Tuesday, October 28, 2008

What is your plan?

The economy is going down the drains, oil prices are also coming down. Does this mean the end for alternative energy? Are people going to be so submerged in survival mode that they will forget what got them there in the first place? Perhaps.

I do believe in the next 5 years we will see fundamental changes in the way we live. I am not sure what those changes will be, I have a feeling the transition is going to be a painful one. The market values will shift from the more superfluous goods and services (i.e. electronic gadgets and fashion) to others more basic ones (i.e. food and energy).

So, if energy becomes a more precious good then we will certainly shift into renewable energy, right? Not so fast, there is a "Tipping Point" to make the shift from fossil fuels into alternative energy, and the odds are against us.

When resources are scarce it is more difficult to decide on a strategy that requires an up front payment even if this strategy is more convenient over time.

If you offer two plans for certain service: plan "A" consist of monthly payments of $10 (for one year total $120); under plan "B" you just make a single $102 payment at the beginning of the year (a 15% discount!). I am sure people with fewer resources will select the monthly plan more times than the "B" plan, simply because it is easier to deliver $10 each month that it is to come up with the full $102. Only if you have the $102 easily available and you are smart enough to calculate the 15% difference (which is more than what most investments return on capital in today's market!), then you will chose plan "B".

Alternative energy requires an up front "investment" to develop new technology, to create new infrastructure and to change certain patterns in the market and in consumer behavior. The current oil thirsty system needs no change in the short term, only when oil becomes scarce enough, then we shall see the high cost of staying in this path. Its like having plan "A" with the last month's payment at $200 (rather than $10) and no right to renew!

For the time being the oil barrel has dropped from the $140 level to the $60 level. Oil, as any other product, follows the laws of supply and demand (as demand dwindles, the price drops). What some people don't realize is that supply and demand work for infinite availability products (subject to cost of production), oil has a very clear limit (when the end of oil is near, even if demand is low, prices will soar). Another peculiarity about oil is that, as the price decreases, oil supply decreases as well. Some sources of oil are too expensive to operate at $50 a barrel. This works against the cause for alternatives, as the supply diminishes, new sources become cost effective and reduce the impact of the diminishing supply.

What shall we do (we = humanity)??. We should have a plan!

Only by having a plan we can counter the INERTIA of the masses (and right now the inertia points towards more oil dependency).

Mr. T. Boone Pickens has a plan (recently featured in CBS's "60 minutes"), to generate wind power and use natural gas for vehicles (for pros and cons on The Pickens Plan go to Wind Energy).

In Israel and now in Australia, Shai Agassi has a plan to deliver electric cars, coordinating between government, car manufacturers, battery manufacturers and creating a "plug in" infrastructure (for more on this go to The Electric Car).

My plan is to find investment opportunities in Greentech. Opportunities with the best technology, the best management and the best business plan I can find. And hope they will make it big and create a better environment and at the same time give me a hefty return on my investment.

What is your plan?!

Until next week, SHALOM!

Tuesday, October 21, 2008

My Greentech Questions

"I only know that I know nothing", Socrates.

This week I am exploring questions that I have about greentech. Some questions may have a simple answer and some may be just rhetorical questions. Perhaps by next week you (the reader) will provide some answers and shine some light into this darkness. So here it is:

When I heard the debate last week, as well as in previous debates, the subject about alternative energy was present. Both candidates agree that new sources of energy are needed (I don't want to start a political discussion, so let's focus on the big picture) with some differences here and there. Both candidates talk about Nuclear power, but NEITHER CANDIDATE ADDRESSES THE DANGERS of this kind of energy source.

It is my understanding that the biggest problem with Nuclear power is the use and disposal of the radioactive fuel. I have heard (and here is my first question) that nuclear plants use less than 5% of the radioactive material power, is this true? And then, we are left with highly dangerous waste that takes over 10,000 years to become safe? To make things more complicated I have also heard that if we increase the percentage of world power generated by nuclear plants we will have no space left to safely store this radioactive material, could this be?

