Author: Terrence Murray

The Obama administration is leaving no stone unturned in its quest to build the country into a greentech power. Today Energy Secretary Steven Chu announced (Happy Earth Day!) a five year, $200 million financing to support “manufacturing-focused research projects that will have near and mid-term impact on the U.S. solar industry.”

After supporting manufacturers of thin-film photovoltaics or CSP parabolic through as well as power project developers that buy them, the DOE is  now looking to finance cleantech’s less glamorous, but nonetheless crucial,  back office. It’s making money available to developers of  manufacturing processes that actually make these panels and CSP parabolic through also get a cut of the government monies — see full press release.

The announcement comes comes at a time of growing concern that China and its cheap manufacturing costs is edging ahead in the greentech race,  at it attracts a growing of investments by clean energy companies eager to cut their production costs and grow their margins.

To be able to manufacturer in the U.S. clean energy companies says they need long-term government backing and as such they  have been pressing the Obama administration and Congress to extend the manufacturing cleantech tax credits implemented as part of the stimulus program.

Of the $200 million announced today the DOE plans to spend $125 million over the next five years  to support projects that develop manufacturing processes that cut the production cost involved in making  PV panels.  The DOE has also earmarked about $40 million for companies that can develop new photovoltaic supply chain solutions processes, for example developing  equipment that improves the  manufacturing of PV panels.

Included in today’s annoucment is $40 million to back marine power technology.

EverGreen Solar, the Marlboro, Mass.-based maker of silicon wafers for solar panels, raised $165 million in convertible secured senior notes this week. The company says it plans to use some of the cash to finance the expansion of its new manufacturing plant in Wuhan, China.

Plans are to expand capacity over the next two years to 500 megawatts by 2012.  EverGreen is in talks with Chinese authorities to secure public funding to support the expansion, a company official tells us. It costs about $50 million to put the initial 100 megawatts online. Chinese provincial authorities funded about 2/3  (about $33 million) of the construction costs.  EverGreen says it expects the government support to continue. ”We have a very strong working relationship with our Chinese partner and are committed to growing our capacity in China,” the EverGreen official explains.

The company official tells G.E.R. that EverGreen and partner Jiawei are on track to begin commercial operation with a 100-megawatt in production capacity in July.

EverGreen is not alone in relocating to cheaper manufacturing locales. BP, just three years after expanding its PV plant in Maryland, opted to shut it down and relocate production to India and China. It said that given the falling price of PV, it didn’t make any sense to operate a manufacturing plant in the U.S.

At a recent investor conference EverGreen said relocating to China would cut production costs by more than half to about $1 / watt by 2012, from about $2 / watt currently.

EverGreen is releasing its first quarter earnings in a couple of weeks. The company says it expects to post $78.5 million in Q1 revenues. Last Quarter the company posted a $21.1 million loss on revenues of $74.5 million.

Image: EverGreen Solar

As expected this morning  biofuel  maker Codexis sold six million shares priced at $13 as part of its Initial Public Offering (IPO), raising $78 million. Shares sold on the low-end of the company’s $13 – to – $15 per share range.  The company has an initial market cap of $441 million.

Credit Suisse led the IPO. Piper Jaffray, RBC Capital Markets and Pacific Crest Securities were co-managers.

Since 2002 Codexis has raised $80 million. Investors include Royal Dutch Shell, CCTV Investments, CMEA Ventures, Pequot Capital, Bio*One Capital and Pfizer. The company manufactures synthetic enzymes that convert organic materials — like wood chips, switchgrass, cornhusks, sugar cane — into biofuel. The process can also be used for the pharmaceutical indusry — see full press release.

Happy Earth Day!

Another day another huge cleantech venture capital funding round, today Amonix, a Seal Beach, Calif.-based maker of concentrated photovoltaic (CPV) solar power systems, has closed a $129.4 million Series B funding.

Kleiner, Perkins, Caufield & Byers led the round. Other participants included Adams Street Partners, Angeleno Group, PCG Clean Energy & Technology Fund, Vedanta Capital, New Silk Route, and The Westly Group. MissionPoint Capital was a returning investor.

The company says it will use proceeds to scale production of its panel (last year the company bought San Francisco startup Sunworks Solar, a developer of thin-film solar panel factories).

The amounts raised by early-stage greentech companies in a single raise is far larger than what straight technology companies ever raised. Kleiner, Perkins-backed Bloom Energy, the energy storage company has so far raised $400 million; Electric car company Tesla Motors is backed by $100 million in venture capital; Thin-film photovoltaic cell maker Solyndra racked up $200 million in venture capital cash in 2009.

Recent data shows that while a growing amount of cash is being invested in cleantech by early and later stage investors, overall PE and VC  funds are having a harder time raising capital. If the trend continues green energy companies could find it hard to raise money.

