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Wind energy tax credits survive as Congress passes fiscal cliff deal

Katie Fehrenbacher — Wed, 02 Jan 2013 05:08:22 +0000

The wind energy industry in the U.S. breathed a sigh of relief as Congress passed a fiscal cliff deal on Tuesday that included an extension of the wind energy tax credits for wind projects that start in 2013. The wind energy tax credits — which began in the early 1990s but have expired at least three times over the years — were set to expire at the end of 2012, and if expired, would have frozen wind project construction in the U.S.

The American Wind Energy Association says that the extension of the credits will save 37,000 jobs and revive business at 500 wind factories. However, the boom and bust cycle will still have an effect on the wind industry, as “layoffs had already begun, as companies idled factories because of a lack of orders for 2013,” says the AWEA.

The New York Times recently reported that the credits could provide a 2.2 cent tax credit for each kilowatt-hour generated by a wind project in the first 10 years, or a payment of 30 percent of the construction cost. The tax credits led to a boom in wind power in 2012, and new wind power installations represented 44 percent of all new electricity capacity created in the U.S. in 2012, according to the Energy Information Administration.

President Obama says he plans to sign the legislation shortly.

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Google powers a data center directly with wind for the first time

Katie Fehrenbacher — Wed, 26 Sep 2012 14:00:11 +0000

While Google has been an investor in, and advocate for, clean energy for years, on Wednesday the company announced that for the first time it will buy clean energy from a utility to directly power one of its data centers in Oklahoma. Google has invested hundreds of millions of dollars into solar and wind projects throughout the U.S., but before this had yet to purchase clean power to directly run one of its data centers.

This move, to have clean energy directly power a data center, has always been in the plans. Google’s former green energy czar Bill Weihl (now at Facebook) told me years ago that the ultimate end game was for Google to procure clean energy to use for its data centers. But the search engine giant needed to find the right area, the right utility partner and a new(ish) data center project.

That sweet spot was a data center built in Mayes County, Oklahoma in 2011. Earlier this year Google started working with utility Grand River Dam Authority (GRDA) to buy 48 MW of wind energy from the Canadian Hills Wind Project in Oklahoma. Google says it paid a premium (higher than the basic cheap power it could get elsewhere) to purchase the wind power from the project. As Greenpeace points out, half of Oklahoma’s power grid is run on coal.

Google says the GRDA approached it about buying power from the wind project in early 2012 to sell to Google. The wind project is GRDA’s first clean power project. We need more utilities like this that are willing to work with big customers that want to buy clean power. Most power customers, other than some of the leading Internet companies, aren’t aggressively looking for clean power and willing to pay a premium for it.

Most of the massive Internet companies are building their data centers in locations where power is cheap and reliable. And usually that means fossil fuel power — coal or natural gas — and sometimes means hydro power. The exception is areas like Iceland, which have geothermal and hydro in spades, so can provide cheap, reliable clean power. The Chief Technology Officer of Verne Global, Tate Cantrell, will be speaking at our Structure Europe event next month.

This is one of the first times I’ve heard of a data center operator buying a substantial amount of clean power from a utility project for a premium. So kudos to Google for that.

Greenpeace released a statement about Google’s clean power data center news:

Google’s announcement today shows what the most forward-‐thinking, successful companies can accomplish when they are serious about powering their operations with clean energy.

Hopefully this is just the first of such announcements from Google.

Google fundamentally believes that it should work with utilities to buy clean power. In contrast other Internet companies like Apple are opting to build their own clean power. Apple is building a massive solar panel farm (through developer SunPower), and a large biogas-powered fuel cell farm (from Bloom Energy), next to its data center in Maiden, North Carolina. Auction site eBay is also building a huge fuel cell farm at one of its data centers.

The leading Internet companies are just starting to dabble in experimenting with clean power. The vast majority are still opting for low cost, reliable power, which usually means going where the grid is powered by fossil fuels. Power and data centers is still controversial — check out the New York Times recent story on that, as well as my opinion on that story. Also read my feature story on the controversial world of clean power and data centers.

