Category Archives: financing

Celebrate clean energy innovation: spread the word about Mad Like Tesla

It’s shameless self promotion, I know, but this is how you create awareness of books, and the point of writing Mad Like Tesla was to create awareness of the innovation going on around clean energy and the immense barriers inventors and entrepreneurs face. I also wanted to celebrate those much-needed risk takers in society, without whom we will never have the kind of breakthroughs necessary to tackle our energy demons. It’s part of the reason I write and have maintained this Clean Break blog for the past six years, without financial gain. It’s a labour of love, as time consuming as it often can be.

Mad Like Tesla: Underdog Inventors and Their Relentless Pursuit of Clean Energy was launched this month and has been well-received. The reviews so far have been positive, and awareness of the book is slowly building. But not fast enough. I want to take this moment to ask my readers, many of whom have already purchased the book (thank you!), to help spread the word. Share this link or the Mad Like Tesla website (www.madliketesla.com) on social media sites such as Facebook and Twitter. Refer to it when commenting on the various blogs you might follow. And for my media friends out there — whether in the mainstream press or the blogosphere — please consider a review, or alternatively, I’m happy to chat about the many odd and inspiring stories in this book. Please see press release here.

Thank you all for your ongoing interest and support. BTW: Many have asked, so I’m happy to report that the e-book version of Mad Like Tesla is now available at Amazon.com.

Tsk, tsk: Globe and Mail runs another misleading Wente column on green energy, electric vehicles

Okay, we all know Globe and Mail columnist Margaret Wente hates green energy, electric vehicles or any non-market efforts, really, to wean ourselves from fossil fuels. We know, even though she never discloses it (but should), that she’s on the board of directors of Energy Probe, a Canadian libertarian think tank that aggressively spreads its belief that climate change is a hoax and green energy such as wind and solar is a waste of time and resources. We also know that Wente likes to be a contrarian because it pumps up her profile. So I wasn’t so shocked when I read yet another column from her bashing the McGuinty government’s green energy policies, and in doing so, cherry picking the facts (or simply spinning them) to mislead her readers. What gets me, however, is how the editors at the Globe and Mail would let it into the paper, as is, and with the headline it was given.

BTW: Here’s my response to her last major assault on green energy back in April 2010.

Here’s my response to Wente’s most recent anti-green column, starting with the Globe’s headline: “Message to McGuinty: Most green-job schemes have been miserable failures.”

I can’t believe the headline writer and overseeing editor would allow the word “most” to make it into that headline. Wente doesn’t back up the “most” claim with any statistics, let alone credible ones. And the few examples she cites are small, based on someone else’s reporting (such as one problematic report in the New York Times) and/or come without any context.

Now, here’s Wente’s opening two paragraphs:

Dalton McGuinty has hit the campaign trail, and he’s paving it green. Earlier this month he announced that Ontario will pump $80-million into building charging stations for electric cars. “They are peppy, they are quiet, and the thing that I like best as a father, and ultimately a grandfather, I would hope, is that they’re clean,” he said. By 2020, he hopes, one out of 20 cars in Ontario will be electrically powered.

Meantime, Costco, the giant retailer, has pulled the plug on its electric car-charging stations, which it had installed in its California parking lots. The reason is that nobody uses them. Even China – which promised it would leapfrog the world in electric-car development – is backing off.

First, Costco is removing chargers that were installed back when GM introduced its EV1 electric vehicle to the market in the 1990s, before the cars were crushed and shredded. Costco says the chargers aren’t used, but that’s largely because electric vehicles only began hitting the market this year and the chargers that are in place are outdated (i.e. based on old standards) or simply stopped working, as you’ll read further down in this Daily Mail story.  Second, Costco is just one company seemingly going against the grain at a time when dozens of others, including Best Buy, IKEA, Walgreens and Lowe’s, are adding them. Personally, I don’t think retail stores are ideal places for EV charging systems, but the fact that so many big brand operations are beginning to test them and deploy them is a good sign. For Wente to cite the Costco decision as proof that EV charging systems, and thus electric vehicles, are being abandoned is quite the stretch. Also completely wrong is her unsupported comment that the Chinese are “backing off.” How she came to this conclusion is beyond me, but perhaps she didn’t read China’s 12th five-year plan. By 2015 China plans to have 4,000 charging stations and growth is expected to increase rapidly from there with plans to invest nearly $5 billion in charging infrastructure by 2020, at which point the country will have at least 10,000 public state-run charging locations, not including the tens, possibly hundreds of thousands of private home and business charging stations that are expected to emerge. That doesn’t sound like backing off.

