Google X Acquires Kite Power Company

On Fridays, in order to keep the blog interesting, we’ll cover technologies, discoveries and ideas that are more speculative in the sense that they are early in the development stage.   Makani Power is the focus of the first Future Fridays blog post.   Makani is developing an airborne wind power platform; a description from Makani’s website explains the system:

The Makani Airborne Wind Turbine is a tethered wing that generates power by flying in large circles where the wind is stronger and more consistent. It eliminates 90% of the material used in conventional wind turbines, and can access winds both at higher altitudes and above deep waters offshore — resources that are currently untapped. Our goal is the utility-scale deployment of airborne turbines in offshore wind farms.

Makani has been in the news lately because they achieved the first fully autonomous flight of the kite power system, see the video here.  The other reason Makani has been in the news is they were acquired by Google X last week.  The acquisition was reported in a Business Week story last week about Google X.  Google X is described as Google’s secret lab that focuses on projects with long odds, but could have huge paybacks if they succeed.  Google’s backing doesn’t ensure success, but it does increase the likelihood that the idea won’t fail for lack of funding.

Solar Continues Record Growth in 2012

Solar Panels U.S. Solar photovoltaic (PV) installations continued to set records in 2012. According to the Solar Energy Industries Association (SEIA) over 3,300 MW of capacity was installed in 2012; a record for annual installations that was driven by a record setting fourth quarter that saw 1,300 MW installed.  To put these numbers in perspective, 43% of all the solar installed in the U.S. was installed in 2012.  The fourth quarter of 2012 alone surpassed the annual installation total for every prior year except 2011.

What is driving the boom in solar energy installations?  Falling prices play a big role.  According to the SEIA the prices of solar panels dropped 60% from the beginning of 2011 to the end of 2012.  This translated into a 27% decline in the cost of installed systems in 2012.  Declines in installed system prices lag solar panels because panels are just one component of the overall system.  A 2012 study of PV system prices done by the National Renewable Energy Laboratory found that panels are typically 45% of the total cost of a commercial rooftop installation.  Incentives also play a big impact on where solar projects get done.  The California Solar Initiative incentive program goes a long way to explaining why half of U.S. solar installations in 2011 happened in California.  The state of New York recently extended its NY-Sun initiative for 10 years, with the goal of adding 2,200 MW by 2023.

For more information on solar industry trends check out the SEIA’s 2012 industry data here.

The Link between Natural Gas, Efficiency & Alternative Energy

Low natural gas prices over the past several years have made investment in energy efficiency and some renewable energy projects less attractive.  Low prices extend the payback periods on capital intensive efficiency projects such as furnace and boiler upgrades.  Low prices have also made onsite generation technologies such as combined heat and power systems and fuel cells more attractive options for displacing high cost electricity than renewable energy options.  Choosing to delay efficiency upgrades or install gas-fired onsite generation is a bet that natural gas prices will stay favorably low into the future, but one of the key indicators of natural gas supply seems to have lost its predictive ability.

Historically, the natural gas drilling rig count has been a leading indicator of natural gas production.  Over the last year, however, production has continued to climb while the number of active rigs has dropped by 55 percent.  What’s driving the divergence between these previously correlated figures, and should industry observers expect the divergence to continue?  The answer is that a number of short term factors including increased drilling efficiency, associated production from oil wells, and an inventory of drilled but not completed wells have temporarily subverted the relationship between the natural gas drilling rig count and production, but this scenario is likely to be a temporary condition rather than a secular change.

To read more from U.S. Energy Price Risk Manager Ben Straus about the divergence of rig count and natural gas production check out the full article in Oil & Gas Monitor: Will the Divergence Between Active Natural Gas Rigs and Production Figures Continue?

