Where are Energy Venture Capitalists Investing?

Venture Capital in the Energy Industry
Venture capital (VC) is an important financial tool for innovative start-ups in many industries. In recent years, increasing amounts of venture capital have been invested in new energy technologies via newly emerging, dedicated industry VC funds. Although government financing continues to provide the lion's share of investment dollars in new and emerging energy technologies, industry experts are starting to see more and more investment activity from private sources. Venture capitalists have invested in everything from distributed generation to online energy exchanges, and many utilities are joining them to cultivate corporate earnings growth.

Venture investing in energy-based technologies and projects began about seven years ago. Unlike government financing, which focuses on developing technologies for eventual application, venture dollars are invested for purposes of financial return. Venture capital is not R&D funding; it is really business expansion capital.

Since the 1960s, venture capitalists have invested in young, rapidly growing companies through purchase of equity securities to help develop new products and services. Venture capitalists often take high risks in anticipation of high rewards.

As deregulation and energy industry restructuring have opened up prospects for high-growth technology companies in the utility industry, private partnerships and closely-held corporations funded by other corporations, pension funds, endowment funds, foundations, and other investors have begun to take notice and establish funds focused exclusively on technology companies servicing the utility industry. Today, a small number of such firms devote themselves solely to energy investments.

Utility companies, as well, see the opportunities and recognize the imperatives. Facing competition, tighter margins, and lower revenues in their traditional businesses, they realize that they must find new ways to raise income and must look to new technologies to become more efficient. Many conventional utility companies have set up venture arms to finance high-growth companies such as Internet exchanges for oil, gas, and power; utility bill presentment and consolidation; and other business-to-business e-commerce services. In addition to the Internet, many dollars are being poured into companies that develop alternative energy sources, particularly fuel cells and other types of distributed generation.

Compared to investment in the Internet, venture capital investment in energy technologies is modest. However, in the past five years, a noticeable surge in venture funding has occurred.
www.EnergyBusinessReports.com

LED chips set new R&D records

LED chips set new R&D records
Over the summer, both Philips Lumileds and Osram Opto Semiconductors unveiled some pretty impressive lab results for power LEDs.
R&D results from power LEDs demonstrated by Osram

Two of the leading power LED chipmakers have announced “record breaking” research results for their LEDs, with values as high as 155 lm and 140 lm/W for white LEDs made using 1 mm2 chips and driven at 350 mA.

We’ve said this in the past in LEDs Magazine, but it bears repeating; these are results from superstar devices in the research lab, not from commercially available products. Our advice is this: be careful not to draw the wrong conclusions from these numbers, but recognize they are important. More than the values themselves, the results indicate the continued progress being made by LED manufacturers.

Innovation is also happening in the labs of other companies that haven’t made recent announcements. And, perhaps most importantly, many of the technology enhancements that have resulted in these higher numbers will eventually move across to the next generation of production devices. Direct comparison of the numbers quoted below is not advised; wait until you can purchase production quantities of the devices and then see how they perform in your luminaire.

Source: LEDs Magazine

Philips claims first with office building entirely lit using LEDs

26 Jun 2008

Philips Lighting France will light an office building in Paris using LED fixtures to achieve both functional and decorative lighting.

