U.S. Fracking Boom Threatens Mass. Clean Energy Sector

Despite Evergreen Solar's bankruptcy and a boom in low-cost natural gas, another Mass. company, 1366 Technologies, is ramping up production of solar wafers. (Curt Nickisch/WBUR)

Despite Evergreen Solar’s bankruptcy and a boom in low-cost natural gas, another Mass. company, 1366 Technologies, is ramping up production of solar wafers. (Curt Nickisch/WBUR)

BOSTON — Could fracking, the controversial natural gas drilling process, come to New England? Geologists say the black shale beneath the Connecticut River Valley may hold enough of the clean-burning fossil fuel to someday make it economic to drill.

While fracking hasn’t come to the region yet, the widespread drilling technology — and the glut of low-cost natural gas – is already affecting Massachusetts’ clean energy companies.

Clean Energy Investments Down

It was big deal when Evergreen Solar declared bankruptcy a year and a half ago. The Westborough-based solar panel maker went out of business after getting millions in state money. But that highly-publicized failure is not the reason clean energy investment in the U.S. fell by one-third last year.

“I think this is a particularly dangerous point in time for American alternative energy entrepreneurs and for the future of the alternative energy industry here,” said Rob Day, a venture capitalist at the Boston firm Black Coral Capital. Day says the money to fund new clean energy ideas has been drying up due to fracking.

“Everybody sees the fracking boom here in the United States and, as I believe as well, the likelihood of a long period of relatively low natural gas prices, leading to low electricity prices, and yeah, it is absolutely driving investors out of the water,” Day said.

That’s making it harder for clean energy companies to get off the ground.

Finding Private Investors

And getting something off the ground is exactly what Keystone Tower Systems is working on. The startup, based in an old industrial building in South Boston, is working on a new manufacturing process that makes it cheaper to build taller wind turbines. How tall?

Solar wafers are baked in an industrial oven as part of 1366 Technologies' manufacturing process. (Curt Nickisch/WBUR)

Solar wafers are baked in an industrial oven as part of 1366 Technologies’ manufacturing process. (Curt Nickisch/WBUR)

“So today we build 80 meter towers in the U.S.,” explained Chief Technology Officer Eric Smith. “We’re going to 120 to 140 [meters].”

Taller wind farms reach stronger winds that produce more energy. Technologies like this have been making wind power cheaper. Smith says the cost of wind has actually been falling in the U.S. at the same rate as natural gas prices.

“So last year, 2012, was the first year in which we installed more megawatts of wind turbines than we installed megawatts of natural gas plants,” Smith said.

But fracking is getting all the attention. And Smith says it’s gotten hard to find private investors for wind. For now, Keystone Tower is funding its progress with federal grants. But Smith’s afraid policy makers will get tunnel vision for natural gas.

“Yeah, I’m not really worried about being able to continue to sell wind turbines in the U.S.,” Smith said. “I have much bigger fears about getting consistent federal support for wind energy than I am about cost pressure from natural gas.”

‘We’re Growing’

By no means is fracking killing Massachusetts’ clean energy sector.

“It is completely invisible to our business,” said Tom Pincince, CEO of Digital Lumens, a company just around the corner from Keystone Tower Systems in the Seaport District. It’s an energy efficiency firm that helps big box stores and warehouses save up to 95 percent of their lighting costs.

“We’re growing as much as we can,” Pincince said. “And no matter how big the fracking boom comes, energy will never be free. And we’re essentially making lights free.”

One of the investors in Digital Lumens is Boston venture capitalist Rob Day. He says fracking does affect firms that don’t offer such a big benefit to their customers.

“Lowering the cost of electricity does raise the bar and makes it not impossible, but certainly makes it more difficult for companies that are looking to sell into this marketplace,” Day said.

Day says many clean energy startups are turning their attention overseas, where electricity costs are high and demand is growing. But Day wants local startups to have a strong domestic market, too.

