January 22nd, 2010
We recently discussed the use of nanotechnology in oil and gas, as well as other industries in a recent panel session at the First Kuwait Small to Medium Oil Industries Conference. Hosted by Sheikh Ahmad Al-Abdullah Al-Ahmad Al-Jaber Al-Sabah, the Minister of Oil, Minister of Information, and the Chairman of the Kuwaiti Petroleum Corporation, the conference intended to not only expand the role of small and medium-sized businesses in Kuwait’s oil industry, but in other industries as well.
By fostering entrepreneurship and development of new technology, Kuwait hopes to diversify its oil-dependent economy by exploring new markets driven by science and technology, and by reducing reliance on a few large organizations in favor of a more balanced ecosystem comprised of businesses of all sizes. To help advance these goals, the Sheikh announced an $87 billion program.
The audience itself posed challenging questions to many of the local speakers, revealing that there is an undercurrent of frustration with the centralization of power in the economy – the same centralization that the Sheikh’s program would address with funds for smaller businesses. Regarding the vision of a new, technologically-powered economy, one woman asked, ”Where is the strategy? Where are the leaders?” Another demanded to know “Whatever happened to privatization?”
In one particularly heated exchange, a financier asked a representative of Kuwait’s PIC Corporation, ”Why are you (PIC) subsidizing Dow Chemicals with cheap feedstock instead of using local companies and supporting our private sector?” The PIC manager replied, “If you can show me one local company, anywhere in the Gulf, that has run hundreds of polyethylene plants and who invented the technology, I will work with them. But there are none.”
The growing momentum behind opening and diversifying the economy was striking – and it poses opportunities and threats for the downstream petrochemical industry in particular. For example, as petrochemical giants like Dow and BASF try to maintain their hold on downstream processing and refining, they would do well to contemplate what happened to international oil companies (IOCs) like ExxonMobil and BP who had invested expertise and capital to pursue upstream exploration and production. Then, as national oil companies (NOCs) developed their own R&D expertise, they were able to increase pressure on and ultimately oust the IOCs, keeping the lion’s share of oil revenue to themselves.
Societal pressure is now on to repeat the performance in downstream industries, and retain more of the value of end products like polyethylene as well. While this transition will take years to unfold, it will not take decades: clients should pay close attention to Kuwait, Qatar, and other Gulf states that are rapidly evolving their economies using advanced nano-, bio-, water, power, and solar technologies as their roadmap.
Posted by Mark Bunger in Biosciences, Nanomaterials
January 15th, 2010
 Click on image to open larger version. While photovoltaic (PV) cells and modules attract most attention from solar industry watchers, the other elements comprising a PV power plant – called the balance of systems (BOS) – have barely earned a second glance. Yet, these components account for slightly more than 50% of the cost of a total system.
BOS components generally fall into three categories:
- Mounting, which includes racking and tracking systems
- Power electronics, which includes inverters and maximum power point tracking devices; and
- Installation, which includes the engineering and design work, as well as the actual labor of putting a system in place
Although not as glamorous as active PV elements, BOS components offer a largely untapped opportunity to improve the levelized cost of electricity (LCOE) for solar installations. Presented as cost per kilowatt-hour ($/kWh), LCOE measures the total lifetime cost of a solar installation. Put another way, reducing BOS costs could bring solar technology one step closer to grid parity.
From our analysis of BOS components – detailed in our recent report, “Balance of Systems: The Next Step to Grid Parity” – we found that labor presents the biggest opportunity for reducing overall system cost reductions. Because wage rates are typically fixed, high labor costs for solar system installation have been viewed fatalistically, as a bitter pill that must be swallowed. However, this view may be misguided. By both reducing the quantity and the quality of labor hours to install a system, integrators possess the largest lever for cost reductions on the BOS side. This will require thoughtful integration of the numerous BOS components to optimize each for reduced labor costs – even if it sometimes increases component cost.
Posted by Ted Sullivan in Solar
January 14th, 2010
Fifteen years ago, if you asked Asit Biswas if he believed there was a global water crisis, he would have answered “Yes.” Now, however, the Stockholm Prize winning water researcher says he believes the water crisis is indeed a myth. Biswas made his statement in a lecture at the 2009 Nobel Conference held at Gustavus Adolphus College last October.
While there are notable books on the subject of global water scarcity, including those authored by fellow speaker Peter Gleick, Asit pointed out that he doesn’t see a world water crisis caused by physical water scarcity, but by water management – or rather, a lack of water management.
