Energy and Infrastructure Investment Banking and Business Development

Brazil jumps to number 5 spot in foreign investment with Renewable Energy in a starring role.

Brazil is the fifth place ranking in global foreign productive investment. That is quite a feat as in 2010 Brazil jumped 10 places in the ranking. As Europe and the US stagnate, high growth markets in secure emerging markets are attracting more attention.

In 2010, the country received U.S. $ 48 billion from abroad and advanced ten positions. With a record inflow of $ 48.4 billion last year in foreign productive investments, Brazil has advanced ten positions and became the fifth in a ranking of the United Nations Conference on Trade and Development (UNCTAD). The country is second only to the United States, China, Hong Kong and Belgium as the world's largest investment destination. Among the attractions of the country, are World Cup, Olympics, Renewable Energies and oil. Last year, the first time, emerging countries outperformed the wealthiest countries in raising this money. The year also marked the resumption of the global flow of resources to production after the 2008 crisis.

 FDI (Foreign Direct Investments) in Brazil increased 84.6% in 2010 compared to the previous year, totaling U.S. $ 48.4 billion, according to the study of the 2011 World Investment UNCTAD. In 2009, due to the international economic crisis, Brazil suffered a 42% decrease in the volume of FDI, a drop above the world average that year. In 2010, the United States once again lead the ranking of the UNCTAD study, with inflows of U.S. $ 228 billion in foreign direct investment, representing an increase of 49%.
China and Hong Kong are classified differently and occupy respectively the second and third places, with FDI of U.S. $ 106 billion and U.S. $ 69 billion. In the fourth, was Belgium, with $ 62 billion in investments.

The jump in FDI in Brazil in 2010 was driven by the entry of more than $ 15 billion in December, of which $ 7.1 billion relate to the sale of 40% of the Brazilian unit of Spanish company Repsol to the Chinese oil company Sinopec.

Biodiesel comes to the forefront

Biodiesel attracts foreign investments from both the big and small such as is the case to enhance production, Vital Planet, a small Dutch company with only a year of operation wants to jump into the biofuels market and is getting ready to start production testing in two weeks in the country. The raw materials used by the company will be 90 percent soybean and 5 percent anhydrous alcohol. The company is getting ready to start testing to produce 25,000 liters of biofuel per day (750,000 per month) in a pilot plant in Campos dos Goytacazes, in the state of Rio de Janeiro. A R$ 13 million investment will be made in the plant and a facility for equipment construction.

Evolution of biodiesel production in Brazil. Soure:MME

The biodiesel blending in diesel fuel in Brazil is already beginning to have positive effect on the Brazilian trade balance. Last year, the 5% consumption of the product, as required by the government (program known as B5) accounted for approximately 30% of the total regular diesel imported by Brazil to meet demand in the country. In 2009, this proportion reached 50%, but imports of diesel were much lower, due to the global financial crisis.

The federal government is stimulation the production of biodiesel with high guaranteed purchase prices reaching as much as R$2.30 per liter. The expectation is that the dependence on diesel imports in the country will gradually decrease down to zero over the next six years, whereas the blend of biodiesel fuel will increase to 10% in 2014 and reach 20% in 2020, plus the installation of new refineries in Brazil by Petrobras up to 2017, according to the state.

Last year, the consumption of biodiesel amounted to 2.5 billion gallons, up 56% over 2009, reflecting the mandatory use of 5% of the product in regular diesel established by the government in early 2010, said Sergio Beltran, executive director of Ubrabio (Brazilian Biodiesel Union). Because of this policy, the country failed to directly import the same volume of diesel consumed, avoiding direct spending around of US$ 1.4 billion. By 2008, the mixture was optional and started with 2% in 2005.

Solar finally begins to take off in a country which has enormous solar resources

A flagship solar power plant project arouses the interest of domestic and foreign companies as Brazil prepares for new legislation and subsidies in photovoltaic.

President of Abeama attended a meeting hosted by Eletrobrás in Florianopolis last month to discuss the project Megawatt Solar, and commented that the time is coming to start the construction of a photovoltaic plant in Brazil.

Representatives of about 30 national and foreign companies participated, on Wednesday, July 22, the meeting hosted by Eletrosul Central Electric SA - a subsidiary of Eletrobras - to present the technical details of the Megawatt Solar - the largest project of solar photovoltaic power generation integrated with building underway in Brazil. The meeting held at the state, in Florianópolis (SC), before the release of the notice of international competition to be published in coming days.

The initiative is Eletrosul pioneer in Brazil, considering the size of the plant - one megawatt of installed capacity - the proposed model - BIPV system ((abbreviation for the building integrated photovoltaics) - and the form of energy trading, which will be offered at auction on the open market. Just the novelty of the proposal is that the state decided to promote the technical discussion with companies who have expertise in photovoltaic generation.

Most of the companies represented have developed solar PV projects in other countries. They are manufacturers of Germany, Spain, Portugal, France, United States, Japan and China. Brazilian companies are also interested in participating in the bidding Megawatt Solar. On Tuesday (21), company representatives toured the headquarters facilities Eletrosul to know the place for the solar plant.

Eletrosul headquarters complex in Florianopolis. The blue areas are covered with photovoltaic modules, and P2 in the area with a solar generator 12kWp has been in operation since February this year. The largest blue area corresponds to coverage of the headquarters of Eletrosul.

The Project - With Megawatt Solar Eletrosul, Brazil wants to encourage the expansion of solar energy in Brazil and other Latin American countries, where the raw material for photovoltaic generation - solar radiation - is abundant. The plant will cost approximately $ 10 million, partially financed by the German promotional bank KfW.  Other flagship projects such as covering the football stadiums with PV panels are planned for the upcoming World Cup and the Olympics are also garnering support for the use of solar photovoltaic energy in many of the installations.

Contrary to the argument that solar energy is too expensive to be implemented in Brazil, today, without any subsidy or tax exemption until the new law to enter into effect next January, the photovoltaic generation is already economically viable in some regions of the country. This is the case of Belo Horizonte, where favorable weather conditions combined with higher electricity rates in the country (U.S. $ 58 per kilowatt hour) cause the production cost of solar energy be a few cents above what is provided today to local consumers. The prospect of an adjustment in the rate of 11%, as authorized by Aneel, will make solar energy more competitive and foreign investment will be sure to flow in.

Wind continues to advance very strongly

As the construction of hydroelectric and nuclear plants are increasingly questioned in the country, renewable sources of energy such as wind, biomass and solar, are gaining space in Brazil.
Data from the Brazilian Wind Energy Association (ABEEólica), for example, shows that by 2013, $ 25 billion will be invested in the country in 141 projects in the sector, spread through the states of Ceara, Rio Grande do Norte, Sergipe, Bahia and Rio Grande do Sul. The chairman of the Energy Research Company (EPE), Maurício Tolmasquim, said that within two years, the country will produce 5,272 megawatts (MW) of wind power, a major breakthrough considering that in 2005, Brazil generated only 29 MW.

