Peel Power: Citrus Power LLC and FPL Strike Ethanol Pact

You remember Mr. Fusion, right? At the end of the first Back to the Future movie, Doc Brown re-appears and takes Marty McFly to the future. Before they can leave, however, he has to fuel up the modified DeLorean by dropping a banana peel into the Mr Fusion he's installed on the car. Presumably, the organic matter in the peel provides the energy required for time travel (1.21 gigawatts if memory serves).

Well, apparently the folks at Citrus Power, LLC are fans of the trilogy. Or at least a derivative of it.

As the name would imply, Florida-based Citrus Power is focusing on using discarded citrus peel as the feedstock for ethanol conversion. On the surface it makes wonderful sense. In 2006, Florida produced 287 million boxes of citrus. The juicing process produced approximately 5 million tons of wet waste and 1.25 million tons of dry waste. This would put potential production at around 120 million gallons of ethanol per year.

The state of Florida, anxious to create new industrial segment based on the region's biggest crop, recently provided Citrus Power with a $2.5 million grant through the state's Department of Energy. ( The federal DoE has also funded research in the area, providing $134,000 to Renewable Spirits to build out their citrus-to-fuel technology.)

Citrus Power also has a true believer, apparently, in FPL Energy, a subsidiary of FPL Group (NYSE:FPL). FPL recently signed a letter of intent with Citrus to develop a commercial scale citrus peel-to-ethanol plant. They are targeting an output of 4 million gallons of fuel.

I love the idea of closed loop systems: the Tyson-Syntroleum partnership I wrote about here is another example. I love non-food source systems as well, as you avoid the ethical dilemma of re-routing food to fuel.

Citrus Power, however, leaves me wanting. Management team bios are long on generalities and short on detailed experience. The founder is a former computer engineer who previously worked at Renewable Spirits (which led to a recently resolved lawsuit). They are 5 employees.

So in terms of long term strategy, the best bet would seem to be holding on until a larger player comes along to purchase Citrus Power as part of an industry consolidation play. Otherwise, potential investors may want to head back to the future to recoup their investments.

PHEV Converters: Great idea, Not Sustainable

Lots of news about PHEVs these days:

• Ford and Southern California Edison are announcing today a partnership to examine customer usage of PHEV modified Ford Escapes. Ford apparently hopes that focusing on the Escape (rather than a concept car like the Chevrolet Volt) will allow them to bring a PHEV to mass market more quickly.
• The federal government continues to bat around a number of ideas on how to spark development in PHEVs. For example, the House included provisions in the recently debated DRIVE Act aimed at providing for 5,000 PHEV conversions in 5 test locations.

So it appears the PHEV gold rush of the early 21st century is officially on. While the main automakers slowly move their behemoth operations to fill this rapidly expanding niche, several after market PHEV conversion operations have spring to life. These include:

• EnergyCS: One of the first players in this space. Like most PHEV converters, focuses primarily on the Prius with lithium ion technology.
  
• Hybrid-Plus: Lithium-ion conversions. In addition to the Prius, also offering Fortd Escape conversions. While most converters target fleets, Hybrids-Plus targets individuals as well.
• Hymotion: Recently acquired by much ballyhooed A123 Systems. (Admittedly, I'm guilty of abetting the ballyhooing). Canadian-based company converts both Priuses and Escapes for fleets. Will start offering conversions for individuals in 2008.
  
• EDrive Systems: Uses technology originally developed by EnergyCS. Not yet installing.
  
• Green Car Company: A relative new player in this space. PHEV conversions are one of several alt fuel conversions products. Uses lead acid batteries.

That's not a complete list I'm sure, and there will be new additions on a regular basis.

But is it worthwhile from a business perspective? I'm not so sure, for a couple of reasons.

• Market: Most of the converters are focused on the broad swath of Prius owners as their target audience, figuring that these early adopters will be willing to pony up for a product that dramatically extends the range of their vehicles. But with manufacturer built solutions about 3-5 years away, my impression is that the vast majority of owners will wait for one of these. These cars will provide the personal statement that early adopters are seeking (the main reason people buy a Prius in the first place) that a converted car cannot provide.
  
• Expense: Conversion aren't cheap. Baseline at present is $10,000 USD. Will the mass market use those funds to convert an older car or use it as a down payment on a newer one when it becomes available.
• Bandwidth: Converters are small companies. By the time they effectively ramp up to deal with potential demand (for both installation and service), the big players will be that much closer to roll out their own products. Which, by the way, will be supported by their existing warranty and service infrastructure.
  

PHEV converters have played an invaluable role in drawing attention to the promise of these vehicles, and have spurred major automakers to really commit to the development of PHEVs.
Unfortunately, the long terms viability of these companies remains in doubt.