Ford Transit Connect Electric Test Drive

By John Addison (3/8/10)

Before I got behind the wheel of the Transit Connect Electric, I asked myself, “Who is going to buy a battery-electric van of this size?” Fleet managers of electric utilities, universities, and city delivery all came to mind. Electric utilities have plenty of off-peak electricity for charging vehicles. For a utility with 5,000 vehicles in its fleet, hundreds could be replaced with the Transit Connect Electric. Many universities have hundreds of light electric vehicles for maintenance and on-campus delivery. The Transit Connect Electric would greatly increase the range and cargo for these applications. Many city delivery applications do not require much range and space, but value fitting in a tight parking spot.

The Transit Connect Electric looks identical to its gasoline cousin that was awarded 2010 North American Truck of the Year. The Transit Connect Electric has over 6 feet of cargo length that can be accessed through two sliding side doors, and two swinging rear doors. By keeping the cargo space to this size, the Ford has an 80-mile range on a charge of its 28kWh of lithium-ion batteries. The cargo space is perfect for many delivery, maintenance, and contractor needs, but not for all. Many fleet applications need the 290 cubic feet available in the Ford E Series vans or the 547 cubic feet of the Mercedes Sprinter.

As I get behind the wheel, I notice that the Transit Connect Electric is still ¾ fully charged, even though Ford has been giving journalists test drives for a couple of hours. The dash is simple in comparison to the Fusion Hybrid. No fancy telematics, GPS, or back-up camera. The rear view mirror won’t help me because of the high cabinets in this particular vehicle’s cargo space. I use the side mirrors to back-up. The vehicle is easy to maneuver out of the tight parking space.
As I turn and accelerate on the busy city street, the vehicle is silent. I cannot even hear the electric motor. Zero to 60 in 11 seconds is nothing to brag about, but the acceleration was adequate on the level street. Initial acceleration felt slow, when I accelerated on a 6 percent grade from a stopped position.

I asked Ford if I could get off their two-mile loop and go up a 20 percent grade. They declined because too many journalists were waiting for their turn to make a test drive. I was assured that the Transit Connect Electric is speced for a 25 percent grade.

After of few more blocks, I looped back to our starting point. With electric power steering, the vehicle was easy to drive. The electric drive system was always quiet and smooth. When I parked the Ford the charge was still ¾ full.

Ford has not yet establishing the pricing for the Transit Connect Electric, but with 28kWh of expensive lithium batteries, it will cost more than the $21,500 gasoline version of the Transit Connect and more than the natural gas version. The 2011 Transit Connect Electric uses a Force Drive electric powertrain manufactured and integrated by Azure Dynamics who has built electric delivery truck drive systems for the U.S. Post Office, Purolator Courier, and Fed Ex. In addition to the Transit Connect Electric, Ford will sell the Focus Electric in 2011 and Plug-in Hybrid 2012.

Transit Connect Electric is well-suited for fleets that travel predictable, short-range routes with frequent stop-and-go driving in cities and have a central location for daily recharging. The electric vehicle will have a top speed of 75 mph and a targeted range of up to 80 miles on a full electric charge. At 240V, the 28kWh Johnson Controls-Saft (JCS) lithium-ion battery back can be recharged in 6 to 8 hours. The battery pack is liquid cooled. An onboard charger with J1772 communications converts the AC power from the electric grid to DC power to charge the battery pack. JCS has supplied Ford for many years. JCS will supply the 8 to 13 kWh lithium battery cells for the 2012 Ford Plug-in Hybrid, but Ford will make the actual pack.

With an 80-mile charge range, the Transit Connect Electric will be used in fleet applications of less than 20,000 miles per year. The lithium batteries have been tested at many electric utilities. The Johnson Controls li-ion battery modules on bench testing at utility giant SCE accumulated the equivalent of 180,000 road miles before losing more than 5 percent of the original charge capacity. This Ford van with its JCS batteries is designed for years of use.
By partnering with Azure and JCS, Ford will be one of the first to delivery commercial freeway-speed electric vehicles in the United States. The Transit Connect Electric is part of a growing family of Ford hybrids, plug-in hybrids, and electric vehicles.

John Addison publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book - Save Gas, Save the Planet - now selling at Amazon and other booksellers.

Behave Yourself!

by Richard T. Stuebi

It's axiomatic among the cleantech community that energy efficiency represents the cheapest/easiest way to address our energy and environmental challenges. Indeed, as illustrated by some analysis by McKinsey & Company, many energy efficiency measures actually have net negative costs to implement.

So, why is it so damned hard for customers to adopt energy efficiency technologies? Consider the recent article from the Wall Street Journal, profiling the challenges faced in Boulder, Colorado -- one of the most environmentally-inclined communities in North America -- in encouraging energy efficiency measures. The WSJ article spurred some navel-gazing among the green-conscious Boulder citizenry, as witnessed in this blog post.

One way of looking at this issue is that it is indeed hard to change people's habits and behaviors, but that eventually people do change. Another way of looking at this issue is that people are economic animals: they do make changes, pretty quickly, like it or not, when something hits their wallets and pocketbooks.

In other words, it's really pushing water uphill trying to encourage a shift to using less energy, when energy is so bloody cheap for most people. Unless/until energy becomes more expensive (taxes anyone?), the only way to spur many customers to use less energy is to change codes such that inefficient devices -- whether they be lightbulbs, refrigerators, air conditioners, TVs or computers -- can no longer be bought.

In the absence of price signals that strongly encourage behaviors to reduce energy consumption, restricting what customers can buy is the only brute-force method available that really works. And, as can be seen in our current political environment, many Americans don't like being strong-armed by their government.



Richard T. Stuebi is a founding principal of the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

State of the California Feed-in Tariff

David Niebauer

A new, innovative feed-in tariff for small-scale solar development is coming to California. Rather than setting a fixed price in an environment in which technology costs appear to be dropping, the California Public Utilities Commission (CPUC) has proposed a market-based approach, allowing developers to bid the lowest prices at which they would be willing to develop projects. This approach focuses on adding capacity to meet California’s aggressive renewable portfolio standard (RPS), and appears to avoid the pitfall of setting a price that is too high or too low. Time will tell if the approach is effective, but the outline of the program released by the CPUC looks promising.

Background

Feed-in tariffs have been employed around the world for a number of years as a policy mechanism designed to encourage the adoption of renewable energy sources. Because non-renewable energy sources (e.g., fossil fuel combustion) cost significantly less to develop in a pure unregulated market environment, renewables require subsidies to make them competitive. Of course, the reason for the disparity is that we already subsidize non-renewable energy development by not assessing the full cost of the resource extraction activities, but that’s a topic for another article.

One approach to the cost disparity problem would be for governments to start taxing non-renewable energy generation, assessing the full cost to society and the environment for those activities. A more politically realistic solution is to provide an incentive to those developing renewable energy resources. The feed-in tariff is an innovative incentive program that is designed to provide a level playing field for renewable energy project development.

A feed-in tariff typically includes three key provisions: 1) guaranteed grid access, 2) long-term contracts for the electricity produced, and 3) purchase prices that are based on the cost of renewable energy generation. Under feed-in tariff regulation, utilities are required to buy renewable electricity from all eligible participants, effectively leveling the market for electricity generation.

Feed-in tariffs have been successfully employed in many countries over the last few years, most notably in Germany and Spain. The goal is described as “grid parity”: the point at which renewable electricity is equal to or cheaper than (non-renewable) grid power.

The California Approach

California regulators, guided by the CPUC, have flirted with a feed-in tariff for a number of years. Standard Offer Contracts for renewable power development were first introduced in California in the early 1980s in response to the state's investor-owned utilities (IOUs) perceived discrimination against small power producers. The CPUC ordered the utilities to offer standardized contracts and to offer one such contract, Standard Offer No.4 (SO4) with fixed prices. By the mid-1980s, private power producers had installed a significant amount of wind capacity in California, much of which is still in service today. Solar technologies had not matured to a level sufficient to take advantage of SO4.

California’s renewable portfolio standard (RPS) implemented in 2002 significantly raised the stakes for solar development. The California RPS program requires electric corporations to increase procurement from eligible renewable energy resources by at least 1% of their retail sales annually, until they reach 20% by 2010. On September 15, 2009, Governor Schwarzenegger signed an Executive Order directing the California Air Resources Board (CARB) to adopt regulations increasing California's Renewable Portfolio Standard (RPS) to 33 percent by 2020. As currently designed, RPS projects tend to be large and located in remote areas with abundant available land, but little transmission access or capacity. These larger projects take several years, at a minimum, to develop, due to the generation and transmission permitting processes, as well as the construction time required.

In early 2008, and as a means to promote smaller scale renewable projects, CPUC adopted a feed-in tariff that directs IOUs to offer a standard contract at the so-called market price referent (MPR) to all renewable technologies up to 1.5 megawatts (MW). However, this program has been generally ineffective because the price is not high enough to attract solar development: the MPR is based on the cost of generating electricity with a combined cycle gas turbine facility.

Renewable Auction Mechanism (RAM)

In August 2009, the CPUC issued a new proposal designed to significantly increase the amount of solar energy installed in the state from smaller producers. It has moved away from using MPR to set the price and instead proposes to implement an innovative bid mechanism. The program would first expand the current feed-in tariff to 10 MW (to cover projects in the 1 – 10 MW size). Rather than setting the price at MPR, the CPUC proposes to allow developers to bid out projects through market-based pricing in what is termed a renewable auction mechanism (RAM). Under this system, developers would bid the lowest prices at which they would be willing to develop renewable energy projects and IOUs would be required to accept eligible projects starting at the lowest bid. As stated in the CPUC proposal: “This mechanism would also allow the state to pay developers a price that is sufficient to bring projects online but that does not provide surplus profits at ratepayers’ expense.”

Solicitations would be staggered for each IOU throughout the year using standard long-term power purchase agreements whose terms would not be negotiable. The program would be capped in each year and IOUs would be required to accept contracts up to the maximum amount of the cap. The program as currently envisioned totals 1 GW over 4 years, although industry observers believe that once implemented it could be easily expanded.

