Air Date: Week of December 9, 2005

More and more companies are investing in green energy sources, such as solar, wind power and biodiesel, and business is booming. Host Steve Curwood talks with Dan Reicher, president of New Energy Capital, an independent fund that invests in renewable energy projects.

Transcript

CURWOOD: For years, green energy systems such as ethanol, along with wind, bio-diesel and solar, have been considered risky business propositions. But, increasingly, the renewable energy market is attracting more and more investors. For an overview, we turn to Dan Reicher. He was Assistant Secretary for Energy Efficiency and Renewables at the Department of Energy during the Clinton administration and now heads New Energy Capital, an independent fund that invests in clean energy assets.

CURWOOD: Dan, walk us through these various enterprises that you’re involved with, and explain why they’re important, please?

REICHER: We currently have seven projects under construction, from Maine to California, that will produce clean electricity from sources like wood chips, and also co-generation using natural gas, as well as clean energy, including biofuels like ethanol and biodiesel.

CURWOOD: Ethanol?

REICHER: Well, ethanol today is an industry that produces a fuel from corn. And we’re building two projects, one in Indiana and one in Michigan, that will produce together almost 100 million gallons a year by essentially processing the starch in a kernel of corn and turning that into alcohol, and that alcohol can then be blended into gasoline to be used as a fuel. So it’s a way of both reducing our dependence on oil and also cutting emissions.

CURWOOD: Aside from ethanol, what are the other renewable energy sources that are now seeing some pretty substantial commercial development?

REICHER: Well, there’s quite a number that are seeing great, great market opportunities. One, of course, is wind energy, and that’s frankly because the cost of electricity from wind has come down very dramatically over the last 20 years. There’s also increasing amounts of electricity produced from geothermal power that’s using heat deep within the earth. Solar energy is growing very rapidly…either solar energy used to produce electricity or solar energy used to produce heat.

And then in the biofuels area, in addition to ethanol, we’re also seeing a very rapid increase in the number of biodiesel plants. This is a fuel that, essentially, can replace standard petroleum diesel in trucks, in cars, and even in home heating, with a vegetable-based source of diesel, typically from soybeans or from used vegetable oils.

CURWOOD: For a long time, there’s not been a lot of interest in the finance community in renewable energy. I think a major reason for that has been, well, one wouldn’t really make money. How has that equation changed, if it ever was true?

REICHER: It definitely was true, and I think the good news is we’re probably in the best situation we’ve ever been in terms of the economic attractiveness of renewable energy today. Think about the factors at play. For example, the high cost of fossil fuels, oil and natural gas and coal. Rapidly increasing concerns about climate change. And increasingly dangerous dependence on foreign oil.

And crucially, and I think this is really the big change from ten or 20 or 30 years ago, we’re seeing dramatic reductions in the cost of clean energy technologies. Wind was 40 cents a kilowatt hour in 1980; it’s about a tenth of that today. Solar electricity is down 80 percent. Ethanol and biodiesel are significantly cheaper.

So, in light of all these factors, what we’re seeing is that the mainstream business community is really convinced, I’d say, for the first time that it can make money in alternative energy. So you have big manufacturers like GE that have gotten in to the business. Major oil companies like BP and Shell. Leading investment banks; to think a few years ago that Goldman Sachs would be in the renewable energy business would have been a crazy thought, but they’ve made a big jump into this industry. Big insurance companies like John Hancock. Major pension funds, the top venture capital firms, and, frankly, hundreds of little clean energy companies all over the U.S., indeed, all over the world. So things have really changed, Steve, and it think it’s very heartening.

CURWOOD: Dan Reicher is president of New Energy Capital a former Assistant Secretary of Energy. Thank you sir.

REICHER: Thank you.

Links

New Energy Capital