Dikeman Skeptical of 'Game Changing' New Energy Technologies

By Jennifer Kho

It's not hard to get Neal Dikeman to say what he really thinks.

The founding partner of Jane Capital Partners, a boutique merchant bank and corporate advisory firm, and chairman of Cleantech.org, regularly airs his views on the Cleantech Blog and Alt Energy Stocks, with recent headlines including "McCain-Palin is the Energy/Cleantech Dream Ticket" and "Is Al Gore Nuts?"

At the 21st Amendment Brewery in San Francisco last week, the founding partner at boutique merchant bank Jane Capital Partners said he was skeptical of the flurry of entrepreneurs claiming they have new technologies that are about to change the world.

"People think new energy [technology] is going to be disrupting the whole industry," he said. "It's not. ... People are lying to themselves if they think their technology is game-changing and it isn't."

As an example of how long change usually takes, he pointed to solar technology. The most effective solar technology today is 25-years old, he said.

The biggest problem still is price, he said.

"Oil companies are making 70 percent margins and ethanol companies are making nothing," he said. "If prices fall, ethanol gets shut out first. Wind also is more expensive to produce - five times more expensive than coal. Solar technology is 20 times more expensive than coal. And subsidies are 100 times higher than oil on a per-unit basis."

Risk is also an issue keeping new technologies from quick and massive rampups, Dikeman said.

"It took wind 15 years," he said. "You can't put new technology on a power plant - it's too expensive. And you've got a fixed price on the contract and you can't make it up on the backside if you're wrong." 

And that's why oil companies – some of which until recently had higher market shares in renewable than they had in oil, because of the relatively puny size of the renewable-energy market - aren't investing more heavily in renewables, he said.

"The reason is very simple – it's not profitable," said Dikeman, who added that he has oil company clients. "It's a no brainer. It's not that they don't want to. They would invest in renewables in a heartbeat. But they take [the idea] to their bosses and they say, ‘Your numbers suck.'"

Jane Capital Partners, which also is a corporate advisory firm, counts oil company ConocoPhillips (NYSE: COP) among its strategic advisory customers. 

Before Jane, Dikeman served as a director of business development at e-commerce company Globalgate and an associate at Doyle & Boissiere, a private-equity firm backed by the California Public Employees Retirement System, also known as CalPERS.

Comments

[CT Programmer:]

Maybe 25 years ago the comment about solar would have been relevant, or 15 years ago the wind-power comment. However, today they are significant percentages of the entire grid and climbing. The oil majors aren't investing in "alternative" energy because they're not good at making money off of it, and they need all the capital they can get their hands on to expand their rapidly depleted oil reserves. When they do venture out, its towards gas because that is the obvious replacement for oil in the next decade or two. This article, combined with one today that is negative on solar, makes me think this greentechmedia is short wind and solar. Oh, and judging by many of the solar stock's latest earnings season, it looks like solar IS profitable. This article is a waste of virtual air.

2008 Sep 08 09:02 AM

[vitamin_j:]

At least with solar, the price of coal means almost nothing. The only cost that matters is how much per kWh the end customer has to pay for peak power, vs. how much per kWh a solar installation would deliver over its 25 year life. In many places, those two figures are rapidly converging.

2008 Sep 08 09:58 AM

[woodsey:]

Without a breakthrough in coal technology ( coal is nearly all carbon ) civilization is destined to be grossly altered if not doomed to greatly decline.

2008 Sep 08 11:56 AM

[john s. gordon:]

nearly all ? - - H/C ratio in coal is about 0.7 depending on rank. in gasoline or diesel is about 2.0.
> jack

2008 Sep 09 08:53 AM

[NOWHEREMAN:]

What are you going to use to clean all of those solar panels?

2008 Sep 09 09:33 AM

[vpratt:]

Over complicating the cleaning issue. I clean mine with the same oxygen-hydrogen compound that is used to cool nuclear reactors: Water. It's also safe for flushing the john.

2008 Sep 09 11:31 AM

[scottm1207:]

Please tell me what oil company has net margins of 70% so I can dump every other stock and ETF I own (including the GEX solar ETF in which I am down) and buying that one.

2008 Sep 09 02:15 PM

[titans:]

First Solar is getting there & NANOSOLAR is supposedly there already....the writer should do more homework before wasting his & our time.....sounds like he's an oilman or dirty coal industry mngt. personel.

2008 Sep 10 02:56 PM

[akur01:]

I agree that new technologies take a long time to develop and become cost effective. Problem is, oil is running out, so long as they may take new technologies are not only necessary and real, but a given.

A}As the price of carbon fuels (i.e. coal, oil), continues to rise, the alternative energy costs will converge.

B)People will pay whatever it takes to have energy as oil becomes harder to access.

Nanotechnology looks to reduce costs greatly in the future. There are already products on the market that were produced nano-technologically (is that a word?).

2008 Sep 12 09:31 PM

[akur01:]

The amount of money spent on wars in the Middle East, because we are stuck on oil, could probably pay for all the renewable energy we need. Or at least close the price gap between oil and renewable.

How many solar panels or wind towers could we buy each year for $300 bil.

Regulations do not allow people who have home solar to put back excess to the grid. How smart is that. Available excess electricty that goes to waste.

There is a contractor who is building homes in a city near me, that are 100% off the grid. Heat, hot water, electricity, all in a brand new house. The people that bought the first house are average folks, and claim the price was affordable, and the house is very comfortable to live in.

2008 Sep 12 09:42 PM