The U.S. Environmental Protection Agency implemented a cap and trade program for sulfur dioxide (the primary contributor to acid rain) in 1995. This program was a great success, and essentially eliminated the acid rain program. California passed AB32 in 2006 to accomplish the same goals for CO2 emissions. This law sets a cap on emissions from almost all sources, and gives polluting companies a certain number of allowances. If companies reduce their CO2 emissions (with renewable power generation, more efficient processes or smokestack scrubbers), they can trade these emissions to companies that still pollute.

Many California companies succeeded in reducing their emissions. In fact, utilities installed so much wind and solar (courtesy of their RPS requirements) that they now have excess allowances to trade. But the gas refining industry didn’t act, and starting on January 1, 2015 they will have to purchase extra allowances. How much? When a gallon of gas is burned it emits about 20 pounds of CO2, which is 0.009 tons. At the current market price of CO2 allowances of $12/ton, that extra CO2 amounts to about 11 cents. So the downside of cap and trade is that the price of gas in California is likely to go up by about a dime. The upside is that we get cleaner air and an even stronger green economy.

But not everyone wants this outcome. In particular, the oil and gas refining industry tried to suspend AB32 in 2010 when they sponsored Proposition 23 (which was defeated by 62 percent of voters). This year they are sponsoring AB69, which will delay the application of cap and trade to transportation fuels. It’s shaping up as a battle between deep-pocketed dirty fuel polluters — and just about everybody else in California. I’m hopeful that California’s cap and trade program continues to succeed, and maybe someday soon will be adopted by the other 49 states. Please join me on this week’s Energy Show on Renewable Energy World as we talk about the real economic impact of cap and trade.

Find more episodes of The Energy Show here.

About The Energy Show

As energy costs consume more and more of our hard-earned dollars, we as consumers really start to pay attention. But we don’t have to resign ourselves to $5/gallon gas prices, $200/month electric bills and $500 heating bills. There are literally hundreds of products, tricks and techniques that we can use to dramatically reduce these costs — very affordably.

The Energy Show on Renewable Energy World is a weekly 20-minute podcast that provides tips and advice to reduce your home and business energy consumption. Every week we’ll cover topics that will help cut your energy bill, explain new products and technologies in plain English, and cut through the hype so that you can make smart and cost-effective energy choices. 

About Your Host

Barry Cinnamon is a long-time advocate of renewable energy and is a widely recognized solar power expert. In 2001 he founded Akeena Solar — which grew to become the largest national residential solar installer by the middle of the last decade with over 10,000 rooftop customers coast to coast. He partnered with Westinghouse to create Westinghouse Solar in 2010, and sold the company in 2012.

His pioneering work on reducing costs of rooftop solar power systems include Andalay, the first solar panel with integrated racking, grounding and wiring; the first UL listed AC solar panel; and the first fully “plug and play” AC solar panel. His current efforts are focused on reducing the soft costs for solar power systems, which cause system prices in the U.S. to be double those of Germany.

Although Barry may be known for his outspoken work in the solar industry, he has hands-on experience with a wide range of energy saving technologies.  He’s been doing residential energy audits since the punch card days, developed one of the first ground-source heat pumps in the early ‘80s, and always abides by the Laws of Thermodynamics.

Lead image: Green microphone via Shutterstock

A year ago, Germany’s beleaguered solar industry rejoiced when the government-owned development bank and federal environment ministry announced loans and repayment support for combined rooftop PV and battery storage options of up to 30 kW. The sector thought it spotted an opportunity to redeem itself on the German and international markets with a technology that German PV and energy management firms had long been perfecting.

The logic of battery technology is pretty straightforward: By storing power generated when the sun is shining bright and demand is low, the owners of household battery systems can use more of the electricity they generate when they need it — twice as much, say experts. Larger storage systems, if connected to solar plants, could help integrate even more renewables into the system, dramatically reducing disparities in supply and demand — the bugbear of PV and wind power. 

A schematic of a typical home energy storage system setup. Credit: Saft.

