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Power Source

How a fresh crop of CFOs is propelling the alternative-fuels industry.

The first time Don Points visited Kramer Junction, California, he didn’t know what to expect. It was 2001, and the retired finance executive had booked a tour of Solel Corp.’s solar thermal power plant in the Mojave Desert. Although Points had heard about solar electric-generating plants from his friend John Myles, CEO of Solargenix Energy, he hadn’t given the concept much thought. But as the former McDevitt Street Bovis finance chief stood in the barren desert, out among the endless rows of sky-blue reflectors, he felt as though he had stepped into an alien world. Points still recalls the eerie silence, punctuated only by the soft electronic whir of actuators moving giant mirrors 1/16th of an inch. “I was awestruck,” he says. “I knew right then that this technology would work.”

Points came out of retirement to join Solargenix as finance chief in 2004. His timing could not have been better. With fuel costs rocketing to the top of the worry list for CFOs (see By the Numbers), finance executives in the clean-fuel sector — once seen as a noble but foolhardy pursuit — now find themselves at the center of the action.

Indeed, the clean-energy industry (solar, wind, geothermal, biomass, hydrogen, fusion) has moved far beyond its early tree-hugger image. Legislators in several states, worried as much about potential power shortages as they are about the environment, have set aggressive targets for clean-fuel production of electricity. Business leaders, too, are exploring ways to insulate their companies from price spikes. One company, natural- and organic-food retailer Whole Foods Market, now meets all of its electricity needs through wind power, a technology whose fuel source is free.

The build-out of the clean-fuels industry has commenced in earnest. Nationwide, there are 101 ethanol mills, and another 40 are being constructed or expanded. General Motors Corp. is ramping up production of vehicles that can run on the high-octane home brew as well as gasoline. Commercial wind farms have cropped up in 34 states, with turbines dotting the rolling farmland near Walla Walla, Washington, and the marshes outside Atlantic City, New Jersey. Close to Las Vegas, Solargenix recently broke ground on a 64-megawatt solar thermal plant — the largest to be built in nearly 15 years. All in, research and publishing firm CleanEdge predicts that by 2015, sales of clean fuels will hit $167 billion. (That’s more than the revenue currently generated by the U.S. airline industry.) “Renewables are poised to grow,” insists Dan Goldman, CFO at clean-energy specialist New Energy Capital Corp., headquartered in Hanover, New Hampshire. “We’re at a tipping point.”

The switch from novelty to commodity is no sure thing, however. Securing capital remains difficult for new-fuel businesses, particularly those short on earnings. To obtain funding, CFOs at these outfits must convince lenders of the viability of often-exotic technologies — no easy sell. And regardless of fears about global warming, clean fuels will not catch on unless they cost as little as fossil fuels. That puts CFOs at alternative-energy companies squarely on the hot seat. “We’re past the crunchy-granola stage,” says Richard Baxter, senior technology analyst at Ardour Capital Investments LLC. “This is about money. If clean fuels aren’t competitively priced, they won’t last.”

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