Since late 2014, the United States domestic energy market has been in the midst of the worst industry downturn in nearly half a century. But investors are lying in wait, looking for the opportunity to jump back in. Optimal timing remains the only factor holding back reinvestment.

With crude oil’s recent price hovering around $50 per barrel, the probability of reaching sustained equilibrium at these prices is low, and the probability of continued decline is even lower. While overall energy market fundamentals continue to raise eyebrows, an investigation of the likelihood of improvement is increasingly necessary. Recent market flux and mergers and acquisitions activity signal a possible revitalization of the stagnant domestic oil and gas industry. Upstream companies, those that search for and extract oil and gas products, are currently attempting to both trim fat to improve their balance sheets and acquire new holdings to position themselves for rapid growth upon further price recovery.

These deals offer insight into possible positive attitude clues from the executive teams behind them. With companies willing to take on extra debt or raise funding through secondary equity offerings, mergers and acquisitions in this area should be taken as a strong bullish sign for investors. In particular, mergers and buyout attempts among smaller midstream companies increased precipitously over the last several months, which hints at the concerted industry effort to consolidate and improve operations efficiency.

However, the largest deals brokered over the summer season are perhaps the most indicative of positive industry sentiment. Recent deal activity by the larger upstream firms has focused on attempts to acquire new oil and gas plays ripe to be highly profitable when the supply glut ends.

Range Resources’ $4.4 billion acquisition of Memorial Resource Development exemplifies just this style of thinking. Memorial Resource Development held promising natural gas reserves in Northern Louisiana, making the company’s buyout essentially an investment in future production for Range Resources.

“The merger [would provide] core acreage positions in the two highest return, lowest cost natural gas plays … [and] complementary assets positioned near expanding natural gas and NGL demand centers.” Drew Cozby, former CFO of Memorial Resource Development explained the rationale behind the buyout given current market conditions to the Dartmouth Business Journal.

EOG Resources’ $2.5 billion merger with Yates Petroleum Company falls along the same lines. EOG Chief Executive Bill Thomas described the addition of Yates’ proven crude positions in Texas’ Delaware Basin and the Powder River Basin of Wyoming and Montana as “paving the way for years of high-return drilling and production growth.” With crude prices still below the breakeven $61 for the Permian Basin estimated by Labyrinth Consulting Services Inc., the deal’s creation of a 574,000-acre position in the heart of the region appears to be either a questionable gamble for the foreseeable future or a bold positioning strategy at the heart of Texas’s most profitable drilling region.

Expected to close by the end of 2016, Anadarko Petroleum’s $2 billion purchase of deep-water drilling access via Freeport McMoRan is also worth noting. Larger energy and exploration companies, such as Anadarko, continue to feel the weight of high proportional debt (38 percent Debt-over-Enterprise Value ratio relative to industry comparable numbers that hover around 28 percent, according to Yahoo! Finance) from low oil prices and are focused on generating the cash flow they need to fund deals that provide access to yet more profitable plays. The Oil and Gas Financial Journal estimates that $3 billion in free cash flow coming over the next 5 years from additional Gulf of Mexico reserves will allow them to do just this, with greater targeted investment onshore in the promising Delaware and Denver Basins.

What is the net result of the previous three deals? According to PLS Inc., merger activity within the industry was the highest in July 2016 at $8.4 billion since the pre-price-crash era, when the highest tally was $12.9 billion in July 2014. Aside from being seismic boosts in production deal flows that the industry has lacked for the last two years, these deals combined are the largest upticks in activity, as big upstream companies vie for exposure to the most profitable onshore regions of US natural gas and crude.

The frenzy among the nation’s largest public energy companies to complete deals in the Texas Permian Basin region has left private equity investment in their wake, according to Mergermarket. The competition for exposure has led to multibillion-dollar entry fees to the region — yet the failure of private equity firms to win deals thus far means that an excess of funds remains for investment around the Permian Basin and elsewhere domestically. Thus, while investments in choice reserves have already raised prices beyond suitable levels for all but the largest buyers, a strong bullish sign for the market remains in the large amount of capital pending deployment.

In terms of market momentum, the laymen investor looking to ride on the coattails of those first to act can only hope the deal frenzy delivers tangibly better equity valuations or higher crude prices. The willingness to spend billions on buying out firms certainly exudes confidence, but this is a market driven overwhelmingly by supply and not demand. With the energy industry’s ability to continually dodge the bullet of demand destruction from the time-consuming and costly nature of finding suitable alternatives, consumers will not need less oil any time soon. Thus, oversupply will continue to be the dominant variable in oil price fluctuations for the near future.

In this vein, broader geopolitics continues to signal that the opportunity for investment is still on the horizon. While positive signals came from the Organization of Petroleum Exporting Countries (OPEC) talks at Algiers, prices may witness the same malaise well into 2017 despite the initial optimism surrounding the output freeze agreement. As per OPEC, its tentative output cap for 2017 will set production levels lower by only 750,000 barrels per day from a previous 32.5 million barrels per day. Considering this number in the context of Russia’s 400,000 barrel per day increase in production for the month of September and the historic tendency for OPEC members to ignore individual quotas, the cutback will probably have relatively minor significance.

Yet, the OPEC decision to decrease output without accord from Russia is confusing. Based on each nation’s disagreements at the last OPEC meeting in April, Saudi Arabia and Iran should be the two states continuing to overproduce as each tries to win market share. In the same competition is Russia, who is now left to fill the void created by OPEC’s decreased production. Moreover, pressure from officials in Moscow will reinforce the predisposition of the country’s oil majors to pump more in order to spur economic growth after the freefall of the Russian GDP and the Ruble over the last two years.

While OPEC’s decision also eliminates geopolitical uncertainty from both Saudi Arabia and Iran through the next year, it preserves the United States’ role as the swing producer nation. Any increase in production by Russia will have to be met by decreased production from the United States, hence its role as the swing state. More specifically, Russia will use increased output as a weapon to force the United States to concede market share, which the domestic producers in the United States will do to protect prices.

From the OPEC arena, the increase in Russian production would have been anticipated, especially given Russia’s attendance at the OPEC talks in Algiers. Thus, much like the Saudi decision to flood the market with excess supply in 2014, Russian overproduction will keep American output subdued despite the promising developments in merger activity from domestic companies.

Should Russia continue to flood the market, as data from its third largest producer Rosneft OAO suggests it will, any gains created by OPEC cuts will be reversed. Worse yet, should Rosneft production levels reach a forecasted 20 percent increase for 2017, the market could be left with an even worse supply glut. As much as US producers would benefit from a return to normalized supply levels, many companies have short positions already prepared for its continuation.