Next Steps

An Administrative Law Judge is currently reviewing certain jurisdictional objections raised by Southern California Edison after the initial CPUC proposal. The issue is whether the state commission can set wholesale prices or whether such an action can only be mandated by the Federal Energy Regulatory Commission (FERC). The RAM approach adopted by the CPUC appears to moot any such jurisdictional challenge. A decision is expected shortly. Once the decision is rendered, the content and mechanism for roll-out of the program will come up for deliberation and vote at an upcoming meeting of the CPUC.

David Niebauer is a corporate and transaction attorney, located in San Francisco, and a founding partner of Energy Counsel Partners, LLP (www.energycounselpartners.com). David’s practice is focused on renewable energy project development and environmental technologies. www.niebauer.net.

Fuel from Algae – Challenges do not Stop Big Bucks

By John Addison (3/3/10 - original post at Clean Fleet Report)

Energy, Water, and Fuel are three of the world’s most pressing needs. Algal biofuel can have a major impact on all three observed Dr. Michael Webber in opening the recent American Association for Advancing Science (AAAS) workshop about the future of fuel from algae.

Algae seems to grow everywhere except in commercial fuel processing plants. Algae grow unwanted in our showers and swimming pools. There are over 30,000 species living on land and in water. Algae include seaweed and pond scum. Scientists are actively searching for the ideal forms of algae to convert our waste and CO2 into fuel. The idea is simple: grow algae, separate the fatty lipids from water, then refine the lipids into biofuel. Producing high volumes of algae biofuel at low cost, however, is anything but simple.

Algae multiply rapidly with up to 50 percent of their weight being lipids, or triacylglycerols, which can be extracted and converted into fuel. Yes, biodiesel and other transportation fuels can be made from algae, but after decades of effort the fuel is still expensive and only made in lab-scale quantities. There are many obstacles to replacing petroleum with algal fuel in this decade. As I took notes at this three hour workshop that includes top experts in algal fuel, I had hoped to deliver a more optimistic report, but no optimism was gushing in the room.

Even if 10 million of the 240 million vehicles in the U.S. are replaced with plug-ins in this decade, that leaves 230 million vehicles needing petroleum fuel, often sourced from countries that don’t like us, or from sources such as tar sands with massive carbon emissions. Biofuel could reduce our dependency on oil. Fuel from algae can include ethanol, biodiesel, bio-jet fuel, and even bio-crude which could be refined and blended at existing oil refineries.

Currently, biofuel from corn, soy, and palm competes with food, uses large inputs of water, ammonia, petroleum, and land. Demand for food goes up; rainforests that supply our oxygen get destroyed.

“If we were to replace all of the diesel that we use in the United States” with an algae derivative, says Solix CEO Douglas Henston, “we could do it on an area of land that’s about one-half of one percent of the current farm land that we use now.”

Scientists at the AAAS conference seem to agree that 4,350 to 5,700 gallons of fuel per acre of algae per year is realistic. This is 10 to 100 times the potential of other fuel sources ranging from soy to jatropha. Land use is not an issue. Algae thrives on CO2, creating the dream of co-locating algal production at power plants and cement plants.

The DOE states, “Despite their huge potential, the state of technology for producing algal biofuels is regarded by many in the field to be in its infancy. There is a general consensus that a considerable amount of research, development, and demonstration (RD&D) needs to be carried out to provide the fundamental understanding and scale-up technologies required before algal-based fuels can be produced sustainably and economically enough to be cost-competitive with petroleum-based fuels.” Now available is a 214-page draft PDF of the National Algal Biofuels Technology Roadmap.

Thousands of strains of algae are being tested by private companies, universities, and research institutions. To achieve higher sustained production of triglycerides, hundreds of variables are being tested including natural strains, GMO strains (many patented), water, light intensity, nutrients, and nitrogen starvation.

Oil must be “brewed” with the right solution, light, mixing, and stirring. Cost-effective photobioreactors must be developed. Dr. Bob Hebner, University of Texas at Austin, has produced 6,000 gallons of algae in one day. Low cost targets appear achievable – $2 per gallon to produce algal oil and another $2 per gallon to process. Yet these are only achievable if the right organisms can be kept alive, water input reduced, energy costs reduced, and lipids can be separated at much lower cost. Costs must be removed at each of these steps:

1. Growing the desired strain. Major problems include predators, competing strains, and death of the needed strain.
2. Harvesting – removing water at low cost
3. Lysing to produce a lipid concentrate
4. Separations – oil from water from biomass

To achieve low cost and volume production, different pathways are being explored including anaerobic digestion, supercritical fluids, pyrolysis, and gasification.

Although algal fuel does not compete with food, it currently does compete with water. For large scale processing use of water will need to be drastically reduced to be economical with the energy cost of pumping water. Waste water or salt water will be needed, not water needed for agriculture. Optimization can likely drastically reduce needed water which can then be recycled.

Genetically modified organisms are controversial. To date, no consistent output from natural algal systems has been achieved. At the AAAS conference, Dr. Dan Kammen, U.C. Berkeley and IPCC lead author, discussed how natural strains of algae could be possible in global small scale production. He expressed concern that although GMO can cause highly productive algae, their inevitable release into other biosystems could be highly destructive.

With its ability to sequester CO2, algal fuel production will benefit from cap-and-trade legislation that exists in many states. Algal fuel can be produced in all 50 U.S. states.

Although the challenges are many, the potential of algal fuel is enormous. Exxon is investing $300 million in Craig Ventor’s Synthetic Genomics with plans to produce fuel from algae. Mexico’s BioFields is investing $850 million in an Algenol Biofuels plant for ethanol from microalgae; Dow is adding $50 million to the venture.

Greg Horowitt, T2 Venture Capital, reports that hundreds of millions are being invested in algal fuel companies such as Sapphire Energy, Aurora BioFuels, BARD, Solix, GreenFuel, and Solazyme. From Boeing to BP, from DARPA to DOE, and from Arch Venture Partners to Bill Gates, serious money is betting that algae will someday be a major biofuel source for our trucks, ships, and planes.

John Addison publishes the Clean Fleet Report and speaks at conferences.

All Electric Cars – The Impact of the Little Guys

by John Voltz

Recently, I made a small diversion from my walk to the office in San Francisco and took a ride in a Wheego. The Wheego was being showcased at Justin Herman Plaza right across from the Ferry Building not far from my office in the heart of the city’s Financial District. The Wheego is a brand new all-electric car from an interesting manufacturer in Georgia. Locally, the Wheego is sold at Ellis Brooks Auto Center. This intrigued me. Ellis Brooks is a venerable car name in San Francisco, having been around for 40+ years. I still remember their radio jingle from my childhood, “See Ellis Brooks today for your Chevrolet, corner of Bush and Van Ness . . .” The Ellis Brooks dealership now sells pre-owned cars and is no longer associated with GM. It has just begun selling the Wheego. Before I took my test drive, I had a chance to talk to Ellis Brooks’ grandson, John Brooks, about why they decided to sign up with Wheego. He seemed comfortable with the manufacturer in large part because the car was assembled from components made by manufacturers already in volume production of vehicles.

So how was the ride? Pretty good. It was quite roomy with a nice, quiet ride and a firm feel of the road. Allowing for the fact that it is a small two-seater coupe, it had the feel of real a car – not a golf cart or an experiment.

Now I should back up for a minute and explain that I have long been a skeptic that there will be significant adoption of all-electric vehicles any time soon. But this car changed my mind a bit.

My skepticism about this has been based on looking at the passenger car market and thinking about what it takes to succeed in that market. Then I compared the passenger car market to other potential electric vehicle markets.

Passenger cars have been the province of integrated high volume manufacturing, low margins, very high quality expectations (especially fit, finish and amenities), and very high service and support expectations. In short, the barriers to entry for this market seem quite daunting, especially when compared to the delivery truck market or the ATV market. These markets have significantly lower volumes, less integrated manufacturing (many manufacturers are essentially final assemblers), much lower quality expectations on fit, finish and amenities, and lower service and support expectations.

There are some low-volume passenger car manufacturers, but all make vehicles aimed at high priced specially markets, not low to mid priced daily drivers.

There is another big difference between the passenger car market and the delivery truck market – what delivery truck buyers want fits really well with what electric vehicles do best:

• predictable low to medium mileage daily duty cycle
• low noise
• excellent torque
• low total cost of ownership

With an electric delivery truck, you don’t need to worry that you’ll ever need to drive from San Francisco to L.A. to visit your sick aunt. In fact, for commercial trucks, limited range can be a plus - there’s no way for trucks to wander very far. With passenger cars, limited range is a big reason not to buy.

Given this, I have felt for some time that we wouldn’t see significant adoption of all-electric vehicles until we started seeing real traction in markets like delivery trucks. I expected passenger cars (and delivery trucks too to some degree) would likely first go hybrid, then shift the hybrid balance to more electric (e.g. using fuel to run a generator to extend the electric range), and then later shift to all electric. These successive market advances would be linked to gaining manufacturing scale, cost down of batteries and other components critical to all-electric vehicles (though batteries is the big one).

My Wheego ride today and my chat with the dealer changed my view. Here was an all-electric car, at a regular car dealer, with a high but regular car price, from a car manufacturer that nearly appeared out of thin air. You see Wheego as a manufacturer is just a final assembler. From my initial quick look, Wheego came on the scene as a passenger car player in 2007 or so, backed by the former founder of MindSpring. Before then, it was exclusively an electric golf cart manufacturer. So it’s really been an eye blink in automotive time scale (2007 to 2010) to see cars turning up at dealerships. Granted, the model at dealers today and the one that I test drove is just a medium speed vehicle (MSV) with a top speed of 35 MPH and not for highway usage (more on that later). But this was still impressive to me.

Wheego gets the car bodies from a big manufacturer in China (a body that is currently used for gas drive cars in other international markets). It gets its motors from a Wisconsin electric motor manufacturer and its motor controller from Curtis Instruments who makes controllers for forklifts. Maybe the truck style manufacturing could work for passenger cars after all.

