Growing Renewable Energy Companies in Western New York

1
Growing Renewable Energy Companies in Western New
York
RENEW NY
Larry Simpson lsimpson_at_renew-ny.org 585-239-6016
2
Agenda

• About Renewable Energy Network of Entrepreneurs
  in Western New York RENEW NY
• Renewable Energy Overview
• Power Generation
• Transportation fuels
• Global Renewable Energy
• United States Renewable Energy
• New York State Renewable Energy
• Western New York startups
• Summary

3
About RENEW NY

• Renewable Energy Network of Entrepreneurs in
  Western New York
• Virtual Incubator serving NY west of Utica
• Stimulate business formation and growth of
  renewable energy companies
• Companies lt 5 years old
• Initiated by NYSERDA 5/1/04 with 150,000, 3-year
  funding.
• Recent 1 year extension
• Partners
• High Tech Rochester (HTR)
• Greater Rochester Enterprise (GRE)
• Rochester Institute of Technology (RIT)

4
Power Generation

• Electric power to homes, business,
• and government
• - Primarily centralized, transmitting and
• distributing power over the electric grid
• - Limited distributed (onsite) energy.
• Solar photovoltaic (PV) examples.
• - Renewables include wind, solar,
• biomass, geothermal, hydro,
• landfill gas, etc.
• - Wind farms competitive (cost and
• scale) with traditional plants.

5
Power Generation Technology Overview
Retail rate .12/kWh in NYS
6
Biofuels
Ethanol - Aka moonshine (grain alcohol) -
US production primarily corn feedstocks today -
Moving to cellulosic feedstocks to increase
production towards 20-40 of transportation
fuels over the next few decades Corn
stover, wood chips and waste, energy
crops (e.g. willow), etc. - Mixes with
gasoline To boost octane levels (versus
MTBE) E85 (85 ethanol) in flex-fuel
vehicles (5MM cars on the road today
and growing) Biodiesel - Mixes with (e.g. B2,
B5, B20), or replaces petroleum
diesel Future - Algae feedstocks, butanol,
etc.
7
RE - World

• 2006 60 billion vs. 40 billion
• in 2005
• Wind power grew 43 in 2005
• and 32 in 2006 to 23 billion
• Constrained by turbines
• Solar PV grew 34 in 2005
• and 58 in 2006 to 19 billion
• Constrained by polysilicon
• US Ethanol production growing
• 3B gallons capacity/year

8
RE United States

• lt 5 penetration in renewables, yet
• 1 in ethanol production (passed Brazil in 2005)
• 1 in new wind installations in 2005 and 2006
• 1 in geothermal
• 3 in new solar PV installations in 2005
• 7 world total vs. Germany 57 and Japan 20.
• Federal Policy
• Energy Policy Act of 2005 (EPAct 2005)
• 19 dedicated to renewable energy
• Presidents Advanced Energy Initiative
• Includes additional wind, solar, and biofuels
  research funding
• 2007 State of Union 20 in 10 20
  bio-transportation fuels in 10 years
• Senate and House Renewable Energy Energy
  Efficiency Caucus bipartisan with over 250
  members
• 25 States with renewable portfolio standards
• Mandated percentage of electricity from
  renewables

9
Energy Policy Act 2005

• 2005 Energy Policy Act (Electric)
• 19 (2.77 billion) tax credits dedicated to
  Renewable Energy
• Production tax credit (.019/kWh over 10 years)
• Wind Farms
• Biomass (50 if crops not dedicated to
  electricity production)
• Geothermal
• Landfill gas (aka methane)
• 30 investment tax credit for solar PV (10 after
  2007)
• 2005 Energy Policy Act (Biofuels)
• Renewable Fuels Standard - Mandate of 7.5 billion
  gallons by 2012
• Ethanol and biodiesel

10
US Renewable Portfolio Standards (RPS)
11
Challenge of National RPS
12
New York State Assets

• NYSERDA
• Annual budget 200MM
• Cited by DOE among the best research
  organizations in North America
• NYS Renewable Portfolio Standard (RPS) 25 by
  2013
• Governor Pataki (no Spitzer RE news. 15X15
  Energy Portfolio Standard)
• Initiated the RPS, and NYSERDA budget increased
  from 25MM to 200M
• Executive Order 111 Purchase of Renewable
  Energy by State Entities
• 10 by 2005 20 by 2010
• Executive Order 142 Purchase of biodiesel by
  State Entities
• 10 in vehicles by 2012 5 in heating by 2012
• 20MM for development of a pilot cellulosic
  ethanol plant (Mascoma Genencor in Greece)
• Directed Thruway Authority to install E85 pumps
  at all rest stops
• Senator Clinton
• Helping brand Rochester area as hotbed for
  renewable energy
• Brought Senior Management from Fortune 500
  companies and Investors to
• Support for RIT renewable energy and fuel cell
  efforts

13
Western NY companies

• 51 early-stage companies
• 20 companies pre-revenue.
• 1-70 employees per company
• 300 current jobs with significant growth
  potential
• Teed up for gt 400 by year end 2007
• gt 40 patents (granted pending)
• Investment
• Local entrepreneurs closed gt 275MM in equity and
  debt in 2006
• Northeast Biofuels (ethanol)
• Western NY Energy (ethanol)
• NextGen Fuels (biodiesel). Sold lt 2-year company
  for 21MM.
• Northern Biodiesel (biodiesel)
• SolarSentry (Pittsford) and Cerion (Rochester)
  each closed gt 1MM this year
• 2000-2008 could surpass gt 1 billion cumulative
  regional RE investments (including established
  companies)
• E.g. New Ethanol refineries, Wind farms, landfill
  gas, etc.