When asked about the geopolitical climate’s effect on the balance sheets of US producers, Drew Cozby, former CFO of Memorial Resource Development, stated his company confronts these challenges by “actively hedging commodity exposure and attempting to lock in well economics … [to minimize] downside exposure.” Yet, confronting a market oversupplied by several millions barrels of excess production each day is nearly impossible.

Potential investors should also understand that these positions will, at best, only partially limit the full downside to Russia’s destructive overproduction, and that the market will probably remain oversupplied. Russia will hold the key to a price recovery in 2017 based on these terms, but the role is one they will not accept. Thus, the tide of domestic optimism and increased mergers and acquisition activity may remain overshadowed for the foreseeable future by these factors as they combine to stagnate the industry’s rebound.

Germany’s plan for “energy revolution” finds its roots as an anti-nuclear rally cry following Chernobyl, when radioactive fallout fell across German soil. In the days following the disaster, radiation levels spiked across the country. Children had to remain indoors, certain agricultural products became inedible and livestock were poisoned.

Generating safer renewable energy became central to Germany’s future goals, and the Energiewende, the so-called “Energy Revolution,” was born.

Now, in 2015, Germany is taking a hard look at its renewable energy initiative, of which is beginning to feel substantial positive effects. The cornerstone of Germany’s Energiewende is their Renewable Energy Act (EEG) first adopted in 2000, which has morphed over the years through a savvy blend of policy, regulation, market-based instruments and financial incentives into the preeminent pathway to renewable energy that we see today in 2015.

As this Energiewende evolves from its early stages, it is attracting global attention. Numerous countries have expressed their interest at following the Energiewende blueprint as their future energy plan. The Germans have expressed their faith that Energiewende is indeed working as planned, and so the signs are promising.

So what is the initiative exactly? Energiewende is Germany’s plan to comprise its energy portfolio entirely of renewable energy and sustainable development enterprises. It is a brazen move set out to tackle climate change and domestic energy security. If all goes as planned Energiewende would abolish any dependency on coal, fossil fuels or foreign energy.

The plans dictate that by 2050, there will be an unprecedented 80 to 95 percent domestic greenhouse gas reductions, a 60 percent market share for renewables in the energy marketplace and a jump in electric efficiency by 50 percent.

Compared to the less ambitious and politically tentative emission reduction agreements by China and the US, Energiewende is a “get-it-done” initiative. But there is risk involved in such dramatic steps. Energiewende takes Europe’s largest thriving economy from its conventional nuclear and fossil fuel energy system to an efficient renewable-based system over a remarkably short timeline.

Any project of this magnitude has its challenges. But unlike many projects, it has the unwavering support of a resolved German people. Historically, economic development has trumped environmental concerns both in terms of policy and political priority, but despite the fiscal concerns, Energiewende seems to be working at the 2015 checkpoint stage. Aside from its more noble goals, Germans want a first-to-market advantage where high value technologies are stamped “Made in Germany” as the world moves towards renewable energy.

At the epicenter of the Energiewende is Germany’s Renewable Energy Act (EEG). EEG is predicated on three principles to bring about the energy transformation. The first is a “feed-in tariff” that guarantees a fixed price per kilowatt hour (kWh) and priority access to the grid for renewable firms, removing the investment risk in renewable energy. The tariff is funded by the second element, an EEG surcharge (currently set down at 6.17 cents per kWh). The third element is capping the tariff, which provides for a steady reduction in the feed-in tariff over a 20-year lifespan, established to reflect the anticipated economies of scale and numerous cost-saving technological improvements.

The effects are more widespread than earlier proponents had hoped for. Since 2000 the price of electricity from an installed photovoltaic (PV) system has fallen on average 13 percent per year. During that time, Germany’s demand attracted Chinese manufacturers, driving down the initial investment and making households not only consumers but also producers. As a result, there was a shift from centralized large-company oligopolistic energy producers to highly efficient distributed production of grid power. Japanese leaders have also expressed a great interest in using the German Energiewende model for its own energy transition.

While many countries were moving towards renewables by requiring utility companies to produce more green power under quota system style policies, Germany’s feed-in tariff system afforded virtually any worthwhile project to go up quickly and as a result the ownership of power production transfers to the citizenry. It has often been referred to as the “democratization” of power. Today, more than half the investment in renewable are in the hands of small investors, greatly strengthening small and mid-sided business, while providing jobs and tax revenues from empowered local communities generating their own renewable energy. This ruralization of energy has strengthened the German economy, improved its energy security and is stabilizing the cost of power, as it is unfettered by fluctuating commodity costs.

The feed-in approach has significantly impacted Germany’s place in renewable energy, but they pale in comparison to their implications for international markets, especially developing nations. Over the past few years they have inked deals with India, Morocco, Bangladesh, Nigeria, Montenegro and Vietnam, among others. Many of these deals involve loans ranging from the hundreds of millions to several billion in euros, all in the interest of implementing more renewable and efficient means of creating power.

In developing countries, the switch from a large-scale power plant to a large number of smaller generators, where the citizens and community get involved, holds the greatest promise. In countries like India, almost half the household population is off the grid and without electricity. There is increasing evidence that decentralized renewable energy is the only practical measure to ensure that all its people, particularly in more remote villages, have access to reliable power and at affordable rates.

In the States we are just beginning to realize how affordable this new brand of renewables can be. The technological advances and economies of scale found in Germany have drawn attention from US domestic power companies. Texas utility Austin Energy recently signed a deal where it now purchases electricity from Sun Edison under a 25 year deal for record setting 5 cents a kilowatt-hour. According to Austin Energy the move is expected to lower rates for customers, as solar rate compares to averages of 7 cents for gas on the low end, and to 13 cents for nuclear on the upper end. The deal was originally devised to purchase 50 megawatts, but was bumped to 150 megawatts for obvious reasons. Austin is currently breaking the 25 percent renewable energy mark and plans to reach 35 percent by 2016. Areas like Texas are in an excellent position to leverage solar power given the abundance of sunshine, especially when compared to Germany whose position is similar to the Pacific Northwest and Alaska.

Energiewende still faces challenges, and experts and policy makers are watching it closely. In spite of all that has been accomplished, a wholesale adoption of Germany’s blueprint leaves some questions unanswered. Revisions to the EEG were enacted in 2014 to address developments within the plan with unforeseen consequences. But as the German’s have shown time and again, such obstacles can be overcome. This initiative is transforming energy investments, accessibility to renewables and most importantly, capturing global attention and inspiring similar projects.