In addition, I began to think about the current passenger car market for all-electrics. There probably is a significant market for all-electric vehicles, even in the current economy, and even if they aren’t strictly ‘economic’ on a dollar per mile basis compared to gas or hybrid cars. Think about how much the early EV1 cost in its day[1], and how people still rave about it years and years later. In my revised view, I think there will be a small but significant true believer market in the U.S. for all-electric cars. Yes, the big boys are coming – Nissan with the Leaf, Chevy with the Volt, Ford with the Focus EV, but not for a year, maybe two, maybe more. In the mean time, the true believer market will be served by the likes of Wheego, Think, Smart, and others. Even after Nissan, Chevy, Ford and other big car companies arrive in the market, the early entrants may have continued success. Plus they may have customers and EV infrastructure that car manufacturers with non-existent, dormant, or failing EV programs may look to acquire. There is no substitute for firsthand customer knowledge.

The Wheego I drove was a medium speed vehicle (MSV) with a max speed 35 MPH and a real world range of 40 miles. The highway speed version is on the way – due to arrive this summer. It is currently undergoing NTHSA cash testing. It will have a top speed of 65 MPH and a range of 100 miles. The high speed vehicle (HSV) Wheego will not be a lot different than the MSV. Differences include: lithium ion batteries, airbags, and some additional structure supports to the body.

I now see the all-electric car market developing from two converging paths – the true believer all-electric passenger car market and the more economically driven all-electric truck and fleet vehicle markets. The true believer market will drive visibility and customer expectations, and provide valuable real world feedback about what electric car consumers care about and will pay for. While the truck and fleet markets will help dive down cost, I expect both will speed the adoption all-electric cars to a significant portion of the passenger car market.

So for you true believers out there, price before incentives for the MSV Wheego is ~$19K (and it’s eligible for a 10% Federal tax credit) putting the MSV price around $17K before any state or local incentives. Prices for the HSV have not yet been announced, but the target price is in the $30K range (and it will be eligible for a $7500 federal tax credit) putting the net cost of the HSV before state and local incentives in the roughly in the mid $20K range.

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[1] The EV1 had a nominal low price of $34K or ~$48K in today’s dollars though it was never sold only leased. Reportedly production costs were $80+K per vehicle at the time. Initial lease costs were $640/month or $900/month in today’s dollars. Later this dropped to $350/month or $ 500/mo in today’s dollars with many different incentives layered on.

Making the Great Lakes Great Again

by Richard T. Stuebi



For as long as I can remember, Lake Erie -- and by extension, all of the Great Lakes of North America -- symbolized water pollution. Sure, it was much worse 40 years ago, when the Cuyahoga River in downtown Cleveland caught fire, but the reputation lingers. (Remember the "Swill" skit on Saturday Night Live in the late '70s?) Although the Great Lakes are a boater's and fisher's haven, for many people (myself included), the thought of bathing in the waters or drinking them untreated remains pretty unappealing.

This is truly a pity for the Midwest, because the Great Lakes represents one of the most fundamental assets that a region can offer: fresh water in enormous quantities. For those who've never seen the Great Lakes, they are misnamed: these are inland seas, not lakes. The Great Lakes hold 20% of the world's freshwater. Pause and think about that for a minute.


In recent decades, there has been an increase in attention paid to remediating the Great Lakes. A unique multi-government collaboration launched in 1955, the Great Lakes Commission was formed to oversee issues spanning the multiple U.S. states and Canadian provinces depending upon the Great Lakes. Founded 40 years ago, the Alliance for the Great Lakes was an early voice advocating environmental improvement in the Great Lakes. Most substantively, the U.S. EPA leads the Great Lakes Restoration Initiative, which targets "the most significant problems in the region, including invasive aquatic species, non-point source pollution, and contaminated sediment."

Recently, the Obama Administration announced a five-year $2.2 billion blueprint for cleaning up the Great Lakes, which aims by 2014 to (1) finish work at five "toxic hot spots" that have been known as problematic for two decades, (2) reduce the rate of new invasive species by 40%, (3) decrease phosphorous runoff measurably, and (4) protect about 100,000 wetland acres. (See article from Chicago Tribune.)

As the central feature of the industrial North American Midwest, which gave birth to the industrial era of the 20th Century, the Great Lakes were long taken advantage of -- often without much respect -- to achieve economic growth, increase standards of living, win wars, and establish the U.S. as the unparalleled leader in the world. $2.2 billion may sound like a lot of money, but it's due time we give back to the Great Lakes, for all that they've given us.



Richard T. Stuebi is a founding principal of the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Cap and Trade vs Carbon Tax - 6 Myths Busted

In the midst of the debate over exactly what commitments will come out of the Copenhagen Accord follow-up discussions, and how a cap and trade system to incorporate those might work, we asked long time carbon trader Olivia Fussell, the CEO of Carbon Credit Capital in New York, to opine a bit on myths on cap and trade v carbon tax for the layman.  Cleantech Blog has written lots on this topic, but it always needs more. 

Myth 1: A Carbon tax provides much greater price stability than emission trading under a cap and trade system.

This argument is valid only when an emission trading system is designed without banking and borrowing options which allow firms to smooth emissions over time. This in turn contributes to leveling of the price of allowances and creates certainty in the market and thus spurs investment.

Moreover, tax regimes can easily be changed by legislative bodies which in turn can also introduce instability.

Myth 2: A carbon tax is a preferable option because the revenues from taxation can be used to invest in low carbon technology and/or used to offset potential regressive effects of carbon taxes on poorer households.

This argument is valid only with the assumption that allowances are grandfathered in an emission trading scheme. One solution to this potential problem is the auctioning of allowances which can potentially generate the same revenues as a tax.

In addition, governmental funding tends to “pick a winning” technology, whereas technological innovation is needed in many areas (renewable energy, energy efficiency, energy storage, etc). A cap and trade system provides an important incentive for the development of these technologies by providing a price signal that enables firms to capture the value of new technologies. Because cap and trade is not technology specific, it can encourage and accommodate any emerging GHG control technologies or practices.

Myth 3: The introduction of a carbon tax is simpler than an emission trading scheme under cap and trade.

True, an emission trading scheme is much more complicated than taxation. The introduction of a new tax does not require setting up a new system with additional administrative costs attached to it. However, having an international agreement on a global tax is highly unlikely if not impossible. This statement is supported by an example of the unsuccessful attempt to impose carbon tax in the 1990s within its multi-national European Union’s structure. Also the Clinton administration unsuccessfully tried to introduce an energy tax in the mid 1990s but encountered strong opposition in Congress.

Myth 4: A Cap and trade system creates market and environmental uncertainty.

Not true, a tax does not set a quantitative, legally enforceable limit on emissions. On the other hand, a cap and trade system measures, monitors, and achieves a specific environmental objective.

Myth 5: Cap and trade doesn’t work because the European Union Emissions Trading (EU ETS) Scheme did not prove that significant emissions reductions were achieved.

The fact that Phase I of the EU ETS achieved only small reductions in emissions was not due to the embedded flaw in the cap and trade but because the emission cap was set too high. In addition, the EU over allocated allowances. This was mainly due to many countries lacking reliable data monitoring and information standards of GHG emissions when the scheme was first introduced. Since then the EU has solved the problem of monitoring and reporting and tightened the cap for Phase II.

Myth 6: A Cap and trade system allows for ‘windfall profits’ for regulated firms.

It is true that implementation of the trading scheme in the EU led to the increase in retail electricity prices. However, this situation can occur under any type of regulation and it’s not cap and trade specific. The determining factor is not the type of regulation but the ability of a company to pass through the costs to consumers. Based on the EU ETS example, electricity generators were able to make profits because they were able to reflect the value of allowances in prices of electricity, even though they received the allowances for free (‘grandfathering’). This problem can be addressed through the mechanism of allocating allowances and more specifically through auctioning. Regulators would require companies to purchase allowances, and this could ensure that the companies incur direct costs, thus reducing their profit margin. However, this does not solve the problem of passing costs onto consumers. One can solve this by passing the revenues from the auctioning of allowances back to the consumers.

You can reach Olivia for comment at http://www.carboncreditcapital.com/

Will Google Charge your Electric Cars?

By John Addison - original article at Clean Fleet Report

Google Energy could be a Smart Charging and V2G Provider

Google finally won approval from Federal Energy Regulatory Commission (FERC) to be an electric utility. Now that they are making billions delivering web ads, do they want to make added billions selling electricity? Quite possibly. Google already offers a smart meter app that allows smart grid customers to manage their home electricity use. With their new approval to be a utility, Google could be a smart grid / smart charge service provider.

Auto makers and utilities have already agreed on smart charging standards that allow you to plug-in using a J1772 connection, but not have charging start immediately. A service provider is needed to look at your preferences, take action, and provide information. Your preference might be to not charge until 9 p.m. when rates fall to a fraction of peak electricity demand hours. You might want to receive a text message when your charging is complete. You might want Google Maps to show you the nearest public charging stations that are available and display their cost per kilowatt hour. It looks like a natural for companies like Google. They story gets better in the year’s ahead when cars are V2G enabled.

Electric car sales will get a boost when the utility meter spins backward and customers make money by plugging-in. University of Delaware, AutoPort, and partners are planning to put 100 electric cars on the road in the next 18 months that will plug-in and sell power back to the utility using vehicle-to-grid (v2G) technology. AutoPort plans to secure local fleets that fund conversion of their vehicles. The University of Delaware currently has six Scion eBoxs, converted by AC Propulsion, to be electric cars with V2G.

I just got to hear from the V2G experts while I attend the American Association for Advancing Science (AAAS) Conference. I am posting this report from the conference.

A solar home might have 3 to 5 kW of solar PV. An electric car might have 24 kWh stored in its lithium batteries. Vehicles can be charged at night when excess wind and other forms of electricity are generated. The electricity can be sold back at premium rates during peak hours.
By the end of the decade, some electric cars will be less expensive to purchase than gasoline powered cars; most will be much cheaper to fuel. Monthly electric utility bills will be small for some; others will get paid to plug-in. The concept is not new. Solar power grew rapidly whenever feed-in tariffs created an incentive by having utilities purchase power from homes and businesses.

V2G will initially be promoted by agile businesses that can make things happen much faster than cautious utilities or automakers. When V2G becomes a billion dollar business, look for hundreds of players including auto makers and utilities.

The V2G cars in Delaware will get Big Bucks to sell electricity back to the grid. Electric utilities are becoming desperate for stored energy. Utilities are willing to pay serious money for some contracted delivery of electricity. Dr. Jasna Tomic of CALSTART reports that utilities will pay $15 to 55 MWh for electricity supplied for frequency regulation, but the utility does not want to deal with 100,000 car drivers. The utility wants one aggregator in the middle to provide the power. This could eventually be a billion dollar opportuntity for a Google, GE, IBM, EnerNOC, Better Place, or a new start-up.