“Because the real risk is that a lot of those companies end up selling overseas. They end up building their customer bases overseas. They may even move overseas or sell themselves to an acquirer overseas,” Day said. “And there’s a real risk here that we lose our leadership position which we’ve built through our innovative capabilities. But we lose our leadership position because we’re not the best market.”

Fracking As An Opportunity

One company that’s trying to keep a leadership position in solar power is 1366 Technologies.

On a tour of the company’s pilot factory in Bedford, CEO Frank van Mierlo explains his company’s competitive edge.

1366 Technologies CEO Frank van Mierlo. (Curt Nickisch/WBUR)

1366 Technologies CEO Frank van Mierlo. (Curt Nickisch/WBUR)

“Our wafer comes out of the machine and is very uniform,” van Mierlo said. “That’s one of the big selling arguments that we have, is that we eliminate a lot of the variability in manufacturing.”

But there’s one room van Mierlo won’t show anybody.

“And right here is the furnace room, where we currently have three furnaces in operation.” The door’s window has been papered over. “To make sure nobody can look in,” van Mierlo explained.

Inside is the company’s key breakthrough — a technology out of MIT. It’s a machine that makes silicon wafers for one-third less than the competition. That’s key because wafers are the basis for solar cells and the most expensive part of solar panels.

“It’s a real-live example happening right here in Massachusetts of how technology is drastically reducing the cost,” van Mierlo said. “You know, we’ve made fantastic progress and thanks to technology we’ll be able to continue that.”

Van Mierlo sees the fracking boom as an opportunity. He says it lets states such as Massachusetts continue to tell utilities to source more of their power from renewable sources. While those cost more now, lower natural gas prices will bring down the electric bill overall.

“So I actually believe we truly have a sunny future, pun intended,” van Mierlo said. “And that gas is a very helpful transition fuel.”

Van Mierlo says the fracking boom will give the U.S. cheaper energy for the next 20 or 30 years. And he hopes the country uses that to invest in next-generation power.

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  • http://www.facebook.com/andy.koenigsberg Andy Koenigsberg

    As a former petroleum geologist, I can tell you without equivocation that the introduction to this story is flat out wrong – there are no economically exploitable formations containing natural gas in the Connecticut River Valley. Period, end of story. This error needs to be corrected. For more information, please review the following web page at the Office of the Massachusetts State Geologist:


    • http://twitter.com/CurtNickisch Curt Nickisch

      Andy, indeed, a USGS report last June suggested there is natural gas there but is hard to process. New England Public Radio produced a story in December about folks looking at economic viability: http://www.nepr.net/news/fracking-conference-held-umass-amherst

      Agreed – under current natural gas prices and fracking technology, it’s not worth drilling, but those conditions may change.

      • http://www.facebook.com/andy.koenigsberg Andy Koenigsberg

        I have to disagree because no gas has ever been found in this basin.

        The USGS report discussed Mesozoic rift basins throughout the eastern seaboard and the problem with that report was there was no quantitative analysis of this basin in particular.

        Also, the geologic conditions in this area are completely unlike the Marcellus Shale in neighboring NY or other Mesozoic rift basins. The shales are too thin and too discontinuous even if they did currently contain hydrocarbons. Although the shales probably did contain hydrocarbons over 100 million years ago, these have long ago migrated out or degraded to residual levels.

        As a long time member of the New England Section of the Association of Engineering Geologists, which is the only state level geological organization, I can tell you that all the geologists I know, some of whom have been working in this state for many decades, find the idea of natural gas being exploitable in this basin under any economic scenario to be extremely unlikely.

        Last, current MA regulations prevent fluid injection into any well,which would prohibit the use of fracking.

        • Eric B.

          “Last, current MA regulations prevent fluid injection into any well,which would prohibit the use of fracking.”
          Good – we don’t need more “cheap” energy which we have to pay for down the road due to health and environmental damage.