This article was featured on the DBJ Instablog on Seeking Alpha.

Congress recently passed a bill confirming, for the first time that “climate change is real and not a hoax”. With that out of the way, America can officially begin to view the future of energy in a new light.

According to recent data from the U.S. Energy Information Administration, fossil fuels accounted for nearly 82% of America’s energy consumption, a number that has remained steady over the last few years. Recently the Keystone XL has become central to a heated debate over the environmental costs versus economic benefits of natural gas.

The price per barrel of crude oil has dropped to its lowest since 2008-2009. Fluctuating between 40 and 50 dollars, this figure is the result of oversupply by OPEC nations and the refusal of other producers to curtail production.

Graph courtesy of

At the same time, the American government continues to wrestle with the contentious Keystone XL bill, a proposal that has environmentalists up in arms.

Keystone XL is an extension of North-American oil company TransCanada’s existing Keystone pipeline. The system covers nearly 3000 miles, delivering Canadian oil to refineries in the mid-west and southern United States.

The proposed extension is a shorter, wider, and more direct route from Alberta to Steele City, Nebraska that passes through sensitive environmental areas, sparking controversy.

Environmental groups point to an array of concerns. The threat of oil spill and leakage raises alarms for the highly sensitive landscape that includes one of the largest reserves of fresh water in the world, the Ogallala Aquifer.

Source: National Atlas
Source: National Atlas


Another worry is the extraction of crude oil from Canada’s oil sands. These tar sand regions provide a majority of the product running through Keystone XL, and research has shown that removing this crude yields more greenhouse gas emissions than conventional methods do. According to the Pembina Institute, a think-tank on Canadian energy, “average greenhouse gas emissions for oil sand extraction and upgrading are estimated to be 3.2 to 4.5 times as intensive per barrel as for conventional crude oil produced in Canada or the United States.”

The project will reportedly transport 830,000 barrels of oil a day and create jobs for people in the area, although the exact number is under heavy dispute.

As of February 2015, both Congress and the Senate have passed different versions of the bill, but President Obama maintains his position against it, having vetoed the proposal once and publicly demonstrating willingness to do so again.

The debate on Keystone XL over the past few years added a new wrinkle with today’s plunging oil prices. While the fluctuations won’t stop the production from current tar sands, a prolonged slump may inhibit future production. According to Amy Harder of the Wall Street Journal, the most efficient existing oil sands have breakeven points below $40 per barrel, while new production areas may require up to $90 per barrel.

However, TransCanada’s CEO, Russ Girling, recently spoke out against these concerns, saying that “Keystone XL is a project that was needed when the price of a barrel of oil was less than $40 in 2008, when we first made our application, at more than $100 last year, and around $45 today.”

Experts agree that the project still makes economical sense, but it is no longer a pressing necessity. Recent data from the federal government shows that the US imported more than 3 million barrels of oil from Canada per day, and U.S. refiners still hope to see the infrastructure built.

Bill Day Valero, spokesperson for Energy Corp., the biggest oil refiner in the United States, recently stated that the “ample supply of inexpensive crude oil would offset declining supplies from fields in Mexico and South America. That’s the case no matter what the benchmark price of crude is today.”

The fall of oil prices isn’t over. Most analysts believe that the price per barrel has the potential to drop to $30, and experts from Citi predict that prices will tumble even further before producers begin to limit production. The passage of Keystone XL will only contribute to the supply.

For the foreseeable future, oil prices will continue to plunge and eventually bottom out. Reliance on fossil fuels will decrease only infinitesimally over the next few years, while demand will remain across the globe. Barring the rapid introduction and commercialization of a viable alternative energy source, the price per barrel will recover. The question is how much the recoup will be.

This article was featured on the DBJ Instablog on Seeking Alpha.

The idea behind patents makes intuitive sense. If a company spends significant resources on researching a new product, it should be granted temporary exclusive rights to its findings. This prevents rivals from stealing those results and profiting from them without paying any costs. Otherwise, the innovative firm would end up losing money for developing new technology.

Keeping this in mind, the Toyota Motor Corporation caused quite a stir when it announced this past January that it is inviting its competitors to use Toyota’s 5,680 patents on hydrogen fuel cell vehicles for free until 2020. After all, a patent is by definition protective. So what’s going on? Have the execs of the car company lost their minds? No, it turns out that Toyota’s move to share its patents is a gamble, but it’s not irrational. The challenges of hydrogen production and distribution have incentivized the company to give away its patents in order to give hydrogen vehicles the “critical mass” it needs to overcome these problems and enter the mainstream market.

Understanding hydrogen vehicles 

To understand hydrogen vehicles, one must first understand the process of electrolysis. Electrolysis is the application of a direct electric current (DC) to induce an otherwise non-spontaneous chemical reaction. For example, the electrolysis of water separates water into its component elements: hydrogen and oxygen.

Hydrogen vehicles rely on fuel cells to perform reverse electrolysis, taking in hydrogen as fuel and oxygen from the surrounding air to produce electricity. They also produce as exhaust water vapor (pure enough to drink), meaning hydrogen vehicles emit no greenhouse gasses whatsoever. Compare this to the 1.8 billion tons of carbon dioxide gas most vehicles release, which the Environmental Protection Agency reports accounts for 28 percent of all greenhouse gas emissions in the United States (second only to power plants). And while a kilogram of hydrogen has the same chemical energy as a gallon of gas, fuel cells are much more efficient than combustion engines such that, functionally, a kilogram of hydrogen is equal to more than six gallons of gas.

Hydrogen vehicles even have advantages relative to hybrids and electrics. Because fuel cells are small and thin, they can be stacked for vehicles of greater size – unlike hybrids, which are restricted by their heavy and bulky batteries. Hydrogens can go farther between refuels than most electrics can between recharges: Toyota’s Mirai has a range of 300 miles, compared to 265 miles of Tesla’s Model S (by far the top range for electrics). In addition, hydrogen vehicles can be refueled in three to five minutes, whereas even the Tesla superchargers require at least 20 minutes for a full charge. Given all this, it isn’t surprising that many experts and industry leaders see hydrogen vehicles as the future of transportation.

Promising but problematic

 The process of electrolysis has been well understood since the 18th century, so why have hydrogen vehicles entered the market only now, two decades behind hybrid vehicles? For much of that time, hydrogen vehicles have been too expensive to manufacture to be of consumer interest. Hydrogen fuel cells need expensive platinum as a catalyst in order to perform reverse electrolysis fast enough for the vehicle’s operation. Furthermore, hydrogen is highly flammable and, like all gasses, expands with rising temperatures (such as those found under the hood of a moving car). Luckily, technological advances have lessened the amount of platinum required, and safe ways of containing hydrogen have been developed. According to Toyota, the cost of making key components of the vehicles has fallen 95 percent in the past seven years, allowing them to sell the Mirai at $57,000 (less than a Model S) instead of the $100,000 it projected in 2008.