Asit believes that there is indeed enough water to go around as long as people manage their water better. In his talk he highlighted the fact that 70% of the world’s water is used for agriculture - therefore, inefficiencies in the food chain are also a major drain on water resources. According to Asit, food waste is extremely high, with the USDA reporting that 27% of food in the U.S. goes to waste, while in India 50% of fruits and vegetables and 33% of all cereal grains never make it to the consumer. Asit noted getting food to the people and minimizing waste is one way to increase food availability without the need for additional water. His idea extends to the domestic side as well, where water leaking from distribution pipes is commonplace around the world.
Water efficiency and management is a cornerstone to many of Lux Research’s water reports, most notably the recent reports published on agriculture and water IT. In the Lux Research report entitled “Malthus Returns: Solving the Unsustainable Agricultural Water Demand Conundrum” (client registration required), we highlight the fact that it’s impossible to recapture an appreciable amount of water evaporating from agricultural regions. The only option left to agriculture is to increase water efficiency through technologies such as drip irrigation provided by Netafim and John Deere Irrigation; smart irrigation systems provided by Hydropoint and PureSense; and practices such as increasing crop yields and reducing the volume of water needed.
Improving water efficiency on the domestic side is addressed in the Lux Research report “Ranking Water Information Technologies on the Lux Innovation Grid” (client registration required). In the report, we highlight the fact that utilities, industries, consumers, and governments need to manage water more efficiently, and a basic solution to the water management problem is obtaining better information about water usage through information technologies provided by companies such as Derceto and Itron to minimize unaccounted-for water, reduce water consumption, minimize water pollution, and reduce energy consumption.
There are no fundamental issues that contribute solely to the water crisis. Water is indeed scarce in certain areas of the world where the population density is high, and it’s true that water efficiency and management are in dire need of improvement, as is the aging infrastructure. Improving water efficiency is an integral component to solving the water crisis, but there is also a need for increased funding of public water supplies as well as more investments in the hydrocosm to continue development of innovative water and energy-efficient treatment technologies. Finally, there’s a need for change in the mindset of how water is used and consumed. Not until all of these criteria are met will we truly see an end to the water crisis.
Tags: Derceto, Hydropoint, Itron, John Deere Irrigation, Netafim, PureSense
Posted by Heather Landis in Water
January 7th, 2010
Late last year, the Chinese government began taking more aggressive steps to shore up the financial position of key polysilicon producers, which had been struggling due to the price collapse of polysilicon during 2009. First, on November 17, LDK Solar announced that it had sold a 15% stake in its 15,000 MT polysilicon plant in Xinyu, China. The stake went to Jiangxi International Trust and Investment, an investment arm of the provincial government, for RMB 1.5 billion ($219 million) – valuing just the polysilicon plant at $1.46 billion.
Then, two days later, GCL Silicon announced that it had sold 20% of the company to China Investment Corporation – a state-sponsored investment vehicle – through the issuance of new shares to raise about $715 million. Additionally, GCL secured investment for a joint venture company to develop solar projects, with a total investment of $500 million. The latter move resembled those of MEMC, SunPower and others who have sought to integrate downstream to ensure demand (see the October 29, 2009 LRSJ – client registration required).
These two investments are notable in that they show more drastic action by government agencies to shore up favored polysilicon manufacturers. Chinese import restrictions on polysilicon helped to buoy the price of the material just a few months ago (see the August 20, 2009 LRSJ – client registration required) – but apparently not enough. The subsequent steps demonstrate the most overt case of government support to date.
Companies in the U.S. and Europe have long complained about the stealthy industrial subsidies received by Chinese firms, arguing that Chinese imports should be restricted on these grounds, and this case gives them the strongest ammunition yet to argue for protectionism predicated on unfair government subsidies. Expect the case for protectionism to continue to heat up as prices fall and European manufacturers struggle to cut costs to remain competitive.
Further, the new funds all but guarantee capacity ramp of these two major players, and this significant amount of capacity coming online over the next few years will further depress the prices of polysilicon, and make it difficult for smaller, independent players to exist. Indeed, increasingly, polysilicon makers can be divided into three groups: incumbents (such as MEMC, Hemlock, Wacker, and REC); state-sponsored firms (GCL, LDK, and Nitol); and those tied up with major device manufacturers (Fine Silicon, Asia Silicon, Joint Solar Silicon). Though a few exceptions, such as OCI and M.Setek, will likely weather the storm, it will be tough going for players without a corporate or government sponsor with deep pockets.