SolarReserve, the Santa Monica, Calif., utility-scale solar thermal power developer, says it expects its $550 million, 100-megawatts Tonopah Solar Energy project to be fully permitted by the end of the year. The project is being developed on federal land in Nevada.

CEO Kevin Smith says it’s talking to project finance banks, which he declined to name.  As G.E.R. reported SolarReserve is considering a combination of long-term bank debt and third-party equity. SolarReserve is also considering tapping the Department of Energy 1603 direct cash grants.

The grant program is set to expire at the end of the year — unless Congress extends them. The Tonopah project is one of 13 renewable energy projects on a DOE fast-track approval process, Smith says.

Is SolarReserve planning to raise more cash?  Smith says that it’s well funded and has no plans to do so. The company raised $140 million in September 2008 as a part of a Series B round of funding led by Citi and U.S. Renewables Group, a greentech funder also based in Santa Monica.

Late last year Nevada power utility NV Energy signed a 25-year, power purchase agreement for the Tonopah output.

SolarReserve is also developing a 150-megawatt facility in California. Smith says the regulatory process with the California Energy Commission for that project will likely take longer because transmission lines connecting the power plant to the grid also have to be permitted.

Yes, George Soros the activist billionaire is still panning to invest in cleantech, a spokesman tells G.E.R. declining to provide more details as to how and when that could happen.

“Plans haven’t changed,” spokesman Michael Vachon tells us.

Back in October Soros announced that over the next decade he would invest up to $1 billion in cleantech. At the time it was unclear if Soros would invest via  a new greentech-focused venture fund or through his excisting  Soros Fund Management.

Is Soros close to announcing a first investment in the sector? Vachon declined to say.

What we know is that Soros will step-in as an early stage investor, backing companies that are profitable and make a contribution to solving the [climate change] problem.

Image: Wikimedia Commons

Jan Van Dokkum, the former president of UTC Power has joined Kleiner Perkins Caufield & Buyers as an operating partner to oversee the VC fund’s growing cleantech portfolio (h/t PeHUB for the info).

Van Dokkum will work closely with Kleiner Perkin’s portfolio companies to help them commercialize their technology.  Energy storage developer Bloom Energy, biofuel developers Codexis, which is expected to issue shares on Thursday and Amyris, which just filed with the SEC for an IPO, are all Kleiner Perkins portfolio companies. While some have revenues, it’ still uncertain  for most of them if  they can evolve into commercial success stories.

Codexis, the biotech company backed by Royal Dutch Shell and Pequot Capital, is on the starting blocks, set to issue shares this week as part of a much anticipated $84 million Initial Public Offering (IPO). According to some reports the share sale could happen Thursday.

The Redwood City, Calif., company does not produce biofuel but manufactures synthetic enzymes that convert organic materials — like wood chips, switchgrass, cornhusks, sugar cane — into biofuel. The process can also be used for the pharmaceutical indusry.

Credit Suisse and Goldman Sachs are lead underwriters. Shares were priced at a range of $13 to $15. This is the second try at an IPO for Codexis which withdrew its previous IPO in 2008 because of the dire market conditions.

The share offering could act as a barometer of investor appetite for cleantech stocks.  Green-sector companies are eager to take advantage of the improving market conditions. Friday Amyris, a developer of sugar-based second generation biofuel, filed an S-1 with the SEC for a $100 million IPO — see our story below.

Other expected share sales include the $300 million offering of solar panel maker Solyndra (lead underwriters: Goldman Sachs and Morgan Stanley.). As well as the $100 million offering of electric car maker Tesla Motors (lead underwriters: Goldman Sachs, Morgan Stanley, JP Morgan and Deutsche Bank Securities ).

On Friday second-generation biofuel developer Amyris filed an S-1 Initial Public Offering registration statement with the Securities and Exchange Commission (SEC). The document provides a first, ruff glimpse of the company’s overall strategy and what it believes are hurdles that could derail the execution of that strategy.

Amyris seeks to raise about $100 million and has hired a team of underwriters to go down their client list and sell the deal to the investor community. Lead underwriters are Morgan Stanley and Goldam Sachs. Also underwriting the IPO are J.P. Morgan, San Francisco-based Thomas Weisel Partners and Brazilian bank Banco Itau.

The company doesn’t have any clients and as accumulated a $120.4 million deficit over the past three years. The company is poised to loose more money in the next few years, having so far not signed any clients. “We do not currently have definitive agreements with customers and may not be able to enter into supply, Amyris says in the filing. The company warns: “We may not be effective in negotiating the terms of our relationships with these companies, which could adversely affect our future results of operations.”

Amyris plans to use IPO proceeds to scale production to go commercial with its biofuel, which is distilled from sugar-based hydrocarbon molecules, in 2011.

Now, for the more interesting information, who get paid what and who owns what.

