Critical mass. Turning point. Widespread adoption.
These are the terms we hear in relation to many emerging clean technologies: They are seemingly continually on the cusp of hitting the mass market in a big way, any day now. But hype sometimes overshadows reality.
The times, however are a-changin': Market dynamics for four prime clean-tech categories - biofuels and bio-based chemicals, solar, wind and electric vehicles - are not just theoretically on the cusp any more. They are visibly on the cusp. Cleantech is happening now, and it's happening here: Colorado is emerging as an industry hub, with local players grabbing national headlines.
And it's not just hype. "I think it's reality," says Alexandra Tune, director at Deloitte & Touche's Denver office. "There are a lot of cleantech companies in Colorado and a lot of cleantech companies are relocating here." She points to the federal government - largely in the form of the National Renewable Energy Laboratory in Golden - as well as the state's mandate that 30 percent of electricity come from renewable sources by 2020. Plus, there's a highly educated work force and numerous cleantech-relevant programs and initiatives at the University of Colorado, Colorado State University, and the Colorado School of Mines.
"It's a culture here," says Tune.
So can Colorado capitalize on its current position and leap to the head of the cleantech class as an international center? Citing state-led and municipal recruitment and messaging efforts as well as the Colorado Cleantech Industry Association's in-progress "road map" to such an endpoint, Tune says, "There's no reason it can't."
BIOFUELS AND BIO-BASED CHEMICALS
"Many companies that were focused on biofuels are beginning to say they're more interested in bio-based chemicals," says Charles "Chas" Eggert, CEO of Boulder-based OPX Biotechnologies. Why? "Specialty chemicals have higher prices, so they can have higher manufacturing costs. The initial commercial plant size for a bio-based chemical can be significantly smaller than a plant for a biofuel."
OPX engineers microbes to efficiently produce bioacrylic and biofuels, and the former has been the company's primary push since its 2006 founding. Biofuels will come next: Because of the market dynamics, small-scale ethanol production can't compete with the oil industry and its vast extant infrastructure, says Eggert. He sees biofuels moving from such inputs as corn and cane sugar - both of which he is quick to label as viable - to cellulose, but innovation is necessary.
"For biofuels, the key trigger is further commercialization of using cellulose, and not corn or cane sugar, to make ethanol," he says. "That is the key that unlocks the value chain for the manufacturing model." Another trigger would be a shift in policy, not a jump in innovation: increasing the "blend wall" - i .e. the amount of ethanol in gasoline - from 10 percent to 15 or 20 percent.
Eggert is quick to point out that bio-based chemicals are nothing new, used by the pharmaceutical industry and others for decades. "There are plenty of examples of successful bio-based chemical companies already," he says. "The questions are, how well can you engineer your microbe and how well can you engineer the process? That's what we at OPX think is our best advantage."
To be sure, 2010 is turning out to be a banner year for OPX Biotechnologies, making it 95 percent of the way toward its target of making bioacrylic for 50 cents per pound, which Eggert says is the target commercial cost. "That's lower than producing it with petroleum."
While the company's biofuels push is slightly behind the bioacrylic's current pilot-stage status, the timeline was accelerated in April when OPX landed a $6 million research grant from the U.S. Department of Energy. With the money, "We're hiring and building out the lab in Boulder to do the work."
Solar demand has surged in 2010 - to the tune of 60 percent over a weak 2009. Looking back at the past 20 years, solar has regularly grown by 25 percent a year. Regardless, it still represents less than 1 percent of electrical generation in the U.S. But that could change in a hurry once the numbers align.
"Grid parity - or when it's cheaper to install solar panels than it is to buy electricity from a local utility - is forecast to happen sometime between 2013 and 2016," says Mark Chen, director of marketing at Loveland-based Abound Solar.
Abound made national news in July when the Obama administration announced a conditional $400 million loan guarantee through the U.S. Department of Energy. The move, which is expected to create 1,200 jobs in Colorado and a plant-to-be in Indiana, is designed to help drive costs down and innovation forward. "It means we'll be able to triple our capacity in the next three years," says Chen.
Exactly when and where solar goes mainstream depends on a host of different factors, among them the amount of sun, local incentives, and the policies and electricity prices at the local utility. Case in point: Xcel sells electricity in Colorado for about half the price that PG&E sells it in California. Add to the mix weaker state incentives, and Colorado is lagging far behind the Golden State at the moment.
But not everyone is convinced. "Is solar oversold?" wonders Deloitte's Alexandra Tune. "I don't know the answer to that. There is definitely a place for it." Tune says a big factor is the price tag: Even though photovoltaic-panel prices have dropped by about 40 percent since 2008, they still have a ways to go.
Tune is quick to point out that improving the efficiency of batteries and the electrical grid, while not as glitzy as solar, is just as important. "The big issue with both solar and wind is transmission," she adds. "Where the sun and wind are is often where people are not."
Establishing Colorado as its North American manufacturing base, Denmark-based Vestas is one of the global leaders in wind technologies. Now the company looks to recoup its investments. "The U.S. has some of the best resources in the world, but wind makes up less than 2 percent of America's energy use," says Andrew Longeteig, Vestas communication specialist. "There is tremendous potential here to increase that percentage."
Longeteig commends the Obama Administration's 2009 stimulus package for "providing capital when banks either went under or simply stopped lending. Capturing electricity from wind is free, but the equipment, construction and grid costs are significant."
Vestas has secured eight North American orders in 2010, including turbines for a project in Lincoln and Elbert counties in Colorado. "These orders will keep our Colorado factories busy and growing," says Longeteig. Along with a new engineering office in Lousville, Vestas' four Colorado plants, located in Windsor, Brighton and Pueblo, employ 1,200, and Longeteig says the company expects that number to nearly double in the next year.
Longeteig argues that the federal government needs to clearly define the country's long-term renewable-energy policy and goals in order for wind to reach its much-vaunted potential. "The lack of a national energy strategy hinders the ability of companies to effectively plan and make decisions as there is no ability to foresee the market beyond a year or two," he says. "Europe and Asia are far ahead of the U.S. because they have enacted long-term energy requirments and goals that are driving significant manufacturing and job growth."
"Transportation is approximately attributing one-third of the energy used in this country," says Hiroko Kawai, formerly a principal with the Rocky Mountain Institute, an energy-efficiency think-tank with offices in Snowmass and Boulder. (She left for Johnson Controls' Lithium-ion Division in Milwaukee in August.) "This year is important for the passenger side of the business because many of the manufacturers are ready for an electric-vehicle launch in the fourth quarter or sometime in 2011." Also important, says Kawai, is a $7,500 federal credit for buying an all-electric vehicle.
"But at RMI, our stance is the electric vehicle is not a silver bullet at all," Kawai adds. "It's good, but it's a limited quantity. There is a little over-excitement."
Public transportation is critical as are natural-gas and biofuel vehicles. And on the all-electric front, innovation is necessary to move toward broader adoption. "The battery needs to improve," says Kawai, noting that the range is too low while the weight and cost remain too high. On the plus side, the key ingredient of lithium, found in abundance in China and South America as well as the U.S., is "highly recyclable."
On President Obama's vision of 1 million electric vehicles on the road in 2015, Kawai points out that number just represents 0.5 percent of U.S. automobiles. "One million sounds great, but 1 million out of 200 million cars is not enough."
The simple fact, says Kawai, is the greening of U.S. transportation "will take a long time."