Tags: Asia Silicon, Fine Silicon, GCL Silicon, Hemlock Semiconductor, Joint Solar Silicon, LDK Solar, M.Setek, MEMC, Nitol, OCI, REC, SunPower, Wacker Polisilicon
Posted by Ted Sullivan in Solar
January 1st, 2010
 Click on image to open larger version Modern agriculture accounts for 86% of the world’s water consumption. However, in regions where crops and livestock are actually cultivated, the rate of consumption often outstrips what local water sources can provide.
Empirical data suggest that it’s possible to use around only 30% of an area’s total annual renewable water resource (TARWAR) before acute water stress problems set in. According to projections modeled in our recent report, Malthus Returns, the total amount of water withdrawn for agricultural purposes is set to rise to 4,923 km3 by 2050 if all current agricultural practices are retained. In the regions where people live and grow food, the aggregate total annual renewable water resource (TARWAR) is 8,128 km3.
Translation: In 2050, agriculture’s demand for water could represent nearly twice what can be reasonably withdrawn in the areas where people live and grow food.
The solution, it would seem, requires 100% adoption of available technologies, such as those shown above. Although that would help bring agricultural water use closer to sustainable rates, it’s more feasible to project adoption rates of 25%. The results of such a scenario are sobering.
At a 25% adoption rate, these technologies will help reduce water consumption to 27% of TARWAR, which still brings agricultural water consumption uncomfortably close to the limits of sustainability. Figure in reservoir evaporation, and agricultural water withdrawals jump above sustainability to 36% of TARWAR.
Biofuels make the situation even worse. Included into the above water wedge analysis, biofuels push total agricultural water needs to 37% of TARWAR when reservoir evaporation is factored in.
Posted by Michael Locascio in Water
January 1st, 2010
The foundation of collaboration in synthetic biology may be cracking, specifically where development of bioethics standards for safety and security are concerned.
Synthetic biology’s de facto industry group, the International Association of Synthetic Biology (IASB), has been the major driver of such standards. Until recently, its efforts to develop standards for bioethics safety and security (BESS) culminated in a report released at a meeting in Munich in 2008. It had relied on what might be termed an open-source approach, using publicly available data as the basis for assessing risk. According to IASB guidelines, all incoming DNA sequence orders must be compared to the gene sequences stored at GenBank, the global online database that provides the most comprehensive repository of gene data. If a customer’s sequence completely or nearly matched a gene known to be pathogenic – a smallpox gene, for example – then a human subject matter expert (SME) would step in to evaluate the risk potential. The SME could then order a background check on the customer, contact a bioweapons expert through the IASB, or take other actions to ensure the legitimacy and safety of the customer’s research. The final guidelines were announced on November 3.
So far, so good. However, two leading gene synthesis companies, DNA2.0 and Geneart, broke with the IASB in November to form the International Gene Synthesis Consortium (IGSC) and promote their own set of standards. Blue Heron Biotechnology, GenScript and Integrated DNA Technologies have since joined them.
The IGSC is establishing a closed system, where members could draw on a database built on public sources like GenBank as well as proprietary data and other tools. In addition, IGSC’s model reduces or eliminates the manual SME work that the IASB method requires. Moreover, Geneart is the leader among a small group of companies – including Febit, Ginkgo BioWorks, Biosearch Technologies and Sutro Biopharma – that started a new industry group this month, the Synthetic Biology Industry Association (SynBIA). While the organization is only now communicating its mission, it claims it will collaborate with the IASB, and even endorse the IASB standard. Even so, it’s hard to see the move as an extension of the IASB, rather than a break.
So what’s behind the growing rift? To get one perspective, we spoke with Stephen Maurer of the Goldman School of Public Policy at the University of California Berkeley. Maurer, who helped the IASB develop its standards program, noted that the consortium claims its membership will be limited to “significant” companies, which means that a smaller number of more powerful organizations will be free to make decisions and move ahead without having to build broad consensus like the more inclusive IASB. Indeed, DNA2.0 underscores that the IGSC’s five members represent 80% of global gene synthesis capacity.
More importantly, the IGSC’s more automated approach would lower costs for members (at the expense of quality, Maurer argued), while smaller companies would still need to rely on slower, higher-cost human SMEs – or else join the standard without the benefit of a vote on its content.