But no matter the cost, a hydrogen vehicle will need hydrogen. And although it is true that hydrogen is the most abundant element on the planet, the overwhelming majority of it is free in the atmosphere. Therefore, hydrogen must be derived from other substances.

The two main ways of producing hydrogen are electrolysis of water and a process called steam reformation, in which natural gas is reacted with high-temperature steam to separate out the hydrogen from the hydrocarbons in the gas. For obvious reasons electrolysis can be ruled out, leaving steam reformation. But since natural gas is a fossil fuel, and the point of hydrogen vehicles is to reduce dependence on fossil fuels and their consequences, steam reformation isn’t preferable either.

And even if this challenge was overcome, there exist little infrastructure for delivering that hydrogen. Gas stations are of course everywhere and the number of charging stations for hybrids and pure electrics continue to increase, but there are virtually no hydrogen fueling stations. As of when this article was writen, fewer than 70 such stations exist in the entire United States –most of which are in California, where the Mirai will begin to sell later this year. Clearly, having a hydrogen car is one thing, but being able to drive it is another.

“Critical mass” solutions

Fortunately, there is work being done on both of these problems. On the hydrogen production front, new technologies such as fermentation, photobiological water splitting, and renewable liquid reforming are being developed. A hydrogen fueling station in Fountain Valley, a suburb of Los Angeles, has already employed one of the newest techniques. The station uses human waste from a nearby wastewater plant as its hydrogen source by adding bacteria to turn waste into carbon dioxide and methane, which is then converted to electricity, heat, and hydrogen.

More recently, scientists at the University of Glasgow published a paper in Science this past September explaining how they created a method based on the electrolysis of water, which produces hydrogen 30 times faster than the current best processes. This method needs much lower currents than traditional electrolysis, making it possible for renewable energy to power the method and thus making the use of hydrogen vehicles completely emission-free. But while these results are promising, they will require a significant amount of capital for further research and implementation testing before they can be commercialized.

As for hydrogen delivery infrastructure, California has invested $200 million to build 100 hydrogen fueling stations, and is willing to invest more in stations if successful. Toyota has also loaned $7.3 million to FirstElement Fuels, Inc., to build 19 stations in California. The company is also working with Air Liquide S.A. to build 12 more stations in New York, New Jersey, Massachusetts, Connecticut, and Rhode Island, where it will begin selling the Mirai next year. Though these prices sound high, they are actually cost-competitive with gas stations on a cost-per-mile basis, since fewer are needed due to the higher efficiency and thus greater range of hydrogen vehicles. As long as the state or private companies are willing to invest in building these stations, the country could conceivably go hydrogen.

But the key words here are “as long as”. If hydrogen vehicles remain a fringe technology, it risks being pushed out of the alternative niche by hybrids and pure electrics, which already have established infrastructures. Furthermore, hybrids and pure electrics lack the problem of energy source production, so they are already favored and more likely to be further developed. Simply put, if hydrogen vehicles don’t gain significant awareness soon, they will be outcompeted by their alternative bedfellows.

This problem explains Toyota’s actions. Although a major player in the auto industry, Toyota understands that its bid in hydrogen vehicles alone is not large enough to draw the critical degree of attention needed. By giving free access to its patents, Toyota effectively lowers other companies’ entry costs by paying for their research in hopes of interesting more automakers, cell part suppliers, and energy companies to enter the market. This would in turn increase the volume of hydrogen vehicles and related support, which could push hydrogens into the spotlight and attract investors and capital to solve the production and infrastructure challenges discussed above. At or near that point, which Toyota judges to be in five years according to the duration of its offer, Toyota will close off access to its patents and begin focusing on its own research and business. Essentially, Toyota believes that the cost of bringing hydrogen vehicles into the spotlight is more than its profits if hydrogens does not become mainstream.

This isn’t the first time Toyota has employed such a strategy. In 1997, Toyota licensed its patents for hybrid technology to Ford, Nissan, and others, who paid for that access. As Toyota hopes will happen again with hydrogen vehicles, this move increased the volume of hybrid activities and steered significant attention. And sure enough, when hybrids entered the mainstream market in the late 2000s and early 2010s, the Toyota sold nearly a quarter million Prius a year, making the Prius the world’s third best-selling car make in 2012. Toyota is hoping for a repeat performance with hydrogens.

Right now, hydrogen vehicles are starting out small. Toyota plans to sell 700 Mirais this year. Hyundai, which is preparing to sell its Tucson, plans to sell just 60, and Honda just entered its final marketing stages. Meanwhile, General Motors, Ford, and Audi are all in the development stage on their own hydrogen vehicles. As Toyota expands the Mirai market to the five states listed above next year and the other automakers make their own market entrances and extensions, time will tell whether Toyota will succeed in pushing hydrogens into the mainstream market with its strategic loss plan.

An Idaho-based company might just have the solution to the issues that currently exist for solar energy. Solar Roadways, founded in 2006, came up with the ingenious idea to replace all United States paved roadways with durable and versatile hexagonal solar panels. On May 18, 2014, a nonmember of the Solar Roadways Company released a video outlining the benefits from such a system, including easy maintenance, ability to be heated in cold climates, and versatility. “SOLAR FREAKIN’ ROADWAYS!” was heard all around the internet not even a week after the technology’s promotional video was released. That was just the beginning.

Right now, the United States is facing the issue of deciding between maintaining poor infrastructure and updating it. The government, on both national and state levels, has not been able to make a proper call yet. As a result of this indecision, highway associations, and departments of public works across the United States have been making slapdash repairs that don’t last nearly long enough and end up causing more issues in the long term. The American Society for Civil Engineers (ASCE) released a quadrennial report in 2013 grading each sector of America’s infrastructure. Since solar roadways have the potential to affect electrical, bridge, and roadway infrastructure, the main focus in funding changes will be centered on those three aspects. The Federal Highway Administration estimates that $170 billion must be spent annually through 2020 to significantly improve the conditions and performance of roadway infrastructure in the United States, representing an increase of $69 billion over current spending. Additionally, the Federal Highway Administration estimates that $20.5 billion must be spent annually through 2028 to improve overall conditions, an $8 billion over current levels. The ASCE estimates that between distributing energy and transmitting it from generative sources to distribution chains, the United States will spend close to $94 billion annually through 2020, a substantial increase from the current $63 billion. All of these estimates will amount to a grand total of $108 billion in extra funding per year, and is simply estimated to be the amount necessary  for the United States to catch up to, not exceed, current infrastructure standards. Conversely, The Economist in June of 2014, reported that implementing a system to replace the entirety of America’s roadways would cost an estimated $1 trillion. Furthermore, this figure does not take into account the research and development that would be necessary in order to implement solar roadways. Put another way, it is without a doubt that, in terms of principal costs, it would be more convenient and cheaper to maintain the status quo for roads in the United States. If Solar Roadways was simply a paving material, it wouldn’t be the cheaper option to  cure the United States’ infrastructure crisis.

