Even for the most studied of clean tech watchers, the business of predicting the future of green technologies is hard work. In 2022, Clean Start Chairman Gary Simon and Executive Director Thomas Hall put their decades of knowledge to work … with mixed results. In this round-up, they are back at the business of sharing their informed take on the future on all things clean tech. The world took notice of the milestone step towards fusion power, but Gary reveals the next big step towards a seemingly endless source of clean power. And while YouTubers can’t stop fawning over the electric vehicle startups like Rivian, Polestar, and Lucia, Thomas makes a bold prediction about the fate of the EV startups.  Will these predictions prove accurate? Let’s debate in the comments but only time will tell.

There will be no Level 3 Energy Emergency Alerts in California this year.   

This alert level is the last step before starting rotating blackouts to preserve the grid.  We had one at this level on September 6, but avoided the rotating blackouts.  It’s pretty bold to say we won’t have another in the coming year because It depends on so many random factors—generator outages, extreme heat, transmission line failures, accidents, and the like.  But we believe the grid is more resilient now and can withstand these random events.

Lithium prices will decline and finish the year below $40,000 per MT. 

Lithium carbonate skyrocketed to $75,000 per MT at the end of 2022 (see Chart 3 here).  That ten-fold price increase since 2020 was causing many to question the viability of the EV sales forecasts.  However, we see many projects to create more supply and to decrease the amount of lithium needed per battery.  The result will be a decline in prices, but not all the way back to levels of $5,000/MT from a decade ago.  We believe the decline will continue into 2024, but one fearless prediction at a time. 

Private, pulsed-fusion company Helion will announce reaching significant milestones. 

The announcement out of Livermore National Lab about “better than breakeven” (actually, the experiment returned only 1% of the energy required to fire the lasers) from the huge 192-laser government-funded multi-billion-dollar National Ignition Facility got a lot of attention.  But a little-noticed privately-financed effort may be making even more progress.  It avoids trying to achieve a stable “micro-sun” ball of plasma (like all the tokamak variations) which may involve insurmountable physics challenges. Instead, it relies on rapid repetitive laser-induced pulses which look easier to control.  It fuses deuterium and helium-3 and doesn’t make radioactive products.  Second, it involves direct conversion of the produced energy to electricity rather than converting the energy to heat and using that to boil water.  The direct conversion is possible because the products of the reaction are charged ions that can be collected, rather than slowing down fast-moving neutrons that have no charge (but create radioactive wastes).  Helion has raised $500 million to build a larger scale demo to start operations 2024.  The metric is whether it achieves the interim milestones in 2023 that will result in investors putting in more money up to the $2 billion they promised. There is another contender pursuing a similar approach (rapid laser pulses and direct DC conversion), but trying to harness hydrogen-boron 11 fusion, based in Australia. This company (HB11 Energy) is also worth watching. It’s Big Science vs. The Little Guys. Our bet is on the underdogs, with their showing some significant gains in 2023.

Power Purchase Agreement pricing on average for either solar or wind will not exceed $50/MWh. 

PPA prices for utility scale projects have been on a steep rise since the beginning of 2019.  Wind has gone from $24.60 to $48/MWh in 3Q2022 according to surveys by Level Ten Energy, and solar has increased from $27.90 to $42.21/ MWh.  These big jumps started in about 3Q2021, and were attributed to congestion in the interconnection queues, increased component pricing during the pandemic, and higher labor rates due to inflation.  We think those problems are now “baked in” and the steep rises won’t continue.  We expect the prices to rise more slowly by the end of 2023, and maybe even drop a little.

Source

Low Carbon Fuel Standard credit prices will increase but stay below $70 for the year. 

These credits are providing strong economic incentives to use non-petroleum fuels and as a result subsidizing the producers of such fuels.  In the summer of 2020, the credit prices reached a peak of about $210 per metric ton of fossil CO2 (equivalent) avoided.  They have now declined to about $60.  These are much higher prices than the carbon allowances from the cap-and-trade program which finished the year around $30 per MT CO2 equivalent, and are creating a powerful incentive to produce alternate fuels.  We expect the prices for LCFS credits to go up because each year CARB ratchets down the fuel carbon intensity target, increasing the need for credits and at the same time reducing the quantity.  Prices come down when the new supply of alternate fuels exceeds demand.  We think we see the supply expanding, so predict that the LCFS credit price will increase only moderately. We have covered how LCFS are driveing emission reductions in California.

Fewer than 10,000 Level 2 Charging Stations will be installed in 2023 in California. 

