Vestas Whiffs On Earnings As Wind Energy Sputters

August 20, 2010

The wind business continues to suffer from a lack of credit and government policy.

This was evident in a disappointing earnings report from wind turbine market leader Vestas Wind Systems. The Danish company on Wednesday responded to the downturn by cutting its annual sales forecast to 6 billion Euros from 7 billion and said it expects an EBIT margin (before interest and taxes) of about half of its previous estimate.

Its explanation was that turbine shipments to projects in Germany, Spain and the United States were delayed.

Here are several details from the financial report:

*Second-quarter shipments of 283 turbines were down 54 percent;
*Second-quarter revenue was off 17 percent;
*The company swung to an after-tax loss of 119 million Euros from a profit of 43 million Euros a year ago;
*The company laid off 300 people in Denmark. It still expects to add 3,000 employees in 2010, down from previous target of 3,400.

“The decline in revenue and earnings reflects the very low level of activity in the wake of the credit crisis and Vestas’ decision not to adjust its capacity further because of short-term market developments,” the company said in a press release.

Vestas tempered the news by pointing out that second-quarter orders rose to 3,031 megawatts of turbines, a record. Banks are more critical of projects than they were before the credit crisis began, but now more are venturing into the market, the company said.

And yet, there is no doubt this burgeoning industry is being held back by a lack of finance. The European Wind Energy Association acknowledged the same in early July as it reported that 118 offshore wind turbines were installed in Europe during the first half of 2010. “Developers are severely constrained.”

A more dire report came from the American Wind Energy Association late last month. The trade association said wind power installations so far this year were off 71 percent from 2009. Only 700 megawatts of equipment was added in the second quarter – below levels from 2007.

The trade association blamed the lack of national renewable portfolio standards mandating the use of renewable energy.

While the second half of the year could be better, installations for the full year will likely be 25 percent to 45 percent below last year, it said.

It could be some time before this boom and bust industry regains its once lofty status.

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Posted by Mark Boslet

How Big Is The Clean Tech Market?

July 2, 2010

What is the annual market opportunity for renewable energy and efficiency measures, such as building controls, energy reconstruction and electric vehicles? Does $1 trillion sound like an enticing number?

One trillion dollars may sound gargantuan, but it is what the International Energy Agency suggested in a recommendation earlier this week. And it isn’t far from the scale of the global warming efforts called for in other top studies.

In its landmark 2007 report, for instance, the Intergovernmental Panel on Climate Change concluded that mitigating atmospheric heat rise would cost the world 0.2 percent to 3 percent of annual GDP. Mitigation isn’t the same as market opportunity.

To obtain an economy where 50 percent of electricity come from renewable sources, the world will need to build the generation listed above

But it defines the magnitude of the effort – and perhaps the willingness of business to respond with innovation.

To put the IPCC’s projection in annual dollars, consider that the world’s gross domestic product is $61 billion. Three percent of that comes to $1.8 trillion a year. The IPCC’s report says the effort would hold temperature increases to between 2 degrees and 4 degrees Celsius.

The Paris-based IEA looks at impact from a different angle. The agency projects that the world will need to spend $46 trillion between now and 2050 to be sure half of all electricity comes from renewable sources. This includes improving energy efficiency.

Divide the number out and it comes to about $1.2 trillion a year. Most of this spending is to come from consumers buying more efficient, low-carbon equipment and, particularly, cars. Of course some of the money will be paid back through lower fuel use.

But achieving an economy where 50 percent of electricity comes from renewable generation requires an industrial investment as well beyond what might be anticipated to meet growing energy demand. That approach includes the annual construction or deployment of:

*More than 30 nuclear reactors;
*Thirty-five coal-fired plants with carbon capture technology;
*Two hundred biomass plants;
*Nearly 16,000 wind turbines;
*Forty-five geothermal plants;
*Three hundred and twenty-five million solar panels; and
*Fifty-five solar thermal plants.

Energy-efficiency improvements in developed countries also must continue at today’s almost 2 percent a year pace, a pace that is almost double from the 1990s.

The IAE points out that in 2008, the world invested about $110 billion in wind, solar and other renewable generation. Investment levels remained relatively stable in 2009, despite the downturn.

Still, they are one-tenth of where they need to be. It sounds like a monster of an opportunity.

