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1. 2010 Expected To Be a Breakout Year for Itron
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2. Solar Rally Cut Short by Europe's Tariff Moves
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3. Why A123 Threw Down for Fisker & Who's Next
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4. Stirling Energy to Kick Off Its First Plant
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5. Daily Sprout
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6. Smart Grid Event: Here Come the Next-Gen Apps
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7. A123Systems Links With Fisker: $23M and Battery Deal
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8. Wake Me Up When Cape Wind Is Here
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9. 20 Battery Startups Hitting the Road With Lithium-ion
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10. Cali's Utilities Won't Be Able to Meet 2010 State RPS
2010 Expected To Be a Breakout Year for Itron
Katie Fehrenbacher - smart grid
Analysts are predicting big things for the Liberty Lake, Wash.-based firm, which was founded back in 1977. This morning Pacific Crest analyst Ben Schuman upgraded Itron to Outperform with a price target of $86, and also increased his estimates for Itron’s 2010 annual revenue and earnings per share to $1.99 billion and $3.11, respectively, up from $1.96 billion in revenue and per-share earnings of $2.98.
Schuman says that current smart meter contracts in California and Texas will drive revenues for Itron’s fourth quarter specifically, prompting him to lift his fourth-quarter revenue and earnings-per-share estimates to $455.7 million and 67 cents, up from $435 million in revenue and 60 cents a share in earnings. Currently, the company's smart meter utility contract wins include Southern California Edison, San Diego Gas & Electric and CenterPoint Energy.
That boosted estimate doesn’t even account for the fact that Itron was awarded tax credits through the government’s program for clean energy manufacturing projects, which Schuman says will add another 12 cents to Itron’s earnings per share within the next several quarters. Itron was one of the only smart meter firms to get in on the recently announced tax credits (General Electric, which also makes smart meters, did as well). Itron said the credits would help it ramp up manufacturing at Itron's smart meter plant in Oconee, S.C.
Over the past six months Itron’s stock has also steadily risen to trade, at last check, at $71.18, up from the mid-$50 range in mid-October, and the low-$50 range last summer.
As we explained in this post on Who Will Win Big In the Smart Meter Rollout? last year, a small but entrenched group of competitors makes up the smart meter market: Itron, Landis+Gyr, Sensus, Elster and GE. Itron might not have the most innovative technology but it’s pretty much the leader when it comes to market share. GE is the dark horse in the race, given its work on some of the more cutting-edge technology out there. But while innovative technology can win over some contracts, many utilities are far more interested in low costs.
Schuman explained Itron’s edge this way: “We still believe that Itron's AMI product will struggle competitively, but our contacts have indicated that, following some fits and starts, the company has differentiated itself with its ability to execute deployments.”
Solar Rally Cut Short by Europe's Tariff Moves
Kevin Kelleher - Energy
The first week or so of a calendar year can be an interesting — if not always accurate — gauge of how investors are feeling about a sector of stocks. Some of the bigger names in solar energy saw a healthy gain in their share prices amid strong volume, signaling a renewed confidence among investors. As of the end of trading Monday, Solarfun was up 36 percent, while Yingli Green Energy and JA Solar were both up 18 percent. Overall, the Claymore/MAC Solar Energy Index was up 11 percent after the first six days of trading, compared with a 1 percent gain in the Nasdaq.
It took only three days to give back most of those gains. The bad news came from Europe, where France said it would cut feed-in tariffs for solar installations and Germany indicated it would do the same in a few months. After trading Thursday, The Claymore/Mac Index was up 2.8 percent, just a bit above the Nasdaq’s 1.1 percent gain.
France had been paying homeowners and businesses 55 euro cents ($0.80) per kilowatt hour for rooftop solar intsallations. On Wednesday, it announced it would cut that tariff to 42 euro cents ($0.61). As Bloomberg explained:
France cut tariffs for electricity produced from rooftop solar panels by 24 percent in an overhaulFollowing a "speculative bubble" that started in November, the Energy Ministry decided it would reject any applications from generators that hadn't already applied for grid connection, according to the statement. Others will have to re-apply under the new tariff regime.