California will struggle to reach its charging station goals. The growth of public and shared charging has been anemic. In January 2021 California had 70,000 public and shared chargers and had 123,000 planned. Of those almost, 6,000 installed and 3,600 planned are DC fast charges. Now, two years later, the state has over 8,500 DC fast chargers and 80,000 total stations.  Where are all the level two charging stations we have been predicting?  The Cost of Level 2 is too high and most of it is not hardware. To reach California’s 2025 goal of 250,000 stations the CEC has committed to spending $2.9 billion, hoping it will spur 90,000 new EV chargers.  $900 Million (plus  ~$384M from NEVI) for light duty EV Charging. That works out to about ~$14,000 a charger. Hopefully that will cover it. But for the next year, we predict people fighting over parking spaces and property managers not wanting a headache will hamper California’s goal. (We hope we are wrong.)

Two EV startup companies will be acquired, one by a non-OEM.

In the past two years, there has been an ensemble of Electric Vehicle Manufactures going public on the New York and NASDAQ exchanges. Capital was cheap and everyone wanted to duplicate Tesla’s Stock success. Becoming public was a great option to raise billions needed to deliver EVs. Things have changed but the EV transition is still full steam ahead. Many new EV companies are trading down 80-90%.  Being a public company now opens them up to something new. Being acquired. There are several Incumbent OEMs that are behind on the EV transition. Toyota, Mercedes, BMW, Honda, etc.  All of the new publicly traded EV companies (with US or European HQs) are now targets for acquisition. And it is not just companies making consumer cars. Both Amazon and Walmart entered into exclusives for delivery vehicles form Rivian and Canoo, whose market cap has been cut in half the last 6 months. Buying a company critical to their distribution at a discount will look very appealing. Small vehicle companies like Arrival SA and Electra Meccanica Vehicles Corp. might be appealing to OEMs like Honda and BMW. With their stock falling and capital cost rising, most of these companies should be eager to accept. Two of the following:

The Sacramento Region will attract a net zero fuel investment >$50 Million.

With the IRA and infrastructure bills, there will be a push for projects that could deliver economies of scale in hydrogen and net zero fuels. With our region’s success with companies and advocacy groups there is a strong possibility of increased investment right here. Sierra Northern Railway has a hydrogen station going in and a hydrogen locomotive, Infinium is doing large projects around the world but operating right here, the California Fuel Cell Partnership has gone international. We believe we will attract enormous investment locally.

Amazon Delivery Vans

By the end of 2022, Rivian finally released more than 1,000 custom electric delivery vans for Amazon. As a startup company, Rivian is looking at major demands from Amazon  with their order of 100,000 electric vans by 2030. Rivian will need to make approximately 10,000 vans per year. We believe Rivian still has many obstacles to overcome in such a short time as a new company. They will fall short in 2023, making approximately 4,000 – 6,000 electric vans.

Installed storage capacity in the US will double. 

According to Wood Mackenzie, by the end of 2022, the installed capacity of energy storage projects in the US totalled 13.4 GWh, including grid-scale installations and customer-owned projects.  In Q3 alone new installations were 4,733 MWh for grid-scale storage and 401 MWh for residential storage projects.  We believe that this total capacity will double over the next year, which is less than many analysts forecast.  They believe that installations will top 30.3 GWh.  We foresee battery production bottlenecks that will restrict the growth. 

The cost of an electric vehicle battery pack will fall below $140/kWh. 

Even in the face of dramatically higher lithium carbonate prices, the prices for a full battery pack have been declining.  The Department of Energy’s (DOE’s) Vehicle Technologies Office estimates the cost of an electric vehicle lithium-ion battery pack in 2022 was $153/kWh on a usable-energy basis for production at scale of at least 100,000 units per year. That compares to $1,355/kWh in 2008, a remarkable drop. The decline has been slowing, but we think it will drop another 10% in 2023.

Source: U.S. DOE, Vehicle Technologies Office, using Argonne National Laboratory’s BatPaC: Battery Manufacturing Cost Estimation Tool.

Let’s hope for a great year!

 1. Oil prices will fall below $60 per barrel.

RESULT: Wrong number, right direction. We did not factor in the Russian invasion of Ukraine and the Western sanctions. On the other hand, even with all the disruptions, the price of oil as we write this ($75.30/bbl) is BELOW what it was a year ago, prior to the invasion. It will likely fluctuate around that level to the end of the year. The peak in the oil price was on March 8 when it was $123.70/bbl. The oil market has a remarkable capacity to over-compensate for a price run-up, and it happened again. Unfortunately, not all of the reduction in wholesale oil prices has shown up at the pump…yet.

2. The installed price of rooftop solar will decline more steeply in 2022 than in 2021.

RESULT: Wrong. The price for installations under 10 kW crept up to $4.71 per kW from $4.65 in 2021. There’s probably some of that attributable to general inflation. The CPUC has not quite made its final decision on net energy metering prices to be offered for surplus generation from rooftop solar, but the proposed compromise essentially postpones most of the expected drop. That may actually stimulate a rush to beat the deadline on this grandfathering period and cause a bump in installed costs.(See our blog specifically on this proposed decision). We will revisit this next year.