Maurer added, “DNA2.0 has in the past told me that they consider the act of cross-checking the customer’s order to be reverse engineering” and a breach of customer trade secrets. However, he doesn’t see that current trade secret law actually requires this result, and that if companies want to take the extra trouble of having SMEs examine customer sequences by hand there is no legal reason why they cannot properly do so. Indeed, U.S. regulatory agencies like the Environmental Protection Agency (EPA) and Food & Drug Administration (FDA) regularly protect such confidential business information.
While this arguably minor point of contention among the nascent industry’s players could be dismissed as growing pains, the number and severity of disagreements evident in these actions indicate a major shift is underway. Firstly, the IGSC’s actions build competitive barriers to smaller companies entering the gene synthesis space. That counters the trend of advancing technologies that have lowered barriers of entry. Non-governmental organizations opposed to synthetic biology in principle are sure to seize the opportunity to portray the start-ups’ discord as evidence that self-regulation is not a viable option. Late last month, as if to warn the squabbling parties about the threat of government intervention if they don’t straighten up, the U.S. federal government reminded the world that it has its own BESS guidelines.
Clients interested in the synthetic biology space should expect this spat to be just the beginning of a tumultuous period, and can look forward to things getting worse before they get better for at least the next twelve months.
Tags: Biosearch Technologies, DNA2.0, Febit, Geneart, Ginkgo BioWorks, Sutro Biopharma
Posted by Mark Bunger in Biosciences
December 23rd, 2009
A panel of battery manufacturers at the recent Advanced Battery Value Chain explored opportunities here and abroad, as well as the potential impact of U.S. economic stimulus funding. The panel included representatives from several companies that had recently received stimulus money, including lead-acid battery maker Axion Power, Li-ion battery and electric-vehicle maker Electrovaya, and Li-ion battery and pack developer Compact Power.
In response to a question of what it will take to make electric vehicles happen, Axion’s Edward Buiel replied that he strongly felt legislation is what will make the difference.
Axion’s lead-acid technology targets “start-stop” applications in which batteries merely serve to a hybrid’s acceleration as it begins to roll. Typically aimed at micro-hybrid vehicles, the technology has potential in the European market where new legislation mandates CO2 emissions from vehicles must be under 130 g/km by 2012. Otherwise, car makers face a very stiff penalty of €95/g CO2/km for each vehicle sold that doesn’t meet the standard.
Buiel said that if the U.S. does not institute a similar penalty, all the stimulus money going to battery manufacturing and electric vehicles will be worthless. He added that Axion’s advanced lead-acid batteries can help improve fuel efficiency by up to 30% in higher performance vehicles like BMWs, which currently emit between 150 and 180 g/km of CO2.
Sinking money into building domestic manufacturing capacity alone won’t be enough to overcome the cost hurdles preventing adoption of electric vehicles. Adding carbon prices in the U.S. won’t be enough to move the needle for next-generation plug-in hybrid electric vehicles (PHEVs) and all-electric vehicles (EVs). Imposing the equivalent of $50/ton of CO2 would effectively raise the price per barrel of oil ($/bbl) by only $20.
Based on our research, however, prices need to skyrocket from around $75/bbl today to around $200/bbl before they significantly impact sales of PHEVs and EVs (see Unplugging the Hype around Electric Vehicles: client registration required). Micro-hybrids are another story, and sales of these vehicles may indeed be spurred by a carbon tax.
Stimulus funding and Chinese competition
Needless to say, the topic of U.S.-China competition in battery manufacturing also came up during the discussion. Panel member Sankar Das Gupta, CEO of Electrovaya, argued that Li-ion cells can be cost effectively manufactured in North America through a high degree of automation. The caveat is high production volumes. U.S. stimulus funding can help companies overcome the capital investment hurdle.
Buiel indicated he expects high quality and advanced lead acid batteries will continue to be built in North America for a long time. The reason is because the U.S. traditionally has more advanced production technology and the manufacturing of lead acid batteries requires more highly skilled labor. Consequently, lead-acid players in North America are less threatened by Chinese competitors than their Li-ion counterparts, like Electrovaya.
Firms focusing on lead-acid technology, he added, will likely get a boost from the European market, where micro-hybrids are more popular than PHEVs in the foreseeable future. However, this advantage figures less prominently in the U.S. and Asia, where the focus is squarely on PHEVs and all-electric vehicles powered by Li-ion batteries.