Then on Thursday, reports emerged that Germany would also cut its solar subsidies. Such a move had been expected for some time, but Germany’s reduction was greater than many had been expecting. According to Tech Trader Daily:
In a research note, Deutsche Bank's Germany-based analyst, Alexander Karnick, says the report, if true, would be worse than expected for the solar sector "on several levels." He contends that the consensus was for a roughly 10% cut in the country's feed-in tariff program in June or July; the story suggests a larger cut, and a quicker implementation. A subsidy cut of that magnitude, he thinks, could trigger a round of price cutting by the solar wafer companies.
In short, the allocation of investor money into solar during the first several days of 2010 left some stocks ripe for a round of profit taking once bad news surfaced. It didn’t take long for that bad news to arrive, and there will surely be more in an industry known for its two-steps-forward, one-step-back method of progress.
But there are other signs that solar energy is moving forward. eSolar, a solar-thermal company, signed an agreement with China’s Penglai Electric to build 2 gigawatts of solar thermal projects in China this decade. The U.S. is offering tax credits to greentech manufacturers that could generate tens of thousands of new jobs. And private investments are picking up even if some government subsidies are disappearing.
Solar bulls may have been dealt a hard blow this week, but then again 2010 has only just started.
Image courtesy of jurvetson’s photostream Flickr Creative Commons.
Why A123 Threw Down for Fisker & Who's Next
Josie Garthwaite - Automotive
But as Jason Forcier, VP of Automotive Solutions for A123 put it to us in an interview today, “We’re not a VC company — we’re a battery company.” So why did A123 pledge to invest $23 million in the firm in addition to supplying Fisker its battery systems and collaborating with the startup on its next-gen vehicle? Here’s two reasons: The electric vehicle market is so nascent and filled with incumbents that building up a relatively early stage player could help the battery maker succeed. And cozying up to Fisker as it develops a new plug-in model could provide valuable lessons that may help it win more contracts down the road.
Grow the Market
First off, by putting up the capital for Fisker at this point, A123 can use its status to help the startup raise the additional investment it needs to access the Department of Energy’s conditional loan and hit its production targets (at least 15,000 vehicles per year by 2012 and eventually up to 100,000 units per year), and potentially become a big customer for the battery maker. Forcier told us that A123’s planned investment (a combination of cash and stock) will be part of a much larger fund raising round — more than double A123’s contribution — that’s still in the works. He said part of A123’s thinking in the move was to “help galvanize the round by bringing our reputation to it.”
A123 has generated a lot of excitement on the public markets on the bet that the nascent market for plug-in vehicles will take off, and carry A123 with it. But as it stands now, while A123’s revenue has grown in recent years, it has never turned a profit. So after losing one battery deal (for General Motors’ Chevy Volt) to battery giant LG Chem and seeing another one (for Chrysler’s lineup of electric vehicles, now significantly scaled back) dissolve, A123 has taken a step that could help build demand for its products.
A123 isn’t alone in these circumstances. Ener1, whose subsidiary EnerDel was in the running for the Fisker battery deal, provided Norway’s Think (one of its key customers) with a $5.69 million bridge loan and $30 million line of credit to help keep it afloat.
Fisker does not find itself in the precarious financial circumstances that Think was in when Ener1 threw it a lifeline, but it does need a hefty amount of capital. Fisker spokesperson Russell Datz told us today that A123’s planned investment will help the startup meet the equity requirements of its loan agreement with the Department of Energy.
Close to Home
In addition to financial support, Fisker also needs parts from U.S. suppliers that will allow it to deliver on its performance and production promises (the DOE expects more than 65 percent of the components for the Karma, based on cost, to come from domestic companies). That’s a short list of potential suppliers when you’re looking at batteries for tens of thousands of vehicles — the industry giants do their battery manufacturing mainly in China, South Korea and Japan.