Why is Belgium, a country that generates 54% of its electricity through Nuclear plants, trying to stop construction of new plants and setting additional tax to existing nuclear power generation. Belgium, as well as Germany, the Netherlands and Sweden have all pledged to phase out existing plants. Why?

I would very much like to know the answers to these questions before we embark on a journey that may lead us into a global disaster!

Let's forget about Nuclear power for a second, let’s focus on a wider subject. How are we going to find a way to generate energy without draining the resources that we have in Planet Earth and without polluting our environment?

I guess most of us agree that the current way we generate energy and dispose our waste is dangerous for our future (please note I said: "most of us". "Why is this so?" is a question I will not ask here, for now).

In order to search for an answer on energy efficiency we need to look at the laws of thermodynamics. The first law states that "Energy can neither be created nor destroyed. It can only change forms". Therefore, we will be better off if we try to use energy that comes from outside our planet: Solar energy. Right?

Well Solar energy is the direct consequence of the power of the sun that enters the earth. But waves, wind and tides (I'm not sure about geothermal) are also partly or wholly a consequence of the sun's effect. So, if we choose wind over solar power, are we selecting an indirect source of power and therefore sacrificing efficiency?

In evaluating an energy source we need to look at two factors: (1) how much energy can we "capture"? And (2) How much energy are we going to waste in the conversion process to its "final destination". And finally compare these numbers to the associated costs in order to find the best solution.

(1) Energy "capture": Solar energy is hard to capture, current solar cells can only attain around 8% efficiency. Other cells are able to convert up to over 40% of the sun’s power, but the cost of the materials used in such cells is prohibitive. Never mind that solar cells depend on the exposure to the sun and therefore are useless at night or with minimum light conditions. Why can’t we have both efficiency and low cost? Is 40% the best we can do?

Wind power has a theoretical limit of 59%. This means that the best wind and the best turbine in the world can only obtain 59% of the energy contained in wind (which already is a factor of the energy coming from the sun!). Can we have wind as our main source of energy with a ceiling of 59% efficiency?

(2) Conversion process: It's not enough that solar cells are inefficient within themselves, the process to convert direct current (DC) obtained with the cells into alternative current (AC) requires inverters which eat up between 5 and 50% of the electricity generated. Wind has a similar problem; the rotation generated by the wind has to be converted into a faster rotation speed to match the frequency on the electricity in the grid. This conversion lowers the efficiency of the turbine. Can we find a system that minimizes the loss of power in the conversion process?

Cost: No alternative energy source up to date has an associated cost that can compete with fossil fuels. Right? These sources depend on government subsidies; the idea is to promote economies of scale until they become competitive. Is there ever going to come a day when alternative, sustainable energy is less expensive than coal?

Wind and sun are variable sources; storage needs to be added to the system to make it work. Supposedly one of the most efficient ways to store energy is by pumping water into a high level storage, and later using the water's falling energy to regain the stored energy (this system achieves about 75% efficiency). Can we use such a system in a large scale alternative power generator?

As for Wave and Tide power generation technologies we have yet a long way to go, those areas are far behind wind and solar. Are we doomed to use fossil fuels until they run out?

In the alternative fuel vehicle arena, the argument of many proponents includes the following statement: "We use less than 25% of the gas in the car to generate forward motion" (the rest of the fuel is spent on noise, electric gadgets, pollution, etc). Can this be?

If the efficiency of current vehicles is so low, how come we have not been able to create a more efficient car in a shorter timeframe?

Finally (I am running out of space), I have trouble understanding the logic behind Hydrogen. Why are some people proposing hydrogen as a fuel? Supposedly hydrogen is a great storage media for electricity. The simplified principle is as follows: add electricity to water and you get hydrogen; turn the system around and release the electricity and obtain water back. Well, using the second law of thermodynamics the amount of electricity released from the hydrogen can only be the as much as the electricity injected in the water. This is power storage not fuel!?

