Archive for the ‘Energy Conservation’ Category

ACORE REFF West Conference Keynote Abstract, September 30

imagesThis coming Wednesday I will be speaking at the REFF West conference in San Francisco about the capital markets crisis and its impact on American innovation. Given the recent upwelling of popular press articles heralding the return of IPOs, my views, which are supported by newly released long-term statistics,are likely to generate some discussion. An abstract of my remarks follows:

The capital markets crisis has put an entire generation of American emerging growth companies at risk. America’s traditional leadership in entrepreneurial growth and innovation is now visibly faltering. This is the result of decades of government and corporate emphasis on short-term development at the expense of funding long-term, basic breakthrough research. Our nation’s lawmakers do not broadly recognize the public policy agenda implications of the fact that technology innovation has gone global. Recently published comparative international economic data reveals long-term declining rates of growth in U.S. government, corporate, and academic Research & Development (R&D) spending, particularly in Information Technology (IT). Further, a new study of the global capital markets illustrates the steep decline of the U.S. global share of public company listings for over a decade while other global stock exchanges have grown and flourished. All of these signs point to America’s slipping global competitiveness.

The global financial crisis has drained risk capital from the private sector at the worst possible time, compounding the effect of decades of neglect of our nation’s IT R&D infrastructure. Of direct consequence to the emerging Cleantech industry, the continuing IPO drought is a symptom of a deeper systemic liquidity crisis for small capitalization companies.

Predictions that U.S. IPOs are about to come back in a meaningful manner are wishful thinking. The current threshold criteria for liquidity as defined by the dominant underwriters in the U.S. accommodate only a small minority of the viable private companies seeking public growth capital. The severity of this untenable situation is compounded by a lack of awareness among our nation’s policymakers that all of these factors are interrelated (the announcement by the White House of an American Innovation Strategy last Monday notwithstanding).

It is not too late to address these challenges with realistic, achievable solutions that will enable structural capital markets reform. We must take specific actions to reverse the unintended consequences of a series of securities regulations bolted onto a framework that has been eclipsed by electronic trading and increasingly left behind in a fundamentally transformed global competitive environment. We must also recognize that, just as we nurture our startups in the unique environment of Silicon Valley, we must provide a public market structure that nurtures our fledgling IPOs and that allows middle market underwriters to support these companies with sufficient liquidity and with thorough, responsible research coverage.

Achieving these goals in the public equity markets does not require the relaxation of Sarbanes Oxley or of other recently implemented measures of corporate governance oversight and director accountability. To respond effectively, however, our legislators and regulators must share a sense of urgency to develop a coherent national innovation agenda that acknowledges new capital formation and new job creation through IPOs as top national priorities.

Going Solar Update– My Panels Are In!

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The Levensohn Go Solar project continues! According to our installation project manager from Solar City, Jeremy, PG&E will take another three to four weeks to turn the system on, but the panels are functional. I will be posting “BEFORE” and “AFTER” comparable electric bills once we are live. Solar City also has an information monitoring function that I look forward to understanding and blogging about once the system is fully operational.

30.92 City MPG from my SmartForTwo!

It worked. Changing my driving habits and moderating my acceleration and weight on the gas pedal increased my mileage in the SmartCar by 10.4%. This is all city driving in San Francisco. What if every driver in America could improve their gas mileage by 10% just by changing their acceleration habits. Maybe that would have an impact on oil prices, now, instead of other solutions which might create more oil supply ten years from now or cost $1.3 trillion in new infrastructure to deploy. Too simple, I must be wrong.

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SmartCar Mileage Update– 28 MPG Fill Up

As my Smart ForTwo gets broken in to city driving, I’ve found that my mileage varies based on my driving habits. For example, if I step on the gas pedal to really accelerate and put stress on that little engine, it sucks down the gas. I am going to test my mileage potential by driving particularly carefully for this next tank of gas and see what I can do. You may say, “that’s stupid, we shouldn’t have to completely alter our driving habits down to degrees of pedal acceleration to get some decent mileage out of that glorified lawnmower.” Perhaps, but I still love my SmartForTwo.

Remember, the SmartForTwo Passion coupe gets considerably better city mileage than a Bugatti Veyron or a McLaren F1– and at a fraction of the price.

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Energy Conservation Opportunities in China

China is a land of contrasts, and on my recent trip, which included visits to Shanghai, Lijiang, Xian, Hong Kong/Macau, and, of course, Beijing, we witnessed a country fully committed to irrevocable infrastructural change and possessed of a national will to move forward in both its social and economic growth. From an energy conservation standpoint, there are great opportunities for China to conserve energy and reduce carbon emissions. The pictures below show some measure of the wide extremes in energy efficiency that we saw as well as the continuing tension between tradition and modernity– sadly, the rapid urbanization that continues in China is likely to consign much of the rich cultural texture of the country to historical footnotes.