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After Solyndra: analyzing the solar industry

Ucilia Wang — Fri, 03 Feb 2012 20:44:10 +0000

Solar companies worldwide will remember 2011 as a dark time in their history. The failing of Solyndra symbolizes that market volatility, and 2012 no doubt started with trepidation. But as we have mentioned before on GigaOM Pro, the industry has survived nonetheless. This report analyzes the current state and future concerns of the solar industry, with a particular focus on the photovoltaic industry and the U.S. market. From the silicon companies to inverter manufacturers to government venture money, here is what to expect as the industry marches toward its uncertain future. Additional companies mentioned in this report include First Solar, Intel, NRG Energy and SunEdison. For a full list of companies, and to read the full report, sign up for a free trial.

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5 bets the DOE made that are better than Solyndra

Katie Fehrenbacher — Wed, 05 Oct 2011 07:00:11 +0000

It’s been almost five weeks since the news came to light that solar panel maker Solyndra was going to crash and take with it 1,100 jobs and $527 million in taxpayer funds. But the story still remains on top of the minds of investors, the media, House Republicans and concerned taxpayers, and it is overshadowing some of the early successes of other green companies that also won government support.

Here’s my top five list of companies and projects that the DOE also backed with loan guarantees or loans and that are showing some early signs of success. Yes, some of these projects still have some risk, but they have met some milestones.

1. Tesla’s Model S factory. This week I got a chance to ride in one of electric car maker Tesla’s beta versions of its second electric car, the Model S. The Model S is one of the first cars in the world to be designed from the ground up as an electric car (in contrast to the more common method of using the body of an internal combustion car as an electric car). It’s a seven-seater sedan, and it has one of the roomiest interiors I’ve seen for an EV. The DOE gave Tesla $465 million in low-interest loans out of the Advanced Technology Vehicle Manufacturing program to build the factory, and Tesla says it already has 6,000 reservations for the Model S. Yes, Tesla will have to pay back that loan by selling Model S vehicles and its tech licensing projects (it has a $100 million deal with Toyota), but it seems to be on track to deliver the Model S in mid-2012.

2. BrightSource’s Ivanpah solar farm. Solar thermal company BrightSource is one of the first companies in the world to start building a massive solar power tower farm. BrightSource’s Ivanpah is now under construction on 3,600 acres of land in the desert near Las Vegas. I visited the farm in August, the same week that Solyndra announced its bankruptcy, and the company is making progress on the first of three sections of the 392 MW farm.

Ivanpah will be built with a $1.6 billion loan, guaranteed by the DOE and funded by the Federal Financing Bank. The farm could still be delayed and there could be other hurdles, but the company has overcome the milestones of being fully financed, and with utility customers. Private investors in the project include NRG Energy, Bechtel and Google, and funders of BrightSource include VantagePoint Capital, Alstom, Morgan Stanley, Draper Fisher Jurvetson and Chevron Technology Ventures.

3. Shepherds Wind Flat. What looks to be the world’s largest wind farm, the 845 MW Shepherds Flat project, went under construction in Oregon in April 2011, and it is expected to start up in 2012. It will use 338 wind turbines from GE and will stretch across 30 square miles. It will cost $2 billion to build. Southern California Edison, a utility, has entered into a contract to buy the wind power. Japanese giant ITOCHU Corporation, Tyr Energy and a subsidiary of Sumitomo Corporation, Sumitomo Corporation of America, along with Google, are putting around $500 million into the farm. Most importantly, the project received a partial loan guarantee for $1.3 billion. With matured wind turbine tech, deep-pocketed private investors and utility customers, there’s little risk in this project.

4. Abengoa’s solar projects. Spanish engineering giant Abengoa Solar received $1.2 billion and $1.45 billion loan guarantees for solar projects using traditional and lower-risk solar thermal trough technology. Abengoa also has utilities that will have commitments to buy up the solar power from the farms. Abengoa is a multinational conglomerate that won’t likely crash and burn, swallowing loans and jobs.

5. The big automakers. OK, maybe not better in this case, but safer, though not likely to lead to innovations. The DOE, remember, gave Nissan and Ford the bulk of the ATVM program loans so far, including $5.9 billion for Ford Motor Company and $1.45 billion for Nissan North America. Word on the street is that Chrysler has been in the process of getting another big chunk. This support will lead to jobs but maybe not produce all that greener cars or cleaner energy.

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Introducing: The new eco label “WindMade”

Ucilia Wang — Wed, 15 Jun 2011 20:31:18 +0000

Some eco labels have been useful marketing tools, such as for organic food, but will they work for clean power? The wind energy industry thinks so and proposed a program Wednesday to encourage companies to invest in wind and display their eco-friendly cred.