I know that many of you will disagree with some of the ideas explained above, please give me your point of view! I also know that some concepts are explained superfluously, unfortunately I have limited time for this blog, and if I get enough requests I may write a book in the future (just kidding!).

Before leaving, I have to announce this week’s big news: I am father of a baby girl, Dana! (my third child).

Until next week: SHALOM!

Monday, October 13, 2008

What the Future Holds

Last year I read a book called "Now, Discover Your Strengths" (by Marcus Buckingham). Together with the book there is an online assessment tool that finds your top 5 strengths. It turns out that my first strength is Strategic. In the results report Strategic Strength is explained as follows:

"The Strategic theme enables you to sort through the clutter and find the best route. It is not a skill that can be taught. It is a distinct way of thinking, a special perspective on the world at large. This perspective allows you to see patterns where others simply see complexity"

Now, I don't pretend to be a visionary extraordinaire or a Warren Buffet. But, sometimes (only some, few times) I am able to recognize future patterns, based on past events, where others don't see it as clear. I call this exercise "Connecting the Dots" after the beautiful Stanford Commencement speech of Steve Jobs (I strongly recommend watching it, if you have not seen it yet - click here)

OK, after this long disclaimer let's get into the main subject of this week: THE FUTURE.

Dot #1: Last month my sister sent me the link to this website called The Story of Stuff (http://www.storyofstuff.com/). Even though I don’t subscribe to ALL the content in the video (which is a bit long, but interesting), I found it very illuminating.

Dot #2: I went to Europe this summer and observed some key differences between them and the US in consumption habits. The Europeans are more moderate than their counterparts in the US. They drive smaller cars, restaurant portions are smaller, live in smaller houses or apartments, etc. If you ask for a glass with ice in Europe they bring you a glass a quarter full of ice; whereas here in the US the glass almost always is 100% full of ice and the glass itself is probably bigger (not to mention the "free refill").

Dot #3: The markets collapsed last week. The economy is facing a terrible crisis and even the very core of capitalism is being tested.

Dot #4: In several magazine and newspaper articles that I have read, as well as in many lectures that I have attended about the Environmental impact of the human activity, I have heard the following hypothesis: “If we don’t correct the damage we are causing the earth today. Then we will cause a major irreversible damage to the earth with unimaginable consequences”. Furthermore, we need to correct at a much higher pace than the pace of damage, because we are increasing pollution and natural resources consumption at an exponential rate and therefore we need to “catch-up” with the exponential curve in order to reverse its effects.

What is the connection between these dots? In my opinion we are about to enter into a new era. It is not something that is going to be announced and recognized right away, it may be a very subtle transition that will take several years. But the end result will be a major shift in consumption patterns.

Let me explain further (before you call me a nut job!).

The Story of Stuff tries to explain the mentality of the capitalist model we have working right now (both in Europe and in the US). True, it is analyzed from the environmentalist perspective and it may have some arguments that are inaccurate. But the fact of the matter is that we have been living in a “consumption based system” where inventory rotation is important and companies are valued based on sales volume (and not on product durability).

The comparison with Europe is important because it shows that we can live with less. I am not saying we SHOULD live with less, but, I am saying that: IF WE ARE UNABLE TO PRODUCE LESS THEN WE CAN SUBSIST.

Dot #3 about the economy is what gives me the impression we WILL need to learn to live with less than we have right now.

And, finally, the last dot in this line. The #4 about correcting the damage to the earth is what makes the line split in two. This hypothesis, if it holds true, may mean that we have two possible outcomes: (1) We will either reach the critical point of “undoing” the damage we have caused Earth, or (2) we will irreversibly damage our environment and therefore damage ourselves (I will let you use your imagination to visualize what this means).

So, in conclusion the new era we are entering into will be one of redefining the way the system works (it could be based less on consumption and more on basic needs). It will be an era of changes in our “standards”, where some of the things we take for granted today (like a glass full of ice) will no longer be. It will also be an era of financial shift, the value of things will change, perhaps a diamond will no longer be as precious and expensive, and water will no longer cost less than wine. And perhaps, it will be an era of becoming more conscious of our Spaceship called Earth, and what its needs are and what do we need to do to keep it in working order.