3. A new microgrid will be developed in our region with at least 500 customers.

RESULT: Didn’t happen. With all the projects popping up around the country, we thought one would take off in our area. Still nothing. We got a similar prediction wrong in 2021, will we make a similar prediction for 2023? A broken clock is right twice a day.

4. The Air Resources Board will publish new, lower Carbon Intensity figures for renewable fuels made from captured CO2

RESULT: Correct. Faced with a lot of controversy over the precise carbon intensity scores calculated for various alternate fuels, CARB created a mechanism to allow anyone to propose a specific “pathway” from raw inputs to miles driven (what used to be called “well-to-wheel”) to calculate this figure. The result has been a profusion of hundreds of calculated carbon intensities depending on the exact circumstances. Over 200 new calculated scores were added in 2022 (making a total of 1390 “pathways”). The result of all these variations is that methane derived from biomass conversion can have a carbon intensity score from -600 (really great) to +90 (no better than regular gasoline). If you intend to sell alternate fuels, be sure to understand how to get the right score for your product. Any negative score can earn money from selling the excess credits that score creates.

5. California will receive a new application for an offshore wind farm.

RESULT: So far there has been no such additional application. However, there has been new momentum. In August, the CEC set goals to have 5 GW of offshore wind generation in 2030 and 25 GW by 2045. If these goals are to be met, someone is going to have to apply for some pretty big installations very soon. On December 6, the Biden Administration announced the first auctions for leases 20 miles offshore California, near Morro Bay and Humboldt. The goal is to have 4.5 GW of wind turbines installed, part of the federal plan to have 30 GW of offshore wind in the US by 2030. The auctions will trigger a review of all the environmental, fishing, and shipping complications of the possible installations.

6. Nationally, renewables (solar, wind, hydro, geothermal) will generate more GWh than coal and nuclear.

RESULT: On the mark. The slide in coal used for power generation resumed through the end of September. In addition, renewables continue to outrank nuclear as a source of generation. “Renewables” in the definition used by EIA includes conventional large hydro as well as small hydro. Many others include only the small hydro. Total generation grew 2.85% from 4,098 to 4215 TWh with the rebound ion the economy from COVID shutdowns.

Source of Generation

Source: Energy Information Administration

7. EV adoption will double in the US with twice as many delivered in 2022 as in 2021. The supply shortages slowed Volkswagen ID.4 and Ford’s Mustang sales in 2021. The Chevy Bolt EV and EUV faced recalls, but should return to strong sales in 2022. Most companies are releasing new EV models. New companies with significant preorders will start delivering. We expect EVs to make up 10% of new purchases (more than double 2021).

Phev + EVs Sold

RESULT: Optimistic but it may prove true. But right now it is not. Argonne National Laboratory which tracks EV sales shows that the first 10 months of 2022 saw 587,640 EVs sold. It is unlikely the last two months of the year. While winter auto 2022 sales are typically the biggest There would have to be more than 330000 EVs sold. EV sales will not have doubled. However, total car sales were down in 2022 compared to 2021, possibly due to the shortage of chips. If so, then EV sales might have been constrained. Still, a forecast of a doubling of sales was aggressive. Estimates by Argonne NL have EVs now at over 10% of new cars, though.

Electric Vehicle Sales

8. There will be another SPAC deal with a regional company, as the boom slows.

RESULT: No other regional cleantech SPAC (Special Purpose Acquisition Company) happened or is on the horizon. The SPAC boom rose quickly and fell even more quickly. Our prediction was in part based on the amount of money that had been raised in these “blank check” companies that were searching for a real company in which to invest. Of the hundreds of SPACs in the hunt, 56 closed deals in clean tech, but the results were disappointing. There are still SPACs actively searching for deals, but nothing new in clean tech in our region has been announced. There still are SPACs out there looking for clean energy investments, but they are broadening what they will consider. For example, Decarbonization Plus Acquisition Corp., lead by a team that already made 3 clean tech SPAC investments, just announced they are buying an oil and gas producer.

Origin Materials was the local company acquired by a SPAC (now listed as ORGN on NASDAQ) and it has done better than most. Its stock started at $10, rose to $13 and is down to $5.50 now. However it has made major investments in two new plants to manufacture its plastic resins made from biomass. It still has $108 million in cash after investing over $330 million in the new plants, and most importantly, has signed up customer product purchases and capacity reservation agreements worth $9 billion. .It may turn out to be one of the better SPACs.

Other SPACs are not doing so well, Volta (EV Charging) may delist and is just the most recent example of SPAC companies running out of money.