Wind energy trade associations representing U.S. and other global companies unveiled rules for getting a WindMade label, which will allow participating businesses worldwide to display their investments in wind energy and hopefully attract more customers in the process. The trade groups also are working on another label, which will be given out with a different set of rules, that will let companies actually slap the WindMade labels on their goods.

The rules for the initial label, which will be open for public comment for the next two months, will require companies to get at least 25 percent of their electricity from wind. Businesses can fill that quota three ways: buy wind power through power purchase agreements, install their own wind turbines, or buy renewable energy credits associated with wind farms. Participants will have to get third-party verification for their wind electricity consumption, and they will pay for related costs.

WindMade proponents plan to finalize the certification rules for the first label this fall.

The idea for WindMade made its public debut earlier this year at a renewable energy conference in Abu Dhabi, United Arab Emirates. Vestas Wind Systems in Denmark, the world’s largest wind turbine giant, is the key proponent of the label and started working on the concept last year. The idea is now being promoted by a new nonprofit, also called WindMade, along with organizations such as the American Wind Energy Association, Global Wind Energy Council, and World Wildlife Fund.

“We believe WindMade gives a company a great opportunity to increase renewable and be transparent about what they do which is important for us,” said Stephan Singer, director of global energy policy, World Wildlife Fund, during the press conference Wednesday.

The rules for getting the WindMade certification went through a review board that included companies such as Walmart, Better Place and Dong Energy, but WindMade promoters declined to say on Wednesday which businesses will sign up to get the label.

Walmart is no stranger to the eco labeling idea. Back in 2009, Walmart announced a plan to assess the carbon footprint of the manufacturers it buys from and stick labels on its merchandise to show the products’ environmental impact. More and more manufacturers are touting their products’ eco-friendly features on the packaging, and this practice has caught the attention of government regulators and stirred skepticism from consumers.

WindMade proponents believe the label program will be a big success and point to a growing number of companies, such as Ikea, that invest in wind energy. It would be a coup if the advocates can get Google to embrace the labeling scheme. Google has become a big investor in wind power plants and has secured the authority to buy and sell wind power in the wholesale market.

Aside from creating labels for wind energy only, the wind trade groups are considering labels that will show a mix of renewable electricity being used by a company. They also are working on a label that can be put on retail products – developing rules for this label will be trickier because issues such as carbon footprint of the various components suppliers will likely have to be considered.

Image courtesy of WindMade

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Solar v. wind: which gets more government love?

Ucilia Wang — Wed, 15 Jun 2011 14:41:59 +0000

It wasn’t so long ago that solar firms were worried they might lose funds to their counterparts in the wind industry when it came to divvying up the stimulus package. But as key programs from the stimulus package draw to a close, the score card shows that while solar gets more loan guarantees, wind projects get more cash grants, which offset 30 percent of a project’s cost.

The results reflect the maturity of the two technologies as well as the designs of the federal aid programs that seek to boost job growth via clean power. The cash grant program, run by the U.S. Department of Treasury, doled out large awards going quickly to big wind farm projects in the early days of the program’s deployment. Energy giant Iberdrola was a big beneficiary.

The story is different with the loan guarantee program that is commonly referred to as the Section 1705 program. Solar projects have been big winners, particularly large solar farms that are set to rise in sunny and arid regions of California and other southwestern states. The U.S. Department of Energy announced not one, but two more loan guarantees for solar projects yesterday. The DOE offered a $1.2 billion loan guarantee to Abengoa Solar for the 250 MW Mojave Solar project in California. The DOE also offered a $681.6 million loan guarantee for a 250 MW project being developed by NextEra Energy Resources. The guarantees reflect the amount the government promises to pay lenders if borrowers can’t.

The latest loan guarantee offerings for solar bring the total amount offered by the DOE for solar projects to about $10.06 billion, which is spread among 10 solar farms with a total generation capacity of more than 23 GW. In comparison, only three wind farms totaling 925 MW have collectively been offered $1.52 billion from the same program, according to the DOE website. Other sources of renewable energy generation, such as geothermal, don’t come even close.