Amyris CEO, BP veteran, John Melo, was paid $829,950 in 2009. The compensation includes a $408,333 base salary; a $200,000 bonus and $221,617 in “other compensations,” including $145,907 in housing and relocation expenses. Seperately, Were Melo, to leave the company he also stands out to make up to $4,371,034. Research and operations head, Joel Cherry got a $1,094,420 total compensation last year, largely boosted by $709,737 he made selling shares.

Compensation Table

Khosla Ventures and Kleiner Perkins Caufield & Byers are Amyris’s largest shareholders, each owning 15.4 percent of the company. TPG Biotechnology Partners is a 12.1 percent owner. CEO John Melo holds a 4.3 percent stake and Kleiner Perkins’s partner John Doerr has a 14.4 percent equity stake.

Shareholders

On securing sugar, which is the feedstock of its second-generation biofuel Amyris writes: “If we are unable to decrease our production costs, we may not be able to produce our products at competitive prices and our business will not succeed.” Another hurdle — one shared by many cleantech companies — is its ability to even transition out of the lab and scale production. It writes: “We have no experience producing our products at the commercial scale needed for the development of our business, and we will not succeed if we cannot effectively scale our technology and processes.”

Amyris has 22 issued U.S. and foreign patents. Specific to Brazil and protecting its IP there. Amyris said it “may employ approaches to trade secret protection that are novel and untested under Brazilian law and we cannot guarantee that we would prevail if our trade secrets are contested in Brazil.” It does not provide details on what “novel” IP protection measures the company are.

This week industry groups released a slew of optimistic reports that highlighted the robust health of the U.S. clean energy sector. In 2009 U.S. solar capacity grew by 29 percent, according to the Solar Energy Industry Association. Wind according to the American Wind Energy Association was up by 40 percent. Geothermal capacity increased by a more modest six percent for the year, said the Geothermal Energy Association.

Those positive numbers were largely expected considering the unprecedented stimulus money that flowed into the sector since the Obama administration took over,  more than a year ago.  Wind and solar developers (and project finance banks) have flocked to Programs like the 1603 direct cash-grants, implemented in lieu of the investment tax credits. Indeed with bank credit committees more selective, having government dollars helps.

The first quarter of 2010L also saw growing cleantech investments from private equity and venture capital funds. According to Bloomberg New Energy Finance venture capital and private equity funds invested $2.9 billion in renewable energy companies, from $1.7 billion in the last quarter and $1.6 billion in the first quarter of 2009. Of concern, however, is that overall, across all industries, venture and private equity funds are raising less and less money. According to the National Venture Capital Association VC funds raised $3.6 billion, down 31 percent from the first quarter of 2009. If this trend continues, it could become harder for clean energy startups to secure early-stage funding.

So, how do we keep this upward momentum going? Crucial is expanding the various stimulus-funded government incentives.  Renewable energy developers have been at pains to explain to some stimulus skeptics that the government program is working. Earlier, in the week G.E.R. guestbloger Michael Zimmer outlined 10 policy ideas that he felt should be included in any comprehensive clean energy law. They included:  Extending the direct cash grants and the cleantech manufacturing tax credits; Establishing a government-funded green bank to provide cleantech developers access to capital at competitive rates.

With key provisions of the stimulus law set to expire at the end of the year, Washington has begun churning the legislative wheel this week to make these green stimulus program more permanent. Joe Romm of the Center for American Progress’s Climate Progress blog, in a testimony to the House Ways and Means Committee on Tuesday, urged for a five – to – 10-year extension of the cleantech manufacturing tax incentive, which of all the stimulus program has been one of the most successful.

The double-digit growth of the wind and solar industry over the past year, underscores the sector’s steep capital needs. It’s undeniable that void of government dollars the sector would have likely flat-lined. This crucial need for a steady capital has fueled a wave of consolidation, which continued this week with the announced buyout of wireless smart grid developer Eka Systems by Cooper Industries. This week Maxim Integrated Products, announced that it would pay $315 million for Teridian Semiconductor, a developer of power monitoring devices  “[smartgrid and cleantech] companies with promising technologies can unlock more value by being part of a larger industrial,” explained Craig Wellen, a partner at specialty investment bank Greentech Capital Advisors, which advised Eka in its acquisition by Cooper Industries.

VC Watch:

According to Bloomberg New Energy Finance’s latest figures, combined, during the first quarter venture capital and private equity funds invested $2.9 billion in renewable energy companies, compared to $1.7 billion in the last quarter and $1.6 billion in the first quarter of 2009.

Element Partners hired named Sujit Banerjee as a managing director at the firm’s Philadelphia headquarters. Banerjee had been a part-time operating partner last year.

The International Finance Corporation (IFC), the World Bank’s private investment arm, is close to announcing a $1.5 million investment in Husk Power Systems, a developer of rice-powered electricity.