Indeed, research firm Pike Research projected last week that there will be 7.7 million charging stations for EVs located in homes, workplaces and public spaces worldwide by 2017, with about 1.5 million of them located in the United States. So much for backing off. I’ll admit that’s an ambitious prediction, but the trend is clear — yet Wente cites a decision by Costco to remove obsolete charging systems as proof that the market for EVs and their associated charging infrastructure is fading.

The rest of the world has begun to discover that the green dream is a mirage. Across the U.S., federal, state and city governments have poured zillions into green schemes. Most have been miserable failures.

The city of Seattle, for example, got $20-million from the U.S. Department of Energy to retrofit houses and make them more energy efficient. The money was supposed to create 2,000 jobs and retrofit at least 2,000 homes. But by this month, only three homes had been retrofitted and only 14 jobs created. Even the greens admit the program is a total flop.

There’s that “most” word again, as in “most have been miserable failures.” She’s referring both generally to green energy initiatives spearheaded by government and specifically to a small $20-million household retrofit program in Seattle that didn’t deliver promised results. Forget that maybe, just maybe this specific program was mismanaged. So what? I mean, programs — private or public — get mismanaged and don’t produce results all the time. Hey, the market even screws up, too. You know, like how mismanagement by U.S. and European banks led to a worldwide financial crisis? No mention of that, of course. Also no mention of how successful the Canadian federal government’s EcoEnergy home retrofit program was before it was cancelled in 2010. In all, Ottawa committed $750 million to a program that encouraged Canadians to spend $4 billion of their own money. In doing so, those Canadians will save an average of $340 million a year every year on their energy bills — all of it money that will be reinvested in the Canadian economy each year. Also, the $4 billion spent by homeowners generated $250 million in GST revenue for the government. All of this also created thousands of jobs, contributing even more tax revenue to Ottawa. How can that be categorized as a miserable failure? It can’t, which is why Wente didn’t mention it — it didn’t fit with her message or her goal, which is to poke holes in the McGuinty government’s green energy and electric vehicle strategy and give momentum to the opposition PC party as a provincial election approaches.

In Massachusetts, the state government poured $58-million into a company called Evergreen Solar Inc. But Evergreen couldn’t compete with cheaper solar panels made in China. In March it closed its factory and laid off 800 people, and this month it declared bankruptcy. In Salinas, Calif., a company called Green Vehicles received a couple of million dollars in government grants to develop an electric car for freeways. It too went under. The mayor says the city will think twice before investing in other startups, regardless of how many jobs they’re supposed to create.

Yes, yes, companies go bankrupt, struggle, lay off people, often because they can’t compete with China or are simply poorly run. These companies are everywhere — biotech, information technology, Internet, automotive, etc., and more so with the U.S. economy continuing to struggle. So Wente cites a company that got lots of U.S. government money but simply couldn’t hit the home run it expected. Is that our standard now? That every bit of public investment MUST result in success? If that’s the case, hell — better shut off the tap that flows to the automotive, forestry and oil and gas sectors, eh? Here’s the thing: the U.S. is actually doing okay competing against the Chinese in solar. It’s exporting more solar product than it’s importing, contrary to popular belief.

Green projects, it turns out, don’t create many jobs, and those jobs are costly. Barack Obama recently visited a plant in Michigan to tout its investment in new battery technology. The plant got grants of $300-million, and expects to create 150 new jobs. That works out to $2-million a job. Then there’s SolFocus, a company in San Jose, Calif., that produces solar panels. The mayor called it an “enormously important” development for the city’s economy,” The New York Times reported. But the company assembles its solar panels in China, and its new headquarters employs just 90 people.