Until next week (when I will hopefully be a Dad for the 3rd time), Shalom!

Tuesday, October 7, 2008

The Race for The Electric Car

As I was relaxing at home after a busy weekend (my wife, who is 9 months pregnant, had a false alarm Saturday afternoon) I channel surfed my TV until I found an interesting program: "60 Minutes" (CBS 7pm). The lineup for this week's stories: "A Look At Wall Street's Shadow Market" (Trying to explain Wall Street's financial crisis), "Elite Officer Recalls Bin Laden Hunt" (an ex-Delta Force tells the story of how close the US was to killing Mr. Terror himself) AND "THE RACE FOR THE ELECTRIC CAR" (don't watch the segment now, read first, then watch. I provide a link at the bottom of this entry. Thanks!).

I can imagine the editorial meeting for this week's "60 Minutes". "We can't have a full hour of such depressing news!"; "Let's find something people can look forward to" ; "here it is! let's talk about the electric car!". So, in spite of the falling economy and the disaster of the war on terror, The Electric Car takes the stage!

Two things came to mind watching this story:

1- How is the new economic reality going to impact Greentech economics?

On one side, I suppose, the general belief is that Greentech will suffer as the rest of the economy will. Although this may be true, I also believe investments are going to look for new markets and they are going to find that Greentech has gained attractiveness if compared to Real Estate, to Wall Street and to many other current-day options. Therefore, I would not call this downturn "a blessing in disguise" for Greentech, but I would call it a "potential opportunity"

2- Silicon valley vs Detroit. GM's Volt and the Electric Car Business Model

In the "60 minutes" segment the main story is about Tesla Motors. The narrator talks about this company from Silicon Valley that is challenging old-school car manufacturers like Detroit's GM. The story begins with Elon Musk the CEO of Tesla who is a co-founder of PayPal, the reporter asks bluntly who will pay a fortune for these cars ($110,000), Elon response: "It's a deal!". The story then turns to Tesla finally yielding to Detroit. The company that started by challenging Detroit is now massively hiring traditional motor-heads.

[Tesla Roadster]

Something that really caught my eye was the part where they interviewed GM's Vice Chairman of Global Product Development Bob Lutz. My impression of Mr. Lutz was of the Plant Manager recently promoted, with his hands still dirty from the grease and his attitude of constantly dealing with Union workers. Nothing wrong with this, except, if you want to have a radical new product and break away from old vices, then Mr. Lutz may be a liability. He goes as far as to say that global warming is a "Pile of Horse Sh--". His product reflects his personality. The Volt is a car that has been promoted as an electric car for over two years now, and it is supposed to come out to market in 2010. It has a 25 mile range with pure electric charge and a small Engine to charge the battery for longer trips. The design of the Volt is nothing that will turn heads (at least not in my opinion). Just as a comparison point take the much less promoted Mitsubishi i MiEV this car is expected to arrive to market at the end of 2009 and has 100 miles of travel with electric power (four times that of the Volt!). Not to mention that the i MiEV is expected to cost around $28k whereas the Volt had a price of $30 and it was recently announced that it will be more like $35k. If you ask me, GM is no competitor in this race.

[GM's Volt]

Chevrolet GM Volt electric car

[Mitsubishi i MiEV]


At the end of the day, the conclusion that I draw from this segment, is that the next breakthrough vehicle will have to come from a traditional car maker using technologies from smaller specialized hi-tech companies. The large car maker has the muscle to assemble and market the vehicle, there are too many barriers to entry to be competitive in that arena. But, they will have to buy or pay royalties to smaller (more agile) companies that will bring the innovation. Mitsubishi partnered with GS Yuasa for their batteries (a young Japanese company established in 2004). The other conclusion (and this one I feel much more confident in) is that the Japanese are better suited for these innovations than Detroit. I am yet unsure about what the Europeans are doing to stay on top of this race (I think they are waiting to see where the market leads, except that they may be running the risk of being too late into the race). Below you may now watch the "60 Minutes" segment. For now I say "SHALOM"

Watch now "60 Minutes"... THE RACE FOR THE ELECTRIC CAR

Wednesday, October 1, 2008

NY Times Week-in-review

Dear Miami Greentech readers:

This week I took the liberty of compiling all the articles (that I could find) related to Greentech that appeared in the NY Times in the last week (from the 23rd to the 29th). I also included one piece of publicity that I found interesting.