Wind projects have continued to draw more money from the cash grant program than solar. An ongoing tally of the cash grants by the Solar Energy Industries Association shows that, as of May 5 this year, 295 wind power plants had received a total of $5.61 billion. On the solar side, 2184 projects had gotten $936 million. California enjoyed the biggest share in solar: $277.4 million for 329 projects. Texas, long-reigning as the wind capital of the country, grabbed $1.4 billion for 19 projects.

Renewable energy power plant developers love the grant program, because it’s more or less an equal opportunity jackpot from which cold hard cash flows. The program mainly requires project developers to show they have installed and are receiving power from the projects – however large or small – before the program expires (in some cases, they just have to start construction by a certain date). It doesn’t distinguish between old or new renewable energy technologies.

Wind project developers have been particularly good at nabbing grants partly because they’ve been in the business much longer than solar project developers and are able to put together projects more quickly. In addition, they tend to be able to attract private investors more readily, as wind technology tends to be less risky than solar technology.

Renewable electricity accounted for 10 percent of the nation’s electricity production in 2009, and wind made up 17 percent of that, according to the latest data available from the U.S. Energy Information Administration. At 0.2 percent, solar took up the smallest portion. Wind electricity production grew faster than any other renewable electricity sources in recent years: 61 percent between 2007 and 2008 and 28 percent between 2008 and 2009.

Loan guarantees are a more arduous process than receiving the cash grants. Loan guarantees requires a lengthier application process, which includes assembling debt and equity from private and public sources. Private lenders already are shy about investing in new technologies, so raising money is a lot tougher for solar project developers than their peers in the wind market. The loan guarantee program largely sets out to help fund newer technologies, and solar fits that definition more than wind.

Among the solar projects that have received loan guarantee offers, those that use mirrors to concentrate sunlight for producing steam to run electricity generators have gotten more money than ones using solar panels, which is a far more common technology in the marketplace. Six of the 10 solar projects, including the most recently announced two, use concentrating solar power equipment and have garnered over two-thirds of the guaranteed amount for solar. Concentrating solar is a riskier technology than solar panels.

The cash grant program is set to end on Dec. 31 this year, and efforts are underway to call for its renewal. The loan guarantee program will end on Sept. 30 this year. The DOE has another loan guarantee program, commonly called Section 1703, that will continue, though this one is targeting novel technologies only and its terms aren’t as generous as Section 1705.

Convincing lawmakers to set aside more money for renewable energy won’t be so easy given the political climate, in which Republicans are pushing for cuts and see some aspects of the stimulus programs as expensive and unnecessary. History will remember this period as a renaissance for renewable energy generation. But how long this renaissance will last remains to be seen.

Photo courtesy of Solar Millennium

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Data Mania: Better Tech Needed to Crunch Climate Change Data

Ucilia Wang — Fri, 05 Nov 2010 22:00:06 +0000

Both Google and the government have taught us at least one important lesson: data rules. But despite supercomputers, sophisticated sensors and software from the smartest people on the planet, precise data is still lacking when it comes to fighting climate change. On Friday, U.S. officials said they will develop what they called the “first-ever, comprehensive and up-to-date database” of satellite images that will show land-use changes around the world.

The announcement, made from Beijing as the U.S. delegation powwowed with those from 85 countries and 58 other organizations to build the “Global Earth Observation System of Systems,” or GEOSS. GEOSS sounds grand and that’s the point: it wants to link all sorts of observation and data collection systems worldwide and promote technical standards and tools to speed up information gathering and processing.

Through a single Internet portal, governments, researchers and organizations can access and use the data for crafting economic and environmental policies. The international community is half way through a 10-year plan to build GEOSS.

The new effort will collect and present more detailed data about how humans use and impact their environment in urban and rural settings. Those details, like the amount of tree and shrub coverage and water on the surface of the Earth, will help researchers or even companies to create better forecasts of environmental changes, including the impact of global warming.

Increasingly, tech companies are using this growing amount of government (and often free) data for their own projects, or to process and sell the refined datasets to others. Solar power plant developers, for example, are always on the lookout for better historical data and meteorological forecasts about the amount and intensity of sunlight in areas they want to build solar farms. Utilities use satellite-based weather forecasting data to help manage the power grid.

Private companies have huge incentives – profits! – to come up with better software to make sense of the jumble of information from satellites and other data collection systems. The growth of the greentech industry, from renewable energy generation to biofuel production, will need to rely on more detailed and accurate data.

