Green & Golden in Colorado

Written by: Brian Wingfield

DENVER -  Other governors must be drooling.

Tuesday afternoon, Colorado Gov. Bill Ritter threw a lunch at the governor's mansion for executives from companies like Apple, Oracle, T-Mobile, Intel and Kleiner Perkins Caulfield & Byers--a powerhouse audience from some of the most important technology brands in the world. The ones that are, you know, booming.

They were there with TechNet, the political group for technology executives, to discuss "clean tech"--what's fast becoming the hottest topic at the Democratic National Convention, and for good reason. Finding new ways to power civilization offers up a box of goodies irresistible to everyone from Silicon Valley investors and engineers hoping for '90s-style payouts, to office-seeking senators looking for visionary solutions, to governors like Ritter, whose political lives depend on hauling home bacon by the ton.

So naturally, the executives got to hear a bit about Colorado. “The people of this state have a special relationship to the land,” Ritter told the group. He says that a focus on the environment is going to be a key element to building a 21st century economy. “It really is about job opportunities.” It sure is.

And Ritter's already ahead in this new derby, trying to position the state as a hotbed for green technology development. Denver Colorado's Airport was festooned this summer with ads branding Colorado State University a green technology epicenter. Earlier this month, Denmark-based wind energy company Vestas committed to putting $700 million in Colorado’s economy by building the world’s largest wind tower manufacturing plant there. The governor says it will create as many as 2,500 new jobs and help usher the new industry into the state.

Ritter's got business-friendly patter on the issue. He says the next U.S. Congress will “absolutely have to deal with” a market-based cap-and-trade system to curb carbon emissions, and he wants to “destroy the silos” between energy and climate policies.

Many of the firms in attendance Tuesday favor some of the ideas he espouses, like a permanent extension of the federal research and development credit, which Congress allowed to lapse in December. State and national mandates for renewable energy production are also popular items of discussion among the clean tech crowd.

An increasing number of businesses--particularly those that aren’t thought of as traditional energy companies--are getting in on the game. An executive from Intel (nasdaq: INTC - news - people ), for example, says his company is now the world’s largest purchaser of renewable energy credits.

And of course there’s Google.org, a branch of the ubiquitous tech company that puts money into solving big problems like climate change, poverty and epidemics. Earlier this month, it put $10 million into companies that are looking for ways to tap the world’s geothermal energy. (See " Looking For Power, Google Goes To Hell.")

Dan Reicher, Google.org’s director of climate and energy, says cleaner electricity production will have an impact on the transportation sector, as plug-in electric vehicles become more popular. “As the grid gets greener, the cars get cleaner,” he says.

In the same vein, electric sports car manufacturer Tesla Motors is reaching out to new markets. The company is now developing a four-door sedan that’s in the $60,000 range--still out of reach for most Americans, but quite a drop from the company’s popular Tesla Roadster, which goes for about $109,000. (We can attest to its coolness after taking a spin.)

“The hardest thing is to say no to a company that changes things by a factor of two or a factor of four,” says John Gage, a partner with Kleiner Perkins Caulfield & Byers, the influential Silicon Valley venture capital firm. “We’re looking for companies that change things by a factor of 10 or a factor of 100.” Drool, drool, drool.

With smart money betting there's a gold mine in solving energy and climate solutions, smart politicians are betting a gold rush will naturally follow. Ritter's already staked his claim.

Could The Credit Crunch Kill Green Energy?

Written by: William Pentland, Forbes

Investment threatens to dry up just as the industry gets ready to take off.

The looming threat of climate change and soaring energy prices has attracted vast amounts of capital into clean energy companies in the past few years.

In 2007, the sector attracted $2.2 billion in venture-backed investments, up 45% from 2006. Biofuels production jumped from 4.9 billion gallons in 2006 to roughly 6.5 billion gallons last year. Meanwhile, in 2007 the U.S. added 314 megawatts of new solar energy systems to the grid, up by 125% from the previous year.

In the past two years, solar energy has become an especially hot spot in the clean energy sector. In 2007, solar energy start-ups raised the lion's share of new investments in the sector, or roughly $600 million in capital raised in 39 deals.

And then came the credit crisis. Already companies have pulled IPOs, and worry is growing that the nascent industry could be choked off just as it is starting to take off. The question now: How bad will the hangover be? Or, more important, how long will it last?

The energy game is ill-suited to the stereotypical garage inventors who sparked the Internet revolution. The key difference is that technological innovation is a very small part of the picture. Future generations of solar energy technologies will produce cheaper and more powerful equipment, but a number of solar energy technologies are ready for prime time today even without those improvements, especially in states like California where government policies have given them an added boost.

