Renewable Energy is America's Next Frontier

In spite of all the advances in renewable energy technologies, the most elusive prize remains unclaimed.  Whether it is wind, solar, water or any derivative of these core renewable energy sources, they each have the same limitation – the inability to store generated power effectively and efficiently.  For the most part, energy storage has relied on batteries, albeit more and more advanced types of battery storage.
But we are poised for a breakthrough on the energy storage front, with a number of unique approaches to stockpiling energy.  It is these processes and technologies that will capture the most interest from investors.  A sophisticated, effective storage process may well cross the various renewable energy sectors, offering the holy grail to each of the core renewable energy sources.

First, innovative work by Saft Energy on a nickel-based battery technology to serve the world’s largest hybrid diesel/wind project on the island of Bonaire, in the Caribbean will see a storage system with a capacity of 3MW for over 2 minutes. While seemingly small, the battery provides emergency power in case of system failure, whereas systems without that backup will experience blackout conditions.

Isentropic Energy is developing a truly creative, yet deceptively simple power storage concept: Using one storage container of hot (500C) gravel, one of cold (-150C) gravel, Isentropic relies on basic heat exchange between the two to generate power. With a round trip efficiency of 72-80% and a projected cost of as little as $8/Kwh, this process potentially crush the cost efficiency of any existing battery storage.
Bloom Energy recently announced its solid oxide fuel cell, producing electricity from natural gas or hydrocarbons on demand.  While current prices are in the range of $7,500 per kilowatt, or $700,000 per system, Bloom hopes to bring those costs down for home generation systems that cost around $3,000 for 2-3 kilowatts output.

Other technologies and processes for storing energy include both compressed air and  compressed nitrogen, as well as pumped hydro.
Pumped hydro is the least innovative, using the same principle as current hydro turbines.  Water is simply pumped to a high level, then allowed to fall through the generation turbines. Most of the larger hydro systems in use rely on lagoon or artificial lake storage to hold pack water power. The major innovation in this process is to  store the water in underground caverns, pump it up to ground level when not needed, and then let it fall down to the caverns again when power is needed.
Compressed air technologies come in several variations.  One will see air compressed and stored in large caverns, for later use.  Because the air does not have to be compressed by natural gas, costs are significantly decreased. General Compression recently announced a $17 million share issue led by US Renewables Group.

A variation on this process is to compress air, generated by wind turbines, into large bags that are stored at depth in the ocean, compressed by the weight of the water.
While each of these systems and technologies has a distance to go to be cost-effective, there is sufficient promise in each to warrant significant interest by potential investors.

Report Also Warns That Investing Must Continue To Increase

In the face of some pretty lean economic times, green energy investing fared quite well in 2009, according to a recent report from the World Economic Forum (WEF).
Bolstered by some encouraging stats showing strong positive trends, the future of funding for green companies is looking good. However, while alternative energy investing appears healthy at the close of 2009, investors must keep up the pace in 2010 and beyond in order to continue making headway against carbon emissions.
H2:  Wind, Water, Solar, Biofuels And More Expected To Play A Huge Role
The World Economic Forum’s report, “Green Investing: Towards a Clean Energy Infrastructure,” identified eight alternative energy sectors the authors expect to “significantly contribute in the move to a clean energy infrastructure of the future,” including:
•    onshore wind;
•    offshore wind;
•    solar photovoltaic;
•    solar thermal electricity generation;
•    municipal solar waste-to-energy;
•    sugar-based ethanol;
•    cellulosic and next generation biofuels; and
•    geothermal power.

And these emerging technologies are drawing a huge share of attention and capital, according to the World Economic Forum. “Clean energy opportunities have the potential to generate significant economic returns. The report shows that even after a tumultuous 2008, an index of the world’s 90 leading clean energy companies had a five-year compounded annualized return of almost 10%, unmatched by the world’s major stock indices.”

Alternative Energy Investing Is Profitable, So How Much Money Is Being Invested?