 Foreigners invest in renewable sources in Brazil

Currently, the capacity of wind power generation in Brazil is 928.9 MW. As president of the EPE, the federal government agency, renewable energy accounts today for approximately 8% (mostly hydroelectric) of the electricity produced in the country and in ten years should reach 14%. Just CPFL Renewable Energy is investing $ 5.8 billion in the sector. Renova Energy already plans to invest R $ 1.2 billion in various projects, mainly wind farms.

Wind farm in the state of Rio Grande do Norte

Wind energy will reduce the operation of thermal power plants with natural gas which are activated to complement the hydro - Tolmasquim said.

ABEEólica's president, Ricardo Simões, has recently said that the energy produced from wind currently accounts for 0.7% of the country's electricity, but in 2013 this percentage will change to 4.3%. He said many foreign manufacturers are begining to install equipment and plants in Brazil, which will allow a gradual reduction of costs in the industry.

Who hasn’t leaped on the massive potential Brazilian biofuels has to offer? Perhaps  biofuels are the international energy policy du jour. Or maybe with a projected 60 billion gallon global market by 2022, capacity depending, we’re on to a winner? Among the nations turning their attentions  to the sector is the European Union (EU). News from the EU commits seven  of the 10 per cent renewable energy generation target for 2020—under  the Renewable Energy Directive (RED)—to biofuels and mandates in the  U.S. and China hold equally hefty swings in the same direction. However  it is nigh-on impossible to talk biofuels without Brazil, whose  estimated 2020 fuel demand total of 16 billion gallons is on schedule to  see eight billion gallons stumped up through ethanol fuels.

Biodiesel in Brazil Becomes a Booming Business as Oil Reserves Dwindle

Source: Brasil Biodiesel

As world oil reserves dwindle, some say we have reach the dreaded “Peak Oil” syndrome, many new business opportunities take shape as necessity is the mother of invention. Many opportunities to cash in on this high growth market are available ranging from developers with pipelines of refineries to be built, agricultural producers with until now useless land, to independent distributors and exporters. 

Biodiesel is not an isolated business in the global economy and many factors contribute to or hinder its development. Therefore, although the Brazilian government has created a very positive regulatory environment, before starting a business involving biodiesel, it is necessary to study the macroeconomic forces that interfere in this business.

The country has great advantages in its geography agronomists, for being in a tropical region, with high solar radiation figures and average annual temperatures. Associated with water availability and regularity of rainfall, it is the country with the greatest potential for renewable energy production.

But biodiesel does not come from treating crops and biomass, new technologies based on Gas Plasma Arc processes and Thermolysis are being used to sole another problem by turning Municipal Solid Waste in biodiesel. Even smaller and remote cities are building plants of this nature to get rid of the waste and make money on the private initiatives investing in building these facilities.

Brazil has explored less than a third of its arable land, which is the greatest frontier for agricultural expansion in the world. The potential is about 150 million hectares, 90 million related to new frontiers, and another 60 related to grazing land that can be converted to agricultural use in the short term. The government Biodiesel Program aims to use only land unsuitable for growing food.

There is also a wide variety of options for biodiesel production, such as the babassu palm and in the north, soy, sunflower and groundnut in the south, southeast and midwest, and castor oil, which besides being the best of the semi-arid northeast, is also presented as an alternative to the other regions of the country.

The synergy between the oilseed complex and the ethanol industry brings the need for increased production of alcohol. Biodiesel production consumes ethyl alcohol by transesterification by ethylic route, which generates increased demand for the product. Consequently, the biodiesel project also encourages the development of this sector, generating new investments, employment and income.

The ANP (Agência Nacional do Petróleo) estimates that the current Brazilian production of biodiesel is the order of 176 million liters annually.

The current level of production is a major challenge to achieving the goals established under the National Program of Biodiesel Production and Use, which will require approximately 750 ML in its initial phase. That is, the current production capacity meets only 17% of demand, considering the mix B2. However, with the approval of plants whose request Moving in ANP, the ability to match production with demand forecast for 2006. This capacity will be tripled by 2012, with the need of adding 5% biodiesel to biodiesel.                                                   

In order to give perspective to the prospect of expanding biodiesel production in Brazil, projections were made for the period 2005 to 2035. Considere the following basic official assumptions to make a projection:

•  Geometric growth rate of consumption of diesel oil substitutes, or 3.5% pa;
•  Blend of biodiesel to diesel by 2% starting and ending at 40%;
•  Oil productivity starting at 600 kg / ha and ending in 5000 kg ha-1;
•  It was considered that large plant that processes over 100 kt.ano-1;
•  Portion allocated to large production plants 80%;
•  Crackers installed in small communities or rural properties reaching 100,000 at the end of the period, with average production of 250 L.dia-1;

The figure shows that Brazil could produce only for the internal market, an approximate volume of 50 GL, the largest share being produced by transesterification (80%) and the remainder by cracking. The production by transesterification meet the large wholesale market, intended to blend with biodieseldiesel, the supply of fleet owners or consumers interested in increasing the proportion of biodiesel in biodiesel.

It is estimated that the production of biodiesel for external and internal markets at the end of the period, is equivalent (see graph above). However, in the first 10 years, the market will absorb the entire production. Throughout the domestic and foreign markets, the ethanolic transesterification route account for 90% of biodiesel produced. In this scenario, the end of the period, there will be a demand for 6 GL of ethanol and glycerol production 4mt, highlighting the potential for integration of chains with the production of biodiesel.

Investment opportunities abound in Brazil…WTE, Biomass, bio-fuels, wind, CSP, biotech and even IT.

The flourishing economy, government subsidies, development bank loans, a good base of technology startups and a highly skilled labor force are creating the perfect cultivating environment for a plethora of opportunities in the country.

The most recent example is the French retail distribution giant, Carrefour's board approval on Monday July 4^th, a controversial plan to merge its Brazilian assets with Casino's Brazilian partner, Pão de Açúcar in what some consider a takeover by the Brazilian company with the help of the state owned development bank BNDES.

Brazil is the country with the largest economic and social differences between classes in the world with the classes AB and DE the only ones growing. This trend is reversing however and since 2004 and the middle class “C” is now growing at an accelerated pace. This is creating huge demand in many areas of the economy.  In an interview last week in Belo Horizonte with economics professor at Gerenciais da PUC Minas, Ricardo Fonseca, the author was told that “40 million people will enter class C and 10 million will migrate to A and B in the next ten years”

 

Target technologies and regions

Waste to Energy

Many see WTE technology as the Redeemer of Brazil's waste legacy. In 2014 Brazil will host the FIFA World Cup followed by the Summer Olympic Games in 2016. As a result a huge amount of investment is being spent, yet waste management improvements have still lacked funds and interest. The potential and interest of institutions in cleaning up the country for waste to energy technologies is flourishing in such a situation help by a strong push by popular demand to present a clean and modern country. Opportunities abound as even small to midsized cities are looking for investors as well as technology companies to bring the necessary capital and know-how.

Strong evidence of this can be seen in the new Brazilian policy on Solid Waste Management, law 12.305 signed by former President Lula on August 2, 2010 also known by its Portuguese abbreviation, PNRS. It took 20 years of discussions in Congress. And after trying to please many different lobbies, resulted in a very misleading piece of work containing mistakes that should be immediately corrected if it is to be taken seriously by society

Wind

Brazil’s national energy research agency Empresa de Pesquisa Energetica said that wind energy accounts for the largest share of the 23 gigawatts registered for two auctions for power contracts scheduled in July. E.P.E. said 429 of the 568 projects registered in Brazil’s A-3 and reserve power tenders were wind farms, which had a combined capacity of 11 GW. The bulk of the wind projects are spread between the states of Rio Grande du Norte, Rio Grande du Sul, Ceare and Bahia.