Please browse them and let me know if you can find a pattern in this multidimensional web of information, or at least if you think we are moving forward towards a cleaner environment.

One interesting note about this week's articles is that there was a Special Section on "The Business of Green" on Sept 24th.

So without further ado. Here are the articles:

September 23

Chrysler Enters the Race to Introduce Electric Models

After seeming to fall behind in the race for alternative-fuel vehicles, Chrysler said on Tuesday that it would produce an electric car for sale in 2010 and follow it up with a broad lineup of battery-powered vehicles.

September 24

Amid Boom, Concerns at Small Solar Firms

Solar power is in the midst of a boom in the United States. High energy costs are one reason. But what may be more important are generous state and power company incentives and rebates, as well as tax credits that make solar systems affordable to many more people and businesses.

Solar Panels Are Vanishing, Only to Reappear on the Internet

Solar power, with its promise of emissions-free renewable energy, boasts a growing number of fans. Some of them, it turns out, are thieves.

How Powerful Is Your Workout?

THE four stationary bikes look almost like any others, except that they are fitted with an arm crank and are hooked up to a generator. As riders pedal and turn the lever, the movement creates a current that flows to a battery pack. They generate an average of 200 watts, enough to run the stereo, a 37-inch L.C.D. television and a laptop for an hour at this new gym in Portland, Ore.

Saving the Earth, One Road Race at a Time

Race organizers are working to reduce the amount of waste produced at their races.

While competing in a half Ironman triathlon two years ago, Bruce Raynor had an epiphany: this event, so rooted in strength and good health, was actually polluting the planet. This led Mr. Raynor to create Athletes for a Fit Planet, which helps races become a bit greener by installing recycling bins, ridding themselves of plastic bags and offsetting carbon emissions

A Building That Blooms and Grows, Balancing Nature and Civilization

In the California Academy of Sciences an exhibit of architecture under the motto: “humanity is only one part of an endlessly complex universal system”


Pumping Hydrogen

On Santa Monica Boulevard in Los Angeles, a futuristic experiment posing as an ordinary fuel station may be bringing the world one step closer to the hydrogen age.

What should come first — the fuel-cell car or the hydrogen pump? Automakers and oil companies answer is to introduce both cars and new fuel stations, clustering them in urban centers like Los Angeles, Berlin and Tokyo.

Shell’s Santa Monica Boulevard station is part of this strategy. So is Honda’s decision to lease about 200 of its newly developed FCX Clarity cars over the next three years to selected customers in Southern California.

Coal, a Tough Habit to Kick

Coal, the “dark fuel,” may be the most visible villain of global warming, but its use is up and projected to go higher. In fact, the demand for coal is rising faster than the supply. So is the demand for oil.

Cleaner sources of fuel remain more expensive, less available and in shorter supply than an old standby.

Solar Projects Draw New Opposition

WHAT’S not to like about solar power? Sunlight is clean, quiet and abundant. If enough of it were harnessed and turned into electricity, it could be the solution to the energy crisis. But surprisingly, solar power projects are running into mounting opposition — and not from hard-nosed, coal-fired naysayers, but from environmentalists.

The opposition is particularly strong in Southern California. Aside from abundant sunshine and virtually cloudless skies, the California desert has altitude, so there is less atmospheric interference for the sun’s rays, as well as broad swaths of level land for installing equipment, and proximity to large, electricity-hungry cities. But it is also home to the Mojave ground squirrel, the desert tortoise and the burrowing owl, and to human residents who describe themselves as desert survivors

The Alliance for Responsible Energy Policy, an environmental group in Joshua Tree, said: “Our position is that none of this is needed. We support renewable energy, and we support California’s renewable energy targets, but we think it can be done through rooftop solar.”