The flashiest numbers from the World Economic Forum’s report show exactly how fast investment in green companies is growing. These numbers (from a January 2009 World Economic Forum press release) speak for themselves:
•    Clean energy investments increased from around $30 billion in 2004 to over $140 billion by 2008. Investments in 2008 exceeded expectations at $155 billion (the report is based on projections for 2008 – which suggests that $142 billion would be invested by year-end).
•    Investment in clean energy has not only increased, but has also diversified geographically. Developing countries attracted 23% ($26 billion) of asset financing in 2007, compared to 13% ($1.8 billion) in 2004.
•    In addition, four key enablers for a shift to clean energy will be energy efficiency, smart grids, energy storage, and carbon capture and storage.
•    Well-developed conditions for innovation, markets for clean energy through public procurement, energy efficiency standards and stable and simple policies are essential to meet the climate change challenge.
H2:  Investment In Green Companies and Alternative Energy Investing Needs To Keep Growing
While the numbers are trending favorably, the World Economic Forum Report issued a strong message of cautious optimism. Green investment funding is booming, but the ultimate goal is to reduce carbon emissions and a reliance on foreign sources of energy.
“New Energy Finance, which collaborated with the World Economic Forum on the report, warns that unless at least US$ 515 billion per annum is invested in clean energy between now and 2030, carbon emissions will reach a level deemed unsustainable by scientists, causing temperatures to rise by two degrees globally.”

Find out more about our Green Venture Fund, JPF Venture Fund 1, LP and how we are working to spur the type of alternative energy investing that the World Economic Forum’s report concluded is much needed.

1/8/2010

Central Penn Business Journal

Imagine being able to extract the solar energy trapped in the world’s tropical oceans and use it as a renewable power source.  Although that might sound like science fiction, a company in Hawaii called Ocees International Inc. is pursuing the technology — and it’s turned to a new Lancaster-based venture capital fund for help.  JPF Venture Fund 1 is the brainchild of Lancaster County resident Jeremy P. Feakins and his administrative team, which includes midstate businessmen Jim Greenberg and Ed Baer.

According to his Web site, Feakins founded and took public Medical Technology & Innovations Inc. and has managed reverse mergers for several companies, including Caspian International Oil Corp., Care Recruitment Solutions International Inc. and IP VoiceCommunications Inc.  A reverse merger is when a private company buys a public company then combines the two.  JPF’s goal is to practice sustainable investing, which involves products or services that improve social conditions, Feakins said.  “We liked the whole area of renewable energy and clean technology companies,” said Baer, the fund’s chief administrative officer and co-founder of The Marston Group Inc., a midstate boutique investment banking and consulting firm.  “We also liked the idea of not only providing the capital and experience to help these companies grow … (and) that everything we look at has a humanitarian aspect to it.”  Of course, the principals of JPF also believe the companies the fund invests in will prove profitable.  “We’re certainly not a charity,” Feakins said. “For us to get involved, the company has to have a product. We’re not interested in things on the drawing board. We’re looking at companies that have proven technology and customers in the pipeline.”

Ocees last fall became JPF’s first client, and several companies are in varying stages of the due diligence process, Feakins said.  He said one company has invented a process to make bricks primarily using whatever soil is available, making housing more affordable to construct. Another company has developed a 15-pound, renewable-energy power pack that could be used by military forces overseas, Feakins said. What the firms have in common is that they need a monetary boost to get off the ground.  “We’re looking at companies that generally have really good technologies and do good for people but haven’t been able to commercialize those (ideas),” said Greenberg, a partner at York-based law firm Katherman Briggs & Greenberg and chief investment officer for JPF.

JPF will require all of its companies to locate as much of their operations as possible at the fund’s 30,000-square-foot warehouse on South Queen Street in downtown Lancaster. For example, the accounting department of Ocees will move to Lancaster, but its power plant will not.  The space could house three or four companies and mean 100 to 150 jobs for the Red Rose city, Feakins said. But before that happens, JPF must raise more funds, Feakins said. The goal is $5 million, and so far the total has reached “in the seven figures,” he said. About 20 investors have signed on, Baer said.  What sets JPF apart, aside from its focus on sustainable investing, is its insistence on management and financial oversight for the companies in its portfolio, the principals sad.  “Too often with these early-stage companies, an investment will be made in the company and they veer from their plan,” Baer said. “We want to make sure that doesn’t happen, as protection for investors.”  JPF’s requirement also is intended to help the company succeed, Feakins said.  “We find a lot of companies are headed by engineers and scientists trying to be CEOs,” he said. “Our view is not that we want to supplant existing management, but we want to be able to help and support management.”