 

Concentrated Solar Power (CSP)

National Agency for Electric Energy – ANEEL: Regulation The Brazilian power industry is regulated by Agência Nacional de Energia Elétrica or the National Agency for Electric Energy (“ANEEL”), an independent federal regulatory agency. ANEEL’s primary responsibility is to regulate and supervise the power industry in line with the policy to be dictated by the MME and to respond to matters which are delegated to it by the GoB and by the MME. ANEEL’s current responsibilities include, among others: (i) administering concessions for electricity generation, transmission and distribution activities, including the approval of electricity tariffs; (ii) enacting regulations for the electricity industry; (iii) implementing and regulating the exploitation of energy sources, including the use of hydroelectric energy; (iv) promoting the public bidding process for new concessions; (v) settling administrative disputes among electricity generation entities and electricity purchasers; and (vi) defining the criteria and methodology for the determination of transmission tariffs. The agency is lead by a General Director and four Directors. Currently, Mr. Nelson Hubner is the General Director chosen by the President.

For the first time CSP has been included in the ANEEL auction process and the next one is due to be held at the end of next August.

Small Hydroelectric

The Brazilian power system is a predominantly hydroelectric system with total installed capacity of 99 GW as of the first quarter of 2009 and average demand of 59 GW in 2009. Historically, Brazil has relied on its hydroelectric power generation to meet its power demand, and given that only 28% of its hydroelectric potential has been exploited, hydroelectric power generation will continue to be the predominant source of power in Brazil in the long term.

Bio-Technology

Brazil's biotech boom. Ten years ago, Brazilian bioscience was transformed by a bold initiative. Scientists and the government must develop and extend the progress that has paid off.

 

Brazilian biotechnology has matured to the point at which its scientists are players on the international stage. And FAPESP is still promoting big ideas, including a new programme to pump money into a broad portfolio of bioenergy research even as the Ministry of Science and Technology constructs a bioethanol research centre; both initiatives seek to build on Brazil's lead in this field. FAPESP is also working to overcome one of the biggest impediments to progress — a lack of doctoral researchers — by encouraging scientists to fill the gaps with young stars from the United States and Europe, part of a broader effort to internationalize Brazilian science.

Information Technology

Brasil IT – The New Upcoming Global IT Power and its New Go-To-Market Identity.

Brazil, in the last 5 years, has been diligently working very hard to promote and position the country as world class IT player, with compatible delivery models that are capable to attend to most demanding world organizations.

From just one more country in the general crowd, Brazil is strongly making its way to become at least 
part of a top 5 list. In every single point of contact, the representatives for Brasil IT made sure that they demonstrated its unique value proposition, based on a highly technically skilled workforce combined with deep business expertise, which together with its unique “cultural DNA”, made for the best alternative that could “hit the ground running” and provide a great opportunity and time to market payback.

Banking policy

The Brazilian Development Bank (BNDES) is the main financing agent for development in Brazil. Since its foundation, in 1952, the BNDES has played a fundamental role in stimulating the expansion of industry and infrastructure in the country. Over the course of the Bank’s history, its operations have evolved in accordance with the Brazilian socio-economic challenges, and now they include support for exports, technological innovation, sustainable socio-environmental development and the modernization of public administration. The BNDES has three integral subsidiaries: FINAME, BNDESPAR and BNDES Limited. Together, the four companies comprise the BNDES System. A specialized development bank Banco do Nordeste also plays a key role in investments in the northeastern part of the country which is the most disfavored in the country.

The author met with high officials in Banco de Nordeste headquartered in the booming town of Montes Claros in the middle of the state of Minas Gerais.  In the HQ of the state owned development bank he was told last week that they had in excess of 500 M€ to allocate in financing for energy and infrastructure projects before the end of the year in the Northeastern region of the country under good terms with interest rates averaging 7-8%, loan terms of 15 years and loan rations of up to 75%.

Waste to Energy is taking off around the world…but what is the best technology per investment dollar?

Waste comes in many forms, municipal solid waste, biomass waste, industrial wastes etc. and in a consumer based society was considered a bothersome collateral which you either dumped into a landfill, incinerated or cleaned up to minimum requirements and injected into the nearest water body.

The production of waste, especially with many countries emerging into powerful economies, has become a problem of such dimensions that something definite has to be done. Waste is causing unbearable pollution and earthquakes and mudslides uncover landfills under housing developments and seepage contaminates water and agricultural land and gases generated cause foul odors and health problems. Worldwide indiscriminate incineration is also contributing substantially to the climate change.

Alas – desperation is the mother of invention, but it seems that as industry and governments have discovered that in solving the problem there is much money to be made the race is on to conquer a new and lucrative market of waste to energy.

Many new technologies are being developed, some combining waste treatment processes in the same plant to produce a variety of useful products such as electrical energy, diesel, heat, carbon black and other recyclable materials. The feedstock is equally varied and the different technologies are combined in a modular fashion depending on the type of waste that is available at each particular location to get the most out of it and at the same.

Municipal Solid Waste

Waste-to-energy (WTE) is the process of creating energy in the form of electricity or heat from the conversion of a waste resource. WTE is a form of energy recovery. Most WTE processes produce electricity directly through combustion (incineration), but a gasification process produces a combustible fuel gas consisting mostly of methane, carbon monoxide and hydrogen.

Latest estimates show that there were 431 WTE plants in Europe and 89 in the United States (2004). The U.S. recycles 14 percent of its trash in WTE plants. Denmark, on the other hand, reuses 54 percent.

Gasification WTE plants work very much like natural gas fired power plants. The difference is the fuel. Waste-to-energy plants use syngas made from garbage—not natural gas— to fire a gas turbine. The same steps are used to make electricity in a waste-to-energy plant as in a natural gas fired power plant, this method is known as “combined cycle”:

•    The fuel is heated, releasing gas.
•    The gas is combusted in a gas turbine
•    The turbine turns a generator to produce electricity
•    The waste heat from the turbine turns water into steam.
•    The high-pressure steam turns the blades of a steam turbine which turns a generator to produce electricity.
•    A utility company sends the electricity along power lines to homes, schools, and businesses.

Thermolysis Process

The principle of thermolysis is based on the decomposition of organic matter into solid residue and combustible gas by using heat at 600°C in the absence of oxygen. After treatment, the volume of sludge is reduced by at least 10.

Unlike incineration or gasification, thermolysis optimises energy production. The gas produced, which can be recycled to treat new sludge, allows the plant to meet its own energy requirements. Moreover, there is no oxidation reaction (combustion) of the matter, only decomposition, enabling a notable reduction in fumes and harmful volatile elements. Pollutants such as heavy metals, when present, are trapped then stabilised. They can then be stored without causing a nuisance for the environment.