Philips has used LED fixtures to light an entire office building in Paris. The office, owned by Generali and located at 100 Champs-Elysées Avenue, Paris, "marks a milestone in lighting history" according to Philips. The company claims that, for the first time, functional office lighting powered entirely by LEDs goes hand in hand with scenic and atmospheric effects that are also based on LEDs. The project came together with architect Anthony Béchu who had been commissioned by Generali to design "an innovative window in the world of LEDs". LED lighting improves people’s well-being and gives designers more flexibility in the layout of open spaces and ceiling design. It removes the restrictions on lighting orientation that is often dictated by the use of fluorescents tubular lamps. Because of the extreme long lifetime of LEDs, the maintenance costs are kept to a minimum. Throughout the office spaces, the functional office lighting is realized through 422 luminaires integrated in a false ceiling with 600 x 600 grids. Each luminaire is powered by 16 or 12 high power (2.6 W) LEDs, depending on their location in the office space. This provides an average of 300 lux everywhere and 500 lux on the working planes. Philips has given special care to the development of optics. In addition, recessed SpotLed 3 K2 luminaires, each with 3 Luxeon high-power LEDs, are applied in the corridors. The solution complies with lighting norms and standards on energy consumption, illumination levels and visual comfort [* see footnote]. To create the desired ambiance, Generali chose a scenario of LED-based color-changing light effects. The glass façade of the top two floors is lit, communicating the image of the building towards the outside world like a beacon in the night. Thierry Braunecker-Becker, General Manager, Philips Lighting France, said "We have been leading the world by unlocking the potential of LED for scene setting, creating atmospheres and lighting up landmark projects with dynamic colorful LED solutions." "We recently announced a broad range of applications for general lighting, and today is the day that the LED enters into general lighting for offices. This marks a moment of truth and is proof that LEDs are making inroads into the heart of the lighting industry. This is exciting and it will accelerate the growth of solid-state lighting." Philips expects the world market for LED luminaires to grow rapidly by more than 30% per year driven by the entrance of LEDs in general lighting, from about EUR 700 million last year to EUR 1.5 billion in 2010. * Footnote Energy consumption regulations: Réglementation Thermique 2005 - the reference value for lighting is 12 W/m2 Lighting standards for offices in terms of illuminance levels and visual comfort: European Lighting Standard for indoor work places (EN 12464-1) Source: LED Magazine

CO2 CAPTURE, SEQUESTRATION, AND STORAGE

Over the last century, human activity had a profound impact on the environment. Fossil fuel consumption, deforestation, and other unsustainable land use practices have resulted in a dramatic increase of carbon dioxide (CO2) and other greenhouse gas (GHG) emissions into the atmosphere. Most scientists believe the increase of CO2 emissions has created the human-induced climate warming conditions that are currently affecting the globe. If this trend continues, climate change will be the inevitable result. The long-term effects of global temperature change are largely unknown; however, adverse effects can already be seen in certain parts of the world in the form of droughts, increased severity of storms, and flooding, particularly in the poorer regions of the globe.

The natural production and absorption of carbon dioxide (CO2) is achieved through the earth�s biosphere and oceans. However, mankind has altered the natural carbon cycle by burning coal, oil, natural gas, and wood and each of these activities has increased in scale and distribution. Carbon dioxide was the first greenhouse gas demonstrated to be increasing in atmospheric concentration

Atmospheric levels of CO2 have risen well over 30% from pre-industrial levels of 280 parts per million (ppm) to present levels of 375 ppm. Evidence suggests this observed rise in atmospheric CO2 levels is due primarily to expanding use of fossil fuels for energy. Predictions of global energy use in the next century suggest a continued increase in carbon emissions and rising concentrations of CO2 in the atmosphere unless major changes are made in the way we produce and use energy - in particular, how we manage carbon. One way to manage carbon is to use energy more efficiently to reduce our need for a major energy and carbon source - fossil fuel combustion. Another way is to increase our use of low-carbon and carbon-free fuels and technologies (nuclear power and renewable sources such as solar energy, wind power, and biomass fuels). The most recent alternative for managing carbon is carbon sequestration.

Carbon sequestration refers to the provision of long-term storage of carbon in the terrestrial biosphere, underground, or oceans, to reduce the buildup of carbon dioxide (the principal greenhouse gas) concentration in the atmosphere. This is accomplished by maintaining or enhancing natural processes, or the development of new techniques to dispose of carbon.

SOURCE: Energy Business Reports

BIOMASS TO BIOFUELS POTENTIAL

Biomass is a renewable energy resource derived from waste. It comes from both human and natural activities and uses by-products from the timber industry, agricultural crops, raw material from forests, household wastes, and wood. Like wind, solar and other forms of renewable energy, biomass produces fewer emissions than its fossil fuel counterparts. After fossil fuels, biomass is the most widely used fuel in the world.