Rambling

This week Senator Kerry (D-Mass.) said he and his co-sponsors — Senators Joe Lieberman (I-Conn.) and Lindsey Graham (R-S.C.) — would unveil the much-anticipated Senate version of the climate change and energy law on April 26th.  The legislation will be debated by the full Senate a little less than a year after the House passed its own version of the bill, the Waxman – Markey bill. Will it include a cap -and -trade provision? What’s more likely is a diluted carbon-pricing scheme, like the CLEAR act proposed earlier this year.

At G.E.R. we’ve repeatedly urged for a long-term renewable energy policy. And it seems that given some of the actions this week in Washington, the heavy legislative mechanics needed to enact such a policy, are greased up and are finally turning, what the end-product will be remains an open question.

Image: Wikimedia Commons

Joseph Romm (#8 in our December Top Ten Ranking and #7 in the November ranking)  was on Capitol Hill Tuesday testifying before the House Ways and Means Committee on how to use energy tax incentives to establish a U.S. green job economy. His comprehensive testimony calls for an extension of ongoing stimulus-funded measures, including the very popular 1603 direct cash grants.  We’ve read through Romm’s testimony and pulled out the portion where he calls for a long-term clean energy tax manufacturing tax credit, which he says should be expanded for at least another five – to – 10 years.

– by Joseph Romm, Center for American Progress

One of the most critical things we can do to foster domestic clean energy industries in this country is realize that demand-side incentives for electricity production is not enough. While incentives that target utilities to encourage them to invest in clean energy infrastructure are an essential component of a comprehensive strategy, they are not enough. You cannot build a market out of demand alone, you must also create incentives for supply. That is why Congress was wise to implement the Section 48C Manufacturing Tax Credits for investments in manufacturing facilities and production capacity for the clean energy equipment and technology.

However, the program, passed under the Recovery Act, was limited to $2.3 billion, and was oversubscribed by nearly a 10-1 ratio. My colleagues at the Center for American Progress have advocated for an expansion of the program, and Vice President Biden in December 2009 announced the administrations plans to add an additional $5 billion to the program, leveraging, an additional $15 billion in private capital.

Congress should recognize that each and every opportunity to create incentives for homegrown manufacturing of clean energy technologies are opportunities to grow our economy and make our indsutries more competitive internationally. Each opportunity should be nourished, and this program should be expanded to provide a stable flow of incentives for a fixed period of time, maybe 5 or 10 years, and then sunset.

Link to original post

House Ways and Means Committee Chairman Sander Levin (D-Mich.) has launched a series of hearings in view of making more permanent key renewable energy subsidies and tax incentives implemented as part of the stimulus law.

The hearings come as Senators John Kerry (D-Mass.) Joe Lieberman (I-Conn.) and Lindsey Graham (R – S.C.) plan to unveil their version of a climate change and energy law on April 26th, a little less than a year after the House passed their own version the bill.

The Kerry – Lieberman – Graham proposal, which is expected to include some form of carbon pricing, should bring more long-term certainty to a sector that so far continues to rely on temporary measures renewed every year or two.

There is a realization in Washington that to beat the Chinese in the ongoing renewable energy race, the U.S. needs to a long-term clean energy law with, many say, a cap-and-trade provision. Pricing carbon would only help cut CO2 and green house gases emissions, it would also unlock new revenues to support the renewable energy industry over the long-term.

Earlier this month, 19 governors (Democrats and Republicans) wrote President Obama urging for an extension of the cleantech manufacturing tax credit.  “Expanding the 48C Advanced Manufacturing Tax Credit will support new waves of domestic production and innovative new jobs and careers,” the governors told Obama.

In launching the hearings this week Chairman Levin said his committee would consider expanding the cleantech manufacturing tax credit and other incentives.

The renewable energy industry is pushing for Congress to extend the very popular 1603 direct cash grants, co-administered by the Department of Energy and the Treasury Department. The incentives, launched last year in lieu of the investment tax credits, fund up to 30 percent of a wind or solar project’s development cost with a direct cash handout.

ClimateWire reports that the Treasury Department has already surpassed the  $3 billion in renewable energy grants it anticipated it would distribute by the end of 2010. As for the cleantech manufacturing tax credits the administration has requested another $5 billion in its fiscal 2011 budget.

What other policy idea should be included in a comprehensive clean energy law? Read guest-blogger Michael Zimmer’s recent post: “10 Proposals For a Comprehensive Clean Energy Policy.”

Image: Wikimedia Commons

Welcome to the March edition of G.E.R.’s Top Ten Players in Green Energy. This month Chevron and its pragmatic green strategy takes the lead. Our ranking takes into account a player’s ability to influence the cleantech industry, whether it be because of a forceful policy position, access to funding or a combination of the two.

