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15 Tips For Clean/Green Tech Accelerator Success

I’ve been helping behind the scenes on a new cleantech incubator recently launched in Vancouver, Canada called the Foresight Cleantech Accelerator. And in the process, I’ve been getting the opportunity to learn what other accelerators and incubators are doing well, and not so well, around the world.

The first incubator launched in the U.S. in 1959, but since then the terms accelerator and incubator have become somewhat synonymous. Both are generally used interchangeably to describe organizations, typically with multitenant facilities, which exist to help foster new innovation—though some characterize accelerators as higher velocity and sometimes contributing cash, as in Y Combinator. Like Foresight in Vancouver, many provide educational programming (in Foresight’s case, a structured curriculum called the Venture Acceleration Program), as well as office space, mentoring, expert clinics and networking with strategic customers and investors. Some even offer capital directly. Still others offer pooled support services such as marketing and accounting.

Incubators are a global phenomenon. In efforts to foster job creation and local economies, they’ve blossomed around the planet. There are some 7,000 such programs around the world, according to a 2011 study by the University of Michigan. And—no surprise—some perform better than others.

Why?

Best incubator practices
What are some of the secrets of success of the best incubators? University of Michigan researchers collected and analyzed data to determine relationships between how an incubation program operates and how its client companies perform, as measured by a number of outcomes. (It even came up with a web-based tool to help incubation professionals measure their efforts against best practices—facility managers take note!)

Highest performing incubators were found to exhibit the following characteristics:

1) No one practice, policy, or service is guaranteed to produce incubation program success. Instead, it’s the synergy among multiple practices, policies, and services that produces optimal outcomes. There is no single “magic bullet” service an incubator could or should offer.

2) Top-performing incubation programs often share common management practices. High-achieving programs have a written mission statement, select clients based on cultural fit, select clients based on potential for success, review client needs at entry, showcase clients to the community and potential funders, and have a robust payment plan for rents and service fees. Incubation programs with lax or no exit policies typically had less-than-optimal performance.

3) Advisory board composition matters. Having an incubator graduate firm and a technology transfer specialist on an incubator’s advisory board correlates with many measures of success. Additionally, accounting, intellectual property (patent assistance), and general legal expertise on the incubator board often result in better-performing programs. Government and economic development agency representatives also play key roles in enhancing client firm performance, as their presence ensures that the incubator is embedded in the community, which is necessary for its success. Local government and economic development officials also help educate critical funding sources about the incubation program. Incubation advisory boards should include diverse expertise.

4) Neither the size of an incubator facility nor the age of a program is a strong predictor of client firm success. Many incubator funders and practitioners perceive that the size and age of an incubator are key success factors. But it is the incubator’s programming and management that matter most. For example, staff-to-client ratios are strongly correlated to client firm performance.

5) High-achieving incubators collect client outcome data more often and for longer periods of time than their peers. Overall, two-thirds of top-performing incubators (66.7%) collect outcome data. More than half collect this information for two or more years, while slightly over 30% collect data for five or more years. Collected data include client and graduate firm revenues and employment, firm graduation and survival rates and information on the success of specific program activities and services.

6) Most high-achieving incubators are not-for-profits. Incubation programs focused on earning profits were not strongly correlated to client success. The most important goals of top-performing incubation programs are creating jobs and fostering the entrepreneurial climate in the community, followed by diversifying the local economy, building or accelerating new industries and businesses, and attracting or retaining businesses to the host region.

7) Public sector support matters. Only three of the top- performing incubation programs studied operated without public sector support from local government agencies, economic development groups, colleges or universities, or other incubator sponsors. On average, nearly 60% of top incubator’s budgets are accounted for by client rent and service fees.

8) Incubation programs with larger budgets (both revenues and expenditures) typically outperform incubators with budget constraints. Programs with more resources have more capacity to deliver client services and are more stable. However, the sources of incubation program revenues and the ways the incubator uses these resources also are important. Incubators receiving a larger portion of revenues from rent and service fees perform better than other programs.

9) The growth or size of a host region’s economy are poor predictors of incubation program outcomes. Incubator management practices are better predictors of incubator performance than the size or growth of the region’s employment or GDP.

10) A region’s capacity to support entrepreneurship has limited effect on incubation program outcomes. Compared with incubator quality variables, regional capacity variables have less predictive power. Among regional capacity measures studied, only urbanization, work force skills, availability of locally controlled capital and higher educational attainment have moderate influence on incubator client outcomes.

Cleantech incubator-specific advice
In support of the Foresight Cleantech Accelerator I’ve been working with, I’ve recently spoken with a handful of others around the world involved with cleantech clusters, incubators and accelerators. Below are some top challenges I heard, and potential ways to mitigate them.

11) Sanity-check the services you offer. Incubator management should review the array of services provided through the incubation program and assess the effectiveness of those services periodically.