A principal advantage of biomass is its low greenhouse gas emission characteristic. Biomass does not spew carbon dioxide into the atmosphere as it absorbs an equal amount of carbon in growing as it releases when consumed as a fuel. Biomass contains less sulfur than coal, and consequently produces less SO2. It can be used to generate electricity utilizing the same equipment that is used to combust fossil fuels, and its use cuts down on the need for landfills, has a positive impact on watershed quality, retards the risk of wildfires by thinning forests, and generates jobs in the local economy.

Biofuels are renewable fuels that are predominantly produced from domestically produced biomass feed stocks or as a by product from the industrial processing of agricultural or food products, or from the recovery and reprocessing of products such as cooking and vegetable oil. Biofuel contains no petroleum, but it can be blended at any level with petroleum fuel to create a biofuel blend. It can be used in conventional healing equipment or diesel engine with no major modification. Biofuel is simple to use, biodegradable, non-toxic and essentially free of sulfur and aromatics. Ethanol and biodiesel are the most widely recognized biofuel sources for transport sector.

Feedstocks used to produce biofuels include corn (the predominant feedstock in the U.S.), sugarcane or sugar beets (common in Europe), various grains, rapeseed or oil seed, soybeans, as well as other bio-sources found throughout the world. Biofuels exhibit a wide range of physical, chemical, and agricultural/process engineering properties. Moisture content is probably the most important determinant of energy value. Despite the wide range of possible sources, biomass feedstocks are remarkably uniform in many of their fuel properties, compared with coal or petroleum.

Biomass can be converted into various types of fuels and used in numerous applications. Two types of ethanol are produced in the United States: fermentation ethanol and synthetic ethanol. In addition, biodiesel, bio-oil, and biofuel from synthetic gas are produced commercially.

Grains and oilseeds are the primary feedstocks used to produce the ethanol, biodiesel, and bioproducts consumed today. Food and feed processing residues and tertiary post-consumer residues are also used to generate a modest amount of electricity. These agriculture-derived biomass resources account for nearly 25% of the current biomass consumption.

Liquid biofuels made from biomass are attracting increasing interest worldwide. Industrial countries see biofuels as a way of reducing greenhouse gas (GHG) emissions from the transport sector and diversifying energy sources. Developing countries see biofuels as a way to stimulate rural development, create jobs, and save foreign exchange. Both groups view biofuels as a means of increasing energy security. These concerns, taken together and highlighted by recent surges in the world oil price, have prompted a wide range of countries to consider biofuels programs. Canada, Colombia, the European Union (EU), India, Thailand, and the United States have adopted new targets, some mandatory, for increasing the contribution of biofuels to their transport fuel supplies. In Brazil, after a period of a decline in ethanol consumption, flex-fuel vehicles - capable of running on varying percentages of ethanol - are revitalizing the ethanol market.

It is becoming increasingly clear that reliance on oil as the principal source of fuel is unsustainable over the long-term. A shift towards any alternative fuel is going to require a governmental commitment to emerging technologies. In addition, integrating alternative fuels into the mass market will have broad impacts on existing policies.

SOURCE: Energy Business Reports

Is Cellulose Ethanol a Viable Energy Alternative?

The last few decades have seen rapid growth in the consumption of the fossil fuels such as oil, gas, and coal. Production, on the other hand, has not increased to match the rise in consumption, primarily due to limited availability of these resources. The situation has been exacerbated by political instability in the Middle East and the catastrophic hurricanes of 2005, which led to sharp rises in the prices of these resources, and, in some cases, acute scarcity. Industrialized nations that are dependent on other countries for oil have been severely impacted and as a result, the U.S. government, along with state governments and the energy industry, has ramped up its support for alternative energy sources.

