I still have ways to go in adding more to the prospective list, so if you are receiving this for the first time I hope you find it relative to your world and please reply with any comments or
requests.
I have decided that I am going to try to publish an article twice a month on this blog, (except in the case of major events or circumstances), feedback and material suggest this could be a good schedule. The first entry of each month I am going to try to provide an overview of what I perceive are the big trends, developments and circumstances related to the new 'Global Clean Energy Economy' in relation to what I presume to be information relative to those seeking or developing professional careers in that space. The second entry each month I am going to try to publish an article that uses an anecdotal experience in my practice or have been told that might provide personal insights to those executives and professionals presently working or seeking to develop a career in this sector.
This month I am going to focus on new reports that offer a trend that appear to be the beginning of the deconstruction of the old 20th century fossil fuel economy and its markets, to new markets reconstructing the 21st century new energy economy. I hope this informs you seek to either find an opportunity in this changing marketplace or informs you better how to adjust or seize and recognize a new opportunity.
I. 'The Great Race', and the upcoming car propulsion revolution
---General Motors' Director of Advanced Technology, Dr. Christopher
Borroni-Bird in an interview with UK's Autocar stated that "using the internal combustion engines is no longer an option and that includes diesels and hybrids". He went on to state that: "Hybrids are not the solution...they delay the day of reckoning. The debate about hybrids being cleaner than diesel is irrelevant--the diesel is dead end because it uses fossil fuels....--that hydrogen-powered cars and electric cars would develop alongside each other and that GM would have a 'cost effective' fuel cell car by 2010. It will trial 100 fuel cell Equinox SUV's across the world in a market test for the car."
This is a huge strategic statement from the head of their advanced technology R&D group as GM is reeling from market share, revenue, and market evaluation loss. It will be interesting when GM senior exec's begin making similar statements.
---In other related developments: Liquide Air to supply portable
hydrogen fueling systems to GM, where Liquide Air is going to supply five
700--bar portable fast fill hydrogen fueling systems in the U.S. in conjunction
with Liquide Air's agreement to partner with GM in Canada installing a fueling
system at GM's Cold Weather testing site. GM also announced the selection
of Continental Automotive Systems to develop the Volt Batteries for the E-Flex system as the latest confirmation that GM is attempting to diversify the industry away from petroleum with a range of propulsion alternatives.
---The second week of May GM had a huge demonstration by driving a fuel
cell powered SUV 300 miles from Honeoye Falls NY to Tarrytown NJ.
---And finally probably the biggest development in the fuel cell and future
car where at Purdue University Professor Jerry Woddall and two students 'invented' a way to use an aluminum alloy to extract hydrogen from water! They hold that the process holds the promise of producing a ready supply of hydrogen upon demand and only as much as is needed. In fact the scientists stated that hydrogen could be used on existing internal combustion engines with a injector conversion or with fuel cells.(These develops insinuate that the auto industry that contributes $355B to the U.S. GDP (2002) is about to go through a complete deconstruction and reconstruction over the next twenty years. How fast and where the tipping point is going to be is still unknown, but conceivably if GM releases test autos in 2010, then going to market greater by 2012-13 it is possible that by 2020 most new car sales will be fuel cell or all electric from the world's second largest auto maker. The only analogy I can make is that the transformation will be as profound as corporate America going from mainframe batch computing to distributed processing through PC networks between 1986 and 1996.)
II. The Mighty Wind[power] cometh!
---Last week the largest wind energy conference took place in Southern California at the LA Convention Center where an estimated 6000 plus individuals attended, offering 400 exhibitors and discussing all things windy. At the conference it was revealed that the U.S. market was on the verge of growing the fastest and biggest in the world where already three is installed 2400 megawatts of power generation making wind the second-largest source of new power generation in the country. The AWEA estimates that the industry will more than double that capacity by installing 3000 megawatts in 2007.
---Wind energy is now the top investment as published by Bloomberg News where global expenditure is estimated to be exceeding $150B in wind projects over the next five years, (according to CLSA research). The Pichet Clean Energy Fund (Phillippe de Weck) stated that Wind has the biggest potential to meet renewable energy targets over the next decade, compared to biofuels and solar." Michael McNamara (analyst for Jefferies Int'l) stated that "Wind energy is cheaper than solar and it is a less risky form of investment." Currently Wind Energy provides only 1% of the worlds energy needs but Denmark boasts that 20% of the grid is met by wind, as Spain derives 9% and Germany 7%. The U.S. is now the fastest growing market for wind with 21 States calling for renewable power mandates. McNamara stated the U.S. is the Saudi Arabia of wind power potential. The threshold that compares wind to petroleum is $45 a barrel and I doubt we are going to see that level soon.
---Colorado Sierra Club and Environment Colorado has proposed a ballot initiative to states make it law that by 2012 10% and by 2022 ,20% of the power will be generated by renewable sources claiming that it will create 4000 new jobs and
raising the State GDP by $1.9B. Colorado boasts the 5th best potential for solar
energy and 11 best State for wind power generation.
(To me the message is clear, Wind Energy is the next explosive market with a whole new sub economy emerging supplying and servicing this demand for power generation state by state and through grass roots efforts mandating power supply. Money will continue to flow into the sector as it appears to be solid in its return. What will be needed is government intervention and partnerships installing new power generation lines from wind farms to distribution networks
in metropolitan centers. Other opportunities will be to be part of the supply chain in manufacturing the huge backlog of turbine orders. But if the current power generation is 1% today and the average demand is 10% in those 21 states by 2020, there needs to be a lot of effort and means to catch up with mandated and desired demands.)
