Big Opportunity, Big Risk For U.S. Cleantech Companies In Mexico

At last week’s RETECH 2012 session on Renewable Energy in Mexico, Miguel Vazquez from the U.S. Commercial Service in Mexico City presented a detailed look at the challenges and opportunities for U.S. businesses wanting to market renewable solutions in Mexico. With its own presidential election looming, Vazquez says that Mexico’s renewable energy policies would likely get a boost, but warned its regulatory framework would continue to be a challenge as American businesses expand across the border.

He said things will likely be compounded by the fact that Mexico ‘s largest utility, CFE, has a mandate to buy the cheapest energy available. That’s a policy decision that helps zero out solar all the way into the year 2026. U.S. companies are also limited in terms of how they can work with CFE, said Vazquez. Today, only power generation projects are considered, not distribution or transmission.

But all that aside, the market for exports to Mexico can’t be ignored, especially in wind and biofuels, where Mexico ranks in the top three globally, according to Dept. of Commerce data. And from a U.S. perspective, Mexico ranks ninth for potential renewable energy exports.

gdmex

 

Vazquez also touched on some of the current renewable incentives in Mexico . One is aimed at taxpayers, and provides a 100% deduction incentive for investing in renewable energy equipment as long as the equipment is operational for at least five years. And in 2009, the Fund for Energy Transition and Sustainable Exploit of Energy was established. In less than two years, it had a capitalization of $260 million that could be spent on sustainability projects.

Mexico is also bringing its educational institutions into the mix, making funds available for renewable R&D from the Ministry of Energy and CFE. Lastly, U.S. business could also get some help from Mexico ‘s “Green Mortgage” program, which provides a lower APR if homeowners purchase renewable energy equipment.

Even with all the incentives, Mexico ‘s renewable portfolio will still only approach 25% by 2026. Because of that, Vazquez said U.S. companies really need to do their “homework” and streamline the way they approach the market. Legal challenges, permitting and land ownership were cited as some of the biggest obstacles. He mentioned it can still take a few years for permits related to power generation projects.

Clean Energy Growth And The Renewable Fuel Standard Hot Topics At Thursday’s RETECH Keynote

SXSWECO Panel “Freeing Ourselves From A High Carbon Future”

"Freeing Ourselves From A High Carbon Future" PanelIn Wednesday’s SXSWECO keynote with U.S. Senator Byron Dorgan, Jigar Shah urged the crowd to “find some _____ inspiration!” You can guess what was left out. Shah argued much of what the environmental movement lacks in strategy, it can make up with focused rage. If you left the keynote inspired and looking for ways to get involved, Thursday’s session, “Freeing Ourselves From A High Carbon Future,” was a great place to reinvigorate the rage.

Moderated by Kelly Rigg, executive director of the Global Campaign For Climate Action, the talk brought real substance to the often cloudy world of climate activism. Panelists Andrew Behar of As You Sew, Sarah Hodgdon from the Sierra Club, and Tim Nuthall of the European Climate Foundation were on hand to share how their organizations are reshaping some of the narrative around cleaner energy and climate change.

The Carbon Bubble

Rigg opened the session with a few slides that set a sobering backdrop for the discussion. The first was an excerpt from the Carbon Tracker project, showing how much carbon will be “unburnable” if reduction efforts aren’t accelerated. It could be as high as eighty percent if we achieve only twenty percent of our reduction goals.

With reserves driving so much of an oil company’s value, it’s easy to see how models built on extraction could suffer.

Just as provoking was another slide (below) on the “450 scenario,” referring to the need to limit the concentration of greenhouse gases in the atmosphere to around 450 parts per million of CO2. The International Energy Agency (IEA) says that without action, in half a decade we could approach the 450 ratio. “At some point, we’re going to have to start decommissioning things,” said Rigg. “Nobody wants to do that.”

 

The Coal Fight

Sarah Hodgdon turned the discussion to some of Sierra Club’s work around its Beyond Coal campaign, and showed perhaps the slide of the session (below). Almost 170 coal plants have been defeated so far according to Hodgdon, a feat she attributes to the combination of grassroots political savvy, smart legal strategy, and effective communication.

“All those things working together have helped us get one win after another,” she said.

Sierra Club | 168 Coal Plants Defeate

And with coal’s percentage of electricity at its lowest in 30 years, Hodgdon emphasized the need to defend the production tax credit (PTC) along with State renewable energy standards.

She also mentioned how Sierra engages with local communities as renewable solutions continue to supplant coal production.

“We’re also supporting communities affected by coal by helping them make a smooth economic transition as plants close across the country.” Even with Beyond Coal’s success, there’s more collaboration that’s needed.

