March 12th, 2010
Fresh off its impressive $14 million Series B round in 2009, advanced materials start-up Novomer picked up further momentum after it announced a development agreement with investor DSM, a materials science company based in the Netherlands. Novomer’s catalyst technology enables production of plastics, polymers and other fine chemicals from renewable feedstocks like CO and CO2. As we’ve stated before (see the April 6, 2009 LRNJ and the August 31, 2009 LRNJ – client registration required), the company is a leader in a relatively unpopulated field: Other than U.S.-based Empower Materials (see the March 16, 2009 LRNJ - client registration required), Norway-based Norner Innovation (see the March 30, 2009 LRNJ - client registration required), and a few players in Asia, there are very few developers of carbon-dioxide-based polymers outside of university labs.
Novomer and its new partner, DSM, plan to focus on creating carbon-dioxide-based polymer coatings and inks for food and beverage, automotive, and industrial applications. The match between Novomer and DSM makes perfect sense, as their technologies and needs complement one another. Namely, Novomer’s carbon-based polymer production technology dovetails neatly with DSM’s deep experience in developing and selling petroleum-based versions of the polymers. This new agreement and its amenable licensing business model make it safe to predict that Novomer is starting to pull away from its competitors. Clients with needs for environmentally friendly polymers should engage.
Tags: DSM, Novomer
Posted by Jurron Bradley in Biosciences, Carbon, Nanomaterials
March 12th, 2010
Fresh, potable water is a dwindling resource for many of the world’s most populated areas, and the infrastructures for distributing and using it are increasingly antiquated or inefficient. The U.S. Environmental Protection Agency (EPA) estimates that more than six billion gallons per day of water (18% of total water treated) are lost during conveyance by leaking pipes. In some low-income countries, such as Indonesia and Mexico, leakage exceeds 50% of water treated, with the global average as high as 35%.
While improvements to physical infrastructure are slow to implement, comparatively faster and lower cost information technology (IT) tools aim to help manage existing infrastructure more effectively. The raft of technologies in this segment apply techniques such as acoustics, digital robot inspection, ground-penetrating radar, wireless sensor networks, and benchmark-based flow modeling. All help provide data toward the detection and location of leaks in pipelines, or measure and assess pipe conditions.
RedZone Robotics is among the more competitive companies on our Lux Innovation Grid, which ranks players according to how their technology, business execution and market presence compare. RedZone stands out largely for its pipe inspection technology, which deploys robots outfitted with an array of sensors that provide pipe integrity information. There are also several leak detection companies on our grid, among them are key players Pressure Pipe Inspection Company (PPIC) and Pure Technologies. Both get high marks for their business execution as well as their technology, which deploys acoustical sensors that allow the flow of water to push the sensors through the pipe.
Bentley Systems and MWH Soft are two of the better-established software companies on the grid. Both apply risk-based approaches to pipe rehabilitation and pinpointing leaks, and both register high business execution scores due to their profitability and high revenues per employee.
Source: Lux Research report ” Ranking Water Information Technology Companies on the Lux Innovation Grid.”
Tags: 7-Technologies, Bentley Systems, Derceto, Echologics Engineering, Martinek Water Management, Miya, MWH Soft, Omni Meta, Pressure Pipe Inspection Company, Pure Technologies, RedZone Robotics, Syrinix, TaKaDu
Posted by Heather Landis in Water
March 5th, 2010
The “food versus fuel” meme that spread like wildfire in 2008 arose from fears that record oil prices would spark a scenario in which modern economies would be forced to choose between crops for food and crops for alternative fuels. It was a simplistic notion based more on hype than science or economics. It also ignored the environmental shortcomings of petroleum-based fuels.
Most scientists agree that the rising price of food in 2008 wasn’t caused by actual shortages. Instead, it derived from speculation, hype, a relatively poor growing season, and ironically, the high cost of petroleum fuel, which made transporting crops to market more costly.
Contrary to the false dichotomy of “food versus fuel” there are many reasons for actively seeking out crops that can serve as both food and fuel.