Forcier described Fisker as being “in a bind” late in the third quarter or early in the fourth quarter of 2009, needing to land a supplier “that could meet their standards and ramp-up plan.” A123 will be able to meet Fisker’s 2010 production needs with a prototype assembly line, said Forcier, and a high-volume line will be up and running in Livonia, Mich. by the end of the year to handle larger scale production in 2011 and beyond.
As part of the deal announced Thursday, A123 will also have a chance to get more involved in the process of developing a vehicle start to finish than it has in the past, and potentially more than some competitors are able to do with other automakers. Forcier said working with Fisker on a brand new model designed “from the ground up” to be a relatively affordable plug-in vehicle will provide A123 with lessons about how to cut costs, which it can then use to win deals with other customers.
Who’s Next?
We don’t think that A123 is about to go on a buying spree, snapping up stakes in battery and electric car ventures. But Forcier said the company may make additional investments down the road. Many companies have “great technology, but they’re looking at the path A123 has had to go down,” said Forcier, and seeing that taking promising tech through to commercial scale manufacturing “requires a lot of capital.” A123Systems raised some $200 million or more over the eight years before its blockbuster IPO.
According to Forcier, some of those companies could win A123’s backing (see our list of 20 startups in this space) if their tech can help A123 increase energy density and drive down battery costs.
Related GigaOM Pro report (sub. req’d): “How EV Battery Startups Can Cross the Valley of Death“
Stirling Energy to Kick Off Its First Plant
Katie Fehrenbacher - clean power
Stirling Energy and Tessera have built Maricopa Solar, a 1.5MW solar project in Peoria, Ariz. (Maricopa County) that will use 60 SunCatchers to sell clean power to local Arizona utility Salt River Project. The ribbon-cutting event is supposed to feature Arizona Gov. Jan Brewer and Department of Energy Solar Program Manager John Lushetsky.
This is just the first small project from the Stirling Energy crew, and the company says that later this year it will start construction of its two much larger solar plants in California — a potentially 900MW plant in Imperial County, Calif. for San Diego Gas & Electric, and a 850MW solar plant in San Bernardino County, Calif. for Southern California Edison.
Founded in 1996, Phoenix, Ariz.-based Stirling Energy has developed a 25 KW electric solar dish that focuses the sun rays directly onto a stirling engine. Stirling engines, which were invented centuries ago, can be more efficient and quieter than internal combustion engines and use a closed system of gases to generate power. Most solar thermal technologies, by contrast, concentrate the sun’s rays onto liquid, which powers a turbine.
Stirling isn’t the only company turning to stirling engines for solar power. One example is Infinia, which is backed by a gaggle of A-list Silicon Valley-ers, including Bill Gross' Idealab and Paul Allen's Vulcan Capital. Infinia's technology is similar to Stirling's and uses mirrored concentrator dishes to track the sun and reflect its rays into a highly efficient Stirling heat engine. Stirling Energy has raised $100 million from Dublin, Ireland's NTR, which in the process took a 52-percent stake in the company, according to the Cleantech Group.
Daily Sprout
Josie Garthwaite - Misc
Small Firms Take Issue With EPA Proposal: Small business owners are claiming that the revised greenhouse gas regulations proposed recently by the Environmental Protection Agency, which would require least 1,200 small entities to acquire Clean Air Act operating permits for the first time, would be financially burdensome for them. — NYT’s Green Inc.
