Amid all the buzz around green tech, here are some names you won't likely hear again: Biofuel Box, Imara, E3 Biofuels, GreenFuel Technologies. Once considered promising green-tech start-ups, each of those companies has closed down or gone bankrupt. Failed businesses are a normal part of technology investing, so their demise doesn't mean clean-energy innovation is dying on the vine--far from it. But if you expected an army of well-intentioned entrepreneurs to upend the mammoth energy industry and find a quick path to profitability, think again. Those start-up failures hint at some of the challenges that U.S. tech entrepreneurs face when trying to make green--as in, money--by being green. Unlike IT, the energy business requires lots of money to scale up, there's resistance to new technologies, and there are many non-technology risks, such as fluctuating energy prices and fickle government policies. Still, technology clearly has a big role to play when it comes to lightening our load on the Earth. So for Earth Day, let's take stock of where green-technology innovation is, weighing the progress and the challenges. The good news: There's a lot going on. From universities to giant corporations to garage start-ups, innovation around sustainable energy and materials is high on the agenda. Ten years ago, solar and wind dominated the discussion of alternative energy, but the field is far broader now. At the ARPA-E Summit in March, for example, scientists showed off algae harvesting systems, more efficient internal combustion engines, solid-state batteries, and efficient LED lighting. (See video here.) Many people (although not enough) from IT or biotech are migrating toward clean energy because they see it as the next wave of innovation in the economy. The not-so-good news: Making energy cheap and clean is a tough nut to crack. People have known how to coax an electrical current from a photovoltaic cell in the sun for decades, but burning fossil fuels to generate electricity is still cheaper. Although the size of energy markets is huge, breaking into them is very hard. Consider the massive investment of the oil and gas industry--pipelines, refineries, wells, gas stations--and the deep pockets of entrenched providers. When an algae biofuel entrepreneur, for example, develops a replacement product, there's a sizable barrier to entry purely on a business level. Often, these products are commodities--electrons flowing through a wall socket, fuel at the pump, concrete, or plastics--and it's difficult to get a premium just because it's a "green product." The good news: Around the world, money is flowing into clean energy-related technologies from the private sector and governments seeking to develop new industries. One of the most dramatic changes over the past two years has been the emergence of China as a huge consumer and supplier of wind and solar power. In the U.S., federal programs put tens of billions of dollars toward research and development and deploying existing technologies, such as solar, wind, or manufacturing batteries for plug-in vehicles. When it comes to funding start-ups through venture capital or private equity, the U.S. outpaces other countries, according to New Energy Finance. And after a downward slide in 2009, venture capital investment in green tech picked up in the first quarter of 2010, rising to $1.9 billion globally, according to the Cleantech Group. Many venture investors are hoping that U.S.-based tech companies, including Tesla Motors, Codexis, Solyndra, and Amyris Biotechnologies, will have great success going public this year. The not-so-good news: The general trend in funding is up, based on investors' and governments' bet on green technologies as an engine of economic growth. But scratch beneath the surface a bit and there are some troubling signs. The first-quarter venture capital numbers show more activity--180 deals more than previous quarters--but the amount of money going to companies is going down from a high mark in 2008. That's a reflection of how many companies are struggling to find financing, said Sheeraz Haji, the president of the Cleantech Group. Meanwhile, venture investors are looking to get a return on their start-ups, which is why the performance of green-tech IPOs is so important. But in many cases, the financial "exit" for young green companies will be through an acquisition, and there have only been a few of those in recent years. The lack of "viable exit strategies" is one of the threats to green-tech expansion, said Ron Pernick, the managing director of Clean Edge, in an annual report. He suggests that there need to be different financing models, based on private and public capital, to overcome the lack of financing options, particularly for scaling up these technologies. The good news: Many state and federal politicians are convinced that investing in clean energy-related industries, through tax breaks or subsidies, is a good idea. The Obama administration has put a number of measures in place to jump-start nascent industries, such as battery manufacturing or the smart grid. It also adjusted the subsidy for solar and wind project finance to address the credit squeeze, although it's set to expire at the end of this year. Federally funded research has also gotten a real shot in the arm, with the Advanced Research Projects Agency-Energy (ARPA-E) catching the attention of many tech entrepreneurs and scientists. In all, there's been a heightened focus on the role government plays in energy. The not-so-good news: The meltdown of the capital markets has done a number on the traditional methods to pay for large-scale renewable energy projects, particularly tax-equity funds and project finance. To some degree, governments around the world, with China and South Korea often cited as aggressive investors, have played the role of banker by providing incentives for businesses to invest. But U.S. Department of Energy loans, first authorized in 2007, have been slow in coming, according to some. An energy and climate bill has been working its way through Congress, with a Senate proposal expected next week. But there are big questions around whether a climate and energy bill that effectively promotes low-carbon technologies can pass given the resistance from incumbent energy providers. So on balance, the wave of green-tech innovation from start-ups we've seen in the U.S. over the past six or seven years has had successes--to a point. The next big challenge is scaling up their technologies and converting what were once upstart companies into global players. Government policies aimed at, for example, revitalizing U.S. manufacturing or accounting for carbon emissions in the economy, can help pave the way for green innovators. But they still need to create competitive companies with compelling products that deliver a good return to investors. Meanwhile, there's the hype that Bloom Energy or some other green-tech outfit is the next Google. Certainly, a high-profile success story--a "Netscape moment," as investor John Doerr calls it--will raise awareness for the potential of green-tech innovation. But a lot of clean-energy technologies will never touch consumers--a Bloom Energy box or efficient LED lighting system, for example, is more likely to be adopted by businesses until the up-front costs go down. That said, consumers are getting in on the act. The smart grid should help us better manage our electricity, electric vehicles can decrease oil imports, and efficient appliances lower our energy usage. But green technologies are just an enabler for people to use energy and other natural resources more efficiently. So it goes for the planet as a whole: tech can help protect the environment but in many ways, it's the consumer that's in charge. Can green tech save the Earth? It won't be easy
Technology
Investment
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Green tech and consumers
Can green tech save the Earth? It won't be easy
Coda's 'everyday electric car' coming to California
LAGUNA NIGUEL, Calif.--The Coda sedan will only impress your friends once they realize it's electric. The sedan, due to start shipping in California in the fourth quarter, is designed to be simple and useful rather than flashy. But functionally, the car will meet the needs of many people and be priced in the "low to mid 30s," or somewhere in the range of $35,000 after federal and state credits and rebates, according to Kevin Czinger, CEO of Coda Automotive. "The coolness of this car is that it's anti-cool," Czinger said after showing off an early version of the car at the Fortune Brainstorm Green conference here Tuesday. "It's a real car--you'd forget that it's all-electric." The heart of the car's technology is its battery system, built around a 34 kilowatt-hour battery pack that can give drivers a range of between 90 miles and 130 miles depending on driving styles, Czinger said. For many people, that's sufficient range for daily tasks, such as commuting and errands, and similar to the range of the forthcoming Nissan Leaf and electric Ford Focus. The company will start taking orders for the four-person, four-door car in the summer and has established a partnership with Sears to have technicians install a 240-volt, 30-amp outlet at people's homes to charge the vehicle. Within two hours, the charging system can give 40 miles to 50 miles of range, Czinger said. Czinger expects to sell about 14,000 cars in the first year of production. After the car's initial release in California, the company hopes to expand distribution to northwestern states in 2012. The Coda is made of combination of components sourced from China and U.S., with about 40 percent of the materials coming from the U.S., Czinger said. The company's goal is to manufacture the majority of the components in the U.S., he said. While other cars have elaborate systems for managing charging, the interior of the Coda is simple, even sparse. Czinger said that the on-board charging system will let consumers manage when to charge and that it could tie into home energy management software like Microsoft Hohm, which Ford is using for its electric vehicles. Updated at 7:00 a.m. PT with corrected name of Ford vehicle. Coda's 'everyday electric car' coming to California
Nuclear power: Friend or foe to renewable energy?
Nuclear power: Friend or foe to renewable energy?
The nuclear power question: Sierra Club President Michael Brune (second from right) says that nuclear power is expensive and not safe, while others argue that the technology is mature and disposal issues can be dealt with. From left: David Crane, CEO of utility NRG Energy, environmentalist Stewart Brand, Brune, and James Connaugton of Constellation Energy.
