The Colorado company, founded in 2009, has engineered a generator that incorporates a circuit board design as one of its main components. A generator’s motor is made up of a rotating component called the rotor and a stationary part called the stator. In a typical generator today, both the rotor and the stator are made with iron wrapped with copper coils to create the magnetic field for producing mechanical energy, which will then be converted to electricity.

But what Boulder Wind Power has done is to engineer a different kind of stator by printing copper wires onto fiber glass and laminating layers of fiber glass together to create a stator that looks, and works, like a printed circuit board, said Andy Cukurs, the startup’s CEO. This design doesn’t use iron, but it does add a magnet to the whole generator to create that magnetic field. In the end, what  you get is a stator sandwiched between the magnet-lined rotor.

The printed circuit board design, Cukurs said, is “light weight, and it translates into cost savings because you don’t have to build a heavy foundation and tower. The wind industry uses weight as a proxy for cost.”

For example, a Boulder Wind Power generator for a 3 MW turbine would weight 40 percent less than more common generators, Cukurs said. If a wind tower weighs 200 metric tons, then the use of the startup’s generator can cut the weight by 6-10 metric tons, he added.

Next-gen magnets

The use of the magnets also sets the company’s technology apart. In fact, the startup’s generator design belongs to a class of technology called “direct drive permanent magnet,” which emerged in recent years to replace designs that create heavier and less efficient or reliable wind turbines. Major wind turbine makers such as Siemens and GE all have developed generators using direct-drive permanent magnets. But whether the technology can really deliver the savings remains a big debate.

The startup has built a 3 MW generator to show how its technology works. It’s close to signing its first deal to create a prototype for a customer, who will give the equipment a whirl and decide if it wants to place an order for more. Cukurs declined to name this potential customer. If all goes well with the deal, Boulder Wind Power will work on delivering the prototype by the end of 2013 or early 2014. Its first revenues could come in 2015.

The startup doesn’t plan to make and sell generators, however. Instead, it plans to make money mostly by licensing its technology.  This approach takes away the pressure of having to raise lots of money to build factories or dealing with multiple manufacturers to source various components. But the company does plan to sell the stators and will hire a manufacturer to make them.

But whether the direct-drive permanent magnet technology can really deliver on its technical promises remains a big debate. Wind turbine makers began introducing permanent generators in 2006, but this type of generators isn’t widely used, according to a report by the U.S. Geological Survey.

Permanent magnets made using rare earth elements are more powerful and efficient than those made with non-rare earth materials, but the use of rare earth also increases the costs. Most of the rare earth elements are produced in China, which curbed their exports in the past and caused a spike in their prices. Efforts to produce rare earth in other parts of the world have been underway in countries such as Malaysia and the U.S. by companies such as Colorado-based Molycorp.

Boulder Wind Power’s technology uses neodymium, a rare earth element, and it counts Molycorp as an investor. Cukurs said high pricing was an obstacle that prevented the wider adoption of permanent magnets in the past, but the prices have come down. Meanwhile, some companies are developing better-performing generators that won’t need rare earth at all.

Boulder Wind Power has raised $46.5 million in equity total from investors that also included New Enterprise Associates, and is looking at raising another round in 2014 if not sooner.

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Researchers from the University of Tokyo and the Japan Agency for Marine-Earth Science and Technology said they have tested and confirmed rich deposits of rare earth elements at some of the 78 locations around Pacific Ocean. Those deposits could produce 80 billion to 100 billion tons of the minerals, compared with the 110 million tons in world reserves that have been estimated by the U.S. Geological Survey (USGS). The Japanese scientists published their finding in Nature Geoscience Sunday.

Japan is particularly keen on finding and mining new rare earth deposits since its domestic manufacturers, like its battery industry, are among the world’s heaviest users of the raw materials. Japan has also been eager to find suppliers outside of China, which produces over 90 percent of the world’s rare earth elements and holds a little over one-third of the world’s rare earth deposits. China has imposed export restrictions on rare earth elements in recent years, which has stirred outcry from countries including the U.S. and Japan.

