smart grid – The Climate Post

August 11, 2011

As Markets Dive, Clean Energy Stocks Hit by “Triple Whammy”

The Nicholas Institute for Environmental Policy Solutions at Duke University

The stock market took a beating this week, after the rating agency Standard & Poor’s downgraded U.S. bonds—but clean tech stocks have been falling even faster than the market as a whole.

Shares in clean energy companies have been hit by a “triple whammy”—producing too much capacity for the demand, problems with government debt, and broader risk aversion among investors. As a part of this, clean energy venture capital funding has dropped 44 percent when compared with last year.

Analysts from the global bank HSBC said wind energy stocks are undervalued and their prices could fall more as debt crises in both the United States and European Union stand to cut wind subsidies further. There are more than seven gigawatts of wind projects under construction now—but few planned beyond 2013 because of uncertainty about policies.

Solar stocks were down after many companies reported dismal second-quarter results, as prices on panels fell—but not as fast as the costs of producing them—and as their margins shrank. First Solar, the biggest solar panel manufacturer outside of China, boosted production but suffered a large drop in profits—and their share price. Suntech, the biggest manufacturer, also saw its stock fall, hitting a one-year low.

But some analysts say renewables stocks are bottoming out, and are set to rise again.

Adjusting to No Nukes

Germany decided to phase out nuclear power within 10 years and rely more heavily on renewables, and the country’s utilities are scrambling to adjust. E.ON, the world’s biggest utility in terms of sales, suffered its first-ever quarterly loss and is laying off 11,000 workers as it aims to boost its spending on renewables.

Another utility, RWE, is also selling off assets to cope with poor performance—but is planning to stick with its renewables investments.

Making the Military Green

The U.S. military is the single biggest user of oil in the world, and has been warned by analysts its dependence is a security threat. Now the U.S. Army has formed a new renewables office that may spend $7 billion over the next decade on renewable and alternative energy power.

Although the military has a target of using 25 percent renewable energy by 2025, many installations lack the expertise to move forward quickly enough, said the U.S. Department of Defense, and the new office aims to fill that gap.

Meanwhile, units within the mega-corporations Boeing and Siemens have teamed up to pursue military contracts for smart-grid technologies, which the military could develop and bring down the costs, helping them reach the market later.

Risky Business

With oil prices high and political uncertainty in many oil-exporting countries, the U.S. faces near-record energy security risks, according to a new U.S. Chamber of Commerce report. In 2010, their energy risk index is as high, as in the late 1970s and early 1980s, and near the record high of 2008. The Chamber predicts the risk level will remain high for another 25 years.

With gloomy economic prospects, the International Energy Agency (IEA), the U.S. Energy Information Administration, and the Organization of Petroleum Exporting Countries all agreed oil demand later this year is likely to be less than they had thought.

With Saudi Arabia boosting its production to the highest level in 30 years, oil prices have fallen a bit in recent weeks, but this is largely because of weak economies, the IEA said.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

August 4, 2011

China Aims to Become Solar Powerhouse with New Subsidies

China is already the world’s biggest solar panel manufacturer, but now it is making a move to become a major solar energy consumer as well, with a nationwide feed-in tariff to pay people or businesses a subsidy for electricity they produce with solar panels. This follows on the heels of the country’s wind energy feed-in tariff in 2009, which led to explosive growth in their wind industry.

China had a mishmash of solar incentives before, but the new policy will give a clearer signal to the market and “encourage more companies to participate in the industry,” said an analyst from Bloomberg New Energy Finance.

China’s latest five-year plan, released in March, set the goal of using 20 percent renewable energy by 2020, and a solar feed-in tariff has been expected for months—so in anticipation many solar installations have already gotten rolling, and a flurry of projects may soon qualify.

Fast and Steady Wins the Race?

China, Germany and the U.K. have the most stable and consistent clean energy policies, which helps boost investment, according to a new report by Deutsche Bank Climate Change Advisors.

However, on the same day as China’s announcement, the U.K. put into place a cut in its solar power subsidy for installations over 50 kilowatts, “effectively ending solar farm development” in the country, Business Green argued.

There was a stampede of projects trying to get completed before the deadline, but some are planning more large installations nonetheless. Also, it turns out a loophole in the solar feed-in tariff would have allowed large projects to still get high subsidies—but the government is now moving to close that.

The U.K. had planned to raise subsidies for other clean energy—but it is delaying the raise in the feed-in tariff for anaerobic digesters.

Besides the U.K., a number of other European countries—including Spain, Italy and the Czech Republic—hacked away at their solar subsidies before, and now the Australian state of Western Australia has also eliminated theirs.

The Canadian state of Ontario, on the other hand, is trying to protect clean energy projects by changing regulations to make it harder to cut clean energy subsidies.

Meanwhile, solar installations have been rising fast worldwide as the price of solar panels has fallen about 20 percent in the past year. But manufacturer’s margins are also falling, so it is not clear how much longer these price trends can continue.

Ethanol Subsidy Survives—For Now

It came down to the wire, but the U.S. Congress passed a deal to raise the debt ceiling before the Aug. 2 deadline, and Obama signed it into law.

