Will The U.S. Generate Too Much Energy? Vinod Khosla Thinks So

The potential for clean-tech innovation is so great you might be wise to expect the unexpected. What about an energy glut?

This was the prediction of rock star venture capitalist Vinod Khosla during a panel discussion Tuesday. The event at Google’s Silicon Valley campus was held to discuss the implications of California’s Proposition 23, an attempt to rollback the state’s ambitious climate legislation.

But Khosla stole the show with his outlook for the clean-tech innovation and energy use. “In 10 to 15 years, we will be shutting down (power) plants” because of an excess of electricity in this country, Khosla said. There is an “infinite” opportunity for technological innovation.

Such an upbeat outlook is no surprise from a man whose venture firm, Khosla Ventures, is an active clean-tech investor. Khosla said his firm is backing companies that hope to cut energy use in lighting and data center server racks by 80 percent.

He is equally upbeat about prospects for the United States over China – not always the prevailing wisdom these days. “I won’t say China is winning the clean-tech race,” he says. “But they are clearly paying a lot more attention to the race.”

Here are several other observations from the panel:

*Asked if there was an advantage to creating companies in Silicon Valley rather than China, Khosla was emphatic. “No question about it.” The people are here. The markets are here.

*Nuclear power no longer has an advantage over renewables, he added. There hasn’t been a nuclear plant build in recent years that can beat $7,000 a kilowatt. That makes wind and solar (in some parts of the world) competitive, he says.

*Proposition 23 is a threat because it will kill the clean-energy markets California’s A.B. 32 created. Both Khosla and Google Green Energy Czar William Wiehl concur on this point. Proposition 23, which will go to the ballot in November, would suspend A.B. 32 until the state’s unemployment rate drops to 5.5 percent or less for four consecutive quarters. Texas oil companies Valero and Tesoro back the measure. A.B. 32 sets reporting guidelines for polluters, establishes a statewide limit for carbon and guides emissions back to 1990 levels by 2020.

*A.B. 32 has helped create 500,000 clean-tech jobs in California, Wiehl says.

*Google, adds Wiehl, has made strides with energy efficiency. The company builds its own data centers and servers. As a result, data center energy use is one half of what it would be if the company followed industry-standard best practices, he said.

*As to the next “Google.” “There is no doubt in my mind we will see 10 of these” in clean tech, says Khosla. “Today California has the pole position to win that race.”

Dispute Over PACE Energy Retrofit Financing Goes To Washington

A week ago, California Attorney General Edmund Brown dashed off a worried letter to federal officials defending California’s PACE financing for home energy retrofits.

A week earlier, government lenders Fannie Mae and Freddie Mac released a vague lenders’ notice apparently critical of the innovative program. Brown worried the notice could derail efforts to expand the Property Assessed Clean Energy financing to 28 million Californians by September.

Now the dispute is the subject of discussions in Washington with efforts to remaking the energy profile of the nation’s homes hanging in the balance.

Notice from federal lenders Fannie Mae and Freddie Mac caused confusion, says California Attorney General Brown, with the future demand for home energy retrofits hanging in the balance.

The low-interest PACE loans allow homeowners to borrow for home energy-efficiency improvements, including solar installation, and repay the loans over the 20 years. The government raises the money by selling bonds. The repayments are added to property tax bills and the 20-year loans stay with homes when they are sold.

This final feature is what alarmed Fannie and Freddie. Would the liens keep the two lenders from underwriting mortgages for the properties, especially if the energy remodeling didn’t translate into higher property values? Participating homes would have higher tax bills than other comparable properties. Wouldn’t they be at a disadvantage in the market place?

Apparently, the dispute is being hashed out among housing officials in Washington. Their decision, however, will have an impact beyond California as states such as New York, Colorado and New Mexico are moving ahead with the program.

