June Top Ten Players In Green Energy
1: President Barack Obama
Last month’s first Oval Office address by President Obama on the Gulf spill was paned for its lack of specifics. We at G.E.R. believed that the speech was pure-Obama as he he provided the outline for a comprehensive climate change and energy legislation. But much like he did during the healthcare debate, he once again left it up to Congress to come with the details. The strategy, while disappointing for the president’s base, has been productive: It got healthcare passed and the administration is close to getting a financial overhaul bill. Will the strategy work for the Kerry – Lieberman climate change bill? It’s been nearly two months since the legislation was officially introduced to the Senate and so far the odds aren’t in favor of its passage, largely blocked by strong opposition to its cap-and-trade provision. But we can’t say that Obama hasn’t given it a try.
2: Tesla IPO
Given the poor track record of cleantech Initial Public Offerings this year, the prognosis for Tesla’s IPO wasn’t good. The California electric car maker lacked revenues and had a cash burn-rate that would scare away the most tested venture capitalists. But on Tuesday night Tesla, two weeks after its IPO, was trading slightly above its $17 introductory price. Investors appear to be betting that over the long, (long) term the California car company, its powerful strategic investors and tested marketing, will come out a winner.
3: BP Managing Director Bob Dudley
When your warmup act is self-immolating BP chief executive Tony Hayward, it’s hard not to look like a public relations genius. But Managing Director Bob Dudley deserves credit for not making any serious mistakes since taking over the response to the Gulf of Mexico oil gusher in late June. He performed competently while fielding questions about the spill submitted via YouTube. Moreover, he made a savvy public relations move by doing it on PBS’ Newshour, America’s least emotional news outlet. He also has great timing. If BP’s new containment cap is successful, Dudley will get the credit. And when the relief well is finally ready, Dudley will get the credit for that, too. It could all still go terribly, terribly wrong: the relief wells could fail, the containment operation could fail, the Attorney General’s office could announce criminal charges against BP executives, etc. But with a bit of luck, Dudley could go down as “The Man Who Plugged the Hole.” It probably won’t get land him in the chief executive’s office once Hayward is booted, but its a pretty good title anyway.
Fremont, Calif.-based Solyndra had been a poster child for the new green economy. First, the thin-film photovoltaic solar panel manufacturer received a $535 million loan guarantee from the Department of Energy to build a manufacturing facility. Then President Barack Obama came to visit the plant, which Energy Department officials heralded as a job creator that would “drive progress across the country.” The next step was to be an initial public offering. In mid June, the company did a sudden about face on the IPO. Solyndra officials explained that “adverse market conditions” made them consider an alternative route: raising $175 million from the existing investor base. Other companies, including Xinjiang Goldwind, have backed off IPO plans recently while others have gotten weak responses. But these companies all have weaknesses and Solyndra is no exception. The company has been burning through its cash quickly and its manufacturing costs are relatively high. Solyndra expects to bring its manufacturing plant online later this year, which should reduce manufacturing costs, but investors are now looking at Solyndra with cocked eyebrows.
5: The 1603 Cash Grants
Of all the programs created by the Obama stimulus, none has been as popular and effective as the 1603 cash grants. The grants were created more than a year ago in lieu of the tax credits, which had financed much of the U.S. green infrastructure up until the financial crisis. So far, the Treasury Department has distributed some $3 billion in cash grants. Funding could grow to as much as $10 billion by the end of 2010. Project finance bankers and venture capitalists as well as project developers are pushing Congress to extend the grants for another two years. It seems that their intense call for more government money has been heard. Last month, Senators Maria Cantwell (D -Wash.) and Dianne Feinstein (D -Calif.) introduced a bill that would extend the cash grant program until the end of 2012.
6: No on Prop 16
When the votes were counted last month, “No on prop 16,” won, despite the $46 million poured by Pacific Gas and Electric (PG&E) to get prop 16 passed. Critics claimed that Prop 16 was a cynical attempt by the company to stifle competition from local governments. Indeed, if passed, Prop 16 would have required cities and counties in California to get the approval of two-thirds of their voters before spending taxpayer money to build renewable energy projects. The victory was described as a major green victory because it will loosen PG&E’s stronghold on renewable generation in northern California and allow dozens of California municipalities to build and operate their own green power, which could help increase the demand for green energy throughout the state.
7: NRG Energy
NRG Energy (#six in our November Top 10) is one of the country’s largest operator of cheap and dirty coal-fired power plants. However, officials at the New Jersey power generator believe that it’s only a matter of time before carbon is priced. And so executives have been using the coal-dependent balance sheet to clean up the company, spending hundreds of millions of dollar buying solar and wind power projects. Last month, as part of this all-out green strategy, the company purchased ArcLight Capital Partners’ 450-megawatt solar project pipeline. With this latest acquisition the company doubles its solar project pipeline to 1,150 megawatts.
8: U.S. Rep. Joe Barton, R-Texas
The one thing you can say for Congressman Barton is that he has principles that he will not compromise. To wit: his apology to BP chief executive Tony Hayward after the Obama administration “shakedown” of BP for a $20 billion Gulf Coast recovery fund. We could blather on about all of the campaign contributions he got from oil and gas companies or how the Republican Party subsequently disowned him, but Barton has done a good enough job of hanging himself. Sometimes, the original can’t be improved upon:
So I’m only speaking for myself, I’m not speaking for anybody else, but I apologize, I do not want to live in a country where anytime a citizen or a corporation does something that is legitimately wrong is subject to some sort of political pressure that is again in my words amounts to a shakedown. So I apologize.
Even Hayward had the good sense to be embarrassed.
9: American Energy Innovation Council
Say it with me: “Green energy is good for the American economy.” Take it from Bill Gates, GE’s Jeff Immelt, superinvestor John Doerr and the heads of DuPont, Xerox and Cummins, who have formed the American Energy Innovation Council. The group has mapped out a plan that involves $16 billion a year of government funding for renewable energy R&D. The AEIC also recommends creating an independent national Energy Strategy Board to coordinate the country’s approach to the green energy future. None of what is proposed in the report is groundbreaking. But without the AEIC and other green energy-friendly business collectives pushing for comprehensive energy legislation, those who claim that capitalists can’t be green will win the day.
10: Nevada Geothermal, U.S. Geothermal
Goethermal power is often overlooked compared to wind or solar power. But, unlike these green rock stars, geothermal is so far the only true baseload renewable power, able to generate electricity, rain or shine, consistently. Still, geothermal investments are few and far in between. Last year, only 397 megawatts of geothermal power came online, compared to nearly 30 gigawatts of wind capacity added by China during the same time period. So, when last month the Department of Energy awarded nearly $200 million in loan guarantee to support U.S. geothermal projects in the Western U.S. we noticed. Boise, Idaho-based U.S. Geothermal secured a $102.2 million in DOE loan guarantee to support the construction of its 22 megawatts Malheur County project in Southeastern Oregon. Vancouver, BC-based Nevada Geothermal scored a $98 million guarantee for its 49.5-megawatt Faulkner 1 facility in northwestern Nevada.