14
Western NY companies

• 18 Biofuel and biomass
• 5 ethanol
• 8 biodiesel
• 5 biomass (biofuel for Power Generation
  application)
• 5 Fuel cell, hydrogen, and components
• 5 Photovoltaic and Solar
• 3 PhotoVoltaic
• 1 Solar heating
• 1 other (solar panel and string performance
  monitoring)
• 10 Services (e.g. solar/wind installation)
• 4 Wind
• 2 Geothermal
• 3 Developers of renewable energy (e.g. wind,
  landfill gas, biomass)
• 4 other (Anaerobic Digester, Soy insulation, and
  diesel fuel catalyst)

15
Clusters
Biofuels Fuel Cell Solar/PV Wind Service
/ Installation Other
Finger Lakes 24
North Country 3
Central 6
Buffalo Niagara 11
Southern Tier (Ithaca) 3
16
Ethanol plants
NDA Beaver Falls 100MM gal/yr.
Catalyst Renewables Lyonsdale .13MM gal/yr.
Northeast Biofuels Fulton 114MM gal/yr.
Mascoma Greece .5MM gal/yr.
Western NY Energy Shelby 55MM gal/yr.
RiverWright Energy Buffalo 110MM gal/yr.
Empire Biofuels Romulus 50MM gal/yr.
Cilion Caledonia 60MM gal/yr.
Funded and permitted
Not yet funded and/or permitted
Cellulosic demonstration plant
17
Resource Matching

• Angel investors (e.g. Rochester Angel Network,
  Insyte Consulting)
• Economic development incentives
• GRE, ESD, County IDAs, etc.
• Venture Capital
• Local, Strategic (e.g. DTE), Energy (e.g.
  Enertech, Rockport, etc.)
• Project Financing (gt 20MM)
• GE, US Renewables Group, etc.
• Grant email alerts
• NYSERDA, Federal Government (e.g. DOE, EPA, SBIR,
  etc.), Private sector
• Grant Writers
• University Research Partners
• Clarkson, Cornell, Rochester Institute of
  Technology, SUNY Environmental School of
  Forestry, University of Rochester
• Center Of Excellence in Energy Environmental
  Systems
• Volunteers

18
Summary

• Renewable energy can be categorized broadly into
  transportation biofuels and power generation.
• Renewable energy is a big (60 billion in 2007)
  market, mostly sold out, and growing rapidly
• Continuing in the foreseeable future due to
  bipartisan Global, Federal, and state policy
• Mainstream investment moving into renewable
  energy
• No silver bullet for powergen or transportation
  fuels. It will remain a mix of technologies
  depending on local resources.
• Potential for breakthrough technology to bring
  costs down
• Biofuels (dedicated energy feedstocks including
  algae)
• Solar PV
• Other?
• Tremendous amount of activity in startup
  renewable energy companies in our region. (51
  known today)
• gt 1 billion regional investment 2000-2008
  including larger companies and startups

19
Growing Renewable Energy Companies in Western New
York
www.renew-ny.org 585-239-6016 lsimpson_at_renew-ny.or
g
20
Positive Global Trends

• Governmental Policy
• European Union (EU) goal of 12 (22 electric)
  renewable energy by 2010
• China Renewable Energy Law (1/2006)
• 60,000 MW of new renewable energy by 2010 and
  120,000 MW by 2020
• Brazil 20 of transportation fuel from ethanol
• 29,000 E85 gas stations, 70 of new cars
  flex-fuel
• Kyoto Protocol (carbon emission caps) driving
  Europe, Canada, and Japan renewable energy growth
  
• Fossil fuel price increase and variability
• Prognostications of peak oil as early as now or
  2010
• Energy Security
• Acute concerns in countries with high imports
• Plentiful growth opportunity
• Renewable energy lt 10 of world consumption
• Significant private sector investment

21
Global Investors

• Worlds largest energy companies in renewables
• GE Ecomagination tagline
• Wind business 3.6 billion in 2006 (from 200MM
  in 2002)
• Siemens, Mitsubishi, Sharp, BP, Chevron, Shell,
  FPL, etc.
• Ford and GM flex fuel (E85) vehicle marketing
• Personal high-profile investors
• Richard Branson, Bill Gates, Vinod Khosla, Larry
  Page, Bill Clinton, etc.
• Bankers and Wall Street
• Goldman Sachs, Credit Suisse, Chase, etc.
• 3 of the largest U.S. 2005 initial public
  offerings were in solar energy
• 400 million offering for China-based Suntech
  Power (made a new billionaire of the Chinese
  founder)
• Venture Capital
• Number of dedicated clean technology (cleantech)
  firms growing
• Premier venture capital firms expanding into
  cleantech
• Kleiner Perkins, Draper Fisher Jurvetson, NEA,
  etc.
• total venture capital dedicated to cleantech
  from .5 in 1996 to 5 in 2006

22
Electricity vs. fuel
0.05/kW-hr
Europe
Brazil

• Modern gas and coal electricity generation
  30-40 efficient.
• Additional 7 losses over transmission and
  distribution grid.
• Internal combustion engine 20-30 efficient.