- Increasing crop yields from existing farmland is preferable to expanding agriculture. Expanding agricultural lands either requires repurposing arable lands and losing their environmental benefits, or increasing irrigation of dry land, which will exacerbate a mounting water crisis (see the report “Malthus Returns: Solving the Unsustainable Agricultural Water Demand Conundrum” – client registration required). Planting food crops and using them for energy allows us to exploit the plant as fuel when food is plentiful, or divert it from energy when food is scarce. If we only plant energy crops, or replace food crops currently being cultivated with energy crops, we lose that option and put our food supply at greater risk.
- Crops grown purposely for biofuel poses economic issues. Growing crops exclusively to provide biofuel feedstocks requires farmers to invest in new seeds, new implements, additional maintenance, fuel, and labor. This requires long-term contracts with farmers in order to ensure a steady biomass supply that justifies the establishment of biorefineries nearby. Dedicated crops require additional tilling, planting, fertilizing, irrigation, and harvesting. All of this increases the cost of the biomass, making it more difficult to produce economically.
- Growing fuel crops on non-arable land is costly too. Planting energy crops on non-arable land requires an even bigger investment in cultivation. There’s a reason why crops aren’t grown on non-arable land: The soil quality is too poor, there is too little rainfall, the area is inaccessible, etc. So in addition to the challenges named above, non-food crops on underused lands lack roads, rail, farmers, fueling stations, and other infrastructure needed to cost-effectively transport this biomass to market.
- Agricultural and forest waste are the most economical and environmentally friendly sources of biomass. As we point out in our report (Biofuels’ and Biomaterials’ Path to Petroleum Parity – client registration required), the vast majority (70% to 90%) of the mass comprising food crops comes from non-food sections of the plant. It’s the stalks, leaves, and other parts that we do not eat. Taking advantage of this biomass requires no additional water, fertilizer, or labor. Plus, it can be transported, processed, and distributed alongside food, which makes more sense environmentally and economically than developing new crop species and fields.
There are certainly exceptions to the points above. There is some risk that biofuel crops could increase food costs, for instance, and specific sites exist where energy crops will work. In the vast majority of cases, however, improving utilization of crops we already cultivate for food (in particular, by recovering the non-food portion of the plant) is more viable from the perspective of the environment, food security, and biofuel economics.
Posted by Mark Bunger in Biosciences
February 26th, 2010
 Click on image to open larger version. Petroleum’s vast scale and energy density moves more mass today than any other human-generated resource. As the percentages in the vertical axis show, the 159 liters that comprise an average barrel of oil distribute to provide 75 liters of gasoline, 37 liters of diesel, and 16 liters of jet fuel. The remainder goes to produce other fuels like propane, and non-fuel materials like petrochemical feedstocks, and asphalt.
In terms of energy, a single barrel contains 6.1 gigajoules, or the rough equivalent to the energy contained in one ton of dry biomass. Depending on the crop, cultivation, and rainfall, a typical hectare of land (2.5 acres or 10,000 square meters) might produce the equivalent of 10 barrels of oil.
So will biofuels and biomaterials ever represent more than a drop in the barrel? Today, they replace a vanishingly small amount of petroleum products – just 0.16%, by our count. That’s partially because many first-generation products, like bioethanol fuel and starch-based plastics only approximate the performance of the petroleum-based chemicals that they aim to replace – and almost invariably at higher cost.
As the horizontal axis illustrates, if biomaterials and biofuels reach their maximum substitution potential with today’s technology, they could conceivably replace 92 percent of the products derived from a single barrel of oil – or about 4.8 trillion liters of petroleum annually.
In theory, of course, new technologies yet to be developed could produce biologically-based replacements for all petroleum, which is itself derived from biomass. However, realizing this potential will take more than technological innovation. These new materials will also need to compete with petroleum in terms of cost and scale.
Source: Lux Research report “Biofuels’ and Biomaterials’ Path to Petroleum Parity” (client registration required). To learn more about this graphic and related intelligence from Lux Research, click here.
Posted by Mark Bunger in Biosciences
February 25th, 2010
Early February saw 2010’s first concentration of M&A activity in the solar market. First, French nuclear power giant Areva acquired Ausra, a linear Fresnel lens solar thermal plant equipment supplier. Ausra struggled in early 2009 as investment in solar thermal installations all but halted (see the February 5, 2009 LRSJ – client registration required), and changed focus from a power plant developer to an equipment provider. The company was rumored to be up for sale since mid-2009. The Areva-Ausra match-up could breathe life into Ausra’s low-cost solar plant technology, and use the experience and reach of Areva’s power plant equipment business to push forward solar thermal installations.
