News and notes - Green jobs, nuclear, demand response. wind, green investment and more

CSR Jobs Rank High for Newly Minted MBAs: I'm a little dubious about the methodology (two job posting sites?), but this study demonstrates the growing demand and supply for CSR-related jobs (especially environmentally-related). A link to the study and presentation of its findings is here. Definitely some interesting information and resources at the tail end of the presentation.

Seen an uptick in nuclear power-related news recently. I'm still staying out of the debate, but wanted to pass on some articles I've found interesting. So here are two positive articles: "Devil’s Advocate: 10 Green Arguments for Nuclear Power", "A chance for nuclear industry to clean up its act", and one negative: "Green advisers dismiss nuclear plans as 'megafix' solution"

Powerit: Cashing In On Making the Grid Smarter: energy demand management system from a new venture that I imagine will soon be (if not already) embarking on its Series B round.

Making Fuel Consumption Visible: I love the broader concept underlying this announcement, and have posted on it several times. I hope someone is conducting a study looking at fuel consumption rates based on this technology, as I imagine the results would be striking.

Wind Power and M&A: A Moveable Feast: article detailing some of the consolidation now happening in the wind power industry. Ireland's Airtricity starting developing wind projects four years ago, and was recently acquired for $1.4 billion. Nice.

Unlike GM, Chrysler touting all-electric cars: As CNET points out, the #3 automaker in the US needs to differentiate itself from the top 2 (as in any mature industry really), and thus Chrysler is looking beyond hybrids and alternative fuels to all-electric vehicles.

How Green are Your Earnings? AltEnergyStocks looks at the question: should GE be included in a green portfolio or index?

Thoughts on 2008 - caution and optimism

Below is a collection of my own predictions for 2008 in cleantech and sustainable business, along with links to writing I've done in the past covering these topics. My post on the predictions from other bloggers, writers and experts is here.

1) Weak US and global economic conditions will have some negative impact on the “green movement” in the short term.

The weakening U.S. and global economies will dampen investor enthusiasm in all things green and cause national politicians to temporarily back off their environmental pledges. The frigid housing market will negatively impact PV solar installation in the US and the poor economic environment will cause some cleantech companies to fail or post poor results. These won’t be representative indicators, but the mainstream media, in a downcast mood, will jump on these outcomes anyway as signs the “green” boom is ending.

Due to this, many undecided Americans will take a step back to pause and reflect on the “green movement” (a term I dislike, but use to encompass “clean energy investment”, “corporate sustainability”, “climate change solutions”, etc). I think there are still many more skeptics than optimists regarding the potential future success of renewable energy and green business. These developments will give the skeptics ammunition to re-emerge and question if the hype is justified. While I think this backlash would have occurred naturally, the 2008 conditions described above will exacerbate it.

2) However existing concerns (energy prices, climate change etc.) will remain, lessening the impact of the developments described above, and allowing for the future long-term development of the “green movement”.

The pause in interest in all things green will be short-term. No more than a year. High energy prices, energy security concerns, increasing scientific certainty around anthropogenic climate change and new weather phenomena (climate change-induced or not) will mitigate some of the media (and the public’s) skepticism and ensure continued interest in all things green. Climate change will not be a large campaign issue (too much issue clutter), but it will be discussed, especially if McCain gets the Republican nomination.

Longer-term, the steps taken to boost the economy (lower interest rates, tax cuts/credits, housing industry bailout) will have a beneficial longer-term impact on the “green movement” spurring consumer and business interest and institutional investment. U.S. politicians and business leaders will recognize the value (and currently wasted opportunity) in developing the variety of industries under the “green/clean” banner. But that will be a 2009-2010 development.

3) One new trend will capture public imagination, while solar will experience a backlash.

This stems from a conversation I had a few months back. To borrow from my own writing, it certainly seems as though the last few years, one specific technology has captured the imagination of the media, the business community and the public. There’s a love affair for about a year, followed by the inevitable falling out of love period, as various individuals question the economic, environmental and political realities underlying each technology. 2004 was the year of the hybrid (Prius); 2005 - wind; 2006 - biofuels; 2007 - solar. I see no reason why this pattern won't repeat itself. As to what 2008 would be, I think I'll stick with energy efficiency (although I'd broaden it to include #5 and #7 below).