SPACs

Source: CleanTechnica.com

9. CleanEdge’s Smart Grid Index QGRD will cross $120.

RESULT: Wrong. It was a rough year for the market all around. QGRD is hovering around $90. While that is performing better than S&P indexes it hasn’t gotten close to $120. We missed this one. We hoped that Government investment in infrastructure and modernizing the grid would help keep QGRD’s winning streak.

10. Elon Musk will step down from the Tesla CEO position.…He still will argue with people about Tesla on Twitter but his SEC liability for doing so will be reduced.

RESULT: Wrong, even though he said he wanted to, he didn’t. Elon contradicted many things he has historically said. There was not much that was “normal” about Elon Musk this past year. We thought he would spend less time on twitter. He said in November that he didn’t want to be the CEO of any of his companies, despite having added Twitter to his list of CEO-ships. It may still happen, but for Musk and Tesla it probably would have been better if he had stepped aside. The Tesla share price ($183) is now about half of its peak in 2022 ($361) after Musk acquired Twitter, breaking a long run of ever-increasing Tesla share prices.

1. EV Sales in US will top 500,000 for the year.   According to the Argonne National Lab, 228,247 PHEVs and BEVs have been sold in 2020 through October, with about half of those sales in California.  In total, 1,671,874 PHEVs and BEVs have been sold since 2010.  In 2020, 748 FCEVs have been sold and in total since 2014, 8,998 FCEVs have been sold.  And cumulative sales of Tesla surpassed one million.
2. QCLN Index to reach new high over 125.  This NASDAQ exchange-traded fund of clean tech stocks hit an all-time high in 2020 of 72 and had a 171% increase over the course of the year.  We don’t expect the same performance in 2021, but believe it will break 125 at some point in the year.  This the first time in the history of this index that gains have been so good or so promising.
3. There will be a huge increase in installed storage projects—3,000 MW will be added in 2021 in the US counting both grid-tied and behind-the-meter storage, and 1500 MW grid-tied capacity in California alone.  According to Wood Mackenzie’s U.S. Energy Storage Monitor, the deployments of energy storage projects in all of the U.S. both behind the meter and direct to the grid totaled 791 MW (peak power) and 1,404 MWh (energy capacity) through the third quarter of 2020.  The total for the full year was estimated to be 1,275 MW.  Of these totals, the amount of grid-tied (front-of-the-meter) peak power added in 2020 was 546 MW and 831 MWh in energy capacity.  The cumulative grid-tied peak power since 2013 was 1,655 MW through 3Q2020 with 414 MW behind-the-meter for a total of 2,370 MW*.  Cal-ISO estimates that in California cumulatively there are 550 MW at year-end of grid-storage projects (double the amount from July), but does not know how much additional behind-the-meter storage there may be.  This also means the utilities fell short of the 1325 MW of storage the CPUC required them to have operational by year end, but at least the capacity was under contract to be added.  The new goal is to have 9,900 MW of new grid-tied storage capacity by 2030 (CPUC Decision 20-03-028). *Estimates made by reading off a graph.
4. The installed cost of a utility-scale storage project will fall below $350/kWh of energy capacity.  According to NREL (https://www.nrel.gov/docs/fy19osti/73222.pdf), the cost of such a system with 4 hours of storage cost $610/kWh in 2015, and had fallen to $393/kWh in 2019.  We expect that cost to drop more slowly to $360/kWh in 2020 and fall below $350/kWh in 2021.  By 2025, we think it will likely drop below $225/kWh as the surge in installations yields economies of scale.
5. A bill will be introduced in Congress to extend Investment Tax Credits to storage projects.  It may not pass until 2022, but we think the idea is gaining momentum, particularly since ITC and PTC for solar and wind were extended in the Omnibus Appropriations Act.
6. Two renewable-based microgrids with over 1000 customers each will be established in Northern California.   We missed on this prediction for 2020, but believe these will be installed in 2021.
7. The revenue generated by our regional clean tech companies will top $6 billion.  The pandemic restrictions pulled the rug out from underneath this one in 2020, but we think companies are still growing and this milestone will be reached.
8. The price of California Carbon Allowances for the first time will exceed $20.  They may not average above this price, but we think demand pressures will increase and push the price up.  Spot prices now at $17.70 and the Dec. 21 futures price is only $18.60, so we are being pretty bold with our prediction.
9. Installed residential solar PV costs for systems under 10 kW will drop below $4.60 per watt.  They inched up in 2020 to $4.65 per watt (californiadgstats.ca.gov/charts), but we think the likely end to tariffs on Chinese PV panels will drop the price a few pennies.  The largest cost component remains the cost of racking and installation, and we think the increased volume of business will create some economies of scale. 
10. Two regional cleantech companies will raise a total of more than $50 million to propel their growth.  The investments in 2020 slacked off, but we thing they will regain momentum in the coming year.

Follow us in 2021