in 2006, and well ahead of predictions (the weak dollar may be a factor here, of course). Almost half of that was asset financing, with wind taking the largest share.
Venture capital and private equity accounted for $8.5bn, up 27% on '06. Early stage saw the biggest rise, reaching $1.8bn; while late stage VC fell slightly to $1.1bn. Solar took $3bn; biofuels was down at $2bn; wind took $1.8bn; and energy efficiency $1.2bn.
More details in the PDF press release here

Various predictions for what 2008 might bring from around the cleantech blogosphere.

The Guardian newspaper presented a worthy list of 50 people who could save the planet. Names from the VC and entrepreneurial worlds include Elon Musk, Craig Venter, Renewable Capital's Bob Hertzberg, and KPCB's Al Gore. Not forgetting, of course, Leonardo DiCaprio.