Yet, 14 months down the road, German PV and energy management companies have sold only around 10,000 decentralized battery systems (not all in Germany), with about 50 percent of the new German owners taking advantage of the subsidies. The Leipzig-based PV company Deutsche Energieversorgung says that only 15 to 20 percent of its battery customers use the supports. Roughly a third of RWE Home Power Storage’s clients have availed themselves of the subventions.

Critics say the bureaucracy required to obtain the credit is cumbersome, and that new laws in Germany that will tax self-consumption have put a damper on PV sales. The fact that these small-scale systems are designed only for self-consumption (in other words they’re not connected to smart grids or the larger power system) limits their usefulness for proving extra grid flexibility to balance renewables. 

Indeed, the numbers so far are modest, even though both producers and suppliers of distributed storage hardware say business has been picking up as of late spring.

A study of 13 European (mostly German) firms conducted by the magazine Sonne Wind Wärme, found that Bavaria-based Sonnenbatterie led the field having sold 2,500 transportable intelligent lithium storage systems in 2013-14, mostly in Germany. It was followed by Deutsche Energieversorgung that sold just 100 fewer, and Nedap of the Netherlands with 2000. Saft Batteries out of Nuremburg moved roughly 1000 systems, half of those in Germany and the other half in Austria, Switzerland, Italy, and Luxembourg. A number of other firms, including E3/DC, Bosch Power Tec, and Frankensolar sold less than 1000 models.  

About 85 percent of the units sold were the more traditional and substantially cheaper lead-acid batteries; while 15 percent were the newer lithium-ion-based models, which are more expensive but also tout more capacity. Not only can lithium-ion batteries store more power while requiring less space, they can be charged and discharged more frequently than lead-acid batteries. The prices of the systems range from 6,000 to 30,000 euros, depending on size, model, producer, and type. Most of the investors were households, followed by small businesses.

Since the program was launched last May, 4,000 solar battery buyers were awarded a total of 66 million euros of low-interest loans and grants of over 10 million euros. The state development bank KfW grants a low-interest loan for the purchase of a combined photovoltaic and solar-power storage system or for retrofitting an existing solar-power installation with a storage system. In addition, the state may cover up to 30 percent of the loan.  Yet in 2013, more than half of the available monies went untouched.

“The support programs were slow getting started,” says Tom Rudloph of SMA Systems, one of the early Germany-based pioneers in battery storage. “But they’ve ironed out some of the wrinkles, so it’s working better now.”

The jury is still out on whether the batteries — with or without the supports — are worth it for small PV users.

Germany’s main solar advocate, the German Solar Energy Association (BSW), claims that small battery units won’t make or save homeowners a bundle, but — in economic terms alone — are probably a break-even proposition, depending on consumption behavior, type of PV system, location and other factors. “There wouldn’t be government incentives if small-scale battery storage was completely economical at the moment,” admits David Wedepohl of the BSW. “But at least half the systems in Germany sell without any incentive.»

The SMA Sunny Boy Smart Energy is a combination of a modern PV inverter and a battery with an effective capacity of 2 kWh. Credit: SMA.

“The point is to create a market for storage, create economies of scale, and generate experience with this new technology,” says Wedepol. “In the future, if we’re serious about running our economies on 90 percent or 100 percent renewable energy, we’re going to need it.” He notes there are factors besides economic viability that motivate people to invest in storage, such as energy independence. Most of the battery companies say independence is their customers’ primary motivation.

Renewable Energy World Conference Expo is one of the leading conferences for the renewable energy industry. The conference features insightful discussions and presentations during technical sessions related to technology, markets, business strategies and policy covering the wind, solar, biomass, hydro and geothermal energy sectors. There has never been a better time to be a part of the exciting, ever-growing world of renewable energy and these speakers show why. Don’t miss this opportunity to network with experts about the technologies and trends on the forefront of the renewable industry’s future.