AWS Trupower, for one, is getting $2.15 million from the U.S. Department of Energy to assemble data and create computer models to help the Electric Reliability Council of Texas to more accurately predict when and where wind energy will be produced at any given time. ERCOT is the largest electric grid operator in Texas, which leads the country in wind generation. The state has roughly 9,730 megawatts of wind energy generation capacity, followed by Iowa at 3,670 megawatts and California at around 2,740 megawatts, according to the American Wind Energy Association.

Google could one day get into weather forecasting, too. An advisor for Google Ventures said this week that he and the search engine giant were interested in working with companies in some way to create more accurate and useful weather forecasting data. Companies such as IBM already are selling weather forecasting services to utilities, and startups like EcoFactor incorporate weather data into their automated demand response services.

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Image courtesy of NASA.

Kleiner Perkins Doubles Down on a “Shrouded” Wind Turbine Design

Justin Moresco — Wed, 20 Jan 2010 19:30:25 +0000

Venture capitalists are starting the New Year off with a deepening interest in the wind industry. About two weeks after Khosla Ventures and others invested in wind turbine maker Nordic Windpower, another wind startup, FloDesign Wind Turbine, announced yesterday that it closed a $34.5 million second round of venture funding to further develop its “high-efficiency shrouded” wind turbines that draw inspiration from the aerospace industry.

High-profile investment firm Kleiner Perkins, the only disclosed backer of the startup’s $6 million first round, led this latest funding and was joined by Goldman Sachs, Technology Partners, and VantagePoint Venture Partners. FloDesign Wind also announced that Lars Anderson, the former head of wind energy developer Vestas’ business efforts in China, joined as chief executive officer. The startup’s previous CEO and co-founder, Stanley Kowalski, will remain with the company as vice president.

FloDesign Wind so far hasn’t officially said much about its wind turbine design or business plan, since the company remains in “stealth mode,” a spokeswoman told us. The company is still working on R&D and is “moving into the next stage of actually building a company around the product,” she said. That product is a wind turbine using a “shrouded” design, a cage-like enclosure commonly used with jet engines (the image is a rendition supplied by FloDesign), as opposed to conventional turbines that use long blades.

The shrouds work off the concept that air moving through a hole will gain speed because of differences in air pressure. The web site New Energy and Fuel has an interesting write-up on the science and engineering behind the design concept.

FloDesign Wind believes its design will be able to extract 3-4 times more energy from the wind than current technologies, according to this YouTube video. The spokeswoman said this would lead to turbines that are more efficient and less costly than competing products on the market today. She wouldn’t say if the startup will look to sell or license its technology to large wind turbine manufacturers like General Electric or Denmark’s Vestas, but the addition of Anderson to the FloDesign Wind team could make a Vestas deal easier.

Wilbraham, Mass.-based FloDesign Wind was founded in 2007 as a spin-off of FloDesign Inc., a contract engineering company that applies aerospace technology to new product development. The startup already has some victories under its belt: in 2008 it won two Massachusetts Institute of Technology-sponsored competitions, the Ignite Clean Energy business presentation competition and the Clean Energy Entrepreneurship Prize. Just a few months after those awards, Kleiner Perkins plunked down the startup’s first venture round, and since then FloDesign Wind has also secured an $8.3 million grant under the Department of Energy’s Advanced Research Projects Agency – Energy, or ARPA-E, program.

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Khosla Bets on Wind, Joins GE to Back Danotek

Justin Moresco — Mon, 14 Dec 2009 22:14:51 +0000

UPDATED High-profile cleantech investor Vinod Khosla has made his first publicly announced bet in the wind industry, backing Danotek Motion Technologies, a designer and manufacturer of advanced electrical generators for wind turbines. Khosla’s venture firm Khosla Ventures led the $13.2 million round of funding for the Canton, Mich.-based startup, and according to the release, this marks the first investment for Khosla Ventures’ new “late-stage Venture Expansion Fund.”

CMEA Capital, Energy Capital Management and GE Energy Financial Services, the investment arm of General Electric also joined the round, which Danotek said will help it expand R&D, increase its staff and ramp up production of its generators. Scott Mabie, Danotek’s director of business development, told us the firm plans to produce about 1,000 generators next year and reach 4,000 units annually within three years.

Khosla, one of the most aggressive clean tech venture investors, has put money in at least 70 cleantech startups spanning a wide array of sectors including solar, water, batteries, engine efficiency, building materials and alternative fuels. But until now, he had not disclosed a direct position in the wind industry. (Update: A Khosla Ventures spokesperson has confirmed that the firm’s portfolio does not include any undisclosed investments in the wind sector, and this is in fact Khosla’s first wind play.)

Earlier this year, reports emerged that Khosla was raising $1 billion for two new funds that would largely invest in clean technology startups. Of the total, about $250 million was for a fund focused on early stage investing and the remainder — about $750 million – was to invest in later-stage ventures. Few details so far have emerged about these funds, and it appears the Venture Expansion Fund cited in the release is the later-stage fund from earlier reports. The Khosla spokesperson we spoke with said she could not confirm this point.

Danotek develops what are known as ”permanent magnetic generators,” which use high-powered magnets to convert the mechanical energy from spinning wind blades into electric power. This type of generator is not new and has been used in small applications, like home appliances, but only recently have engineers started looking to use it in large-scale power generation, Mabie said.

Danotek has added special cooling technology and other design features that the firm said have increased the generator’s efficiency at high and low wind speeds. The startup estimates its technology will enable wind turbines to harvest an average of 15 percent more energy than turbines currently on the market, providing about “$1 million in additional revenue over the life of the turbine,” according to a release. Danotek also said its generators are more reliable and less costly to maintain than conventional induction generators because they contain fewer “wear-and-tear” parts.

With this latest investment, Danotek has raised a total of $21 million in venture financing. It’s the second time GE Energy has invested in the firm, a notable vote of confidence from one of the world’s leading wind turbine manufacturers. In November last year, GE Energy, Statoil and CMEA invested $7.25 million in Danotek’s first round of funding.

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Tailwinds Strong for Small Wind Industry: Report

Justin Moresco — Wed, 09 Dec 2009 21:30:01 +0000

The wind power industry is more developed than most types of renewable energy, but one segment — small wind power systems with turbines of 100 kilowatts or less — is just beginning to pick up steam. These systems, buoyed by government incentives and increased interest in clean sources of electricity, are gaining traction in a number of niche applications in residential and commercial markets, according to a new report by Pike Research released today. The market research firm forecasts that the global small wind market will expand to $412 million in revenue by 2013 from $203 million this year, a compound annual growth rate of nearly 20 percent. During that same period, worldwide installed capacity of small wind turbines will reach 115 MW from about 49 MW today, the study predicts.

“Small wind energy is less expensive than solar on a cost per watt basis which is driving more and more businesses and rural consumers to give it a second look,” David Link, a Pike Research senior analyst, said in a statement. Link said small wind has been most successful in residential off-grid, agricultural, community microgrid and remote telecom network power applications, as well as at schools and government buildings.

But the market has important barriers that it will have to deal with if it is to become a larger player in the renewable energy space. Those barriers include intermittent power availability (wind doesn’t always blow when you need electricity), permitting and siting challenges (even small wind towers can have a visual impact), and a “general lack of suitability of off-grid applications,” the study found. Because of the intermittency issue, small wind systems are often used in conjunction with other energy sources such as solar PV or diesel generation, and energy storage systems for backup power, all of which increase the cost of electricity for the consumer compared with relying on just one system.

The American Wind Energy Association, a trade group, published a report earlier this year that found that U.S. sales of small wind turbines grew 78 percent in 2008, although the additional installed capacity last year — about 17.3 MW — is still quite small.

With the potential for profits in small wind, it’s not surprising that venture capitalists are beginning to take the sector more seriously, according to this Wall Street Journal report. The American Wind Energy Association lists 20 small wind turbine vendors on its web site, all of which the trade group says sell products that are commercially available. (Note also that the list only includes association members.) Newberg, Ore.-based Abundant Renewable Energy, for example, designs and manufactures 2.5 kw and 10 kw turbines, the former having close to a 12-foot rotor diameter. Barre, Vt.-based Northern Power Systems develops and builds 100 kw turbines. Northern’s parent company, Wind Power Holdings, raised a $37 million first round of funding last year led by RockPort Capital Partners and Allen & Co.

Image courtesy Northern Power Systems

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