Under the Sea?

However, mining rare earth under the sea won’t be easy. The deposits described by Nature Geoscience are a few miles from the ocean’s surface and located in international waters. Accessing those materials in the middle of the Pacific will pose technical and environmental challenges, according to a Bloomberg report. It also will spark some political wrangling over who gets the mining rights.

Major rare earth mining companies are already digging up the valuable materials on land. Colorado-based Molycorp held an initial public offering last summer to raise money for reopening an abandoned rare earth mine in California. The mine would be the first new U.S. source of production of these minerals in more than a decade.

But many countries including China already have a deep interest in undersea mining for all sorts of materials and are undertaking research and development work to make that happen.

China Stranglehold

China can provide an abundant and cheaper supply partly because its production is a by-product of iron mining. But mining operations aren’t known for being environmentally friendly in the first place. In fact, a new rare earth processing plant under construction in Malaysia that will provide one-sixth of the world’s supply is facing delays because of an environmental review that recommends stricter environmental and safety measures. The review came out last week and prompted a one-day halt to the trading of the stock of the plant owner, Australia-based Lynas.

Lynas’s new plant exemplifies a concerted effort by Japanese companies to minimize their reliance on China by investing in rare earth mining elsewhere. Mitsubishi UFJ Financial Group took a 10 percent stake in Lynas. At the same time, Sumitomo in Japan agreed in late 2010 to invest $130 million in Molycorp. Sumitomo has delayed completing the transactions but said recently it will do so after securing enough Japanese customers. Molycorp also has announced a joint venture with Hitachi Metals in Japan to produce rare earth alloys and resulting magnets.

The term “rare earth” is something of a misnomer because of many rare earth elements are actually abundant in the Earth’s crust. Seventeen elements are classified as rare earths, the USGS said. But these materials are less likely to become concentrated deposits like other common metals and are generally difficult to mine at a commercially viable scale, so they have largely come from only a handful of sources.

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The deal is Molycorp’s second acquisition this month. In early April, Molycorp said it would spend $89 million for a 90-percent stake in European rare earth mining company AS Silmet. Molycorp now has two new avenues for rare earth manufacturing capabilities outside of China, a country which has traditionally owned 95 percent of the world’s rare earth metals. These metals are used for a variety of growing markets, including hybrid vehicle batteries, wind turbines, compact fluorescent light bulbs and magnets for electric vehicle motors.

Molycorp says its new mines in Arizona will immediately produce rare earth materials that can make “neodymium iron boron” magnets, which are used in hybrid and electric cars and wind turbines, and “samarium cobalt” magnets, which are used in defense applications. China announced back in December that it will significantly cut its exports of these types of rare earth metals, opening a market for western alternatives.

Molycorp’s deal with Santoku isn’t Molycorp’s only Japan partner; it has a joint venture with Japanese mining giant Hitachi Metals, and a $130 million financing deal with Sumitomo Corp. Japanese companies, like European and American firms, want a way to be less dependent on China for rare earth metals, too.

Back in December, Molycorp’s stock rose above $50 per share, up dramatically from its debut price of $13.25 in July 2010. Friday morning, Molycorp is trading at around $75 per share, around five times its initial price.

Molycorp’s most recent earnings (last month) were solid, with a narrowed loss for the fourth quarter, and a jump in revenues. Molycorp recorded a loss of $7.9 million, compared with a loss of $9.1 million for the year earlier. Revenue jumped to $21.7 million from $2.2 million for the prior year.

Molycorp previously mined its metals from a 50-year-old rare earth mine in Mountain Pass, Calif., but stopped removing ore in 2002 after it had problems with toxic waste spilling into a nearby lake. Molycorp plans to start mining again in the Mountain Pass mine this year after modernizing and expanding the project.