Spinning reserves is another major opportunity. If a GW coal or nuclear plant goes down, a utility needs to find a new GW of power online in ten minutes. If you are an energy aggregator who can guarantee that GW 24/7 year-round you can make money every day of the year, even if reserves are rarely needed. A utility might pay $20 MWh for spinning reserves.

Ken Huber, Manager Advanced Technology for PJM, an independent systems operator (ISO) PJM, told me that they had 30 incidents last year that required the use of spinning reserves. On average, the reserves were only needed for about ten minutes. PJM is an energy wholesaler with over 550 member companies that serve 51 million people services in 13 states. On a typical day they are providing 100 GW of electricity. They can handle a 144 GW peak load.

These premium ancillary services can cost-justify early adoption of V2G. A decade from now, less valuable peak and base-load delivery of electricity from electric car batteries may add to the economic value of V2G.

Utilities and their air quality regulators would like to get rid of dirty peaker plants that may only be fired up a few hundred hours per year, when temperatures soar and air conditioning blasts cold air. Dr. Tomic estimates a peak power value of 5 to 80 cents per kWh. For those afternoon peak hours, utilities might offer 2 to10 cents per kWh.

100 V2G cars in Delaware is only a beginning. Fleets will be early adopters of V2G. In the United States, fleets currently have over 20,000 light-electric vehicles in operation. These same fleets will be candidates for new freeway-speed electric vehicles with V2G. Early adopters will include other universities, corporate leaders, and government organizations. The U.S. Post Office, if it secures funding support, may convert part of its 220,000 fleet to electric delivery vehicles with V2G. Utilities with thousands of cars and heavy-duty trucks are perfect candidates for early adoption of V2G.

A New Breed of Energy Service Providers

Electric cars, smart grids, and needed grid available storage will attract a agile innovators, many with deep pockets. Ken Huber of PJM identified a number of potential aggregators that include energy storage providers such as CAES which currently provides PJM with one MW of lithium-ion battery storage; smart grid providers such as IBM, Microsoft, Google, and Cisco; vehicle service providers such as GM OnStar, Grid Point, and Better Place; and demand-response providers such as Comverge and EnerNOC.

Some energy providers will fight to be first to market with smart charging and V2G services. Others will be fast followers. Most utilities will leave the investments of capital and creating new business models to others. Some innovative utilities may directly offer their own V2G services – Duke, Edison, Sempra, Austin Energy, and Xcel come to mind. Electric car customers will benefit from the convenience, smart charging cost savings, and ability to make money with V2G.
The Grid is Ready for Millions of Electric Cars

“Electricity is the new vehicle fuel,” explains Dr. Will Kempton, Director, Center for Carbon-free Power Integration, University of Delaware. He is confident that the U.S. electric grid can support millions of electric cars that are likely to be added in the next decades. He observes that the U.S. total grid load is about 417 GW. If all U.S. cars will converted to V2G plug-ins with an average of 15 kWh per vehicle, they would provide 2,865 GW. A U.S. fleet of electric vehicles could provide 7X entire electricity needed in U.S.

The average U.S. car is parked 23 hours per day. If most charge off-peak and only 20 percent are available for V2G at any given time, V2G will be a major contributor in energy security and more affordable electricity. A brighter future will be created by early adopters of electric vehicles, utilities with renewable energy portfolios, and a new breed of smart grid and V2G service providers.

John Addison publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book - Save Gas, Save the Planet - now selling at Amazon and other booksellers.

Vermont Yankee to be Shut Down

“Vermonters sent a message to President Obama and the nuclear industry today,” said Greenpeace’s Nuclear Policy Analyst Jim Riccio. “The nuclear renaissance is dead on arrival. We can retire old, decrepit and leaking reactors like Vermont Yankee and help usher in the energy revolution that America needs.”

Saving Cleantech: Bloom town Silicon Valley?

Just on the eve of the industry headliner San Francisco Cleantech Forum, Bloom Energy finally blooms?

Solid Oxide Fuel Cells (SOFC) like the Bloom Box have been under development for a couple of decades, and many of the major firms both in the US and abroad are still at it. The issues, questions and performance/cost/longevity triangle constraints are well known. So far Bloom Energy has answered none of them. Though we congratulate them on getting into what looks like significant first field trials. That puts them in small company with the maybe twenty or so other companies out of 1,000 plus who have tried. All of those handful took well over $100 mm plus to do it (though $400 mm is rather a lot of money, I must say, that’s taking one for the team). All of them took 5-10 years plus. At one point as an industry we were spending $1.5 Billion per year in annual R&D on fuel cells. Perhaps two companies, Fuel Cell Energy and Smart Fuel Cell, are arguably shipping commercial product today, with UTC, Plug Power and ClearEdge Power other possible contenders for "commercial".

Of course, none of them have shown as little evidence of what progress has actually been achieved as Bloom. And while it's a great list of customers, I’m not certain that eBay or Google are necessarily seasoned fuel cell buyers whose judgment I’d trust (especially after reading the rather suspect financial cost effectiveness analysis Google subjected their original solar PV pilot to).  Where's the Department of Defense and Department of Energy who has bought and/or validated virtually every fuel cell in existence?  But view the quality of the information provided for yourself:

Bloom Energy;
http://www.cbsnews.com/video/watch/?id=6228923n

The major SOFC SECA players’ peer reviewed reports:
http://www.netl.doe.gov/publications/proceedings/09/seca/index.html#core

I’ve been asked numerous times this week what I think of the Bloom unveiling. My answer was simple, I’m excited at the promise, but since they haven’t actually shown anything yet, the skeptic in me says beware the devil who asks for the check before showing the details.

I have sent an inquiry to the “press” button on Bloom’s website. We shall see if I’m one of the privileged reporters who gets a call back. I won’t hold my breath. Because I’m just a blogger who once helped found a fuel cell company, right? Not exactly Lesley Stahl.

And I hope the $800,000 price quoted in this week’s media was for something larger than the 25kW unit the Kanellos reporting machine was crediting as the Bloom Box size last year. I imagine it must be. Somebody check me on my math, but that would be ugly. Perhaps it’s for a 100 kW size (one of the 400 kW total 4 unit installation Google reportedly has), which is a more manageable but still ugly $8,000/kW a bit better (as it should be) than ClearEdge’s 5 kW residential unit of 1/20th the size, or maybe it’s $800,000 for the full 400 kW and then would be close Fuel Cell Energy’s $2,000-$3,000 /kW larger MCFC units (for which they lose 30 cents on every dollar and have stated they need to double to c $150 mm in revenues before the gross margin will be positive)? Have to be careful here, the fuel cell /DG industry makes the solar and hybrid car industries look like choir boys when it comes to economic analysis statistics.

So on the technology itself, any one who has been around fuel cells for long, before answering any question like, “what do you think, is it exciting?”, would hope you’d get the basic questions people ask of all serious fuel cell technologies answered. Questions like these:

On the technology:

What’s the basic design of the cell and stack?

What are the cell/stack/system performance and efficiency curves?

How many cells/stack, stacks/unit, cell and stack size/performance?

How many of the current generation of cells, stacks, systems have they built and when?

What’s the production yield of the cells/stacks? Is it automated?

What’s the metal alloy they use?

How do they do the sealing?

How do they handle the metal to ceramic junction?

What’s the history of cracking?

What do the cell degradation curves look like (in the lab and the field)?

How many hours do they have on cell/stack/system/field trials?

How many thermal cycles?

What are the results of the 1,000 and 5,000 hour tests in the lab, and how do the field trials stack up against the lab results? How many of each is the sample size/distribution of results?



On the system:

What is the operating temperature, normal operating condition specs, fuel/air flow rates, electrical and thermal output?

What are charging, and what’s the installation cost? Is it turnkey?

How long to start up/cool down the system?

Are all the stacks in the field trials the same? Have any of them been replaced?

How does the system move the gas/air/exhaust? What’s the history with that BOP system?

What’s the actual system level field performance across the fleet in the field?

And how much of this is externally validated?


Then we'll get to the real questions.  First, just the basics please.  The same questions I've personally asked executives at dozens of fuel cell companies over the years.

And then let’s hope this week’s launch is because the technology is actually ready, not because the company’s last round came in short and Kleiner Perkins has been after them to try and float it. Fuel cell companies have a long history of doing that, too.

Neal Dikeman is a partner at cleantech merchant bank Jane Capital Partners, LLC, and a long time entrepreneur in cleantech.  And yes, I did my time in fuel cells, too.

Gators Go for World Championship With Record Prices for Solar Power

by Tom Rooney

Something’s gotten into those Gators.

First, they won back to back championships in college basketball. Then they added a national football title to the mix, along with a Heisman trophy.

Now the city surrounding the University of Florida is doing something of even greater national import. Something that just might be remembered in 100 years as the place where America began its march to world energy leadership:

The Gainseville city leaders became the first in the country to set a competitive price for people who create renewable energy with their solar panels or wind farms or whatever, and who sell it back to the local utility.

They call it a feed-in tariff, if you must know the technical term. But it is simply the price you receive for generating your own power then selling it back to the utility.

Many solar leaders regard it as the key to the next step in the growth of solar in America -- both the use and manufacture.

Which is also the key to creating energy independence and reducing carbon.

Which of course we are not doing enough of.

On a recent trip to China, I visited several large factories where they make solar panels.

I wish everyone who wishes America to be an energy super power could have seen what I saw. These factories are world-class models of efficiency and skill. Their managers, many of whom are trained in the United States are very good and getting better.

Many of the panels they make are going to places where local utilities pay premium prices for solar power generated on rooftops; there is no doubt that wherever solar owners receive higher prices, more solar power exists.

In Germany and Spain and France and Italy, the feed-in tariff is as high as 72 cents per kilowatt hour. In German it is the highest, that is why they have more solar than anyone anywhere.

And most of this they did ten years ago.

In Gainseville, they recently set their price at 32 cents per kilowatt hour. Interest in solar in this college town is exploding far beyond what an economist might expect from the financial incentives alone.