Services found by the University of Michigan (in the study previously referenced above) to be statistically significantly related to client firm performance include:

  • Providing entrepreneurial training (from business basics to comprehensive training in managing a new enterprise)
  • Offering increased access to investment capital
  • Securing strong supportive relationships with local area higher education institution(s)
  • Providing production assistance (from R&D and prototyping through to engineering production systems)
  • Developing strong mentor programs (e.g., shadow boards, loaned executives, periodic engagement with incubator managers, participation in program activities)
  • Shared administrative services and office equipment, and assistance with client presentation and business etiquette skills

But in cleantech, not all of these services may be necessary. Incubators shouldn’t feel bound to traditional concepts of what has been appropriate at other tech accelerators—even successful ones like Y Combinator. The requirements of clean and green tech companies can be different. In fact, the pivot earlier this year of high profile San Francisco green tech accelerator Greenstart to simply focus on design was apparently in direct response to client needs.

12) Don’t assume business training is business training. Some graduates of a certain energy software accelerator in Texas complain about the value of its programs, characterizing them as oil and gas executives trying to teach energy and water entrepreneurs about energy efficiency. Ensure you have relevant, credible domain experts teaching your companies.

13) Cultivate bench strength in your domain experts. Clean/green incubators lament that it’s hard for them to keep top coaches and entrepreneurs-in-residence (EIRs). The good ones apparently keep leaving to join the most promising companies they’re working with, or investment funds. Accelerators need to be constantly recruiting and developing new coaches and EIRs, interviewees cautioned.

14) Raise lots of money. An incubator needs financial support, and clients can’t be expected to contribute 100% of an organization’s requirements. Raise funds early and often. In terms of a best practice, the Research Triangle Region Cleantech Cluster (RTCC) has done a great job securing local commercial support, convincing 10 large companies with a significant local presence to each contribute $25k/year with a 3 year commitment (for a total of $75k each up front) for an advisory board seat. Supporting companies include ABB, Duke Energy, Field2Base, Power Analytics, PowerSecure International, RTI International, SAS, Schneider Electric, Sensus and Siemens.

15) Beware of incubator founders leaving, sometimes collapsing the operation. Founders of accelerators get lured away more often than one might think, one interviewee said, pointing to NREL’s CleanLaunch program. Launched with fanfare in 2011, its website is now down as of this writing after the founder left. Mitigate by ensuring the board has a succession plan for the organization’s leader, who, being human, isn’t beyond being lured to the next possible disruptive start-up him or herself.

This post was originally published here and is republished by permission.

Will Crystalline Solar Kill Thin Film? A Conversation with Applied Material’s Solar Head Charlie Gay

By Neal Dikeman

I had a chance to chat today with Dr. Charlie Gay, the President of Applied Material’s solar division.  You may recall, we broke the story in the blogosphere 5 years ago about Applied’s entry into solar, which was anchored with a highly touted and very aggressive strategy for turnkey large format amorphous silicon and tandem cell plants called SunFab.

Charlie reminded me that when they began 5 years ago, they did so along two major thrusts:  The acquisition of Applied Films in June 2006 getting an inline coating system for deposition of silicon nitride passivation layers on crystalline and in parallel an internal project to adapt their large flat panel display manufacturing technology for photovoltaics.

They still like the large module format, for a simple reason, cost in the field for large scale solar farms is heavily about getting area costs down relative to power output.  I was excited for another simple reason, when major capital equipment developers get involved, manufacturing maturity is not far behind, it forces everyone to rethink scale in different ways.

After a huge initial splash outselling everyone’s expectations in that SunFab concept, many industry analysts later kind of wrote them off as flash in the pan when they were reported having problems as implementations came in slower and smaller and harder than expected on their SunFab lines a couple of years ago, and a saw a major restructuring in 2009. But they’ve had success with that product anyways, EVERYONE saw a major restructuring in 2009, and more importantly the original vision of leading solar into mass manufacturing is still going strong, now across a range of products and technologies in thin film and crystalline manufacturing equipment.  Let’s put it this way, in their annual report they call themselves the largest equipment manufacturer to the solar sector, they have $1.5 Billion in annual revenues in the Energy & Environmental division, which is heavily PV, and there are like 120 mentions of the word solar in their annual report, almost once per page.

So what I really wanted to talk to Charlie about was the future of PV manufacturing. He frames the future by drawing a mirrored parallel between photovoltaics and integrated circuit manufacturing, beyond just semiconductors:

  • In IC, dozens to hundreds of device architectures exist, but basically one material, silicon.
  • In PV, there is essentially one architecture: the diode, but dozens to hundreds of material choices.

But silicon has been the mainstay material of PV for a number of reasons.  So we got into one of my favorite topics, the manufacturing improvement potential in crystalline silicon.

His version of Moore’s law for solar runs like this:  the thickness of the solar cell decreases by half every 10 years.  Today it’s 180 microns thick.  The practical possibility exists to get down to about 40 microns, with some performance improvement by making it thinner, but we can’t go much below 40 without being too thin to absorb enough light.  This fits with other conversations I’ve had suggesting that over the past couple of years most of the major crystalline solar manufacturers were working on paths to take an order of magnitude out of cell thickness.

