Friday, 24 April 2009

Clean Sweep 60

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


Policy
Wednesday's underwhelming Budget promised new funding mechanisms for two to four carbon capture and storage (CCS) projects, plus £90m for preparatory studies. The following day, energy secretary Ed Miliband fleshed that out by announcing that all new coal-based generation in the UK must have some CCS capability. Existing plant will be retrofitted within five years of the technology being judged as technically and commercially proven.
And there's the rub - the technology on the scale required doesn't actually exist as yet. There'll be big opportunities for anyone who can provide the necessary, whether complete systems or critical components.
For more information, see the government's CCS consultation page


Deals
And as if by magic, US CCS developer Powerspan announced a $50m new funding on the same day as the UK plans were unveiled. New investors George Soros, Tenaska Energy, AllianceBernstein and Persimmon Tree Capital join existing backers including RockPort Capital and NGEN Partners.
The new money helps the New Hampshire company commercially deploy its electro-catalytic CO2 capture technology for coal-fired plants. The tech is currently being tested at a 1MW pilot plant in Ohio, with a 120MW commercial demo scheduled for 2012. The captured gas will be used for what Powerspan calls 'enhanced oil recovery operations' - pumping into oil reservoirs to help pump the hydrocarbons out.

Solar thermal tech developer Ausra secured new equity funding of $25.5m from Khosla Ventures, KPCB, Generation Investment Management, Starfish Ventures and KERN Partners. All took part in the Californian firm's previous $60m round in October 2008.
The new funding comes four months after Ausra announced a major change of strategy, from building and operating large solar thermal plants to supplying tech and hardware to industrial and utility customers. The firm is still developing a contracted 177MW plant for Pacific Gas and Electricity.

Green chemicals developer GlycosBio raised a $5m first round led by Draper Fisher Jurvetson. The funding goes towards hiring technical staff and scaling up production.
Texas-based GlycosBio uses bacterial fermentation to produce precursor chemicals for biofuel and biochemical refineries. The firm says it can use a range of low-quality materials as feedstock, including cellulosics and algae, and generally be a lot cleaner than the traditional petrochemical sources.

Battery manufacturer A123 Systems raised $69m from General Electric and other VC and corporate investors. The money goes towards new factories - the Massachusetts-based firm also announced it had secured $100m tax credits from Michigan to support construction.
A123 produces lithium-ion batteries based on its proprietary Nanophosphate technology, which the firm says can provide higher voltage and longer life than competing systems. It recently won a contract to provide batteries for Chrysler's forthcoming hybrid electric vehicles.

'Energy intelligence' group EPS Corp raised a $30m second round led by Altira Group. Previous investors NGEN Partners and Robeco also joined in.
Founded in California in 2001, EPS produces software-based systems to help blue chip companies analyse and manage their energy use.

Energy efficient lighting group Luxim announced it had completed its $12m third round, led by Sequoia Capital.
California-based Luxim is developing what it calls a new class of solid-state plasma light sources, boasting high efficiency, long life, and full-spectrum light quality.

In an interesting seed investment, Polaris Ventures has backed 'solar fuel' start-up Sun Catalyx with a reported $700,000. Details are sketchy, but the company is headed by MIT professor Daniel Nocera who has developed a new catalytic method to produce split hydrogen from water. This could be a highly efficient way of storing the energy generated from solar PV. MIT's Technology Review has a good overview of the tech.


Further reading
New Energy Finance have released their Q1 figures (28kb pdf) for new investment in clean energy - $13.3bn, a 44% plunge from the previous quarter and 54% down on 2008Q1. As well as a sharp drop in underlying activity, NEF analysts say that deals are taking longer to complete. VC and private equity deals held up relatively well, however, slipping 22% to $1.8bn, the lowest level for two years.
Another couple of US sources also released quarterly stats. Dow Jones VentureSource's tally of US VC activity counted nine renewable energy deals worth $117m, a 73% drop in value from 2008Q1. PwC and NVCA's MoneyTree Report (34kb pdf) meanwhile counted 33 cleantech deals and $154m, down 84% from 2008Q4 and the lowest cleantech total since 2005. Rob Day of Cleantech Investing ponders what it means.

Following the UK government's announcement on promoting electric cars, the UK Energy Research Centre weighs in:
"There is no point forcing car makers to produce low carbon options if no-one will buy them, so it is right that ambitious regulation is combined with grants and other incentives – including taxes on gas guzzlers - to deliver a transformation of the car fleet. But there is a bigger picture. If car travel becomes cheaper overall and car dependence grows then all our efforts to reduce emissions get harder and may take too long."

An interesting new publication - Clean Tech Law & Business, which claims to be the first peer-reviewed journal devoted exclusively to the pursuit of environmentally sustainable technology. The first issue focuses on carbon trading (and, on that subject, here's a provocative comment piece in last week's New Scientist from NEF's Andrew Simms).