Which tells us that people have important economic and non-economic reasons for using renewable energy.

If only they get the chance.

A competitive feed in tariff is just the beginning. The bigger the local market for solar, the greater the chance for local manufacturers to compete.

And that is what is missing in America so far. Missing from the plans of those who hope for tens of thousands of green jobs; Missing from the folks who crave energy independence. Missing from those who say solar is the cure for carbon.

But not missing in Gainseville -- where their 32 cent per kilowatt hour is a message to the rest of the country that this is what people do who are serious about energy independence and carbon reduction.

Compare that with California, the most solar friendly place in America, where solar power owners are lucky to get 1/3 of that.

There’s always a reason why we are not going whole hog on solar. The grid is not ready. The price is too high. We have more and better energy in -- fill in the blank -- that all we have to do to get it is -- fill in the blank.

But the blanks are always years and and years and trilions of dollars away. Meanwhile, Asian suppliers and European competitors are racing ahead.

Today our national leaders correctly say that America can and should be a world power in renewable energy. But business leaders in Asia feel America will not get there.

If we are going to compete -- let alone win - for this world energy championship, we are going to have to acting like winners. And we can begin by acting the way they do in the hometown of the national championship Gators.

Tom Rooney is the President and CEO of SPG Solar. He can be reached at http://www.spgsolar.com/

Batteries 'R' Us

by Richard T. Stuebi

Of all the cleantech technology sectors, the one I can least keep track of is batteries. For those of you who want to keep pulse of this dynamic arena, a new blog called This Week in Batteries is just what you might be looking for.

The host of this blog is Venkat Srinivasan, who is part of the Batteries for Advanced Transportation Technologies (BATT) Program at Lawrence Berkeley National Laboratory, so he should be pretty near the center of the action in the battery world -- at least as it pertains to electric vehicle applications.

Srinivasan's most recent post is a nice riff exposing the absurdity of extrapolating Moore's Law for semiconductors to other realms of technology advancement -- as if forever-continuing exponential improvements won't bump up against the laws of physics.

Richard T. Stuebi is a founding principal of the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Investing our way out of the Recession

I recently ran across this blogpost from a man I really respect. He says, "However, Paulson acknowledged to NPR host Scott Simon, the "conundrum" is that to spur the economy, we now need to spend more and create more jobs. Paulson did not offer a solution to this impasse.

Indeed, this contradiction is now paralyzing the nation's political life, as Americans are worried about both high unemployment and record deficits. The Obama Administration and Congress are now walking a tightrope between these anxieties.

Luntz on Climate

by Richard T. Stuebi

Frank Luntz is an influential pollster in Republian circles. So, it's notable when Luntz releases findings that support movement on the climate front.

That just what happened in late January, when Luntz's firm The Word Doctors collaborated with Environmental Defense Fund to announce recent polling data that suggest that a majority of Republican voters continue to believe that human-induced climate change is a real phenomenon and want action to address it.

Some of the more interesting findings in the report "The Language of a Clean Energy Economy" include:

• The concept of "carbon neutral" does not resonate well with the American public. "Energy efficiency" and "healthier environment" carry more weight.
  
• The statement "it doesn’t matter if there is or isn’t climate change; it is still in America’s best interest to develop new sources of energy that are clean reliable, efficient and safe" is the most compelling framing of the issue.
  
• National security tops every other reason to support climate action -- particularly among Republican voters but also among a large segment of Democratic voters.

As Luntz summarized in his own words, "Americans want clean, safe, healthy, secure energy. That's why Republicans and Democrats alike strongly support action to address climate change. Sure, Republicans are more concerned about the national security component and Democrats the health component, but support for action right now spans all partisan and ideological lines."

It's a fine and pleasant synopsis, but I'm not as sanguine as Luntz, only because energy independence is a strained rationale (not to mention probably more unattainable than major carbon emission reductions) for dealing with climate change. Why? Two reasons:

• One, if you want to maximize domestic energy production immediately and cheaply, you'll rush right to coal -- which only exacerbates the climate concerns.
  
• Two, until America's vehicle fleet becomes electrified -- a long way off -- you can't run America's vehicle fleet on coal or any other lower-emitting form of domestically-produced electricity. For the foreseeable future, we'll have cars and trucks running primarily on (mostly imported) oil, and producing carbon emissions to boot.

I'm not the only observer to be concerned about an unrealistic or even ill-advised pursuit of energy independence -- see "Oil Independence: Realistic Goal or Unrealistic Slogan?" for a good summary of the literature, and a nuanced and balanced view of the notion of "energy independence". This reinforces how unfortunate it is when the seemingly only basis for bipartisanship on climate policy is a principle that is very slippery at best and easily warped at worst.

Richard T. Stuebi is a founding principal of the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

USPS may buy 20,000 Hybrid and Electric Vehicles

By John Addison (2/15/10)

Most of the 220,000 U.S. Postal Service vehicles only travel 20 to 25 miles per day making them a good match with the range of an electric vehicle. Hundreds of stops make hybrids and electrics ideal for capturing braking energy and regenerating the batteries.

Instead most USPS vehicles run on gasoline, increasing our nation’s dependency on oil. The popular mid-sized delivery vans achieve about 10 mpg. The 40,000 that sometimes run on E85 ethanol do worse. The Postal Service generates over 5 million tons of CO2 per year, only 12 percent of that is from its 220,000 on-road vehicles.

A Winton electric automobile was first used by the Postal Service in 1899. It only took an hour-and-a-half to collect mail from 40 boxes, less than half the time it took the horse-powered wagon. Over the years, USPS has used a variety of hybrid and electric vehicles.

No one type of vehicle meets all delivery needs. Jets and long-haul trucks move mail across the nation and around the world. Many delivery routes demand larger delivery vans. Others are best served by smaller and lighter vehicles.

Mail is being delivered on a trial basis by three-wheel electric vehicles in Florida, California and Arizona. The T3 has a range of 40 miles, a maximum speed of 12 mph and a load capacity of 450 pounds. Powered by two rechargeable power modules, the T3 has zero gas emissions and costs 4 cents a mile to operate.

The Postal Service is testing a fourth generation fuel-cell Chevrolet Equinox. The crossover vehicle has an electric drive system, lithium batteries, and a hydrogen fuel-cell vehicle to keep delivering electrons for extended range. When I visit my alma mater in Irvine, I see the Equinox used to deliver mail. The Irvine hydrogen station is used by the University, corporations, the USMC, and early personal drivers of the Honda FCX Clarity. A second fuel-cell vehicle is being tested in Washington, DC.

In New York City, the Postal Service has had 30 electric 2-ton vehicles on the street since 2001. They were recently joined in Long Island, NY, by two 2-ton hybrid electric vehicles.

The USPS uses medium-duty hybrid electric vans from Eaton Corporation (ETN) and Azure Dynamics (AZD.TO). They join the 10 existing Hybrid-Electric Ford Escape vehicles currently in the fleet.

USPS had ordered 185 Chrysler plug-in hybrid vans, but new Chrysler executives have cancelled the ENVI electric and plug-in vehicles. The electric vehicle manufacturing was cancelled even though that was part of Chrysler’s argument that it needed $20 billion of loans from the taxpayers.

Quantum (QTWW) announced on February 1 that it was selected by the US Postal Service (USPS) to produce an advanced electric postal delivery vehicle based on the widely used Long Life Vehicle (LLV) platform. Quantum is also making the hybrid-electric drive system for Fisker.

Quantum was competitively selected, along with 4 other companies, for participation in a 1 year demonstration and validation program to be conducted by the USPS for the use of electrification of the 178,000 LLV segment of the postal delivery fleet, the largest civilian fleet in the country.
The short range mail routes with numerous stops make postal delivery vehicles an ideal application for a battery electric vehicle with regenerative braking features. Under this program, Quantum will integrate its Quantum Quiet™ high efficiency battery electric drive system, into a Grumman LLV, and optimize for the 500 to 700 stops per day use of a postal delivery vehicle. UQM has received from Quantum an electric-motor and propulsion system order for the USPS electric drive system.

A bill is now being debated in Congress, HR 4399: American Electric Vehicle Manufacturing Act, that would enable the USPS to have 18,000 hybrid-electric and plug-in hybrid vehicles as part of its fleet, plus at least 2,000 pure battery electric vehicles. The bill would reduce the need for dirty peaking power plants by accelerating the use of smart grid and vehicle-to-grid. The bill calls for 3,600 charging stations. The bill priorities buying of American made vehicles with American made advanced batteries. Recycling and reuse of the batteries is part of the proposed legislation. The bill calls for $2 billion of estimated spending, investment, and research.

The USPS has demonstrated zero-emission leadership for over 100 years. In sun and darkness, rain and snow, carriers walk billions of miles delivering mail and packages.

John Addison publishes the Clean Fleet Report and speaks at conferences.

Big Oil Fights Big Ag

By John Addison (2/9/10)

Americans are Spending 20 percent of their income on transportation. In the average two-car household it is often higher. Big Oil and Big Ag are fighting for their share of that money
Petroleum use has started to drop in the United States as we have fewer cars and more fuel efficient cars. The U.S. Department of Energy continues to report drops in refinery utilization due to weak demand for gasoline and diesel.

Ethanol and biodiesel further cut into oil profits. Big Oil is maneuvering to slow Big Ag from selling more biofuels. Big Oil giants include Exxon (XOM), Chevron (CVX), and Shell (RDS.A). Big Ag giants include ADM, Bunge (BG), and Cargill.

Industry leaders are trying to sound high-minded, not crude. No food fights. No fighting in the war room.

The latest EPA Renewable Fuels Standard will cause over 8 percent of our car and truck fuel to come from food crops in 2010. That lowers Big Oil’s sale of gasoline and diesel by 8 percent. That’s real money. Billions. The EPA does not require that the biofuel come from food, that’s just our only volume choice in 2010. Cellulosic and waste production is still at the expensive pilot stage. EPA talked tough in developing the new RFS, but in the end, gave the industry ways to qualify by making corn ethanol.

We need fuel from wood and waste, not food and haste. Big Oil may actually win the fight to stop using food crops with low-yields per acre, and help the transition to high-yield low carbon emission sources. The industry has invested over a billion dollars in advanced biofuels, algal fuel, and biotech ventures.