The KUG Technology

Thermal Conversion by Gasification

The Pyrolyzer system uses a slow pyrolysis method developed by the German company KUG GmbH. It is an innovative state of the art pyrolysis process for the gasification of carbon based waste materials to produce fuel gas. The fuel gas (PyroGasTM) reaches a calorific value of 5 to 14 KWh/m3 or 500 to 1400 BTU/ft³ depending on type of feedstock. PyroGasTM made with the KUG process can be used interchangeably with natural gas or for highly efficient, extremely low-emission power generation in gas engines, gas turbines, and combined cycle systems. Alternatively, it can also be used as feedstock for liquid transportation fuels production or separated into Hydrogen and Liquid Natural Gas (LNG).

  Characteristics of the KUG Thermolysis Process

• Gas production: 820 m3 per metric ton feedstock material.
•  Heating value: ~500 - 1400 BTU/ft³, depending on the feedstock.
• Very low emissions (50% below German Environmental Air Emission Standards).
• Adjustable to various feedstocks, including biomass, wood waste, MSW, rubber and plastics.

Innovations of the KUG GmbH Process

• Multistage bi-directional gasification reaction is controlled kinetically on a catalytic carbon bed.
• Improved heat transfer by indirect heating using the carrier effect.
• Reaction occurs in the absence of oxygen avoiding Dioxins and Furans.
• Bi-directional flow of the materials avoiding short cuts in the gas stream ensuring complete gasification.
• Multistage gas treatments using newly patented technologies.
• Tars treated internally by additional integrated cracking reactors
• Vitrified slag with minimized residues.

Advantages of the KUG Pyrolysis Process
•    Fuel gas with quality standards comparable to natural gas in purity and BTU value.
•    Very low emissions.
•    High thermal efficiency (70 - 85%).
•    Efficient separation and processing of liquid aromatic oils and tars with conversion into additional fuel gas.

The integrated Waste / Bio-Mass to energy plant

Bio Mass can contribute to a huge extend for covering the fuel and energy demand.  Each country has a treasure of not-used sources of bio mass, such as waste from rice peeling, sugar cane or leftovers from oil mills, straw, sawdust, wood waste. Statistically only 50% of the produced food reaches the table of the consumer. The rest is sorted out during the supply chain by not meeting quality standards, exceeding legal shelf times or other reasons. These materials can be turned into fuel and energy without having any impact on the alimentation of the population.

Catalytic Pressure-less Depolarization

Recyclable waste is sorted out and sent into the specific recycling processes. For the left over passive and non-toxic ashes – in lack of local production that could use those - a final deposit is created following international standards.

Green Power Inc (GPI) claims to have developed a method of inexpensively converting biomass and household waste into high grade diesel fuel, a process they call "NanoDiesel" that could go a long way toward solving the world's energy and waste problems at the same time, without upsetting the CO2 balance.

In March of 2008, GPI completed their first production prototype that is said to be capable of processing 100 tons of municipal and other waste per day in a low heat and low pressure, proprietary catalytic system, converting the feedstock into high grade fuel, including diesel, kerosene, and fuel oil; as well as electricity and an asphalt component.

The preparation of incoming waste stream includes chopping, extraction of metals, glass, and sand, so that approximately 2/3 of the feedstock is able to be run through the unit to produce fuel and electricity.

The key to the system is the catalyst (trade secret) which is said to be made from environmentally benign components.

GPI says a 100 ton/day facility will employ approximately 5 people per shift, in three shifts per day. Methane generated in the process is used to run a generator to power the facility, with 1 Megawatt excess available for distribution.

They claim that the raw costs of producing the diesel is about $0.60/gallon. Covering capitalization, maintenance, marketing, decommissioning and other costs will place the actual cost much higher, but still competitive with fossil-based fuel.

The conversion of input waste to fuel output is said to be around 25-30% efficient so that one ton of input waste will produce around 120 gallons (~3.8 barrels) of diesel. Materials that can be converted to diesel fuel through this process include plastics (including PVCs), rubber, waste oils, agricultural wastes (food and animal waste) and wood. The diesel produced is not biodiesel, but purportedly a pure hydrocarbon diesel, equivalent to what comes out of the oil fields.

Other products that can be produced in a combined plant are:

•    Recyclable materials (metals and glass)
•    Synthetic Diesel
•    Electrical Power
•    Fertilizer and manure for agriculture
•    Water for irrigation
•    Neutral ash for industrial / construction / agriculture

How can I get my deal structured and marketed by a pro without spending s small fortune? What are the trends for sourcing and advising on new energy deals?

There has been a pendulum swinging back to advisory-only firms as private equity funds, companies and even developers are turning to boutique investment banks. This is evidenced by data provided by the market research firms such as Bloomberg and Freeman Consulting to mention a few.

The reasons are several and weigh heavy; specialization and independence (no balance sheet related conflicts) are the major reasons but many times an international reach, local industry and financial contacts are also high in the list. Many such boutique firms also include market entry advising services that include strategic local investors and partners, JVs and alliances in addition to sourcing the deals. Many are just not seeing the justification of paying the big name’s big fees.

Market trends

In a recent article published early this month by Bloomberg it was stated that “European companies are increasingly favoring independent advice from boutique investment banking firms. The firms accounted for 37 percent of fees in the region last year, earning about $2.2 billion, according to New York-based research firm Freeman Consulting. That’s up from a 26 percent market- share in 2008 and 30 percent in 2009, the data shows.”

Robert Leitao, Rothschild’s head of U.K. Global Financial Advisory, said in an interview in London before a Vivendi purchase was announced. The trend has “been accelerated by the unraveling of the crisis and the fact that there are stresses and strains within the universal banking model, which aren’t always client friendly.”

“Conflicts frequently develop and when a full-service bank is retained on a deal, the team tends to push the client to do that deal as they may be conflicted on the next,” said Keevil. Independent firms “also don’t have to worry about quarterly earnings as much. They are less likely to act as guns for hire and more likely to advise a client not to do something that would be harmful to its long-term interests.”

Independent Advisors

In a recent interview, Scott Bok, chief executive officer of Greenhill Hill & Co stated that small and large companies, developers and even corporate boards need independent advisers especially when dealing with private-equity funds as potential buyers because the funds generate so much lucrative business for the “bulge bracket banks”.

“It’s hard to rely on the large investment banks to vigorously represent your interests against those funds when those funds are literally their most important clients,” said Bok, who added that they were already expanding to take advantage of the need for independent advice.
While it’s going to be “a lot harder now,” investment bankers at the largest banks and securities firms will still angle for deals in which they can play a role on both sides because the payoff can be large, said Smith, a former partner at Goldman Sachs Group Inc.

The renewable energy and cleantech markets have experienced challenges over the last several years. The state of the global economy, inconsistent national positions on environmental policies, the scarcity of private funding to develop sustainable technologies, and obtaining the capital to mature the commercial side of the market have presented significant hurdles across these sectors.

Although investments and boutique M&A in the sustainable industries have lagged, this is about to change. The rate of financing components, technological innovation and policy changes that impact the sustainable industries space has been astounding over the past five years and bulge bracket and generalist firms cannot adapt quickly enough on the specialized knowledge required. In the coming months, we believe the clean energy market landscape will be marked by significant investment activity from Fortune 100 companies, a string of mergers and acquisitions, and investment in the development of new technologies for transforming waste to energy, natural gas extraction, and production.