4) Coal power plant cancellations will grow, sparking interest in a variety of energy alternatives

As I blogged here, I believe the pace of coal plant cancellations or postponements will quicken. I last counted 22 cancellations in the past 12 months. There’s a reason why a lead Citigroup analyst (and others) downgraded coal stocks in July. There are a number of financial ramifications as a result of this, but more importantly, that lost capacity must be made up somewhere. Utilities and power generators (and city and state governments) will need to choose between natural gas, lobbying for nuclear, or looking at other alternative technologies.

5) Some smart people will begin applying the lessons of the most recent technological revolution to the consumption of energy.

As I also blogged here, the concept of empowering and engaging the consumer, so that they are actively involved in the generation and consumption of their own power will be a dynamic trend in the coming year. Demand response technology, smart and net metering, last-mile smart grid efforts, incentivizing energy efficiency – each can and will play a role. Although as my caveat above stated, we should only be witnessing the start of this long-term trend, and maybe even just the first outliers.

6) Reducing the energy intensity of transportation will be the primary focus, but the solution is still to be determined.

Whether one considers the new Energy Act, the build-out of high speed trains, the focus on ethanol and infrastructure from “field to fuel pump”, or electric vehicles and battery storage, the bottom line is this. We need to get people from point A to point B using less energy, and with less environmental damage. I didn’t post as much on this topic as I would've liked this year, but it is one that will continue to hold the attention of investors, policy makers, corporate executives and individual consumers. 2008 will see a variety of solutions proposed, and while I don’t see one gaining more favor than any others, I do believe those solutions that keep #5 in mind may do well.

7) “Design” and aesthetic appeal will be a growing consideration and differentiator among renewable energy and other clean technologies.

My significant other has long appreciated the idea and concepts underlying renewable energy, but disliked the outwardly unappealing and awkward appearance of solar panels, wind turbines, CFLs, etc. I think it’s a valid criticism. Key to the resurgence of a number of companies (Apple, Mini Cooper) and has been the focus and integrating of style and design with technology. Everything from green buildings to urban environments to distributed generation could benefit from a similar philosophy and I think they will in 2008.

8) Labor shortages will be as big a constraint to the energy industry (traditional and alternative) as polysilicon and turbines are to solar and wind respectively.

Clean Break (linked above) has a good reference on this (although he has a different take), and I’ve posted about jobs in the green industry here and here. The US was already suffering from a dearth of engineers and scientists in most fields, but the shortage appears especially acute in energy. The lack of qualified technicians and installers for distributed generation mirrors a similar shortage (for different positions) in traditional oil, gas and power. While some “green jobs” legislation was included in the Energy Act, ultimately, much more support is necessary to meet the growing need for labor in this space.

9) People will focus on “managing intermittency” through diversification and other energy portfolio strategies, as well as a variety of energy storage solutions.

I’ve covered the geographic diversification and intermittency issue here for solar and wind in detail. Outside of cost per watt, this is the biggest challenge and drawback for renewable energy. It’s not a bold prediction to state the people will be working on ways to store energy where intermittency is a factor, but I do think more project financers, investors, energy executives and policy makers will focus on the potential value in diversification across regions for wind and blending solar (Thermal, CSP and PV) with other renewable and traditional energies.

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So that’s it – my predictions for 2008. Before writing this post, I didn't expect that I would leave out predictions on carbon legislation and carbon markets, emission measurement technologies and global climate change policy. I could be wrong, but ultimately, given the economic challenges and US elections in 2008, I don’t think much will be happening in those areas.

I was somewhat surprised also by my pessimism, but as I worked through this post, I started to realize what had been bothering me about so many of the predictions and forecasts I had read. Many (especially the optimists) seemed to be looking to cram at least 5 years of development and success into 2008.

I personally believe the industries that are growing around cleantech, renewable energy and green business are strong enough to withstand a pause, and in fact could benefit from one. That’s not to say that I wouldn’t love to see growth that far exceeds the $117 billion invested this year and in fact I’m sure just that in 2008. But the rush to invest and overwhelming interest in all things clean and green is, yes, beginning to look a little frenzy-ish and bubble-ish. And I’d rather smooth that out of the system now, than go through a dot-com cycle lasting five years.