Environmental Finance reports that the Norwegian government's plan to invest NKr20bn (£2bn) of its pension fund in sustainable investments is potentially the largest such allocation ever made. Private equity comes near the top of the list of potential asset classes.

Wednesday, 22 April 2009

2009 Budget - what's in it for cleantech?

Alastair Darling's 2009 budget had some bright spots for cleantech developers and investors, but was far short of the brave green budget that many wanted.

Most of the goodies came some 40 minutes into the 50 minute speech, under the theme of 'building a low-carbon recovery'. Darling acknowledged green technology as one of the great growth sectors for the world, and emphasised the legally-binding target (as required by the Carbon Change Act) to cut emissions by 34% by 2020. For more information, see HM Treasury's new Building a low carbon economy page.

The key points and initiatives from the budget:
• Saving energy is the easiest and most cost-effective way to cut emissions, Darling said - there's £435m extra support for energy efficiency measures for homes and public and commercial buildings. There's also £100m for local authorities to build energy efficient social housing, as part of a £600m support for housebuilders.
• Darling also promised £405m to support low-carbon industries and advanced green manufacturing, deliverred through existing schemes such as the Environmental Transformation Fund.
• Offshore wind generation can build on the success of North Sea oil-gas industry. £525m new support over two years for offshore wind (and as much as £3.5bn over the project lifetimes), funded through the Renewables Obligation. Darling says he's confident that will lead to £9bn worth of major projects going ahead, providing energy for 2.8m households. However, the government's also bringing forward incentives for the oil industry which could unlock an extra two billion barrels.
• New funding mechanisms will be put into place for two to four carbon capture and storage projects, with £90m for preparatory studies.
• Access to £4bn new project finance from the European Investment Bank.
• Combined heat and power (CHP) plants will be exempt from the Climate Change Levy from 2013 to 2023. That could bring forward some £2.5bn investment.
• A new £750 Strategic Investment Fund to support 'advanced industrial projects of strategic importance', with £250m earmarked for low carbon investments.
• No more info on the electric car initiative, but the wider car scrappage programme was confirmed - £2000 for cars over 10 years old, to run from next month to March 2010, supported by £300m from government and match funding from participating manufacturers. Full details to be announced soon - it'd be good if the subsidy was dependent on the fuel efficiency of the new car.
• Of general tech industry interest, there'll be a review of taxation as it relates to innovative R&D and IP.
• And for the waste treatment people, landfill tax will be up £8/t each year from 2011-13.

Not too bad. But not that good, either. Thoughts?

Thursday, 16 April 2009

Electric car proposals unveiled

The UK government has published its strategy for promoting 'ultra-low carbon vehicles' - meaning all-electrics and hybrids, though obviously their 'low-carbon' nature depends on the source of their electricity - as part of its low carbon industrial strategy. It's being promoted as a £250m, five-year strategy, adding (limited) detail to the previously announced plan.

The headline initiative, which will account for most of the £250m figure, is subsidies of £2,000-5,000 for buyers of electric or plug-in hybrid vehicles. The subsidies will be made available as eligible cars hit the showrooms around 2011. The early state of the technology and lack of manufacturing scale means that first models likely to be around double the price of a petrol or diesel equivalent, so the announced subsidy is unlikely to make up the whole difference.

The plan also offers £20m to help set up networks of charging points and other infrastructure. That's not a huge amount given that, for example, Better Place Denmark in investing Euro103m in the initial deployment of their charging network in a country with a tenth of the population. The UK plans are just aimed at a handful or urban demonstration projects, giving around 200 motorists 'the opportunity to drive a cutting-edge car and feedback the information needed to make greener motoring an everyday reality'.

The Guardian has a handy illustrated guide to the current generation of electric vehicles (I'm still waiting for my Tesla test drive). Most only really make sense in an urban environment, where the vast bulk journeys will comfortably fit within a battery charge. And generation considerations aside, cities can also get big health advantages by cutting exhaust pollution.

Last week, the London's mayor outlined plans to promote electric car use in the capital. Proposals include 25,000 charging points by 2015, at an estimated cost of £60m (mayor BoJo says his local government will contribute a third of this, with the rest from central government and the private sector).

Elsewhere, next week's budget is expected to announce a £2,000 subsidy for anyone trading in an old car for a new one. Admittedly that's more to do with helping ailing carmakers by stimulating demand for new cars, but it's profoundly detached from reality from an environmental viewpoint.

The government is targeting some £2.3bn support for the automotive industry during the current downturn. Much of this 'Auto Assistance Programme' is (at least nominally) intended to support green technology development.

For full details, see Ultra-Low Carbon Vehicles in the UK (pdf 1.8mb).