If this comes to fruition, crystalline can literally wipe the floor with the existing thin film technologies.  Basically think sub $1 per watt modules with the performance of high grade crystalline modules today.  And as cost per watt equalizes, that higher efficiency starts to really tell, as since Balance of Systems costs have fallen at 10-12% per doubling of installed fleet, compared to module costs falling at 18-20%, in a world where BOS increasingly matters, the old saw about lower area cost per unit of power installed starts to actually bite for once.  Think ultra thin high performance low cost large format x-Si modules with fancy anti reflective coatings and snazzy high grade modules with on module inverters or DC optimizers mounted on highly automated, low cost durable trackers.  Think solar farms approaching effective relative capacity factors of 2.5-3 mm kW Hours per year per MW on 25 year systems at $2-3 per Watt installed.  Possibly the only thing on the planet that could match shale gas.

In fact, the entire thesis of thin film as a business and venture capital prospect has been built on the premise that crystalline material costs were just too high to get to grid parity. I’ve got scads of early thin film business plans touting that.  That thesis is under extreme pressure these days. I’d submit that if the industry 7 years ago had really understood how much improvement could be had, we’d have saved billions in potentially stranded thin film development.

Charlie says there are about a dozen different paths for enabling 40 micron cells.  The most interesting approach to him is an epitaxial growth process on reusable silicon templates.  A process which grows a thin layer of silicon on top of a reusable layer of silicon, using perhaps one mm thick silicon templates, etching the surface, and directly depositing silicon from trichlorosilane gas.  The idea would be to rack templates into a module array, grow the cells in an oven to your 40 micron level, then glue the glass module to the back side, and then separate it off to form a “ready to go assemble” module.  The challenge is basically oven and materials handling designs that get it cost efficient in high volume.

In essence, all you’d be doing is integrating a silicon ingot growth process directly into a module. Instead of growing ingots, cutting thick wafers, forming cells, then building modules from them, you grow cells racked into their own module personally instead of growing ingots first.

Hella cool.  A process like that means using fairly manageable capital equipment and materials handling technology development in known device and module technologies we could literally rip the ever living guts out of crystalline manufacturing costs.  And there are 11 more paths to play with???

The way he thinks about it, on a broader perspective more people are working in photovoltaic solar R&D today, by his estimate some 70,000 researchers and $3 billion per year, than in all of the prior PV history.   And that means whereas perhaps five main innovations over 35 years drove almost all of crystalline PV manufacturing costs (screen printing, glass tedlar modules, adapting steel from tires for cutting wafers, silicon nitride processes, and fast metrology tools), in today’s world, Charlie thinks we see 5 equivalent innovations in PV manufacturing technology every 2 years.

So I asked him to comment on whether there were parallel cost-down opportunities for thin films or whether it is an also ran waiting to happen.  He thinks there are.  He mentioned organics.  I pushed back hard, as organics have been written off by almost everyone for never seeing yield or performance, so where does he see the opportunity?  He responded that he picked organics to keep me from narrowing the materials field prematurely to just A-Si, CdTe, CIGS, and GaAS.  Silicon just like carbon can surprise us, e.g. bucky balls, carbon nanotubes, and just because early materials had stability and process issues, doesn’t mean we’ve exhausted the opportunities.

He says what he wants us to recall is that we are currently operating in PV manufacturing today with the materials that were on the radar in the energy crisis from 1974-1980.  That is changing in the lab and universities these days.  And given time the results will surprise us.

He draws a parallel between photography and photovoltaics, both invented in 1839, both rely on sunlight acting on materials. In photography, people started off putting films on glass, then putting films on mylar, and running things continuously.  Implying that in solar, we’re still on glass c. 1890.

He said to think about the original Ovonics/Unisolar vision in thinking about how you get to high speed continuous processing with thin film (think paper manufacturing, where done roll to roll it’s far more consistent than one-offs can be done).  If that is still our ultimate thin film paradigm (got to love the chance to use the word “paradigm”), the stars are still in front of us with what thin film COULD do.  And while roll to roll has had significant materials technology and process control challenges for the current class of materials, let’s go back to the mirror parallel to integrated circuits, in photovoltaics, one main device, scads of material options.  Just a matter of R&D hours and time.

He markedly did NOT suppose that the current state of thin film devices could beat 40 micron crystalline silicon by themselves.  It’s worth considering that we may look back and find that thin film, CdTe and First Solar were the stepping stones to 40 micron crystalline, not the other way around.  Maybe my next question to Charlie is whether he and I should set up Neal and Charlie’s 40 Micron Solar Company of America yet. 😉

 

Sunetric Offers Free Solar PV Systems to Raise Money for Japan

HONOLULU— www.hawaiiredcross.org, www.withaloha.org and www.Sunetric.com — Sunetric, Hawaii’s largest locally owned and operated solar installer, has donated two solar photovoltaic systems to raise funds for two local charities assisting Japan. The first is the American Red Cross Hawaii State Chapter and the second is the “With Aloha” Foundation. Donations raised through the website www.solarforjapan.com will go directly to the American Red Cross Hawaii State Chapter and the “With Aloha” Foundation to aid in the relief efforts. Donors of $10 or more will automatically be entered to win one of the solar arrays. Winners for both PV systems will be drawn live on ESPN radio’s Bobby Curran Show on Monday, May 2.