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Posted by Mark Boslet

Biomass Is Big In Sweden, Wind Falters In The US

June 24, 2010

Biomass now accounts for 32 percent of the energy consumed in Sweden, but the gale behind wind energy in the United States has faltered.

Biomass is now the largest source of power in the Scandinavian country, ahead of oil. The fuel is primarily used for heating , especially in multi-family dwellings, and the increase has been aided by taxes on carbon dioxide, sulfur and nitrogen oxide.

Wind farms, like this one in west Texas, can now generate 14 percent of the state's electricity

As a result, Sweden has become the world’s largest consumer of wood pellets, and wood pulp has gone up 20 percent in price since 2005.

On the other hand, the momentum behind the wind industry in the United States has calmed to a breeze. According to the American Wind Energy Association, the nation added new capacity in the first quarter at the slowest pace since 2007.

Only 539 MW of new generation went in during the three months. This suggests an annual pace of 2,156 MW in 2010, down from 10,000 MW in 2009 – a recession year.

The explanation may be simpler than some believe. Wind projects take a long time to plan, which explains why 2009 totals were up from 2008 despite the global downturn. (In 2008, 8,500 MW of generating capacity was added.) Wind projects take 18 months or so to plan. So 2009 installations were conceived during in the relatively good year of 2008 or before. This year’s projects were born in 2009, when credit was tight and investors were avoiding risk at every turn.

Unfortunately, the poor first-quarter performance reveals another stark reality. The Department of Energy’s $3 billion in wind technology investments apparently haven’t had the desired effect of stimulating deployment.

Texas, however, is bucking the national trend. The state now has the capacity to generate 14 percent of its electricity from wind farms with 6,721 MW of turbines installed.

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Posted by Mark Boslet

Big Blow For Tidal Power

June 18, 2010

The prospect of nearly unlimited, renewable energy from the tides suffered a blow this month when OpenHydro announced it would pull its experimental underwater turbine from the Bay of Fundy.

The test in this most extreme tidal environment was seen as a critical opportunity for the industry to prove that harnessing the tides had finally become feasible.

OpenHydro says it will pull its experimental tidal turbine out of the Bay of Fundy this fall after two rotors broke.

OpenHydro lowered its 400-tonne, six-story turbine onto the seabed last November, choosing the swift flowing Minas Passage near Parrsboro, Nova Scotia.

Last week, the Irish company said it would yank the turbine out by October after an underwater video discovered two broken blades. The blades are made of a combination of plastic and glass.

The setback underscores how difficult it is to operate in the corrosive, storm-plagued marine environment. The $10 million, 1 MW project had hoped to show a first-of-its-kind tidal plant could be built to supply as much as 25 percent of Nova Scotia electricity.

The Bay of Fundy was selected because it arguably has the highest tides in the world, competing for the honor with the Ungava Bay in Quebec and the Severn estuary in the United Kingdom. Tides can rise 55 feet or more, generating a potential of 1,013 MW of power, 152 MW of which can be harnessed with little environmental impact.

The test was being closely watched and will be viewed by the industry as a big setback. The theory is that the predictability of the tides will ultimately make the energy they generate less expensive than solar and wind – though today it is roughly three times more costly. According to an Electric Power Research Institute study, that price in the Bay of Fundy could be as low as 5.5 cents a kWh, roughly comparable with the wholesale price of electricity.

According to a press release, OpenHydro, which has raised $74 million in funding since 2005, plans to repair the turbine and reinstall it next year. The difficulties “will further our understanding of how the turbine has operated in this unique and challenging environment, bringing us closer to commercially developed tidal arrays in the Bay of Fundy,” said CFO Peter Corcoran.

The company had lowered a video camera to view the turbine in May after an acoustic modem intended to monitor underwater motion malfunctioned.

The setback isn’t the first for tidal power. Verdant Power, for instance, struggled to keep its turbines running in the powerful currents of New York City’s East River, and was forced to pull prototypes only weeks after they were installed when blades broke.

The company is presently operating new smaller devices with fewer moving parts. The new design anchors three turbines on a triangular frame rather than place them directly on the riverbed.

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Posted by Mark Boslet

Washington’s Big Money For Clean Tech

June 10, 2010

Microsoft Chairman Bill Gates and General Electric CEO Jeff Immelt hope to convince the federal government to triple clean tech investments.