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The acquisition gives Molycorp a door into Europe and doubles its rare earth manufacturing capabilities. These metals are used for a variety of growing markets including hybrid vehicle batteries, wind turbines, compact fluorescent light bulbs and magnets for electric vehicle motors.

China provides 95 percent of the world’s rare earth metals, but announced in December that it will significantly cut its exports of these metals, opening a market for western alternatives like Molycorp and AS Silmet. Molycorp is one way the U.S. and other countries can avoid being so reliant on China for the growth in greentech markets.

Back in December, after China announced it would cut exports, Molycorp’s stock hit above $50 per share, up dramatically from its debut price of $13.25 in July. The company reined in its IPO ambitions on its first day of trading and priced its shares at $14 apiece, down from the $15-$17 per-share price range estimated. The stock then debuted on the New York Stock Exchange at $13.25, and hovered mostly between $12.10 and $13.00 during the first day. It’s now worth almost five times that initial price.

Molycorp’s most recent earnings (last month) were also solid, with a narrowed loss, and a jump in revenues. Molycorp recorded a loss of $7.9 million, compared with a loss of $9.1 million for the year earlier. Revenue jumped to $21.7 million from $2.2 million for the prior year.

Molycorp previously mined its metals from a 50-year-old rare earth mine in Mountain Pass, Calif., but stopped removing ore in 2002 after it had problems with toxic waste spilling into a nearby lake. Molycorp plans to start mining again in 2011 after modernizing and expanding the project.

Reuters reports AS Silmet is one of two rare earth manufacturers in Europe, and it produces 3,000 tons of rare earth products and 700 tons of rare metal products per year. After the acquisition AS Silmet will reportedly get mining feedstock from Molycorp’s California plant and will be one of the first European rare earth metal producers not to source its metal mining feedstock from China.

Molycorp also has partners in Japan, including a joint venture with Japanese mining giant Hitachi Metals, and a $130 million financing deal with Sumitomo Corp. Japan also wants a way to be less dependent on China for rare earth metals.

Image courtesy of Molycorp.

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Of the five trends, I’d put the rare earth materials one right at the top of those being driven by cold, hard economic realities. China dominates the supply of rare earth materials with around 95 percent of global production, but it has been imposing increasingly stringent quotas on their export over the past year or so. That’s led to a surge in investor interest in rare earth mining outside China, with companies like U.S.-based Molycorp or Australia’s Lynas reaping the rewards.

Still, starting up new mining and manufacturing projects will take years. In the meantime, efforts are underway to both recycle more rare earths and find ways to build technologies that don’t need as much of them, as Clean Edge’s report highlights. Japan’s Hitachi provides an example of both trends — in December, it announced a new technology for extracting rare earths from disk drive motors and air conditioner compressors, and it’s also one of several companies designing electric motors that use ferrite magnets instead of rare earths, Clean Edge reports.

On the opposite end, I’d put Clean Edge’s prediction of an LED lighting renaissance in the “less likely to happen” category. That’s not because LEDs aren’t making great strides in lowering cost and improving light quality compared to both their cheaper, green compact fluorescent counterparts — they are — but because they’re under attack by anti-green political forces.

In the U.S., key regulations to phase out incandescent light bulbs in favor of CFLs and other more efficient options are now under threat of repeal by key Republican lawmakers. While incandescent phase-out plans aren’t under attack in Europe and Asia, the U.S. may well take a step backwards that harms the progress of LEDs.

Another problem with the LED market is that it relies not only on politicians, but also on consumers, to make the right decisions. Studies have shown that consumers don’t really understand which of their actions lead to real energy savings, and overestimate the impact of no-cost, feel-good techniques over those, like light bulb replacement, that require some significant up-front investment.

Clean Edge’s remaining three trends to watch fall somewhere in between these two extremes, and in different ways. Take the report’s prediction that the growth of new sources of natural gas will play an increasingly intertwined role with big solar and wind power projects. That is predicated on the continued low price of natural gas, driven largely in North America by the opening up of more new shale gas supplies. But intensifying concerns over environmental damage from the “fracking” techniques required to extract these supplies may strip the “green” label from natural gas soon.