“It feels like what we’re missing though is a movement, where we’re connecting the dots between the coal and oil efforts.” When asked what was holding up those efforts, she thought much of the policy was in place, but that local issues were soaking up resources and time.

“People are working hard locally, so at times it’s hard to have the cohesion you need at the national level,” she explained.

Targeting Shareholders

Andrew Behar with Bay Area non-profit, As You Sow, is attacking the climate issue by targeting corporate shareholders. With a combination of advocacy and litigation, his team approaches the process both strategically and tactically.

“One of the ways we can make change is to file a shareholder resolution,” said Behar. “We target certain companies and you have to get through the SEC, so often it’s very complex.” And the companies As You Sow is battling are some of the largest in the world. Getting a seat at the table is only half the battle. “When you sit down with these companies — you have a human being there. We get to ask them, do you have kids, do you have grandchildren,” said Behar.

He also mentioned the firm’s focus on divestment, which essentially redirects assets to companies that support cleaner policies and more social responsibility. “You see a lot of activity on campuses, but the thing about these campaigns are they’re very complex.” Behar says many of the investments and funds are shielded under layers and layers of bureaucracy, so enacting change can be cumbersome.

But whether it’s a divestment campaign or simply filing a resolution, Behar stressed the importance of a multi-faceted campaign.

“These companies like Duke Energy and First Energy, they’re the guys that control what’s on the ground. They don’t see things in a short window of time,” he explained. “The key is coordinating all the pieces in a strategic way.” As You Sew says it boils down to five things: grassroots efforts, consumer awareness, litigation, policy and shareholders. The next deployment for Behar’s group will likely be the fracking battleground.

“We think stopping the building of gas plants will be the next big fight, you just can’t do coal anymore because the price isn’t viable. Strategically we need to get the price of gas up. That’s what we’re working on.”

A European Perspective: Roadmap2050

Artifact Via Roadmap2050.eu

Tim Nuthall with the European Climate Foundation had a hopeful, if not fascinating look at the Roadmap2050 project, aimed at helping move along Europe’s goal of 80-90% emissions by 2050. He was armed not just with data, but visually appealing data. Understandable data. For once, it looked like the environmental coalition had more resources than its usual opposition.

“What was impressive was the coalition that stood behind it. McKinsey did the analytics and KEMA led credibility to the solutions which got us into the meetings,” said Nuthall. For visuals, the group worked with a notable architect which he says helped the conversations live well beyond a project that was started in 2010.

As for mobilizing the effort, Nuthall says they ran a number of different models and all of them came to the same conclusion.

“Not surprisingly, what we found was that we needed to decarbonize our power sector.” The analysis looked at the costs of replacing carbon with renewable energy in various increments, from 20% all the way up to a complete phase out. He said the differences were accounted for by using carbon capture and storage (CCS) and nuclear. “We could use both CCS and nuclear because our goal was simply to reduce carbon, rather than single out any one technology,”he explained.

“What we found was the cost of those various scenarios are the same. It was technically feasible and financially doable,” he said. When asked about the political ramifications, he mentioned the data from their energy roadmap was used by the European commission to relay part of its own findings. “So from a political outcome perspective, it was a solid result.”

Roadmap2050 artifact

With a deep political focus, Nuthall’s team covers multiple fronts and is well-versed in what characterizes much of the denier mentality.

“In an European context, I’d characterize the deniers in three ways — disgruntled, ideological, and paid. Quite a heady mix,” he said.

“We’ve seen skepticism be very effective. Look at Poland, a country where 95% of its power runs on coal.” He says opposition to renewables has stood in the way of their proposal, essentially grinding it to a halt. Adding to the difficulty is the fact that power generation in Poland is owned by the government. “In the EU, we need rage in Poland.”

“One Thing As A Game Changer”

Rigg closed the session by asking the panelists to identify the one thing that could be a game changer for connecting the dots. In her view, there aren’t any technology barriers to fixing the problem, it’s political will. “We need to figure out how everyone that takes action in this movement has a way to connect with elected officials. We need to say we will make this an election issue,” she said.

For Hodgdon, it was how activists and environmentalists talk about their work, something she described as “drawing things together under the national narrative.” She urged fracking activists to bridge their communications with other groups targeting coal or oil.

Andrew Behar might have had the most disruptive suggestion, saying he wants to tie sustainability initiatives to executive pay. “Executives today are focused on keeping stock prices stable, quarter-to-quarter. If we have sustainability goals that look two, three, or five years out, corporations would start to shift. Right now it’s a total disconnect.”

