Solar power companies see lights in the tunnel

The optimism remains in a lot of Swedish cleantech companies, and solar power companies are no exception. For example, Climatewell is a Swedish cleantech company with a factory in Spain. With new investments in the fabric they are multiplying their production rate. Stockholm based Midsummer is another company using the sun as a direct source of energy, with a fully-automated production technology as their competitive advantage. The method is borrow from the cd/dvd industries. Recently, Midsummer was chosen as one of te most interesting technology companies in Sweden at a venture capital event. They are looking for additional financing to be able to scale up the production to commercial levels next year.

The most spectacular news however might be the articles about Ripasso Energi AB. Ripasso intends to use Stirling engines for solar power generation. The use of the stirling engine is an increasing trend in the solar tech sector, other proponents include Swedish Cleanergy. Ripasso pretends to use an engine earlier used in Swedish submarines. Another interesting aspect is the owner of Ripasso, former Ericsson CEO Sven-Christer Nilsson. According to a recent public funding application, their pretensions are far from modest: "to make Sweden a world leader in the area of Concentrated Solar Power".

Wind Power to Increase in Sweden

The 30 largest wind power developers in Sweden are planning to develop wind farms amounting to approximately 18GW in power during next few years. This calculation considers approximately 6000 new towers, generating in total 55 TWh per year.
With increasing possibilities for EU member countries to count emission reductions from projects developed in other Annex I countries, this number may as well increase even further.

Further beneficial factors for the wind power industry are looming at the horizon, through a from a recent Swedish government proposal. According the proposal, bureaucratic obstacles will be removed, and the possibility for wind farm neighbors to appeal court decisions will be reduced.

Morphic Biogas Fuel Cell System

After successful pilot testing, Morphic will no start to market a complete system for biogas-to-hydrogen transformation. The reformer technology comes from their subsidiary Helbio S.A. and generates a hydrogen used in fuel cells from Exergy Fuel Cells, another subsidiary.
Naturally, biogas from waste disposal centres, farms and waste water treatment plants could be upgraded and used directly for heating, power generation or vehicle propulsion; it is not entirely necessary to convert it to hydrogen. But thanks to the conversion, the application is more versatile. The hydrogen can be used wherever fuel cells are necessary.
Read more about it here (in Swedish).

Biogas fuel cell applications, but with a rather different technology, have earlier been discussed here

Volvo to resume development of gas vehicles?

Volvo CEO Stephen Odell has only been working for Volvo during a few weeks. According to a recent interview(in Swedish), Volvo may now reconsider their decision to not develop any more gas vehciles.

With their gas vehicles, Volvo had a relatively important part in the promotion of biogas in Sweden during the late 90's and early 00's. During these years the biogas sector developed considerably, with several technology companies starting up as a result. A few years later, Volvo informed about their decision to not develop gas versions of coming models. Until now, perhaps.

IKEA Greentech - a new Swedish cleantech investor

IKEA will invest in Swedish and European cleantech companies, through it's subsidiary IKEA Greentech AB. IKEA prospers from the interesting combination of a excellent distribution network and customer base and a very solid financial position.

In particular, IKEA will invest in cleantech companies with products that benefit it's clients (they amount to 500 000 000), warehouses (270) or suppliers (1500), from the alternative energy and energy efficiency areas.

So what should they focus on? Do the maths, 500 000 000 clients is a very interesting customer base. Hence, finding high-quality products relevant for IKEA's customer should be a top priorirt. Further on, they should be cost-efficient in small scale. An area that satisfies both of these conditions is energy efficiency (including water and material efficency). I would say that where the largest potential is to be found.
Small-scale energy generation using energy from the sun (solar power, solar heating and wind power) does fit with the first description. Small-scale energy generation is getting increasingly popular whit high petroleum prices, and solar insolation is favourable in many of the countries where IKEA is present. However, as discussed earlier, the efficiency of these installations is often far lower than medium- to large scale plants.

Considering what may be useful for their suppliers and warehouses, other areas may be interesting as well.

Sweden has got the largest share of renewable energy in the European Union

Sweden the top nation in the European Union regarding the share of energy coming from renewable sources, according to a recent study by the Swedish Energy Agency. Hydropower and forrest-based bioenergy are two contributing factors. 43,3% of the energy comes from renewable, up from 33,9% in 1990. 52% of the power supply is generated by renewable sources. The largest share is reached in the power sector, followed by the paper & pulp industries and the district heating sector. According to the study, the largest room for improvements regards the transport sector, which only represents 1% of the renewable energy use in Sweden.

Other countries in Scandinavia, while non-members of the European Union, generate an ever higher share of their energy from renewable sources. Iceland is the foremost example, with 73% of total primary energy supply and 100% of power production comes from renewable sources. Further on, an impressive 98% of Norwegian power supply comes from hydropower.

There are certainly many opportunities to increase the share of renewable energy in Sweden even further. Many medium-sized to large initiatives are under way. Large wind farms are being developed throughout the country for power production, and many medium-scale biogas plants are planned in southern and central Sweden. The biogas sector is already extensive in southern Sweden and in the Stockholm area. Further it is fairly within reach to increase the hydro power output by increasing and optimizing the generation the rivers already being used, and to develop low-temperature geothermal energy systems for heating. And as capital costs decrease, solar power and wave power will also be feasible options, although it would take many years for these types of energy to constitute an important part of the Swedish energy sector.

Interesting IT solution for fuel efficiency

Swedish company Blueflow Technologies has developed a technology for informing boat operators on fuel combination and speed. With simple additions to the boat, and with a wireless connection, it is possible to display the information on a cell phone or laptop computer.

Using this information it is easier for the boat owner to choose speeds with higher fuel efficiency. With soaring oil prices, investments in technology like these pay off in even shorter periods. Further on, BlueFlow are sure to find a strong domestic market as well, Sweden is the country with the most leisure boats per capita.

Check it out here

Lignoboost aqcuired byt Metso Power

Lignoboost and their predecessors have during almost a decade developed a promising technology to produce biofuels from black-liquor a byproduct from the pulp industry. Now they are taken over by Finnish group Metso.

I have earlier mentioned them regarding my skepticism about some ability to attract Swedish VC. Well, at least they got aqcuired by a large group of companies, that already produce technology with the same target market. That will open up many opportunities for Lignoboost.
It will be interesting to see however, if politicians, public servants and institutional investors will take this as another example of the Swedish cleantech "brain-drain": the inability of Swedish cleantech companies to attract national investors, and the eventual take-over from foreign companies (Solibro being a high-profiled example). Further on, would it is interesting to question wether this is a problem or not.

The state of the Swedish cleantech market

According to E24 (in Swedish), Swedish cleantech companies face a dismal outlook, with only 3 out of 14 publicly traded companies making a profit last year.

A few observations could be made however. First of all, these numbers should not be taken as a representation of the whole cleantech market. Many successful cleantech companies are not traded on the public stock market. It is also important to remember that many companies not mentioned in the article work with cleantech in one way or another, but only as a part of their product or service portfolio. For instance: Sweco (consulting), ABB (energy efficiency, etc) and Alfa Laval (biofuel equipment, etc). Further on, in the long term several of the companies mentioned in the article face growing demand for their products.

To invest in a company that is yet to make a profit requires excellent market insight and at least a basic technical understanding of the products being offered. And even more so than in the case of investing young but profitable companies. Rome wasn't built in a day and many cleantech companies will need several years of R&D before being able to launch a competitive product. Ambitious innovators may become early leaders in developing markets. But without an initial knowledge, the outside investor might as well bring her or his money to a racecourse, where the gambling is equally risky but more exciting.

Is domestic fuel production feasible?

Swedish scientist Bengt Steen of Chalmers University pretends to produce a renewable fuel, by letting hydrogen react with carbon dioxide from the atmosphere. The hydrogen is to be produced from solar power, wind power or hydro power. Moreover, the technology is to be small-scale, housed in a container no larger than a refrigerator. An ambitious idea, but is it economically feasible?
Well, at least Swedish Foundation for Strategic Environmental Research (Mistra) has some trust in the idea. Mistra will provide 4 MSek (approx. USD700000) of funding for the project.

Steen says that the small scale is "more" sustainable than current energy technology. But is small-scale fuel generation really sustainable? Or is the beauty of the concept more related to the somewhat utopist idea of everyone being energy independent?

This project still is at a very early stage, so it’s hard to comment on the financial aspects of this project. But small scale applications are often inefficient compared to larger scale ones. Further on, from a material point of view it is in many cases a waste of resources to produce a large number of small units for home users, than to assemble central plants. This is the case of many small-scale energy applications, such as anaerobic digestion, solar power and wind power.

Small scale may sound beautiful, but will it be sufficiently cost-efficient? Steen has an interesting challenge. Still, even if consumers would make a net profit from domestic production, this concept could still find a market in Sweden. Interest in domestic energy supply is high, as shown by a recent study. 68% of the persons asked reply that they are “very interested” in generating their own power (or own shares in wind power plants). Some legal obstacles remain however.

Kista Cleantech Venture Day

Another cleantech investment event is coming up, this time in Kista, Stockholm, 20th of November. At the event, which is co-organized by the city of Stockholm and the US Embassy, a group of Swedish Cleantech companies will be presented to US investors. Several of these companies have been mentioned earlier on this blog.

Read more about the event "Kista Cleantech Venture Day" here

The current state of the cleantech sector in Sweden

The state of cleantech investment in Sweden

A brief overview of some current events in the Swedish cleantech investment sector:

• Swedish public foundation Industrifonden ("The Industrial Fund"), has invested USD3 Million in Chromogenics.
  Although the first commercial applications include bike helmet visors, the technology is expected to be used in energy efficient windows.I have earlier mentioned Chromogenics here and here.
  

• The Swedish Energy Agency, Energimyndigheten, recently published their (in Swedish) overview of the Swedish cleantech sectors, with focus on the investment development. THe report can be found here (in Swedish).
  
  
• How can cleantech companies and venture capitalists and other types of investors meet in a beneficial manner? That question was studied by Maria Tunberg from Cranfield University/Swedish Agricultural University. According to the study, TAG could be the answer. TAG stands for TechnologyApproval Group, and is a model that has been working with reasonable success is Great Britain. The TAG models focuses on uniting three different parts of the cleantech market: technology providers and developers looking for capital, possible clients and VC companies. A committee, with representatives from industry and possible, evaluates the market potential of different cleantech companies. In that way, cleantech providers can adapt their products and services according to the needs of the market, and find possible clients. Investors can take part of the results, and be sure to put their money in technology companies and innovators that are sure to have clients and a market potential.
  
  
• Criticism has been forwarded regarding the interest (and hype) about cleantech in Sweden. According to Anders Ocklind from the Swedish fuel cell company Cellkraft, companies that have been hyped recently, especially those picked by Michael Wood. It should be noted however, that this criticism comes from a competitor to the chosen companies. The criticism seems to be focused on the technologies themselves. As earlier stated in this blog, it is true that specific companies and products may be overvalued, and thus failed investments. But that does not necessarily only depend upon technology characteristics. It should be remembered that although the technology is the primary component of the investment opportunity, it is not the only one. Revolutionary application or innovative marketing of a mature technology can give a strategic advantage. Besides, it is a natural consequence of selecting several assets for a conceptual portfolio that some assets will not develop as good as others. By diversifying the portfolio that is not necessarily a problem.
  

The Value of Young Cleantech Investment Companies?

While the blog Investeringar i vindmöllor och förnyelsebar energi" (in Swedish) recommends Borevind as an investment, considering it's rather low value, it would not be an investment free of risk. The price/equity ratio is 225%, which is lower to other Swedish cleantech companies. But should Borevind be compared to technology companies such as Morpic or generation asset owner Elous Vind? They have a rather different focus (Morpic develop technology solutions and Elous own wind power projects). No doubt about Borevind having chosen an interesting market niche. Metainvestments in the renewable energy field, if conducted wisely, could be more profitable than focusing on a few specific technologies or one kind of power projects. The Borevind portfolio is not very diverse however, focusing mainly on wind power. The tiny investment in Rindi Energi may be a step in the right direction, considering the stable conditions and increasing demand for this type of bioenergy solutions.

placera.nu (in Swedish) confirms that the Borevind investments need to be quite successful to meet the high expectations. Investors, often institutional ones, may create a hype in the cleantech area when pumping in money into the market without proper previous research, because a general political and public interest in renewable energy. The valuation of companies like Borevind may be a sign of this hype.

Further on, the price-to-equity ratio should be used with care when analyzing young cleantech companies. There is little historical data available and thus difficult to make a comparative analysis. Thus, other factors should be considered to estimate the value and assess the investment opportunity. Price-to-earnings is of one them.

Landmark approval of Wallenius system

The PureBallast system, developed by Swedish companies Wallenius Waters and Alfa Laval has been approved by UN/IMO. PureBallast is a solution for treating ballast water of ships. The process is checmical-free and imitates nature's own way of treating water. This is the first time a chemical-free solution of this kind gets approval by the IMO. The solution can also be used in other applications, such as cleaning swimming pools.
German shipping company E. R Schiffahrt has already ordered the systems for four of their boats.

Ballast water is a huge environmental problem, with microorganisms and other organisms invading coastal areas where they are non-indigenous.

Morphic får banbrytande order

Morphic får en relativt stor order på sina bränsleceller.

Bolaget går faktiskt med förlust, och om de inte har väldigt höga vinstmarginaler är denna order inget som kommer att ändra på det. Ändå stiger aktiekuresen.
Är förväntingarna rimliga? Det krävs troligen fler order på vindparker eller pa Morphics hybridsystem för att företagets värdeökning skall kunna betraktas som substantiell.

The Cleantech Investment List Is Growing

Michael Wood, the US ambassador in Sweden, has put cleantech investments on the top of the agenda. Recently, he added a few companies on his list of interesting Swedish cleantech companies:

• Ageratec
  
• Catator AB
  
• EcoHeater AB
  
• HB Transfer Stockholm
  
• Kockums AB
  
• Midsummer AB
  
• Nilar International AB
  
• Svensk Rökgasenergi AB
  
• Swedish Biogas International AB
  

Readers of this blog will remember that I have written about some of these companies earlier. And having followed Ageratec for some time, I am glad to see they get attention.

There are however more companies that potentially could be included. How about:

• Malmberg Water, water treatment and biogas upgrading
  
• Envac, automatic waste management systems
  
• Hotab, biomass combustion plants
  
• Ecoera, advanced agro-pellets technology
  
• Scandroots, biological waste treatment
  
• myFC, small fuel cells

Small player tactics in the solar technology game

While Norwegian REC may be the most well-known example of Scandinavian solar energy technology, there are some very fine examples from Sweden as well.

However, for solar cell production, economy of scale is often a very important factor. Large investments are necessary for the construction of production facilities, and that creates an entry barrier for smaller players in the field. So how could smaller players tackle this? Well, economy of scale is not a phenomenon that is unique for the solar power tech sector, and lessons can be learnt from other sectors. One way for smaller companies to remain in the competition might be to find a niche market, and being unique or extraordinarily good at something very specific. For solar power, the variables commonly available to make your product stand out are efficiency and price. With cells being more efficient every year, and companies can stand out if they can offer commercial products with efficiency close to the levels reached in laboratories.
Another way to move ahead may be to apply unorthodox production methods to lower the price even in small and medium scale production. By simplifying the process, or applying techniques from other types of industrial production, cheaper cells can be produced, at the cost of lower efficiency.
Swedish company Midsummer are doing just that, hoping to get a share of the flourishing solar market.

Is this the way forward for smaller solar technology firms? Or would they, as in the case of Solibro, be better off trying to excell in quality, performance or efficiency, and associating themselves with a company of large production capacity?

Swedish cleantech investors are making moves at home...

.. slowly. And the steps aren't that big.

But things are happening. Recently, Sustainable Technology Partners Nordic invested 15 million SEK in Swebo from Boden, northern Sweden. Swebo is (was) a family owned company, providing plants and equipment for bioenergy generation, with an focus on efficient combustion solutions of non-refined feedstocks.

And the 15th of June, Capman announced that they, together with SEB Venture Capital and Aloe Private Group, will acquire 80% of the shares in KMW, a company delivering medium-to-large scale biomass CHP plants. The company is based in Norrtälje, north of Stockholm.

Both these companies have in common a long tradition, stable development, quality products of proven technologies on a growing international market. They are no brand new "stars", with a hyped technology and high expectations based un uncertain assumptions. The message is quite clear from Swedish cleantech investors, at least so far.
Let's do some predictions. Next targets may include Hotab-Gruppen. 30 years in the combustion market, with turnkey biomass plants for multiple feedstocks. They also have a clear export focus, especially directed towards the Eastern European market. It is family owned, and venture capital influx would facilitate further expansion. Other potential candidates may be Janfire and Petrokraft.

Companies with a shorter history, and expectations rather than a solid sales record, might find it harder to attract domestic investors. That may affect more or less hyped, innovation-based companies. A few examples: Ecoera, Chromogenics and Lignoboost
(Don't get me wrong, I am not judging their products, only their short term possibilities to access Swedish venture capital.)

Another possible future trend may be horizontal integration, takeovers and fusions between the cleantech companies themselves, which was the case when Nibe acquired Iwabo Naturenergi