Bill Gates and Jeff Immelt, CEO of GE, want the federal government to triple clean-tech investments

The pair of corporate titans said Thursday they want $16 billion to go each year to research, develop and deploy technologies including wind energy, solar and nuclear fission. Their newly created American Energy Innovation Council includes fellow heavyweights John Doerr, a venture capitalist, and Bank of America Chairman Chad Holliday, among others.

On the surface, this flood of money makes obvious sense. But in a sense it is nothing new. Contained in proposed federal legislation waiting Congressional approval is clean-tech spending that will increase to $50 billion a year by 2020 says Mark Trexler, director of climate strategies and markets at risk management firm DNV.

About $13 billion comes from tax credits and other fiscal measures. The rest is the result of ratepayer increases for electricity and other energy.

The spending should lead to massive investments for wind, solar and carbon capture, Trexler said at the Cleantech Institute conference at the University of California, Berkeley.

The trouble is the legislation has a slim chance of passing and the stalemate over bills, such as Waxman-Markey, could last another five to six years, says Trexler. If Democrats lose seats this fall and again in 2012, “it doesn’t make sense that the numbers look any better,” he says.

According to Maximilian Auffhammer, also at the Cleantech conference, the Waxman-Markey has another big benefit for clean tech that is not well known

Among the bill’s important policy mechanisms are “the most stringent building codes we have ever seen,” says Auffhammer, an associate professor at the University of California, Berkeley.

The bill would bring into existence the first nationwide system of building codes and tighten them every year through 2030. They will spark considerable demand for green building technologies, he says.

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Are Fuel Cells The Next Big Thing For Phone Companies?

June 7, 2010

Solar and wind-powered cellular base stations are finally taking off. Next up: hydrogen fuel cells, compressed air storage and lithium ion batteries.

A push for renewable-energy base stations appears to be gaining momentum in the telecom industry, with routers and other network-access gear likely to follow suit and go green someday.

The adoption of solar and wind powered cellular base stations seems to be picking up as solar prices fall.

The market acceptance is fueled by lower costs, particular after last year’s sharp fall in solar panels prices. But system engineering is making great strides as well, translating higher solar and wind energy efficiencies into higher overall product performance.

The expanding market is the reflection of a multi-year push by the telecommunications industry for alternative power – and in that sense it mirrors the initiatives of other industry trying to grasp the energy realities of the 21st Century.

But the story has a unique twist. The industry has an obvious starting point: the remote cellular base stations springing up in hard-to-reach developing communities, where trucking in fuel for diesel generators is expensive.

Until recently, solar and wind energy were the two technologies mature enough for deployment. Still, high costs caused the market to evolve slowly, with only a few hundred solar base stations sold a year.

That changed last year. With the dramatic price reductions in solar panels during 2009, the market accelerated. As many as 5,000 solar powered based stations now operate around the world, and, by 2012, this is estimated to balloon to more than 100,000.

“We see a dramatic shift in the market,” says Frederic Wauquiez, a marketing director for alternative energy programs at Alcatel-Lucent. Low-cost electricity from the grid is holding back buying in developed countries, but places such as India, China and Africa are showing growth.

With that success, new technologies are coming to market. Among the leaders are Motorola, which in the past year more than doubled the base stations using hydrogen fuel cells for back-up power at its SINE network in Denmark. More than 100 are in service.

Sprint also employs at least 250 hydrogen fuels cells for back-up power at its cellular towers with technology from ReliOn of Spokane and Altergy. The company received a $7.3 million Energy Department grant to boost its back-up power capability to 72 hours from 15.

Alcatel-Lucent is working with fuel cells in limited trails and says the technology will be the next it introduces. The company’s position is that fuel cells will never be the sole source of base-station power, Wauquiez says. The economics are not there when hydrogen must be carted into a remote site, he says.

At the same time, the French company is working with compressed-air energy storage, advanced vertical-axis wind turbines and lithium-ion batteries. Compressed air will come, Wauquiez says, but the efficiency is low. Advanced turbine designs are “interesting,” and Alcatel-Lucent has battery manufacturers trying to develop the right battery for its needs, he says.

Alcatel-Lucent finds the alternative fuels market important enough to mention in the Corporate Social Responsibility Report it issued last week. The company estimates it has as many as 340 alternative-fuel energy base stations in the field, a 40 percent increase in a year and a more upbeat achievement than the report’s 30 percent target.

