Sunday, January 08, 2017

Why Dow 20,000 Is So Boring?

The financial media cannot stop tweeting about the possibility of Dow Jones Index breaching the 20,000 mark. Rising stocks boost public confidence and sense of affluence. Yet, for the broad population, the rising market index doesn’t seem to generate widespread excitement. Why is that? A possible reason is: lower direct participation by the public in market activities, both in listed securities and new issues (IPOs).

(Source: Wall Street Journal)
An excellent write up last week in the Wall Street Journal (“America’s Roster of Public Companies Is Shrinking Before Our Eyes”) highlighted the declining pace of IPOs. Tech IPOs have been particularly lackluster. In 2016, technology companies raised only $4.3 billion from public markets, versus $19 billion from private equity investors. Overall, 111 companies went public on U.S. exchanges, raising $24.2 billion. That is the lowest dollar volume since 2003, according to Dealogic.

 On the other hand, Lise Buyer made the case in Fortune (“Why 2016 Was Actually a Pretty Good Year For Tech IPOs”) that an investor who bought all tech 2016 IPO stocks at debuting prices would have done well, netting over 35% returns. Though this was a volatile year, many of the IPO stocks ended in the black after the year-end market rally.

Saturday, January 03, 2015

Ivanpah – A Sad Postscript

Sadly, my worst fears about the Ivanpah’s projects under-performance came true (see the blog “Operational Hiccups at Ivanpah”).  The project owners BrightSource, Google, and NRG have requested financial relief from the federal government.  After going live in February, the project has accumulated payment deficits of over $400M on its loan repayments.

According to various media reports, the 392MW project has generated only about a quarter of the energy it expected to produce.  Miscellaneous reasons have been offered for financial troubles – including delays in processing tax credits and low revenue due to cloudy skies.

It is ridiculous to blame the sun.  As my analysis in the previous blog bears out, the concentrated solar facility was underperforming on the very days when the PV energy output in surrounding region was high.  The sun is not the culprit – the project design and engineering is.

There is another twist in the tail here.  Not all of its energy comes from the sun – it also burns natural gas to supplement power generation.  Reportedly a higher portion of the power is coming from natural gas than originally designed.  In other words, the true conversion of solar energy to renewable power is even worse than the data suggests.

It remains a mystery – why do smart and committed people make bad decisions, ignore previous learnings from several failed CPV projects, and then try to hide the bad outcomes with ridiculous explanations?

Monday, March 03, 2014

Operational Hiccups at Ivanpah Solar Worry Me

The world’s largest solar thermal facility was brightly unveiled to the American Public in Ivanpah, CA by the U.S. Energy Secretary Ernest Moniz on February 13.  The project, designed and sponsored by BrightSource Energy and owned by BrightSource, NRG Energy, and Google, cost $2.2 billion and received $1.6 billion federal loan guarantees through the Department of Energy.

NRG Energy tweeted: “Thrilled to announce: Ivanpah is fully operational & delivering solar power to California!”  And Ernie Moniz exclaimed: “This is fantastic news! I'm hoping this is only the beginning of many to come. This is the type of energy we need.

But the operational data negate this optimism, and I’m worried that this concentrated solar project may not fare much better than several other projects that have not turned out well.  Generally, operational complexity and risk do not deter me.  But when a project utilizes public money and goodwill to absorb risks and generate private profits, even a partial failure could become a lightning rod for public criticism. 

Sunday, November 10, 2013

Energy Productivity is Key to Profits and Growth

“If energy efficiency improved by 2% a year, the entire global population at the turn of this century could live at the American standard of living with less energy than we use today.”  Dr. Richard Muller, speaking at WAVE event “GENIUS: Ideas and People that Move Us,” makes no apologies for being a capitalist, one who believes that “a solution which is not profitable is not sustainable.”  The key to profitable investing, he believes, is efficiency in the use of energy and resources.  Or, as he is more likely to say, energy and resource productivity.

At WAVE, we recently hosted Dr. Richard Muller, a Berkeley physicist and a leading authority on climate science.  An acclaimed author of ten books including “Energy for Future Presidents,” and a researcher whose projects have led to two Nobel Prizes, he initially earned (dis)repute for pointing out inconsistencies and inaccuracies in climate research.  Later, he designed and led the most comprehensive research on global warming, concluding that many solutions embraced by environmentalists, such as the electric cars and solar thermal energy, are futile.

Friday, August 23, 2013

Electric Cars – Are the Savings Real?

The government website Energy.gov contends that it costs about 3 times less to drive an electric vehicle.  An eGallon costs $1.22 versus $3.56 for a gallon of gas.

I’m not convinced.  I’d rather drive a hybrid car rather than an electric car.  Here is why.

Embedded in the computation for eGallon are assumptions that do not hold true for me.  It assumes a low cost of retail electricity, 12.3 cents/kWh versus my actual cost of about 19 cents/kWh.  It also assumes that a comparable gasoline car drives 28.2 miles per gallon.  Now, according to the government data (http://www.fueleconomy.gov), a comparable hybrid car drives about 44 miles per gallon.  Adjusting for these two assumptions, an eGallon will cost $2.94 versus $3.80 for me in Massachusetts.

Thursday, July 11, 2013

Technology is Not Enough - A Parable


Every day, I see hundreds of cars moving.  Why do the cars move?

A simple question like unlocks a series of esoteric thoughts to a physicist like me.  Generations of scientific discoveries help us understand and explain the car’s movement.  You have the laws of motion, Thermodynamics, energy conversion and conservation, friction, electromagnetism and electricity, quantum mechanics that allow us to design chips at nanoscale, and gravity and general relativity whose understanding is essential for accurate operation of the GPS.  Nearly all of our scientific knowledge of physical worlds is neatly encased in the movement of the car.

Tuesday, April 30, 2013

Urgent: Seeking Collaboration between Green Think Tanks and Investors

The push for carbon trading is losing steam and the environmental groups are trying to figure out their next move.  At the same time, the green investors seeking federal grants for their solar/battery/e-car ventures are also facing an uphill battle.  Is environmentalism dead?

Far from it.  People still want a cleaner planet and more sustainable living, but the manner in which we have pursued that goal requires rethinking.  The past approaches have often pitted the environmental lobbies and the free-market capitalists on opposite sides of the table.  One wants more taxes, the other wants less.  One wants to create new bureaucracies, the other wants to eliminate them. One wants more laws, the other just wants free money.

This needs to change.  A comprehensive approach to climate change requires an alliance between all three principal stakeholders: business, government, and environmental groups.  Only a concerted approach can achieve better outcomes.  Since the political process takes its cues from the environmental and business groups, it would be immensely helpful if these two groups developed a common ground.  But how do they do that?