QUICK NEWS, June 2: MONEY WANTS NEW ENERGY; SUN’S PROMISE; TITANS CONTEND FOR OCEAN WIND; THE U.S. NEEDS NEW WIRES

MONEY WANTS NEW ENERGY
Finance Market Coming Back - As Predicted
May 2011 (Cascadia Capital)

"In our Q4 report, we talked about how we believed that the financing market was coming back... even if not reflected in the Q4 numbers. Well…$2.6 billion Venture Capital and Private Equity dollars came into the sector. March alone was a $1 billion month…[Interestingly,] the vast majority of funds were put to work in existing companies who had received institutional capital in the past… indicative of a maturing industry…

"…[D]ominant trends…[include] [1] Increased investment in capital intensive sectors and companies…Clearly, the large growth equity and PE funds are increasingly comfortable putting more dollars to work in single investments in today’s market…[and, 2] Greater willingness by investors to accept risk…[although] there are some types of risk they are more comfortable with than others. Investors are willing to take execution risk, scale up risk and timing risk…[but] less willing to take on technology or customer adoption risk."

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"PE funds and corporate investors comprise a larger percentage of investor activity. The sustainable industries are beginning to mature as a sector. Business models are becoming clearer, businesses are showing they can become profitable without government support and costs are coming down with scale. Private Equity funds and corporations see the market maturing and are eager to establish a foothold in the market."

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"Similarly, we are finding a pickup in activity in the M&A markets. M&A transaction volume totaled $15.2 billion in Q1 almost doubling the $8.9 billion M&A transaction volume in Q4. Fortune 1000 corporations in a variety of industries -- oil and gas, technology, industrial, power electronics etc. are actively looking for acquisitions in the sustainability sector. They are seeing business models that are profitable and growth rates that make it an attractive sector.

"One area to note is the LED sector. Customer adoption of LED is happening at a much faster rate…[so] many large corporations do not have the product line to meet market need. Rather than internally develop products – which could take 12-36 months - corporations are buying companies that have products which can be plugged into their distribution systems."


SUN’S PROMISE
Solar PV's Tremendous Promise; Renewable energy has achieved surprising growth in the past five years, and looks set to continue that progress in the coming years
25 May 2011 (World of Photovoltaics)

"Renewable energy has achieved surprising growth in the past five years, and looks set to continue that progress in the coming years. Of the various renewable energy sources, the solar photovoltaic industry has enjoyed the strongest growth recently, averaging 50% annual installation increases for 5 years running…Worldwide, a total of 37 GW of solar were installed by the end of 2010, with 17 GW in Germany alone…[T]his installed solar capacity is capable of producing a full 25% of that country's peak electricity consumption (70 GWpeak) on a sunny afternoon…While the rate of growth will likely slow in 2011, current estimates are calling for another 22 GW of solar to be installed worldwide this year.

"…[B]eyond 2011, it is likely that recent events in Japan will spur countries to increase their investments in the solar industry. In Germany, the government is now working out the details of raising its 2020 renewables target to 40% of total electricity consumption (from an earlier target of 35%). Solar PV will play a large role in that, and Germany will probably raise its annual installation cap from 3.5 GW to 5 GW…Japan was an early adopter of solar PV in the late 1990s, only to drop the ball in 2006. It restarted its solar PV support program in 2009, and now has 3.5 GW installed country-wide. It currently has a target of 28 GW total by 2020, but this number is likely to be revised upward…"

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"In China, the government…may double [its PV target]…over the next five years…This would mean a total of 10 GW by 2015, rather than the previous target of 5 GW. Although China is now home to over 50% of the world's solar PV manufacturing, 99% of that production is exported to other countries. China is just getting started with its own installations, with 400 MW being installed in 2010. Getting to 10 GW by 2015 will require a very aggressive program. One important point to keep in mind: in 2006, China stated that it would install 5 GW of wind by 2010 and 30 GW by 2020. It managed rather more than that: 42 GW were installed by the end of 2010!

"The past decade's rapid rise in solar PV installations has brought with it a rapid decrease in costs. The levelized cost of electricity (LCOE) from solar PV has dropped by 75% this past decade…More importantly, the supply of electricity from solar PV comes on at the time of highest demand, in the afternoons. This is when the price of electricity peaks, up to 25 cents US per kWh and higher. Solar PV is thus able to shave this peak demand, reducing the high power demand on the network at midday, and produce electricity at a price below the spot market price…"

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"…[Challenges] remain. Barriers to installation must be eliminated in most countries, from outdated regulations to unnecessary paperwork. A US-based solar PV installer recently estimated that installation costs in the US residential market could be reduced by 50 cents per watt (or roughly 15-20% of the total cost) by instituting a standard permitting process. Overall costs must continue to be reduced, and manufacturers continue to work towards broader grid parity. It is likely that we will see costs drop another 10% overall in 2011 alone.

