The Latest on Alternative-Energy Deals From Dow Jones Clean Technology Insight

What’s New
By MARA LEMOS STEIN AND SARI KRIEGER
Capturing the Imagination

Large and small companies are putting down markers as providers of carbon capture and sequestration, or CCS, now that a national emissions-trading program is becoming a more likely prospect in the U.S.
Saskatchewan Power Corp. is going ahead with retrofitting an existing coal-fired power plant with CCS technology that will capture the plant’s carbon-dioxide emissions for resale. Among the companies vying to provide SaskPower with this CCS technology are Irving, Texas-based Fluor Corp., Montreal-based Cansolv Technologies Inc., and Powerspan Corp., of Portsmouth, N.H., which recently received more than $50 million from George Soros and a handful of private-equity investors.
What companies in the CCS business have in common is that they see government support as critical to making the technology feasible, given the high cost. SaskPower, for example, is relying partly on Canadian government support for its retrofit of the Boundary Dam Unit 3 project. The Canadian government will contribute C$240 million (US$220 million) toward the project, which SaskPower estimates will cost C$1.4 billion.
”We’re observing governments around the world that are beginning to propagate regulation [and] incentives” to promote CO2 removal from coal-fired plants, says Frank Alix, Powerspan’s chief executive. “In the absence of a regulatory driver, the only way to deploy these systems commercially would be for the government to put financial incentives in place, such as tax credits, or loan guarantees, that would make it economically attractive.”
The recent stimulus package included $3.4 billion in grants to promote research for carbon-based fuels, including coal. The Energy Department also offers loan guarantees for commercialization of new clean technologies, but it isn’t yet clear how the agency will allocate these funds.
Powerspan, meanwhile, intends to apply for grants and loan guarantees once the DOE publishes guidelines for the programs, Mr. Alix says. The company has developed an ammonia-based technology that removes CO2 from the flue gas emitted by coal-fired power plants and maintains it in a form that can be transported or stored underground. The company plans to use its $50 million in new equity to deploy its technology at a commercial-scale demonstration plant.
Lighting the Way
Makers of light-emitting diodes expect that market to heat up soon. Change is coming thanks to the impending U.S. ban on incandescent bulbs—due to be phased in starting in 2012—as well as improved technology and greater corporate focus on energy efficiency.
LEDs rely on semiconductors to generate light. They use less energy than incandescent bulbs and last a lot longer. But they cost a lot more, too. So far, they are mostly used in high-usage commercial settings. But costs are dropping, and manufacturers plan to target a broader market.
Philips Electronics NV, the Dutch lighting giant, has launched a new LED-lighting audit and retrofit business that aims to help redesign the lighting in the U.S.’s 100 billion square feet of commercial, industrial and government space. It has new LED products as well, including a floodlight, recessed light and streetlight.
Rudy Provoost, chief executive of the Philips Lighting unit, says he expects LED lighting to reach $30 billion in annual sales in the next 15 years, up from about $5 billion estimated by analysts for 2008. Philips executives say floodlighting is the largest part of its lighting business, and with these lights selling for about $5,000 each, they expect significant revenue from this product.
Chris Hammelef, vice president and general manager for Philips Hadco, another Philips lighting unit, says he expects the LED streetlight design to bring $30 million to $40 million a year in sales in the next five years.
But Philips doesn’t have the LED market to itself. Other top companies that make various products along the LED supply chain include Cree Inc., of Durham, N.C.; Nichia Corp., of Tokushima, Japan; Osram GmbH, of Germany; Cooper Industries Inc., Peachtree City, Ga.; and Renaissance Lighting Inc., Herndon, Va.
Cree recently launched its first LED replacement light, which is being tested by companies for possible large-scale deployment. The lights can be used in current fixtures. “The markets that this product enables are massive,” says Gary Trott, Cree vice president of market ­development.