Exxon Mobil’s CEO Rex Tillerson famously referred to ethanol as “moonshine.” Now Exxon is investing $300 million in Craig Ventor’s Synthetic Genomics with plans to produce fuel from algae. BP Biofuels was voted 2009 Biofuels Corporation of the Year by the World Refining Association at its 4th annual Biofuels Conference. BP has poured hundreds of millions into basic biofuel research and into a variety of partnerships including biobutanol with DuPont and Virgin Fuels, and energy cane in the U.S. with Verenium. Shell has established a $12 billion sugarcane ethanol joint venture with Brazil’s Cosan (CZZ).

In the future, if biotech can deliver low-cost liquid hydrocarbons from biomass that can be profitably blended at the refinery, then Big Oil may partner with industrial agriculture. Valero (VLO), the largest refiner in the U.S. bought a number of ethanol plants at deep discounts from bankrupt VeraSun.

For now, both the petroleum producers and industrial agriculture want to control EPA regulation, federal tax breaks, and billions of federal funds. They also want greenhouse gas emissions measured their way. If growing more corn for ethanol and soy for biodiesel leads to rainforests being destroyed, then Big Oil favors that being included in biofuel emission lifecycle analysis. Big Ag is against such land-use analysisArgonne Lifecycle Presentation California Lifecycle with Land-use Studies
Renewable Fuels Standard.

EPA has finalized a rule implementing the long-term renewable fuels mandate of 36 billion gallons by 2022 established by Congress. The Renewable Fuels Standard requires biofuels production to grow from last year’s 11.1 billion gallons to 36 billion gallons in 2022, with 21 billion gallons to come from advanced biofuels. Increasing renewable fuels will reduce dependence on oil by more than 328 million barrels a year and reduce greenhouse gas emissions more than 138 million metric tons a year when fully phased in by 2022. For the first time, some renewable fuels must achieve greenhouse gas emission reductions – compared to the gasoline and diesel fuels they displace – in order to be counted towards compliance with volume standards.

Biomass Crop Assistance Program. USDA has proposed a rule for Biomass Crop Assistance Program (BCAP) to convert biomass to bioenergy and bio-based products. USDA provides grants and loans and other financial support to help biofuels and renewable energy commercialization. BCAP has already begun to provide matching payments to folks delivering biomass for the collection, harvest, storage, and transportation of biomass to eligible biomass conversion facilities.

Biofuels Working Group. In May, President Obama established the Biofuels Interagency Working Group – co-chaired by USDA, DOE, and EPA, and with input from many others – to develop a comprehensive approach to accelerating the investment in and production of American biofuels and reducing our dependence on fossil fuels. Today the Working Group released its first report: Growing America’s Fuel – a new U.S. Government strategy for meeting or beating the country’s biofuel targets. The report is focused on short term support for the existing biofuels industry, as well as accelerating the commercial establishment of advanced biofuels and a viable long-term market by transforming how the U.S. Government does business across Departments and using strategic public-private partnerships.

Frank Maisano, an energy specialist based in Washington D.C. at Bracewell & Giuliani, a law firm that represents refiners and cellulosic ethanol makers, gives this perspective: “The long-suffering lifecycle Greenhouse gas rule was released last week with great fanfare, including a call with Energy Secretary Chu, EPA Administrator Jackson, Interior Secretary Salazar and USDA Secretary Vilsack. It followed a meeting with the White House and highlighted several biofuels task force recommendations. Beyond confusing most reporters about EPA’s authority to go beyond the 2007 Energy law requirements for ethanol, the two takeaways seem to be EPA was giving in some (at least enough to placate Vilsack) on indirect land-use regulation of biofuels, and that the US is WAY behind its biofuels requirements in the same 2007 Energy law. Certainly, the coalition of enviro advocates, food groups, small engine groups and refiners were annoyed with the first point while ethanol supporters reluctantly said they could live with the EPA position. Ethanol emissions expert Tim Searchinger of Princeton may have said it best: “the numbers are inconsistent with the great bulk of analyses by others, which consistently find that emissions from indirect land use change for crops grown on productive land cancel out the bulk or all of the greenhouse gas reductions.” EPA’s Jackson said they weren’t messing with the equation to get to a specific result.”

Frank Maisano also summarized the following: “House Legislation to Limit EPA Authority, GHG Lifecycle Analysis –Last week, House Ag Chair Colin Peterson introduced legislation to prevent EPA from regulating GHGs, but added a twist: a provision blocking its land-use biofuels rule as well. This makes for an interesting dilemma should the two remain together, especially for members such as oil-patch Democrats that may want to block EPA authority on GHG regulation, but toughen land-use provisions to ethanol’s measuring stick. We shall see how this plays out. On the Senate side, Sen. Murkowski said she is likely to petition the Senate Environment and Public Works Committee by the end of February to force the release of her proposal to block the EPA from regulating greenhouse gas emissions. Murkowski now has 41 votes, including her own, supporting the resolution (S.J. Res. 26).”

Regulation that helps Big Oil and Big Ag is billions of tax breaks for exploration and for not growing crops. EPActs encourage government buying of flex fuel vehicles. No automaker, including the primary beneficiaries of the regulation GM and Ford, offer a flex fuel vehicle in the U.S. that can deliver 20 mpg (EPA combined) running on E85. No U.S. sold flex fuel vehicle does much better on gasoline. As the 4 million vehicles in federal, state, and local government fleets continue to add flex fuel vehicles, more gasoline and more ethanol must be purchased to deal with the poor mileage. In the end, it’s more taxpayer dollars going to Big Oil and Big Ag.

By John Addison. John Addison publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book - Save Gas, Save the Planet - now selling at Amazon and other booksellers.

Why isn't there a Building Efficiency Trade Association

Is it time for a real trade association for the Building Efficiency industry?

I was thinking about this today. I have seen one that really does the job. For those of you that have been a part of the efficiency industry for a long time, you know that it is like a greyhound race. Companies running as fast as they can to realize the dream only to come up short on actually catching the rabbit. Energy Efficiency in the US alone is estimated to have $440B of potential by LBNL and over $3 Trillion when calculating the ultimate economic potential by 2030. As the costs of new electricity, water, and natural gas capacity continues to rise, saving electricity, water, and natural gas becomes a far more cost-effective option – important during a recession. The challenge is that from energy efficiency financing to building codes – there is no coherent industry voice.

That's why we need a real trade organization. Yes, there's the Alliance to Save Energy; American Council for an Energy Efficient Economy; US Green Building Council and many others. And, yes, these organizations have worked on standards, financing, and regulations that would help the industry.

All that's well and good, but we need an organization willing to do the hard work in the industry to establish and prioritize efforts to tackle the biggest obstacles to our growth. This is not easily done by a non-profit – we need a trade association. Currently, there is no widely recognized leader for energy efficiency financing, standards, and other issues. Leaving this to non-profits will leave us in the slow lane. A pathway for incremental change and more stop/start efforts.

An industry-wide trade association dedicated to energy efficiency financing, building codes, and other important areas make sense.

Jigar Shah, CEO Carbon War Room, Founder of SunEdison

Gray Power

by Richard T. Stuebi

The distinction between "green power" -- electricity without any carbon emissions, usually from renewable energy sources such as solar and wind -- has been clearly drawn vs. "brown power" -- electricity generated from fossil fuels.

In a recent article in The Nation, author Lisa Margonelli writes about "The Case for 'Gray Power'". "Gray power" is the term that Ms. Margonelli uses for a concept called "energy recycling", wherein electricity is generated from capturing waste heat from burning fossil fuels. So, gray power is not as "green" as renewables, but given that the fuel is being burned anyway, generating more electricity from the same amount of fuel burn is surely a good thing.

Ms. Margonelli makes the point that there are huge untapped opportunities for capturing waste heat to generate electricity in the U.S. -- especially in the Midwest and South, with the plethora of coal-fired powerplants in the region. This message has been pounded home loudly and frequently by such people as Thomas Casten of Recycled Energy Development.

So what's preventing this opportunity from being captured? Ms. Margonelli argues that there are two main impediments. First, various electric utility and state regulatory practices impair the economics of those who might pursue gray power opportunities. Second, the U.S. Clean Air Act is written in such a way to discourage major modifications of powerplants -- even if they are modifications that improve economic and environmental performance.

Her proposed remedy is the creation of a federal Clean Power Authority, analogous to an organization like the Tennessee Valley Authority or Bonneville Power Administration, whose mission would be to recycle wasted energy from powerplants in the South and Midwest.

While I agree that the two issues she identified are in fact real impediments to recycled energy, Ms. Margonelli misses a third critical one.

In Europe, waste heat recapture is much more prevalent than in the U.S. Why? Because the waste heat often can't be economically converted into electricity, but must remain as heat -- and Europe's infrastructure is much more optimally configured to economically use this heat.

Given that Europe is so compact and densely populated, pretty much every powerplant is within 20-30 miles of a sizable town, and many of these towns have central district heating systems that can make direct use of the waste heat piped in from the powerplant. In contrast, most major powerplants in the U.S. heartland are situated hundreds of miles away from any city center with a district heating system that can use waste heat. Lacking an economically proximate market for waste heat, it just goes up the stack -- poof!

No question that opportunities to capture gray power in American urban centers are non-trivial, and they should be diligently pursued. But what's needed to make gray power in the U.S. more of a widespread reality is not so much a federal Clean Power Authority, but technology that can economically convert low-grade (and low-value) waste heat into higher-value electricity. And that is exactly what firms like Akron-based ReXorce Thermionics are working to develop.


Richard T. Stuebi is a founding principal of the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

U.S. Wind Energy Breaks Record with 10 GW added in 2009

By John Addison

The U.S. wind industry broke all previous records by installing 9,922 MW installed last year. This expanded the nation’s wind fleet by 39% and bring total wind power generating capacity in the U.S to over 35,000 MW. The five-year average annual growth rate for the industry is also 39%. U.S. wind projects today generate enough to power the equivalent of 9.7 million homes, protecting consumers from fuel price volatility and strengthening our energy security.

Wind power and natural gas are the leading sources of new electricity generation for the United States, generating 80% of new capacity, as most utilities avoid the risks of adding coal and nuclear power plants.