"Solar PV holds tremendous promise, both near-term and looking further out. It remains probably the most versatile renewable energy source available to us, being able to scale from a 5 kW home installation, up to a 300 MW utility scale installation in the California desert. Both the U.S. and China look to be leading countries in the next five years of this growth…"


TITANS CONTEND FOR OCEAN WIND
Siemens Drops Gears in Offshore Wind Battle With Vestas
Todd White and John Buckley, May 26, 2011 (Bloomberg News via SF Chronicle)

"Siemens AG is betting it can sell an unproven wind turbine that uses rare-earth metals from China to cement its lead over Vestas Wind Systems A/S in an offshore power market that's forecast to be worth $50 billion by 2020.

"Germany's largest engineering company is developing a machine with fewer moving parts to be used at sea, saying the design offers simpler maintenance and improved reliability. Denmark's Vestas, the world's biggest supplier for land-based wind farms, is sticking with its existing technology."

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"With winter gales exceeding 90 miles (145 kilometers) an hour and waves topping 15 feet at prime sites in the North Sea, the thousands of turbines planned must be rugged enough to avoid a maintenance disaster that could sour the offshore fortunes of either supplier… Siemens's "direct-drive" design eliminates gears that are a major cause of outages in current turbines, the novelty may be its main drawback, analysts said…

"The windmills, whose blades sweep an area bigger than a football field, are competing as the centerpiece of offshore renewable-energy spending that the U.K. Carbon Trust said may grow to 33 billion pounds ($53 billion) by 2020, about eight times its 2010 level. Britain is the world's largest offshore market, with more than 1.3 gigawatts of the total installed base of about 3 gigawatts at the end of 2010."

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"…[Denmark’s] Vestas is offering a traditional turbine design that employs gearboxes to convert the slow rotation of blades into faster revolutions to drive an electrical generator. That approach may attract financing more easily…Siemens's machine is gearless, with the blades linked to a generator's rotor so they spin at the same pace. To generate power from a slower rotation, the device needs a larger diameter and more magnets made from rare-earth metals. Tests on a 6-megawatt prototype will start this year…

"…[T]he Vestas approach at sea is…more proven and financeable…Siemens does offer for sale two geared turbines for offshore wind: a 2.3-megawatt model and a 3.6- megawatt device…Germany's Enercon GmbH is the only company to succeed with a direct-drive turbine so far and has installed them only on land…Vestas and Siemens dominate offshore projects: Of 2,935 megawatts of installed sea-based wind capacity in Europe at the end of last year, 1,385 megawatts were from Vestas while Siemens had 1,346 megawatts…It's from around 2015 that the European market will really take off, as up to 32 gigawatts projects from the U.K.'s third round of licensing begin to be built…"


THE U.S. NEEDS NEW WIRES
WIRES to Secretary Chu: Don't Forget Electric Transmission Infrastructure
May 26, 2011 (WIRES, Working group for Investment in Reliable and Economic electric Systems)

"…[A letter] to U.S. Secretary of Energy Steven Chu… expressed concern that the recently-issued Strategic Plan of the U.S. Department of Energy, in stating its goals for ‘modernizing’ the electric grid, altogether ignores the need to upgrade and expand America’s high-voltage electric transmission system."

WIRES’ letter to Secretary Chu,…indicates that the electric transmission industry and capital markets are prepared to marshal resources and expertise in pursuit of a stronger grid. It points out, however, that there remain serious barriers to planning and constructing the most efficient transmission system for the nation’s 21st Century requirements…"

While the New Energy industries consider it of paramount importance, it apparently remains a question in Secretary Chu's mind (click to enlarge)

[Jolly Hayden, President, WIRES:] “The Department's leadership is critical to advancing a national policy that favors responsible expansion of the transmission grid. WIRES encourages the Department to explicitly champion policies that remove barriers to grid expansion and upgrades.”

"In encouraging the Department to champion improvements in the planning and regulation of transmission projects, the letter cited two recent studies sponsored by WIRES that illustrate the benefits of transmission – a study released this month by WIRES showing that transmission initiatives could yield $30-$40 billion in annual economic activity that supports 150,000-200,000 new full-time jobs in each of the next 20 years, and another study released in January describing the use of smart technologies, including synchrophasors, to improve performance of the transmission grid."