Huge technological development---hydrogen

A Purdue University engineer and National Medal of Technology winner says he's ready and able to start a revolution in clean energy. Professor Jerry Woodall and students have invented a way to use an aluminum alloy to extract hydrogen from water — a process that he thinks could replace gasoline as well as its pollutants and emissions tied to global warming.

But Woodall says there's one big hitch: "Egos" at the U.S. Department of Energy,
a key funding source for energy research, "are holding up the revolution." Woodall says the method makes it unnecessary to store or transport hydrogen — two major challenges in creating a hydrogen economy.

"The hydrogen is generated on demand, so you only produce as much as you need when you need it," he said in a statement released by Purdue this week. So instead of having to fill up at a station, hydrogen would be made inside vehicles in tanks about the same size as today's gasoline tanks. An internal reaction in those tanks would create hydrogen from water and 350 pounds worth of special pellets. "No extra room would be needed," Woodall said, "and the added weight would be the equivalent of an extra passenger, albeit a pretty large extra passenger."

The hydrogen would then power an internal combustion engine or a fuel cell stack. "It's a simple matter to convert ordinary internal combustion engines to run on hydrogen," Woodall said. "All you have to do is replace the gasoline fuel injector with a hydrogen injector."

How it works. Here's how it all happens: Hydrogen is generated spontaneously when water is added to pellets of the alloy, which is made of aluminum and a metal called gallium. "When water is added to the pellets, the aluminum in the solid alloy reacts because it has a strong attraction to the oxygen in the water," Woodall said. "No toxic fumes are produced." This reaction splits the oxygen and hydrogen contained in water, releasing hydrogen in the process.

An electrical and computer engineering professor, Woodall first discovered the basic process while working as a researcher in the semiconductor industry in 1967. "I was cleaning a crucible containing liquid alloys of gallium and aluminum," Woodall said. "When I added water to this alloy — talk about a discovery — there was a violent poof. I went to my office and worked out the reaction in a couple of hours to figure out what had happened. When aluminum atoms in the liquid alloy come into contact with water, they react, splitting the water and producing hydrogen and aluminum oxide."

NOTE: This has bigger implications than people realize and fall into the paradigm that a Nobel Laurette economist and venture capitalist where the driving force of the new clean energy economy will be the investment into capital resources replacing direct fuel costs. When this technology is developed the implication is that consumers of energy (be it in transportation or equipment) will derive energy from water and a capital expenditure of this system and using it with a fuel cell electrical generator. Distributors of energy (oil companies or power providers) will become obsolete.

Weekly headlines as market advances

• Kleiner, Perkins, Caulfield & Byers states that venture funding for green or renewable technologies will be $3.5B in 2007 up from $1.6B (Ray Lane, managing partner).

• Deloitte's Survey Shows Consumers Would Pay More For Renewable Energy in Power News by on Tuesday 15 May 2007 According to a recent survey conducted by the energy and resources industry group of Deloitte & Touche USA LLP, the U.S. subsidiary of Deloitte Touche Tohmatsu, a majority of consumers would pay more for clean energy. A total of 62% of those surveyed said they would willingly pay higher electric rates for clean coal, and 54% said they would pay more for alternative energy sources, the company says. In addition, 44% of the respondents cited environmental reasons as the primary motivator when it comes to the purchase of alternative or renewable energy. The factor of price was the second most mentioned motivator (30%), followed by energy reliability (15%) and jobs creation (8%). "We were surprised at the increasing level of support from consumers, but the findings remain mixed," says Branko Terzic, Deloitte's regulatory policy leader, energy and resources. "While more than three quarters of the consumers surveyed believed that alternative energy brought benefits, 42 percent would not pay an additional 5 percent on their electricity bill to support government-mandated alternative energy purchases."

• Wal-Mart is purchasing as much as 20 million kWh of solar power, from BP Solar, SunEdison LLC, and PowerLight, a subsidiary of SunPower Corporation, for 22 combined Wal-Mart stores, Sam's Clubs and a distribution center in Hawaii and California.

Part II Case Study of Successful Search Project

Alternative Energy pre-IPO company seeks experienced CFO to lead it in acquiring private investment capital and lead the firm in preparation if a desired IPO.

This search was referred to me from a managing director at a private equity firm that had a small investment in it where I was told they were looking for a top level, experienced CFO. The firm can be described as both cleantech and biotech firm using convergent technologies to produce clean natural gas.

The requirement was to seek out and deliver candidates that possessed an oil & gas financial industry background and also find someone who has experience working in a scientific, biotech or pharmaceutical/chemical oriented environment who had raised institutional investment capital along with an IPO and publicly owned environment. Within a week I was fortunate to secure not one but two individuals who fit the profile and were interested in pursuing the position.

It is interesting to note that both were highly prized and involved in post IPO companies and yet found the prospects of working in another venture exciting and potentially rewarding. Both recognized the unique opportunities in developing this business model for today's energy and environment marketplace. And both had worked with a scientific bio-engineering company.

