Homeland Security and the Department of Defense Initiatives Have Led to Further Innovations in the Renewable Energy Sector
By Ann-Marie Fleming
Reprinted with Permission
As Homeland Security initiatives focus on protecting the current energy infrastructure and establishing energy independence, attention on renewable energy sources has heightened. With approximately 60% of the oil utilized in the U.S. being imported, often from countries openly hostile to the United States, seeking alternative energy sources has become an issue of National Security.
Considering the attention that the renewable energy industry has received since 9-11, it appears that Homeland Security has generated more nationwide interest for renewable energy than had previously been achieved by campaigns promoting environmental health and protection. This increased focus and public interest, combined with industry maturity, has attracted the attention of the investment community further validating the growth potential of renewable energy. The flow of new investments reflects growing confidence in the renewable energy market and its ability to become a profitable and widely accepted industry. The industry has been plagued by barriers such as a general resistance to change and a high degree of entrenched interests, however, as Clint Wilder, Contributing Editor of Clean Edge Inc., a San Francisco based research and consulting firm reporting on the clean technology industry explains, "When you start to see a lot more mainstream corporate and investor interest, such as Toyota and GE, in moving to change things, then you start to see the industry move forward." The venture capital arena has also seen its share of investor interest. As Nth Power's energy-tech venture data reveals, a lower number of deals were completed in 2004, down 14%, however the dollars per deal rose more than 18% to an average of $7.5 million. Total venture investments for the energy-tech sector reached $520 million, up from $509 million in 2003. According to Rodrigo Prudencio, an Nth Power principal, "the growing number of VCs participating in energy-tech deals has led to deal competition and higher investments in the most promising companies."
While there are several renewable energy technologies currently being developed to accommodate the vast array of security needs, Solar Photovoltaics (the conversion of sunlight directly into electricity) has gained a large portion of the Homeland Security limelight. According to Clean Edge research, the market for Solar Photovoltaics (PV) will reach $39.2 billion by 2014 growing from $7.2 billion in 2004. As described by Credit Lyonais, the solar industry as a whole has grown 30% per annum, and with its apparent unswerving government support, solar is expected to continue along this same growth pattern.
A considerable portion of the renewable energy market drive stems from the growing demand for military specific technologies that strengthen, improve and even solve current military deficiencies contributing to the overall empowerment and continued development of Homeland Security. During the American Council on Renewable Energy's third national policy conference Renewable Energy in America: The Call for Phase Two, Admiral Dennis McGinn, US Navy (Retired) and Vice President of Battelle Memorial Institute, drew attention to the potential impact of renewable energy technologies on military applications, whereby increasing efficiencies, the speed and overall agility is improved helping to establish a faster, lighter and more flexible military. In light of military demands PV technology has become a viable solution for energy related improvements. Co-op America's Solar Catalyst Group, in conjunction with Clean Edge Inc., identifies solar PV in their Solar High-Impact National Energy (SHINE) project, as the technology with the greatest short-term potential for provision of environmental, economic and national security benefits. The attractiveness of solar PV is its flexibility, deployability and reliability across a variety of applications. "Military applications are geared around next generation solar technology that is flexible, where solar can be taken into the field and you can have a solar collector similar to a drop cloth so troops can have the ability to communicate from remote areas," said Rodrigo Prudencio. Answering the call for next generation solar technology, according to Daystar Technologies, Inc. (NASDAQ: DSTI), is their Lightfoil™ product, a high performance silicon free Copper Indium Gallium Selenide (CIGS) solar cell on Titanium foil less than the thickness of common household aluminum foil, allowing it to be conformed to curved surfaces with the ability to be cut to shape for complex geometric requirements. Dr. John Tuttle, Daystar's CEO explains, "Lightfoil™ is specifically designed to meet the unique weight, flexibility and high power challenges posed by high altitude airships for border patrol as well as portable and off grid power for Homeland Security applications." With news of Daystar's Lightfoil™ product, the industry appears to be on the right track.
With the increased involvement of the government in renewable energy as a means of strengthening Homeland Security, the scope of protection has expanded. Solidifying and developing domestic energy production and protecting the existing energy infrastructure is a National Security priority. Protection against threats such as terrorism and the movement towards strengthening the military has been an obvious priority of Homeland Security and the Department of Defense, however, their umbrella has recently been extended to include protection against possible power disruptions caused by natural disasters or system related failures. There are numerous events that could potentially leave the country in a vulnerable state with crippling power disruptions as was experienced in the East coast blackout in 2003. As a result, there has been a recent movement towards developing and securing power sources for hospitals, police and fire departments, government buildings as well as traffic signals, street lights, highway signs and other related infrastructure. Solar PV is believed to have the solutions to the nation's need for critical infrastructure and public protection from power failures and natural catastrophes.
The majority of today's solar PV market uses silicon as the base material; however, the industry has long been plagued with the challenge of overcoming the high manufacturing costs associated with producing efficient solar cells. Approximately half of the costs associated with silicon solar cells are incurred at the front end through the energy used to convert the silicon into a crystalline wafer. In addition, silicon is a shared material being utilized by both the computer and the solar industry, with resulting supply constraints from shortages in the amount of sand and quartz being converted into silicon, forcing prices to continue to rise. Compounding the problem is solar's use of second quality silicon, basically using what the computer industry rejects, therefore solar PV manufacturing is reliant upon another industry's waste stream. However, companies such as Daystar who develop non-silicon products using a patented manufacturing method borrowed from the computer hard drive industry, produces high efficiency solar cells using a high throughput low cost process. In the silicon arena, companies such as Evergreen Solar, Inc. (NASDAQ: ESLR) have separated themselves from the rest of the industry by leading the movement towards lower cost manufacturing which has allowed them to take advantage of markets in the U.S., Europe and Japan where the demand for the installation of PV products is growing dramatically.
Resulting from the surging solar industry and Homeland Security involvement is the growth of enabling technologies. Synergistic industries such as opto-electronics feature companies such as Essex Corporation (NASDAQ: KEYW) who are working in conjunction with National Security to create more passive and efficient products; helping to increase the efficiency of utilizing various renewable technologies by increasing the efficiency of the whole electrical industry. "Their requirements for power are much lightened using Essex's technology in the optical network facilitating the use of lighter generation technologies such as renewable solar and others," adds Dr. Leonard. Essex has grown from $4 million to over $60 million in recent years by assisting government agencies to identify and deploy cutting edge technology that enhances both national security and energy efficiency.
The Road Ahead
As the attention and expectations for solar energy and other renewables continue to grow, future avenues for development begin to materialize. The partnering of renewable products for the development and implementation of hybrids, and continued growth in enabling technologies, which are necessary for solar and other renewable products to become more competitive and more available from the grid, are two areas where Dr. Leonard predicts future growth. Other prospects for progression, according to Rodrigo Prudencio include standardized solutions for consumers allowing the installation of on site power without having to utilize expensive customized engineering. A cycle seems to have been created; Homeland Security and the Department of Defense initiatives have led to further innovations in the alternative energy sector and in turn these innovations have pushed military and security programs as well as their technology, to evolve in order to take advantage of these developments. It appears that the future looks bright as the convergence of renewable energy technology and Homeland Security continues, driving market growth, sparking innovation and increasing National Security.
Ann-Marie Fleming Ann-Marie Fleming has an MBA from Webster University and an Honors B.A from the University of Toronto. She has over fifteen years of experience spanning the brokerage, banking, and mortgage industries.