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Refining Strategies to
Deliver Energy Efficiency and Green Technology Innovation
Encore Clean Energy Inc., SunPower Corporation, Distributed Energy Systems
Corporation, Alchemy Enterprises Ltd. and Honda Motor Co. Ltd. Provide
Insight on the Future Energy Path
By Jennifer Lee
April 2006
While concerns are increasing over how long global oil supplies will match
consumer needs, the pathway is widening for companies offering technological
and environmental solutions. With increasing support from a Federal level and
individual States increasing their incentives for energy saving products,
companies already establishing themselves in this sector are also in a
position to expand their product lines and reach into new areas being promoted
at a government level. SunPower Corporation (NASDAQ: SPWR), Alchemy
Enterprises Ltd. (OTCBB: ACHM), Encore Clean Energy Inc. (OTCBB: ECLNE) and
Honda Motor Co. Ltd. (NYSE: HMC) discuss their vision on technology,
innovation and market drivers in the changing energy sector.
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On a recent visit to the National Renewable Energy Laboratory, President
Bush spoke about the country’s potential to become less dependent on
non-renewable sources. During his presentation he clarified: “What I’m talking
about is a comprehensive strategy. In other words, we’re not relying upon one
aspect of renewable energy to help this country become less dependent. We’re
talking about a variety of fronts.” As we see states moving to increase their
energy saving incentives, offering rebates to consumers who opt to purchase
energy wise products, the reach of these state policies can be felt across
many sectors.
Larry Shultz, CEO of Encore Clean Energy Inc. (OTCBB: ECLNE), a company
that produces a product in this market called the Magnetic Piston Generator,
describes the company’s innovation as a, “heat recovery technology which
converts waste heat into electricity. This technology, looking forward, is
really the key to our thrust into the clean energy marketplace because what
most people don’t know is that for every mega watt of electricity generated in
the United States, more than a mega watt of heat goes up in smoke- either up a
smoke stack or through a cooling tower.”
When explaining where the company positions its technology in the current
marketplace, Shultz explains that, ”American industry is very inefficient
where all of that heat is wasted. So what the MPG technology does is it
converts that wasted heat into electricity whereby we can continue to harness
up to 20% of that wasted energy.”
Speaking about the company’s current shift in focus Shultz reports that,
“Encore is not really focused on 4 product lines anymore, we’ve really trimmed
our product lines to focus on the lowest hanging fruit, which is waste heat
recovery and no one is really focused on this in the U.S.
Following where he sees the market headed over the near term, Shultz reports,
“I view the market for renewable energy products in the US as a high growth
industry. The worst thing that we can continue to do is to export our money to
buy energy from sources when we have this huge amount of untapped heat
resources available to us here today. I believe there is a coming energy
crisis to the country. We believe the market for renewable energy products is
vast and the trickling effect of the Energy Policy Act of 2005, at this time,
doesn’t really help us- it’s not really helping any innovations on our side at
this time. However I totally agree that the market for power is going to be
centered around the end user and distributed power, which is why our waste
heat recovery tech is so perfect, because it is centered around the end users
existing equipment and infrastructure.”
According to the U.S. Department of Energy, Secretary Samuel W. Bodman made
the announcement on April 3rd that, “$140.3 million in weatherization program
grants (will be designated) to 31 states and the Navajo Nation to make energy
efficiency improvements in homes of low-income families.” The Department
conferred that, “weatherization can reduce an average home’s energy costs by
$358 annually.”
Such bold steps for policy makers, lead to a market reaction which can be felt
on many levels. Julie Blunden, Vice President of External Affairs for
SunPower Corporation (NASDAQ: SPWR) draws an example of how current shifts
in public policy are influencing the market in important ways. Ms. Blunden
states, “We think that SunPower’s growth is a good example of how public
policy is helping to drive capital investment as well as technology advances.
Our investors and suppliers see that the solar power market is growing rapidly
in the U.S. and around the world and have supported our growth to meet that
demand. Within the next decade, solar will be at a price parity with retail
electricity rates in much of the developed world, offering SunPower access to
the trillion dollar global electric market.”
Further to this, Blunden said that, “at both the Federal and state level, we
have seen a real increase in appetite for policy which encourages renewable
energy and solar power. Some of the main drivers behind this shift are
increasing fuel prices and volatility, environmental concerns including
climate change, and a renewed focus on energy security risks.” Noticing the
shift in how the market views problems with energy supplies, Blunden offered
that, “it’s not just political risk that is at issue with energy supply today,
but weather risk as well.”