There’s a set time limit on JPF’s involvement. “I don’t know of any (funds) like we are,” Baer said. “We are in effect a short-term investor. We invest in these companies just prior to taking them public, and we insist that they agree to allow us to take them public.”  Baer said the fund hopes to take Ocees public on the London Stock Exchange next fall. Europe offers better opportunities than the United States to take renewable energy companies public, he said.  Companies also must agree to undertake a 12-month campaign to raise more money once they go public. Overall, JPF’s goal is to begin divesting itself of a company after 12 to18 months, Baer said.   Firms would no longer be required to stay in Lancaster once JPF divested itself, but the fund would allow them to keep renting space at the JPF facility, Baer said.

As many of you know Africa is in the world spotlight when it comes to climate change and the many challenges it faces. World Bank Vice President Obiageli Ezekwesili talks about some of the many challenges facing Africa and their plans to move forward on the issue of climate control. Obiageli points out that Africa is one of the fastest organizing continents with only 24% of its population having access to a stable energy source. The number is projected to grow and a cost effective and environmentally friendly solution is needed. Africa is a large contributor of CO2 to the environment and needs to be able to move its continent in a more environmentally sustainable direction.

Obiageli also suggests that another major problem facing the continent is the need for a sustainable land management program, especially in the area of deforestation. Overall Africa needs to adapt and enforce greater climate risk control in order to join the rest of the word in reducing climate change. Obiageli makes the case that in order for Africa to proceed forward they need help in the form of financing, knowledge and access to technology. This is a great video on the subject. Please take a moment to view it below.

Climate Change and Africa from World Bank on Vimeo.

Green Investing Tips From TreeHugger.com

Treehugger.com has published a really great resource listing some tips for investing in green. They say that there is no better time to invest in green than now. The top reasons being a green friendly administration creating thousands of jobs and pledging billions in funding toward the initiatives and the general value ofcurrent green stock offerings. Here are a couple snippets from the report and their top 3 tips for green investing:

1. Look to alternative energy companies for long term investments, not short term:
" Investments in alternative-energy companies, for example, probably won't pay off immediately, but they might in five to eight years, he said." They also note that "Alternative-energy companies could receive a boost if fuel prices go back up, as could makers of hybrid cars."

2. Invest in companies working to curb water shortage—which will soon be a massive issue—especially "companies attempting to develop efficient ways to desalinate ocean water to increase the supply. Other firms are working on recycling water for industrial use."

3. Check out transportation investment options. Most of the advice offered here is pretty standard stuff:

To find out more about Treehuggers green investing tips visit their article located here.

OTEC is the hydro energy conversion that uses the temperature difference between deep and shallow sea water to run a heat engine.

What does it mean?  We can create all the energy we need from our Oceans exclusive of fossil fuel.  JPF Venture Fund 1 is working with the only company that , in conjunction with the US Department of Energy, developed a working Ocean Thermal Energy Conversion (OTEC ) plant for the purpose of producing electricity.  The benefits are too many to list, but here are some highlights and links if you want to learn more about this world changing technology: Chilled soil agriculture, Aquaculture, Desalination, Hydrogen production, Mineral extraction.  Did you know that one 2 megawatt plant can produce 4300 cubic meters of desalinated water each day?  That's 1,135,940 gallons of fresh drinking water every day and that's just a one of the many by products of OTEC technology.  The world is going green and JPF Venture Fund is committed to getting us there.  Call us to learn more about JPF Venture Fund 310 993 5993.

Links:

http://www.nrel.gov/otec/what.html

http://en.wikipedia.org/wiki/Ocean_thermal_energy_conversion

 Great article today from the LA Times!

Are we finally starting to see some

support from the V.C. community?


LA Times.com

Silicon Valley venture capitalists nurturing growth of green technology

Start-ups often need big money and investors steeped in big science and big government.