III. Here Comes the Sun.... bringing down the costs
---Solar PV costs are expected to decrease by 40% over the next 36 months! In short it appears that "Moores Law" could be at work in solar technology as advances in
poly silicon materials indicate that the cost of PV solar panels will decrease greatly. Also the production and distribution of solar PV cells has risen 6-fold
since 2000 and has grown 41% in 2006, even though grid connected power is still
less than 1% overall, lead by Japan and Germany where the world generates 5000
megawatts. China could end up being the worlds silicon producer as it passed the
US as the 3rd largest manufacturer in 2006.
---Breakthrough solar dyes could change solar panel applications as researchers from the Nanomaterials Research Centre in New Zealand have now developed synthetic dyes that can be used to generate electricity at one tenth of the cost of
current silicon-based solar panels. They state thee compounds work in
low-light conditions and can be cheaply incorporated into window-panes and
building materials, thereby turning an entire building into a generator of
electricity. The synthetic dyes are made from simple organic compounds
closely related to those found in nature.
---Solar industry to grow from $20B to $100B in 2010
states Financial Times where "profit growth is expected to
accelerate as costs are contained or lowered pushing margins up to nearly
60 per cent." These high profits hopefully will mean more capital investments
into production facilities and R&D. A 10-fold increase in production of
high-purity silicon, the main material used to make solar panels, is also
forecasted for 2015 by Photon Consulting, a German research group.
---Slicing the silicon leads to other breakthroughs where at the heart each cell is a single wafer of highly refined and expensive silicon that contributes around 75 per cent of the total cost. By slicing the wager this reduces by 90 per cent the
amount of silicon used in a cell. A single wafer 15 cm in diameter can be used
to cover an area of one square metre. "We think that taking current
knowledge would knock off three-quarters of the cost." Now the South
Australian-based solar cell maker Origin Energy expects to manufacturer sliver cell this year but major production will not be available until 2010.
---Growing number of Americans who shun power lines, choosing to live off the grid, without commercial power. All the residents of Three Rivers Oregon get most of their power from solar panels on their rooftops or on nearby freestanding
structures. The phenomena is occurring with about 180,000 homes, mostly in
the West because of people moving into remote areas that are beyond the reach of
commercial power, because of ample sun and environmental conscientiousness, and possibly because of Westerners' traditional independent streak. National demand is soaring, and the off-the-grid movement is yet to be felt in a significant way by the power industry, nonetheless, the number of people going off the grid
increases by about a third each year, said Richard Perez, who publishes Home
Power magazine.
Initial capital costs appear to be solar's barrier to rapid advance and in that light material costs, manufacturing economies of scale and material science are all converging to create a competition on cost. Solar is also restricted by the aesthetic design limitations and limited applications of placement. That said solar appears to also be in breakthrough as large capital
purchasers like retail outlets; Wal-Mart, Target, Kohls, Home Depot and Lowes,
government entities like the US Army & AirForce at their bases, industrial facilities like Frito Lay. A tipping point will be recognized when a significant portion of new development is incorporating solar into all their building designs. Yet this movement unlike Wind is about getting off the grid or reducing one's dependence on the grid and not transferring power
generation of the grid. As the cost indeed comes down and aesthetics and applications become more flexible and inviting solar will only grow in penetration. The risk as seen by investors is that it will be both a consumer market and B2B market but not an industrial market.
IV. Biofuels and converting fuels
---The controversy of biofuels, namely fuels derived from grains is heating
up. Cargill's CEO stated it is a risky venture at best and some are warning of a Great Biofuels Bubble. Yet each month another ethanol plant is erected causing the recent rise in corn prices--almost 70 percent Sept 2006-February 2007, the spike being sooner than many agriculture economists had expected. According to the United States Department of Agriculture, this year the country is going to use 18 to 20 percent of its total corn crop for the production of ethanol, and by next year that will jump to 25 percent. And that increase, says Marshall Martin, an agriculture economist at Purdue University, "is the main driver behind the price increase for corn." The jump in corn prices is already affecting the cost of food. The most notable example: in Mexico, which gets much of its corn from the United States, the price of corn tortillas has doubled in the past year, according to press reports, setting off large protest marches in Mexico City. It's almost certain that most of the rise in corn prices is due to the U.S. ethanol policy, says David Victor, director of the Program on Energy and Sustainable Development at Stanford University.
Cellulosic production at hand: "In the laboratory, there are no more obstacles to speak of. We've reached viable solutions to the major problems with cellulosic ethanol production," said Elba Bom, bioethanol coordinator for Brazil's Science and Technology Ministry. "The question now is putting these solutions into the most efficient industrial models."A prototype plant could be built in about two years, she said. "There is not one cellulosic technology, because there is not just one feedstock. Some countries, such as the United States, will use switch grass or wood chips, while Brazil will use bagasse and straw from cane processing," Bom said. Helena Chum, senior advisor for the National Renewable Energy Laboratory said the cost of cellulose ethanol production in the United States was expected to continue to keep falling rapidly -- from $6 a gallon only a few years ago to $2 a gallon around 2008. "Eventually, by 2012 to 2016, it should fall to $1 per gallon, when output should reach 20 billion gallons," Chum said, adding that 5 billion to 8 billion gallons of that will come from cellulose. The United States passed Brazil as the world's largest ethanol producer in 2006 and the two countries now account for about 70 percent of world output of the biofuel.
The Biofuels market is the most risky because it is tied at the hip with the internal combustion engine and the 20th century economy. It is flying in the face of the New Global Energy Economy which is seeking to replace direct energy costs with capital technology and resources,
(renewable from self generating occurrences, sunlight, wind and hydro & wave). It is interesting the GM is now moving away from the engine and towards all electric and fuel cell even with cellulose's development.
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