Tuesday, 14 April 2009

Sustainable energy - without the hot air

Inspired by the glowing review in the Economist, I've just been reading David MacKay's Sustainable Energy - without the hot air (available as a book through the usual sources, or as a free download under a Creative Commons licence). Like the Economist, I'd strongly recommend the book to anyone involved in sustainable energy, whether as technology developer, investor or policy-maker; and whether your main interest is in renewables, nuclear or clean(er) fossil fuels, or in energy efficiency.

MacKay might seem like an unlikely person to write such a book - a physics professor from Cambridge, he's primarily a specialist in information theory, with a sideline in international development. It's maybe that off-centre viewpoint that allows him to use some simple tools from physics and maths to address the most basic question - can renewable (or, at least, sustainable) sources replace fossil fuels for the UK?

Along the way, he demolishes some of the wilder, waftier claims of industry boosters and environmental campaigners, as well as many of the objections of the climate change deniers and do-nothings.

MacKay starts with a basic balance sheet for the UK, roughly adding up the net energy consumption - around 195 kilowatt-hours per day per person (195 kWh/d/p), including domestic heating, transport, consumables, etc - and potential renewable resources - 180 kWh/d/p, including on- and off-shore wind, biomass, solar heating and PV, wave and tidal, and all those other technologies that VCs love. (A brief chapter towards the end sketches out the equivalent numbers for Europe, America and the world.)

So, it's a pretty close thing. A bit more energy efficiency, and a bit of coal and nuclear generation, and we should be OK. Right?

As ever, the devil's in the detail. MacKay uses pretty basic considerations to derive estimates for each slice of the two pies, and leaves all other social, political, economic and environmental factors to hang.

For onshore wind power, for example, it's a simple question of finding average wind speeds for the UK, typical power per area of wind farms, and population density; guesstimating what portion of the country we could conceivably cover with windfarms; and doing the sum. If we cover the whole country with windfarms, we find that we could just about cover our current consumption. Slightly more realistically, if we put windfarms on just the windiest 10% of land, we could generate around 20 kWh/d/p, a bit less power than is consumed by domestic heating.

Somehow, that kind of datum doesn't crop up too often when wind developers talk about Britain's huge wind resources. Obviously, that's not to say that on-shore wind doesn't have a role to play in a sustainable energy mix, but if it's to be a significant role, we'll need to dedicate significant resources to it.

It's a similar story with the other renewable areas, as well as areas like 'clean coal', carbon scrubbing and nuclear, and the potential for importing our energy from overseas. The basic message is that the necessary reformation of our energy system requires major action. Perhaps most importantly, it also demands more realism in facing the challenges than is often encountered on any side of the debate.

There's little consideration of individual technologies - solar PV is just considered as working at 20% conversion efficiency, for example - but that's no bad thing given the uncertainties that remain. There's also little consideration of the affordability of various solutions (or, perhaps more importantly from the VC perspective, their potential profitability) but that's a whole other can of worms which MacKay deliberately skates over.

From a cleantech VC viewpoint, this all provides another valuable perspective on which broad categories of technologies genuinely do have the potential to make a substantial contribution to the energy mix, and which don't. Jatropha-based biofuels seem of very limited use, for example - MacKay calculates that covering the whole of Africa with jatropha plantations would only replace a third of today's global oil consumption.

Moving to a sustainable energy economy is (just about) possible, given the right political and industrial leadership. The most important things, MacKay concludes, are to electrify transport; electrify heating and cooling in buildings through heat pumps; and ramp up domestic renewable generation, perhaps alongside clean coal and nuclear. But the most important thing for the UK is likely to be large-scale solar generation in hot, less-populated countries:
As long as we can build peaceful international collaborations, solar power in other people’s deserts certainly has the technical potential to provide us, them, and everyone with 125 kWh per day per person.

In all, it's a remarkably provocative and eye-opening analysis. No less remarkably, it's also very accessible - clearly and entertainingly written with diagrams and doodles aplenty, but with exhaustive footnotes and references and the more technical bits rounded up at the end. Highly recommended - and, like I said at the top, available for free.

Wednesday, 8 April 2009

Clean Sweep 59

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

Deals
AIM-listed cleantech specialist Low Carbon Accelerator has announced follow-on investments in two of its portfolio companies. Scotland's Proven Energy, a producer of small (2.5-15KW) wind turbines, secures an extra £500,000 in two tranches, giving LCA a 49.83% stake in the company. LCA last invested £700,000 in Proven in December 08.
And electricity demand management developer RLtec (aka Responsive Load) hit its performance targets and banked the extra £300,000 from its last round in October. LCA now has a 82.6% stake in RLtec.
LCA's latest annual report has some interesting comment on where they see investment opportunities.