By Todd Woody

September 20, 2009

Reporting from Menlo Park, Calif.

In what would have been an unaccustomed move for a Silicon Valley venture capitalist not too long ago, Alan Salzman recently flew to Copenhagen to attend a conference on climate change and schmooze government policymakers.

His mission: Explain the role of venture capitalists and their green-tech start-ups in cleaning up the environment.

"All aspects of clean tech bump up against government regulations," said Salzman, whose firm, VantagePoint Venture Partners, has funded such high-profile firms as electric car maker Tesla Motors Inc. and solar power plant developer BrightSource Energy Inc.

A few years ago, venture capitalists rarely ventured too far from Sand Hill Road, a stretch of low-slung office parks nestled among redwood trees in the hills above Stanford University that is home to some of the world's biggest venture firms. As a rule, Silicon Valley venture capitalists kept their distance from regulators and policymakers. Not anymore. Climate change legislation and state regulations are influencing the fate of their green-tech portfolios and helping determine whether a start-up turns out to be the next Google Inc. or the next Webvan, the online grocer that spectacularly flamed out in the dot-com crash of 2001.

"If you're doing tech investing you don't care too much what's going on in Washington with regulatory policy, but it absolutely matters with clean tech -- it's a big driver," said Marianne Wu, a partner at the Sand Hill Road firm Mohr Davidow Ventures. "I don't think anyone from our IT group has been to D.C. in the last year. But our clean-tech group certainly is going to D.C. often."

Reinventing the past

Silicon Valley venture capitalists have always been about inventing the future -- taking a wild idea, nurturing it with cash and creativity and giving birth to new products, companies and industries we once couldn't imagine and now can't conceive of living without: the Web, Google, the iPhone, Twitter.

But as green technology becomes the latest tech wave to break from the nation's entrepreneurial epicenter, it's now all about companies reinventing the past. Solar power companies, electric car start-ups and algae biofuel ventures aim to remake century-old trillion-dollar industries on a global scale.

Venture capitalists poured $4 billion into green-tech start-ups in 2008 -- nearly 40% of all tech investments in the U.S., according to a survey by PricewaterhouseCoopers. Green-tech investment plunged in the first half of 2009 to $513 million as the recession dragged on, but there are signs of a rebound: Silicon Valley's Khosla Ventures announced this month that it had raised $1.1 billion -- the biggest first-time fund in a decade -- that would be largely devoted to investing in green-tech start-ups, many in Southern California.

But green-tech companies face unique challenges, including global markets, tough technological hurdles and a future shaped by government incentives and regulatory policy. Those challenges are changing the game on Sand Hill Road.

"If you're starting a Web 2.0 company, your basic needs are personnel and servers -- there is no physical product, no manufacturing capacity, no inventory, no steel in the ground," VantagePoint's Salzman said, referring to software-based companies that provide services over the Internet.

Green-tech start-ups, he said, often need big money and investors steeped in big science and big government.

Solyndra Inc., a Silicon Valley start-up that makes rooftop solar arrays for commercial buildings, burst onto the market last October with a staggering $600 million in venture funding and $1.2 billion in product orders. If that wasn't enough, it has since raised nearly $200 million more and secured a $535-million loan guarantee from the U.S. Department of Energy to build a factory in Fremont, Calif.

California's requirement that utilities obtain a growing percentage of their electricity from renewable sources has created new markets for Mohr Davidow Ventures' start-ups. One company, Energy Innovations Inc. of Pasadena, is developing photovoltaic power equipment for commercial use. Another, Nanosolar Inc. of San Jose, has raised half a billion dollars and sells low-cost, thin-film photovoltaic panels for solar farms.

Recently, Tesla Motors scored a crucial $465-million, low-interest loan from the federal government to build the Model S, a battery-powered sports sedan, while BrightSource Energy has applied for a loan guarantee to help finance its first solar power plant.

"We have to be competitive on the global level, and to me it's very hard to understand how we can think globally without having some sort of partnership with the U.S. government," said Tom Baruch, a longtime Silicon Valley venture capitalist whose firm, CMEA Capital, was an early investor in Solyndra.