Boutique Investment Banks advantages

Possibly the greatest advantages of working with boutique investment banks are the high focus and specialization and the much more competitive fees charged. Following are the principle services offered by these firms which many times are success fee oriented with reduced retainer fees.
Identifying required agreements.

Probabilistic Analysis of Forcatsed Returns

 

Boutique investment banks have substantial knowledge regarding what is required from an investor’s standpoint regarding a project’s legal aspects. Here, all documentationn and contracts that need to be arranged are done so independently from an investor’s perspective. The way is prepared in reducing the perceived risk in securing supplies, land lease, environmental reports, PPA’s and so forth which are all part of any investors DD and as of today none are perceived as existing in this project.

Ensure bankability

To ensure that agreements and contracts are attractive it’s important to build them “risk” proof. This is done by hedging currencies, forcing contract partners to carry extensive liability cover, remove any and all outside factors that might occur and impact the project negatively. Bauhaus will provide the mechanisms by which most risks will adequately dealt with.

Profiling and screening of possible investors

Already at this phase it’s important to start discussions with intended and potential investors. This gives the project valuable input regarding other factors which need to be covered and it also builds the project to be ready from day 1. Hence limiting time risks and also shortening the time to market so that once the elections are over the project can take off.

 
Risk analysis and management

The boutique investment bank would run different scenario data models to evaluate each risk such as currency risk, country risk, supply risk, management risk, time risk and all other financial risks with a great enough potential to negatively impact on the project.  We have the knowledge and the necessary tools to run complex simulations and hence limit any risk exposure or at least create enough knowledge to ensure that the risks are known factors and can eliminated if possible.

Correct and rebuild the financial information

We have already identified areas that need to be corrected and more will follow when we run our complete case study. In the screening process, risk analyses and DD process we will gain knowledge as to how the material should be presented to ensure the highest possible success rate.

Prearranging a risk elimination “tool box”

With the vast amount of information created in the overall process we can prearrange Insurances, Liability cover etc. We will make certain that all agreements are written in a way which limits the risks and also arrange binding quotas to remove risks were possible.

This together with the technical and physical breakdown will serve to create a platform from which the project can be realized in a timely fashion. It will provide the investor with confidence that every corner has been looked at and all holes have been filled.

I’ve done all the homework and the investor road-show, why can’t I still get my new energy project (or company) funded?

When you have poured over your investor memorandum and have had an exhausting investor road show with your Energy project or cleantech company and still can’t get the funding, then what do you do? Company executives tend to blame the credit crunch but this is simply not true. The year 2010 was a record year where over $200bn was invested in 2010 in Clean Energy and related industries worldwide and the forecast for 2011 is in excess of $240bn.

Market Investment facts and figures.

The report “G-20 CLEAN ENERGY FACTBOOK” recently published by The Clean Energy Economy and the PEW Trust heralds the dawning of a new worldwide industry—clean energy—which has experienced investment growth of 230 percent since 2005. Demonstrating its strength, the clean energy sector declined only 6.6 percent in 2009 despite the worst financial downturn in over half a century. In 2009, $162 billion was invested in clean energy around the world. Rebounding from a sharp downturn in the last quarter of 2008 and first quarter of 2009, clean energy investments in the G-20 averaged a robust $32 billion in each of the last three quarters of 2009. In an encouraging sign for the future, many governments prioritized clean energy within economic recovery funding, the bulk of which will reach innovators, businesses and installers in 2010 and 2011.

 

Download G-20 Report Investment 2010

The Bloomberg NEF “Global Trends in Sustainable Energy Investment 2010” states that “investment in sustainable energy reached $162 billion in the year 2009, the second highest figure ever, after 2008’s revised $173 billion (see Figure 7 in the report). Although the 2009 figure was down by 7%, it was higher than the $157 billion achieved in 2007, at the height of the world economic boom, and it was nearly four times the 2004 total of $46 billion. The setback in sustainable energy investment was relatively mild given the severity of the world economic downturn and the caution that the banking crisis and stock market fall created among many types of investors. The quarterly pattern for new financial investment in clean

energy (defined as total investment minus corporate and government research and development and small-scale projects) shows that the first quarter of 2009 marked the bottom for the clean energy sector.” But the sector report shows mild growth in 2010 and forecasts even stronger growth for 2011.

 

 Download NEF global investments trends_2010

 If there’s so much money pouring into New Energy, what is my problem?

Most funds and investment sources are literally buried under mountains of proposals, investment memorandums and requests for funding. With a global economy and an online world this is compounded a hundredfold and is similar to looking for a job where your CV is just a drop in the ocean where even if it surfaces on someone’s desk it is hard to distinguish it from the hundreds of others on the same desk.

Even if your Investment Memorandum (IM) has been done by a financial expert it’s still probably going to have the same textbook content and bland development that everyone else’s IM has. Even if you are lucky enough to get through the elevator pitch, into the board room and through your presentation, 5 minutes after you leave it is muddled in the fund manager’s mind especially after the next 15 presentations he sees that same day.

The secrets to getting funding

Business is still done by people

Regardless of the no doubt useful electronic world, deals are still done by people and emotions and relationships still normally make the final call on the project to get funded. If you are a project owner or company executive looking for funding use an investment firm with expertise in your particular field, they are much more likely to have personal relationships with fund managers that will place closer attention to investment requests from these sources than others.

Remember that the information overload is also a problem with the funding sources and many are even using specific firms to source projects, do the first level analysis and due diligence and weed out the ordinary investments from the truly attractive ones that merit their attention.

Profile your investor targets

Make sure that your business objectives are very clear: from what you company mission is to what kind of exit strategy you will be offering the investor and whether you want a strategic investor or a purely financial one. Technology preferences, geographical locations, hurdle rates, typical investment ranges, share ownership preferences and many other investment criteria must be known before you even make the phone call to an investment source. If this is not done up front you will waste a lot of time money and over-shop your investment proposal. The investment community is a closely knit one and you can run the danger of closing doors before you even knock on them.

Proper Valuation including Synergy

The persistence and the magnitude of the overvaluation comes from two problems. The first is that the process of setting valuation is flawed, with those that are richly compensated by the closing of the transaction (developer or executives) also being responsible for analyzing the level of the valuation itself. Hubris – The managers in searching for funds make mistakes in assessing the company values and their pride prevents them from admitting these mistakes. Overconfidence – The same overconfidence that leads managers to overestimate cash flows on conventional capital budgeting projects manifests itself in valuations, perhaps in its most virulent form. Anchoring and framing – When negotiating a valuation, both the firms managers and the investor compare the valuation to reference points which are often unrelated to the intrinsic value. Synergy – Quantify the synergy produced by specific events or situations according to the type of investor coming on board and include it in the valuation in a comprehensive way.

Quantify your Risk Analysis

The things that investor hate the most is risk. Of course there is no such thing as a riskless investment (especially nowadays). But if a risky investment, which provides the proper hurdle rate, is not correctly handled, mitigated and numerically analyzed, the investor will close the IM and walk away – it is simply not his job to do this analysis for you. You are the one who has to prove without a shadow of a doubt that your investment has been thoroughly analyzed, hedged and has contingency plans.