Two examples of energy inefficient vehicles in China today– one in Shanghai and one in Lijiang (Himalayan foothills)–

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Clearly the tractors that run on whatever-combustible-fuel-you-pour-into-them need to be taken off the road– in Lijiang the tractor-cum-carryall was the vehicle of choice.

Apparently the Chinese authorities are reducing gasoline subsidies post-Olympics and are maintaining heavy tariffs on luxury vehicles, such as the Ferrari. THat won’t stop the billionaires of China, but these policies may promote greater use of public transportation. A mistake made by the Chinese authorities has been the promotion of a domestic car manufacturing infrastructure for decades– as a result, there is a significant incentive for car manufacturers in China to produce cars.

The architectural revolution in Shanghai is staggering. See some of the examples of change and the vision of Shanghai’s future– Shanghai is planned to be the largest city in the world:
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These images of some of the people we met while on the trip truly capture the urban/rural dualism that is at the core of China’s rapid urbanization challenge today.Lijiang_china_187
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Wind Power and Natural Gas– Some Thoughts on the Pickens Energy Plan

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Boone Pickens made his fortune on oil and has been a bull on natural gas since before I invested in the Mesa takeover attempt of Texaco in 1988. Now he is a bull on wind power and believes that the combination of wind farms and transitioning the nation’s autos from oil to natural gas powered vehicles will deliver the knockout blow to the oil monopoly.

The United States is the “Saudi Arabia of wind”, as Pickens describes our country on his website pickensplan.com. Pickens believes we should capitalize on our natural wind power and points to rippling positive economic benefits from the creation of new jobs at windpower generating stations in rural America, noting the population gains and tax revenue increases from wind power generating stations in Sweetwater, Texas as an example of this rural renewal.

According to an April 2008 article in The Guardian:

“Over the next four years he [Pickens] intends to erect 2,700 turbines across 200,000 acres of the Texan panhandle. The scheme is five times bigger than the world’s current record-holding wind farm and when finished will supply 4,000 megawatts of electricity – enough to power about one million homes”.

On an even larger scale, Pickens estimates the overall cost of transtiioning to wind power in the U.S. as follows:

“Building wind facilities in the corridor that stretches from the Texas panhandle to North Dakota could produce 20% of the electricity for the United States at a cost of $1 trillion. It would take another $200 billion to build the capacity to transmit that energy to cities and towns. That’s a lot of money, but it’s a one-time cost. And compared to the $700 billion we spend on foreign oil every year, it’s a bargain.”

I would appreciate any comments from those who are familiar with the economics of wind power in action– particularly the successful experience of Germany with wind power.

While the Pickens Plan may make a lot of sense, the website, and what I have heard of the Pickens message so far, omit a major element required for success– immediate moves by American energy consumers to reduce energy demand and increase energy conservation.

The highest impact action we can take to break the oil monopoly and to eliminate our oil addiction is to go cold turkey– drug addicts break their dependency by changing their behavior. Notice how the market oil price drop from $147 to $128 in the last week reflects increasing signs of reduced demand for oil driven by global economic weakness combined with noticeable reductions in demand in the United States over the past twelve months.

We need to permanently change our consumption behavior and develop new patterns that will put a permanent brake on oil price increases during the period of transition. It will take decades to reach a new supply/demand equilibrium as we develop permanent substitutes for oil through renewable energy sources. Sustainable energy solutions will doubtless include wind power and solar power as well as other innovations.

But demand management will make a difference in oil consumption now and does not cost $1 trillion to implement. Change your behavior today to make a difference now!

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It’s Time to Go Solar

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In the continuing spirit of permanently changing my energy consumption patterns to reflect the new reality of our “here-to-stay” twin energy and climate change crises, I am converting my house to solar power. I was referred to SolarCity by my friend John Fisher of DFJ, an investor and a director of the company, as a one-stop shop to get this conversion done. We are at the front end of the process, and I will report further on my experience with the transition as it occurs. John recently converted his San Francisco home to solar and is very happy so far (it’s good to be a satisfied user of your company’s products/services).

Why am I doing this? Very simple– it’s a win/win. With my new 11.400kW DC (STC) 9,672kW AC(CEC) solar power system — yes, you must convert from DC to AC — I will immediately save almost $4,000 in utility bills in Year 1, which also means an 85% reduction in my electricity bill. Because I am actually buying the equipment myself, the cash flow break even runs about 6 years, depending on what your assumption is for the future annual escalation rate of electricity prices– historically it has averaged 5% per year, and many expect this to accelerate.