An opposite issue faces the use of biofuels for the aviation industry, another Clean Edge prediction. That’s because commercial and military aviation players may be primarily interested in biofuels as a hedge against uncertain, but likely rising, fossil fuel costs. But the question is whether biofuels will meet the technical requirements for use in aviation — and whether they can be produced at competitive prices at the scale demanded.

Clean Edge’s final trend may well be the most universal: the growth of low-cost green building techniques for the developing world. The report cites examples like San Francisco-based Architecture for Humanity’s open-source, collaborative model for bringing green design principles to true greenfield building environments, as well as Idealab and its $2,500 WorldHaus green homebuilding kit set to be deployed in India, Kenya and South Africa this year.

Lastly, while we’re in the habit of trend-spotting, I’m going to make some not-so-bold predictions of my own: trends that rely on government regulation will sputter out in the coming years. However, trends guided by cold, hard economic realities, on the other hand, will be the ones to make a real difference in global markets.

Image courtesy of Denis Giles via Creative Commons license.

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MolyCorp:

When MolyCorp’s stock rose to over $50 per share recently, I had a moment of Holy MolyCorp! This week the stock stayed up in that range, and rose slightly after the rare earth mining company announced fourth quarter earnings with a narrowed loss, and a jump in revenues. Molycorp recorded a loss of $7.9 million compared with a loss of $9.1 million for the year earlier. Revenue jumped to $21.7 million from $2.2 million for the prior year.

A couple trends are keeping MolyCorp’s stock up and sales coming in. One is China, which provides 95 percent of the world’s rare earth metals, and which announced that it will significantly cut its exports of these metals that are used for a variety of growing markets including hybrid vehicle batteries, wind turbines, compact fluorescent light bulbs and magnets for electric vehicle motors. That increases the sales window for MolyCorp.

MolyCorp priced its IPO at $14 apiece last year.

Suntech:

2011 has generally been a good year for solar stocks and Suntech announced killer fourth quarter earnings this week. Suntech generated revenues of $945 million, which was a 61.9 percent increase compared from the quarter a year earlier. At the same time Suntech earned $383.4 million up from $44 million from the quarter the year earlier.

Suntech’s U.S.-traded shares jumped 33 cents, or 3.7 percent, to $9.33 in extended trading following the earnings report, reported BusinessWeek. But as the Toronto Star points out, Suntech’s cost structure is still not as competitive as some of its solar peers.

Evergreen Solar:

However, Evergreen Solar was the exception to the solid green earnings week, reporting a net loss for its latest quarter of $411 million, a sharp increase from a net loss of $98.4 million from the quarter the year prior. The dramatic loss came from Evergreen shutting down a plant in Massachusetts — a very controversial and political move given they’d accepted state subsidies — in order to move manufacturing to China.

Evergreen revenues rose 20 percent to $89.3 million from $74.5 million in the prior year, and its stocked remained at its same low level.

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What has almost quadrupled the company’s stock over the past weeks and months? Most recently news from China. China provides 95 percent of the world’s rare earth metals, but announced this week that it will significantly cut its exports of these metals, which are used for a variety of growing markets including hybrid vehicle batteries, wind turbines, compact fluorescent light bulbs and magnets for electric vehicle motors.

Molycorp previously mined these types of metals from a 50-year-old rare earth mine in Mountain Pass, Calif., but stopped removing ore in 2002 after it had problems with radioactive waste spilling into a nearby lake. Molycorp plans to use the proceeds of its IPO to start mining again in 2011 after modernizing and expanding the project. Basically Molycorp is one way that the U.S. can avoid being so reliant on China for the growth of these greentech markets.

The other bits of news came from Molycorp itself. Last week Molycorp announced a joint venture with Japanese mining giant Hitachi Metals, which followed on a $130 million financing deal with another Japanese conglomerate Sumitomo Corp. Japan also wants a way to be less dependent on China for rare earth metals.