 

While one cannot make uncertainty disappear, you can consider ways in which you can get a better handle on how a project’s value will change as the situation changes. There are four approaches for dealing with uncertainty. The first and simplest is sensitivity analysis where one can ask what if questions about key variables to estimate how much room for error the project has on each one. The second is scenario analysis , where you develop a few most likely scenarios and a few less likely ones and compute the value of the project under each one. The third approach is decision trees, designed for multistage investments, where you evaluate the probabilities of success and failure for each stage and the consequences for the final value. The last approach is simulation where the probabilities distributions are estimated for each input variable rather than expected values. All this requires specialized knowledge, reference databases and powerful software which only expert firms have and know how to apply.

All of this work and analysis has to be done up front and the numerical outcome may force you to change your initial business plan in order for it to really become attarctive.

Brazil is an investment attraction and not just in energy. What are the other hot spots?

One of the world's hottest destinations for investment, Brazil is also creating record numbers of jobs. Government figures point to 2.52 million jobs in 2010 with 3 million expected this year.

Brazil's investment potential recently led the Daily Mail Investment Extra to describe it as "a hot spot for those seeking big returns". Brazil is currently the world's eighth largest economy and one of the fastest growing. Thanks to massive sums of foreign and domestic investment, Brazil saw GDP growth in excess of 7% in 2010, the fastest expansion for the last 20 years.

The Economist Intelligence Unit is predicting that in 2011 Brazil would move ahead of Italy into seventh place in the ranking of the largest world economies with a GDP of US$2 billion. Among the reasons for the changes in the ranking of the largest economies in the near future are the advance of the emerging economies that were not drastically affected by the 2008 crisis which left Europe and the USA with modest growth which is expected to continue in Europe until at least 2012 according with Negocios (in Portuguese). However, during the past years since the crisis, Brazil successfully committed itself to fiscal stability and responsible policies that encouraged investment and a large domestic demand. Additionally, the Brazilian economy is benefiting from the strong demand for commodities and raw materials from China. Another important factor strengthening the situation of Brazil and other emerging economies has been the currency appreciation against the euro and the dollar.

Housing (ecological)

In meetings with top official from Banco do Brasil, Bauhaus Capital Partners was told that approximately “45 million people would be joining the middle in class in the country in the next ten years alone”. This creates tremendous demand and pressure for any requirement on any type of infrastructure and energy is no exception. The same officials told Bauhaus that they had R$150bn ready to invest but were lacking in projects from Brazilian entrepreneurs.

The administration is regulation for controlled growth, not only to keep inflation in check, but also on
other fronts such as keeping large growth in an environmentally friendly path and not destroying an also large foreign currency generator as is the eco-tourism and also “well intended” political movements fostered by public support.

The Banco do Barsil currently has a share of around 20% of the Brazilian housing market and plans to expand this share further during 2011. The Bank of Brazil has funds to the value of around R$7 billion for investment in Brazilian real estate and has already reached contractual agreements with 16 major property developers. The structural bank BNDES is also very active in the area with large funds available to subsidize infrastructure and energy projects.

Minha Casa Minha Vida, one of the world’s most ambitious social housing programs, aims to build 3 million homes by the end of 2014 and reduce the housing shortfall for low-income Brazilians by almost 40%. Since its start in late 2009, the program has been hugely successful and is heavily over-subscribed throughout Brazil.

With a government budget of R$105.7 billion, Minha Casa Minha Vida is solely financed by the government-owned Caixa bank. The largest public bank in Latin America, Caixa provides both funds for developers of Minha Casa Minha Vida projects and mortgages for homeowners.

Brazil Drawing Foreign Investment to Renewable Energy

In the ranking of most attractive countries for investment in renewable energy generation Brazil comes in 19th place. The list was disclosed by international consultancy firm Ernst & Young and also points out that in coming years, the country should grow above the global average in the field, which should range from 15% to 20%.

According to the survey, there are now ten ongoing wind energy projects in Brazil. Their combined capacity is 256.4 megawatts. Aside from those, over 45 projects have already been cleared by the National Electric Energy Agency (Aneel), with a potential to generate 2,139.7 megawatts.
Also in the field of wind energy, many multinational corporations like Siemens, Gamesa, Acciona and Suzlon have announced that it is going to build a turbine manufacturing plants in Brazil.

The survey, however, underscores that renewable energy generation is going to become crucial. In that
respect, it cites large-scale projects that should be concluded, such as solar energy generation in North Africa for supplying the European market. With a huge amount of underdeveloped land Biomass, Biogas and other agro-industry related energy producing technologies are at the forefront. Brazil also know for its massive cities has a number of large incentives and initiatives in Waste treatment, waste to energy, water treatment but are lacking stronger more experienced companies that are looking for partners from more advanced markets such as the European Union or North America.

Biofuels

Taking advantage of advances in biofuels and other alternative sources of energy and consolidating a "clean" energy matrix in Brazil will require increased investment over the next several years, the Institute of Applied Economic Research, or IPEA, said.

Brazil has the potential but needs greater investment in alternative energy research and projects and
should view such efforts not as a "sacrifice for the national economy" but as "socially and environmentally responsible" policy, according to the report, titled "Energy and the Environment in Brazil." In the case of biofuels, the study recommends the government provide subsidies and even tax exemptions to help that sector compete with oil derivatives.

According to the study, which cited 2009 figures, Brazil consumes 25 billion liters (6.6 billion gallons) of ethanol annually and demand could rise to 60 billion liters in 2017. More than 90 percent of new automobiles in Brazil are equipped with "flex-fuel" technology, meaning they can run on ethanol, gasoline or any combination of the two. The country has invested in sugarcane-based ethanol production for several decades and is currently the world's largest producer and exporter of that alternative fuel.
Despite the expected growth in demand for biofuels in Brazil, the study also forecasts that demand for fossil fuels in the country will continue to rise until 2030.

Industry and Technology

The annual growth came largely on a 26.5 percent surge in capital spending, a sign that Brazilian companies are investing to keep up with future demand. Industrial output grew 13.8 percent and household consumption expanded 6.7 percent even as interest rates rose during the quarter.
Although the new government does not have a lot of room to cut spending--if it wants to accomplish planned investment ahead of the World Cup (2014) and the Olympics (2016)—fiscal policy will be tightened in 2011. The government has already frozen USD 12bn in spending (0.5% of GDP) from its 2011 budget and will cut the loans it provides the BNDES state development bank by more than half in 2011. This should help slow inflation through lower public demand and decreased subsidized credit growth, allowing monetary policy to reduce the carry on currencies by reducing the inflation adjusted interest rate (currently the second highest in the world.) However, EDC economics believes the magnitude of the fiscal retreat is unlikely to be significant enough to sustainably curb inflation.

The government has still projected its spending in infrastructure and social developments to USD 959 bn between 2011 and 2014. On the solvency side, the Dilma Rousseff administration has used the few years of solid global demand prior to the financial crisis to lower external indebtedness, smooth its debt maturity profile and improve currency and interest rate dynamics. As a result, external debt metrics are low and financing needs, although high will continue to be absorbed by the domestic market.