The 39% expansion of wind power is remarkable because many projects required hundreds of millions in long-term financing during the sever recession and time when many banks stopped lending. Also, many lenders who previously wanted production tax credits (PTC), lost money in 2009 and had no need for PTC.

There is mixed optimism about wind power’s continued growth will continue in 2010. Three GW of new wind are under construction with more projects that will be added during the year. TVA added 815 MW is a good example.

Improved price-performance of equipment is one driver. 1603 Treasury Grants (Excel spreadsheet of 240 Funded Projects), Investment Tax Credit, and other tax credit with completion deadlines will also fuel growth in 2010. RPS in 30 states is another driver.
Without new energy or climate legislation we may not see added growth of wind and other renewables. Uncertainty is a deal killer. Lack of new high-speed electricity transmission is the biggest obstacle to growth of renewables. NIMBY activism and lack of appropriate cost sharing are challenges for high-speed transmission.

Natural gas growth may surge ahead if wind growth stalls in 2010. Utilities also prefer natural gas power plants for baseload power. In the decade ahead, large-scale grid storage may make the variability of wind power less of an issue. Report about 32 new grid storage and smart grid projects.

“The U.S. wind energy industry shattered all installation records in 2009, chalking up the Recovery Act as a historic success in creating jobs, avoiding carbon, and protecting consumers,” said AWEA CEO Denise Bode. “But U.S. wind turbine manufacturing – the canary in the mine — is down compared to last year’s levels, and needs long-term policy certainty and market pull in order to grow. We need to set hard targets, in the form of a national Renewable Electricity Standard (RES), in order to provide the necessary stability for manufacturers to expand their U.S. operations and to seize the historic opportunity we have today to build up a thriving renewable energy industry.”

Early last year, before the Recovery Act (ARRA), the industry anticipated that in 2009 wind power development might drop by as much as 50% from 2008 levels, with equivalent job losses. The clear commitment by the President to create clean energy jobs and the swift implementation of ARRA incentives by the Administration in mid-summer reversed the situation.

Recovery Act incentives spurred the growth of construction, operations and maintenance, and management jobs, helping the industry to save and create jobs in those sectors and shine as a bright spot in the economy. Some 50 U.S. facilities are planning expansion, including turbine manufacturers headquartered outside the U.S., although some will need financing and greater market certainty to expand. The United States competes with Europe and Asia for wind industry job growth. In 2009, most U.S. wind projects were divided among a dozen turbine manufacturers such as General Electric, Vestas, Suzlon, Siemens, and Mitsubishi.

America’s wind power fleet will avoid an estimated 62 million tons of carbon dioxide annually, equivalent to taking 10.5 million cars off the road, and will conserve approximately 20 billion gallons of water annually, which would otherwise be withdrawn for steam or cooling in conventional power plants.

Texas extended its lead benefiting from strong winds and fewer regulatory hurdles than many states in the nation. Fourteen U.S. states now have over 1 GW of installed wind. The top five states by wind power installed (in MW):

Texas 9,410
Iowa 3,670
California 2,794
Washington 1,980
Minnesota 1,809
AWAE Market Report

Can wind power continue to grow? Yes. The November 2009 feature article in Scientific American reported how wind, water and solar technologies can provide 100 percent of the world’s energy, eliminating all fossil fuels by 2030. Recommended reading is “A Plan to Power 100 Percent of the Planet with Renewables“ by Mark Z. Jacobson and Mark A. Delucchi.

John Addison publishes the Clean Fleet Report and presents at conference.

Getting the LEDs Out

by Richard T. Stuebi



Keith Scott, VP of Business Development at Bridgelux, recently posted on GreenTech Media an interesting take on the state of LED lighting markets. Mr. Scott claims that "we are in the middle of the LED lighting revolution", and sees big expansion ahead in for the sector.





In some ways, the picture he paints parallels the recent trends in the photovoltaics sector. The prices for LED lighting system are high in large part because of booming demand for LEDs from other applications (e.g., high-def TVs). This is triggering expansion of LED manufacturing capacity, which should alleviate supply constraints and drive down prices. Regulatory drivers -- Energy Star, California's Title 24 and other code tightenings -- will spur demand to absorb the increased supply. Product designers are working to integrate LED into holistic systems that better satisfy customer needs on a variety of attributes -- not just light quality, but also temperature.


Solar energy has consistently been one of the sexiest segments of the cleantech arena. If LED technology is following a somewhat similar trajectory, then shouldn't it start garnering more attention?


Richard T. Stuebi is a founding principal of the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Impact of Energy Efficiency on the System

by Jigar Shah, Founder SunEdison and CEO of the Carbon War Room

I was looking at the new Homestar program on the Efficiency First website here: http://www.efficiencyfirst.org/home-star/

To start, it would be an amazing effort on the part of the Federal government. This comes on the heels of a huge effort on the part of the government to weatherize homes across this country. As many of you who know me, this is right up my alley. The problem with this program is that Homestar doesn't really fundamentally shift our priorities as a nation. Assuming there is $23B of money available over 2 years available, here are some options:

1) PACE - property tax financing. This money could be used as a first loss guarantee available to the first $230B of non-recourse financing by cities. This would NOT be a Federal loan guarantee. As many of you know I find the Federal loan guarantee generally allows banks to be lazy and cuts out small contractors that can't afford to do the paperwork

2) Utility on bill payment mechanisms - with the threat of PACE above, you might finally see utilities offer this program in a large enough quantity to offset the need for new generation facilities period. The beauty of this method is that it protects utility profits with decoupling or other half measures that really do not scale fully. The utility can use this method to carefully roll out energy efficiency in the best interests of its shareholders. Physical equipment like ice storage: http://www.greentechmedia.com/articles/read/coming-to-so-cal-53-megawatts-of-ice would be my first choice. It shift peak power to off-peak power and reduces overall air conditioning by making ice at night when it is cooler. This technology by itself could reduce demand charges for customers by over 30% while make the utility more profitable by smoothing out generation usage. In this case the $23B would be used as a 20% subsidy to be matched by 80% utility money for energy efficiency. The 20% would pay for the "utility profits" and usher in a new way of thinking.

The reason this is better than Homestar can be best summed up by the article below. When the utility sells less electricity, it needs to raise rates to cover its fixed costs. The Federal government would spend its $23B in energy efficiency only to see almost 50% of that be charged back to rate payers in bill increases . . not catalytic.

http://www.miamiherald.com/news/florida/story/1325051.html

``It's a balance,'' said Mayco Villafana, FPL spokesman. ``If you do too much energy efficiency, a la what the conservationists are asking for, you are going to increase electric rates. You are reducing consumption but you still have to pay for existing power plants, transmission lines plus any new
construction.''

It's a classic chicken-and-egg dilemma for the utility regulators. They've let the companies start charging customers for new nuclear power and natural
gas-powered generators based on the companies' predictions that Florida needs to double it electricity capacity by 2050. But if conservation reduces demand, will existing customers be forced to pay more?

``How outrageous is that?'' asked Kristin Jacobs, a Broward County commissioner and chairman of the county's Climate Change Task Force. ``We should just continue to stumble along in our wasteful excessive ways?''

Renewable Energy Reaches over 60% of new capacity additions in 2009

As wind come out at a robust 9.9GW in 2009, Solar at maybe 600MW, etc, it looks like the zero-emissions folks will again install a majority of incremental MWs. The balance is mostly natural gas a little bit of Coal. Getting this number of 100% by 2012 and then above 100% by 2015 will be critical to achieving emissions reductions in our electricity sector. So what are the barriers:

Obama State of the Union: Clean Energy: 15; God: 2

Today, reading back through President Obama's 2010 State of the Union address I went looking for his discussion of energy and cleantech. I counted Energy with 15 mentions, crushing Healthcare at 7, and losing out to Jobs at 26. Of course, God only got 2 mentions in the final line (1 more than George W. Bush's last state of the union address).

So what exactly did he say?

"To build a future of energy security, we must trust in the creative genius of American researchers and entrepreneurs and empower them to pioneer a new generation of clean energy technology. Our security, our prosperity, and our environment all require reducing our dependence on oil.


Last year, I asked you to pass legislation to reduce oil consumption over the next decade, and you responded. Together we should take the next steps. Let us fund new technologies that can generate coal power while capturing carbon emissions. Let us increase the use of renewable power and emissions-free nuclear power. Let us continue investing in advanced battery technology and renewable fuels to power the cars and trucks of the future. Let us create a new international clean technology fund, which will help developing nations like India and China make a greater use of clean energy sources. And let us complete an international agreement that has the potential to slow, stop, and eventually reverse the growth of greenhouse gases.


This agreement will be effective only if it includes commitments by every major economy and gives none a free ride. The United States is committed to strengthening our energy security and confronting global climate change. And the best way to meet these goals is for America to continue leading the way toward the development of cleaner and more energy efficient technology."

Oh, wait, that was from George W's last state of the union address. Hmmmh. Here's President Obama's:


"Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. (Applause.) Two hundred thousand work in construction and clean energy;
. . .

Next, we can put Americans to work today building the infrastructure of tomorrow. (Applause.) From the first railroads to the Interstate Highway System, our nation has always been built to compete. There's no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products.
. . .

We should put more Americans to work building clean energy facilities -- (applause) -- and give rebates to Americans who make their homes more energy-efficient, which supports clean energy jobs.
. . .

You see, Washington has been telling us to wait for decades, even as the problems have grown worse. Meanwhile, China is not waiting to revamp its economy. Germany is not waiting. India is not waiting. These nations -- they're not standing still. These nations aren't playing for second place. They're putting more emphasis on math and science. They're rebuilding their infrastructure. They're making serious investments in clean energy because they want those jobs. Well, I do not accept second place for the United States of America.
. . .

Next, we need to encourage American innovation. Last year, we made the largest investment in basic research funding in history -– (applause) -- an investment that could lead to the world's cheapest solar cells or treatment that kills cancer cells but leaves healthy ones untouched. And no area is more ripe for such innovation than energy. You can see the results of last year's investments in clean energy -– in the North Carolina company that will create 1,200 jobs nationwide helping to make advanced batteries; or in the California business that will put a thousand people to work making solar panels.

But to create more of these clean energy jobs, we need more production, more efficiency, more incentives. And that means building a new generation of safe, clean nuclear power plants in this country. (Applause.) It means making tough decisions about opening new offshore areas for oil and gas development. (Applause.) It means continued investment in advanced biofuels and clean coal technologies. (Applause.) And, yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America. (Applause.)

