Dow profits from Clean Technologies

We published this week ICB’s annual Top 40 Power Players within the global chemical industry and Dow Chemical CEO and president Andrew Liveris was chosen as the top power player for 2010.

This reminds me of my attendance at Dow’s annual investor day last month where a lot of the business presentations I saw targets clean technology such as Dow’s solar shingle, epoxy resins in wind energy, water treatment, energy storage, technologies in green building trends, green polyethylene….During the event, Liveris said they expect the clean tech energy sector opportunity to be more than $2 trillion by 2020.

We toured their POWERHOUSE solar shingle pilot facility in Midland, Michigan, where we were able to ask some questions such as what type of materials/chemicals are being used for the product, how much it will cost per unit, how many units will be sold next year, etc. Unfortunately, a lot of the information are proprietary but Dow did say that the shingles will use copper indium gallium diselenide solar modules, or CIGS, made by Global Solar Energy Inc. CIGS cells typically are more efficient at turning sunlight into electricity than traditional polysilicon cells.

Dow also expects a $5bn market opportunity for chemicals and materials used within the solar industry and the company expects to earn more than $1bn from its solar shingles by 2015. The solar shingles are going to be commercially launched next year. Dow said it continues product testing in various climate conditions.

During that time, Dow announced that the solar shingles received product safety certification from Underwriters Laboratories (UL). Over 50 individual tests were conducted to assess the safety of the DOW™ POWERHOUSE™ Solar Shingles against building code standards, including wind and fire resistance, and electrical code requirements, such as proper wiring and photovoltaic (PV) connections.

We were able to also tour one of the model zero-energy homes in Michigan, which uses not only the solar shingles but also several Dow Chemical products such as heat transfer fluids, polyurethanes, coatings, adhesives, sealants and other energy-saving building construction products. Market opportunity just for low/zero-VOC coatings alone is around $800m and Dow expects to gain sales of more than $160m in this market by 2015.

Speaking of heat transfer fluids, Dow said it achieved record supply of heat transfer fluids this year mostly for solar power applications. To date, Dow supplied to 14 large Concentrating Solar Power (CSP) plants in Spain and the United States, with a total capacity of more than 700 MW. The fluid collects the heat energy from the solar panels and transports it to a power station where it is used to produce steam, which drives turbines that generate electricity.

When it comes to wind energy, Dow’s venture capital business made a minority equity investment this year in wind turbine blade manufacturer Blade Dynamics Ltd. The company plans to establish and operate a new manufacturing facility in New Orleans. In September, Dow formed a collaboration with Astraeus Wind Energy Inc. (AWE) and MAG Industrial Automation Systems (MAG) to develop “material-enabled automated manufacturing solutions” focused on improving and enhancing the manufacture of wind turbine blade components, and finished blades, for the wind industry.

Chemically-speaking, the liquid epoxy resins (LER) market, of which Dow is a major producer, is actually benefiting from the growth within the wind energy market. According to Dow, new epoxy resins could lighten wind turbines and increase energy efficiency.

Dow has been very active as well this year in energy storage projects, where its joint venture company Dow Kokam broke ground in June for a new lithium ion batteries production facility in Midland. Dow also announced at their Investor Day its plans to form a new business focusing on manufacturing and selling materials for advanced batteries.

The business will start selling raw materials and associated technology in 2012 initially focusing on rechargeable lithium ion batteries for the automotive market. Dow did not disclose the specific type of materials they will sell to battery manufacturers. As far as my research goes. some of the major materials used in automotive lithium ion batteries include lithium ion phosphate, lithium metal oxides, polymeric separators, anode materials such as graphites, and electrolytes, etc.

A Dow official said the company is also looking to invest in lithium projects in China to capitalize on the growing energy storage market potential in the region. Government clean technology subsidies and environmental policies in China are expected to drive increasing demand for electric vehicles, according to the official.

Dow Chemical estimates the global energy storage industry to grow from the current $24bn to $74bn by 2020, with the largest growth opportunity in the automotive market. For lithium ion battery materials, the market opportunity is said to be around $15bn.

Speaking of China, Dow’s Electronic Materials business unit announced at the event its plans to construct a new manufacturing facility in Zhangjiagang site in the province of Jiangsu, to meet the growing material demand to serve printed circuit board (PCB), electronic and industrial finishing, and photovoltaic (PV) markets in Asia. Construction is expected to begin in late 2010, with production anticipated to beginning in late 2011.

Finally, I was able to speak to Dow’s vice president of sustainability and EHS (Environnmental, Health and Safety) Neil Hawkins at the event. He noted continued strong demand for chemicals and other clean technology materials in the US despite regulatory uncertainty in the implementation of renewable energy policies from the newly-elected US law makers.

Hawkins also briefly described some of Dow Chemical’s sustainability accomplishments this year such as the innovative hydrogen peroxide to propylene oxide (HPPO) process jointly developed with BASF aside from the solar shingle product. (I will actually post about HPPO in the next few days mostly from my interview with Evonik).

Dow noted that sales from products with sustainable chemistry performance increased from 1.7% in 2008 to 3.4% in 2009. In terms of their won greenhouse gas and energy efficiency goals by 2015, the company said it plans to reduce its GHG intensity by 2.5%/year and reduce their energy intensity by 25% from 2005 baseline. Unfortunately, according to Hawkins, it is not easy for the company to quickly reduce their global manufacturing’s GHG and energy intensities because of frequent adjustments from mergers and acquisitions activities such as the recent acquisition of Rohm and Haas.

Check out my brief interview with Neil Hawkins on the video below:

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