Luckily, Solar Roadways has possibilities that far exceed those of asphalt and concrete. First and foremost, solar roadways would provide a national path towards energy independence. According to 2013 figures from the Energy Information Administration, fossil fuels, the majority of which are imported, make up 67% of the electricity generated in the United States. Constantly functioning solar panels, covering 31,250 square miles of roads, parking lots, driveways, playgrounds, bike paths, and sidewalks in the United States could change those proportions. According to Solar Roadways’ own estimates, their technology spread across the country could produce over three times the electricity that we currently use in the United States every year. Solar roadways would thus not only allow for sustainable energy independence, but would also allow for enough of a cushion to maintain energy independence even in the most drastic of situations.

Secondly, Solar Roadways could help improve energy efficiency in the Unite States. One current large issue with energy production in the United States is that energy grids are removed from energy production, especially when it comes to nonrenewable sources. However, the way solar roadways are designed would allow for the grid to run concurrently with energy production in an efficient way and could help the United States  control overall costs of energy.

Beyond the primary issue of energy, Solar roadways could improve transportation infrastructure in several other ways. Solar roadways could significantly improve highway safety. Current levels of accidents per year on asphalt roadways hover around 6.5 million accidents. Through the use of heated and illuminated panels that are easily replaceable and have storm drains installed, roadways will have increased visibility. Giving drivers more control on roads during rough driving conditions should improve overall highway safety.

Finally, Solar Roadways would have the advantage of easy recyclability. The tiles created by Solar Roadways, from the glass surface to the inner components, are entirely recyclable. In contrast, concrete and asphalt recycling are labor and capital intensive processes that are not easily undertaken by any company or government institution that seeks to repave roads, sidewalks, or the like.

A report from the National Economic Council and the President’s Council of Economic Advisers from July of 2014 illustrates that “a high quality transportation network is vital to a top performing economy.” It has already been established that the United States’ transportation infrastructure is of poor quality and may in fact be a drag on economic growth and productivity. The process introducing solar panel laden roads may also prove to be a prime opportunity for the federal government to implement more stringent quality standards on infrastructure.

Of course there remain many large issues and question marks as to the feasibility of implementing a nationwide conversion to Solar Roadways. The largest issue that arises when switching a major amount of asphalt and concrete production to solar panel production is labor displacement. The asphalt production industry employs somewhere around 300,000 Americans, and the concrete production industry employs close to 170,000 Americans. Solar roadways thus needs to make up for close to 450,000 jobs in manufacturing, engineering, and maintenance if it can be a viable alternative for the United States to accept the technology and continue job growth. Unfortunately, projections on exactly how many manufacturing and engineering jobs Solar Roadways can produce  are unavailable due to a lack of empirical evidence.

Furthermore, solar roadways have only been produced and tested as successful prototypes in a small shop setting in Idaho. They have not been produced on a large scale. Solar Roadways has yet to analyze the impacts that different weather and geographic conditions can possibly have on their product. Making the move to mass production will also be a significant challenge. These specialized solar panels are meticulously crafted on a small scale that has not yet been translated into an industrial level operation. Before solar roadways can be implemented, the company needs to iron out all of the possible issues that can occur during mass production or implementation. While issues that can arise by the end of the prototype phase will be figured out, the fact remains that the technology is not viable in its current situation and cannot be adopted by the United States as is.

Finally, strong political interest groups may also prove to be a stumbling block for the energy infrastructure startup. Established industries such as asphalt and big oil have political clout and are certain to lobby against roadways. Oil is one of the largest industries in America and possessed deeply entrenched political power in Washington, rivaled only by the American Medical Association and the National Rifle Association. Solar Roadways, if it wants to find a solid place in America, will thus have to face and combat considerable political clout.

There is no doubt that Solar Roadways has great prospects as a technology. It will help the world reduce its carbon footprint and dependence on non-renewable sources of energy. Solar Roadways offers important improvements to the current system of highway infrastructure ranging from safety to energy efficiency. While nothing is yet concrete for solar roadways in terms of implementation, the potential for solar roadways, especially in a country with thousands of miles of roads like the United States, is limitless.

Forty years ago, long gas lines and sharply rising energy costs caused every president from Nixon to Obama to call for United States’s energy independence. Five years ago, Russia’s energy development made it the largest energy producer in the world. Today, political problems in Nigeria, Libya and Sudan, in addition to other Middle East strife have caused a substantial rise in energy prices.

Hydraulic fracking, horizontal drilling, and other advances allow rigs to tap oil and natural gas deposits locked in shale. Since 2009, the United States increased oil production 135.6%. Texas shows the strongest increase, by nearly 225%. For Texas, that means an extra 3.72 billion barrels yearly. North Dakota saw increases by 152.2% and states like Pennsylvania, previously producing nominal amounts of oil and natural gas, have become energy production giants. Unemployment in Texas and North Dakota dropped concurrently. Pennsylvania’s energy workers enjoy salaries $20,000 higher per year than the average Quaker state citizen.

John Kirby ’16 aspires to enter the energy industry, taking the last three terms off to find a job “rough-necking” or a related job. After a long search for work, Kirby settled in Odessa, Texas working for a parts manufacturer called Barnhart Bolt and Special Fasteners. He explains, “Getting a job on a rig is tough. It’s dangerous, employers do not want injuries, but the pay is exceptional.” For entry-level rough necks, compensation is about $18 an hour. During a typical seventy-two hour week, workers make about $1,600, with time and a half over 40 hours. People come from across the country to work in previously economically depressed areas of Texas and North Dakota.