So what is this year’s objective? Wauquiez won’t say. It is still being hashed out, he said, but it will be more ambitious than in 2009. Perhaps this confidence is a sign renewable energy products really do have a foothold in the industry.

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Posted by Mark Boslet

Offshore Wind Farms A Political Tinder Box As Turbines Get Taller

June 4, 2010

The 130-turbine Cape Wind farm continues to stir controversy on Cape Cod, where opponents vow to tie up the project for years in the courts.

Tempers exploded on the other side of the Atlantic after a consortium of three companies, including Siemens, came together Friday to build one of the United Kingdom’s largest wind farms off the Welsh cost.

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Siemens joined forces Friday with RWE and a Munich utility to build a one of Europe's largest offshore wind farms in Wales.

Wind farm politics remain a fiery affair. This is especially true as the size of turbines and farms grows larger Government officials push hard to find renewable energy in the shallow, coastal waters of the Atlantic, the North Sea and the Great Lakes. Many residents object, fearing they will lose something they can’t regain.

As wind towers begin to stand 400 feet or more above sea level, they create a greater threat to the panoramas that have defined ocean-side living for centuries. The result is that projects become more controversial and difficult to site.

This is the case in north Wales, where Siemens, German-based RWE AG and Munich’s municipal utility formed a $2.4 billion partnership on Friday to install 160, 492-foot turbines 10 miles off the coast. The farm is to be completed in 2014 and will be one of Europe’s largest.

Residents complain jobs will be created in Germany instead of Britain. But mostly they worry at the way views of the sea will be changed at the resort community.

Similar complains sound off in Cape Cod. Interior Secretary Ken Salazar approved the 130-turbine project last month. Residents complain the 440-foot towers will interfere with air traffic. But they direct most of their complaints at the way the farm will alter views of the sea and Nantucket.

Similar complaints confront farms planned for the Great Lakes. On Friday, New York added an additional project to the mix, saying it would chose among five proposals for large farms on lakes Erie and Ontario expected by 2015.

Expect more controversy as nations balance change and energy independence.

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Posted by Mark Boslet

Modern Wind Turbines Not Cleared On Bird Deaths

June 4, 2010

A government-sponsored study examining bird and bat deaths from wind turbines found that newer, slower spinning turbines don’t necessarily ease the killings.

The report by the National Wind Coordinating Collaborative and funded by DOE may not end the controversy surrounding older turbines and the fear they are to blame for more than their share of deaths. But it will sound the call for more study.

Study finds modest number of bird deaths - fewer than 14 annually per MW hour of electricity.

The report found that wind farms in total are responsible for relatively few deaths – fewer than 14 bird deaths annually per MW hour of electricity. Many farms have fewer than four.

This is lower than deaths from other sources, such as vehicles, transmission lines, windows and cats.

More uncertainty appears to exist about bat deaths. Some farms report a relatively high death rate while others find few fatalities.

But perhaps its most significant observation is that taller turbines with wider blades are no pancea. The potential impact on birds and bats is uncertain, the report stated.

In the past, many blamed the high level of bird deaths at older wind farms, such as Altamont Pass in California on the outdated turbines that spin there.

The study, by in large, should ease the worries of some environmentalists. As wind energy expands in the U.S. and massive killing of wildlife isn’t expected. But that doesn’t mean continued technological efforts to reduce collisions aren’t needed.

This is especially true when considering that most birds killed at wind farms in the United States are smaller songbirds – three-quarters of the total. The most dangerous times of the year are spring and fall, when the birds are migrating. Often they fly at night and above the reach of wind turbines. It is believed they are most vulnerable when they land.

The most at-risk bats are tree-roosting species, such as the Eastern Red Bat and the Hoary Bat. The most dangerous periods are in the late summer and fall, again when migrations occur. But direct collision with a turbine blade isn’t the only danger for a bat. Some likely die from the trauma of suddenly having a spinning blade alter nearby air pressure.

In the past, Altamont Pass in California was often thought of as the killing for birds, in particular predators, such as hawks and golden eagles that hunt there. This was believed due to the older turbines and the large bird populations.

But newer towers aren’t off the hook. Today’s wind turbines stand 260 feet tall with blades that stretch 260 feet in diameter. Older turbines were no more than 80 feet high and blades only 60 feet in diameter.

While these monster turbines spin slower (20 or so revolutions a minute) their span is huge, sweeping more than a acre of sky. In three years, the sweep will expand to 1.5 acres. This broader reach increases blade tip speed to 150 miles a hour or more.

As it turns out, this may be no deliverance for birds and beasts.

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Posted by Mark Boslet

Farm Waste Fuels A Data Center

May 19, 2010

Calls for data-center energy efficiency grow louder each year as massive computing warehouses approach the limits of available power.

Companies such as Google and Microsoft respond by building facilities in unlikely settings, such as central Oregon, North Carolina and Iowa, where cheap, abundant energy from sources such as hydropower can be found.

H-P researchers calculate a profit in manure-to-methane energy generation at a dairy farm.

But what about locating next to a dairy farm to take advantage of the energy in cow manure? The idea is not as far fetched as it sounds.

A team of Hewlett-Packard researchers crafted a blueprint for just such a system and say it could turn a profit in three years for an average-sized dairy farm. The system uses an anaerobic digester to turn manure into methane and recycles waste heat from a turbine to cool equipment and warm the bacteria inside the digester.

For nearly a decade, greening the world’s data centers has been a focus of IT managers. A 2008 study from McKinsey found that an average data center uses the energy of 25,000 homes, with consumption in the industry rising 24 percent a year. Calculations show data centers now use 1.5 percent of all the power consumed in the U.S.

“My goal is to develop a data center that consumes no net energy from the grid over its lifetime,” says H-P Distinguished Technologist Cullen Bash. The dairy-farm plan is a step in that direction.

Bash describes the paper he and four colleagues presented Tuesday at the ASME 2010 International Conference on Energy Sustainability as theoretical. But he insists: “We think it is reasonable. All the components you need exist.”

Bash calculates a farm large enough to install the system will have 10,000 dairy cows and an investment of $5 million. The outlay will pay for itself in two years and in the third generate a positive cash flow, he says.

According to the blueprint, the digester turns 547 metric tons of daily manure into a gas that is 60 to 80 percent methane, or high enough quality to generate electricity. The fuel then powers a gas-fired generator and supplies electricity to the I MW center’s IT equipment, its air-handling units and refrigeration at the farm. Demand could reach 1.2 MW without the need to rely on the electric grid.

Waste heat from the generator is recycled to maintain digester temperatures, produce hot water and run a heat-absorbing chiller at the data center.

Bash says H-P researchers have explored various alternative power sources for data centers, including solar cells and wind turbines. But in some ways, the use of local farm resources makes the most sense. There’s a synergy that benefits both with mutual reductions in CO2 emissions, he says.

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Grid Storage Boom Looks Many Years Away

May 18, 2010

Grid storage is in its infancy today and is likely to stay that way, contrary to the hopes of an increasing number of venture investors.

Experts claim the demand for methods to storage energy on the electric grid will rise over the next several years, but at a slow pace. Fueling this trend is the build out of solar power plants and wind farms, which produce power at irregular intervals and therefore need to store it for future use, and the introduction of reasonably priced electric cars.

A grid storage flywheel test takes place in Massachusetts. But analysts see only 17 percent growth in grid storage over five years.

So far, few technologies are up to the task. Lithium batteries for too expensive, flywheels untested, hydrogen storage too energy intensive and molten salt thermal too developmental. Among the most promising at present are the more traditional compressed air and pumped water, despite the need for an uphill reservoir or an available underground mine.

Clearly progress will be made on these and other emerging technologies. But when it will arrive is anyone guess.

According to ABI research, the expected boom in grid storage is many years away. Today, electric grids have 128 GW of storage attached to them. That will grow to only 150 GW globally in five years, or about 17 percent over the period – clearly not enough to satisfy the desires of venture capitalists, who frequently call grid storage one of their hottest themes.

So is grid storage setting itself as one of the big disappointments of the new decade? According to ABI Research Director Larry Fisher:” Over the coming decade, as countries across the globe strive to meet their renewable energy targets, they will come to understand the need for energy-oriented storage. However, while such storage will serve to keep power costs low in the long run, each such implementation requires hundreds of millions of dollars to install and test, which will create a near-term rise in end-user electrical rates.”

Think 2020.

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