More than 12,100 people have been confirmed dead and nearly a half million people are homeless in the wake of the earthquake and subsequent tsunami that hit north-east Japan on March 11. Funds are urgently needed for food, water, medicine, shelter and clothing. The first donation benefits American Red Cross relief efforts in Japan. The American Red Cross has been a primary source of support for the residents in the wake of the disasters in Japan. “We are so grateful to Sunetric for their compassion in this time of great tragedy. Their efforts in raising much needed funds for the American Red Cross Japan Earthquake & Pacific Tsunami relief effort will help us save lives and give hope to those in need. We cannot thank them enough for their wonderful contribution to the cause of humanity,” said Coralie Matayoshi, CEO of the American Red Cross, Hawaii State Chapter.

The second donated PV system supports the “With Aloha” Foundation which is holding a fundraiser on April 9 at the Pagoda Hotel. Presented by aio, the fundraiser is a block party, benefit concert, and food tasting featuring 24 local restaurants and entertainers from around the world. Proceeds from this event, along with donations raised by the solar giveaway, will be sent to Tohoku University Hospital in Sendai, Japan, where many of the earthquake and tsunami victims are receiving care.

“We are so thankful for Sunetric’s generosity in donating not one, but two, photovoltaic systems to help raise funds for the victims of Japan’s earthquake and tsunami,” said Susan Eichor, aio President & COO. “With Aloha is a community inspired movement of Hawaii organizations coming together and helping those in need. We are humbled to partner with companies like Sunetric to support Japan …With Aloha.”

The $15,000 solar arrays are projected to save an average household more than $100 per month. Both donated systems are identical and offer ten Trina PV panels of 230 Watts per panel. They come with 3000W Centralized Inverters and 25-year production warranties. The systems must be installed on the island of Oahu, but winners can transfer their prizes to a friend or family member. Donors to the Japan relief efforts will automatically be entered to win. To register, go to www.SolarForJapan.com. For every $10 donation, one entry to the drawing will be given. For $20, two entries will be given and so on. No purchase or donation is necessary.

“As a local company, Sunetric is proud to be involved in the effort to provide help and kokua for Japan,” said Sunetric Founder Sean Mullen. “Through this partnership, Oahu residents can make a difference for Japan’s people, while also getting an opportunity to switch to solar.”

About the American Red Cross:

The American Red Cross, a humanitarian organization led by volunteers and guided by its Congressional Charter and the Fundamental Principles of the International Red Cross Movement, provides relief to victims of disaster and helps people prevent, prepare for, and respond to emergencies.

About aio:

aio is a family of businesses specializing in media, technology, sports and food. Media include: Hawaii Business, Island Family, Honolulu, Hawaii Home + Remodeling, Hawai‘i, Hawaii-Ai, Ala Moana and Whalers Village magazines; Hawaii Buyer’s Guide and Lei Chic (online newsletter)and ESPN 1400 and 1500 AM (radio). Other aio companies include: Watermark Publishing (books), Obun Hawaii Group (printing), Upspring Media (software and websites), Talisman LBS (mobile marketing), B. Hayman Co. (commercial turf), Punalu‘u Bake Shop, Hukilau Honolulu Restaurant, Nutricopia (food) and HWB Foundation.

About Sunetric:

Founded in 2004 by Sean and Beth-Ann Mullen, Sunetric is Hawaii’s largest locally owned and operated solar installer. Since its inception, Sunetric has designed and installed more PV than any other company in the state and is responsible for nearly 60,000 solar panels and 12.5 megawatts of solar installed across all islands, providing the equivalent greenhouse gas benefit of taking 3,000 vehicles off Hawaii roads each year. Hawaii’s first SunPower Elite dealer, Sunetric has installed several of the largest photovoltaic systems in Hawaii, including Kona Commons shopping center on the Big Island, Wilcox Memorial Hospital on Kauai, and Y. Hata on Oahu. Visit www.sunetric.com for more information.


FACT SHEET
Sunetric’s Solar PV giveaways benefit American Red Cross and “With Aloha” Foundation

Who: American Red Cross Hawaii State Chapter, “With Aloha” Foundation and Sunetric.

What: Online Giveaway of two (2) donated $15,000 solar photovoltaic systems ($30,000 total).

Why: To support the victims of Japan’s disasters through the American Red Cross Hawaii State Chapter and “With Aloha” Foundation.

How: Register at www.SolarForJapan.com. No purchase or donation necessary. Every $10 donation automatically gets one entry to the drawing; every $20 gets two entries, and so on.

When: Register online now through May 1. Winners will be drawn live on ESPN radio’s Bobby Curran Show on Monday, May 2.

SYSTEM DETAILS
• Value: $15,000
• Ten 230W Modules
• Brand of Panel: TRINA
• Unirac Sunframe Compression Racking System
• 3000W Centralized Inverter
• $105.28 per month savings
• $1,263.36 per year savings
• Installation and permitting included for the island of Oahu
• Giveaway transferrable on the island of Oahu
• Installation must begin on or before May 1, 2012

WARRANTIES
• 5 Years for the module
• 25 Years for production

FOR MEDIA ONLY: For an electronic version of these documents or images, please contact Julie Ford at (808) 593-2890 or Julie@schweitzerconsulting.com.

Intelligent Energy Raises £7 Million to Accelerate Commercialisation Plans in Further Material Up Round

Loughborough UK, 14th April, 2011 – Intelligent Energy, the global clean power systems company, today announced it has recently completed a fundraising round of approximately £7 million ($11 million) from existing and new institutional shareholders. This investment, achieved through a placement at £1.70 per share, enables Intelligent Energy to accelerate the commercialisation of its advanced fuel cell power systems.

“This material up round helps us to further accelerate the commercialisation of our clean power systems,” commented Dr. Mark Lawson-Statham, Director of Corporate Finance at Intelligent Energy. “We are experiencing real customer pull for our fuel cell power systems across our market segments. This is not surprising, as like us, a number of our partners and customers are seeing major commercial tipping points across the automotive, consumer electronic, backup power and combined heat and power markets.”

Late last year, the company announced its joint venture with Scottish and Southern Energy, IECHP (UK and Eire) Ltd., had received a £3.7 million investment from Scottish and Southern Energy, Scottish Enterprise and Intelligent Energy, to continue the development of fuel cell combined heat and power (CHP) systems for residential, commercial and light industrial markets in the UK and Ireland.

“Volatile oil prices and the fragility of our current energy infrastructure, further highlights the need for clean and reliable energy technologies,” said Dr. Henri Winand, Chief Executive of Intelligent Energy. “This investment allows us to continue the commercialisation of our fuel cell technology, some of which is already undergoing public road testing. Our Fuel Cell Black Cabs have debuted on the streets of London, while the Suzuki Burgman Fuel Cell Scooter recently obtained European Whole Vehicle Type Approval – a first for any fuel cell vehicle.”

About Intelligent Energy

Intelligent Energy is a global clean power systems company, with a range of leading fuel cell and hydrogen generation technologies. The company partners with leading global companies in the transportation, oil and gas, aerospace, defence, distributed generation and portable power markets. Current partners and customers include Scottish & Southern Energy plc and The Suzuki Motor Corporation, with whom Intelligent Energy built the Burgman Fuel Cell Scooter, a recent recipient of European Whole Vehicle Type Approval, which qualifies the scooter as safe to use on EU public roads. Other successes include developing the world’s first hydrogen fuel cell motorbike and supplying the fuel cell system to Boeing which powered the world’s first manned fuel cell aircraft.

Long Live Green Squared Suburbs

I’m watching a CNN special on reinventing Los Angeles, and calling on suburbs as dead, time to move on. 

But I LIKE suburbs.  I like grass.  I like trees.  I like quiet.  I like space – both in my house and between my neighbors.  I don’t like my neighbors waking me up with loud sex at freaking 4 am (which I’ve decided is just par for the course in city environments).

I like my own garage.    Walkable and mixed use can be great.  Done that.  I’m never giving up grass and quiet for walkable and mixed use again.  And well designed suburbs can give you both.

What I don’t understand is why the suburbs have to die – just because of commutes and smog.   Why does being green and sustainable mean I have to live in a hot urban hellhole or drive an hour and half each way?  Why can’t I have a green squared suburb – green with grass AND sustainability.  Why is density good in and of itself?  That’s a false choice.

A large chunk of the professionals I know telecommute and adjust work schedules around commutes, at least sometime.  And still get their jobs done.  Companies need to get this. If I ever got a real job (not that it’s going to happen), I guarantee you lack of flexible working hours and location would be a deal breaker.

Like with most things in economics, it doesn’t even matter if only a portion of the population can do flex and remote.  Just make it possible for 10-20% of the total workforce to adjust, even some of the time, and add that flexibility in.  We’ll likely find that we relieved pressure on house pricing, infrastructure, and everything else, benefiting all of us.  That’s the flip-side benefit of inelasticity in economics.  Small changes in volume can change price fast.

So I submit:

If we have electric vehicles and renewable energy to fight smog.  Especially the continued rise of what I call the one-two auto family – one big car and one small one (which is frankly all the first generation of EVs is good for).  Flex schedules and flex commutes letting the family adjust cars to the right purpose.

If we have the web and skype and mobile everything on our phones.  And cloud computing for all our office stuff.

If ecommerce and on demand continues to grow and change the shopping and entertainment experience.  Read flex travel and random amenities in the smallest town – this is what broadband is delivering us.

If we build flex time and telecommuting into the basic employer – employee contract, with employers paying a premium for the 9 to 5 at the office.  The employer gets more productivity for less money.  And the employee gets their life back and spends less on gas and food.

Then we can have our suburbs and walk them too, or live sustainably, more cheaply, and profitably in small and medium sized cities, and relieve pressure on price and annoyance in the large cities.  And not give up our quiet, space and grass.

These are not big ifs.  Long live the green squared suburb!