Richard Walsh, Washington Gas and Electric

Rich Walsh manages the green energy portfolios and other cleantech initiatives for the large commercial market at WGES. Between his time at WGES and previously at Sterling Planet, Rich has worked with utilities, corporates, and government including organizations like PGE, McDonalds, NHL, Hilton and the DC Government; helping them meet their energy and sustainability goals. Mr. Walsh will be presenting in the Utility Integration track in the session about Transactive Energy: Opportunities and Challenges for the Grid of the Future.

To register, visit http://www.renewableenergyworld-events.com/index.html

My 10 Clean Energy Stocks for 2014 model portfolio weathered the storm relatively well because of its emphasis on defensive and income stocks.  

Since the last update, the model portfolio was down 4.8 percent, compared to 5.5 percent for small cap stocks (as measured by the Russell 2000 index ETF, IWM) and a 9.8 percent decline for clean energy stocks, as measured by PBW, the Powershares Wilderhill Clean Energy Index.  The relative strength of the model portfolio was in spite of significant weakness in foreign currencies.  The Canadian Dollar, Euro, and South African Rand fell 3.3 percent, 3.4 percent, and 5.8 percent for the month, dragging the model portfolio down 2.8 percent more in US Dollar terms than in local currency terms.

Since portfolio inception on December 26th, 2013, the model portfolio is up 1.5 percent in dollar terms, and 3.8 percent in local currency terms.  The small cap stock index was down 3.9 percent, while the clean energy stock index eked out a tiny gain of 0.3 percent.

Stock market trends down in September. Image source Yahoo! Finance.

Individual Stock Notes

The chart and discussion detail the performance of individual stocks in the 10 Clean Energy Stocks for 2014 model portfolio, along with relevant news items since the last update.

(Current prices as of August 5th, 2014.  The «High Target» and «Low Target» represent my December predictions of the ranges within which these stocks would end the year, barring extraordinary events.)

1. Hannon Armstrong Sustainable Infrastructure (NYSE:HASI). 
12/26/2013 Price: $13.85.     Low Target: $13.  High Target: $16.  Annualized Dividend: $0.88.
Current Price: $13.77.  YTD Total US$ Return: 4.2% 

Sustainable Infrastructure REIT Hannon Armstrong paid its regular $0.22 dividend for the third quarter.  The REIT has a goal of paying dividends equal to 100 percent of distributable income, which were $0.20 in the first quarter, and $0.22 in the second quarter.  I expect third and fourth quarter distributable income to be sequentially higher as the company deploys capital from its $75 million April secondary offering.  This implies that we can expect a small increase in December’s fourth quarter dividend, which I expect to be approximately $0.24.

2. PFB Corporation (TSX:PFB, OTC:PFBOF). 
12/26/2013 Price: C$4.85.   Low Target: C$4.  High Target: C$6.  
Annualized Dividend: C$0.24. 
Current Price: C$4.32. YTD Total C$ Return: -7.2%.  YTD Total US$ Return: -11.7% 

Green building company PFB re-authorized its normal course issuer bid to purchase up to 50,000 shares of its own stock over the next year.  Over the past year, the company repurchased 19,500 of its shares at an average price of C$4.92.  Given the current price of C$4.32, I would expect it to step up these purchases.

3. Capstone Infrastructure Corp (TSX:CSE. OTC:MCQPF).

12/26/2013 Price: C$4.44.   Low Target: C$3.  High Target: C$5.   
Annualized Dividend: C$0.30. 
Current Price: C$4.21.  YTD Total C$ Return: 27.0%.  YTD Total US$ Return: 20.9%

Independent power producer Capstone Infrastructure announced strong second quarter operating results based on higher wind production and increased income from its British water utility, Bristol Water. The results were generally in line with analysts’ forecasts, but Scotiabank increased its price target for the company to C$4.50 from C$4.00 while keeping its «Market Perform» rating.  

Last week, Capstone closed C$76 million financing for its 25-MW Goulais wind farm, which is under construction in Northern Ontario.

In the October 3, 2014 issue of the journal Nature Communications, the researchers report that they’ve succeeded in combining a battery and a solar cell into one hybrid device.

