“Benjamins for Biofuels” Part IV: DOE awards $529 million for company making an $89K all-electric sports car in Finland, while US projects languish
The US Government offered $529 million loan to an Al Gore-backed company making $89,000 all-electric sports car in Finland, while US projects for US jobs go unfunded.
The move follows a $465 million loan to Tesla Motors for another all electric sports car. Employees of Fisker’s top investor, KPC&B, donated more than $2 million to the Obama presidential campaign, and customers who have pre-ordered the Fisker include Al Gore. Gore is a partner in KPC&B.
The DOE denied that politics played a role in the decision, saying that a “detailed technical review” took place, and that the bulk of loan proceeds for the Silicon Valley-based Fisker will go towards development of a $40,000 family sedan.
There’s only one catch. According to the Journal, the family sedan has not yet been designed.
Meanwhile, response continues to pour in to the Digest regarding delays, confusion and unhappiness over government-related funding of bioenergy, as reported this week in the Digest’s “Benjamins for Biofuels” series on bioenergy financing. I asked for success stories and horror stories, and received none of the former, plenty of the latter. Successful ventures, of course, have less of a motivation to write.
But zero is zero. Unless you count the millions for Finland.
At the National Science Foundation
A bioenergy research project was declined by NSF, in part, because of a “very poor” grade given by a reviewer who wrote: “To base the proposal on the theory that there will be a variety of low-value feed stocks available is, in the opinion of this reviewer and many other industry observers, a faulty premise. Biomass is cheap right now because no one wants it. However, as demand increases, it will become more expensive. Further the laws of supply and demand mean that replacing a significant amount of gasoline with biofuels would drastically lower the demand for gas. This would, in turn, cause the price of gas to plunge, making biofuels less competitive.
The same argument could be made to reject solar and wind energy research — or any alternative energy — by making the case that massive adoption of solar or wind would cause the price of coal to plunge, making solar and wind less competitive. The same argument could be made, in fact, about guns and butter. Or the impact of the automobile on the price of horses. Or the impact that the invention of the wheel on piggyback service providers.
From the same review of this technology, I quote:
Reviewer #1: “This is a well thought out proposal supported by a well qualified team.”
Reviewer#2: “This is a well written proposal with good technical foundation to carry out the project. Project team collectively has good qualification and sound experience to advance the scientific work in a professional manner.”
Reviewer #3: “The company has a very poor intellectual property position. The company does not appear to have a sound business plan.”
Reviewer #4: “The proposed team has no relevant experience in commercialization or business development experience.”
Reviewer #5: “The proposed plan is sound and improved results are likely with further research.”
At the Department of Energy
The Finnish national flag
A reader that a DOE/USDA decision on a grant regarding a demonstration of an integrated and sustainable production of biofuels from algae has been moved back from September to November (DE-FOA-0000096). The original application date in March was moved to April, and then June. According to an unconfirmed rumor, the announcement may be moved back to 2010.
After a call placed to the Assistant Secretary for Energy Efficiency and Renewable Energy, the DOE Press Office decided to respond to the Digest’s enquiries, and has assigned a helpful Deputy Press Secretary to look into some of the problems raised by Digest readers.
A reader writes: “We met with Patrick Davis, program manager of vehicle technologies at DOE/EERE and one of his assistants. Joining us at the meeting were two senior research officials from DOT/Federal Railroad Administration (FRA) who told Davis that it is their belief that the AHL-TECH technology is worth considering for next generation “high speed rail” (HSR) passenger service which is a cornerstone of Obama administration transportation, clean air, and energy policies. Davis advised that “vehicle technologies” do not include anything related to railroads but are focused on cars, trucks, engines, hybrids, batteries, etc. He added:
1. DOE can’t do anything because “we don’t have any money;”
2. We won’t have any money for new programs until the FY11 budget cycle;
3. Congress will decide what to do (meaning DOE has no control over or input into the process); and
4. We may have some new direction(s) that could include rail in six months or so.
A reader writes: “On April 11, 2009 DOE announced a whopping $38.5B in loan guarantees to “encourages the development of new energy technologies and is an important step in paving the way for clean energy projects.” All a start-up company has to do is fill out reams of paperwork and submit it along with their justification of why they need the money and there $75,000 non-refundable application fee. ” David Frantz, Director of DOE’s Loan Guarantee Office, said, “We intend to move forward quickly and deliberately to issue solicitations, conduct a thorough financial and technical review and support these truly innovative technologies that hold great promise for our nation’s energy security.” So for a meager $75,000 application fee, a small company that only needs a couple of million dollars to get started, can put life on hold for 15 months or more (if DOE gets the process streamlined down to 15 months) while they wait to hear if DOE will guarantee a loan that the banks won’t make. In the meantime, $38.5B is held in limbo because it is “budgeted” for loan guarantees that are never made, or if made, go only to huge corporations that can afford to pay $75,000 and keep operating while they wait to see if the loan guarantee goes through. So much for “accelerating commercialization.”
A reader writes: “If I have been working on a project for several years, and have interest from customers, I can always go to the DOE for a $150k SBIR grant. First, just make sure your “innovative” technology has already been thought of so the government already has put in a cubbyhole for funding (“Yes Mr. Inventor, it does appear you have an engine that will run on water, but we cannot give you the $150k grant to research it because there is no Water Engine category in our SBIR solicitations for this year. Perhaps next year…” ) Then all I have to do is go back to the drawing board, spend the next six months to a year to have someone else tell the DOE that the project I have already spent time and money on to develop and that customers want to buy is worth looking at, because this phase is only a “Feasibility Study” (“Yes, Mr. Inventor, here is $150k to confirm that the product you have designed and shown can work and that customers want to test is actually feasible.”) Then once I have put my project on hold for almost a year, and spent $150k of the government’s money, I can then put in for another grant for up to $750k for R&D on something I have already developed! After a meager three to four years I am ready to commercialize the product that was ready to go when the entire process started. But if you do not go through Phase I, showing the feasibility (again) of what you have already developed and are ready to build, you cannot request the $750k in R&D money. That is what the “guaranteed loan” programs are for.”
At the Department of Agriculture
Another day has passed without response to the Digest’s requests for information relating to concerns raised by readers.
However, an assistant to Senator Blanche Lincoln of Arkansas, chairman of the Senate Agriculture Committee, was in touch to say that they are looking through the notes and would respond as soon as possible. She mentioned that the health care bill mark-up process is causing problems with time. What a thoughtful response!
Next steps
I promised readers a four-part series, which would include a review of international bioenergy financing as well as a potential solutions on the horizon to the problems we are seeing. We’ll wrap this up on Monday with an additional Part V of the series, and will continue to track and report on your concerns in the days and weeks to come.
Digest readers, if you have horror stories or success stories, please contact me, and help bring them into the open light of day. At least two of the companies reported on earlier this week say that new opportunities have arisen, because of phone calls and emails that have come in after sharing their stories.
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