Given its environmental and economic benefits, together with the vast availability of feedstock, ethanol has taken on prominence as one of the most favored alternatives to fossil fuel.

An in-depth analysis of the prospects for the use of cellulose ethanol as a fuel includes a comprehensive analysis of how cellulose ethanol is produced, its cost-effectiveness, the growth drivers promoting the use of ethanol over other fuels, the barriers to market, and much more.

Focus on the steps government is taking to promote ethanol use, including tax incentives, funding for research and development, funding for technology, and other measures.

The basics of ethanol production; how ethanol differs from other fuels, and the benefits to consumers from using ethanol.

A complete source analysis of this promising young industry and the market potential of ethanol as an alternative fuel source.
SOURCE: Energy Business Reports

UNDERSTANDING ENERGY HEDGE FUNDS

Hedge funds are private investment funds charging a performance fee and typically open to only a limited range of qualified investors. In the United States, hedge funds are open to accredited investors only. Because of this restriction, they are usually exempt from any direct regulation by regulatory bodies. Hedge funds are credited to Alfred Winslow Jones for their invention in 1949.

Speculative energy trading has a strong future, but it will not be the traditional utilities and energy merchants that will create and maturate that market. While much of the energy industry has returned to the relative safety of trading around assets and marketing activities, energy markets have become characterized across all energy commodities by increasing prices and price volatilities. Oil markets are booming and were not at all impacted by the Enron collapse.

Energy trading will now be dominated by more sophisticated and well-capitalized financial players such as hedge funds and investment banks, as well as by multinational energy companies with a global footprint, while electric utilities are more marginalized to niche markets. Evidence of the fund?s influence on oil markets has been the 55% growth in open interest on Nymex crude, heating oil and gasoline contracts over last year and the more violent and volatile intraday trading moving during recent months. These market drivers are bringing greater financialization and maturation to the energy complex.

According to research, it can be established that there are over two hundred known hedge funds active in the energy sector with many more information. To put this in some context, there are more than 8,100 hedge funds globally managing over $1 trillion in assets today. Energy is still a relatively small but rapidly growing component of their universe. There are many factors responsible for this change in hedge fund strategy. For one thing, traditional equity returns this year have been flat so that many funds are not making the kinds of returns expected for this type of investment.

SOURCE: Energy Business Reports

DRIVE SMART

Why Oil Prices Are So High?

How to explain the oil price? Why is it so high? Are we running out? Are supplies disrupted, or is the high price a reflection of oil company greed or OPEC greed. Are Chavez and the Saudis conspiring against us?

Saudi Oil Minister Ali al-Naimi recently stated, “There is no justification for the current rise in prices.” What the minister means is that there are no shortages or supply disruptions. He means no real reasons as distinct from speculative or psychological reasons.

The run up in oil price coincides with a period of heightened US and Israeli military aggression in the Middle East. However, the biggest jump has been in the last 18 months.

When Bush invaded Iraq in 2003, the average price of oil that year was about $27 per barrel, or about $31 in inflation adjusted 2007 dollars. The price rose another $10 in 2004 to an average annual price of $42 (in 2007 dollars), another $12 in 2005, $7 in 2006, and $4 in 2007 to $65. But in the last few months the price has more than doubled to about $135. It is difficult to explain a $70 jump in price in terms other than speculation.

Oil prices have been high in the past. Until 2008, the record monthly oil price was $104 in December 1979 (measured in December 2007 dollars). As recently as 1998 the real price of oil was lower than in 1946 when the nominal price of oil was $1.63 per barrel. During the Bush regime, the price of oil in 2007 dollars has risen from $27 to approximately $135.

Possibly, the rise in the oil price was held down, prior to the recent jump, by expectations that Democrats would eventually end the conflict and restrain Israel in the interest of Middle East peace and justice for the Palestinians.

Now that Obama has pledged allegiance to AIPAC and adopted Bush’s position toward Iran, the high oil price could be a forecast that US/Israeli policy is likely to result in substantial supply disruptions.

Solution for high oil price

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