During his 2008 campaign, Mr. Obama promised to create five million green jobs over the next decade. But as The New York Times reported last week, “federal and state efforts to stimulate creation of green jobs have largely failed.”

At this point Wente hasn’t established that green projects don’t create jobs, but she goes ahead and makes this statement anyway, giving only a tiny snapshop of job creation by mentioning two more ventures — one an electric vehicle battery maker and the other a maker of solar panels. She talks about how one government investment in a battery maker worked out to $2-million a job, though she doesn’t talk about future job growth at that company that was seeded by this government money — she only talks about the situation as it stands today so early in the birth of this new market. And this is where Wente goes off tracks, referring to a recent New York Times report that was clearly the inspiration for her column in the first place. That is, she waited for a juicy story in a more left-leaning U.S. newspaper like the Times and used it as a way to legitimize her own biases on the green energy topic. After all, it’s juicy to quote the Times saying “federal and state efforts to stimulate creation of green jobs have largely failed.”

But the Times article was also a failure of journalism. As Joe Romm points out at Climate Progress, isn’t it kind of strange to declare a program a failure about two or three years into a 10-year mandate? As Romm writes, “Imagine if, in 1963, two years after JFK’s famous speech to Congress, the New York Times had run a story, ‘Space program fails to live up to promise.'” Let’s keep in mind as well that the space program wouldn’t have gone far either if, during that time, a U.S. Congress filled with anti-science, anti-government Tea Partiers prevented the flow of money into Kennedy’s vision. Obama’s goal is achievable but not when such programs are consistently under attack by state and federal legislators who have only one objective: to defeat and humiliate the U.S. president. This is Wente’s objective with respect to McGuinty, who is also facing resistance but has actually delivered so much more: 20,000-plus green jobs, and counting. Is that a failure? Wente mentions that job count, but she doesn’t directly call it a failure, preferring instead to breeze over results in Ontario and focus on negative outcomes in the U.S. market.

Maybe he should take a look at Spain, which also set out to become the solar-power capital of the world. Everything went fine, so long as the subsidies kept flowing. But when the world economy went south, the Spanish government couldn’t afford them any more and pulled the plug. Bye, bye solar, and bye, bye jobs. By one reckoning, Spain spent half a million euros for each green job it created.

The moral of the story is as clear as a row of giant wind turbines on the horizon. Governments that invest in risky, expensive and unproven technologies will probably lose big. The only way they are able to lure private investment is with generous subsidies and long-term contracts. And even then, the failure rate is high. Ontario has already attracted its share of “suitcase” companies that are here so long as the money flows, and not a moment longer. And when they go belly-up, guess who’s stuck with the bills?

It’s predictable that Wente again trots out the Spanish example, which she also used in her wind-bashing column a year earlier. It’s the only example she can really offer up, largely because Spain’s solar market did in fact go through troubles and it is one cautionary tale that’s worth learning from. However, Spain is not representative of the market and its health. Wente neglects to mention countries that are thriving, how quickly solar costs are falling, how worldwide investment in solar continues to grow at a healthy pace, and how Ontario solar manufacturers are saying they can deal with a 30 per cent reduction in the feed-in-tariff rate as part of a plan to eventually eliminate incentives. No question Ontario could have done a better job executing its green-energy programs, and while there may be the occasional dud along the way, what this province is doing is investing in a future that Wente apparently can’t see or appreciate, or maybe doesn’t want.

By the way, to call solar and wind and electric vehicles “unproven” technology is, well, wrong. This stuff works, and it works well. It’s no less proven than the iPhone or BlackBerry Wente carries on her hip. Is it risky? Yes, because the deck is stacked against it and folks like Wente don’t make it any easier. But risk is also a matter of perception. I mean, drilling deep in the Gulf of Mexico or North Sea is risky, and so is investing in the oil sands, and so is sending people deep underground to mine for coal.