1: Chevron

Over the last decade, some oil and gas majors jumped right into the green energy revolution, hoping to leverage their considerable cash and energy expertise into a profitable sideline in renewables. That tactic has not weathered the recession well, as BP has shown in the last year. Enter Chevron with a new approach. The California-based company has been easing into green energy with an eye towards making its core oil and gas business less energy intensive. In March, The company opened Project Brightfield, an 8-acre facility to test solar panels under different conditions and compare the performance against benchmark technologies. Chevron is also testing concentrating photovoltaic technology at a mine in New Mexico and solar steam technology in Central California. It’s not a strategy that’s going to save the world, but it is moving green energy forward.

2: Steven Chu, Energy Secretary

Every day, there is one thing you can be sure Energy Secretary Chu thinks about: China, and how can the U.S. beat the rising green power to lead the global green economy. These days, the Secretary is not mincing words, reminding anyone who’ll listen that failure is not an option. He’s blunt and says that  right now, void of any climate change law and paralyzed by the loud voices of climate change deniers, the U.S. is losing that race! At a press briefing last month, Chu told reporters that on China, “the U.S. should sit up and take notice.” He added: “The [Chinese] leadership increasingly sees economic opportunity in cleantech… Having missed the industrialized revolution and the semiconductor revolution, they do not want to miss this opportunity.”

3: Old-school Techies Become Cleantechies

Comparisons are often made between the innovation that drives Silicon Valley companies and the kind of game-changing ideas that cleantech companies need to succeed. It’s not surprising, then, that the two industries have started to share some brainpower. In March, we saw Geoff Tate, formerly of chipmaker AMD and Rambus, take over at Nanosolar, a solar cell maker. A week later, Tony Fadell, the not-quite-James-Brown-but pretty-good-anyway “Godfather of the iPod,” announced that he was leaving Steve Jobs’ kingdom to work with consumer greentech companies. Another former chips guy, John Van Scoter of eSolar, told Earth2Tech that the solar markets today are reminiscent of the semiconductor industry 25 years ago. Things are ready to take off and the techies know how to achieve ignition. Let’s hope so.

4: Alcoa

The aluminum giant looked at its aluminum raw product and saw cash. Last month, the company rolled out an innovative aluminum-based concentrating solar power (CSP) parabolic trough, that could act as the company’s entry-point into the trillion-dollar global cleantech business. The parabolic trough is being tested at the National Renewable Energy Laboratory’s (NREL) Colorado campus. If test results are good, Alcoa would be well-positioned to turn its budding CSP technology into a full-fledged business. The move by the Pittsburgh-based company in some ways is reminiscent of General Electric’s own entry into the wind turbine business more than a decade ago.

5: Dalton McGuinty, Premier of Ontario

Ever heard of Dalton McGuinty? He’s the Premier of Ontario and these days, probably one of the most effective (and low-key) green politicians in North America. As Washington endlessly debates climate change and carbon pricing, McGuinty and his left-leaning government have passed some of North America’s most effective (and investor-friendly) climate change regulations. The regulations have helped attract  billions in new investments, creating the types of green-collar jobs that gets a lot of political airplay south of the border. Over the past year, shepherded by McGuinty, Ontario has debated, passed, and implemented a province-wide feed-in tariff. A couple of years earlier, it launched the RESOP program, an effective system that links renewable energy power projects with long-term power purchase agreements. Ontario is plowing ahead, laying the foundation of a green economy.

6: The Blackstone Group

In the end,  the New York buy-out fund wasn’t willing to spend its much needed political capital defending an unpopular (and potentially lucrative) coal-fired power project. Not when Congress was set to debate crucial legislation that could have severely impacted its bottom line. The plant in question was going to be Senate majority leader Harry Reid’s back yard. Not a good idea, when you’re trying to make friends on the Hill. Instead the fund portfolio company, Sithe Global,would convert the 750-megawatt coal-fired Toquop energy project into a 700-megawatt natural gas-fired power plant with a 100-megawatt solar photovoltaic power plant. Blackstone is going green to literally save its green…

7: BP

“It’s just business….”  That’s in short how BP Chief Executive Tony Hayward justified his company’s decision at the end of March to close its Maryland photovoltaic panel manufacturing facilities, arguing that with the price PV at an all times low, it just didn’t make business sense to operate a U.S. plant. Instead, BP is relocating  its U.S. production to Chinese and Indian joint-ventures. The company is testy when pressed to tell whether it is scaling back its cleantech business in general, and points out that in the past four years, it’s invested about $1 billion a year in clean energy and plans to invest about the same amount in the next two years. What is undeniable is that Hayward has shelved his predecessor Lord Browne’s “Beyond Petroleum” strategy that sought to transform BP into a forward-looking pan-energy company (at least in the public consciousness). Under Hayward, BP is an old-fashioned oil and gas business with cleantech investments.

