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Smart Grid in downtown Chicago – a great step forward towards bottom-up smart grids.

About 12 buildings in downtown Chicago are taking part in smart grid testing.

A central network will check wholesale electricity market signals from grid operator PJM Interconnection to convey them to the participating buildings.

The buildings will then be able to respond to market signals by scheduling and implementing curtailment strategies that will enhance grid performance and monetize the savings efforts. The pilot program will be fully functional by 2011.

We consider this to be a very important news. Whenever we think of energy efficiency and clean energy first two pictures come to our mind are solar panels and wind turbines. A more focus is needed on the distribution side of the power.

According to the International Electro technical Commission, about 8 percent to 15 percent of electricity is lost during transmission through power lines. At the same time, the intermittent nature of renewable sources, such as solar energy or wind power, is a burden to most existing grids. The Electric Power Research Institute estimates that the collective smart grid industry will grow to become a $200 billion market over the next decade.

In this area, based on our experience, a significant amount of work will be around meter data standardization ( just as EDI happened), cyber security, and alogrithmic load balancing. Very soon companies may get created which will focus totally on studying consumption trends and variation of such trend based on territorial demographics and households.

From infrastructure point we consider the downtown Chicago news to be important and would like to wish success to it. The reason is: if this kind of model works, we might end up having smaller community based smart grid networks which are self sufficient and which ultimately will join together to form a larger smart grid network. Thus instead of taking a top down approach, this would become a bottom-up approach. It may end up looking like a Bee-Hive. Communication among such networks will be complex and it may borrow features from mobile telephony networks or passive neural network type researches. Again, these are just thoughts.

The week it is – 8/2/2010 to 8/3/2010

 

Industry News:

1. China Q2 2010 cleantech investment going high.
2. US wind industry installed only 700 MW in last quarter.
3. Terra-gen power begins construction of new 3000 MW Wind energy firm in CA.
4. Plasco Energy Group raises $270 million in investments for the commercialization of its waste-to-energy technology.
5. The United States Department of Energy has offered to guarantee 80 percent of a $98.5 million loan to Nevada Geothermal Power that will be spent on developing its Blue Mountain Faulkner 1 geothermal project in Northwest Nevada.
6. Wells Fargo’s Green Lending business went over $6B. In fact, from personal experience, we find that smaller local banks are also having separate green equipment leasing desk. We do not see that much PPAs here in Midwest rather the lion share is around leasing solar equipments (PV/Thermal).
7. The largest M&A deal in July as reported by Thomson Reuters has a value of $9.015B where Investor Group acquired EDF Energy-UK Power Distn Bus.
8. Carbon trading bill dropped from US Senate.
9. Wind farms are currently being acquired at an average of $1.8 million per MW which is in line with 2009. However, solar plants are being sold at a discount compared to last year with a recorded average of $2.5 million per MW versus $3.1 million in 2009. This is largely due to overcapacity in Spain and Germany combined with regulatory uncertainties.
10. Corporate M&A activity remained robust in 2Q10, marginally surpassing the prior quarter in terms of completed transactions (152) and total transaction value ($14.5 billion).
11. The number of deals recorded in 2Q10 was down from a record high of 192 in 1Q10, but still represents a strong quarter by historic standards. This completes 1H10, up 65% on 1H09.

12. In terms of activity by sector, wind and solar remained joint clear leaders accounting for 43% of completed transactions in 2Q10. Energy efficiency (16%) claimed third spot.

 

Financials:

1. Indexes we followed- NEX, WHPRO, CGW, CTIUS, DSI, ECO, GRN, SOLEX
2. Funds we followed – CGW, ICLN, GEX, QCLN, WGGFX

North American Climate Exchanges:

1. Chicago Climate Exchange – CCX
   1. Carbon Financial Instrument (CFI) is selling at $0.10 (price/metric ton of carbon di-oxide). Total volume sold in last six months is 15000 Metric Ton. The total volume sold last year (2009) was 500,500 metric ton.
2. Montreal Climate Exchange – MCeX.

Trends we saw:

1. There is a major focus on fuel cell business especially related to automobile sector.
2. PV sector is relying heavily on Govt. subsidies even in countries like Germany and Spain.
3. Waste-to-Energy conversion has some major focus and new innovations are happening in this space.
4. While the major power corporations are focusing normally on expansion of their transmission capabilities ( a lot of M&A in Grid space is happening in Northern Continental Europe and in South East Asia) the smaller innovative start-ups are more focused on creating equipments such as PV/waste-energy converters/fuel-cells/automotive equipments and related.
5. PE Hub mentions that Consumer Internet/Web 2.0, Cleantech/Energy and Internet Marketing will be the top areas for the VC industry.
6. China provided three of the top five public market transactions and a total of 12 IPOs in 2Q10. North America provided the remaining top two deals including the $226 million oversubscribed IPO of Tesla Motors Inc., the electric car manufacturer.
7. In the long run focus could be on more efficient solar-cells and waste-to-energy conversion from innovation side.