Whittaker Associates: Giving Information Meaning">Whittaker

By Vidhan Rana

Until a few years ago, ethanol, biofuel or bio-diesel were the words that came to mind when one talked about the alternative energy industry. Today, however, solar and wind seem to be the buzzwords. While the number of new wind farms and photovoltaic cell manufacturing plants has increased over the last few years, new biofuel plants have dwindled. However, the biofuels industry is poised for a comeback.

While new bio-fuels project announcements peaked in 2006 at 201 projects, they totaled a mere 66 in 2008. The chart below shows the number of new project and expansion announcements in the United States between 2003 and 2008 in the biofuel industry. In total, there were 604 bio-fuel related projects in the United States in those six years. Approximate net investment stood at around $50 billion, or $84 million per project.

The above chart does not mean that the biofuel industry is in a decline. Opening a new bio-fuel plant can be an expensive business. With the economic downturn and the lack of credit both hitting producers around the same time, new projects were hard to undertake. There was also some overcapacity in the market due to the high volume of activity in 2006 and 2007. In addition, low gasoline prices meant that some forms of biofuel could not compete with gasoline economically. The situation became so dire that a number of major ethanol producers filed for bankruptcy in 2008 and 2009.

However, the Energy Information Administration, a part of the US Department of Energy, expects biofuel demand to increase over the next 10 years. In fact, the Department of Energy projection shows the demand for oil-based fuel (gasoline, diesel and jet-fuel) declining over the next 10 years. The chart below shows the demand pattern of oil since 1970 (numbers after 2008 are projections).

As the economy comes out of the current recession, demand for biofuels is expected to go up again. New government regulation to increase fuel standards and the Obama Administration’s push for energy efficiency will also boost the demand for biofuels. Last year 7% of the gasoline Americans pumped into their tanks came from plant-based fuel. According the to the Energy Information Administration, that number is likely to double over the next decade as mandates for more biofuels are implemented.

Another trend that is likely to impact the biofuel market is the mandates that say that all fuels cannot be made from corn, the most popular raw material for ethanol. Governments all around the world are concerned that if too much corn is used for ethanol production it may increase the prices of corn-based food products. As a result, companies are increasingly looking to convert municipal and industrial waste, wood pallets and a number of different materials into biofuels. Whittaker Associates identified over 50 up-and-coming start-ups that are banking on the projected increased demand for biofuels and are making major investments in the industry.

As demand for biofuels rises, new plants will be built and existing plants will be expanded.

By Vidhan Rana

The solar industry has been creating a lot of buzz around the country, especially in the Southwestern states. Our analysis revealed that more than $4 billion dollars has been invested by companies in this industry, creating over 10,000 jobs, since 2003. The map below shows the locations of the solar investment announcements. The red dots represent new investments and the blue dots represent expansion announcements made by existing companies.

While a large majority of the solar industry announcements are concentrated around the Western and Southwestern states as shown on the map, states like Michigan and Pennsylvania, with their strong manufacturing expertise, are also faring well. United Solar Ovonics, a Rochester Hills, MI, -based company that manufactures photovoltaic solar cells, has invested over $400 million in Michigan and has created almost 1,000 jobs over the last 3 years. In August 2008, Flabeg–a Germany-based manufacturer of high-tech glass and mirror applications–announced that it is building a 209,000 square-foot manufacturing facility in Findley, PA, that will eventually employ around 300 workers.

Flabeg makes mirrors for utility-scale concentrating solar power plants. While a lot of attention is paid to photovoltaic, a technology that converts the sun’s energy directly into electricity, concentrated solar power (CSP) technology uses mirrors to reflect and concentrate sunlight onto receivers that collect the solar energy and convert it to heat –which can then be used to produce electricity.

While CSP power plants represent only a small proportion of the electricity generated from solar technologies, 5%, or 419 MW out of 8775 MW, contribution from CSP power plants is projected to increase dramatically over the next few years due to some recent technological advancements. One notable technology that is currently being developed in Spain is the world’s first thermal storage plant. Thermal storage allows a solar plant to produce electricity even after the sun goes down–this particular 50 MW plant in Spain is capable of producing electricity for more than 7 hours without sunlight. The Solar Energy Industry Association reports that CSP facilities with over 6,000 MW of generation potential are currently under development in the United States.