Sustainability Reporting Now Common Practice

Value of Reporting CoverNinety-five percent of the 250 largest companies in the world issue sustainability reports according to a report by Boston College Center for Corporate Citizenship and Ernst & Young.  As the link between material business impacts and environmental and social issues becomes clearer corporate sustainability activities are increasingly seen as risk mitigating.  A survey done in conjunction with the report: Value of Sustainability Reporting identified the top four motivations for reporting as:

  • Transparency
  • Competitive advantage
  • Risk management
  • Stakeholder pressure

Stakeholder pressure is increasingly coming from institutions.  The report finds that stock exchanges in 20 countries require or strongly encourage sustainability reporting.  These requirements cover 44% of capital invested in exchanges around the world.

When organizations were queried about the value of sustainability reporting improvement in reputation and public trust were cited as the number one reason.  The three other major values to reporting cited in the survey are shown below.

  • Improved reputation
  • Employee loyalty
  • Improved accuracy of corporate CSR information
  • Helped refine corporate strategy

Beyond these qualitative benefits the report found that the most transparent companies tended to have higher cash flows, and improved share prices.

The report indicates that the Global Reporting Initiative (GRI) framework is the most commonly used.  Of the companies surveyed for the report, two-thirds use the GRI framework.  In 2011, over 2,500 companies reported to the GRI standard or used it as the model for their sustainability report.  The latest version of the GRI standard: G4 was just released, and provides a greater emphasis on helping companies determine and report material impacts.

Water Scarcity a Growing Business Concern

Globally, water demand is predicted to exceed supply 40% by 2030 according to the report Charting Our Water Future .  The report was produced by the 2030 Water Resource Group – a consortium of businesses formed in 2008 to look at water scarcity issues and headed by the World Bank and McKinsey & Company.  The map below, developed by the U.N. Environment Program, highlights geographies that are experiencing some level of water stress.  With the red areas considered to be over-exploited – that is, water withdrawals already exceed the recharge rate, resulting in resource depletion.

water-scarcity-index_14f3Source:  United Nations Environment Program

In 2012 the U.S experienced the most severe and far reaching drought in the past 25 years, with over 2,000 counties in 26 states being declared natural disaster areas.  This is the largest disaster declaration in U.S. history.  As of late April 2013 the U.S. Department of Agriculture predicts that most of the U.S. west of the Mississippi will continue to experience varying levels of drought; with the most severe drought conditions occurring in a line from South Dakota down through Texas.  For the most up to date information the USDA Drought Monitor can be found here.

The CDP’s 2012 US Water Report shows that water-related issues are already a concern for many U.S. businesses.  Of the 141 S&P 500 companies surveyed 45% said they had experienced detrimental impacts due to water related issues in the past five years.  For example, in 2008 Southern Company reported a $200 million loss from reduced power production caused by drought, and in 2010 Kimberly-Clark reported a $2 million loss due to production curtailments caused by drought.  Additionally, 63% of respondents identified water as a substantial business risk to their direct operations or supply chain.

The takeaway is that water scarcity will continue to be a business risk that should be actively managed to reduce the negative impact it may have on operations and the bottom line.  When water scarcity is severe enough companies must approach the issue as one of risk management and mitigation, not necessarily cost control.

 

Welcome to Trending Energy

Welcome to the kick-off of U.S. Energy’s blog: trending ENERGY.  A new vehicle to communicate with existing customers and the broader community interested in sustainability topics at the intersection of energy and the environment.  We are going to start the blog covering sustainability topics such as onsite renewable energy (e.g. solar), sustainability reporting, carbon footprints, CNG as a transportation fuel, and regulatory and policy issues.  Our goal is to keep you informed about important changes and developments in the rapidly changing sustainability landscape.

We’re excited to start the blog not only because it allows us to cover a broader array of topics in a timelier manner, but because it’s an opportunity to hear from you.  We encourage you to comment on a post you found interesting, drop us a note letting us know how we’re doing, or asking us to cover a specific topic.

 

Nicholas Franco
Director, Sustainability Services
U.S. Energy Services