Reclaiming His Place in the Sun

Arnold J. Goldman, once the world’s undisputed sun king, is back in business with a new company focusing on more efficient solar energy plants.

In 1989, Arnold J. Goldman was the world’s undisputed sun king. His realm was a desolate patch of the Mojave Desert north of Los Angeles, where his company, Luz International, created the world’s largest solar energy installation. At the time, Luz’s plants generated roughly 90 percent of the solar energy on the planet.

Two years later, his reign was over, done in by an uninterested public. While the solar field that Luz built for Southern California Edison still runs today, the company went kaput, unable to compete profitably with the lower costs of companies producing electricity from traditional sources.

After 20 years wandering outside the desert, he is back, with a reconstituted company and a contract from Pacific Gas and Electric Company to purchase up to 900 megawatts of power while creating more efficient solar plants at Ivanpah, Calif., on the Nevada border.

A Cautious Approach to Nuclear Power

Nuclear power plants might seem like part of the solution to global warming, but few reactors are likely to be built soon.

With the federal government offering the nuclear industry $18.5 billion in loan guarantees and billions more in production tax credits and insurance against bureaucratic delays, at least a few new reactors seem certain to be built.

But reactors, it turns out, are not at the top of the list for stopping global warming, at least in the United States, at least not any time soon.

Among the issues are the cost of nuclear power, fears about safety and questions about how to dispose of waste.

Electricity From What Cows Leave Behind

For years, the cows at Green Mountain Dairy here produced only milk and manure. But recently they have generated something else: electricity.

The farm is part of a growing alternative energy program that converts the methane gas from cow manure into electricity that is sold to the power utility’s grid.

The Home Energy Audit Gets an Upgrade

Fuel costs and a drop in the price of special cameras that show where heat escapes from buildings have created a new market for energy auditors.

Kept Out of Landfills and Reborn as a Bag

TerraCycle makes tote bags, pencil cases and other products from juice boxes and candy wrappers, then sells them at some of the country’s biggest retailers.

Founded in 2001, TerraCycle is aiming to make billions by collecting used plastic bags, juice pouches, cookie wrappers and other items that cannot be recycled and fusing them into everyday items like tote bags, pencil cases and messenger bags to be sold at some of the country’s biggest retailers.

September 25

General Motors’ New Plant Will Build Smaller, Fuel-Sipping Engines

General Motors said Thursday that it intended to double its production of gas-sipping, four-cylinder engines by 2011.

To do so, G.M. said that it would invest $370 million in a plant to build its most fuel-efficient engines ever. The factory will open in 2010 and make 1.4-liter engines for two compact cars scheduled to go on sale late that year: the Chevrolet Cruze, which is expected to get about 45 miles a gallon in highway driving, and the Chevrolet Volt, a plug-in vehicle whose engine will start after the battery is depleted.

Europe Toughens Its Auto Emissions Plan

European Union lawmakers proposed tougher-than-expected emissions goals for car makers, dealing a blow to the German automobile industry.

The bill would be the first legally binding carbon emission standard ever for new cars in Europe.

September 26

Nothing to report

September 27

Nothing to report

September 28

Nothing to report

September 29

One More Chance on Energy

Last December, Congress passed a useful energy bill that ratcheted up fuel economy standards for the first time in decades. That seems a long, long time ago. Since then, Congress has gone steadily and sadly backward on energy policy.

Progress on fuel economy standards will remain stalled unless the Senate overcomes its partisan divide over the issue.



AFS Trinity Power has developed patent-pending technology that makes it possible for plug-in hybrid electric vehicles to achieve 150 MPG, go 40 miles in all-electric mode, and use gasoline for additional unlimited miles in hybrid mode.

To those of you who celebrated the new year this week: