Like this post? Subscribe to our RSS feed and stay up to date. A Bit More Than the Usual Rumbling Hits Yellowstone

Written by Amanda Peterka

In the past week or so, some 400 earthquakes have added to the already precarious land at Yellowstone National Park. Although the area is the largest supervolcano in North America, the rumbling is a bit more than normal.

Like bees, when earthquakes occur in great amounts in one area, it’s called a swarm, reports NPR. But this swarm is bigger than the usual that would happen. The swarm has a magnitude of 3.9 on the Richter scale, and the quakes have happened at greater frequency than the norm.

And all of the earthquakes have occurred under Yellowstone Lake. The last time something like this happened was 20 years ago, reports Wyoming’s Local News 8. Said one geologist on the station: “We think it’s where more magma heat and steam escaped through cracks in the crust. That’s probably what’s causing the earthquakes.”

No one knows for sure why this is happening, though. But no worries to the people living around Yellowstone - the last huge volcano eruption was about 640,000 years ago.

Earlier in the year, around April, the same thing happened in Oregon, except it was 600 earthquakes in 10 days. That one, though, was different - it didn’t occur around any places where tectonic plates meet, the vast land areas that form the Earth’s crust. Three of those quakes had a magnitude of 5.0 or higher. Most, however, happened out at sea, and were barely felt on land.

Casualties of global warming? Who knows. There’s not much anyone can really do about these, except wait them out.

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Cashing In on Clean Technology

By: Venuri Siriwardane

The future of all alternatives to oil rests on a single make-or-break factor -- money. And even as private investors fled other markets last year, clean-tech company coffers were still brimming with venture capital dollars.

Clean tech -- a loosely defined environmental category -- includes companies involved in solar power, biofuels, batteries, water, recycling, even farming. And as VCs clamored to get in, funding for the industry posted an all-time high of $2.6 billion in the third quarter of 2008. Experts linked the boom to soaring oil prices, generous tax credits, and a public fascination with all things green. Though they also say the torrid pace can’t continue, the amount of capital raised globally last year -- $8.4 billion -- still exceeds the 2007 full-year total of $6 billion, according to the Cleantech Group, a San-Francisco-based market research firm.

But these days, a rare confluence of events has sobered many clean-tech insiders. Facing liquidity hurdles, VCs are shouting from the rooftops that portfolio companies better start cutting costs. Oil prices have dipped to four-year lows, making traditional energy sources seem more viable. Credit remains scarce, which doesn’t bode well for a reputedly capital intensive industry. And as predicted, fourth quarter funding dropped last year to $1.7 billion, marking the first quarterly decline since 2004.

So could the go-go era of clean-tech investment come to a screeching halt? Unlikely, says Dan Squiller, a clean-tech CEO who bagged $30 million in Series D financing -- just days after bankruptcies and fire-sale deals mauled Wall Street in September. "Our new investors are just as enthusiastic about the company now as they were when the funding closed," says Squiller, whose San Diego-based firm, PowerGenix, manufactures recyclable batteries. "I think the clean-tech segment may be operating to a different drumbeat."

Here's why clean-tech executives and their investors are bullish about the long term.

What the Experts Say

Even as the economy sours, industry watchers say a host of factors should keep VCs funneling cash to clean-tech firms. Projected increases in global energy demand, declining production of oil and coal, growing concerns about climate change, and a desire for U.S. energy independence are "long-term drivers that haven't changed and won't change with respect to the credit crunch and the downturn," says Brian Fan, the Cleantech Group's senior director of research.

Still, he warned that companies will take a hit on valuations as VCs face roadblocks when trying to draw capital from their limited partners. “We forecast a pullback in clean-tech VC funding from the previous couple of quarters, when it was just record quarter upon record quarter,” Fan says. "But clean tech will remain a bright spot relative to other sectors competing for VC investment."

To an extent, clean-tech investment hinges on government policy. Congress recently approved an eight-year extension of the investment tax credit for utility-scale solar projects. President-Elect Barack Obama has pledged a new green economy along with support for alternative energy sources. And a cooperative of 10 Northeastern state governments have agreed to cap carbon emissions beginning this month. All have spurred cautious optimism throughout the industry's ranks.

Commodity prices also play a role in the evaluation of clean-tech firms, says Joe Muscat, Ernst & Young's director of clean tech and venture capital. But current lows shouldn't scare away the savviest investors who know the era of cheap oil is over, though pricing volatility remains.

"There are bigger drivers at work than what the spot price of oil is, and I do think clean tech will continue to be a significant percentage of the total of venture capital investing," Muscat says. "But it's going to be tough. There will be some consolidations and some failures because of the capital environments in this period of time."

Higher Returns for VCs

Potential investments -- including current portfolio companies -- are going to get much cheaper in the next few years, and therefore, returns on future investments are going to get much higher, says Richard MacKellar, managing director at Chrysalix Energy. The Vancouver-based VC firm, which funds clean-tech companies worldwide, has shied away from over-valued solar companies for more than two years. But with valuations deflating, MacKellar says Chrysalix is eager to resume activity in the space.

"What we're going to see is higher scrutiny and lower values," he says. "But I believe VCs recognize that this hiccup will lead to a sweet spot of optimum returns -- for those of us who do have the courage to make the investment in tough times."

As other investors retool, Good Energies, a global VC firm investing exclusively in clean tech, plans to keep pumping cash into the sector. "We're long-term investors and our philosophy is to always be a long-term investor," says CEO Richard Kauffman. "In terms of us, we're going to continue to invest through the cycle."

But as capital is rationed in the market, he pointed out that his firm faces a tough balancing act: preserving cash for existing portfolio companies, and supporting new companies with promising technologies. Since initial public offerings are currently off the table, many VCs will shift their focus to the latter, he says.

"Because they require less money, investing in earlier-stage companies is a reasonable strategy," Kauffman says. "By the time those companies have reached critical mass, perhaps the IPO market will be open again, or there will be additional capital available."

A Plan for Capital-Efficiency

Clean tech is famously capital intensive, but now is not the time to pitch a "bleeding cash model" to investors, says Jeff Wolfe, CEO of groSolar, which ranks at No. 757 on the Inc. 5000. As VCs ramp up due diligence, they could become leery of project-based financing, which often requires exorbitant amounts of capital. Instead, they may turn their attention to more capital-efficient companies.

Wolfe's firm, a Vermont-based distributor and installer of solar energy systems, has secured both Series A and B financing over the past two years. Sales doubled to $60 million in 2008, he says, and the company is attracting "significant interest" from venues for capital. "You've got to prove why and where you're spending the money," Wolfe says. "VCs will still invest in companies that can do that."

The market for clean-tech investment indiscriminately favored all firms in the space -- until now, says Larry Letteney, COO of Second Wind, No. 4,369 on the Inc. 5000. The Massachusetts-based company, whose leading investor is Good Energies, develops software for wind farms and recently introduced a new product called Triton. Letteney expects the product -- which uses sonic detection to calculate wind speed, direction, and turbulence -- to catapult revenue this year. Currently courting investors for its third round of financing, Second Wind boasts the kind of proprietary technology VCs love.

"There is not necessarily a high volume of innovative, technological companies with the capacity to grow and generate outside margins in renewable," Letteney says. "The environment that we face for the next several quarters really only fazes companies that can't display a level of low risk and high return, which would calm the fears of any investor."

Going forward, many in the industry contend that clean tech will steal investors away from other troubled sectors. "We're aware of a ton of cash peripherally, and it has to go somewhere," says Michael Brown, chairman of Greenline Industries, a California-based seller of biodiesel processors and No. 7 on the Inc. 500. To accelerate its overseas expansion, his firm closed a $20 million Series A financing deal early last year.

Brown, who hopes to bring biodiesel production to Africa, says support from the incoming Obama administration will ultimately be the biggest boon for clean-tech investment. “The smart money, out of Wall Street and out of the stock market, is just sitting there, and it doesn't want to be sitting there," he says. "I think that money is very sensitive to the election of Obama and knows that this is the sector to be in."

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Garage Invention Turns Restaurants Into Power Plants

By Alexis Madrigal

Would you like power with those fries?

A new garage-engineered generator burns the waste oil from restaurants' deep fryers to generate electricity and hot water. Put 80 gallons of grease into the Vegawatt each week, and its creators promise it will generate about 5 kilowatts of power.

That's about 10 percent of the total energy needs of Finz, a seafood restaurant in Dedham, Massachusetts, where the first Vegawatt is being tested. At New England electricity rates, the system offsets about $2.50 worth of electricity with each gallon of waste oil poured into it.