Cleantech Forum Snaps – Affirmative Action, Star Trek, and Starvation

Three comments I really liked from the premier conference on cleantech:

Art Rosenfeld, California Energy Commission – It’s all about cool white roofs to combat climate change.  Art is one of the deans of energy efficiency in California.  It’s been long known that white roofs can cool a building and help reduce the heat island effect in cities (cities are always hotter than the country, basically because they make more heat, and shifting from trees to concrete, asphalt and asphalt shingled roofs both reduces the cooling affects of aspiration and absorbs a larger portion of heat into the phyiscal environment).

So Art is now effectively calling for step by step, low cost and simple geoengineering through policy to combat both energy efficiency demons and climate change.  E.g, not only do cool white roofs reduce heat in the city, they reduce the cooling bill in the building, and reduce GHGs from energy use.  He posits that a shift from black roofs to white roofs and/or shifting roof design to flatter roofs that are more effective in white roofs would save literally billions upon billions of tons of CO2e over time, with no measurable cost difference.

So, call it the affirmative action program for cleantech, but color matters.

Sheeraz Haji, CEO Cleantech Group – It’s all about Data.  The idea is pretty simple – everything in cleantech from here on out – e.g. smart grid, energy efficiency, solar performance, water use, EVs, etc all depends on more, cheaper, faster, more granular, timely and better data and the analysis it can drive.  Sheeraz’s question to define future opportunities in cleantech is, “so what does data need?”

John Denniston, Kleiner Perkins – It’s all about food.  Think food security, food v fuel, water use, fertilizer source and ag run-off, crop yields, etc.  I love this topic.  For those of you who haven’t heard of him, go google Norman Borlaug, the recently passed away sage who made possible our ability to not starve and threw Malthus for a loop for the last few decades with dramatic crop yield improvements from his selective plant breeding and fertilizer intensive ag.  The favorite argument of the day, which John mentioned, is the “in the next x decades of years we’ll need more food than in the last x – thousands of years”.  Right or wrong, the scale is sure changing. 

So, whether your answer to John’s all about food is less people, more GMO, more technology, more water efficiency, or shifting diets, we’re going to need another Norman Borlaug or life is gonna suck.

The Landfill Wars

Guest blog by Don Willis

I have been to recycling conventions all across the country. It never fails that all of them have programs dedicated to landfill operators. Somehow recycling companies have not yet gotten the message. Landfill Operators are NOT recyclers. They may dabble around the edges of recycling so that the various levels of government give them a ‘feel good’ badge for attempting to be green, but the bottom line is that it is clearly becoming an us versus them scenario as we talk about ways of getting to zero waste.

I met with a landfill operator last year, at the request of a community that wanted us to build a recycling center in their city. The city had a seven year agreement with a waste collector. The waste collector also owned the landfill. It was not possible for me to build a facility in their city unless the waste company agreed to work with us on tonnage. I told the city it would never happen, but at their urging I agreed to meet with the Landfill Operator. He was pleasant and polite, but the meeting lasted only a few moments. He very politely stated that, “We’re in the landfill business. We get paid to bury trash, not recycle it.” He was absolutely correct. Landfill Operators are not in the business of recycling. If we ever needed to be hit over the head with that we just were in Florida. Landfill Operators from around the state lobbied tirelessly to get the yard waste ban overturned and they were successful. Yard waste, which prior could not be buried in landfills in Florida, could now be sent there under the guise of increasing methane production at bio-reactor landfills.

In case you don’t know bio-reactor landfills are landfills at which you see the pipes sticking up out of the surface. These pipes collect the methane that is created when organic matter in the landfill breaks down. This material creates methane because there is no oxygen in the landfill. If there were the decomposition process would yield carbon dioxide instead of methane. In the presence of oxygen decomposition yields many beneficial items. In the absence of oxygen, we get dangerous and deadly landfill gases that pollute our air and cause health problems for any nearby residents. The purpose of collecting this gas is an attempt to avoid these problems and make a few bucks selling the gas to a power company.

When a company owns a landfill they own a limited shelf life commodity. A landfill will only hold a certain amount of waste. If you can only hold a specific volume of waste, then the profit mechanism becomes a factor of time. A landfill that will hold X number of tons that takes 30 years to fill, is more profitable if the landfill operator can fill it in 20 years, instead of 30. This paradigm is the antithesis of the desires of the local community. In the example I used above the landfill at one time had belonged to the community. They sold it to the company that now operated it. They spoke to me of how many years of life the landfill had as if to get across the point that they had no concern at where the waste of the city would need to go for the next 50 years. They had no clue that the landfill operator had begun receiving waste from other communities. The landfill operator had reached out and had begun receiving waste from cities as far as 200 miles away. A landfill operator is sitting on a volume of space. The quicker the operator can fill that space the more profitable the space becomes.