Nuthall mentioned a few things. The Poland fight is obviously a big one, as he again mentioned more “rage” is needed. Effective grids was another key point, something that would be critical to keep renewable integration moving forward. Lastly, was a quote that could have been the bumper sticker for the session. “We have to stop taking a spreadsheet to a knife fight. We have to stop fighting ideology with policy.” In other words, the movement needs to get a helluva lot smarter. And fast.

SXSWECO Session: Startups And Corporations: Bringing Clean Technology To Market

Cleantech Group’s Greg Neichin Moderating

Cleantech Group‘s Greg Neichin opened up Wednesday’s panel “Startups and Corporations: Bringing Clean Technology to Market” with an important observation.  The cleantech market, and certainly the broader energy energy space, is a bit different when it comes to getting big companies in the same room with startups.

“For the most part, they tend to get along,” he told a packed session.

The session assembled a good mix of panelists, from a startup and venture capital firm to sustainability executives from Nike and Intel.

Nike’s Dan Cherian described its approach to working with startups, and dispelled the notion that its startup relationships are purely investment-oriented.

“We don’t just do investments, we’re involved in things like licensing, joint development agreements and strategic alliances, ” Cherian explained. “Not all of our innovation happens inside the company, we think of it as strategic partnering and investing,” he added.  As Cherian summarized Nike’s view, it was clear the company sees sustainability as as a growth opportunity, with Cherian saying Nike is “heavily invested” in  helping the company grow through sustainable business.

Intel’s Lorie Wigle and Rockport Capital’s Dhiraj Malkani

Intel’s Lorie Wigle, the company’s GM of Eco-Tech, said much of its startup work is focused on energy efficiency. Specifically, her team looks at the application of technology  and how to grow revenue. Wigle mentioned a joint project with KLG Systal that tackled water management. Through KLG and other partners, Intel was able to see their technology implemented in different ways, underscoring the importance of tightening up your partner network before approaching larger corporations.

On that note, Streetline‘s CEO Zia Yusuf brought some street-level (not intended)  levity to the big company pitch discussion.

“Many startups make the  mistake of thinking ‘we got the meeting’ and the ”number of meetings’ are a good metric for progress,” said Yusuf.  His assertion was those elements have nothing to do with success . “It gets down to can the corporation sell more of their product because of what you do.”

Nike’s Cherian concurred, urging young companies to make their objectives very clear. “If your objectives are clear, we (Nike) have the right people in place for you to interface with”, he explained. He says Nike has three or four areas set up  within the company to address various segments of innovation.

“Even if you talk to the business development group or venture unit, you have to realize they might not have the decision-making capability, ” he said. “When we get a message from a company, we apply that correspondence to whichever filter is the best fit.” Cherian added one other tidbit for the startup crowd: get a recommendation. He said even the slightest nod from a known partner or third-party can help startups in the early cycles with various corporate groups.

Another key discussion was the role large corporations can play in developing industry standards.

Streetline’s Yusuf mentioned their partnership with IBM, where they’ve integrated Big Blue’s Cognos platform. He stressed how important it was to understand the dynamics of the marketplace and who’s pushing open technology.

“Startups should know who leads the market and what products are innovating, ” said Yusuf.  “IBM would love to sell us a bunch of their products, but we know which pieces of their platform help us solve our customers’ problems.”

Intel’s Wigle mentioned the company’s involvement in the Smart Grid Interoperability Panel and how much intelligence it’s captured from the ecosystem as technology is commercialized.  Because Intel has some much infrastructure that startups need, the company established its own incubation program, of sorts.  Technology Days brings together startups in Intel’s portfolio and allows them to make their pitch. Not only can Intel share its R&D practices and standards work, but young companies get a purview of what’s coming down the technology pipe.

The panel bridged some of the standards discussion with a few examples of where data and technology are currently coming together for disruption. All of them agreed the “internet of things” was shaking things up the most around cleantech innovation. With smart sensors, advanced levels of automation, and the move to open data, companies like Fitbit and Nest were cited as two companies capitalizing on the standards push.

If startups should come away with anything, it’s take the time to get your ship in order before approaching the big guys. If you’re focused, have the right partners, and understand protocol, they’re listening.

144,000 Wind Turbines Could Power The East Coast

offshore wind turbine
offshore wind turbine (Photo credit: Tigre Hobbes)

Recent calculations from Stanford University showed 144,000 offshore turbines could provide enough power for the whole East Coast.

Projects like Massachusetts’ Cape Wind have been in the works for at least a decade without much movement, though it has won Federal approval and should start deploying turbines in a year or so.

The article also highlights a key point related to offshore wind: its peak time availability.

“People mistakenly think that wind energy is not useful because output from most land-based turbines peaks in the late evening/early morning, when electricity demand is low,” Dvorak said. “The real value of offshore wind energy is that it often peaks when we need the most electricity — during the middle of the day.”

 NBC News