David Gelbaum, the environmentally minded philanthropist who is cutting charitable donations after investments in alternative-energy firms last year put him "in a highly illiquid position," has decided that he is not ready to retreat from the renewable-energy industry.
On Monday, Entech Solar Inc. said that Gelbaum had become chief executive. The Fort Worth, Texas, solar company is one of several tiny renewable-energy businesses in which Gelbaum and his Quercus Trust have invested.
"I'm sure there will be challenges," Gelbaum said in an interview. He says that Entech Solar isn't making any money, and he wants to focus on commercializing the company's products.
Entech Solar makes a skylight and is hoping to commercialize two separate products that use concentrating solar power, which concentrate sunlight onto receivers that collect the energy and convert it into heat and electricity. The ThermaVolt, under development, is being designed to produce electricity and hot water. The SolarVolt, also under development, is to produce electricity only. Gelbaum came to the company's attention when he started buying its stock. Quercus currently owns about half of Entech Solar, according to regulatory filings.
Gelbaum had been an anonymous donor to the American Civil Liberties Union, the Sierra Club and an organization that provides services to military personnel. He announced funding cuts last year, saying that his alternative-energy investments had become illiquid. The publicity-shy mathematician publicly identified himself so that other donors would step forward.
Gelbaum said that he is sticking with alternative energy because it is good business. "It's a business decision," he said. "I got into cleantech because it was something I felt I understood."
Gelbaum said that solar energy is currently expensive except in certain areas, such as those with time-of-day pricing, in which electricity prices vary depending on when it is used. He says that if the costs of residential solar power declined to 13 cents to 15 cents per kilowatt hour, "it would take off." He says that prices aren't there yet, and puts prices in some places at around 18 cents per kilowatt hour. However, prices have been falling: a report from New Energy Finance last November estimated a 50% drop in solar power prices by the end of 2009 from 2008. New Energy Finance has since been bought by Bloomberg LP.
Renewable energy hasn't been kind to Gelbaum lately. Quercus lost money on its renewable investments last year, but Gelbaum says that he limited those losses by buying "a lot of puts" and selling short futures on the Standard & Poor's 500-share index. I "made a lot of money on my insurance," Gelbaum said.
Gelbaum said that for now, he isn't buying any publicly traded shares, outside of the small, additional investment he announced in Entech Solar as he took over the CEO role. He said he has sold shares in "a couple" of companies, including Bluefire Ethanol Fuels Inc., a cellulosic-ethanol maker.
Gelbaum is optimistic about solar power because if "it ever gets cheaper than fossil fuels," the supply "will be practically infinite." He said that knowing when investments will pay off is hard to determine because there is "so much uncertainty" and "there's always possibility for disaster."
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