I am grateful to the House for passing such a bill last year. (Applause.) And this year I'm eager to help advance the bipartisan effort in the Senate. (Applause.)

I know there have been questions about whether we can afford such changes in a tough economy. I know that there are those who disagree with the overwhelming scientific evidence on climate change. But here's the thing -- even if you doubt the evidence, providing incentives for energy-efficiency and clean energy are the right thing to do for our future -– because the nation that leads the clean energy economy will be the nation that leads the global economy. And America must be that nation. (Applause.)"


Reducing dependence on foreign oil? New technologies? Renewables? Energy efficiency? Combating climate change? New nuclear? Offshore oil drilling?

I like it all. And it seems like I've heard this before. And unlike Obama President Bush even mentioned clean technology by name. Stop talking and deliver.


Neal Dikeman is a partner at cleantech merchant bank Jane Capital Partners LLC and the Chairman of Carbonflow and Cleantech.org.

What is Your Water Really Worth?

Hydrocommerce Corner-Where Water & Money Meet

Brought to Investors by http://www.investorideas.com/ and its water investing portal, http://www.water-stocks.com/

January 26, 2010 Edition
By William S. Brennan
Bio and more info: http://www.water-stocks.com/Bill_Brennan/

What is Your Water Really Worth?

A typical day for most adults in the western hemisphere begins with a cup of coffee, a shower and a brush of the teeth before we head of to work for the rest of the day. Most never even give water a second thought as we move about our daily routine since every time we turn the faucet, out gushes a commodity that never seems to end. But what would happen one day if you went to turn the shower on and nothing came out? Or worse the color was dark brown or something unrecognizable that reeked and was visually unappealing? What would you be willing to pay for uninterrupted clean water in the developed world? From an investment perspective, water prices are based on user expectations, failing to reflect the costs of infrastructure and maintenance. A prime example is the Metropolitan Board in Southern California where a 14% price increase did not cover the cost of delivering water, triggering the utility to access its reserves for $182 million. We bring this to light because this is not a one off situation. Water utilities get paid based on usage fees, giving them perverse disincentives to conservation and limiting their ability to invest in new technologies should water stress occur.

Most Americans as well as inhabitants of developed countries don’t pay much attention to the price of water because it is probably the cheapest utility bill that arrives in the mailbox. Think about it. Aren’t you excited that your cell bill is going down due to competitive pressures. So when is the other company going to show up at my front door and install a new water pipe in my front yard so I have an option who I should write the check to at the end of the month? Never! What you have now is what your children and grandchildren will have for the next 50 to 100 years. I can say that with a high degree of confidence since we have for the most part the same pipes and the same company supplying water over the last 100 years. Sure the name may change and the municipality may run out of money forcing it to sell its water works but the majority of us are dealing with the same company that our Grandparents did. This means that those same pipes that worked so well in New York, Philadelphia, Boston and Los Angeles since the 1930’s are still the same pipes that are bringing us our water today!

So what is the real underlying value of water relative to the state of our infrastructure, the energy used to treat and move it and ultimately, is it priced correctly? The water that runs into our homes goes through a comprehensive treatment protocol that is governed by the EPA before it ever hits the transmission pipes. The cost of treatment alone when you add in the energy to move water through various membranes and filters is likely far more than the average person realizes. Once clean enough for potable use, that water travels miles to reach its destination through a complex menagerie of pipes, motors, and valves before it reaches its final destination. Did you ever consider the energy cost to move water up a hill? Just ask the Metropolitan Water District in Southern California or Denver Water in Colorado and they will be happy to provide an answer. In addition, hydro electric plants regularly pump water uphill by “pumped storage,” in which water is moved from a lower-elevation storage facility (either a reservoir or a purpose-built container) to a higher elevation for release during peak demand. Although pumping the water uphill consumes more electricity than is generated by the water flowing back down, the financial return for the peak power is higher than the cost of pumping water during off-peak times. Did you ever give a second though to just how much energy is needed to provide water services? Energy is required to lift water from significant depth in aquifers, pump water through canals and pipes, control water flow and treat waste water, and desalinate brackish or sea water. Globally, commercial energy consumed for delivering water is more than 7% of total world consumption. Energy consumption effects water use more than we realize with 50% of our fresh water being used by electrical power plants

What most fail to realize is that the water industry is a “rising-cost” industry, with prices rising faster than the rate of inflation. Most costs are associated with infrastructure replacement, regulatory compliance (treatment), and population growth (for some areas). Labor, energy, and chemicals are the three major operating expenses for many systems where rising costs are coupled with flat or declining demand (conservation), another source of price pressure. One of the first points we always make with investors in the water sector is that water demand is relatively price inelastic; however, large-volume and discretionary use may fall due to price response. Ultimately, water customers experience the combined and regressive effect of water, wastewater, and stormwater charges. So get ready for higher water rates.


From our view, full-cost water pricing is essential for sustainability, as well as economic efficiency; in the coming years, accurate pricing will signal and encourage efficient production and use and emerge as the catalyst for behavioral change among end users. In the absence of full-cost pricing, subsidies can flow to or from water systems and sustainability will become more questionable, especially in regions where water shortages are expected to persist. Regulated water utilities, many of which are nongovernmental, are likely to charge customers for the full (accounting) cost of service. Presently many government-owned (but not all) water systems are reluctant to charge the full cost of service through rates. That will change albeit slow due to the political nature of the beast. Census Bureau data illustrate a persistent gap between expenses and revenues for water and wastewater services (comparatively). Remember, ratemaking can be politicized (“willingness to charge”), which may play a role in cost avoidance, including investment deferrals as we have seen from our not so stimulating U.S. stimulus plan. However, cost allocation and rate design are both technical skills that reside within the body of a water utility. And don’t leave out political skills which are needed too (communications, participatory processes, and accountability) in order to prepare the public for the inevitable price increases that we believe will be 3x-5x your present water bill over the next five years.


Often overlooked by most people, politics has and will continue to play the leading role in setting the ultimate price of water globally, resulting in prices that short term, may remain artificially low in comparison to the intrinsic value of water in certain parts of the world; not enough water stress exists in those areas to move pricing that wakes up the end user. Shortsighted but prevalent. Consider this as likely scenario…even while the average water usage drops among end users, the cost to maintain existing operations continues to climb. First, a minimum usage charge for those areas that the water usage does not support the underlying cost will be implemented. Ultimately, however, we will pay the full cost and when that occurs, pricing will become significantly higher and hopefully more intelligently applied across the usage spectrum. We anticipate that regional pricing structures will become more creative (as we have seen in certain parts of water starved California) – including tiered rates where the first tranche of water-basic “human right” water is priced just below or at full cost while the next tranche of water beyond the first tier is substantially increased through tariffs and usage levels that provide a true and measurable disincentive to overuse. So while you ponder over your next underpriced water bill (if you are lucky enough), consider picking up a few shares of the local water company if it’s a publicly traded security.


By William S. Brennan
Brennan Investment Partners LLC

Bio and more info: http://www.water-stocks.com/Bill_Brennan/

Disclaimer: This column, Hydrocommerce Corner-Where Water & Money Meet with Bill Brennan, is the opinion of William S Brennan.Content found in the articles is subject to the terms found in the InvestorIdeas.com disclaimer and does not represent a recommendation of investment advice. Investors should seek the advice of a qualified investment professional prior to making any investment decisions.

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TVA Expands Renewable Energy and Solar Charging

The smart grid charging of electric cars with renewable energy advances. The Tennessee Valley Authority (TVA), the Electric Power Research Institute (EPRI) and Oak Ridge National Laboratory Friday (ORNL) announced that they will deploy solar-assisted charging stations for electric vehicles across the state of Tennessee as part of one of the largest electric transportation projects in U.S. history.

Speaking at an event in Knoxville introducing the Nissan LEAF (NSANY), TVA Chief Executive Officer Tom Kilgore said that the first prototype charging station using solar-generated electricity will be tested at EPRI’s Laboratories for Electric Transportation Application in Knoxville this spring, possibly near the University of Tennessee campus where many electric car enthusiasts may live in multi-unit dwellings where garage charging is not available.

Modular solar charging stations can start with the charging of four cars and expand to over 10 electric cars and may be part of future fueling stations. Both stations and Nissan LEAFs will use J1772 smart charging communication.

This regional electric vehicle initiative is being done in conjunction with ETEC, which has received $100 million matching funding from DOE to install over 12,500 electric charging stations nationwide and a smart grid infrastructure.

The solar-assisted charging stations will use the sun to generate power needed to offset the charge of the electric vehicles during peak power demand periods. While vehicles are charging, the stationary batteries and smart grid controls will provide additional localized support to mitigate any impacts on the power system.

The TVA Fact Sheet also discusses re-use of automotive lithium batteries stating, “Stationary battery storage will provide additional localized grid support to mitigate the impacts of charging multiple vehicles in one centralized location. Stationary storage will also provide future opportunities to re-use automotive batteries that are no longer ideal for vehicles. These batteries may have 60 to 70 percent life left in them and can be used to support the power grid.”

Over 5 GW Renewable Energy

The Tennessee Valley Authority is moving closer to its goal of having more than 50 percent of its power generation from renewable energy by continuing to add solar and wind energy.

A power purchase agreement (PPA) with Iberdrola Renewables (IRVSF), will deliver up to 300 megawatts from the Streator Cayuga Ridge project in Illinois, starting in mid-2010. This 300MW PPA is the largest PPA to date for Iberdrola, the world leader in wind farm assets with over 10GW of wind power and 54GW of additional RE power in its pipeline.

With the new contracts, TVA has purchased up to 1,265 megawatts, enough power to serve more than 300,000 average-size homes in the Tennessee Valley. TVA’s current renewable energy portfolio now includes 5,095 megawatts from hydro, wind, solar, and methane sources. In addition, TVA’s nuclear plants contribute 6,900 megawatts of electricity.

TVA is the nation’s largest public power provider and is completely self-financing. TVA provides power to large industries and 157 power distributors that serve approximately 9 million consumers in seven southeastern states.

John Addison publishes the Clean Fleet Report and speaks at conferences.