The boom in oil dramatically affects local economies beyond the rigs. Kirby explains, “Halliburton, Schlumberger, Baker Hughes share the same interview question: do you have a commercial drivers license.” Truck drivers are compensated between $100,000 and $200,000 a year, depending on the hours they work. Like roughnecks, marginal salaries increase dramatically as the hours increase, and drivers also come from across the country. In places like North Dakota, “roughnecks and drivers sleep in their truck due to lack of infrastructure.” To boot, the overwhelming influence of oil trickled down to local businesses, and such businesses quickly become national.

John Kirby started working at Barnhart Bol in May. Over the next three months, Barnhart started sending parts and pipe all over Texas, expanding beyond its typical deals with Odessa. In more recent months, they shipped parts and pipe to Ohio. Many manufacturers grew dramatically due to the boom in oil. Collectively, fracking, drivers, and manufacturing companies trickle down to other local businesses.

Fast-food chains, grocery stores, and even bars all experience substantial increases in business. Construction companies in North Dakota near the Bakken Oil Field are constantly at work, building infrastructure to accommodate the influx of immigrants to North Dakota. Because of high wages associated with energy, local businesses must match high salaries. John Kirby describes, “Even McDonalds offers jobs paying $15 an hour.” He continues, “If you are unemployed in Odessa, you really just don’t want a job.”

The energy boom affecting local economies are feared to be short-lived; however, labor opportunities are sustained through other industries. Areas depleted of oil still have manufacturing plants that no longer just supply parts for local rigs, but rather, drilling sites nationwide. Moreover, roughnecks and truck drivers are adaptable, and they desire to work wherever there is opportunity.

The United States is scheduled to surpass Russia as the world’s largest energy producer within the next few years. In the race to dominate energy, the United States utilizes hydraulic fracking technology to increase production and create jobs. Much of the growth results from the private sector, independent of Republican or Democrat allegiances. Fossil fuels may not generate clean energy, but they are creating jobs faster than we can anticipate. Kirby concludes, “Fracking is happening. We (the United States) are the best at it, we have the best technology, and we know what to do with it.” The sweaty, oily, often four fingered hands of roughnecks are carrying the United States towards a dream of energy independence.

Where can the U.S. and China collaborate in renewable energy? With the state of competition between the two countries both in the Olympics and in other arenas, areas for collaboration may seem dim, but actually there are possible areas for doing so.

Definitely there is a need for collaboration to make renewables reach grid parity, meaning that renewable sources become just as cheap as fossil fuel based sources. Feed-in-Tariffs, or fixed prices per kilowatt-hour that have been preset in order to attract investors in solar and wind have been under attack in many countries. This despite the fact that external impacts for coal and fossil fuel power plants (such as public health respiratory impacts ) have not been captured in their energy pricing, and their subsidies remain untouchable at the moment.  For example, ask coal plant investors about the health impact of emissions and the handling of byproducts such as coal ash, and many will say it is not their concern. A carbon tax should capture these fossil fuel external impacts, but as public opposition in Australia shows, implementing a carbon tax is not a cake walk.

Publicly funded government research institutes, such as the Department of Energy Sandia and Lawrence Livermore laboratories are probably not high on the list for collaboration venues. Unwarranted collaboration is one ticket for scientists to be charged with improper handling of classified information, such as what happened in the case of Dr. Wen Ho Lee, who was eventually cleared by the courts. Anything is possible of course. Nixon did fly to China in the seventies for his pingpong diplomacy, but surprises like that are either fodder for films or novels. If it happens, it happens, but don’t count on secret American or Chinese government labs suddenly ushering in a new spirit of cooperation.

Nevertheless, research however in public and private universities like Tsinghua and Dartmouth should be strengthened. Jointly authored journal papers in technology areas like solar, wind, hydro, biomass, energy efficiency and other energy topics are probably the most basic way of encouraging some type of collaboration. The exchange of scientific ideas should be unfettered in order to march forward – a brilliant and breakthrough idea can now come from anywhere in the world. For example, the efficiency of polysilicon based solar photovoltaic panels are now hovering just above the 20% range. Breakthroughs in making solar photovoltaics more efficient, such as combining photovoltaic technology with the Seebeck effect on the same wafer, are possible areas that scientists can collaborate on.


Standards are another area of collaboration. In the semiconductor industry for example, many chip companies realized early in the ballgame that it does not make sense for wafer sizes to be different, as the resulting lack of standardized deposition tools will simply redound to unwarranted expense for all. So standards result in equipment and materials that can be marketed to different companies, resulting in cost savings across the entire sector. At the moment, the situation in the solar photovoltaic sector is that some companies still resort to custom built manufacturing equipment, which is basically what made the early days of the chip industry uncompetitive.

Then there is of course private company research, both in core technologies owned by the company and technologies that reside in its key suppliers. Microsoft, Intel and other Fortune 500 companies have their own R&D labs in China, employing Chinese scientists who work closely with their American counterparts. Collaborative research in this framework is determined to a large extent by corporate strategy, including access to markets. Collaboration within companies in the same sector, such as solar, will probably happen to a larger scale in the future in the same manner that American chip companies banded through the SEMATECH alliance to improve their competitiveness. However, there is a very low likelihood that this sort of cooperation will happen between the U.S. and China, except perhaps for a couple of non-core business and technology areas.

Related to this is the global supply chain for renewables. Some materials, like polysilicon, are important for the manufacture of solar panels. While the cost of this commodity item is driven by supply and demand, and made efficient by the many decades it has been there and by the number of companies who use it, nevertheless any opportunity to lessen its cost should be examined, if at all this is still a concern. Having reliable strategic suppliers to the wind and solar sector, or a framework for developing these suppliers, can be a good area for collaboration.

Manufacturing research, both in the U.S. and China, need to be coordinated – if not shared. While asking for sharing may be difficult as there are intellectual property issues to contend with, a certain framework that allows different creative minds to dance to the same tune will always be helpful. For example, manufacturing cost savings developed by Chinese manufacturers will not help if new American technologies will not be manufacturable using those new technologies. Again, having industry standards that companies actually comply with is key.

Access to markets, in order for renewable energy companies to grow, is important. No one will pay a corporate research scientist any money to do research if there is no business. Therefore, one area of collaboration for both China and the U.S. is unfettered access to markets. This is easier said than done of course – the new U.S. tariffs on Chinese wind turbines, and earlier on solar panels, undermines access to markets.

Finally, there should be common support for the Green Fund by both the U.S. and China. Most of this Fund will be used to pay for capital expenditures in renewable technologies like wind, solar and others. By having this money available, it can jumpstart a market that will signal to renewable energy companies, be it in China or the U.S., that the slack from the slowdown in Carbon Development Mechanism (CDM or “carbon credit”) funds will be taken over by the Green Fund. Once economies of scale have taken over – with demand for renewables coming from many parts of the globe, the current opposition to renewables determined mostly by its current cost should go away, and ensure healthy growth for all renewable energy sectors such as solar and wind in the years to come.