8: UK, Wind Tidal

The United Kingdom has been on a green energy spree without precedent this winter and spring. First came the offshore wind plan worth tens of billions of Sterling (UK’s Energy and Climate Change Ed Miliband #1 in the January Top 10). Now, the Crown Estate, which manages public land, has awarded development rights for 1.2 gigawatts of wave and tidal projects around the Scottish coast. The tender is the first step in making Scotland the “Saudi Arabia of marine power,” a laudable goal. Of course, there is a great deal of uncertainty in this project. Critics compare wave and tidal energy to fusion – a comparison that is a little bit harsh, but points out that marine power is largely untested on a utility scale. We at G.E.R. – perhaps a bit predictably – respond that risk is good and, yes, even failure is good. Government and industry needs to invest in these large-scale energy programs to see if they work. There’s no sense in waiting for the perfect technology.

9: GE

Here at G.E.R., we love R&D and we really love it when oil and gas or industrial majors invest heavily in R&D. This month, General Electric (# 3 in the December Top 10) really turned our windmills with announcements about its work on thin film photovoltaic solar cells and €340 million ($453 million) investment in offshore wind turbines in Europe. The offshore turbine manufacturing plant and testing facilities are an obvious move. The U.K. alone will provide a multibillion Sterling market in the coming decades, so it makes sense to develop the best new offshore technology nearby. GE is betting on its 4-megawatt wind turbine, designed with technology from recent acquisition ScanWind of Norway, and will open offshore testing facilities in Norway and Sweden. GE’s research into cadmium telluride solar cells is more of a gamble, since it has long been invested in traditional silicon for its s

olar cells. First Solar dominates the cadmium telluride market space right now, but GE is working with another acquisition, PrimeStar of Colorado, to barge into the market. The chances of failure are greater here and that’s partly what makes the effort great. GE is following the advice of its own slogan by being innovative.

10: France Folds Carbon Tax Plan

When Nicolas Sarkozy (#7 in the December Top 10) took over the French presidency nearly three years ago, he vowed to make climate change one of his cornerstone policies and moved quickly. After a few months in office, he called together a national conference for government officials, industry leaders and policy makers. Fast forward to this year, and Sarkozy, much like his American counterpart, is learning the tough realities of climate politics. His administration recently announced it would fold its plan for a first-of-its-kind carbon tax, calculating that the unpopular administration wouldn’t have the political capital to pass the legislation. The French parliament had actually already voted the tax into law, but a few hours before its implementation, the country’s highest court deemed it unconstitutional, ruling that the law’s many loopholes to the country’s carbon-dependent industries rendered it infective.

Smart grid startup Eka Systems hired Greentech Capital Advisors as its financial adviser in its acquisition yesterday by Cooper Industries for an undisclosed amount.

We caught up with Greentech Capital’s Craig Wellen, who worked on the Eka deal. He expects a healthy M&A deal flow this year in the cleantech sector as large industrial companies continue buying small, cash-hungry companies developing promising technologies, including smartgrid systems.

“[smartgrid and cleantech] companies with promising technologies can unlock more value by being part of a larger industrial,” he explains.

He mentions that Greentech is involved in another deal, in the U.S. solar space. Acquisition talks are ongoing and he expects a public announcement in the next few weeks, declining to provide further details.

No word on whether Cooper also hired an outside adviser. We’ve reached out to them and will post with any update.

Element Partners has hired named Sujit Banerjee as a managing director at the firm’s Philadelphia headquarter. Banerjee had been a part-time operating partner last year.

At Element Banerjee will oversee the firm’s investments in power storage, semiconductors, and power electronics, and will expand Element’s efforts in photovoltaic. Since joining on a part-time basis he’s co-sponsored investments in energy storage company Deeya Energy and Petra Solar, a maker of solar microinverter.

Element Managing Partner David Lincoln:

We have worked with Sujit as a co-investor over the course of the last nine years, and he has repeatedly demonstrated exceptional capabilities and instincts as an investor. He has been an invaluable resource to us over the years, and we are confident that his strong technical background will complement our investment capabilities.

See full press release

By Arno Harris, CEO of Recurrent Energy

A few weeks ago I flagged a story in the Christian Science Monitor titled “Stimulus Funds for Clean Energy Largely Unspent” because I thought it deserved a clarifying ‘blog post. The story repeats several big misunderstandings about the status of renewable energy programs included in the American Recovery and Reinvestment Act of 2009 (ARRA). The general thrust of the story is that the lack of immediate and large uptake of stimulus funds is a sign that the program isn’t working or having its intended result.

The reality is that despite the low outflows of ARRA funds to date, the stimulus program is playing an important role in maintaining business continuity for developers of solar and wind projects in the US. In fact, the expiration of the program at the end of this year poses a major disruptive threat to the progress that’s been made in renewable energy in the US over the last few years. It’s critical that we get the program extended for a couple more years to enable the industry to recover fully.