Anyway, none of this is going to change Wente’s mind. But I do expect better journalism from her, at least on this issue. And I do expect the editors of the Globe and Mail to challenge unsubstantiated claims, even if they come from columnists.

HSBC: Embrace renewables and efficiency before “commodity crunch really begins to bite”

HSBC Global Research just put out a report titled “Energy in 2050” and concludes that the world can grow without excessive environmental damage, “but it will need a change in human behaviour and massive collective government foresight” — both of which, unfortunately, we lack at the moment.

Some other interesting comments:

“As things stand, the world simply doesn’t have the luxury of turning its back on nuclear power, despite the recent disaster in Japan”

Oil demand and overall energy demand is expected to double between now and 2050 as developing countries grow and add more cars to the roads.

If we do nothing, “a doubling in the amount of carbon in the atmosphere, more than three and a half times the amount recommended to keep temperatures at a safe level.”

“We have become terribly complacent in the way in which we use energy… The lowest hanging fruit is in the transport sector. Smaller, more efficient cars will get you from A to B, just not as quickly. Similarly, buildings can be powered much more efficiently, with the cost of alterations coming down quickly as technology evolves.”

“The lead times we highlight on the measures in ‘the solution’ are often long. Therefore the squeeze on fossil fuels in the interim could be both persistent and painful as oil prices are so sensitive to minor imbalances between energy demand and supply.”

It’s an interesting read, and while those who follow these issues closely won’t find anything new, it’s good to have another major institution issuing a warning and call for much-needed change in the way the world operates.

Mad Like Tesla, now shipping from Amazon.com

Canadian sites are taking pre-orders for a few more days still, but for my U.S. readers Amazon.com has started shipping my new book Mad Like Tesla: Underdog Inventors and Their Relentless Pursuit of Clean Energy. The book tells the stories of some clean energy entrepreneurs/inventors taking huge risks and thinking outside the box to solve some of the world’s most pressing issues. Each one is at a different level of development but all face similar barriers along their journey. The stories set the stage for discussion about a specific type of clean energy, technology or field of discovery (e.g. fusion, solar, waste-heat recovery, biofuels, energy storage, biomimicry, etc.) supported by some historical context and current-day examples.

Why Mad Like Tesla? That’s explained in the introduction, but in a nutshell Serbian-American engineer Nikola Tesla invented many important technologies in his lifetime. yet he faced constant struggle against naysayers and skeptics who couldn’t, at first, grasp the significance of what he was sharing with the world. Many dismissed Tesla as a mad scientist, and yet his inventions shaped the world largely for the better. So, in my view, if someone today is mad like Tesla, that’s not necessarily a bad thing. It’s quite a good thing, actually — we need more of these people, for the changes necessary in our world will not come from the kind of cautious, incremental steps being taken today.

I have a website for the book in the works, but it won’t be ready until end of August.

Thanks for your support!

Cleantech startups can’t rely on venture capital to succeed; corporate partnerships will be key.

My latest Clean Break column looks at how venture capitalists — impatient with lengthy returns on their investments and worried about the economic climate — are retreating from the cleantech space to less risky investment opportunities. Picking up the slack are corporate investors such as ABB, GE, and Siemens, who are making large strategic investments or outright purchasing promising cleantech companies as a way to plug holes in their own R&D machines. Is this the way the market is going? When it comes to cleantech, particularly the “hardware” side of the business, it seems that strategic partnerships with large corporations are the way to go, and that VCs that plan to continue investing in the space must increasingly see their role as a matchmaker that hooks up promising new technologies with industry behemoths that have enough clout (the money and the track record) to bring these technologies to market. In other words, venture capitalists have to be a little more patient and take the role of company builders, seeing their final exist as part of a corporate purchase or corporate-backed IPO.

We’ve seen this approach before: biotechnology.

The full column is below:

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The clean technology market is a tough space to be in these days if you’re a startup in North America on the hunt for early-stage venture financing.

Venture capitalists who have already invested in clean energy, smart grid, energy efficiency and electric vehicle technologies are starting to get cold feet.

