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Archive → August, 2011

Epic Fail: Solyndra files for bankruptcy

While you were at lunch, the nascent cleantech manufacturing industry in the U.S. collapsed.

Actually, that’s not quite true, but it is true that Solyndra will file for bankruptcy. This is a big deal – Google News lists 85 news outlets covering the story. Solyndra is famous for its stylish, glass tubular, CIGS-powered, solar rooftop modules. And for raising vast amounts of venture capital. And for getting a $535 million Department of Energy loan guarantee. And for filing for, and later cancelling, a planned IPO in late 2009.

Solyndra’s success in raising money was an early indicator that venture capitalists had turned to so-called cleantech industries, taking some of the shine off of internet and technology-based start-ups. It was the first company to benefit from the DOE’s loan program, part of the 2005 Energy Act.

But cleantech — particularly solar — has been looking a bit less shiny lately. Earlier this month, Evergreen Solar filed for bankruptcy protection, and its filing shows that the firm does not plan to emerge in anything like its current form. Evergreen also received government largess, getting more than $50 million in support from the state of Massachusetts.

Both Solyndra and Evergreen had proven technologies and they had the financial resources to scale up their manufacturing. Compared to many segments of cleantech, this sounded like a pretty good risk for investors. However, both technologies were based, at least in part, on solar module designs that minimized the use of polysilicon. That was smart at the time, because polysilicon supplies were very tight, and shortages threatened to choke the life out of (traditional) solar manufacturing. That was back in 2007-8. But by the end of 2008, chemical makers made plans to ramp up their manufacturing of polysilicon. The stuff was fetching record prices, after all, and it’s made from sand.

Beginning in 2009, polysilicon manufacturers like Hemlock Semiconductor (owned in part by Dow Corning) and Wacker Chemie began doubling, tripling, quadrupling etc their polysilicon capacity. Billion dollar plus-sized polysilicon plants in the US also won government support. By late 2009 there was an overabundance of polysilicon and an oversupplyof modules in inventory, crushing prices.

Firms like Solyndra and Evergreen had raised money and started scaling up manufacturing right as solar modules became a commodity. Chinese manufacturers at that point had their eye on making solar modules for close to $2 per watt. It was not a good time to have a technologically distinct – and more expensive – solar product.

In 2010-2011, European countries – especially Spain – cut back on solar subsidies. Germany has trimmed them as well. All solar makers were busy cutting costs amid strong competition, especially from China, and selling into a market with constrained demand.

Looking at the subject from a distance, it seems that polysilicon makers and their ambitious and steep increases in capacity are what doomed the non-polysilicon players. Materials suppliers, not just of polysilicon, but of also of polymer backing sheets, UV protecting films, and metal pastes, are doing very well selling into the photovoltaic market.

But government bets on cell manufacturing technology have not paid off. It is not clear yet how much of the loan gurantee Solyndra leveraged into actual financing. Still, Congress will likely have a great deal to say about lessons learned from Solyndra.

The End of the Plastic Bag

There is a giant hurricane threatening the entire East Coast. And the economy is in shambles, regardless of what Ben Bernanke promises to do at the Fed today. But this week I’ve been thinking about something a lot smaller – plastic shopping bags.  Or more particularly, the demise of the single-use plastic shopping bag.

It seems that the minister of the environment of Italy, Stefania Prestigiacomo, imposed an outright ban on single-use, non-biodegradable plastic shopping bags, beginning on Jan.1 of this year. I learned about this because we here at C&EN were wondering what would cause a bunch of bio-based chemicals firms to want to put manufacturing plants there.

Bagging it. Washington, DC discourages plastic bag use

Earlier this week, Genomatica, a bio-based chemicals maker, said that it would enter a joint venture with Italian bioplastics firm Novamont. This follows a string of similar announcements that have made Italy a hotspot of bio-based chemical production. In May, compostable plastics firm Cereplast announced it would build a 100,000 ton per year facility in Assisi. In the same month DSM and Roquette said they would build a commercial-scale succinic acid plant in Cassano Spinola.

Back here in the U.S., wrangling about plastic bags is done on a local, not national, level. San Francisco – as usual – led things off with a ban in 2007.

Washington, DC, the hometown of the ACS, took a more subtle route that I believe was really based on old-fashioned moral suasion. The DC council learned the trash that made the Anacostia River such an eyesore was, inlarge part, plastic bags. Starting in early 2010, regulations were put in place requiring a 5 cent fee for plastic bags at any retail outlet selling food. The fees collected would go to help clean up the river, as would the decrease in plastic bag use.

I’m not the only one thinking about plastic bag bans this week. Over on the Greenbiz blog, Leslie Guevarra asks if these regional efforts are gaining any ground. And she points out that the media have been tracking efforts by the American Chemistry Council – the main trade group of the chemical industry – to push back against bag bans and fees.