Green investor

Such talk was once heretical in Silicon Valley, and it still rankles Vinod Khosla, one of its most prominent investors. A co-founder of Sun Microsystems Inc. and a longtime partner at marquee venture capital firm Kleiner Perkins Caufield & Byers, Khosla started his own outfit, Khosla Ventures, in 2004 to invest in green-technology companies.

Khosla maintains one of the most eclectic green-tech portfolios -- companies involved in things as varied as solar energy, plant-based industrial chemicals and methods to improve the efficiency of internal combustion engines.

He has developed a reputation as something of a contrarian when it comes to green investing, dismissing electric cars, zero-emission buildings and other favored technologies as unable to pass what he calls the "Chindia" test: the price at which China and India will adopt a technology without subsidies.

"In the end, every single technology has to compete unsubsidized in the marketplace against fossil fuels," said Khosla, rail-thin and dressed head to toe in black during an interview at his Sand Hill office.

For Khosla, green tech is not so much changing the nature of Silicon Valley venture investing as it is about taking it back to the future. Before such investing became more of a financial business, venture capitalists in the 1980s understood technology and took technical risks, similar to what is happening now with clean technology, he said.

"It's not like you have another clever idea and you do a Web application," Khosla said. "It's about fundamental breakthroughs, and that's physics, chemistry and biology, the hard stuff."

For instance, Khosla is backing Calera, which was founded by a Stanford University professor to create "green" cement by combining carbon dioxide emissions from power plants with seawater. Another Khosla-backed company, Amyris, was started by UC Berkeley researchers.

"When I met them they were working on malaria drugs," he said of Amyris' founders. "Six months later the same genetically engineered bugs were producing diesel."

Khosla also dismisses the notion that green-tech start-ups need hundreds of millions of dollars in venture capital. Although that may be true for companies developing large-scale renewable energy projects, most green-tech ventures require no more capital than a typical chip start-up, he said.

"What's different is the amount of technical expertise needed, which many venture capitalists are just not equipped to do," Khosla said. "It's about being more patient and looking for larger breakthroughs rather than rushing things to market."

Forging alliances

Idealab founder Bill Gross has sat on both sides of the venture table and knows the virtues of patience -- solar companies that he started in 2001 are just now bringing products to market. Although it's not a venture capital firm, Pasadena-based Idealab invests in green-tech start-ups. Gross is also chief executive of solar power plant builder eSolar and the founder of Energy Innovations, funded by Mohr Davidow Ventures.

"Putting metal in the ground is a completely different thing than putting bytes on the server," he said. "In the old days you could start an Internet company and go public 15 months later. With a clean-tech company, 15 months later you're still working on a prototype."

Venture capitalists have often forged alliances with mainstream corporations to help their start-ups, but the trend has accelerated as green-tech firms try to break into multi-trillion-dollar markets. BrightSource Energy, for instance, counts among its investors not only Google and VantagePoint but oil giants including Chevron Corp., BP and Norway's Statoil Hydro.

BrightSource in August struck a deal with Chevron to build a solar power plant to generate steam that will be injected into an oil field in Coalinga, Calif., to enhance petroleum production. And this month BrightSource signed up global engineering and construction giant Bechtel Corp. as a contractor for its first big solar power plant as well as an investor in the project.

Such networks now need to be global, venture capitalists say. In the past, technology invented in Silicon Valley would first find a market in the U.S. and then spread to Europe and Asia. Thanks to years of government support for clean technologies in Europe and Asia, the most thriving markets and most formidable competitors are often found outside the U.S.

"Global markets are very, very important, and that requires a broader understanding of the competitive landscape," said Wu of Mohr Davidow Ventures. "In a lot of cases, we're seeing the technology innovation begin in the U.S. but the market starts somewhere else."

For Khosla, the changes wrought by the green wave are just the latest cycle in Silicon Valley's never-ending reinvention of itself. That venture capitalists now have the opportunity to help save the world from climate change only increases the return on investment.

"That's not to say we're do-gooders, but it's nice to work on things your kids are proud of," he said. "And I have a lot of fun at it, going up against the conventional wisdom."

Copyright © 2009, The Los Angeles Times