Tags: Axion Power, Compact Power, Electrovaya
Posted by Ying Wu in Alternative Power
December 18th, 2009
Nanocyl recently announced that it plans to increase its multi-walled carbon nanotube (MWNT) capacity from 40 tons/year to 400 tons/year by July 2010.
Thus, Nanocyl joins the scale-up race started by other competitors profiled in our Nanomaterials Journal, including Showa Denko, CNano, Bayer MaterialScience and Arkema (client registration required). Assuming its plans materialize, Nanocyl aims to expand global production capacity further to approximately 2,200 tons in 2011, almost 2.5 times greater than this year’s capacity.
Don’t be fooled into thinking the MWNT market is expanding at such a rate, because none of the suppliers listed are operating at 100% utilization. In fact, we typically hear single-digit percent utilization is the norm. This imbalance of demand and supply brings joy to the ears – and pockets – of customers who incorporate MWNTs, since prices should start to fall from the $200/kg range – for standard grade MWNTs – to expected lows of approximately $50/kg. The producers, of course, are betting that this price drop will ultimately broaden the application base and allow them to drive up utilization and eventually become profitable. But it’s still quite possible that the markets will continue to develop slowly, and weaker manufacturers will get burned.
Stay tuned as we monitor the MWNT space, and keep a lookout for an upcoming Nanomaterials State of the Market report devoted to carbon nanotubes in early 2010.
Tags: Arkema, Bayer MaterialScience, CNano, Nanocyl, Showa Denko
Posted by Jurron Bradley in Nanomaterials
December 11th, 2009
We recently met with Takao Inoue of the newly formed Innovation Network Corporation of Japan (INCJ) in Tokyo. Formed through the support of Japan’s government, INCJ aims to encourage development of emerging technologies, as well as the adoption of an “open innovation” model among Japanese corporations. The vision is to enable industrial giants from Sony to Toyota to develop new products more rapidly by accessing inventions from universities, start-ups or other large corporations. Inoue explained that INCJ has been given 90 billion yen ($1.0 billion) to invest, with commitments for up to 900 billion yen ($10.2 billion) over the next 15 years. The Japanese government committed to providing 90% of the funds, with the balance coming from private firms, such as domestic leaders like Panasonic and Tokyo Electric Power, and overseas player like General Electric. INCJ plans to pursue investments in “environment and energy, life sciences, electronics, machinery and components and advanced materials,” with additional areas possible in the future.
As part of its role, INCJ will serve as an early-stage venture capital (VC) or angel investor. It will provide funds to secure promising intellectual property from universities and government labs, and back start-ups and spin-outs – filling a gap in which traditional Japanese VCs have been unwilling to invest more than small sums. However, Inoue-san noted, INCJ’s mission isn’t limited to early-stage investments. It will also provide larger investments to fill capacity expansions and project finance needs – a role that’s missing in the West as much as Japan. Such projects require larger sums than VCs are willing to offer, or impose too much technological risk to entice traditional private equity investors.
It’s still early days for INCJ. The firm was established in June, and won’t make its first investments until early 2010. But clients should watch to see if it can maintain its political and private support, and succeed in bridging gaps in Japan’s existing financing model, which make the country poorly suited to fund emerging technologies in energy, environment and materials.
Posted by Michael Holman in Alternative Power, Biosciences, Nanomaterials, Solar, Water
December 9th, 2009
 Bioplastics may be renewable, biodegradable and sometimes both. But despite their eco-appeal, they currently represent only 1% of global plastics revenues. Yet as dozens of start-ups are entering the market along with large chemical companies such as Dow Chemical, Bayer, and BASF and even agricultural players like Cargill, we expect today’s $1 billion biopolymer market to see double-digit growth in the coming years.
Even so, before they see widespread adoption, biopolymers must be both as effective and economical as conventional plastics.
In our recent report, “Growing Tomorrow’s Green Materials,” (client registration required) we assessed emerging green materials, and scored them on three dimensions: their performance characteristics, economic competitiveness and ecological profile. Taken from that report, this week’s graphic shows biopolymers under-perform their conventional counterparts on every dimension except the ecological.
Granted, performance and cost may be secondary considerations in some applications, such as toothbrush handles, packaging and printer cartridges where traditionally used plastics materials are arguably over-engineered for the job. But in order to compete on a scale with conventional materials, biopolymers will first need to deliver comparatively higher – or at least unique performance attributes and lower costs than their conventional counterparts.
Posted by Mark Bunger in Biosciences
|
|