CSP plants are not limited to the Southwest. In December 2008, FPL Energy began construction on a 75 MW CSP facility in Martin County, Florida. This facility will become the first CSP power plant outside the Southwest. It is also the world’s first hybrid solar plant that uses solar-thermal in combination with a combined-cycle natural gas plant. FPL Energy is building the solar facility beside its natural gas plant, using 180,000 reflective mirrors over roughly 500 acres of land.

According to the National Renewable Energy Laboratory (NREL), approximately 455 construction jobs are created for every 100 MW of installed CSP. In February, a 280 MW CSP plant was announced near Phoenix, Arizona, which is estimated to create around 2,000 construction jobs during the plant’s construction over the next two years.  CSP’s supply chain includes materials (e.g. steel, plastic, copper, brass, concrete, aluminum, etc.) and components (e.g. mirrors, motion systems, fasteners, oil pumps, valves, circuit boards, temperature sensors, etc.). According to an analysis by NREL, a 100 MW CSP plant would generate around 4,000 direct and indirect job-years compared to approximately 500 job-years for a combined-cycle fossil fuel plant of the same capacity. Translating this to the 6,000 MW currently under development, CSP technology alone can help generate approximately 240,000 jobs in the country over the next 3 to 5 years. In terms of permanent jobs, a 100 MW CSP plant is estimated to create around 90 jobs in areas such as administration, operation, maintenance, service contracting, water maintenance, spare parts and solar field parts replenishment. This compares to around 10 to 60 jobs for a similar-sized conventional coal or natural gas plant.

Investing in concentrated solar power technology is not only a smart way to reduce our fossil fuel consumption and thus our carbon emissions, but also a great way to stimulate our lagging economy.

By Vidhan Rana

Geothermal power is an inexhaustible supply of energy that is estimated to be equivalent to 42 million MW globally and can last for billions of years. Heat from the earth’s core is a significant source of energy and if developed properly, can fulfill a large proportion of our energy needs. In countries like Philippines and Iceland, geothermal accounts for over 15% of energy needs. In Iceland, geothermal energy provides over 90% of space- and water-heating needs. In the United States, however, less than 1% of our energy comes from geothermal. Geothermal Energy Association, a trade association for this industry, believes that geothermal can supply over 10% of our energy needs.

Unlike other renewable energy sources, geothermal power is available 24 hours a day and has a fairly constant rate of power generation. It essentially has no greenhouse gas emission and thus can serve a substitute for non –renewable sources of energy.

Geothermal energy can be harnessed in one of these three ways:

Electric Power Generation – where wells are drilled into a geothermal reservoir. Heat below the earth’s surface then boils the liquid, usually water, into vapor, which then drives the turbines that generate electricity. This is the most common form of geothermal power, but requires temperatures over 100 degrees Celsius (212 F). Therefore, only some regions in the country are able to generate electricity through this technique (Check map below for areas with geothermal potential).

Direct Use – heat from the earth is directly used, without involving heat pumps or a power plant, for space heating, food preparation, hot spring bathing and spas, agriculture, aquaculture, green houses and other industrial purposes. According to Oregon Institute of Technology’s Geo-Heat Center, U.S. installed capacity of direct use systems totals 470 MW or enough to heat 40,000 average-sized houses. In some cities, direct heat is used to melt snow on pavements and roads. A large part of Western and Central states in the U.S. has potential to utilize this source of energy.

Geothermal Heat Pumps – this system takes advantage of Earth’s relatively constant temperature at depths of about 10 ft to 300 ft. A geothermal heat pump system consists of pipes buried in the shallow ground near a building, a heat exchange, and ducts into the building. The pumps circulate water or other heat transfer fluids through pipes buried in a continuous loop, either horizontally or vertically, under a landscape area, parking lot, or any number of areas around the building. To supply heat, the system pulls heat from the Earth through the loop and distributes it through a conventional duct system. For cooling, the process is reversed; the system extracts heat from a building and transfers it below the earth’s surface. Though electricity is used to move the liquid around the system, heat pumps are estimated to be 30-60% more efficient than conventional heating and cooling systems. Because temperature at 10 ft under the surface ranges constantly between 10 and 16 degrees Celsius (50 and 60 degrees F), any area in the U.S. is suitable for this type of use.

The map below shows areas where geothermal resources are concentrated in the United States.

As the map above shows, geothermal resources are concentrated around the Western states. Therefore, these states have been in the forefront of geothermal energy generation. As of August 2008, a total of almost 3,000 MW of geothermal electricity power capacity was online in the U.S. About 2,500 MW of that capacity is currently installed in California.