Vegawatt's founder and inventor, James Peret, estimates that restaurants purchasing the $22,000 machine will save about $1,000 per month in electricity costs, for a payback time of two years.

"You take this waste resource and make it a profit center," said Peret, who spent four long years cooking up the project in his garage. "When I started telling people, they said, 'Someone's gotta have done this.' I'd run into more people. They'd say, 'Why hasn't anyone done this?' My only response was, 'I don't know; it seems like a good idea.'"

While Vegawatt is a small solution, Peret's invention is a very clever embodiment of several long-cherished alternative-energy ideas: capturing both the heat and power from fuel combustion, making energy where it's used, and recycling used resources. Big industrial plants that make paper, for example, have long taken advantage of these concepts to save on their utility bills, but the Vegawatt will be the first product that could turn thousands of fast food restaurants into mini power plants.

"Now the restaurant owners are going to be motivated to put every single drop of waste oil into this thing, because it will pay for itself," Peret said.

And importantly, it provides convenience for restaurateurs or Burger King managers, instead of subtracting it, like so many green solutions seem to.

Restaurants that fry delicious things like chicken and french fries generate dozens of gallons of waste oil that have to be stored in barrels out back. Because used cooking oil is considered a low-grade hazardous material, they haven't been allowed to just throw it away; they generally had to pay rendering-plant operators to come. But it is now a sellers' market for grease.

Higher crude prices have made other types of oil more expensive. Biodiesel makers and renderers have become increasingly willing to pay up to 40 cents a gallon for the stuff. There have even been reports of "biodiesel pirates" stealing fryer grease.

In fact, Vegawatt is derived from the home-brew fuel movement that many trace back to Dr. Thomas Reed, who popularized a recipe to convert waste cooking oil into biodiesel more than 20 years ago. Peret converted his truck to run on straight vegetable oil, or SVO to home brewers. But he was troubled by the inefficiency of the process.

"If you want to run waste vegetable oil in your car, it's not as simple as going behind a restaurant and filling up," Peret said. "People that do this spend the majority of their free time collecting fuel from restaurants."

Peret realized he could use the same engine technology to power an on-site generator and defray a restaurant's electricity costs.

"It's not difficult to go from spinning tires to spinning magnets," he said

So he created a test unit — which you can see at the back of his garage in the top photo — that's basically a diesel generator hacked to run waste cooking oil. It feeds power directly into the restaurant's electrical system through a 30 amp hook-in.

Vegawatt is more efficient than a typical coal or natural gas plant. Peret said it can capture 70 percent of the fuel's caloric value. That's because the generator captures and uses the waste heat it generates.

"All the water [the restaurant] would send to its boiler, instead of sending it straight there from the city, we run it through our heat exchanger first," Peret said. "Depending on the flow, [the water] can go into the hot water heater at 120 degrees." (This non-electrical energy savings is included in the 5-kilowatt rating cited above.)

The big power plants, though technically very efficient, waste most of the fuel they burn. After accounting for all the sources of energy waste "what you are left with ... is just 27.6 units of usable energy out of every 100 units you started with," energy researcher Benjamin Sovacool explained in his recent book, The Dirty Energy Dilemma. "In terms of making toast, it would have been nearly four times more efficient just to burn a lump of coal and place your bread over the flame."

Biomass energy sources — like waste wood, switchgrass or cooking oil — are best when used right near the source of their creation. Dragging the stuff creates more emissions and raises the cost of the fuel. Vegawatt doesn't have that problem. By company estimates, the Vegawatt generates 50 percent less carbon dioxide than a comparable amount of electricity from a coal power plant.

"In terms of the amount of energy that it takes to transport this waste, it's a french fry," Peret said. "You just feed the guy who is picking up the bucket and pouring it into the system."

Forest Gregg, an alternative-fuels expert and author of last year's SVO: Powering Your Vehicle with Straight Vegetble Oil, called it a "nifty application and a great business idea."

Gregg also drew attention to a strong part of Vegawatt's pitch: that it won't require "intervention or maintenance by restaurant staff." That's because when users buy a system — or lease it for $450 a month — they get a service contract with the company for cleaning and maintenance.

The owner of the very first Vegawatt, George Carey (pictured above), seems pleased with the unit, too. He heartily endorses the company on its website, saying, "The Vegawatt system enables me to significantly reduce my energy costs, generate clean energy on-site, and very importantly, reduce the heavy energy footprint of my restaurant."

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