But the deal did not include a near-term cut of ethanol tax breaks, as some had expected, which would have netted an estimated $2 billion in additional revenue.

However, it is likely the ethanol tax break will not be renewed, in which case it would cease at the end of this year.

Meanwhile, ethanol producers are pushing for a change in regulations to allow more ethanol to be blended into gasoline, allowing gasoline to be E15—15 percent ethanol—compared with E10 today. Last month, experts testified to Congress that the higher ethanol content may damage some cars’ engines, and more tests were needed to ensure E15 is safe.

There are also plans to carry ethanol in existing oil pipelines—but a new study found ethanol could crack the pipes, since bacteria that eat the fuel and excrete acids could thrive inside the pipes.

Making the Smart Grid Smarter

There have been many proposals for making our electricity grids and appliances smarter to help them use less electricity at peak times and shift use to off-peak hours of the day.

However, if many people’s appliances all switch on suddenly when the electricity rate drops, an MIT study found, the spike in power use could bring down the grid. But smarter tuning of how electricity rates go up and down during the day could avoid the problem.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

March 31, 2011

Obama Aims for Elusive Goal of Energy Independence

On Wednesday President Obama set a goal to cut oil imports by one-third in the next decade. It’s a goal, he acknowledged, that echoes calls for energy independence from every president since Nixon. But it’s time for the country to “finally get serious about a long-term [energy] policy,” Obama said.

One of the first steps, he said, is to boost domestic oil and gas production—in line with Republicans’ “drill, baby, drill” refrain that’s called recently for expansion of offshore drilling. The country will likely hear more from the administration about this, since a White House official told reporters on Tuesday that Obama’s speech is the beginning of a new “concerted focus on energy.”

Drastically reducing oil imports would be a historic turn, since imports have been on the rise in recent months—and have risen sharply over the past 40 years, as domestic oil production has fallen since its peak in 1970. From more than a dozen countries scattered around the world, the U.S. imports about 9 million barrels per day—about two-thirds of the oil it consumes, and about one-seventh of the oil produced outside its borders.

Andrew Revkin’s Dot Earth blog has a full transcript of Obama’s speech.

Blueprint for Innovation

The administration’s 40-page “Blueprint for a Secure Energy Future” shares details of other proposed measures, including cars with better fuel efficiency, increased ethanol production, and more clean energy. It calls for boosts in efficiency—but actual cuts in total energy use are hard to come by, a new U.S. Energy Information Administration report points out, as increasing numbers of gadgets have eclipsed efficiency gains.

The blueprint also calls for building a “smart grid,” but California utility PG&E has had a rocky start with its roll-out of smart meters. Some customers have feared the meters’ radio signals would harm their health, and now PG&E will disable the radio transmitters—but those customers will have to pay for manual readings.

While Obama’s energy blueprint calls for putting many well-established technologies into place, research continues on several cutting-edge energy-related technologies. Advances were announced last week on an “artificial leaf,” which uses sunlight to split water, creating hydrogen fuel. Meanwhile, the U.S. and U.K. announced $10 million in new grants for research aimed at improving on natural leaves to boost food and biofuel production.

Meanwhile, the U.S. Department of Energy is aiming to boost innovation with a new effort, “America’s Next Top Energy Innovator,” which will reduce costs and paperwork for start-ups to license patents.

U.S. states have continued to lead the way, with California’s Assembly passing one of the world’s most aggressive renewable energy standards, calling for a third of the state’s electricity to come from renewable sources by 2020.

In general, though, the U.S. is lagging on clean energy funding, falling behind China and Germany, according to a Pew Charitable Trust report. The report pointed out global clean energy investment is on the rise, reaching $243 billion in 2010, a new record high. China has also begun using a voluntary carbon trading system called the “Panda Standard.”

Germany’s Nuclear Fallout

The fight to control nuclear power plants in Japan continued, and the country may have lost the race to save one reactor from a meltdown, the Guardian reported.

In the wake of Japan’s disaster, Germany has been the country to change policies most drastically, with the Green Party toppling the conservative Christian Democrats in a major state election, and politicians calling to permanently shut half the country’s nuclear plants. The European Union’s energy commissioner said this nuclear backlash will mean more reliance on coal.

Juicing Up Cars

Meanwhile, with oil prices remaining high—hovering well above $100 a barrel—the members of the Organization of Petroleum Exporting Countries (OPEC) are set to mark a milestone this year, said Fatih Birol, chief economist of the International Energy Agency, with oil exports bringing in more than a trillion dollars.

Despite high prices at the pump, sales of fuel-efficient cars have stalled, according to the U.S. Environmental Protection Agency. One complaint about electric cars has always been their limited range on a single charge, but Secretary of Energy Steven Chu forecast that in about five years electric cars will be able to go 300 miles on a charge.

Tesla Motors, manufacturer of an all-electric sports car, is taking U.K. auto show “Top Gear” to court over battery range. The car maker claimed the show’s negative review was libelous, alleging the part when the car’s battery ran out of juice and was pushed to a garage was faked.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.