Walter Schroeder, President and Director of Distributed Energy Systems
Corporation (NASDAQ: DESC), which focuses on giving commercial and
industrial users more control over the cost and reliability of their energy,
says, “innovators of energy sustainability fall into three distinct
categories: manufacturers, developers or integrators.” He reports that some of
the top companies currently participating in this sector on the manufacturing
side include: “Evergreen Solar, General Electric ( for wind), Energy
Conversion Devices ( for solar) and Sun Power Corporation.” In terms of
developers he listed, “Cape Wind, Sun Edison, AES Corporation and Solar
Integrated Technologies and for integrators, Northern Power Systems,” came up
at the top of this list.
In terms of states who are making good headway in their energy sustainability
policies, Schroeder commented that, ”the states that are doing the most are
California (way out ahead), New York and New Jersey. Connecticut and
Massachusetts get honorable mention.”
Jonathan Read, President and CEO of Alchemy Enterprises Ltd. (OTCBB: ACHM),
an alternative energy based company currently “developing a new electric power
cell technology that it believes will generate and manage electricity to power
a broad range of applications, from every day vehicles such as buses, trucks,
trains and cars to alternative power supply stations to power homes,” offers
comment on the market. Read points to the fact that there are some states
which have taken on a more aggressive strategy than others, with respect to
encouraging renewable energy strategies. He says that, “as we are the
producers of a power source, we’re reliant on our customer to work with the
states on end-user tax credits. We are actively working to position ourselves
for Federal tax credits and or grants as it relates to alternative energy.”
In speaking further on the line of state-specific incentives for the energy
wise consumer, Read said, “there are two tiers of state and Federal tax
incentives. The first is for the producer of alternative energy technologies
and the second tier involves provisions and tax incentives for end users (ie.
motorists) which we would partner with once our technology is fully fleshed
out and proven.” In terms of when the company is planning on having their
technology incorporated into a vehicle for use, he furthered, “we hope to have
a fully functional bench model by end of this year, towards the first quarter
of next year. We are anticipating a major test within the next month.”
Alchemy has been currently working with New Zealand based company
Designline for approximately six months. Designline prides itself in
creating, “innovative designs, working in partnership with customers to
provide superior build quality and transport that is sustainable.” Read says,
“our initial strategy is to joint venture with Designline to get our first bus
up and running and seek other end users for other joint ventures or sale of
this technology and licensing.”
With respect to the long held challenge of global oil supplies, Hillard
Huntington recently addressed the Senate Foreign Relations Committee on March
30th. As Executive Director of the Energy Modeling Forum at Stanford
University, he informed the Senate that some of the factors contributing to
‘tight oil markets’ over recent months include: “anti-government attempts to
disrupt congressional elections in Venezuela culminating in an explosion at an
oil pipeline connected to that country’s largest oil refinery and devastating
hurricanes Katrina and Rita in the United States in August and September.”
Such a future for world supplies of oil present hybrid and fuel cell
manufacturing companies with an entry point into the market. As these
opportunities continue to present themselves, the changing shape of
transportation design and delivery should follow a pattern of competition
among global leaders already entering into this realm.
Innovation and Expansion
Jamie Wimberly, CEO of Distributed Energy Financial Group, a company
that specializes in consulting and financial services, focusing on innovative
energy technologies and solutions, says that when looking at some of the top
companies functioning in the renewables sector, “picking winners is difficult
when all the puzzle pieces of integrated systems and business models are
coming together at the same time. I will therefore let the numbers do the
talking. The top five companies in the DESI based on Q1 performance include:
Metretek Technologies (MEK, + 67.0% in Q1 2006), Ballard Power Systems (BLDP,
+ 62.0%), Medis Technologies (MDTL, + 58.6%), Sat Con Technologies (SATC, +
53.3%), and Itron (ITRI, + 49.5%).”
As the market grows, we are seeing companies such as Honda Motor Co. Ltd.
(NYSE: HMC) expanding their range of services, with the launch of a
compact household cogeneration unit, which combines “the world’s smallest
natural gas engine-with an efficiency configured, compact, lightweight power
generation system employing Honda’s unique sine-wave inverter technology to
create a compact unit suitable for residential use, boasting an energy
efficiency of 85%.” According to the company, the use of this unit in
combination with a heating system which uses “recovered exhaust heat is
expected to result in approximately 30% reduction in CO2 emissions.”