 

Waste treatment, a big problem for cities and industry. One man's trash is another man's treasure.

Whether it is finding a sustainable solution for disposing of agricultural waste products, urban waste or other industrial waste materials, there are hidden profits in generating energy and other useful byproducts by bothersome waste. Large cities and industries around the world are faced with a nightmare of what to do with the accumulation of debris as outputs soar and regulations get tougher.

Drivers

The climate change phenomenon, its causes and consequences, is now generally accepted and recognized by the international scientific community, governments, the private sector, NGOs and the general population.

It requires a robust response. Solutions must be found that will mitigate emissions of greenhouse gases and help to adapt to its unavoidable consequences. The complexity of the issue requires the acceptance of a common responsibility from both the public and private sector.

According to the white paper issued by ISWA on “Waste and Climate Change”  In the EU region, municipal waste management activities alone could potentially account for 18% of the 2012 Kyoto GHG reduction target set for the original 15 member states of the EU.

Global energy (Petajoules. PJ) from waste 1990-2006 (IEA, 2009). Biogas includes landfill gas and anaerobic digester biogas. Based on national data reported to IEA from OECD and non-OECD countries.

At the city and local community level, there are numerous examples of waste management solutions involving new technologies and integrated systems, which have resulted in net greenhouse gas reductions as well as other associated sustainable development benefits. The transfer of sustainable technology to developing countries is crucial to reducing GHG emissions. The Clean Development Mechanism (CDM), introduced under the Kyoto protocol, has provided an opportunity for the waste sector to make significant advances towards this goal. However, structural and administrative improvements to the CDM registration process are needed. Through aerobic and anaerobic biological treatment technologies, organic wastes can be recovered and transformed into soil conditioners and fertilizers. These processes reduce GHG emissions by sequestering biogenic carbon in soils, improving soil physical properties, and adding soil nutrients.

Waste offers a significant source of renewable energy. Incineration and other thermal processes for waste-to-energy, landfill gas recovery and utilization, and use of anaerobic digester biogas can play important roles in reducing fossil fuel consumption and GHG emission.

Development of treatment of municipal waste in the EU 1995 to 2007 (Eurostat, 2009)

 

Stimulus mechanisms

Solid waste CDM projects in the pipeline are distributed mostly between Asia/Pacific and Latin America; respectively 44% and 42% of the total (October 2009). In Asia, the highest number of projects is in China with India following in second position. In Latin America, Brazil and Mexico represent the majority share. Other regions are poorly represented. For example, Africa and the Middle East account for just 7% and 5% of the total number of projects, respectively.

Currently, there are 89 waste-to-energy facilities in the United States that dispose of 90,000 tons of solid waste a day, and produce 2,700 MW of electricity (enough electricity to supply 2.3 million homes) IWSA (2007). Waste-to-energy has a long history of being a reliable energy source in North America; existing facilities are expanding capacities and several new facilities are being planned. There is significant interest in conversion technologies such as hydrolysis, anaerobic digestion, gasification and plasma arc which can convert solid wastes into industrial biochemicals and fuels, although most of these technologies have not yet progressed beyond the pilot stage.

Investment Scenario

Environmental and sustainability issues have never had a higher profile than in recent times. There has been a realization, reflected in legislation, that landfill is not a sustainable solution for any country’s waste. Add to this a backdrop of volatile energy prices, due to diminishing fossil fuels and geopolitical instability, and waste is now increasingly being seen as a potential renewable energy resource rather than just a problem. To achieve this, the Institute of Civil Engineers in the UK estimates that £10 billion (US$16.6 billion) of investment into waste treatment infrastructure will be required over the next 10 years, with a significant proportion being used to develop WTE.

The waste sector is considered to be relatively recession-proof and continues to attract strong interest from investors. The move away from landfill, coupled with the push for sustainability has fundamentally disrupted the industry, both damaging some players’ ‘bury it or burn it’ business models and creating great opportunities for others.

However, despite improvements in debt markets, funding challenges remain for both project-finance funded WTE plants and private equity funded corporate investments. Investors are also wary of backing the wrong opportunity in an evolving market where long-term competitive advantage is hard to judge.
Municipal waste contracts provide stable revenue streams which are more attractive to the more risk-adverse investors such as banks. Commercial waste streams are inherently more uncertain and are usually only contracted on a short to medium-term basis. As bank funding is effectively secured on the ability of contracted waste income to service the debt, un-contracted (‘merchant’) waste projects will struggle to secure debt-based funding structures.

Source Roedl & Partner

 

As WTE companies and technologies become increasingly established, interest from private equity investors follows. The market dynamics include all of the key factors that prove attractive:

    * significant opportunity for market growth, which is primarily driven by regulatory changes
    * contracted revenue streams, often from large ‘blue-chip’ clients or local authorities, and
    * technological innovation leading to the ability to develop a roll-out platform.

Private equity investors looking to be involved in the sector will want to fund companies that have a deliverable growth strategy, and broadly speaking, the funding challenge for companies looking for direct investment mirrors that of companies seeking project finance.

Ecological housing is providing the solution to high demand for housing, low carbon profiles and renewable energy for emerging countries.

When it comes to trashing the planet, gas-guzzling automobiles and belching factories get most of the blame. Yet the primary offenders are actually closer to home. Here are the shocking numbers: The construction and operation of buildings generate half of all greenhouse-gas emissions in developed countries, according to estimates based on data from the U.S. Energy Information Administration. Residential buildings alone account for 21% of national energy consumption -- nearly as much as transportation (27%)

Ecological housing has the purpose of reducing negative effects on the environment, and going further than that into actually aiding the environment. Ecological houses are built with the goal of sustainable development, in other words using resources and technologies that focus on renewability. Ecological communities are an incredibly rapid-growing industry. Ecological housing can be used on individual home projects, or to create entire estates or communities.

The Brazilian case

Two major international sporting events are propelling real estate investment in Brazil. The hosting of the 2014 Soccer World Cup and the 2016 Olympics has attracted investors to the emerging regional powerhouse.

Massive infrastructure spending combined with increase demand for housing, both for owner-occupancy and rental, is expected to boost the real estate market for several years.

From 2006 to mid-2008, property developers in Brazil witnessed enormous increases in launches and sales. Strong lower and middle class residential property demand fuelled a construction boom.

The boom was slightly interrupted by the global financial crisis and economic slowdown in 2H-2008. After Rio de Janeiro, Brazil’s popular samba and beach city, clinched the bid to host the 2016 Olympics, the housing boom resumed immediately.

In Q3 2009, the average price of new launches surged by 25% to BRL3,465 (US$1946) per sq. m. from a year earlier.  The number of units launched also rose by 44% to 7,858 units from 5,462 a year ago, according to Cyrela Brazil Realty, Brazil’s largest developer.  The average price of sales increased by 13% while the number of units sold rose by 28%, within the same period.

Around 83% of Brazil’s 195 million population live in urban areas. The metropolitan area of Sao Paolo has a population of more than 27 million. The state of Rio de Janeiro has a population of more than 15 million.