Iberdrola update, groSolar funding, energy trends, green collar jobs and oil watch

A few items of note today:

EDP to decide on sale of renewables business: the Iberdrola Renovables IPO isn't making much noise (although it is a huge traffic draw to this site for some reason), but Portuguese power company EDP is considering a similar path:

EDP will decide on the sale of 20 to 25 percent of its renewables business in the first quarter of 2008, EDP's chief financial officer Nuno Alves was cited as saying. Alves said in an interview...that some banks had shown interest in carrying out the sale of its renewables business, which includes NEO in Europe and recently acquired U.S. wind-farm company Horizon Energy. He said EDP's renewables business could be worth around 10 billion euros.

EDP plans to invest 7.6 billion euros until 2010 in NEO, which has wind farms in Portugal, Spain, France and Belgium. Portugal's biggest industrial group recently bought U.S. wind-farm company Horizon Energy for $2.2 billion.

We should see continued consolidation in the wind power industry over the next few years, and those companies with the capacity to go public or raise private capital will do so soon. As onshore wind nears approximate grid parity with traditional energy sources, wind finance becomes as much a real estate, scale and turbine sourcing play as anything else. Those companies with available capital and market leadership should be best positioned to take advantage of this maturing sector.

Meanwhile, a quick update on Iberdrola Renovables (IBR) – it saw a second day bump of almost 7%, before falling back and is now trading about 5% higher than its first day opening price.


groSolar Raises $10 million in Growth Equity Financing:

groSolar, a national solar energy firm, announced today that it has secured $10 million in a Series B financing…NGP Energy Technology Partners…led the investment round. Each of the company’s original investors (SJF Ventures, Calvert Social Funds, and Allco Financial Group) also participated in this latest round of funding. groSolar closed its $2.25 million Series A financing in September 2006.

While usually I’d leave this up to various cleantech investment blogs, there are couple things I wanted to note. First, there are several positive signs for groSolar in this news: solid but not excessive second round valuations, follow-on investments from all original investors, quick close for new funding round. Second, groSolar isn’t a pure technology play in the solar space, so much as a distributor and installer, in both the commercial and residential sectors. This is one small example of the growing maturity of the solar industry – that traditional business models (grafted onto high-tech plays) are seeing significant interest, funding and growth.


The World of Energy in 2007: just wanted to highlight this excellent post, which discussed 11 highlights and trends in energy this year. It also serves as a good demonstration of the diversity and breadth of opportunity in this space, but also the challenges in keeping it all straight. To really play in renewable energy, the perceived expertise necessary can sometimes feel overwhelming. Fluency in innumerable unique technologies, mastery of global, regional and domestic policy, familiarity with entrepreneurship, capacity to understand a variety of finance and investment strategies (project finance, VC/PE, debt, public offerings). The list is endless. Or you could just be a blogger and opine ad naseum, no skill set necessary...


Green Collar Jobs Could Fill Many Needs: I came across a similar report a year ago, when I read the Apollo Alliance’s New Energy for America report, detailing how U.S. clean energy investment could lead to 3 million ‘green collar” jobs, especially in inner-city neighborhoods, the manufacturing sector, and rural communities. The new report referenced above came out of the Ella Baker Center, and focuses on the Bay Area in particular, and how green business:

[has the] ability to provide green collar jobs to those lacking high school diplomas or work experience, or who were formerly incarcerated. These jobs -- which are blue collar jobs within the green economy -- can be found in non-profits, social enterprises and the public sector.

Oilwatch Monthly - December 2007:

1) Plateau production - Both the International Energy Agency (IEA) and Energy Information Administration (EIA) figures show that the plateau of global liquids production that began in 2005 recently ended due to a large production increase of 1.4 million b/d in September/October. This production increase has been sustained during October/November.

2) Total liquids - In November world production of total liquids increased by 55,000 barrels per day from October according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 86.55 million b/d, which is the all time maximum liquids production.