Dennis Posadas is an international fellow (based in the Philippines) of the Climate Institute Center for Environment Leadership Training (CELT) and a former engineer/analyst for a leading U.S. semiconductor firm. He is also the author of Jump Start: A Technopreneurship Fable (Singapore: Pearson Prentice Hall, 2009) and Rice & Chips: Technopreneurship and Innovation in Asia (Singapore: Pearson Prentice Hall, 2007)

The economic crisis has caused many companies to reevaluate their business practices in order to cut unnecessary expenditures. Pursuing sustainability and green business practices in the workplace has become an important focus in the drive for increased efficiency. In order to understand the developing merge between the corporate sphere and the environmental sphere, the Dartmouth Business Journal interviewed four very diverse, yet equally insightful experts and asked them to share their opinions on corporate sustainability.

Steven Chu | Secretary of Energy, US Department of Energy 

Steven Chu, current US Secretary of Energy under President Obama, has been instrumental in directing the US government to invest in clean energy and address the global climate crisis. With a double major from the University of Rochester and a PhD from UC Berkeley, he went on to win the Nobel Prize in Physics in 1997. As Secretary of Energy, his current endeavors are focused on research and development of biofuels in order to reduce US carbon emissions.

Dartmouth Business Journal (DBJ): How can US business leaders implement sustainable practices in the corporate sector?

Steven Chu (SC): I think that green corporate behavior pays off in the long run. There are some companies that pursue sustainability genuinely, but there are many that only want to appear as though they do. Skilled and visionary leadership at the executive level is incredibly important in carving a successful approach to sustainability. Not only do shareholders prefer to invest in companies implementing green practices, these companies enjoy greater profits due to increased efficiency. If business leaders want to stay competitive in the rapidly evolving economy, they need to be ready to look forward and  face the challenge to run their companies sustainably head-on.

DBJ: Are companies that promote their sustainable practices at risk of intellectual property infringement by foreign competitors?

SC: This is a problem that we were very wary of; similar practices have been carried out by other nations regarding high-speed rail, coal, and now, nuclear energy, where they examine the systems that we have and think of how to improve. In terms of developments, a gap between China and the United States is quickly growing as it’s now become one of the top five patent producers in the world. However, it all comes down to the behavior of a country’s researchers. Some researchers prefer to remain secretive about their work, and others, who are excited and willing to share their work, collaborate to reach success more quickly. In my experience, the latter has been routinely more useful in creating change and progressing in this race for clean energy. Sure, there are chances that you will be ripped off and copied, but those are sometimes the risks you have to take to make a greater impact in the field.

Durwood Zaelke | President & Founder, Institute for Governance and Sustainable Development

In addition to his work at the Institute or Governance and Sustainable Development, Durwood Zaelke is the Director of the International Network for Environmental Compliance and Enforcement. In 2008, he was given the award of “Champion for Protection of Climate” by the U.S. Environmental Protection Agency. He currently teaches at American University Washington College of Law where he is the Director of International and Comparative Environmental Law. He has performed extensive research on fast action mitigation responses to climate change as well as on resolution for trade and environment conflicts.

DBJ: If efficient management and sustainability are connected, why do some profit-maximizing businesses degrade the environment?

Durwood Zaelke (DZ): Short term profit usually overwhelms sustainability, unless governments change the incentives, through regulatory mechanisms, best practices, capacity building, training, funding or other financial incentives.

DBJ: Does sustainability always make good business sense?

DZ: Some sustainability strategies provide high rates of return in the short term and are easier to convince managers to follow. However, even where you can make money with a sustainability strategy, you have to first get the attention of management, and then get the initial resources to get the strategy in place. Most managers are already busy and not looking for new work. The bottom line is that governance really matters. Some governance can be internal, but government-provided governance can truly change corporate culture.

DBJ: What steps can the future business leaders of America take to implement sustainable practices in corporate sector?

DZ: Future business leaders need to be futurists, who see the major forces affecting global business, including climate change, which will show its impacts in an increasingly powerful way in the coming years. It would be malpractice for a business leader not to educate him or herself about the impacts and risks of climate change, even if he or she doesn’t believe the science. Climate will affect water supplies, and food availability, Climate will affect the availability of other raw materials. A reasonable corporation should study, monitor, prepare, and progressively implement both a defensive plan to prepare for coming impacts, but also an offensive plan to start reducing the behavior that is causing climate change (whether in the form of emissions, sources, or sinks). There will be future liability for corporations that do not act in a reasonable way to mitigate and protect against climate change. This liability may be statutory, or it may be common law.

Todd Larsen | Corporate Responsibility Director, GreenAmerica

Todd Larsen oversees Green America’s efforts to encourage businesses to adopt greater social and environmental responsibility and to support socially and environmentally responsible public policies. Green America is the leading green economy organization in the US. Founded in 1982, this national membership organization works to harness economic power-the strength of consumers, investors, businesses, and the marketplace-to create a socially just and environmentally sustainable society.

DBJ: Are sustainability and corporate social responsibility linked?

Todd Larsen (TL): At Green America, we consider sustainability to be core to a company’s corporate social responsibility (CSR). We have a broad view of sustainability that encompasses both social justice and environmental responsibility, and we expect corporations to serve all of their stakeholders, including consumers and workers across their supply chain. Many corporations today focus on short-term profits at the expense of the environment, worker’s rights, and providing safe products and services. However, there is increasing evidence that sustainable companies that perform better on CSR measures have better long term financial performance. As a result, all stakeholders, including shareholders, would benefit from a company pursuing sustainability.

DBJ: Can a multinational company ever be fully sustainable?

TL: There really is no such thing as being fully sustainable. For all companies that want to pursue sustainability, it is a constant process of making improvements. There are no fixed goal posts for sustainability because as we learn more about environmental and social impacts, and how to reduce harmful practices and increase beneficial ones, the goals of sustainability keep advancing. That being said there are multinational companies whose very business models preclude sustainability, such as coal mining corporations. Other companies only somewhat pursue sustainability, such as WalMart, which improved its environmental standards but still relies on low-paid labor both in the US and abroad. In general, smaller companies have been more willing to pursue sustainability as a core component of their business model. Green America has strict social and environmental criteria for earning its Green Business Seal of Approval, and most of the companies that are able to earn our Seal are small. We do have some larger companies that have earned our Seal, including Clif Bar, Aveda, and Organic Valley, and these are companies that built sustainable practices into their business model from the start.