As recycling rates continue to rise across the country landfill operators are fighting back. In state after state they are lobbying to remove landfill bans on items so that they can increase the tonnage they receive. They speak of how they are doing it so that they can make their ‘bio-reactors’ more productive but the bottom line is they are in the business of burying trash, not recycling. Landfills need to become a thing of the past. They no longer serve any useful purpose. Much like the buggy whip, they served a purpose in their day, but no longer. We have the ability to recycle 100% of our waste. Why do we still tolerate an industry that pollutes our air, soil, and ground water? It isn’t time to remove bans on items going to landfills. It is time to expand the bans on items going to landfills. It isn’t time to embrace bio-reactor landfills. It is time to see them for what they are, the best that can be made of a bad situation. Don’t let a landfill operator tell you that landfills are safe. They are not, cannot, never have been, and never will be safe. The manufacturers of the liners they use admit that the liners have a limited life and are subject to puncture. That means that every landfill using liners today will pollute our groundwater just as much as the estimated 50,000 closed landfills that dot our country. Every liner will leak, every liner has or will have punctures, and every liner will break down. When they do every drop of rain that falls on them will become contaminated with thousands of chemicals on its way to our ground water.

We are not in the same business. We need to understand that and take it to heart. We need to get as good at lobbying as they are. Recycling may be winning the battle for the hearts and minds, but the landfill operators are winning the lobbying war.

Don Willis CEO
Green USA Recycling, Inc.

5 Cleantech Wishes for 2011

Five things I’d like to see in cleantech 2011.

  1. A fuel cell in one of my blogger’s houses.  This one’s actually in progress, so hopefully it’s a gimme.  So come on Marc, we’re waiting for the pictures and the blog!
  2. More cleantech IPOs.  Come on guys, the market’s been rolling, we ought to be able to deliver ONE good IPO or two?  We did see RigNet (NASDAQ:RNET) get out in a $60 mm IPO.  RigNet’s a telecommunications for remote and offshore oil and gas markets but maybe no one outside of Texas counts it.  Of course, a nine year old c. $80 mm in revenues/$25 mm in EBITDA company backed by long time cleantech investor Altira, ought to to make the list.  And Chinese LED maker SemiLEDS (NASDAQ:LEDS) made it out in an $89 mm IPO.  So maybe the IPO market isn’t dead to cleantech, and after market performance is guaranteed to go badly, at least for profitable companies.
  3. And speaking of LEDs, I’d like to see lots more of them next year – in houses, on street lights, hanging from Christmas trees.  And I’d like to see them brighter and cheaper.  And I probably will!
  4. A major cleantech conference in Houston.  Perhaps someday rivaling the OTC – Offshore Technology Conference.  When that happens, perhaps we’ll know cleantech has arrived as a real sector.
  5. Lots of EVs!  I admit it, I don’t think much of venture backed EV startups, but I’m really excited to see some EVs.  I imagine them like the herd of tractors in the tractor tipping scene from the movie Cars (don’t ask why, that’s just the mental image I have).  And since I’m testing driving an Nissan Leaf Electric Vehicle a couple of weeks, this wish is bound to come true.  I will definitely be blogging it.

Here’s thanking all our Cleantech Blog and readers and Cleantech.org members for your support. Happy holidays, and good luck in a new year!

Smart Power – Our Future Whether You Like it or Not

I had a chance to meet Peter Fox-Penner, the Chairman Emeritus of the Brattle Group the other day, when he was announcing the launch of his new book, Smart PowerBrattle Group is a long time economic consulting group to the power industry.  Smart Power is about the emergence and issues around the smart grid.  I’m a huge proponent of intelligent energy systems, having cofounded one company building superconducting fault current limiters, and recently cofounded another one still in stealth commercializing distributed power flow controls for transmission lines.  Rather than just hammer out a book review, I’ve asked Peter to opine on a number of questions about electric power, and share some of his thoughts.  Hope you enjoy!

Peter, exactly where do you think the trillion dollar need laid out in your book is going to come from?  How much higher is it than our current spend?  What is the source of capital- IOU or private financial investors? New Entrants? Munis?

In 2008 The Brattle Group studied investment challenges for the utility industry and found that between $1.5 and $2.0 trillion was needed from 2010 to 2030 to maintain current levels of reliable energy service.  Several other sources have independently projected a similar level, most recently Credit Suisse.  For more information, see slide 4 here:

In our Brattle study, the majority of the investments were in generation and distribution.  Without taking carbon prices into account, around $500 billion dollars of investments were needed in both generation and distribution, while transmission investments came in at almost $300 billion.  The remaining investments were needed to implement advanced metering, energy efficiency, and demand response.

These are significant increases compared to our current levels of spending.  Investments in the utility industry have been steadily declining since the 1970s. What will be particularly challenging for the industry is that investments must be made as the electricity sales trend line goes flat.  Consequently, we can expect the financial health of utilities and the price of power to suffer if we don’t plan for these conditions. While the industry is seeing an influx of new entrants, especially in the smart grid area, utilities are still going to provide the capital for these investments and will have to ultimately pass the costs onto ratepayers through higher prices.

Our T&D grid has been underinvested for a long time.  We all know it, but still it’s underinvested.  What will make that change?