In California, PACE has already proved its popularity. In Sonoma County alone, 800 solar and other projects have been soaked up $30 million in financing. Energy remodelers say that along with President Obama’s HOMESTAR energy retrofit initiative now moving through Congress, PACE should spark a boom in business. And it should cut energy use at homes and businesses – about 40 percent of the nation’s demand.

In his May 18 letter, Brown, who is running for governor, said Fannie’s and Freddie’s advice notices “caused confusion and concern among California PACE stakeholders (and may have) serious financial implications for participating local governments and the thousands of homeowners and small businesses currently participating in these programs”

He said California has earmarked a substantial portion of $570 million in funds for PACE. The goal is to “support green manufacturing jobs and thousands of additional jobs associated with installation and maintenance of energy efficiency and renewable energy projects,” he said, calling for a withdrawal of the notice.

California’s Perilous Race Against The Electric Car

It isn’t hard to argue California is in danger of losing its race against the electric car.

The state will be among the first to see large numbers of battery-powered plug-ins on its roads. But its electrical infrastructure is far from ready, and regulators worry a surge of evening recharging will push peak power use beyond capacity.

Utilities commissioner Dian Grueneich admits to grave concerns about peak power demand

What’s more, officials say paying for necessary upgrades to electrical lines and equipment could push up utility bills at a time when some voters are pushing back against greenhouse gas reduction goals. A ballot initiative written to roll back California’s 33 percent renewable electricity target appears to have qualified for the November ballot.

It is no surprise California is on the vanguard of the electric car movement. Drivers here are expected to snatch up electrics in a surge of green enthusiasm. It also is no surprise California finds itself steering through unfamiliar territory. The state often blazes paths for the rest of the nation to follow.

What’s interesting is how much territory there is to cover. The state’s public utilities commission – the CPUC – is just now preparing its first key regulatory ruling.

The agency’s decision later this month will address the thorny issue of whether electric-car charging services are utilities and therefore subject to commission rules. The alternative is to let the market dictate prices and business conditions.

The importance of the judgment can’t be understated, but it is just the tip of the iceberg. With electric vehicles from Nissan, GM and other makers scheduled to go on sale late this year, the state is still at an early stage of the largest change to public transportation in more than a generation.

Officials and industry executives admit to grave worry. Even utility executives, who vow they will be able to supply the power for recharging, acknowledge their forecasts of electricity demand are changing rapidly. With uncertainty running high, time is running short.

The scale of the challenge is enormous. Thirty-three percent of the state’s greenhouse gas emissions come from transportation and without addressing vehicles California will never meet its goal of returning to 1990 CO2 levels in a decade. To do so means putting 2.5 million plug-in hybrids and electric vehicles in service – one for every 15 people in the state.

With so many unknowns, “we don’t have the answers,“ says CPUC Commissioner Dian Grueneich. “This will be a massive task.”

It is not surprise electric cars such as Nissan Leaf are expected to be big in California. No surprise the state is blazing a trail for others to follow.

During a keynote at the Berkeley-Stanford Cleantech Conference this week, Grueneich said she fears that electric cars will drive up the demand for power during the late afternoons, when air conditioners hum, office lights blaze and car owners arrive home to plug in. It is a time of day when there can be little excess power to spare.

“We are gravely concerned…(electric cars) will drive up our need for peak power,” she said. The commission hopes to use the lure of cheap, off-peak power to delay some of this demand. But it also is rushing to prepare the electrical infrastructure before local power circuits are overwhelmed.

This means building out neighborhood networks that typically handle five to seven homes. Utilities will target communities where electric cars are anticipated in the largest numbers. While there is some guesswork required, these neighborhoods are most likely the ones that first took to hybrid cars.

Regulators hope their gerrymandering is right. If all or a majority of the homeowners in a local community add electric cars – each with the capacity to draw as much power as an additional home – the circuits could buckle. It is a race against time, says Grueneich. Applications from utilities for local upgrades generally take 30 to 50 days to process.