Todd Stern: Climate Bill Still in Reach: In his first public comments since last month’s disappointing Copenhagen climate talks, top U.S. climate negotiator Todd Stern said today that the White House “fully understands the importance of putting together the strongest domestic program,” despite the fact that health care reform has pushed the climate bill to the back burner. — Politico
Pay to Play: Instead of paying smart grid startups to participate in SmartGridCity, the ambitious plan from utility Xcel to wire up some 50,000 Colorado homes with smart grid tech, Xcel wanted the startups to pay $5 million to join the project. — Greentech Media
First Solar Snaps Up Solar Projects: First Solar has completed its acquisition of a portion of Edison Mission Group’s pipeline of utility-scale solar projects in California and the Southwest. — Press Release
Michigan Volt Rollout Deets: DTE Energy will be one of several utilities that will be getting some of the more than 100 pilot-build Chevy Volt vehicles from GM, slated for distribution this summer. “Those utilities will also participate in installing at least 500 charging stations in public places as well as businesses and residential parking areas.” — Autoblog Green
Smart Grid Event: Here Come the Next-Gen Apps
Katie Fehrenbacher - smart grid
This is an invite-only event, but we do have a small number of seats still available for entrepreneurs, innovators, investors and utility execs that have strong opinions and would like to participate. This will be a town-hall style event, where the discussion is led by a group of thought leaders, but the audience will be actively participating and it will be live-streamed online.
Our thought leaders include:
- Andrew Tang, senior director of PG&E’s Smart Energy Web
- Scott Lang, CEO of Silver Spring Networks
- Warren Weiss, partner at Foundation Capital
- John Steinberg, CEO of EcoFactor
I’m interested in hearing your thoughts on potential questions for our speakers. I’ll be moderating the discussion and the audience Q&A, so if you have a burning question please either submit it into the comment section or send it to me at katie AT gigaom.com. If you would like to attend the event please send me an email about why you’d be a great participant, and if we can accommodate you we will.
We want to thank Silver Spring Networks for its generosity in sponsoring the event and making it possible.
Image courtesy of horizontal.integration’s photostream on Flickr Creative Commons.
A123Systems Links With Fisker: $23M and Battery Deal
Josie Garthwaite - Automotive
A123 and Fisker will work together on Fisker’s planned second-gen model — the lower priced Project Nina, slated for a 2012 launch — with the intention of having A123 also supply batteries for that vehicle (the Nina deal won’t be finalized until after Fisker can ensure that A123 meets certain performance and delivery requirements). In all, today’s announcement marks the start of an ambitious new alliance between two well-funded entrepreneurial ventures (who both have Uncle Sam in their corner) hoping to build a plug-in vehicle empire in the entrenched auto and energy storage industries.
Of the $23 million that A123 plans to invest in Fisker, $13 million is slated to be in cash and $10 million in common stock. According to this morning’s release, the deal marks only the beginning: The investment arrangement is meant in part to “allow Fisker Automotive and A123 to work closely together to optimize the performance of future vehicles.”
Today’s deal comes a bit behind schedule — CEO Henrik Fisker said last month that a battery supplier would be named by year’s end. At least two other companies were in the running at some point for the deal — worth some $150 million to $200 million — including Advanced Lithium Power and Ener1 subsidiary EnerDel.
Fisker took a partial stake in ALP early last year, and when EnerDel announced in May “a potential long-term battery supply agreement” for the Karma, Fisker spokesperson Russel Datz told us, “We will continue to work with ALP but we are always on the lookout for new technology, especially with the government poised to finance it.”
EnerDel batteries had to undergo “some final in-vehicle tests to make sure everything checks out,” an EnerDel spokesperson told us last year. But yesterday the Indiana-based battery maker filed a brief update with the SEC informing its shareholders that it had broken off talks with Fisker (as VentureBeat notes, it could have something to do with timing: EnerDel has committed to filling a $70 million order for Think electric vehicles and it may not have enough manufacturing capacity for both projects).
Analysts estimated that Ener1 would get some 15 percent of its 2010 revenue and 28 percent of its 2011 revenue from Fisker-related projects, Cleantech Group reports.
Ener1’s stock took a dive after the announcement, closing down 15.5 percent at $5.18 yesterday. It has risen only slightly (to $5.20) in morning trading. A123, which had the biggest initial public offering of 2009, has seen its stock on the rise this morning, climbing as high as $22.64 this morning, up more 11.4 percent from yesterday’s close at $20.05.
Both Fisker and A123 have received significant backing from the federal government. In addition to raising about $100 million in venture capital, Fisker has secured $529 million loan from the Department of Energy to help it build the Karma (scheduled to begin deliveries this fall) and start working on Project Nina.