Singapore-based tidal turbine developer Atlantic Resources Corporation has raised a $14m round led by Norwegian renewables group Statkraft.
Atlantis has developed a range of undersea turbines for both shallow and deep water installation, and counts Morgan Stanley among its backers.
Atlantis and Statkraft also announced they would collaborate on new marine energy projects in the Pentland Firth, Scotland. Up to 700MW of licences are currently up for grabs.
Statkraft has also taken a 50% stake in StatoilHydro's proposed 315MW wind farm off the Norfolk coast. Construction is due to start this summer.

Anglo-French renewables investor Platina Partners has invested Euro134m in three Spanish solar plants run by portfolio company Anemoi Renewables. The plants at Cantillana, El Coronil and Ocana have a total output of 19.7MW. The new funding comes from Platina's Mistral Energy II renewables fund.

Across the pond, US VCs picked up the pace after a few slow months.
Electric car developer Fisker Automotive took the biggest round, with $85m from Euro-US consortium Eco-Drive (Capital) Partners and existing investor KPCB. The California firm last announced a $65m third round led by a Qatari consortium in September, and is preparing to launch its sporty plug-in hybrid Karma later this year.

Lilliputian Systems, a developer of miniature fuel cells for consumer electronics, raised $28m. Stata Venture Partners, Altira Group and Argonaut Private Equity joined existing investors including KPCB, Atlas Venture and Rockport Capital.
Lilliputian was launched by former MIT researchers in 2002, and is currently testing prototypes of its 'Silicon Power Cells'. The cells include a chip-based generator powered by fuel cartridges, and promise to deliver 20-40 times the energy of Li-ion batteries for the same weight.

Smart grid start-up EnergyHub closed a first round with .406 Ventures and Physic Ventures. Terms were not disclosed.
New York-based EnergyHub is developing a range of monitors and software tools to help households manage their energy use - an attractive area for VCs, with rivals including UK-based Onzo and GEO. New funds go towards product development and starting pilot programmes with utilities.
In a closely related field, Boston-based Ember raised an extra $8m from existing investors including Polaris, DFJ and Stata Venture Partners. The firm, which also has a development centre in the UK, provides Zigbee standard wireless networking systems which allow smart meters and appliances to talk to each other.

Biochemicals group OPX Biotechnologies raised a $17.5m round led by Braemar. The Colorado firm is engineering microbes to produce fuels and petrochemical replacements, using what it calls a Efficiency Directed Genome Engineering platform.

Elsewhere, micro-turbine manufacturer Southwest Windpower closed a $10m round from GE and existing investors; tech group Sarnoff (formerly RCA Labs) spun off a new LED tech business, Lightscape Materials, with $3m start-up funding from Wisepower and Foosund HDS; and Nasdaq-listed oil-based biofuels producer New Generation Biofuels Holdings closed a $3.17m private placement, reflecting a lack of appetite on the public market.


Fund news
Curzon Park Capital is a new London-based cleantech VC backed by Edmund and Danny Truell, the founders of Duke Street Capital.
The new firm was founded after the brothers bought out a £20m fund previously managed by E-Synergy. Investors include Dutch asset manager Robeco.
Edmond Truell acts as chairman of the new firm, with former E-Synergy managers C├ędriane de Boucaud and Sam Richardson continuing as directors.

Google, the fairly well-known search engine group, has officially launched its new VC wing, the imaginatively titled Google Ventures. The new operation aims to invest $100m in a year, in start-ups in a range of tech areas including cleantech, and is understood to have already made an undisclosed investment in smart grid developer Silver Spring Networks.

Not a VC fund, but a potentially interesting alternative - Greendaq is a new US-based private exchange for cleantech companies and commodities. The Aruba-based online exchange aims to help growing cleantech companies to both raise money and achieve liquidity, and serve investors who may be wary of direct investment in private start-ups. The first company to list is UK jatropha biofuels producer Carbon Credited Farming.


Further reading
First quarter VC figures are now in, with totals down but not out.
Greentech Media analysts counted 59 deals worth at least $836.1m (undisclosed deals are likely to take the total over $1bn). That's down on last year, but close to 2007 figures.
The Cleantech Group meanwhile counted 82 deals and $1bn, down 41% on the previous quarter and almost half on 2008Q1.

The UK is in for a green budget come 22 April, according to the Independent:
In an exclusive interview with The Independent, the Prime Minister trailed measures to make Britain "a world leader" in producing and exporting electric cars, hybrid petrol-electric vehicles and lighter cars using less petrol. Alistair Darling, the Chancellor, will announce in his Budget that trials for electric cars in two or three cities will begin next year. Councils will be invited to bid to become Britain's first "green cities". The Government will open talks with power companies to ensure the vehicles can have their batteries recharged at a national network of power points at the roadside.
Mr Darling will also set a target of creating 400,000 jobs in "green industries" over the next five years.

More as we hear it.