Meanwhile, dish Stirling solar thermal technology developer Infinia raised $11.5 million in an equity financing round. This follows a $50 million capital raise mid-2009, and a $58 million raise in April 2008. Infinia competes directly with Stirling Energy Systems, which received $100 million in financing from NTR in May 2008.
The hoard of cash flowing into solar thermal component developers follows the acquisition of leading parabolic trough technology provider Solel by Siemens for $418 million in October 2009. But two questions remain.
First, who’s next to buy? Large component firms, including energy and defense firms, may see a strong fit between their competencies and the large-scale, highly regulated processes required for solar thermal plant execution. As for targets, we’ll keep our eyes on three firms:
- Heliostat and power tower developer BrightSource Energy, which continues to execute in plant development
- Linear Fresnel lens and parabolic trough developer SkyFuel, which offers a lower-cost technology option and potentially lower price tag, and
- Power tower technology developer eSolar, which recently signed a licensing agreement for a 2 GW facility in China
The second question is tougher to answer. Where is all that solar thermal set to go? While 50 MW plant installations continue in Spain, regulatory issues continue to dog the U.S. market (see also the January 7, 2010 LRSJ – client registration required). Clients should expect large-scale wrangling among new solar thermal owners as they push through complex solar thermal projects and offer the reliability, and balance sheet, needed to get the huge projects off the ground.
All of this stands in sharp contrast to IPO activity among photovoltaic technology firms. In Q4 2009, Trony Solar indefinitely postponed its IPO followed by Daqo, a Chinese polysilicon producer, which filed (see the January 21, 2010 LRSJ – client registration required), then lowered, and then in January postponed its IPO. Then, earlier this month, Jinko Solar – a vertically integrated ingot, wafer, and cell producer, joined the list and withdrew its IPO due to “poor market conditions.”
Even the completed IPO of U.S.-based STR Holdings in Q4 2009 yielded lackluster results after repricing twice in the days ahead (see the November 5, 2009 LRSJ – client registration required).
While the general market slump since the first of the year will put investors off, their greater concern likely lies in the volatility of the subsidy-driven solar market – and with good reason. A fresh storm of price cuts and continued margin pressure is brewing for late 2010.
Tags: BrightSource Energy, Daqo, eSolar, Infinia, Jinko Solar, SkyFuel, Stirling Energy Systems, STR Holdings, Trony Solar
Posted by Johanna Schmidtke in Solar
February 24th, 2010
Bloom Energy, the previously secretive fuel cell startup, is finally going public with its story, appearing on 60 Minutes last week. In an interview with Lux Research, Bloom’s Stu Aaron told us that the company intends to produce electricity from natural gas at a lower cost to the customer than the grid. Stu claimed the cost of electricity over the fuel cell’s 10-year life is $0.08/kWh to $0.10/kWh (when running as base-load for 24 hours a day), including government incentives and assuming a $7/mmBTU natural gas long-term contract. Stu also confirmed that the 100 kW fuel cell system’s price without incentives is in the range of $700,000 to $800,000.
Although their technologies are different, there are a number of similarities between Bloom Energy and Better Place, which leases electric vehicle (EV) batteries and provides charging infrastructure via a monthly payment plan. Both companies raised hundreds of millions of dollars: Bloom has received over $300 million in investment over its eight-year history, while Better place raised $700 million to date, including $350 million Series B in January 2010.
Both companies are also heavily reliant on subsidies. Bloom’s California customers achieve the quoted electricity costs only because they pay for just half of the system’s capital expense, based on the generous 30% U.S. federal tax credit and the $2,500/kW California rebate (New York and Connecticut also have generous rebate programs for fuel cells, as do many countries around the world). Without incentives, we calculate electricity would cost $0.13/kWh to $0.14/kWh, with about $0.09/kWh from system cost and about $0.05/kWh coming from fuel cost. Note that this is high compared to average retail U.S. electricity costs of roughly $0.11/kWh. In the case of Better Place, without subsidies, a U.S. customer would end up paying some $689/month over eight years, while a conventional gas-powered vehicle would cost only $443/month (see the February 10, 2010 LRPJ – client registration required). But massive government EV incentives could make EVs competitive in specific markets under Better Place’s model – Denmark has offered a tax credit of $40,000 or more per vehicle and Israel has similarly generous subsidies in place – although additionally generous government support is needed to put Better Place’s infrastructure in place.