Grueneich estimates the changes to the state’s electrical infrastructure could run to millions, if not billions, of dollars. “To move to a clean economy is going to cost some money,” she admits, suggesting that rate increases are possible.

PG&E’s Saul Zambrano, director of integrated demand side management core products, promises the utility is “on top” of the numerous changes. But he also admits its estimate of electric car adoption is a moving target. When Nissan announced in March it would sell the electric Leaf for $32,780, PG&E was surprised at the affordable sticker. So surprised it lifted its sales forecast. (The utility declined to release the exact figure.)

“We know the electric cars are coming,” says Zambrano. “We used to think 2011. Now we think late 2010.”

PG&E agrees that the new cars are likely to be clustered in certain neighborhoods, underscoring the need to make infrastructure upgrades rapidly.

Another set of concerns comes from carmakers. One of these worries is the need for a standard plug, so drivers don’t get stranded at charging stations without the correct technology, says Marc Tarpenning, a co-founder and former employee of Tesla Motors.

Service stations also need to be allowed to sell electricity. This requirement underscores the need for the CPUC to change its regulations authorizing only utilities to sell electric power, Tarpenning says.

He added that until recently he projected the need for a string of charging stations along the highways that connect California’s cities. He has revised his thinking.

“You could imagine a world where for a period of time we don’t worry about long distance charging,” he says. Drivers will take gasoline-powered cars on lengthy trips and use electrics about town.

But then, he points out, you could imagine too few.

California Solar Market Shows Strength In 1Q, But Financing Hard To Get

California’s solar panel market showed solid growth in the first quarter of the year, but financing remained hard to get for many homeowners.

Solar installations were up 43.5 percent in the first quarter in California.

California’s market is the most developed in the U.S. and steady growth here is a signal that other markets, particularly New Jersey and Florida, could follow suit.

According to an analysis of data from the state-funded California Solar Initiative, solar installations in the state rose 43.5 percent in the three months. This comes despite declining state incentives, says FBR Capital Markets analyst Mehdi Hosseini, who crunched the numbers. The greatest growth was in the San Diego area, where installations have lagged northern sections of the state.

And yet, applications for new residential solar systems were soft, increasing just 28 percent. The soft economy and the difficulty with higher credit requirements explain the weakness, says Hosseini. Large commercial projects also suffer from a lack of credit, continuing a trend from last year, he said.

On the other hand, utilities such as PG&E have shown an appetite to finance residential projects, as have some banks, such as U.S. Bank, suggesting a change a foot in financial markets.

SunPower continued to be the largest seller of modules in California. However, China’s SunTech took over the number two spot from Sharp. On the whole, SunPower, Sharp, Japan’s Kyocera, and number one worldwide solar cell maker First Solar all lost share as Chinese and other Asian module makers shifted their focus from Europe and channeled low-price product to California and the U.S. market.

California Renewable Energy Credits To Spark The Building Of Solar And Wind Farms

The California Public Utilities Commission approved the use of tradable credits for renewable energy in a ruling that should promote new solar and wind farms in the state.

The decision allows utilities to buy and sell credits for renewable power – a step that will necessary if they are to meet state’s 20-percent renewable energy goal by this year and the 33 percent goal by 2020.

Out-of-state credits can only make up 25% of a utility's renewable power, so more in-state plants will be needed

The credits allow utilities to pay for out-of-state renewable power – such as from a wind farm in Montana – that will be delivered to California at some point in the future, though not immediately. The commission says the scheme, which has been adopted by 30 others states, will provide utilities with the flexibility they need to meet ambitious targets that otherwise might not be reached.

But in contrast to other states, it drew a line in the sand. It ruled that only 25 percent of a utility’s renewable power can come from credits, putting pressure on the state’s energy sector to build more in-state plants. In recent years, California has lagged other states in adding renewable generation.

Some observers said the decision, released largely unnoticed late last week, could create an environment for more rapid development.