ARRA was passed in the early days of the Obama administration as the magnitude of the financial crisis began to unfold. Among its many provisions was a section intended to support continued development of renewable energy projects–particularly wind and solar projects. The provision allows wind and solar developers to receive a cash grant in lieu of the Investment Tax Credit (ITC).

The industry lobbied hard for these grants because the financial crisis made it almost impossible to close tax-oriented financings. Prior to ARRA, most renewable energy projects in the US relied on tax credits–either the ITC for solar or the related Production Tax Credit (PTC) for wind. Because most developers don’t have large current tax liabilities, they cannot use the tax credits themselves. Instead projects were typically financed in partnership with a ‘tax equity’ investor (an entity with a large tax bill) who would make a cash investment in the project and receive the benefit of the tax credits in return.

Just because the funds aren’t flowing doesn’t mean the ARRA renewable energy grants program has not been effective….

With the financial crisis in full swing at the end of 2008, tax equity markets dried up and developers couldn’t get projects financed. As a solution, ARRA directed the US Treasury to offer developers a cash grant for projects equal to the previously utilized ITC. Using the cash grant disqualifies a project from using the ITC, so this was not an new incentive per se, just an new way of delivering the same incentive to the developer. The policymakers’ intent was to reassure developers that they could continue to advance projects with full confidence they could secure project financing.

Because ARRA passed into law in early 2009, there’s a misperception that the industry has had full use of the grants since then. However, it actually took almost 9 months to get the grant program operational–there were procedures to define, rules to clarify, forms to create, websites to build, people to hire, etc. The ironic thing is that while everyone waited to see how the program was going to work, banks and developers put all project financings on hold. It just didn’t make sense to burn legal expenses on financing until it was clear exactly how the stimulus grants would be made available.

By October of 2009, the program rules were published and Treasury was technically open for business. However, banks and developers were still waiting in the starting blocks. They weren’t ready to apply for grants, they were ready to start figuring out how to finance projects using the grants. At that point, they began pouring over the program documents and forms to figure out the best way to finance a project eligible for the grants.

As a result, it really wasn’t until November/December 2009 that developers started to see financing term sheets begin to flow from banks into the market. Let’s think through the timeline implications of this for a typical solar project. Term sheets can take several weeks or months to get to signature. And getting from term sheet to financial close typically takes several more months. We’re just now closing the first of our ARRA-related financings–and I suspect many other players in the industry are on roughly similar timelines.

What’s interesting is that even when a developer closes a financing, they don’t apply for the grant money–that doesn’t come until the end of construction. Apply that insight across the entire industry and you have a wave of  ARRA-stimulated projects that are likely to apply for funds mid- to end-of year.

This brings me to the most important point: just because the funds aren’t flowing doesn’t mean the ARRA renewable energy grants program has not been effective. The very existence of the program has given banks and developers confidence to proceed with projects that otherwise would have been abandoned or mothballed. The flow of funds will become apparent later as the projects become operational. The key indicator to watch right now is NOT the flow of funds, it will be the flow of financing and construction announcements that we should start seeing with some frequency in the coming months.

In closing, this is also why it is so important to extend the ARRA grants program for another two years. The industry has just gotten out of the starting blocks because of the delay in getting the grant program operational. Letting the program expire at the end of 2010 will seriously undermine market confidence and disrupt project finance markets just as they are emerging from the ruins of 2009. The US is poised to become the leading market for solar and renewable energy–we need to extend ARRA to ensure we make that dream come true.

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This morning Cooper Industries announced the purchase, for an undisclosed amount, of wireless smart grid developer Eka Systems. On Monday Sunnyvale, Calif., Maxim Integrated Products said it would pay $315 million for Teridian Semiconductor, a developer of power monitoring device based in Irvine, Calif.

On Eka, Cooper Industries says the company’s technology is at an early stage of development with little change of going commercial anytime soon. “This acquisition represents a long-term commitment to this space as we plan to make significant additional organic investments in this product line,” Cooper explained in a prepared statement.

Maxim said Teridian had a 50 percent market share in the fast-growing system-on-chip (SoC) energy measurement market. Maxim will use Teridian’s market position to accelerate its sales of existing power management systems.

There has been a steady flow of smart grid  M&A deals over the past year.  Last summer GridPoint acquired the energy business of  Canadian web technology services company Lixar SRS and V2Green a company that develops technology to manage the charging of electric cars. Also, Sensus, a North Carolina company with $670 million in annual revenues, bought Boise, Idaho-based Telemetric, a provider of communication solutions for smart grid systems. And  in September Google-backed Silver Spring Networks acquired home energy management startup Greenbox SRS.