However, the final similarity between these companies is the most significant one: both sport valuations of over $1 billion (Bloom’s Series F places the company at $1.45 billion, while Better Place’s Series B puts it at $1.25 billion). Niche markets do little to satisfy expectations this high, and both companies have not been shy in claiming that their technologies will eventually find a place in every home. While neither company will live up to its aggressive claims anytime soon, Bloom has a better shot at unsubsidized profitability in the long run. If it can successfully mass produce reliable systems and convince customers to take on the responsibility to produce their own electricity, Bloom should be able to bring down costs through high-volume manufacturing to the point where it will be competitive with electricity from the grid in many areas while providing relief to increasingly overtaxed transmission and distribution systems. While Bloom’s cells running on natural gas are not necessarily greener than combined-cycle gas plants, its economics justify a brighter long-term future than Better Place’s. However, whether it can do so quickly enough to justify its billion-dollar valuation remains to be seen – and will depend heavily on where government subsidies roll out.
Tags: Better Place, Bloom Energy
Posted by Jacob Grose in Alternative Power
February 19th, 2010
According to a recent article in the Wall Street Journal (subscription required), Toyota Tsusho, a supplier to Toyota Motor (which also owns 21.8% of the company), has agreed to invest between $100 million and $120 million for a 25% stake in a lithium (Li) mining project operated in northern Argentina by the Australian-listed company, Orocobre. Toyota Tsusho will also pay for the completion of a feasibility study this year. To help finance the deal, Japan Oils, Gas, and Metals National, a state-owned Japanese corporation, is giving Toyota Tsusho low-cost loans in order to secure a steady supply of Li to Toyota Motor.
This kind of deal will help cement the dominance of Panasonic, Toyota’s partner for electric vehicle batteries. The companies have a JV called Panasonic Electric Vehicle Energy (PEVE). While only 27% of the world’s Li supply goes to batteries today, batteries are the fastest growing use for the alkali metal, and Japanese chemical companies like Mitsubishi Chemical and Sumitomo Chemical, as well as some Chinese buyers, are all interested in acquiring stakes in Li producers. However, while Chinese battery makers like BYD enjoy a significant domestic supply (according to the most recent U.S. Geological Survey, China was the third largest producer of Li in 2008), Japanese companies must move quickly to make sure their supply is not disrupted.
After Chile, Argentina is the largest South American source for the metal; and, unlike Bolivia, which has the greatest reserve base in the world, Argentina’s government is relatively stable. Considering that battery price is already the most significant factor in whether plug-in hybrid vehicles (PHEVs) and all-electric vehicles (EVs) will be successful (see the Lux Research report, “Unplugging the Hype around Electric Vehicles” – client registration required), expect more major automakers to work on securing access to Li, lest they find themselves at the mercy of fluctuating commodity prices. The wild card? Innovative companies like Simbol Mining might find a way to flood the market with low-cost Li, but unless and until they do, expect aggressive attempts to secure Li supply.
Tags: Panasonic, Simbol Mining, Toyota Motor Co.
Posted by Jacob Grose in Alternative Power
February 12th, 2010
In a highly anticipated speech, the U.K.’s chief scientist, John Beddington recently told participants at the Oxford Farming Conference (OFC) that in order to deal with rising human population, the world and the U.K. must turn to genetically-modified (GM) crops and nanotechnology. In addition to decades of opposition to GM foods, activists in the U.K. have opposed nanotechnology in food, and the House of Lords recently issued a scathing report on food industry secrecy (see the January 22, 2008 LRNJ and the January 12, 2010 LRBJ – client registration required). The statements were nothing new from Beddington, but still highly controversial in a country where environmentalists such as Prince Charles have decried GM and nanotechnology because of, as the Guardian put it, ”the risk of upsetting delicate ecosystems in nature.”