A123Systems raked in more than $249 million under the Department of Energy’s battery grant program last summer to help it set up manufacturing in the U.S. — an award the government called “the single largest investment in advanced battery technology for hybrid and electric-drive vehicles ever made.” According to today’s release, A123 will manufacture the cells and battery systems for the Karma at a facility with hefty backing from the state government in Livonia, Mich., where production is scheduled to begin this year.
Wake Me Up When Cape Wind Is Here
Katie Fehrenbacher - clean power
But is the end of the controversy actually near? Probably not, however, the fate of the project is looking somewhat more hopeful. On Wednesday Ken Salazar, secretary of the Department of the Interior, said he would be reviewing the project and that a final decision on Cape Wind would be made by the end of April. Public comments are being accepted until February 13.
The entrepreneur behind Cape Wind Jim Gordon released a statement that suggests he’s optimistic enough:
We are convinced that when Secretary Salazar has the complete record before him that the verifiable public benefits of creating jobs, greater energy independence, cleaner air and mitigating climate change will far outweigh any perception of negative impacts.
If the project is actually approved by April, there’s likely to be several more years of wait on public utility commission approvals, building out the electrical connections, ordering and receiving the turbines, and other issues that will be specifically related to the first offshore wind farm in the U.S.
OK, I know these things take a long time, but if these type of timelines become de rigueur for clean power in the U.S., we’re going to need a whole lot of help making it to any kind of near term domestic carbon emissions cuts.
Image of Nysted offshore wind farm off the coast of Denmark in the Baltic Sea, courtesy of Cape Wind.
20 Battery Startups Hitting the Road With Lithium-ion
Josie Garthwaite - Energy Storage
When we first put out our list of 13 startups working on lithium-ion batteries for vehicles, the market was waiting for billions of stimulus dollars for advanced batteries to be doled out, and hoping to gear up for its biggest ever plug-in vehicle push in 2010. That was a half a year ago, and subsequent DOE funds and major supply deals have made winners and losers out of contenders.
One of the startups on our original list — A123Systems — went on to have the biggest public offering of 2009 (now that it’s publicly traded, we’re still tracking ‘em but cut the company from our startup watch list). At the other end of the spectrum, a once promising company called Imara called it quits after being unable to raise new financing. So uh, they won’t be hitting the road any time soon.
Here’s our updated list, now with 20 battery startups (working on battery cells, materials, management systems and other tech) you should know about:
The company joined the National Alliance for Advanced Transportation Battery Cell Manufacture, a group of 50 U.S. companies that plans to invest more than $600 million in a battery R&D center in Kentucky, if DOE funds come through. In the meantime, the Texas Emerging Technology Fund has awarded the startup up to $1 million in funding that commits ActaCell to locating in Texas a “substantial percentage” of the work covered by the award.
The TIP funds, which require Amprius to come up with a matching amount for the project from private sources, will support development of a continuous manufacturing process for a silicon-based anode material for lithium-ion batteries (Amprius currently cranks out small batches of silicon nanowires — if successful, the TIP project will enable production of these nanowires “by the mile”). The idea is to build a battery with higher energy density using nanostructured silicon instead of graphite for the anode material.
Near the end of 2009, Boston-Power joined a new coalition of companies funded by the Swedish government to develop electric vehicles — the first real evidence the startup had made headway with an automotive customer. But whether and how that project will go forward remains uncertain (the company has declined to answer our questions on this topic), since the automaker involved in the group is Saab, the loss-making Swedish division of General Motors that’s on the verge of a wind-down.
The Azusa, Calif.-based startup raised $15 million in its first round of financing, with investors including CMEA Ventures, Harris & Harris Group and U.S. Venture Partners. In August 2009 the company secured $5 million of a planned $27 million Series B round, according to an SEC filing (CFX has not announced additional equity financing since then). Over the next three years the startup plans to focus initially on lithium batteries, and later expand into components and materials for the devices, CFX chief executive Joseph Fisher told Think Equity.