So depending on how bearish you are about the world energy consumption situation (or how bullish you are on the price of oil) the break even may be sooner. In any event, I am reducing my fossil fuel consumption (lots of cute statistics available to make you feel good about yourself) and paying far less money to PG&E.

SolarCity is a very interesting venture, but it is not a technology company. This is a construction services company (procurement, construction, installation, and monitoring of solar panel arrays and meters) and, most interesting, a financial services company.

If you cannot afford the capital cost of owning your own solar array, SolarCity will do this for you NO MONEY DOWN. The difference between self financing and ‘going all the way’ with SolarCity is that you will pay about 15% lower monthly electricity bills, not 85% lower, while you pay off the system over 15 years. SolarCity will also cap your annual rate increases at 3.5%– which is well below what you would experience with PG&E. You get to feel good, SolarCIty makes a lot more money, and I hear that some financial organizations in New York may be interested in aggregating these solar system financing costs and securitizing them– no surprise.

The SolarLease vs. Buy Option

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So here are some cute statistics:

Over the next 30 years, my system will offset:

588,706 lbs of CO2;

404 lbs of NOx;

101lbs of SO2; and

117lbs of particulates.

This amount of CO2 is equivalent to the amount absorbed by 1.27 acres of trees over their lifetime and the amount emitted by driving an average car 758,642 miles.

Are you feeling good yet? I am. Seriously, check out SolarCity. Make a difference!

Ever Heard of a Partial Zero Emissions Vehicle (PZEV)?

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I thought it was a joke, but it isn’t. Given my recent commentary on inappropriate Presidential word use, I was similarly troubled by the ‘Partial Zero Emissions Vehicle’ logo on the back of my rented Subaru Legacy when I picked it up at Boston’s Logan airport yesterday. I suspected some marketing gimmick concocted by those who should know better.

Happily, a trip to Wikipedia and GreenCar.com laid my anxiety to rest.

What is a PZEV? Per Wikipedia,

A Partial Zero Emissions Vehicle is a vehicle that has zero evaporative emissions from its fuel system, has a 15 year (or at least 150,000 mile) warranty and meets SULEV tailpipe emission standards. .. SULEV means Super Ultra Low Emission Vehicle (SULEV), a conventionally powered or gas-electric hybrid vehicle designed to produce minimal air pollution at their point of use, typically 90% less than that of an equivalent ordinary full gasoline vehicle. … Various techniques are used to reduce pollution in these vehicles. In order to qualify as a PZEV, a vehicle must meet the SULEV standard and, in addition, have zero evaporative emissions from its fuel system plus an extended (15-year/150,000-mile) warranty on its emission-control components, which incidentally covers the propulsion electrical components of a hybrid electric vehicle.

There are about 20 different PZEV models available today– for more on this topic, go to Green Car.com.

This is good news– apparently the engineering enhancement required to roll PZEV’s off the assembly line cost about $1,500 for auto manufacturers , but only $200 of the cost is being passed on to consumers. The Subaru Legacy appears to be pretty popular in this category. Unfortunately, with an MSRP in the mid-$20′s depending on what options you take, the car only delivers 20 MPG in the city and 27 MPG on the highway. At least it, and others in its class, deliver minimal emissions. In comparison, the Prius appears to deliver the full package.

Any comments from readers who are more knowledgeable on this topic?

Weight vs. Features and Fuel Efficiency in New Cars

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My friend, who prefers to be known on the web as “Dr. Klahn”, is an avowed expert on vehicle technology and a serious car person. Earlier todayhe sent me the following comments on trends in next generation fuel efficient vehicles–

I was just catching up on my MyYahoo homepage news and came across your various posts on the smartcar. If you’re looking for another interesting angle to engage readers on, diving into a conversation about fuel economy relative to weight is interesting. Much of the Smart car efficiency gains are due to the fact that it weighs a diminimous amount and can get by on 70 hp. The new turbo minis are the same – they weigh less than 2500 lbs and even the Prius gets a lot of gains from relatively light weight (~2900 lbs). In general, cars weigh too much these days. The Lexus Hybrid SUV actually gets pretty darn good MPG considering the damn car weighs 4400-4500 lbs. Imagine the MPG if you knocked 1000 lbs out of it. Unfortunately, Americans want features – electronics gadgets and safety features that weight a ton. In contrast, Ferrari has gone so far as to say their next cars will probably not have a whole lot more HP, but will in fact just be lighter. They have a concept car called the Mille Chili, which is targeting 1000 kilo weight. Power-to-weight is really the key factor here.

Also, worth noting is that the national highway organization revised down all MPG ratings for 2008. The 2007 and prior ratings were based on unrealistic speeds in cities and highways. The 2008 ratings are much more accurate. Every car’s numbers were revised down.

Dr. Klahn