California’s geothermal power generation exceeds the capacity of any other country in the world. The state derives around 4.5% of its energy needs from geothermal power plants. In addition to the installed capacity, a total of around 97 projects are under development in 13 different states with a total of 4,000 MW of new geothermal power plant capacity. In addition to the states that already have installed geothermal power generation capacity, states like Arizona, Colorado, Florida, Oregon, Washington and Wyoming are joining the geothermal market. California has another 930-1040 MW under development, while Nevada has another 1080-1900 MW under development. According to some estimates, geothermal power plants could be generating over 15,000 MW by 2025, more than quadrupling our current geothermal electricity generation.

By Vidhan Rana

We have witnessed such a flurry of bad economic news in the last few months that many of us are becoming skeptical about our economic future. However, there are still sectors within our economy that remain active and are experiencing massive growth. Over the next few months, Whittaker Associates will be analyzing some of these sectors in our monthly newsletter.

During his first week in office, President Barack Obama reemphasized his campaign commitment to reduce America’s dependence on foreign oil. A law passed by Congress in 2007 required that by 2020, new cars and trucks meet a standard of 35 miles per gallon, a 40-percent increase over the status quo. President Obama plans to introduce regulation that will force auto manufactures to begin implementing changes as early as 2011. Battery technology will play a central role if these fuel-efficiency standards are to be met.

Currently, most of the batteries we see in advanced hybrid cars like the popular Toyota Prius are manufactured in Asia. Toyota has made numerous advancements to its nickel-metal hydride battery packs since they were first introduced in 1997. American manufacturers are far behind Asian manufacturers in developing battery technology. However, with oil prices hitting record highs last summer and concerns about global climate change rising, auto manufacturers in the United States are finally making some headway into this sector.

In early January, Governer Granholm of Michigan signed a new $335 million tax-credit program to help companies develop and manufacture advanced batteries in Michigan. If battery manufacturing expands in the state, the Michigan Economic Development Corporation predicts that over 50,000 jobs may be created in the state. Later in the month, General Motors announced plans to build a lithium-ion battery plant in Michigan to assemble battery packs for the 2011 Chevrolet Volt, the company’s highly anticipated plug-in electric hybrid.

A Massachusetts-based battery company, A123 Systems, asked for a $1.8 billion government loan to build a factory in southeast Michgan to produce lithium-ioin batteries for hybrids. A123 expects to build an additional plant beyond the Michigan facility, and combined, the two plants are expected to create more than 14,000 jobs. In another development, Ricardo, Inc. annnouced that it has opened a $2 million battery technology center that will help automakers develop hybrid and electric powertrains for future vehicles. The center, located in suburban Detroit, already employs 32 engineers. Ricardo will receive almost $1 million over 10 years from the state through the tax-credit program signed by the Governer earlier in the month. These are welcome annoucements for a state that has seen a string of bad news over the last few years.

Late last year, 14 U.S. technology companies joned forces to seek $1 billion in federal aid to build a plant to make advanced batteries for electric cars in the country. Such developments are encouraging and will certainly help American manufacturers catch up with their Asian rivals.

Whittaker Associates has identified over 50 companies that are directly involved in advanced battery manufacturing. The combined revenue of these companies stands at around $17 billion. Additionally, a review of battery-related capital investments and expansions in the United States revealed over $750 million of investment in the country since 2003. The industry has already created over 3,000 new jobs over the last five years.

The map below shows the 58 project announcements Whittaker Associates observed in the United States in the last five years. A large proportion of the announcements are centered around southeast Michigan and northern Ohio, as most of the batteries are intended to be used in cars.

One company, California-based Tesla Motors, is already producing cars that will spur excitement about battery-powered vehicles.  Skeptics argue that battery-powered cars are not as powerful and “fun” to drive as gasoline-powered cars, but Tesla is proving them wrong. The Tesla Roadster, the company’s first production model, is an all-electric sports car. The car has a range of 221 miles and can accelerate from 0 to 60 mph in less than 4 seconds. By May 2008, the company had sold more than 800 cars and had another 400 buyers in its waiting list. Its current model, the Roadster Sport, will sell for  around $128,000. The company plans to unveil a sedan in 2010 that will be comparable with the BMW 5 Series and Audi 6, at a price tag of around $60,000. There are also plans for a more affordable sedan priced at around $30,000 by 2012.