  • anneex

    I heard this whole report this morning, and kept waiting for you to mention the cost of fraking in terms of the damage it does to the water table. Really, is not the cost of destroying our pure water supply taken into consideration when calculating how much money is to be made from frakking?

  • Walt Corey

    Yes, IF fracking proves to be not harmful there may be a rest-bit for fossil fuel. However, I don’t see cars running on NG and while NG currently is competitive with geothermal, for heat, NG does nothing for AC. If PV technology could bring down costs so the avg home owner with a south facing roof could cut 1/2 their electric bill, that would do far more to further energy independence than lower cost NG for power plants.

    Where does it say savings power companies may see in NG prices would be dollar for dollar passed on to consumers.

    • http://www.facebook.com/andy.koenigsberg Andy Koenigsberg

      The PV system on my roof has cut my annual electric bill by 70% and I can run my central AC full time during the summer and my bill will be either negative or less than $20. Unfortuantely, with cheap natural gas, electric prices have been flat for the last few years, so my payback on the system will be about 20 years, or about the time I retire and sell my home.

      • heatherGirl

        So you want expensive energy instead? That seems just plan stupid.

        • http://www.facebook.com/andy.koenigsberg Andy Koenigsberg

          It was not my intent at the time.From 2000 to 2007, my electric bill had been going up 20% a year and I expected a break even in 8 years. I think the whole fracking boom is a chimera that will result in a bust because declining prices will eventually become a disinsentive to drilling then electric prices will start to go back up.

          Also, at the time I put my system in, the price of solar panels was well was something like three times higher than they are now. Industrial sized solar farms are being installed in many areas of MA right now – three in my town of Westborough. Even without subsidies, which are or have gone away, the way business taxes are structured, capital write downs make the break even point for such systems less than 5 years and the power generated is in the several megawatt range. No noise, little maintenance required and the systems will last in the neighborhood of 20 years.

          • Walt Corey

            I’ve not seen any drop in our electric bill, same usage but the per KW expense keeps rising.

  • jimmy Kim

    The Chinese threaten mass. clean energy. Who care’s if the wafers are uniform if the the Chinese make 500 of them for the same cost. Pick the best 100 and sell them for less than everyone else.

  • crescentfang

    Solar and wind are so intermittent that they can’t deliver more than 1/3 of the power anyway and gas generators would be needed to take up the slack. Gas is also cleaner than coal and has a high hydrogen content so it produces less CO2. This is a replay of the 1970′s: after spending lots of money developing “alternative energy” it has proved to be unnecessary and uneconomic. The government has, as usual, bet on the wrong horse.

  • Regula

    Fracking is the big boom. But the last word isn’t spoken yet. Ground water pollution has occurred in many places. Once this pollution problem becomes more acute, fracking may in fact turn out to be a technology that has to be outlawed to save the US’s water supply. Many countries prohibited fracking for that reason and for the tendency to cause minor earth quakes which damage the foundations of buildings near enough to get affected. Unfortunately, the US government has shown itself to be more interested in the money than in public health (see the problem with Monsanto’s GMO seeds and herbicides). Fracking may well turn out to be a boom not so much for cheap NG, but for the pharmaceutical companies.

  • heatherGirl

    Well we just can’t have affordable energy ruining our chance to have over priced green energy! Isn’t that really what this is about? If we have energy people can afford then no one will want the expensive solar and wind power?

  • Flitzy

    Let us hope that Massachusetts has the good sense to ban it before it can even come here.

    That ‘boom’ that is referred to is the sound of ‘fracking’ slowly destroying the Earth and everything on it.


    Unemployed people can’t afford expensive solar electricity. Is that difficult to understand?

  • Mitch Withers

    There is very little incentive to frack for natural gas. If something is cheap, you don’t try to make more of it. The money is in tight oil, and gas is a cheap byproduct. If the supposed formations are dry gas, it’s not going to happen until gas gets more expensive. And that won’t be for a while.

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