5 Responses to May 2 news: Clean-tech venture capital jumps 54% in first quarter; Solar stocks soar on Sunpower deal
Venture capitalists spent the first quarter of the year dousing the clean-tech industry with attention, giving more money to fewer companies and hiking investment 54%.
Green companies raised $1.1 billion in the first three months of 2011 compared to $743.3 million in the same period last year, according to Ernst & Young and data from DowJones Venture Source. The number of deals fell to 69 from 79.
Santa Clara-based MiaSole, which makes thin-film photovoltaic solar panels, raised $106 million in one deal in February and is considering going public.
In the lead since at least 2005, California had by far the most deals — 30, compared to seven in Massachusetts. The state’s clean-tech companies attracted $637 million in investment in this year’s first quarter, nearly 42% higher year over year.
Northern California’s 24 deals pulled in $505 million compared to 32 deals drawing $332 million over the same period last year. Six deals total in Southern California ended up with $132 million — $84 million from the Los Angeles metro area, $48 million from San Diego and a sliver from Orange County.
The energy-generation sector was the major player over the quarter, reeling in $450 million compared to $158 million year over year. Solar power companies alone hooked $363 million compared to last year’s $139 million pot.
The next time you’re gritting your teeth as you fill your tank with $4 gas, here’s something to consider: Your pain is their gain.
The last of the Big Five oil companies announced first-quarter earnings Friday, so the totals are in. Between the five of them, ExxonMobil, BP, Shell, Chevron, and ConocoPhillips made $34 billion in profits in the first three months of 2011 — up 42 percent from a year ago.
That’s about $110 for every man, woman, and child in the United States — in just three months.
Exxon alone cleared a cool $10.7 billion profit from January through March, up 69 percent from 2010. That’s $82,175 a minute.
Why the staggering increase in earnings? Precisely because you’re paying $4 a gallon for gas.
Gas prices shoot up when oil prices shoot up, and when oil prices shoot up for reasons that have nothing to do with how much it costs to bring it out of the ground, it’s a windfall for the folks who produce it.
The average cost to produce a barrel of oil, including exploration, development, extraction and taxes, is about $30, according to a U.S. Energy Information Administration survey. The going rate to buy one is about $113.
Solar stocks posted widespread gains in the late trading after SunPower announced a deal to sell up to a 60% stake to the French energy giant Total.
As my colleague Todd Woody noted earlier, Total agreed to pay a fat 49% premium for the stake. That’s triggered a wave of speculative fever across the sector, as investors try to guess what other solar companies might get caught up in any potential consolidation phase in the solar sector.
Ergo, in late trading:
MEMC Electronic Materials is up 78 cents, or 7%, to $11.93.
Suntech is up 51 cents, or 5.6%, to $9.56.
Jinkosolar is up $1.14, or 4.4%, to $27.05.
Yingli Solar is up 56 cents, or 4.6%, to $12.82.
First Solar is up $7.66, or 5.5%, to $146.05.
ReneSola is up 39 cents, or 4.5%, to $9.05.
Trina Solar is up $1.25, or 4.5%, to $29.16.
Canadian Solar is up 58 cents, or 5.6%, to $10.88.
Energy Conversion Devices is up 10 cents, or 5%, to $2.12.
Noting that oil companies announced a 30 percent increase in profits this year while Americans are struggling with $4-per-gallon gas prices, President Obama called on Congress, yet again, in his weekly address to end taxpayer subsidies for oil companies.
“While rising gas prices mean real pain for our families at the pump, they also mean bigger profits for oil companies,” Obama said. “This week, the largest oil companies announced that they’d made more than $25 billion in the first few months of 2011 – up about 30 percent from last year.”
The president said he does not have a problem with any company being rewarded for their successes, “but I do have a problem with the unwarranted taxpayer subsidies we’ve been handing out to oil and gas companies – to the tune of $4 billion a year.”
The president said it is just not right or smart.
“When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right,” he said. “They aren’t smart. And we need to end them.”
The Republicans’ weekly address also focused on gas prices.
President Barack Obama used his weekly address to the nation to reiterate his call on Congress to stop granting tax subsidies to oil and gas companies.
“When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right,” Obama said Saturday. “They aren’t smart. And we need to end them.”
Despite recent signs of economic recovery, families across the country are experiencing “real pain” from soaring gas prices, Obama said. He pointed out that even as people were struggling to fill their gas tanks, some big oil companies reported more than $25 billion in earnings in the first few months of this year, far surpassing profits from the same period the year earlier.
As much as he supports the business successes of energy firms and lauds their entrepreneurialism, “I do have a problem with the unwarranted taxpayer subsidies we’ve been handing out to oil and gas companies,” Obama said.
The federal government’s ability to gather and analyze energy data and produce market forecasts will be significantly impaired by the recently enacted budget cuts, the administrator of the Energy Information Administration said.