The firm also has agreements with India's Tata Motors and Norway's Miljø Innovasjon for highway-speed electric cars, and it announced plans to form a joint venture with India’s Hero Electric last month to build lithium-ion batteries for the Indian market as well as exports. The company was founded in 1996 and began trading on the Toronto Stock Exchange four years later.
Enax claims the new batteries will be safer and have a longer service life than today’s offerings, as AutoblogGreen reports. The company, which aims to provide batteries for “electric vehicles, submarines, fuel cell system, etc.,” also supplies electrodes to other companies.
With its $4 million award, Envia co-founder Michael Sinkula has told us the company will expand its focus to include anode (or negative electrode) technology. Working in collaboration with the Argonne National Laboratory on the DOE-backed research, Envia aims to develop a prototype of a non-graphite anode for vehicle batteries.
Founded in 2003 by Wang and Keith Kepler, President and CTO (both directed research at now-defunct battery maker Polystor), Farasis has raised venture capital from Chinese investors and at least $750,000 under the DOE’s small business innovation research program.
To reach commercial-scale manufacturing within three years, Sakti3 requested $15 million from the Department of Energy’s battery grant program, but those funds have not come through so far. In November Sastry told CNN she expects Sakti3 to commercialize its technology by late 2010.
Founded in 2007 as a spin-out from the National Renewable Energy Laboratory, Planar is working on solid-state, high-capacity batteries. Backed by Battele Ventures and Innovation Valley Partners, the startup requested $56 million in DOE stimulus funds last year to support a Gainseville, Fl. manufacturing facility. But Planar has not been among the stimulus winners.
Those funds did not come through, but Quallion told Green Car Congress last month that it’s still building the factory, remains on track to develop lithium-ion tech to reduce idling emissions from heavy duty trucks, and is supplying battery “packs for small electric vehicles for evaluation” by companies in the U.S., EU and Japan.
Related GigaOM Pro reports (sub. req’d): “How to Break Into the Energy Storage Market” and “How EV Battery Startups Can Cross the Valley of Death“
Cali's Utilities Won't Be Able to Meet 2010 State RPS
Katie Fehrenbacher - clean power
Over the past several years the state utilities, like PG&E, Southern California Edison and San Diego Gas & Electric have been rushing to sign up various contracts with clean power providers in an attempt to reach the 2010 target. But as Mark Griffith managing director at Black & Veatch put it in an interview with me, the contracts might be in place but the projects won’t be online in time. “Utilities are making the effort,” explained Griffith, but projects can take a long time to build, particularly getting the transmission lines built.
While it’s already 2010, even by the end of the year utilities won’t have enough clean power projects built and delivering power to meet the state requirements. Many in the utility and power industries have predicted that this would happen over the past few years, which is why California utilities have tried to overshoot the percentage total for their contracts (i.e., not contracting 20 percent of clean power but 30 percent.) “Just because you have a contract doesn’t mean that project will work out,” said Griffith. (See PG&E’s former contract with a geothermal provider that went cold).
California utilities have also been asking the state's Public Utilities Commission for years to allow them to buy renewable energy credits without having to purchase the actual energy generated from renewable sources in order to meet California's RPS.
Missing the 2010 RPS deadline will increase pressure on utilities for the next deadline: California says that utilities need to provide 33 percent clean power by 2020. Black & Veatch says that the California utilities will also miss that later target if only in-state clean power is counted (meaning utilities can’t ship in clean power from out of state, like a Nevada solar farm, to meet the RPS.)
The in-state/outta state issue is an important component for California regulators to deal with in the next couple of years. California Governor Arnold Schwarzenegger recently killed proposals that would have put limits on how much how much of the 2020 RPS utilities could meet with power generated out of state. Proponents of keeping clean power in the state are arguing that the restriction would boost more green jobs in the state.
Wherever California utilities end up getting their clean power, clearly utilities have been struggling. It’s a new energy world and it’s in a state of flux. A note from Griffith was the most telling: “The energy industry’s New Normal faces a series of fundamental risks.”
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