Key to the innovation is a mesh solar panel, which allows air to enter the battery, and a special process for transferring electrons between the solar panel and the battery electrode. Inside the device, light and oxygen enable different parts of the chemical reactions that charge the battery.

The university will license the solar battery to industry, where Yiying Wu, professor of chemistry and biochemistry at Ohio State, says it will help tame the costs of renewable energy.

“The state of the art is to use a solar panel to capture the light, and then use a cheap battery to store the energy,” Wu said. “We’ve integrated both functions into one device. Any time you can do that, you reduce cost.”

He and his students believe that their device brings down costs by 25 percent.

Researchers at The Ohio State University have invented a solar battery — a combination solar cell and battery — which recharges itself using air and light. The design required a solar panel which captured light, but admitted air to the battery. Here, scanning electron microscope images show the solution: nanometer-sized rods of titanium dioxide (larger image) which cover the surface of a piece of titanium gauze (inset). The holes in the gauze are approximately 200 micrometers across, allowing air to enter the battery while the rods gather light. Image courtesy of Yiying Wu, The Ohio State University. 

The invention also solves a longstanding problem in solar energy efficiency, by eliminating the loss of electricity that normally occurs when electrons have to travel between a solar cell and an external battery. Typically, only 80 percent of electrons emerging from a solar cell make it into a battery.

With this new design, light is converted to electrons inside the battery, so nearly 100 percent of the electrons are saved.

The design takes some cues from a battery previously developed by Wu and doctoral student Xiaodi Ren. They invented a high-efficiency air-powered battery that discharges by chemically reacting potassium with oxygen. The design won the $100,000 clean energy prize from the U.S. Department of Energy in 2014, and the researchers formed a technology spinoff called KAir Energy Systems, LLC to develop it.

“Basically, it’s a breathing battery,” Wu said. “It breathes in air when it discharges, and breathes out when it charges.”

For this new study, the researchers wanted to combine a solar panel with a battery similar to the KAir. The challenge was that solar cells are normally made of solid semiconductor panels, which would block air from entering the battery.

Doctoral student Mingzhe Yu designed a permeable mesh solar panel from titanium gauze, a flexible fabric upon which he grew vertical rods of titanium dioxide like blades of grass. Air passes freely through the gauze while the rods capture sunlight.

Normally, connecting a solar cell to a battery would require the use of four electrodes, the researchers explained. Their hybrid design uses only three.

The mesh solar panel forms the first electrode. Beneath, the researchers placed a thin sheet of porous carbon (the second electrode) and a lithium plate (the third electrode). Between the electrodes, they sandwiched layers of electrolyte to carry electrons back and forth.

Here’s how the solar battery works: during charging, light hits the mesh solar panel and creates electrons. Inside the battery, electrons are involved in the chemical decomposition of lithium peroxide into lithium ions and oxygen. The oxygen is released into the air, and the lithium ions are stored in the battery as lithium metal after capturing the electrons.

When the battery discharges, it chemically consumes oxygen from the air to re-form the lithium peroxide.

An iodide additive in the electrolyte acts as a “shuttle” that carries electrons, and transports them between the battery electrode and the mesh solar panel. The use of the additive represents a distinct approach on improving the battery performance and efficiency, the team said.

The mesh belongs to a class of devices called dye-sensitized solar cells, because the researchers used a red dye to tune the wavelength of light it captures.

In tests, they charged and discharged the battery repeatedly, while doctoral student Lu Ma used X-ray photoelectron spectroscopy to analyze how well the electrode materials survived — an indication of battery life.

First they used a ruthenium compound as the red dye, but since the dye was consumed in the light capture, the battery ran out of dye after eight hours of charging and discharging — too short a lifetime. So they turned to a dark red semiconductor that wouldn’t be consumed: hematite, or iron oxide — more commonly called rust.

Coating the mesh with rust enabled the battery to charge from sunlight while retaining its red color. Based on early tests, Wu and his team think that the solar battery’s lifetime will be comparable to rechargeable batteries already on the market.

The U.S. Department of Energy funds this project, which will continue as the researchers explore ways to enhance the solar battery’s performance with new materials.