(Credit: Martin LaMonica/CNET )LAGUNA NIGUEL, Calif.--As renewable energy gains steam, environmentalists are increasingly being asked whether to support their longtime enemy: nuclear power.
At the Fortune Brainstorm Green conference here, nuclear power has frequently entered the discussion over the future of clean energy. Prompted by government policies, utilities are investing in wind and solar power but there are limits to what renewable power can do, say people in the industry.
When environmentalists say that clean energy can supply all electricity needs in the near future, they're being idealistic, said David Crane, the CEO of utility NRG Energy, which has invested in solar and wind, but is seeking to build a nuclear power plant in Texas. Compared to carbon capture and underground storage at coal plants, nuclear is more mature, he said.
"For people who want to deal with realism, ask yourself what does a utility CEO do when the lights go out and the governor of the state calls you yelling and screaming," he said during a panel on Tuesday. "I'm not against renewable but you got to keep all of this in proportion. We need low-carbon or no-carbon baseload generation in this country."
Wind and solar power are intermittent, which means that they do not provide electricity continuously. Nuclear power plants can work round the clock and don't have carbon emissions during operation, which is the primary reason that environmentalist Stewart Brand now backs nuclear.
There is also the issue of cost. Nuclear, wind, and solar are all more expensive than generating electricity with natural gas at its current prices, said Crane. But if government policies do not include support for nuclear power, such as loan guarantees, then utilities will move to natural gas because it is less polluting than coal. But a spike in demand will drive up prices from $4 per million BTUs, which is where it is now, panelists said.
"Renewables could get to 20 or 30 percent of generation (from about 2 percent now) and we can get there affordably. But if you take nuclear out of the equation, the choice is not 50 percent renewable, the choice is taking natural gas to 40 or 50 percent," said James Connaughton, executive vice president for corporate affairs, public affairs, and environmental policy at utility Constellation Energy.
In the U.S. there are 26 proposals to build new power plants to meet growing electricity demand and three are in the running for government loan guarantees, said Connaughton. He projects a "symbiosis" between nuclear, natural gas, and renewable in the decades ahead where scaling up each power source will lower costs.
Environmental group the Sierra Club "enthusiastically" opposes nuclear power for a number of reasons, including its high cost, risks of handling nuclear waste, and risk of proliferation of weapons, said Michael Brune, the executive director of the Sierra Club.
"I can understand why we are having this conversation," he said. "But the only reason to invest in nuclear power is because we tried it before, because we know it can work. That's not a compelling reason, we need to rise to a challenge as a species, as a country."
By contrast, representatives from other environmental groups, the Environmental Defense Fund and the Natural Resources Defense Council, said on Monday that they were not totally opposed to additional government incentives for nuclear power.
Those groups expected that an energy and climate bill--now being crafted by the Senate--would include support for nuclear but not a huge expansion because of the costs, waste disposal, and proliferation risks of nuclear, said Frances Beineke, the president of the Natural Resources Defense Council. Nuclear, which now accounts for about 20 percent of power generation in the U.S., cannot get to 50 percent, as coal does now, because of cost, she said.
Solar, wind cheaper than nukes?
Policy questions aside, there is still an ongoing question over what the impact of technology improvements can have on the adoption rate of solar and wind, compared to other potential sources.
Bill Gross, the CEO of solar thermal company eSolar, is optimistic that solar can generate 20 percent of electricity in the U.S. by 2020, but it will only happen with lower costs. eSolar makes equipment for solar power plants using computer-controlled mirrors which create heat that makes steam to run an electricity turbine
"We're focused on price and to be competitive with solar thermal you need to focus on higher capacity factor (of how often a solar system can generate electricity). It's very hard to store electrons. It's easy to store heat so we can get a capacity factor of 60 to 65 percent," he said.
Oil giant BP has diversified into alternative energy because it sees a growing demand for energy across the world in the next 20 years. It has decided to focus its efforts on biofuels, solar, wind, and carbon, capture, and storage.
"We believe that onshore wind and solar PV (photovoltaics) can compete and are much more cost-competitive with nuclear or perhaps carbon capture and storage at this time given its newness," said Katrina Landis, the CEO of BP's Alternative Energy division.
Which one will scale up quickest? "It depends on government support. Governments need to be very clear on the rules and the rules need to be lasting," she said.