Saturday, December 29, 2007

The Clean Tech Revolution by Ron Pernick and Clint Wilder-- Review

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The book The Clean Tech Revolution The Next Big Growth and Investment Opportunity by Ron Pernick and Clint Wilder is about how green technology will be a tremendous future business opportunity.

The writing is very exuberant with an almost bouncy quality to it. It reminds me of Red Herring during the dotcom boom, or Wired Magazine. It can get annoying at times. However, it does bring out the quality of showing you a lot of information very fast in a fun manner.

Another unfortunate aspect of the book is that many of the companies that are investments are not publicly traded. I was hoping that I could find publicly traded stocks to investigate. There are some of these like Cree, Florida Power and Light, and GE. Also there are a lot of foreign stocks listed like Q-Cell AG and Vestas which are on foreign exchanges. I even saw some stocks from the Indian and Spanish stock exchange.

The book is initially broken down into eight sections on different kinds of technology; solar energy, wind power, biofuels and biomaterials, green buildings, personal transportation, smart grid, mobile applications, and water filtration. I think the book is more an introduction to the topic than for an advanced reader. I had a number of quibbles with the content in the book.

The section on solar energy focuses on how solar will scale up with larger production. One of the major problems with solar power is that it is not profitable unless it is on the large industrial scale. Walmart for example has invested in buying bulk quantities of solar panels and using them to power a lot of their stores. They believe this will lead them to long term savings. There is a bit on solar in developing countries. Solar power is non-grid based so it can be used to make things like solar powered lanterns for developing countries like India. For investments, there were not a lot of companies I was interested in.

The next section on wind energy was much better. In November of 2005 in Colorado, Xcel energy sold wind power for cheaper than natural gas or coal to 33,000 customers. Wind power for the first time had achieved parity in pricing with other forms of energy. This has led to a boom in production of wind energy in the United States as a viable alternative form of energy. I was quite happy with this chapter. It is very hard to find out about publicly traded companies for wind energy. I know of one that wasn't listed here, Western Wind Energy, but the listing for Florida Power and Light was quite useful to me as an invester.

I thought the chapter on biofuels and biomaterials was shoddily done. I don't think they gave the concept of the biorefinery justice in this chapter. The one point which I liked is that they described the point where ethanol mixed with gasoline became cheaper than just gasoline alone. Biodiesel and ethanol are currently cheaper than gasoline at the pump. There was also an over focus on cellulosic ethanol a future technology which is in development. Cellulosic ethanol seems to be pie in the sky to me.

I think they are much closer to developing ethanol from algae than cellulosic ethanol. Two companies that are working on algae ethanol are Aquaflow Bionomics in New Zealand and Greenfuel Technologies in the United States. These companies are already in the demonstration stages for commercial production of biodiesel from algae.

The picks for stocks annoyed me as well. I understand the choice of ADM, the monster of ethanol and agribusiness giant. But, they aren't exactly an environmentalists dream. If I had a choice to put down a company instead, I would have put down MGPI , a company that makes multiple products from wheat, alcohol-- including ethanol, personal care products, pet products, vegetarian products, and biopolymers. MGP Ingredients is a very interesting example of a biorefinery, or a refinery which makes multiple products from a single biological source. An interesting tidbit from the chapter was that Toyota plans to produce $30 billion dollars of bioplastics per year.

The chapter on green buildings was one of the better chapters in the book. It gave good descriptions of the benefits of green buildings. Green buildings cost slightly more but in the long run save money on energy, sewage, recycling, water reclamation, and air conditioning. It is interesting to note that 46% of our energy usage comes from the built environment, and 76% of electricity use. The dichotomy of long term planning versus short term profits comes out very clearly in this chapter. A green building will pay for itself in approximately 8.1 years. From my understanding, most companies survive for approximately 20 years. This means that huge green buildings won't be viable except for larger corporations with strong finances that can plan for the long term. For example, Bank of America is working on building the greenest building in the world.

The book also talks about the concept of the ZEB-- Zero Energy Building. This is being done with large housing developments where houses are built green from the start and include energy efficient insulation, solar power, water conservation and enough green features to make them not need the energy grid most of the time. The features are amortized into the mortgage, ultimately saving money in the long run.

The next section is on personal transportation. I found the focus on personal transportation only to be odd. From the perspective of clean transportation, clean trains and airplanes ultimately have more environmental impact. I understand the urge to have your own car. I even think that the description of the Toyota prius becoming a mainstream vehicle is very interesting. I also think the concept of the Tesla all electric sports car is interesting. But, the Tesla is still $92,000 to buy, not exactly a mainstream item.

I am going to add in my own two cents here. I wished they had included things like the Boeing 787 Dreamliner, a new passenger airplane that is 20% more efficient in fuel usage than other planes. . Also a bit on trains like the Green Goat hybrid diesel electric train being developed by Railpower would have been nice.

The section on the smart grid fails to hold my attention. While it is interesting, they are talking about using superconductors to transmit power as well as carbon nanotube power lines. These are very interesting subjects, but they seem to be ten to twenty years from now. Their story on grid monitoring software to check peak usage seems to be the most practical thing being discussed. They also mention in passing that Google locates some of its data centers near hydroelectric power plants to guarantee a continuous supply of power. Again, they fail to mention a very important technology, net metering, meters designed to allow people to sell excess solar and wind power back to utilities.

I found the section on mobile technologies to be very future oriented. Too future oriented. They talk about things like portable fuel cells and carbon nanotube ultracapacitors. These seem to be things that are in the future not now.

The water filtration section was kind of odd. It was a step away from the talk about energy usage and efficiency. It almost didn't seem to fit in with the rest of the book. They posit that water will be the new oil. People need to make massive investments in desalinization plants along the coastlines to meet the United States water needs. It was a little bit too much hype for my tastes.

Where the book fails is that it makes no mention of updating existing hydroelectric dams so they produce more energy and are more environmentally sound, nor does it mention geothermal energy.

The final sections of the book are "cool". I especially like the chapter called "Create Your Own Silicon Valley". This sets up steps on how to encourage clean tech centers in cities which create new jobs, encourage research, and improve the economies of cities. The writers of the book do a very good job with this because it seems to be what they are focused on in real life. Their website is basically about publicly traded clean technology stocks and clean venture capital.

I would recommend this book as an introduction to the concept of "clean technology." However, if you are beyond the introductory stage you might have some difficulties with the book.

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