Honda supplies these units to Climate Energy LLC, headquartered in Boston
Massachusetts. According to a release issued by the Climate Energy, the Micro-CHP
System is, “conveniently configured to replace existing space heating furnaces
and boilers in new and existing homes. The concept is simple: electric power
is produced as a by-product of the normal supply of heat to the home. The
result can be dramatic; lower electric bills will be experienced by
homeowners, while ultimately lowering the nation’s overall energy use and
pollutant emissions.”
When asked whether he thought companies taking a leap in this market would
create a trend over the next one to two years, Wimberly commented, “Yes,
absolutely. DEFG strongly believes that the full functionality and value
proposition for many so-called energy technologies have yet to be discovered.
For example, advanced meters are communications platforms which can serve as a
conduit to the home or office, and do so much more than simply be the cash
register for the utility. Power electronics, energy storage devices, and other
enabling technologies with cross over potential into other markets are what
make this sector so exciting to follow.”
World Oil Supplies
Taking a look at the future of fuel supplies available to meet global demand
is a pressing topic for investors and consumers alike. The U.S. Department of
Energy (DOE) recently released a report in February entitled, “Peaking of
World Oil Production: Impacts, Mitigation & Risk Management,” authored by
Robert L. Hirsch, Roger Bezdek and Robert Wendling. Under a section dealing
with the topic of current oil resources, it states that “because oil prices
have been relatively high for the past decade, oil companies have conducted
extensive exploration over that period, but their results have been
disappointing. If recent trends hold, there is little reason to expect that
exploration success will dramatically improve in the future.”
The solution to the current oil dilemma presents a challenge for enterprise,
in such a respect that fuel efficient vehicles must be made affordable and
practical for end users. Speaking at a scheduled talk entitled, “National
Security: High Mileage Vehicles and Alternative Fuels” at a renewable energy
and fuels convention in Las Vegas April 11th this year, Roger Duncan of Austin
Energy, spoke about the state’s Plug-in Partners National Campaign. The
initiative involves the use of plug-in hybrid vehicles (PHEVs) which are,
“outfitted with a battery pack sufficient to power the vehicle from 20 to 60
miles on battery charge alone. Considering that half the cars on America’s
roads are driven 25 miles a day or less, a plug-in with a 25-mile range
battery could eliminate gasoline use in the daily commute of millions of
Americans.” DaimlerChrysler is already making a Sprinter Van prototype which
has an ‘all-electric’ range of 20 miles.
Panelists at this talk tended to agree that bigger batteries needed to be
allocated to hybrid vehicles in order to make them more efficient and useful
in the fight against oil dependency. Speaking on the energy front overall, a
report issued by Pricewaterhouse Coopers entitled, “The Big Leap: Utilities
Global Survey 2006,”
Amory Lovins of the Rocky Mountain Institute spoke. He outlined the current
oil problem, stating that, “the Department of Defense is increasingly
handicapped by half-century old patterns of using and getting energy, designed
for massive steel forces, ‘floating to victory on a sea of oil.’ Today’s war
fighting needs just the opposite.”
Gradually, the solutions for today’s current energy dilemmas are being
introduced on a scalable level. Making renewable energy affordable, convenient
and accessible continue to be the challenges associated with opening the way
forward in this market. Since the introduction of the Energy Policy Act of
2005, the impact is gradually being felt, but the emphasis could continue to
be left with the end users, who are suggested to be the primary market drivers
for this sector.
Three factors which continue to affect levels of investment in this sector are
regulatory uncertainty, oil shortages and the growing demand to boost US
security and lessen the dependence on foreign oil reserves. As regulations
change per state on a continual basis, the market will evolve to meet the
demands of government, but end users must be able and informed about the
options they can afford. As US security becomes a heightened issue however,
this industry may get the added boost and incentive it needs to bridge the gap
between capital investment, product manufacture and end user purchasing.
Disclaimer
Jennifer Lee
Jennifer Lee has a degree in English Literature from the University of British
Columbia. She holds a publishing certificate from Simon Fraser University and
has worked at both Vancouver and Western Living magazines, where she began her
career as an editorial intern. She has worked as an editor in countries such
as Zimbabwe and South Africa, producing books, newsletters and editing various
quarterly magazines on a variety of international development related topics.
In South Africa, she worked to help produce a bi-weekly newsletter for the
Institute for Security Studies on crime and corruption headlines which
appeared in all national and provincial papers. Prior to working in southern
Africa, she wrote articles for DMR Consulting Group, on mergers and
acquisitions taking place in the market during 2001. She now produces a
quarterly publication at the University of British Columbia.
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