Environment Forum

California approves reverse auction renewable energy market

The California Public Utilities Commission on Thursday approved a unique reverse auction market to let renewable energy developers bid on small-scale projects under a program that would generate up to 1,000 megawatts for the state’s three big investor-owned utilities and further spur the solar industry.

Think of it as the eBay approach to ramping up production of carbon-free electricity.

The idea is to avoid problems with so-called feed-in-tariffs that set rates artificially high for renewable energy production. In Spain, for example, high rates spurred a solar building boom that was followed by a crash when a cap on renewable energy production was reached and rates fell.

Under the plan approved by California regulators, the onus would be on developers to calculate the cost of their projects and then offer a bid high enough to generate a profit yet low enough to beat out competitors. The 1,000 megawatts to be developed would be split between Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric.

At peak output, 1,000 megawatts would power about 750,000 homes.

“This mechanism would also allow the state to pay developers a price that is sufficient to bring projects online but that does not provide surplus profits at ratepayers’ expense,” utilities commission staff wrote in their original proposal. “Providing a clear and steady long-term investment signal rather than providing a pre-determined price can create a competitive market.”

Dubbed a reverse action mechanism by the utilities commission, the program applies to renewable energy projects that generate up to 20 megawatts of electricity. The hope is to encourage development of small-scale solar power plants that can be built relatively fast and plugged into the grid without major – and expensive – transmission upgrades.

California solar installer raises $15 million to expand to the East Coast

During a withering recession, one would think the residential solar business would suffer. After all, five-figure photovoltaic panel arrays would seem to be one of those household improvements that would be first to fall off the to-do list.

Yet on Wednesday, Sungevity, an Oakland, Calif., solar installer, announced that it had raised a $15 million round of funding to further finance the three-year-old startup’s breakneck growth. Including the $15 million, the company has raised a total of $25 million from Greener Capital, Firelake Capital, BrightPath Capital Partners and individual investors such as the actress Cate Blanchett.

Sungevity says that in 2010 its share of the California residential solar market has grown from 0.4 percent to 2.9 percent. The company’s innovation has been to use imaging technology and proprietary software to remotely size and design rooftop arrays, allowing customers to order their solar systems online. That cuts out multiple visits to a home by salespeople and installers.

But what’s really driving Sungevity’s growth, and that of competitors like SolarCity and SunRun, is a financial innovation.

Earlier this year, US Bank created a $24 million tax equity fund for Sungevity to finance solar leases. That lets homeowners obtain a solar array for no money down and a monthly payment that can be offset by the savings on their electricity bill. For its part, US Bank gets to take a 30 percent federal investment tax credit on the installations.

Danny Kennedy, Sungevity’s co-founder and president, said that the company had signed one megawatt’s worth of solar leases in October alone and connected solar arrays generating 500 kilowatts of electricity to the power grid.

“It depends on the month and geography, but broadly 95 percent” of sales are leases, Kennedy, a former Greenpeace activist,  said in an e-mail.

GE, VCs put $30 million in Silicon Valley startup’s “smart windows”

A $30 million investment in Soladigm, a Silicon Valley startup that makes “dynamic glass,” by General Electric and other investors offers a window into where venture capital may go in 2011.

Soladigm uses an electrochromic process to electronically darken or lighten windows to save on costs for heating, ventilating and air conditioning, or HVAC in industry parlance. The company’s dynamic glass darkens during the summer or hot times of day to cut air conditioning use and lightens when the weather is cold to capture and retain heat.

“We can save about 25 percent of the HVAC energy load,” Rao Mulpuri, Soladigm’s chief executive, said in an interview. “That has the capital benefit of resizing HVAC systems to handle a lower load than you would otherwise have.”

Energy efficiency products and services that offer customers a return on investment are likely to attract investors in the coming year as federal incentives for big renewable energy projects start to sunset, according to Dallas Kachan, managing director of Kachan & Co., a San Francisco research and consulting firm.

“We predict energy efficiency will emerge as the clear rock star of clean tech in 2011, not just in terms of dollars invested, but in mindshare,” Kachan said in an e-mail.

Among Soladigm’s new investors is General Electric, which has made big plays in energy efficiency. GE in November named the Milpitas, Calif., startup as one of the winners of its $200 million Ecomagination Challenge contest that sought partners and ideas for the conglomerate’s green building and smart grid efforts.

Other investors in Soladigm’s latest round include DBL Investors, NanoDimension, includes Khosla Ventures and Sigma Partners.

Electric trucks pick up speed

While the delivery of the first Nissan Leaf electric car to a California buyer over the weekend made headlines, there’s been relatively little attention paid to the small but growing electric truck and bus market.

As the workhorses of the economy, delivery trucks, city buses and other heavy-duty vehicles don’t carry the cachet of, say, a Tesla Roadster electric sports car. But electrifying urban fleets could go a long way to reducing greenhouse gas emissions and pollutants as well as helping wean the United States off imported oil.

It’s a huge potential market, as overseas companies have recognized. For instance, on Sunday, China’s BYD acknowledged it was in talks to supply battery-powered buses to the city of Los Angeles.  And on Monday, the U.S. licensee of the United Kingdom’s Smith Electric Vehicles announced it had sold electric trucks to the U.S. Marines.

“Diesel is great for the highway but it is not very good for efficiency or pollution in urban environments,” Robert Kanode, chief executive of battery maker Valence Technology,  said in an interview. “When you’re going down the street and stopping three times on a block, electric delivery trucks really make sense.”

Valence, based in Austin, Texas, makes lithium iron magnesium phosphate battery systems for electric trucks manufactured by Smith Electric and other companies.

“We always felt that fleets would be first as we didn’t know when electric cars would show up,” said Kanode about Valence’s decision to make truck batteries when the company started 20 years ago.

Buyers for corporate delivery fleets generally don’t suffer from range anxiety when it comes to electric delivery trucks, according to Kanode. He said the different battery systems Valence sells to Smith give trucks a range of 30 miles, 50 to 60 miles or 110 to 120 miles.

Deloitte acquires two carbon consultancies

The Cancun climate talks may have ended inconclusively and chances that the United States Congress will enact a cap on greenhouse gas emissions over the next two years are slim to none, but business still sees money to be made in the carbon market.

On Monday, for instance, Deloitte, the tax and consulting giant, said it has acquired two greenhouse gas consultancies, ClearCarbon Consulting and DOMANI. Terms of the deals were not disclosed.

ClearCarbon, based in Arlington, Va., conducts audits of corporations’ greenhouse gas emissions to calculate their carbon footprints. The firm also performs lifecycle analysis of companies’ supply chains and does due diligence on products’ environmental attributes. ClearCarbon’s clients have included Walmart, NBC Universal and International Paper

DOMANI, based in Denver, advises corporations on energy, carbon and water use.

“Deloitte has identified the sustainability services market as a key growth area,” Jessica Blume, national managing principal for research and innovation at Deloitte, said in a statement. “As an emerging offering, the acquisitions of ClearCarbon and DOMANI will further strengthen Deloitte’s ability to help clients drive value, mitigate business risk, and drive growth, efficiency and innovation through improved environmental, social and financial performance.”

For the time being, Deloitte will brand the companies and their services as “ClearCarbon by Deloitte” and “DOMANI by Deloitte.”

The acquisition comes as big players like IBM beef up their own carbon consultancies and branch out into environmental services involving water, energy and the smart grid.

California voters’ support for state climate change law rises

Memo to Texas oil companies Tesoro and Valero: The return on your investment in California environmental politics is falling faster than the snow on the Sierra Nevada.

The petroleum refiners bankrolled Proposition 23, a measure on the November that would have suspended AB 32, California’s landmark global warming law. But they found themselves outspent and out-organized by a coalition of venture capitalists, hedge fund managers, renewable energy companies, environmental justice activists and some high-profile Republicans like California Gov. Arnold Schwarzenegger. In the end, Prop 23 suffered a crushing defeat when 61.6 percent of voters cast ballots against the measure.

Now a new Field poll commissioned by Next 10, a non-profit San Francisco research firm, shows that California voters’ support for AB 32 has risen since the Nov. 2 election.

The survey of 493 registered voters released this week found that 66 percent of them favor AB 32, which requires California to cut its greenhouse gas emissions to 1990 levels by 2020. And 64 percent support the cap-and-trade carbon trading market the state recently unveiled and which, if approved by the California Air Resources Board, will go into effect in 2012.

“Seventy-three percent of California voters agree strongly or somewhat that California can reduce greenhouse gases that contribute to global warming and expand jobs and economic prosperity at the same time,” according to Next 10.

Of course, environmental issues are as Californian as beaches and clogged highways. But a parsing of the county-by-county election returns for Prop 23 shows the breadth of support for the climate change law and may offer some lessons for attempts to enact such legislation in other states, if not nationally.

Broad swaths of California’s conservative inland counties voted No on 23, according to California Secretary of State records. For instance, while a majority of voters in Riverside and San Bernardino counties favored Meg Whitman, the Republican candidate for governor, over Democrat Jerry Brown, they voted No on 23. So did San Diego County, not exactly known as a bastion for tree-hugging types.

Renewable energy advocates fear a time bomb in the tax bill

Solar and wind advocates hailed the United States Senate’s move Thursday night to extend for another year a key incentive program for big renewable energy projects. But they warned that another provision of the tax compromise under consideration could devastate the industry.

First the good news for green energy proponents: If the tax bill passes in its present form, developers will be able to receive through 2011 a federal cash grant to cover 30 percent of the cost of solar power plants, wind farms and other large renewable energy projects.

Enacted as part of the 2009 stimulus package, the Treasury cash grant “1603” program was offered as an alternative to a 30 percent investment tax credit that few developers had use for as they typically have no profits to offset. And so-called tax equity investors who would buy those credits from renewable energy developers in exchange for financing their projects largely disappeared as the recession took hold.

The cash grant program is set to expire at midnight on Dec. 31, which led California and federal regulators to green light nearly 3,000 megawatts’ worth of solar power plants over the past three months, with two more projects expected to be approved next week.

But that building boom is likely to go bust unless the cash grant program is extended.

“An extension of the program will keep our U.S. industry growing and help achieve the industry’s goal of installing enough new solar energy to power 2 million new homes each year by 2015,”  Rhone Resch, president of the Solar Energy Industries Association, a Washington, D.C., trade group, said in a statement Friday. “The program has allowed the solar industry to grow by over 100 percent in 2010, create enough new solar capacity to power 200,000 homes and double domestic solar employment to more than 93,000 Americans.”

Of course, this time next year, the solar and wind industries would find themselves in the same exact position. Congress’ failure in past years to enact a long-term extension of a production tax credit for wind developers, for instance, led to a cycle of boom and bust as the tax credit would expire and then later be revived for another year or two.

Iberdrola takes a shine to the U.S. solar power plant market

Iberdrola Renewables, the Spanish green energy giant, has jumped into the United States solar power plant market, announcing a deal Thursday with Silicon Valley’s SunPower for a 20-megawatt photovoltaic farm to be built in Arizona.

Altogether, SunPower, based in San Jose, Calif., will construct 50 megawatts’ worth of solar power plants for Iberdrola, including a 30-megawatt project to be built in Colorado.

“We are excited to enter the U.S. solar business by building our first 50 megawatts with SunPower,” Martin Mugica, Iberdrola’s executive vice president, said in a statement Thursday.

The U.S. solar ambitions of Iberdrola, the world’s largest wind developer, had been something of a mystery.

In 2008, Iberdrola quietly acquired Pacific Solar Investments, a year-old Henderson, Nev., startup – and its lease claims on about 180,000 acres of federal land in Arizona, California and Nevada. Pacific Solar was among a score of companies – from Goldman Sachs to no-name speculators – filing claims on United States Bureau of Management Land during the great solar land rush of 2007-2008.

(BLM records show that Pacific Solar began filing solar lease claims while its founder, David Saul, was still serving as chief operating officer of Solel, an Israeli solar power plant builder subsequently acquired by Siemens for $418 million last year.)

Iberdrola still has lease claims on 165,600 acres of BLM land in Arizona, California and Nevada for both photovoltaic and solar thermal projects, according to federal filings.

Robots rule at Silicon Valley solar factory

Solyndra, a Silicon Valley solar module maker, took some heat in November when it decided to close a factory, lay off workers and delay expansion of a new manufacturing plant that was built with a half-billion-dollar federal loan guarantee.

In making the move seven weeks after opening the new factory, called Fab 2, the company cited the need to rein in capital expenditures in the face of aggressive competition from low-cost Chinese manufacturers.

Still, the $733 million plant is up and running and Solyndra this week released a video of the automated factory. It’s obviously a commercial for the company but the video also shows how in the long run U.S. companies may be able to compete against China in the global market.

Fab 2’s robots outnumber workers of the flesh-and-blood variety. Driverless carts and automated cranes shuffle photovoltaic parts across the 300,000 square-foot factory, handing them off to large orange robots that look like the machines in the Terminator movies.

The robots feed long glass cylinders into large devices that coat them with advanced thin-film photovoltaic materials. Other robots assemble the tubes into solar panels before they’re loaded onto trucks to be shipped to customers who will install them on large commercial rooftops.

“A lot of capital has gone into the factories but once they’re running our labor costs are quite low and allow us to operate here,” Bob Bierman, Solyndra’s executive vice president for operations and engineering, told me when I visited Fab 1 and Fab 2 in September.

North American photovoltaic market predicted to double in 2011

Renewable energy lobbyists on Wednesday held a press conference to warn that the failure of Congress to extend a key financial incentive would be disastrous for the solar and wind industries. At the same time, IDC, a research firm, released a report predicting that the North American photovoltaic market will double in 2011.

So what gives?

What has the renewable energy industry worried is the expiration at year’s end of a Treasury program that lets developers take a cash grant to cover 30 percent of the cost of big solar, wind and geothermal projects in lieu of taking an existing investment tax credit.

Since most green energy companies have no profits to offset with the tax credit, the cash grant has become crucial to obtain financing to build multibillion-dollar solar power plants and wind farms.

“It’s simply the most important policy for continuing growth of renewable energy in the United States,” Rhone Resch, president of the Solar Energy Industries Association, said Wednesday during a press conference.

While some of those projects are photovoltaic farms that install tens of thousands of solar panels like those found on residential roofs or on the ground in huge arrays, many are solar thermal power plants that use mirrors to heat liquids to create steam to drive an electricity-generating turbine.

While the tax credit and federal loan guarantees are critical for such utility-scale projects, the residential and commercial rooftop market depend on a host of state and federal incentives that won’t be as affected if the cash grant program disappears.