21st Century Regenerative Technology

1. Valero Gets Corny, Plans to Buy VeraSun's Ethanol Plants
2. San Diego Utility to Roll Out Smart Meters Mid-March

Valero Gets Corny, Plans to Buy VeraSun's Ethanol Plants

2009-02-09 17:08

Katie Fehrenbacher - Biofuels

Massive oil refiner Valero Energy has been taking stakes in biofuel startups over the last year, including algae fuel maker Solix Biofuels, and cellulosic ethanol maker ZeaChem. But now the company has a different sort of biofuel assets in mind — not next-gen technology, but the corn ethanol plants of bankrupt ethanol producer VeraSun. VeraSun said late Friday that it is in the process of selling all of its assets to Valero for $280 million.

Why on earth would the oil refiner want the leftovers of a corn ethanol maker that clearly couldn’t make the financials work in this difficult economic climate? VeraSun CEO Don Endres painted a pretty grim picture in Friday’s announcement, saying the decision was based on “current difficult industry conditions and continued constrained credit markets.” Last week the large ethanol producer Archer Daniels Midland said that almost 21 percent of U.S. ethanol production capacity has been shuttered due to weak demand and slim margins.

Well, as the WSJ’s Environmental Capital points out, ethanol mandates, which require oil refiners to blend a percentage of ethanol into gasoline, aren’t going anywhere — and now is the time to scoop up cheap distressed assets. The ethanol markets aren’t expected to get better anytime soon, but it’s not that much of an expense for an oil company’s balance sheet. Like Robert Rapier says in his R-Squared Energy Blog “I don’t expect that this is the last we will see of this.”

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San Diego Utility to Roll Out Smart Meters Mid-March

2009-02-09 13:00

Katie Fehrenbacher - Energy

The recession could be standing in the way of some utilities’ smart grid plans, but San Diego Gas & Electric, which services 3.4 million residents across 4,100 square miles, is trying to keep on track. Stephanie Donovan, spokesperson for the utility, told us recently that starting in mid-March San Diego Gas & Electric (SDG&E) will start rolling out 2.3 million electric and gas meters at its customers homes.

That means the utility’s project is just slightly behind schedule, as SDG&E had been planning to start a broad smart meter deployment in February. Itron, which will be providing the meters for the rollout, said last month that some of its utility customers would be changing up deployment schedules, with some moving forward more quickly than expected and others deploying somewhat later than their initial schedule.

itronsmartmeterpicture

SDG&E has chosen to use Itron’s OpenWay smart meters, which use an open-standards approach to provide a two-way communication between the utility and the resident’s home. The OpenWay meters also have a ZigBee chip embedded, enabling the resident to create a home area network that can help cut energy consumption.

For SDG&E, coming close to the deployment deadline is still pretty good — these smart meter projects are a substantial effort for utilities and require years of planning, regulatory approval and hundreds of millions of dollars. SDG&E’s project was approved by the California Public Utilities Commission back in 2007, and the utility estimates expenditures for the project on the order of $572 million (including at least $500 million in capital investments).

That kind of investment is pretty standard for a utility’s smart meter project. Ed Legge, an analyst with the Edison Electric Institute, said an average utility will spend at least $500 million on a large scale smart meter rollout. And it would take at least $50 billion for all of the investor-owned utilities (which make up 70 percent of the U.S. utilities) to roll out smart grid networks.

This week, utilities and smart grid firms will all be waiting for a vote on the stimulus package, which would allocate $4.5 billion for a smarter power grid, with a goal of 40 million smart meters installed. While those funds are just a drop in the bucket for the overall industry, companies like smart grid software maker eMeter are already saying that they’re seeing a stimulus-induced pickup in the market.