The $50 price point is quite a difference from Molycorp’s almost rocky debut. The company reined in its IPO ambitions on its first day of training and priced its shares at $14 apiece, down from the $15-$17 per share price range estimated. The stock then debuted on the New York Stock Exchange at $13.25, and hovered mostly between $12.10 and $13.00 during the first day.

With a higher stock price, does Molycorp have a better chance of securing a Department of Energy loan guarantee? Its first loan guarantee application was  “summarily rejected” by the DOE, and Molycorp filed a second request in June for a $280 million guarantee, with the hopes that its IPO would help strengthen that application by “substantially [alleviating] equity funding and liquidity concerns that the DOE might have.”

Well, it will need either a loan guarantee, more contracts, more partners or just more funding to ramp up to full scale mining. Molycorp plans to reach full-scale production (40 million pounds of finished rare earth products per year) in 2012, and says it expects to spend as much as $511 million to get there.

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First Wind’s problems had been foreseen. The Boston-based company had hoped to raise up to $300 million by offering shares at $24 to $26, which would have given the company a midrange market value of $1.2 billion. The company has some 504 megawatts of capacity in seven projects and another 232 megawatts under construction in four projects.

But with losses of $233 million and outstanding debt of $582.2 million as of the end of September, the company had acknowledged that it might be at risk of default, giving analysts little hope that it could meet its price targets. Indeed, the company first re-priced its IPO to $18 to $20 per share on Wednesday before canceling it altogether.

First Wind isn’t the only clean energy company facing a difficult time entering the public markets. Research firm Kachan & Co. found that an increasing amount of greentech investment this year has gone into shoring up startups that haven’t been able to engineer an exit via an IPO. The challenge is clear in the solar power field, where a large chunk of the $822 million invested in the second quarter went to later stage companies.

The poster child for this trend is thin-film solar panel maker Solyndra, which called off its $300 million IPO in June, choosing instead to raise $175 million from venture investors. In July, the company’s founding CEO Chris Gronet was replaced by Brian Harrison, former president and CEO of flash memory maker Numonyx. While the company cited unfavorable market conditions for ditching its IPO, it has also come under scrutiny for high production costs, ongoing operating losses and negative cash flows, according to an April note from auditor PricewaterhouseCooper.

Solyndra isn’t the only greentech company to back off the public markets. In August, China’s Trony Solar abandoned its IPO for a second time (the first was in December), citing unfavorable market conditions.

In the meanwhile, greentech startups that have gone the IPO route have faced mixed results. Tesla Motors saw an impressive debut, with share prices rising well above their $14 to $16 target — despite the company’s long road yet to profitability.  Biofuel technology firm Amyris saw a respectable debut in September with shares priced at $16 holding steady through early trading. Rare earth mining company Molycorp, on the other hand, saw shares fall below an already reduced $14 per share target in its July IPO.

First Wind’s woes extended to those of one of its main suppliers, wind turbine maker Clipper Windpower, which had to be bought out by investor United Technologies earlier this month amidst declining orders for its gear. United Technologies paid $271 million for 49.5 percent of Clipper last year, but paid only $223 million for the rest of the company this month.

Indeed, it’s been a tough year for the wind power industry after a series of years of blockbuster growth. The global wind power industry is expected to be flat in 2010, with 37.7 gigawatts of installations, down 2 percent from 2009, Bloomberg New Energy Finance reported Thursday.

This year’s doldrums hit particularly hard in the U.S., which is expected to see a 39 percent year-over-year drop in installations, the report stated — bad news for U.S. developers like First Wind. China, on the other hand, saw a 25 percent boost in wind power installations compared to 2009, Bloomberg New Energy Finance said. Out of all the wind turbines installed this year, half were installed in China.

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Rare earth mine in Mountain Pass, Calif.

Greentech IPOs and the Department of Energy’s loan guarantee program are like peas in a pod these days. An initial public offering slated for later this week — that of Molycorp, a company that mines minerals used in many green technologies — offers the latest example.