Batteries are classifed by the material they use to store energy. Common battery types include lithium-ion; nickel-metal hydride; hydrogen fuel-cell; zinc-bromine; and lead-acid. Lead-acid batteries have been around for more than a century and we use them every day as starters in our cars. While much of the buzz centers around lithium-ion and nickel-metal hydride batteries, lead-acid batteries are making technological advances of their own. Axion Power, a Pittsburg, Pennsylvania-based firm, has invented a lead-acid battery that powers a car for about 45 miles or 70 kilometers. The company replaced a normal negative electrode in the battery with a plate made from activated carbon, a material used in supercapacitators.

Axiom Power is not only developing its battery technology to power cars, but is also experimenting with a mobile energy-storage system that can supply up to 1MW of power for 30 minutes or 100KW for ten hours. If this technology is developed successfully, it may help answer the problem of matching the supply of power generated by solar and wind energy to the demand of energy.

In 2007, Congress passed the U.S. Energy Storage Technology Advancement Act, which may provide up to $100 million a year from 2009 through 2014 to set up four energy storage research centers in the U.S. Currently, battery power storage is very costly compared to other storage options such as pumped hydro storage – over $1,000 per kW installed compared to 2 cents per kW. However, storage application companies expect that battery storage costs will decline as the technology is developed and volume production kicks in.

Developing advanced battery technology here in the United States will not only revive its sagging economy but help it regain its position as the leader in innovation. In his most recent book, Hot, Flat, and Crowded: Why We Need a Green Revolution—And How It Can Help Revive America, Tom Friedman argues that America should embrace clean energy and green technology solutions and regain its economic and political stature in the world. Developments in battery technology are going to play a huge role in this revolution, and will hopefully bring us closer to the goal of energy independence we have been pursuing for over three decades.

By Vidhan Rana

Have you heard of the Athabasca oil sands? If you haven’t, you will surely hear about them soon. In the near future, oil sands may represent as much as 2/3 of the world’s total petroleum reserves. Canada’s Athabasca oil sands alone hold about 1.7 trillion barrels of oil sands, compared to 1.75 trillion barrels of conventional oil worldwide.
Alberta’s large deposits contain at least 85 percent of the world’s known bitumen (oil sands) reserves. Currently, only about 10 percent of the reserves are counted as recoverable, which amounts to about 3/4 of North America’s petroleum reserves. Many countries around the world have oil sand deposits, but only Canada and Venezuela have oil sand reserves that equal the world’s total reserves of conventional crude oil.
Until a few years ago, extracting crude from oil sands was not economically viable, since large amounts of energy are required to reduce the bitumen’s viscosity to extract the crude oil trapped in the sand. However, high oil prices and new technologies have enabled companies to extract the oil sands at a profitable level and convert the crude to usable products. Most of the oil sands’ extraction so far is done through surface-mining techniques, but over 80 percent of Canada’s reserves are too far below the earth’s surface to be extracted in this manner. New in-situ techniques have been developed to extract oil that was unreachable just a few years ago.

In July 2007, Royal Dutch Shell released its 2006 annual report and announced that its Canadian oil sands unit made an after-tax profit of $21.75 per barrel, nearly double its worldwide profit of $12.41 per barrel on conventional crude oil. A few days later, Shell announced it filed for regulatory approval to build a $27 billion oil sands refinery in Alberta, one of $38 billion in new oil sands projects announced that week.

A huge environmental cost is associated with oil sands extraction. The extraction process involves clearing forests, destroying natural habitat for plants and animals in the area. Since a significant amount of energy is used in the extraction process and produces carbon dioxide emissions, this resource is no more environmentally friendly than any other petroleum-based products. Under pressure from environmental groups, the current Conservative government in Canada announced last year that it was going to phase out some of the oil sands tax incentives over the coming years. However, with oil prices crossing over $100 this year, government tax incentives may no longer be necessary to promote investments in the area.

Fort McMurray, which lies in the heart of the Athabasca oil sands reserves, grew from a population of 37,000 in 1996 to 80,000 in 2006. By 2010, oil sands production is projected to reach 2 million barrels per day, or two-thirds of Canada’s total oil production. By 2015, crude oil extracted from oil sands is expected to represent over 80 percent of Canada’s oil production, which is estimated to be around 4 million barrels per day. The Athabasca oil sands are now featured prominently in international trade talks, with energy rivals China and the United States negotiating with Canada for a bigger share of the oil sands’ rapidly increasing output.