What set one apart from the other was his experience with oil & gas even though the other possessed energy and renewable energy experience. Ultimately the client chose the individual with direct experience with their ultimate customer. The purpose of these two unrelated anecdotes reveals that even at top executive positions in emerging companies with new technologies that industry experience is paramount along with horizontal experience and personality.

Case Study: CEO hired for emerging company

Often I am asked by prospective CEO's how does one transition into another leadership role after working as a management consultant for a few years?

This week I concluded a search assignment for a CEO of an emerging company
that is in a related to the cleantech sector. The selected individual had wealth of professional experience directly related to the search parameters requested by client which was essential for him to be initially considered as a viable candidate.

(Note: Over the last decade industry and/or technology experience in a certain field is becoming as essential for CEO's and CFO's as with qualifications for other senior or mid-management positions. Meaning vertical market knowledge is as important as hozizontal or management experience, expecially in emerging or rapid growth business models.)

He was able to draw upon his experience as a consultant developing relationships and defining the position and business opportunity, but it was his management experience that provided him the credibility to compete for the position. That experience coupled with his ability to seek out investors who were comfortable and even highly interested in the business because of his participation is what carried the day.

This is important to understand for a prospective CEO should have a network of investors, either angels or a Private Equity firm already established, so they can to be an active player in this kind of business opportunity.

It is no different than developing a supportive Board of Directors in a publicly-held company where in fact the investors will be sitting on the Board. Furthermore in this case the prospective CEO had to make a leap of faith in actually developing the business plan that would be presented to the new and old investors (who were also active founders) currently engaged in parts of the management. They were seeking further capitalize their business model but had to come around that to do so required a new professional and accomplished management team that the new investors were actually backing, not merely the exciting emerging new technology. For the prospective CEO developing the business plan was a double sided edge, since there was no flushed out working plan previously he could be inviting competition but he also had developed his plan and was able to present to willing investors who quickly backed him.

Each week I am going to attempt to outline successful completed searches in this arena...

Cleantech investment still rising

with Emerald Technology Ventures, Scott MacDonald, Investment Director a global leader in cleantech venture capital.is a pioneer in this rapidly emerging sector and is focused on innovative technologies in energy, materials and water, managing three venture capital funds and two venture capital portfolio mandates totaling over $380M. cleantech area.

"A reputable and experienced LP in the venture asset class told me just last
week that every generalist fund they speak with mentions an initative in
cleantech. I think the great generalist funds will invest in the sector (as you
know a few already are) and they will likely be successful....

...I think there is an incredible opportunity for new technologies to help upgrade the antiquated electricity grids in Europe and North America and to leap frog into the incredible build-out that is going on in countries like India and China. China last year built an average of five 300 megawatt electricity plants a week and energy consumption is expected to continue rising fast as China aims to quadruple the size of its economy by 2020. This means a lot of new grid infrastructure technology will be deployed. We have a number of portfolio companies in the “smart Grid” space and will continue to seek out investments in this space.

Thin film vs. Conventional PV ? - Thin film if you have deep pockets and patience-

Solar concentrators vs. Flat Panel - No comment, yet.-

Cellulosic vs. Corn Ethanol - Science project vs. commodity. I’m a VC…science project always wins.-

Cleantech vs. Greentech - Make great products, build great businesses and provide great returns to investors (and hopefully help out our world along the way) and no one will care what you call it.

Wall Street: This is the year of the thin film PV stock

Overall the message is clear investment in capital equipment that replaces direct fuel costs is nothing but seeking long term competitive advantages in productivity and costs.

The market seems to constantly recognize a trend ahead of the media but once the newspapers start to talk about it it is too late to be in on the bigger fiscal gains. Nowhere in the renewable energy is it more recognizable than in the solar related stocks.

• Amorphous Silicon has (64%) of the thin film market as of 2005
• Cadmium Telluride had 26% share of the market and is ramping up.
• Copper Indium Gallium Selenide has 10% share of the thin film market, with more potential,

In 2005 all solar stocks outperformed the average NASDAQ stock by an amazingly wide margin ; 100 fold greater. 2006, was the beginning of a significant ramp up in solar financings.

• Solar IPO's
• Solar R&D allowing the industry to continue and even expand its current robust growth.
• 2006 was "The Year of the Solar IPO" continuing in 2007 and beyond.

All indications is that 2007 may mark a very significant chapter in the history of the renewable energy industry -- the beginning of the transition from the current dominant technology, crystalline silicon, to the "next generation" photovoltaic (PV) technology -- thin film technologies.