Where this gets interesting is in the actual report:

For the second consecutive month the International Energy Agency (IEA) has published figures showing a new all time high in world liquids production. As oil production increased from 85 million barrels per day in September to 86.5 million barrels per day in November, some breathing space has been created….

This new all time high brings to question whether those who called the peak in conventional crude in at may 2005 have been proven wrong. Called peak because that has so far been the month of all time high conventional crude production at 74.30 million b/d. If proven wrong by reality due to higher production, the case for a nearby peak in all liquids production is much less defensible.

Again, feel free to review the actual report here, for Oil Drum’s detailed monthly analysis of the present state of oil and other global fuels production.

Solar news and notes

I've been tracking the PV solar sector for a while, and have a report coming out on it sometime in the near future (the date keeps getting pushed back). After decades of false promises and missed opportunities, we are definitely witnessing a re-emergence of distributed solar technology, with astounding growth rates in demand and production capacity, innovative R&D, billions in capital investment, sizable annual cost reductions, and a changed political landscape.

I find it interesting that until this year, much of this progress appeared to be occurring under the radar. Now of course, you can't stop reading about solar (too many articles to link), or how to make money investing in it and the inevitable backlash has already begun.

"Why" this is happening is a complicated tale. Too much for this post. The recent McKinsey report had some very interesting things to say on the potential future for PV solar:

By 2030 the US could have somewhere between 28 gigawatts (low-range case) and 148 gigawatts (high-range case) of solar PV capacity [ed. note: this is actual capacity, not peak] depending largely on the degree of cost compression and learning rates achieved from production and installation. Solar PV could achieve growth akin to that of the semiconductor industry, if conditions are favorable.

And ultimately how does that happen according to McK? Grid parity - ie solar cost per watt being equivalent to traditional gas and coal generating sources without subsidies. I'll be writing a lot more on this, but for now, I just wanted to highlight some recent stories I've come across, which highlight some of the key themes in the solar space: policy, investment, and market economics.

• Solar Showdown in Congress: Green Wombat highlights something I'd discussed a few days ago, the fear that vital renewable energy tax credits won't be extended by Congress. This would severely damage the near-term prospects for solar - both on the large utility-scale segment, and in the residential market. Long-term extensions of these incentives would help to create stability in investment and manufacturing, moving away from the damaging volatility of past years. Everyone expects the subsidies to end at some point in the future, but their presence is vital now while the solar industry builds capacity, improves technology and reduces costs. On average, manufacturing costs come down 20% for each doubling of capacity. As highlighted above, eventually you reach the important level of grid parity. This article is a week(ish) old, so extension of these credits has been included in the House energy bill. But it is uncertain if they will remain in the final version of the bill sent to the President (if one gets sent at all).

• First Solar Buys Ted Turner's Green Energy Company: One issue I highlight in my to-be published report is the value and importance of marketplace consolidation horizontally and vertical integration up and down the supply chain. This is an example of the latter. It will be interesting to watch if the pace of this activity increases. Also, Ted Turner exited this investment after 10 months. I wonder if it was the return multiple or the industry itself.
  

• Chinese Solar May Trade Margins for Market Share: Two years ago, analysts and experts began forecasting that silicon pricing would return to normal in a few years. Recently, the timeline for this "decrease in price" continues to get extended. Over the past year, I've seen it move from 2007 to 2008 to 2009, and now some say silicon prices won't drop until 2010. Too much demand, too little supply, coupled with poor policy and manufacturing planning decisions. As this article states, nothing has changed to date with silicon prices and they continue to stay high. Those solar panel manufacturers best positioned are the ones signing long-term contracts. More importantly, you can expect consolidation among those companies least able to weather the shrinking margins. More on the silicon shortage here.
  

• German Subsidies Could Decline 9% in 2009: The boom in German solar interest caught everyone by surprise (manufacturers, politicians, investors, etc.). But I sometimes wonder what people expected, after giving feed-in tariffs for solar that were 55 eurocents per kilowatt hour generated - this was ten times the level of other renewable subsidies. The German proposal still needs to be voted into law, but given past statements from environmental ministers and politicians, I expect this to occur. Meanwhile, California is now contemplating a feed-in tariff. Feed-in tariffs concern me somewhat - they are wonderful at spurring demand, but can cause severe market disruptions, if they push demand too high too quickly. Germany is a prime example of this phenomenon.
  