Astute observers will note that upset ecosystems are precisely the reason that Beddington was calling for new food technologies. The ongoing debates over food, fuel, and climate are highly intertwined and show that there will inevitably be tradeoffs between environmental ideals. Despite organic foods’ ostensible wholesomeness, they cannot be produced in sufficient quantity to feed the world’s burgeoning population. Despite biofuels’ upward pressure on food prices, they can be an environmentally superior alternative to petroleum if they do not come from crops grown on former forest land. And despite environmentalist fretting about GM crops, these crops have never been shown to harm humans who consume them or the plants and animals in the environment. As the climate debate evolves post-Copenhagen, look for the role of biofuels and GM plants to shift to a more positive tenor as more thought-leaders and activists bow to these realities – much as, for instance, some environmental groups have swallowed their initial distaste to embrace nuclear power in the face of climate change worries.
Posted by Mark Bunger in Biosciences, Nanomaterials
February 5th, 2010
Changes in Israel’s water industry are having a drastic effect on the nation’s water bills. At the start of the year, Israel’s national water company, Mekorot, which provides 80% of the nation’s water, increased water rates by 25%. Additionally, rates will increase by another 16% during this summer, and at least another 2% at the start of 2011. Currently, water rates range between $1.5 and $2 per cubic meter.
The additional money will help fund a rapid integration of desalination plants into Israel’s water infrastructure. Currently, Israel sources 80% of its drinking water from Lake Kinneret. However, recent water usage levels have caused the lake to drop 1.5 meters in the past two years, and created a total deficit of 2 billion cubic meters. In a report, Mekorot stated there is a 38% chance that the lake will drop to a level by the end of 2010 that prohibits further pumping.
Mekorot instituted a program in 2008 to drill relief wells, which reduced water sourcing from Lake Kinneret by nearly 50%. The company’s long-term water solution involves installing a series of desalination plants that draw from the Mediterranean Sea. Currently, three plants are fully operational, providing approximately 150 million cubic meters of water per year. A fourth plant in Hadera became operational in December 2009, and is expected to reach its full capacity of approximately 125 million cubic meters per year within a few months. Mekorot is planning on bringing two additional plants online by 2012, bringing the total production to 600 million cubic meters, or 80% of Israel’s residential demand. The Israel Water Authority predicts that the increased water production will end the country’s water shortage within three years.
Once completed, the company will invest an additional 5 billion ILS ($1.36 billion) to install a new east-to-west pipeline. The company will focus on reducing water loss with the new pipeline, but it has not made an estimate on the increase in yield at this time.
Even with such drastic rate increases, Mekorot’s CEO believes that the company will still endure heavy losses, and the company is already facing an $8 billion gap in the project’s funding. This indicates that the Israeli people can expect further increases over the coming years. The Israeli government has attempted to ease the impact on customers by temporarily suspending the national Drought Tax until April 2010. At this time, there are no additional plans for government funding or support of the project.
Posted by Steven.Minnihan in Water
February 4th, 2010
The economic downturn has hit key nano-enabled product segments hard, particularly automotive, construction, and electronics. The output of these three sectors is immense, accounting for 10% of the U.S. GDP in 2008, and 9% worldwide. Plus, because all are big end markets for nanomaterials and their intermediates, the disruption within them has rippled back up the value chain.
As a result, Lux Research has lowered its previous projections for nano-enabled product revenues by 21%: We now expect nanotechnology to generate $2.5 trillion in 2015. Hardest hit will be two nanomaterials and two types of nanointermediates.
Among materials, carbon nanotubes and ceramic nanoparticles will see the biggest impact from the recession, due largely to their out-sized applicability in the struggling automotive and construction sectors. The relatively diverse applications for ceramic nanoparticles will enable them to recover more quickly. Among nanointermediates, nanocomposites and coatings will take the biggest whack. However, both should return near previously projected revenue levels by 2015.
Source: Lux Research report “The Recession’s Ripple Effect on Nanotech” (client registration required). To learn more about this graphic and related intelligence from Lux Research, click here.
Posted by Jurron Bradley in Nanomaterials
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