Brazil has Latin America’s highest level of inequality. This is very visible in the favelas on the hilly outskirts of Rio de Janeiro and other cities. Favelas are named after the squatter settlements on the hill Morro da Favela, near the centre of Rio. It is estimated that about one-third of Rio’s population lives in favelas. The situation is the same in other major cities, such as Brasilia and Sao Paolo; perhaps 40% of the cities' population lives in these squatter settlements.

Home ownership is at 75%, with only about 14% of the 42 million housing stock rented. But around 85% of all homeowners live in low quality, self-built, single-room housing units.

Housing and ecology go together

One Spanish company, Perfiles SM, has brought to the market a very interesting solution combining the need for multi unit housing with economic and rapid deployment together with an ecological solution for middle to low class housing solutions.

The uniqueness of this solution is that all the materials necessary for complete infrastructure of the housing development are self contained in a standard 40 foot shipping container. This patented process produces all of the necessary elements to build two complete family units, including all the bathroom and kitchen sanitary equipment and materials. These materials are all low carbon footprint and generate EU green certificates. But that is not all, the houses are completely insulated providing high energy efficiency ratings for both cold and heat.

 

The roofs of the housing units which are certified for up to 11 stories in height are laden with photovoltaic and solar thermal panels, from a revolutionary Israeli technology, that provide both electricity and hot water, a luxury in houses in general in many countries like Brazil. But the energy sustainability does not end there; the central heating or cooling facility operates by the low CO2 emission burning of biomass pellets which can be produced nearby.

These “houses in-a-box” which are environmentally friendly provide all the necessary high cleantech materials and are assembled on site generating much needed local employment. The container itself forms part of the unit infrastructure. All the necessary materials are shipped inside a standard container and shipped to the closest port for low cost transportation to the development location. A four man team can construct and have ready for occupancy a building of twelve 60 square meter family units in 30 days, reducing financial strains of the developer. 

The end user cost of each family unit, depending on the country and final destination can be as little as
24,000€. The housing units not only are permanent and a have an expected lifespan superior to traditional housing in the EU, but can also be completely disassembled and put back into the original container if need. This also makes this application ideal for emergency housing in regions hit by natural disasters.

Why go through all the pain of permitting and subsidizing energy generating plants when the downstream user can be environmentally friendly and contribute the largest cuts in CO2 emissions?

For more information contact Eco-Housing

2011 Survival Manual for New Energy and Cleantech Investors and Developers. What are the business models and technologies to look for?

Investors and developers of renewable energies and cleantech companies can relax (or almost), it is a market here to stay. However, the changing and shifting regulatory environments, intense competition and upheavals in a still highly volatile global economy make for a treacherous path and players need to be constantly shifting strategies and investment targets on a global scale.

Regardless of the energy technology whether it is photovoltaic, wind, biomass/biofuels, tidal, waste treatment or even energy efficiency, almost every information source forecasts steady and double digit growth until the year 2025. The problem however, is that of late the opportunities change from country to country almost on a monthly level and investors as well as companies have to scramble and aim at a constantly and very erratically moving target. One month the market is in France the next month it is gone, enter Brazil and exit Spain, the US extends its cash grants at the eleventh hour and China hungrily eats up whatever moves – not a market for the faint of heart.

Case in point -The Photovoltaic Nightmare

The boom in German installations has been driven by upcoming reductions to the nation's feed-in tariffs (FITs) for solar power. Project developers have been working overtime to finish projects in time to reap higher incentives. As a result, high demand for solar modules has carried the global solar industry over 
the last nine months.

 

 

Amendments to the PV feed-in tariffs (FITs) in Germany's Renewable Energies Act (EEG) were passed in early July and a further adjustment to the FITs took effect Oct. 1. The changes mark a further shift toward the rooftop segment by abandoning field installations on cropland and increasing the attractiveness of the self-consumption bonus for small- and medium-scale rooftop installations.
Italy also adjust its national feed-in-tariff (FIT) levels. The new levels that took  effect on Dec. 31. Funds allocated to solar electricity generated by open-space systems with a capacity up to 5 megawatts (MW) will be cut by 9.3%--on average--during the first four months of 2011, according to EuPD Research. Incentives for systems with a capacity of 5 MW and greater will be decreased by 14.2%. Adjustments for rooftop systems are between 4.75% and 13.28%, depending on the size of the system. Tariffs will be reduced every four months in 2011.

France has just suspended its feed in tariffs for three months, de iure, by a decree published on December 9th and probably to restudy the policy warning of a major cut back. According to the Association Professionnelle de l’Energie Solaire “This decision contradicts the intentions of the government of wanting to develop a French solar industry to compete among the world leaders in the field. Recall that a pilot with an erratic unstable regulatory framework is not conducive to the development and competitiveness of the French PV industry. The arrangements on December 9th, will have an impact on employment in the sector, from upstream to downstream in the chain.
Also stated in a recent study by HIS Emerging Energy Research “In domino‐like fashion, European regulators are revising their feed‐in tariff mechanisms to keep pace with PV technology’s rapid cost declines (30% to 50%). However, the policy shifts in Germany, Spain, the Czech Republic, and Italy are sparking unintended boom and bust cycles as developers rush to capture higher tariff rates before planned feed‐in tariff reductions. The most nimble companies will be the most successful in the near‐term”.

 

Other technologies are not exempt from all this turmoil as we have seen the biofuels and biomass take a roller coaster ride while market forces closely tied to oil prices and the balking on government decisions to finally regulate these technologies from Spain to the US. Even Brazil with a 17% CAGR in bioethanol production has seen commotion while politicians back renewables while on TV but behind the scenes plan budget cut backs and regulatory changes.

The Ernst & Young Contry Index Report for Q3 2010 reports that “The existence of a ‘two stream world’ (with BRIC and other new economies in the fast lane and those in the West hesitant) is of increasing importance to the renewable sector.

How do you navigate the labyrinth?

New emerging markets have always been difficult to navigate and make it safely into the mainstream as a successful player, but it is even more difficult when it is a highly regulated one and dependent on government subsidies. In order to be successful or even just merely survive in this treacherous terrain you need the following qualities:

1.    Have an organization that is knowledgeable in international markets at a local level as new opportunities pop up in new markets. This team must be expert in local regulatory and industrial affairs and since many opportunities are in emerging markets most of the local developers do not have the capacity to optimize a deal and pass the hurdle rate.

2.    Have a team that has the financial and technical expertise to quickly (before the market changes again or someone else beats you to the deal) recognize a good deal and get it to financial closure.

3.    Relationships in global and local players. If you are to exploit opportunities in your area of expertise you need to be able to partner with the local industry actors and be able to do so quickly in efficient structures.

Now, unless you are a large multinational or even a large private equity fund, and there are very few of these, you need expert help. You need someone who is not affected by the business culture of your conglomerate, does not have a fixation on the margins “we always make” and most of all be able to have the local, global relationships, that will bring the internationally located “crown jewels” to your portfolio. In such a highly volatile and double digit growth markets even large corporations are using highly specialized international boutique firms.

The world has gone through another quantum state change and, as many times happens in growing and improving, the crisis has left a new playing field and like always, many of the winners will not be the expected ones to win but the smart ones who play all the right moves. It is much like Clayton M. Christensen explained in his book “The innovators Dilema” – why great firms fail when new technologies and markets are born.