“It lends some certainty to the markets in California,” says  Seth Hilton, a partner at the law firm Stoel Rives. “It’s helpful in that sense.”

But it ultimately may prove to be unrealistic. Utilities may need to buy renewable power from where ever they can find it and in whatever quantities available to meet the 33-percent target. So if the 25 percent limit remains in place and citing new plants in state continues to plod along, credits may only contribute to failure.

Ice Energy Inks Energy Storage Deal In California

Ice Energy took its first step toward installing 53 MW of energy storage in Southern California on Tuesday, signing a deal with the city of Glendale.

The Colorado company said it would install 1.5 MW of its Ice Bear air conditioning devices on Glendale municipal buildings and on several nearby commercial buildings.

Ice Energy's Ice Bear will be installed on 28 municipal Glendale buildings

The units freeze water during the nighttime and employ the ice in the daytime to cool buildings during peak energy periods. The ice lasts as long as six hours and can reduce air conditioning peak energy use by as much as 95 percent, the company says.

The deal announced Tuesday is Ice Energy’s first project under an arrangement it reach in January with the Southern California Public Power Authority. The agreement calls on Ice to deploy 53 MW of energy storage devices in Southern California and is billed as the industry largest distributed storage effort.

The effort’s goal is to reduce peak energy demand in a state where power use surges during summer months.

Glendale will replace air conditioning units on 28 city buildings with higher efficiency models to run alongside the Ice Bears. The program is being supported with $20 million of federal stimulus funding.

The stimulus funds are expected to fund similar installations on 250 businesses in Glendale.

Groundbreaking Energy Proposal Requires Grid Storage Technologies In California

Jerry Brown may want to be governor of California. He also wants to be its newest climate crusader.

Attorney General Jerry Brown is considering a run for Califorina governor. He also wants to become the state's newest climate crusader

The state’s Attorney General, aided by Assembly member Nancy Skinner introduced a groundbreaking bill on Friday calling on California utilities to keep a reserve of electricity stored for emergency use.

The bill may be the first in the country to mandate the use of grid storage – an emerging, yet critical technology in the fight against global warming. As solar and wind technologies are increasingly used to generate power, energy storage become a crucial way to set aside power for when the wind isn’t blowing or the sun isn’t shining.

Brown’s bill appears to be aimed at providing a security net for when the peak demand for electricity spikes, such as on hot summer days when air conditioning is in wide use.  California’s energy use is particularly spiky for this reason.

The bill, if adopted, would require utilities to store 2.25 percent of daytime peak demand by 2014 and 5 percent by 2020. In a press release, Brown claims this will lower costs for consumer, since expensive peak-use plants won’t need to be brought online.

It also should accelerate California’s adoption of a smart grid capable of better managing power use and wheeling power both up and down electric lines, instead of just in one direction.

However, storage technologies, such as the use of giant lithium ion batteries, are still at a nascent stage.

California Is First To Offer Big Incentives To Clean Tech Manufacturers

Immigrant entrepreneurs may be getting all the attention, but California is ponying up for domestic clean-tech manufacturers.

Is California the golden state again? Sens Kerry and Lugar draw accolades for innovative bill in Congress

The state on Thursday became the first to offer large-scale incentives to green-tech companies eager to set up shop in the U.S.

Both moves show how policy makers are shifting their focus to innovative companies and start-up founders to combat what many believe could be a long period of slow employment growth in the U.S.

For their part, Senators John Kerry (D-Mass) and Richard Lugar (R-Ind) introduced a clever bill in Congress that will make it easier for foreign entrepreneurs to obtain visas. If these innovators can raise $100,000 from angel investors or $250,000 from venture capitalists – and create at least five jobs in two years – they deserve special treatment, the bills states.

This long-sought effort to open America’s doors to creative foreigners drew support from more than 100 VCs.