According to recent market research reports less than half of the nation’s top 20 power utilities are using analytical software to comb through the mountains of data generated by the growing number of smartgrid devices being deployed, mostly as demonstration projects. Smart grid demonstrations are going on in Chicago, the Bay Area and Miami.

Going fully commercial for smart grid companies will require lots of cash. That’s one reason blue-chip, straight technology companies with deep pockets like Google, IBM and IT giant Cisco Systems, are committing significant investments to smart grid initiatives as they want to get in early on what they believe could be the next tech-boom.  The federal government is also investing, having committed nearly $4 billion to smart grid projects to increase the “reliability, efficiency and security of the nation’s [electricity] transmission and distribution system.”

Regarding long-term funding some companies, including Silver Spring, which so far has raised $275 million across multiple VC rounds, is now looking to raise more cash via an upcoming IPO managed by Morgan Stanley.

Either way much like the rest of the clean energy sector, smartgrid’s steep cash requirement ensures for more M&A transactions (and IPOs) in the future.

According to Bloomberg New Energy Finance’s latest figures, combined, during the first quarter venture capital and private equity funds invested $2.9 billion in renewable energy companies, compared to $1.7 billion in the last quarter and $1.6 billion in the first quarter of 2009. Notable deals included — not surprisingly — an electric car transaction, the $350 million Series B round for US electric vehicle infrastructure firm Better Place and the $219 million raised by Brazilian wind developer Energimp.

Of concern though, is that the amount invested by venture funds remains far from the levels reached before the global financial meltdown. According to the National Venture Capital Association across all industry VC funds raised $3.6 billion, down 31 percent from the first quarter of 2009 — see chart below. If this trend continues, it means that cleantech companies, among others, will have a harder time finding capital. For the full year the NVCA expects VC funds to raise $15 billion, about half of what was raised in 2008.

China continues to be the other major story emerging from the various “quarter in review” now being circulated. The country attracted some $6.5 billion in new renewable energy investments last quarter. The Brussels-based Global Energy Wind Council (GEWC) even predicts that the country is slated to add more than 20 gigawatts of new wind capacity annually by 2014. By that time GEWC expects Asia will get 148.8 gigawatts of electricity from wind power plants compared to 136.5 gigawatts in Europe and 101.5 gigawatts of installed capacity in North America.

In North America first quarter clean energy investments grew to $3.5 billion from $2.4 billion in the previous quarter. Post financial crisis credit committees are stricter but are still approving some loans, in part motivated by government programs like the U.S. Treasury’s direct cash-grants. What will happen when that ends remains an open question. Investments in Europe slowed down to $4 billion during the first quarter, from $6 billion in the previous quarter and $7.6 billion during the first quarter in 2009.

Worldwide investment in clean energy totaled $27.3 billion in the first quarter of 2010, up from $20.8 billion during the same time period a year ago but significantly down compared to the $31.6 billion invested in the fourth quarter of 2009. Bloomberg New Energy Finance CEO Michael Liebreich maintains his bullish 2010 forecast predicting total new investment in clean energy will end up between $175 billion and $200 billion compared to $162 billion invested last year.

Husk Power Systems is close to securing a $1.5 million financing from the International Finance Corporation (IFC), the World Bank’s private investment arm. The funding is expected to be finalized at a meeting in May and follows last month’s $375,000 investment by the Acumen Fund.

We first learned of Husk Power from Lynn Tabernacki of the Overseas Private Investment Corp., (OPIC), one of the company’s inaugural backers, with $750,000 invested in the company. The Shell Foundation, the philanthropic arm of Royal Dutch Shell, also put some money into the startup.

Husk Power plans to use the new investments to deploy up to 100 of its new plants across India over the next year, Reuters reports.

The company, launched by a group of MBA students at the University of Virginia Darden School of Business, has developed an inexpensive electricity-generation system that turns rice husks into biogas to fuel mini power plants.

It’s unclear what equity stake the IFC will take in the company following its investment.

UK-based CPV developer Circadian Solar has appointed the founder of German thin-film photovoltaic company Johanna Solar Technology, Jeroen Haberland, as its new CEO. He replaces acting CEO Dr Robin Godfrey, who plans to remain at the Company in a business development role.

Robert Bosch GmbH acquired Johanna Solar earlier this year.  Prior to launching Johanna, Haberland was a senior sales and marketing executive with Siemens.

Circadian is one of a growing number of cleantech companies reshuffling their senior management (or here) to grow sales and mature into full-fledged commercial companies.

In a prepared statement Haberland said:

The company has reached a point of maturity following extensive technical development. The technology upon which the systems are based is at once robust and innovative, and I believe that it has the potential to make a significant contribution to the solar market worldwide. The work that I have done in the past complements the company’s existing strengths and position, and I look forward to leading it to the next stage.

Image: Solar Plaza