• Thin film panels have the potential to produce power significantly cheaper than today's standard silicon technology.
• Made in the form of a monolithic piece of glass, upon which various thin films are then deposited.
• Firms are also working on depositing various thin film materials on flexible substrates, (i.e., stainless steel or plastic).Three types of thin film technologies: Amorphous Silicon (a-Si); Cadmium Telluride (CdTe); Copper Indium Gallium Selenide (CIGS).
• Advantages of thin film technologies over conventional crystalline silicon includes:
• Lower cost of production than conventional silicon processes.
• Lower manufacturing facility cost per watt
• Uses far less material, than the amount used in standard silicon cells.
• Lower energy payback
• Produces more useable power per rated watt.
• Superior performance in hot and overcast climates.
• Ability to be attractively integrated into buildings
• Produces the lowest cost power

Public companies that have made numerous comments in their annual reports concerning their work in thin film and consider it to be a key part of their future expansion strategy.

Transitioning into this sector as an executive

I have had many conversations with executives who are veterans of other industries or sectors trying to enter into this rapidly expanding field. Not unlike other search assignments, the requirements seek to find experiences and knowledge particular to the client, some demanding an energy related background others seeking individuals from certain seemingly unrelated industries. My advice is to think of this field as the new driver of the economy where all forms of business and human endeavor applications will integrate and connect to applying this new technology platform with our lives. In this way one can use one's resume embodiment as a competitive advantage seeking these emerging opportunities. Some suggestions:

At the CEO level think about identifying convergent or integrated business services or products that will enhance the usage, service or product delivery, cost competitiveness, distribution or management of companies or products and services in cleantechnologies. Once one identifies a class or model, develop it seeking out investors and a team. Examples:

• Executive of a structural steel and struss company identifies that the one of the primary cost items of Wind Power is the tower, the structure and its components and the delivery of the structure to remote wind farm locations. He has formed a company that has greatly reduced the cost of those structures, and lowered the cost of delivering them to remote locations while increasing the load capabilities.
• Executive in the software industry has developed sophisticated power measurements in independently identifying excess power submitted to the grid from solar or wind power generating units and accurately measuring power delivered from the grid. The software generates an automated invoice to the utility with validation.
• Logistics executive is developing software and management systems specific to the ethanol industry to integrate with the railroad and trucking industry.

At the CFO level the demand is acute for search services right now. Companies that are formed and operating often put off hiring a strategic finance executive until the need arises from demands of regulation reporting to capital funding programs. Yet clients are seeking specific experiences and intuitively know that the CFO must be able to communicate to specific audiences.

• Alternative Fuel company that is a both a biotech and an energy company sought someone who knew about oil, gas and coal field leases while also having experience working in a scientific or pharmacuetical company. The ultimate reason is that it became known that the primary audiences for capital financing would be analysts with biotech or scientific experiences as to how the financial markets would valuate this company.
• Fuel Cell company is both an industrial instrumentation and energy storage company but also must integrate their equipment with their primary users, in this case the communications industry. This company sought an individual who had close in knowledge of the telecom market as well as experience internationally where the electrircal grid was not fully integrated.
• Ethanol producer is a company that is both an agri-business firm (using commodities) as well as an energy producer, but most of all it is a liquid processing manufacturer that is part of a complex logistics chain. This company sought an individual who had experience with processing manufacturing like breweries but also knowledge and experience with an integrated outsourced logistics chain.

Business Development Executives are individuals who usually have a long personal knowledge of a particular marketplace or sector. Yet the largest call is not for marketing or sales but for partnering capabilities not much different than the early stages of the dot.com era.

• Solar panel manufacturer and distributor was seeking an executive to develop and implement sales and sought home improvement business development professional that came from the plumbing fixture business to set up partners with retail distributors and new home construction companies.
• Wind Power company needed to look into the agri-business world to find an individual who had experience with knowledge of acquiring large tracks of leased land.

However there is one fundamental string that holds all these individuals together, the recognition and conviction of sustainability and greentech as a force in the 21st Century business paradigm. Yesterday I linked to a astounding figure that in 2006 $48B in R&D in this market sector while last quarter over $900M was invested from the venture capital segment, an increase of over $300m from 2006, while the rest of the venture community recorded a downturn in placements.

Today's Highlights

BIGGEST NEWS of the Day NY TIMES REPORTS

Venture Capital Rushes Into Alternative Energy

By MATTHEW L. WALD
Published: April 30, 2007
Money is flowing into alternative energy companies so fast that “the warning signs of a bubble are appearing,” according to a report on investment in clean technology by a New York research firm, Lux Research. Matthew M. Nordan, president of Lux, said that the amount of venture capital put into clean energy investments last year was $1.5 billion, up 141 percent from the $623 million of 2005, and that in the same period, initial public offerings by companies in this sector rose to $4.1 billion, from $1.6 billion in 2005. The investment is driven by fear that the peak of oil production is approaching, he said, and by the possibility of new taxes or other restraints in an effort to curb global warming gases, principally the carbon dioxide that is given off by burning fossil fuels. Still, the promise seems enormous. “The secular trends are in place, and that’s what’s driving the investor,” Mr. Nordan said.

Read the entire report: CLEAN TECHNOLOGY" TAKES OFF WITH $48 BILLION IN 2006 FUNDING, BUT ENERGY TECH BUBBLE LOOMS