The relentless pursuit of technical improvements has brought solar and wind power prices down enough to compete with conventional energy-generation technologies in many markets. Success in both wind and solar energy depends on scale, or the ability to lower costs by producing large amounts.

The trouble is that a number of solar energy companies have major projects in the pipeline that seek to scale up their operations to commercial size. In other words, they need to find a sizable chunk of change in the tightest credit conditions seen in decades. The bottom line: Energy projects depend on scale, and scale depends on capital.

"Unless you can scale it, it doesn't matter," said Vinod Khosla, a well-known Silicon Valley investor, while speaking at MIT last week.

Several green energy companies already pulled the plug on planned IPOs. In January, Imperium Renewables, a venture-backed bio-diesel producer that operates the largest bio-diesel plant in the U.S., shelved IPO plans to raise as much as $345 million, citing "current market conditions." Last week, Germany's solar energy start-up Schott Solar, which originally planned to announce its offering price range on Sunday, decided to delay its IPO until credit conditions improved.

To make matters worse, the collapse of investment bank Lehman Brothers (nyse: LEH - news - people ) has become a liability for many solar energy companies. In recent years, Lehman had become a principal underwriter for solar energy companies raising money or financing debt to build factories and solar farms.

Evergreen Solar (nasdaq: ESLR - news - people ), a solar panel maker in Marlboro, Mass., appears particularly vulnerable to Lehman's collapse. Evergreen loaned Lehman 30.9 million shares of its common stock in a recent deal to help the company raise more than $375 million through an offering of senior convertible notes. At least one industry analyst, Jeff Osborne of Thomas Weisel Partners, has cut his stock valuation by 26% because he fears Evergreen will not be able to recover the shares from Lehman.

If these devaluations accelerate, the sector could see a wave of consolidation or significant investment from much larger companies like industrial giant General Electric (nyse: GE - news - people ), no stranger itself to the credit crisis.

"One model is for these clean-tech companies to make strategic alliances with the Fortune 100 companies," John Steuart of Claremont Creek Ventures told Greentech Media, a trade publication. "For example, they can trade sales and marketing rights for a capital investment. Or they can sell the licensing rights for a product in exchange for an investment."

This process has already begun to some extent. In 2007, Chevron-Texaco's venture capital arm bought significant stakes in two solar energy companies: BrightSource Energy, a developer of utility-scale solar plants, and Konarka Technologies, a developer of photovoltaic materials.

But while the credit freeze may kill off some firms, the good news is that those that can stick out the downturn will likely do as well if not better than originally expected if they can survive a few years. In a poll of nearly 300 venture capitalists, corporate buyers, bankers and entrepreneurs, 79% of the respondents expect "a strong stream" of IPO activity to begin in 2010 or later, according to a recent survey by auditor KPMG.

If the Senate's last minute inclusion of renewable energy tax credits in the bailout package survives the legislative process, the turnaround could come much sooner than that.

More Energy New:  Heartland Energy Colorado | Energy Development Corporation

Green Gas

(Source: DailyOrange.com)

Two researchers from the State University of New York College of Environmental Science and Forestry are going to start producing biodiesel fuel from dining hall waste on a large scale.

Michael Kelleher and Neal Abrams were awarded the Enititaive grant that funds the operation earlier this month. The Green Energy Cooperative is a project that will include a team of students from SUNY-ESF and The Martin J. Whitman School of Management.

"The project brings students together to find an innovative solution," said Stacey Keefe, executive director of the Enititative. "After graduation, these students will find innovative, responsible solutions to today's issues."

The grant is part of a larger award given to Syracuse University by the Ewing Marion Kauffman Foundation, based in Kansas City, Mo. Totaling $3 million, it is a five-year initiative aimed at encouraging community improvement, according to the foundation's Web site.

Sponsoring 53 different projects in the Syracuse community, the Enitiative grant will give $20,000 to begin the Green Energy Cooperative, said Kelleher, director of renewable energy systems at ESF.

The program will utilize a set process to produce the biodiesel fuel, Kelleher said. Students will gather used vegetable oil from dining halls on campus, which will then be brought to the biodiesel reactor on the ESF campus. Finally, through a laboratory process, the oil will be turned into clean, biodiesel fuel. It is this fuel that will power SU diesel vehicles.

The business portion of the project deals with the sale of the freshly made fuel. Whitman students will negotiate and sell the fuel to SU and ESF, and any profits from the sale of the fuel will be reinvested in other sustainability projects.

The exact costs of the process have not yet been determined, Kelleher said.

Kelleher and Abrams have experimented with the waste-to-fuel process in the past but only produced small amounts of the fuel, Kelleher said. Now the additional funding will allow for a much larger operation, he said.

"These are investments in our future." Kelleher said. "We have to live more compatibly with our environment."

MORE new from DailyOrange.com:  Heartland Energy Development