Have bag bans or fees made their way to where you live? If so, how has that impacted your behavior and that of your neighbors? Do you think these kinds of laws work? If no rules are in place were you live, have you noticed if people have become more likely to decline a bag or bring their own bag out of awareness of environmental/litter issues?

What if Everyone Is Wrong About Lithium Ion Batteries?

Lithium ion batteries are one of the few segments of cleantech that a respected market research firm can say will become a world-leading technology “and achieve 350% revenue growth from 2010 to 2020.”

The 350% comes from the latest report from IHS iSuppli, written by Satoru (Rick) Oyama, and nicely summarized on the company’s website.

The reasons that figure is believable are simple and easy to understand. These batteries already exist! They already work! And soon they will be in electric cars, and everyone expects there to be many electric cars made in the next ten years.

But what if we were to take the longer view and have the technology clock start at 2020 rather than end there. Given that the average car on the road today is 10 years old, we can imagine that all the gas-powered cars being sold this year will be nearing their end-of-life in 2020, and a number of people might choose that year to finally own an electric car. (Though some folks like my mom will still be driving their 2002 Corolla).

In 2020 the auto industry can expect to sell a large number of electric cars. But it might look back to 2011 and question whether trying to optimize an arguably mature technology (lithium ion batteries) was the right thing to do. Apple did not optimize cassette technology to create the iPod, right?

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Cleantech Stocks Get Thumbs Up

Given the stock turmoil today and yesterday, recent earnings reports from IPO’d cleantech firms may be flying under the radar for most people. And to call them “earnings” reports is a bit generous, too; they are really “losses” reports, but that is to be expected for early-stage technology firms.

Solazyme's Algenist skin products - Analysts are buying it, and other cleantech stories

Still, its worth noting what analysts are saying about companies like Amyris, Gevo, KiOR, and Solazyme and what the firms reported for the second quarter. While I was mulling a post on just this subject, Jim Lane, over at Biofuels Digest got his post up yesterday covering the first three companies. So I’m giving a hat tip to him and suggesting that you go over there and read his summary.

But if the heat and the stock swings have you too worn out to do that, the short take is that though Amyris and Gevo posted results that were not as strong as expected, analysts following the firms are still enthusiastic about the stocks. KiOR will release it’s second quarter results next Thursday. The important pieces that analysts are looking for is whether the companies have a realistic plan for increasing scale (whether they use their own, or other company’s capital to do so). They also want to get a sense of where revenues will come from in the short term, for example, from product sales or off-take agreements from reliable customers.

Yesterday, Solazyme reported revenues of $7.4 million, which beat the expectations of analyst Laurence Alexander of Jefferies & Co. He had predicted $6.0 million. Most of the revenues came from R&D funding but the company has begun generating sales of its skin care line, called Algenist, made from an algae-derived tailored oil. Alexander says that the Algenist launch will turn out to be larger than expected, meaning more revenues, and thus, less operating losses, into the future.  In addition, he notes that the company will deliver 283,000 liters of fuel to the U.S. Navy and the contract calls for up to 550,000 liters. He’s put a Buy rating on the stock.

Cleantech Chemistry recently posted an interview with Cameron Byers, Solazyme’s senior vice president & general manager of fuels and chemicals about how the company plans to make money.

DSM Stakes Out an Eco-Friendly Niche

Dutch chemical firm DSM has been much in my sphere lately. In this week’s issue, I write about the firm’s engineering plastics, which were designed for recyclability and do not contain halogenated compounds.

When I’m not writing about earth-friendly technology, I cover the more day-to-day side of the chemical business by writing about company earnings. This week I am reviewing earnings results from European chemical firms and I note that DSM touts its sustainability efforts in its quarterly report. Most chemical firms relegate this information to their annual report, or to a separate yearly sustainability report.

DSM reported on the number of products in its pipeline that meet its own criteria for better environmental profiles (they call them ECO+ solutions). Apparently the pipeline is chock full of ECO+; 87% meet that benchmark. It reported on the ECO+ proportion of current products (40%) as well as progress toward energy efficiency goals. DSM has targeted a 20% improvement in 2020 compared to 2008.

The wording of the report indicates that these measures are updated at least twice per year. Usually, earnings reports are intended to inform investors of the financial results of a firm over a short period of time. Sustainability efforts, of course, tend to take a longer-term view.

I wonder what credit investors give DSM for claiming this eco-niche and for the transparency of semi-annual updates. We should remember that the reports have other audiences in addition to investors – stock analysts, regulators, members of the communities where a firm operates, and employees. Oh, I forgot the media. That’s another one.