Impatient with how long it takes to realize a return on these investments, many are taking a pass on new deals and choosing instead to nurture existing portfolio investments.

The uncertain economic climate hasn’t helped, nor will a U.S. debt deal that threatens to cut the federal government’s financial support for clean energy innovation and infrastructure.

Some venture capitalists are walking away altogether.

The numbers tell the story. Venture capital investments in the United States during the second quarter totalled $1.1 billion (U.S.), a plunge of 44 per cent compared to the previous year, according to data released this week from Dow Jones VentureSource.

There were also 12 per cent fewer deals, and of those that received financing about 80 per cent were relatively mature revenue-generating companies.

So much for venture capitalists being venturesome.

Those who continue to invest are increasingly staying clear of capital-intensive, high-risk hardware deals and putting their money in less risky software and service ventures, many of them aimed at energy efficiency and management for homes and businesses.

Clearly, making a new kind of energy storage device, wind-turbine generator or vehicle drive train is more expensive and requires more patient capital than that required to develop a new software program or Web-based service model aimed, for example, at encouraging consumers to conserve kilowatt-hours.

“The venture community hates energy hardware because of the long development cycles and the fact that the technology buyers in this area, including utilities, are very conservative,” Michael Brown, chairman of B.C.-based venture capital firm Chrysalix Energy, explained to me.

These buyers want to see a track record of performance. They want to know the product they’re purchasing will work flawlessly, and they want the companies they purchase from to have 20 years of experience behind them.

This is difficult for most venture capitalists to swallow. They aren’t prepared to wait a decade or more before seeing a return on their investments. They want out within four years, maximum. “So when Silicon Valley (venture capitalists) try to play in clean tech hardware, they get their heads handed to them,” said Brown.

But where venture capitalists are bowing out, big corporations are beginning to step in. At least that’s what New York-based investment bank Peachtree Capital Advisors has observed.

“Corporate investors, perhaps willing to overlook concerns about short-term profitability for long-term potential, were active in making both investments and acquisitions in the first half of 2011,” according to the firm.

Take chemical giant DuPont, which in 2010 generated more than $1 billion in revenue by selling materials and other chemical-based products to the solar industry. Last month, Dupont acquired California-based Innovalight, a start-up specializing in manufacturing silicon inks used to improve the efficiency of solar cells.

The same month, General Electric acquired Israel-based Lightech, a developer of technologies for improving the efficiency and quality of LED lighting, and shale-gas developer Chesapeake Energy made a major investment in Colorado’s Sundrop Fuels, which can make biofuels by vaporizing wood with concentrated sunlight.

Concentrated solar technologies for generating electricity have also attracted the attention of giants. ABB, the world’s biggest power equipment supplier for the grid, acquired Novatec Solar in March.

That acquisition followed a series of similar deals in 2009 and 2010. Siemens acquired strategic interests in Israeli start-up Solel Solar Systems and Italy’s Archimede Solar Energy; Areva purchased Ausra; and Alstom bought into BrightSource Energy. Both Ausra and BrightSource are based in California.

What’s the lesson here? For one, big corporations have a strong interest in these emerging clean technologies because they represent future low-carbon, low-impact product and service offerings that are expected to rise in demand.

Second, venture capitalists will have to change the way they operate if they want to truly tap into the money-making potential of this sector.

Brown said venture capital firms have to stop obsessing about early revenues from the start-ups they invest in. They have to concede that some innovations — the ones with the greatest impacts — will take time to unfold, so the emphasis instead should be on finding strategic corporate partners willing to go along for the ride and support ongoing development.

“There are a lot of big companies out there that are going to care about new innovations but don’t have the wherewithal to do it internally. They will rely on small companies to do the big discoveries for them,” said Brown.

“The end objective is that all or some of those partners buy you out, or they put their signature on a product and help launch an IPO. I actually think that’s the model.”

This will require venture capital firms to be more patient and approach investment deals with a different mindset, Brown added.

“It changes the culture of the investment organization dramatically. You have to stop being an investor and start being a company builder.”