The second barrel of policy initiative was fired at the start of the Cleantech Forum in San Francisco. The California Energy Commission said it set aside $90 million to support manufacturers. The decision reflects a new urgency in the state, which has lost 32 percent of its manufacturing base since the dot.com crash 2001. With it went 600,000 jobs.

Commission Chairman Karen Douglas said $30.6 million will be available in the form of low-interest loans for manufacturers focused on renewable energy or energy efficiency.

An additional $59.5 million of support will go to companies developing transportation technologies, such as electric cars, and renewable fuels.

With both announcements, it appears the time has come for the state and the country to open their sails and welcome the next generation of business leaders. The timing couldn’t be better considering the paltry $15 billion job package Congress approved Wednesday.

California Expects to Have 17 Million Smart Meters In Place By 2012

California continues to expect 17 million smart meters to be installed across the state by 2012, despite complaints by some residents about higher electric bills and electromagnetic radiation.

By 2011, the meters will provide energy use data in real time, and, this year, data can be transmited to monitoring services, says CPUC's Aloke Gupta.

Twelve million of them will be electric meters and 5 million will be gas, said Aloke Gupta, senior energy analyst at the California Public Utilities Commission.

The smart meter rollout is part of a $4.6 billion state project designed to bring new capabilities and flexibility to the electric grid. Adding these features will be especially important if electric cars catch on in the state and the electricity demand grows from daily car recharging.

But in the past several months, some residents have complained of bills that increased after the meters were installed. A suit is already pending against utility PG&E. Others worried aloud at public hearings that the meters gave off electromagnetic radiation.

The meters are hoped to let residents better manage the energy use. By 2011, they will provide energy use data in real time, instead of after the present 24-hour delay, Gupta said at the Grid ComForum in Silicon Valley. By the end of this year, they will be able to transmit data to third party companies providing energy monitoring and conservation services.

All three of the state’s large utilities are involved to varying degrees. PG&E is to install 10 million meters and claims it now oversees the largest smart meter deployment in the world. Its network, however, is likely to become eclipsed in the next several years by China, which wants to install up to 40 million meters annually.

The meters, being made by GE and Landis+Gyr, with networks provided by Silver Spring Networks, have transmitters that can communicate not just with utilitie but to appliances inside a home. The “radio” into the home is not yet activated yet, says Kenneth Abreu, principal resource analyst at PG&E. It will be in a year or two, he says.

California Energy Efficiency Standards Could Slow Falling TV Prices

Here at this year’s Consumer Electronics Show, the excitement seems to be reserved for large screen TVs that plug into the Internet and display movies in 3D.

Korean consumer electronics giant Samsung highlight both capabilities as it discussed the features of its new line of LCD and LED models. This year the company will launch the first ever apps store for downloading software widgets to its televisions and its phones. Imagine the possibilities! (What about an app from the NFL?)

Sharp also is enthusiastic about Internet connections. It will roll out models with movie streaming links to Netflix (and with an enhanced color technology it calls QuadPixel).

But as televisions get more exciting and more capable, price declines may not come as rapidly as in recent years. That’s because energy efficiency improvements, like those being required in California, could add development costs. The state wants TVs 58 inches and smaller to burn a third less power by 2011 and almost 50 percent less by 2013.

It is likely television prices will fall more slowly, says Michael Troetti, president of Sharp Electronics Manufacturing Company of America. California’s standards are “challenging to the industry at a standpoint when the economy is tough,” he said Wednesday at the CES show.

Also likely to keep prices firm is a push among makers to sell premium models – those loaded with the latest features: online connections, remote controls sporting  LED displays, backlit LED screens that measure less than an inch thick. The strategy seems to be to load on features and hold the line on prices.

Energy efficiency will just be part of the plan. This certainly seems to be the case at Sharp, which on Wednesday unveiled several new lines of feature loaded “premium” models.

Each of them already meets California’s energy standards, says Troetti.


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