• 2008 Cleantech Predictions: Solar. Interesting predictions from a solar VC: I think he's too aggressive in his forecast for the alleviation of the poly-silicon supply crunch (he says late 2008, I see this going well into 2009...excluding the possibility of a global recession of course). Completely agree and welcome his prediction that entrepreneurs will move outside cell and module production into various downstream aspects of distribution, installation, financing, etc. Squeezing costs out of distribution and installation could drop overall solar costs 20% and more. Compare Japanese costs to California for evidence. (about $6/watt versus $9/watt, with most of the difference coming on the distribution and installation side). Also, I understand his interest in focusing on China and India, but as the solar sector grew 500% in Spain in 2006, and Italy and Greece are making a lot of noise, I wouldn't stray too far from Europe (or the U.S.) next year.

UPDATE: One other article I forgot to add which I thought tied together several of the themes from above:

Solar Installers: Cutting Costs to Compete: As per the CEO of SunPower - 50% of the cost of solar is in its installation. This sounds high, but I'm not the CEO of a large solar power installer. So go with him on this one. Couple good insights from the panelists this article references, especially that solar installation on the residential level is just like any other consumer product: a lot of it comes down to trust and marketing.

News and notes

Enjoyed this post from BusinessGreen Blog. PR professionals, never an especially welcome guest at the dinner table, have a tough job. But they could make it easier on themselves if, as this post describes, they didn't snail mail (with color picture) a press release hyping Mercedes' new effort at going green.

The House is working hard to pass the revised energy bill. You can't please everyone, but there's a lot of good stuff in here. The increase in CAFE standards has been getting the most press, but three keys for me are the 15% national RPS (4% efficiency, implemented over a 12 year period), the extension of the production tax credits and the worker training program.

• The state RPS have essentially guaranteed market demand, and provided some level of mid-range comfort for investors (of all stripes) in renewable energy. Pushing this to the national level will certainly drive demand. The economic impact of this -- given historic supply constraints, existing inertia, need for energy infrastructure investment, etc. -- remains to be determined. While an RPS model encourages the market to find the best technology (as opposed to the government picking), it can lead to various detrimental production, manufacturing and distribution issues if not conducted strategically and gradually, and accompanied by other market transformation legislation.
  
• Previous PTC extensions through 2008 have smoothed some of the historic volatility in renewable investment (especially wind), brought on by excessive cyclicality and uncertainty. However, some individuals I've spoken with recently have been getting nervous as we moved closer to the 2008 deadline for extension. This bill would hopefully assuage those fears, and continue the impressive growth in several key renewable sectors in a more stable fashion.
• As renewable energy has boomed, supply constraints have appeared up and down the respective value chains (turbines, silicon, etc.). Recently, mixed in with the boom in green jobs articles, have been others concerning a delays in private PV solar installation in California due to a lack of qualified workers. The bill throws out the possibility of 3 million green jobs created in 10 years. I've no idea the feasibility of this, but some simple math says thats 25,000 jobs per month, or about 20% of all monthly job creation in 2007. Is that possible?
  

More (insightful) analysis and perspective on legislative possibilities can be found on Nathanael Greene's sweet blog.

Finally, I really like GreentechMedia's new market taxonomy. Pretty pictures do it for me, especially if they're transposed across an X-Y axis.

We have organized the green-technology market to reflect how the end user might interact with the variety of technologies, processes, applications and services flowing into the field.

Greentech is also developing this open-source style, so feel free to leave comments on the link.


UPDATE: I forgot to include this little nugget, which relates to the comments on green jobs above. In a recently released report, the American Solar Energy Society sees 40 million new green jobs by 2030. The ASES has put out some great research before, and you can find this specific jobs report here. Based on a quick read, most of the numbers come from the Energy Efficiency sector, which they classify as an almost trillion dollar a year industry. Some might view that as a generous definition, but there's some excellent information and case studies in here.