The agency’s 2011 funding levels were cut by 14 percent, or $15.2 million, in a short-term budget deal signed into law earlier this month. Since the fiscal year is more than half over, the cuts will effectively run twice as deep.
Critics of the cuts say that at a time of acute concern over rising oil and gasoline prices, scaling back data collection and analysis of domestic crude and natural gas reserves and the role of financial speculators in energy markets is a mistake.
“Congratulations to those policy makers who thought that cutting the E.I.A. budget would be wise: You’ve managed to lose a few ounces of weight by removing a small sliver of your brain,” Michael Levi, senior fellow on energy and the environment at the Council on Foreign Relations, wrote in a blog post on Thursday.
The generous social benefits being doled out by Saudi Arabia and other oil-rich Persian Gulf nations are contributing to high oil prices, according to a report by the energy advisory firm, PFC Energy.
The report said that populist spending programs, which have recently become even more generous in an effort to ward off the social unrest that has swept much of the Middle East, are forcing some Arab OPEC countries to keep oil prices high to pay for generous social policies.
Such policies include high government salaries, direct payments to citizens, “payoffs” to the religious establishment, housing allowances, and large subsidies to keep gasoline prices low. “Today’s high oil prices facilitate the financing of the expansive spending packages that [Saudi] King Abdullah has recently announced to prevent outbreaks of popular unrest within the country,” said the report, prepared for the firm’s private clients.
PFC Energy also cited the countries of the United Arab Emirates as funding growing social largesse with oil revenues. The report said increases in government spending among OPEC countries makes it unlikely that the oil cartel will allow oil prices to dip below $90 per barrel in the future.
The Congressional Budget Office (CBO) on Friday released an estimate that said H.R. 1230, the “Restarting American Offshore Leasing Now Act,” would bring in an estimated $40 million in revenues over the next decade, and would cost just $2 million to implement.
The bill is expected to be on the floor next week, and would require the administration to conduct offshore lease sales in the Gulf of Mexico and off the coast of Virginia.
CBO said requiring lease sales would not affect revenues related to the Gulf, because the Department of the Interior already has an expectation of making these sales. However, it said increased lease sales off the coast of Virginia would lead to another $40 million in revenues over the next decade.
CBO also said it would cost about $2 million for Interior to complete environmental assessments to prepare for the sales near Virginia.
H.R. 1230 is one of two energy bills up next week. The other, H.R. 1229, would require Interior to act within 30 days on applications to drill in the Gulf of Mexico.
A year ago, when the Offshore Technology Conference came to town, BP’s Macondo well was still gushing thousands of barrels of oil a day into the Gulf of Mexico, and the weight of the disaster hung heavy in the air. On Monday, when this year’s show begins, the mood should be different.
Offshore officials say a sense of optimism is returning to the business after a tumultuous year, thanks in part to the recent resumption of drilling in the deep-water Gulf and $100-plus oil prices that are boosting the incentive to explore worldwide.
But at OTC, one of the world’s largest gatherings of offshore professionals, the Deepwater Horizon tragedy is still likely to loom large “” in presentations, technical papers and sales pitches on the exhibit floor. The overriding message: The industry has learned from the crisis and has emerged the better for it.
“I think people are just really ready to get back to doing what we do best,” said Susan Cunningham, board chairwoman for the massive event, which runs through Thursday at Reliant Park.
That renewed sense of purpose, she said, may help explain why attendance at OTC is expected to be at near-record levels this year. Registrations are tracking ahead of last year, when attendance was 72,900, the second-highest ever. The record year was 1982, when an oil boom drew 108,000 people, she said.
California’s authority to enact automotive air pollution standards that are stricter than federal law has withstood legal challenge after a U.S. Court of Appeals ruled that the U.S. Chamber of Commerce and the National Automobile Dealers Assn. did not have legal standing in the case.
Under the 1970 Clean Air Act, California may request waivers of federal standards to enact its own, stricter laws “” a right granted because the state had its own pollution laws before the federal government’s.
However, the George W. Bush administration refused to grant California a waiver after it enacted a 2004 law to curb planet-heating carbon dioxide emissions from cars. The Obama administration issued the waiver in 2009, but it was challenged by the chamber and the auto dealers. Fourteen other states had adopted the California standard.
The three-judge panel of the D.C. Circuit found that “Because the Chamber has not identified a single member who was or would be injured by EPA‘s waiver decision, it lacks standing to raise this challenge.” The dealers too, it said, had failed to prove economic harm.
California and the Obama administration last year issued joint regulations to curb carbon dioxide pollution by 30% in cars through the 2016 model year, making the waiver unnecessary. But environmentalists remained concerned that a successful challenge could thwart California’s plans to adopt stricter clean car standards for post-2016 models.