DBJ: How can business leaders implement sustainable practices?

TL: Most companies will only adopt sustainable practices if there are champions within the company that make the case for them. Even if a sustainable practice will save the company money over time and/or improve its brand image, a company may not adopt the sustainable practices due largely to inertia or fear of unintended consequences. Increasingly, younger business leaders are supporting sustainable practices, carefully demonstrating the benefits and addressing concerns of upper management, and, as a result, more and more companies are becoming more responsible. Also, many younger business people are starting their own business, making it sustainable from the ground up. At Green America, we have over 4,000 business members who consider sustainability a chief concern of their company. That number is only going to grow.

Joe Coleman ’11 | Public Relations Chair, Big Green Bus

Joe Coleman ’11 is pursuing a major in Environmental Studies with a concentration in chemistry and economics. He hails from Poway, California and has been a part of the Big Green Bus since Fall 2010. During his time at Dartmouth, he has volunteered at a clinic in Buenos Aires, Argentina and taught English and math to children in Yambiro, Ecuador. He is currently the President of the Class of 2011 and was a lab TA in chemistry and Presidential Scholar in organic chemistry in past years. This is his first summer with the Big Green Bus, and he is incredibly excited to spend his senior summer promoting environmental issues across the nation.

DBJ: Is this the first year that the BGB is planning to address corporate social responsibility specifically? How successful do you think your presentations will be?

Joe Coleman (JC): I’d say this is the first year that we have an emphasis on businesses. We are definitely planning on visiting some businesses. As of now, we are planning to visit Waste Management, Boloco, and LL Bean. I don’t anticipate that our presentations will directly influence these companies. I do, however, think that we will influence individuals. Through our presentations, website, and even the bus itself, I think we can raise general awareness and this will indirectly penetrate corporations in a grassroots manner. Overall, we plan to learn from our conversations with people along our trip, extend our knowledge, and spread the important messages. The bus will essentially serve as an educational classroom on wheels.

DBJ: What role do you think sustainability plays in corporate social responsibility?

JC: I think it is a critical element. Sustainabilityisasocialjusticeissue and I anticipate that the realm of corporate social responsibility will continue to grow in the future.

DBJ: Why should a company pursue CSR? What is the most important message the BGB wants to give businesses?

JC: I think it just makes practical business sense. A company can no longer focus on profit maximization in isolation. It’s not sustainable. Moreover, companies that are preemptively implementing sustainable initiatives can minimize their vulnerability to fluctuating energy prices, while also boosting their brand’s image.

The solar sector represents an attractive, alternative solution for large scale energy production due to its environmentally friendly nature and potential to achieve economies of scale. The capability to scale solar energy production to meet all of humanity’s electricity generation needs is enormous; the sun radiates 3.8 million EJ of energy to the earth every year, 200 times our current rate of use. However, other sources of alternative energy like wind and hydroelectric power presents considerable competition for investor capital. In order for the solar sector to withstand the competition, the future of solar power depends upon its price competitive technologies in centralized power generation. Currently, Concentrating Solar Thermal (CST) system presents the only viable solution, which still remains more expensive than other sources of alternative energy. This economic equation will soon change due to SkyFuel Corporation’s development of the SkyTrough. SkyFuel’s inventions have allowed it to reduce the cost of CST arrays by 35% and will allow CST plants to deliver electricity at rates lower than those of wind or other forms of solar technology.

CST systems use long parabolic mirrors to focus sunlight on a vacuum pipe that runs through the trough of each mirror. The mirrors and pipe move throughout the day to maintain the focus on the pipe. The pipe contains a heat transfer fluid (traditionally an oil derivative) that carries the collected heat energy to a heat exchange system, effectively converting water into steam. The steam drives steam turbines and produce electricity. One major advantages of CST lies in
its applicability to current turbine systems present in most power plants. “Recycling” turbines in this manner enables conversions from fossil fuel to CST plants at very low cost, making CST easily scalable if energy demand increases. CST can also easily and cheaply store energy in the heat transfer fluid with almost 100% efficiency. A CST power plant can thus draw on the heat in the fluid (stored during the day) at night to continuously produce electricity. Solar panels only produce electricity during the day and wind power is naturally intermittent, hence disqualifying both from becoming
major supports of a power grid. Furthermore, CST has proven its reliability: CST has been used in the United States since the parabolic collectors at the SEGS plants in California for nearly 20 years. Among the options for alternative energy production, CST plants may prove to be the primary means of producing the constant power supply necessary to become a substantial part of electricity production.

Because of these advantages, CST is projected to grow massively, with research reports predicting that 12 GW of CST capacity will be installed by 2020, almost all of it in large plants over 100MW. Recently, political concerns about high natural gas prices, pollution from coal plants and climate change have led to many states passing renewable energy mandates. This assures demand for new CST plants as utilities search to meet environmental policies like the California Renewable Portfolio Standard, which mandates that 20% of the state’s electricity must come from renewable sources by 2010. However, the problem with CST systems lies with its cost, not its efficiency. Fields of huge, precisely shaped, breakable glass mirrors are extremely expensive to build and maintain. And even a cutting-edge CST plant must charge more than 13 cents per kWh, a standard price for wind power.

SkyFuel is positioned to capitalize on CST growth because it presents an ingenious solution to the cost problem. SkyFuel’s system, SkyTrough™, uses its patented Reflectech™ mirror film in the parabolic reflector troughs instead of traditional glass mirrors. Reflectech™ mirror films are similar to plastic, consisting of many polymer layers over an inner layer of pure silver that gives it reflectance equal to a parabolic mirror. Furthermore, Reflectech™ is shatterproof and significantly lighter than heavy glass mirrors. Reflectech™ is so light that it can be laminated to aluminum sheets to create larger panels than the largest feasible glass mirrors, increasing accuracy of light concentration (and thus efficiency), while decreasing assembly costs. Since the support apparatus of SkyTrough™ can maintain lower weight than glass mirrors, engineers could use a tubular aluminum space frame that is 30% lighter. The space frame not only lowers weight strains, but also allows easier installation, hence reducing labor costs.

These benefits aggregate to make SkyTrough 35% cheaper to build and significantly cheaper to operate than any CST system on the market today. Additionally, Reflectech™ films eliminate the bottleneck in the parabolic trough production process (making the sagged glass mirrors) allowing SkyFuel to rapidly produce SkyTroughs™ and reducing lead time for orders. Armed with this innovative solution to its cost problems, CST power is positioned to supplement the conventional means of electricity production in the United States.