The Greenwood, Colo.-based firm, which has requested an approximately $280 million loan guarantee, filed in April to raise up to $350 million in an IPO. Priced at the middle of Molycorp’s expected $15-$17 range, however, the company’s 28.1 million shares could raise nearly $450 million. According to one of the company’s most recent filings with financial regulators, it’s hoping this week’s offering will help pave the way to the guarantee.

Molycorp mines a group of metals known as rare earth elements, which the U.S. currently imports almost entirely from China. Using proceeds from this week’s planned IPO, the company aims to modernize and expand its Mountain Pass, Calif. rare earth project (a more than 50-year-old mine where Molycorp stopped removing ore in 2002), and also acquire a rare earth metals and alloys producer.

But the company is on the hunt for additional funds. And as Molycorp CEO Mark Smith said earlier this year in a Congressional hearing, “Traditional bank financing in the current climate – with very short repayment periods and interest rates near double digits – is not economically feasible.” The loan guarantee program, he said,  ”would allow Molycorp to accelerate development in the near-term while ensuring rare earth resource availability in the long term.”

Loans and guarantees from the DOE, awarded so far to companies including Tesla Motors, Abengoa, Beacon Power, BrightSource and Solyndra, also serve as a vote of confidence in a venture’s technology and ambitious plans, potentially helping to assuage investors’ fears about putting money into a firm with a rocky financial history or profits that are slim to nil. (Molycorp has run its business at a loss since inception, including $28.6 million in losses last year, and it expects to “incur substantial losses for the foreseeable future.”)

But these awards don’t come cheap, and the public markets can be an important source of capital for awardees to meet cost sharing requirements. The Energy Department’s loan guarantees can cover only 80 percent of total project costs, and some also require recipients to pay a “credit subsidy” at the time of closing for the estimated long-term cost to the agency of the guarantee.

Molycorp remains in the very early stages of the application process, having submitted its request in June. According to the company’s SEC filing, the DOE notified Molycorp last that it had cleared the initial review to see if the project meets basic eligibility requirements. (A DOE spokesperson tells us the program has many as 350 applications for this preliminary stage.) So now the company can submit an application for the next phase, which looks at technical and financial aspects of a project.

Even making it past these preliminary hurdles marks an important milestone for Molycorp. Back in December, the company saw a previous loan guarantee application (in Smith’s words) “summarily rejected” by the DOE, which explained that the program was not intended to cover mining projects and Molycorp’s project went “too far upstream,” according to Smith’s testimony.

A group of 20 senators led by Sens. Lisa Murkowski (R.-Alaska) and Evan Bayh (D.-Ind.) are now urging the Department of Energy to open the loan guarantee program to projects that would increase U.S. production of rare earth elements, and create a fast track for applications that “would help to rebuild the domestic rare earth supply chain and manufacturing sector.”

Even if Molycorp’s application gets an expedited review, however, it’s hardly a shoe-in for a loan guarantee. The company says in its filing that with its new application, the DOE has told the company that it should (among other things) “address its current liquidity situation and provide equity commitments.” Molycorp hopes its IPO will cover those bases, noting in its SEC filing that the company, “believes that the completion of its initial public offering should substantially alleviate equity funding and liquidity concerns that the DOE might have.”

As Molycorp acknowledges, it’s far from certain that the company’s submission to the DOE will move onto the next round of reviews in the agency’s due diligence process. It won’t get a response on the latest portion of its application until November 2010 at the earliest. And beyond that, the company would have to meet still more conditions to actually tap government support.

“Accordingly,” the filing states simply, “Molycorp ultimately may not successfully obtain a loan guarantee under the DOE program.” Depending on how much appetite investors end up having this week for a mining company looking to ride the wave of high hopes for emerging green technologies and fears of China limiting rare earth exports, the IPO may help boost Molycorp’s odds of a green light this time around.

Image courtesy of the U.S. Geological Survey

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