The transmission side of the grid is one of the industry’s areas experiencing rapid increases in investment.  In the 1990s we were investing $2 billion a year and now investments are around $8 billion a year. Looking forward, these investments are expected to triple to support the development of 3,000 miles of lines per year through 2017, compared to about 1,000 miles of lines per year over the last decade.[1] Many of these investments center on reliability projects and future transmission investments will yield more projects that support public policy goals. (For example, RPS will require new lines to reach renewable resources).

On the distribution side, new end-use technologies, including advanced metering and plug-in hybrid electric vehicles (PHEVs), will require new investments.  While the costs of smart meters are relatively small compared to the total industry investment needed, smart meters are the building blocks of smarter grid systems and an important trend to watch.  Policy goals, such as the administration’s target to deploy 40 million smart meters and recent ARRA funding, have been instrumental in supporting these investments.

California botched deregulation badly, and despite successes like Texas, that debacle chilled the deregulation push for a long time.  Without a new drive, can we really get the capital mobilized into new generation and T&D?

There isn’t a clear relationship between the two – deregulation on the retail side doesn’t necessarily equate with investment.  Utilities in California, which is still integrated, are investing; so is Texas, which is deintegrated.  In Smart Power I explain the complex interplay between vertical integration, deregulation, and the future regulation of the industry.

It is worth noting that historically large amounts of transmission investment are underway and planned – over $100 billion of new projects, by Brattle’s estimates, in North American.  The FERC is already creating “a new drive” for this investment.

As to distribution (i.e. low voltage grid) capital, the constraint on investment is mainly the financial health of state-regulated utilities.  This is not looking very good and this is a primary concern in Smart Power.  Note that deregulation of either transmission or distribution wires is unrealistic and unwise for the foreseeable future.

Do you see AMI rolling out faster in IOUs or in Municipals?  Domestic vs. overseas?

The amount of AMI investment is greater for IOUs than municipal utilities only due to scale. The actual percentage of customers with AMI is higher among smaller municipal utilities, public utility districts, and electricity cooperatives.  The FERC’s 2008 Assessment of Demand Response and Advanced Metering reported that cooperatives had reached an AMI penetration rate of 16.4 percent in 2008 while IOUs were at 2.7 percent.[2]

Smart meter deployment recently reached a high of 25 percent of U.S. residential accounts.[3] AMI deployment in the U.S. has seen a surge due to ARRA funding, but EU countries may deploy faster by enacting regulations that make smart meters mandatory.  The UK government plans to put smart meters in every household by 2020.  France, Ireland, the Netherlands, Norway, and Spain are projected to have close to 100 percent smart meter installation by 2020 as well.   Generally, the EU is not ahead of the U.S. today and may not be for some time.

For more information on AMI and dynamic pricing potential see:  http://www.brattle.com/_documents/uploadlibrary/upload805.pdf.

What do you think are the top 3 business cases that will make smart grid/AMI fly?

At the moment there aren’t three business cases that have made Smart Grid or AMI “fly”- in every case so far there have been elements in proposed plans that experience pushback from either regulators or customer groups.  The best smart grid business cases incorporate robust pilots and show clear evidence of substantial favorable bill impacts.

Without fundamental changes in the lines, switch gear, transformers, et al that actually make up the grid, how much good can better two way communications with the meter actually do?  What is really needed underneath?

First of all, when utilities implement smart grid systems they typically upgrade more components than just the meters and their communication system.  The transformers, switches, etc., are all being gradually upgraded to be “smarter” incrementally at most utilities — it is a question of how quickly the old gear is turned over.  But more importantly, many of the direct customer benefits of the smart grid do not require substantial change-outs of the distribution system hardware you allude to — not at all.  These benefits come from much more customer and utility control over customer energy use, including dynamic pricing, and this doesn’t rely on the hardware items you mention.

We’ve been talking about wind and DG causing problems on the grid for a long time.  Are they really?  Where in the world can we point to examples and the solutions of that?

The intermittency of large wind and photovoltaic resources continue to provide operational challenges.  One example occurred in Texas where a combination of events caused a disruptive decline in the system frequency.  Wind production dropped from over 1,700 MW to 300 MW over three hours and emergency procedures were activated.  At the time of emergency procedures, non-wind resources were under-producing by about 300 MW.  To further complicate matters, demand was at a high that day and exceeded the day-ahead forecast.  Wind intermittency has also been known to disrupt energy prices (creating negative electricity prices in places like Texas and New York) but this is a far smaller issue than reliability of generation.  Having noted this, the variability of renewable is not a huge, impenetrable road block – – it is steadily being addressed.

Since we already have an effective carbon price embedded in supporting our wind power markets of c. $40-80/ton, what price of carbon do you see being needed to make the difference?

The carbon price needed to make wind comparable to other generation types (gas CC, coal, etc.) after all of the subsidies/incentives for wind generation would depend greatly on the region. There is also quite a bit of range depending on your options on projected gas prices, plant costs, and wind capacity factors.

How big a deal is it /how much does it cost to actually roll out AMI?  It seems as if every project takes forever and gets huge flack.

I don’t agree with the premise of your question.  Many utilities have rolled out AMI systems and they are working extremely well.   There is a lot of press lately about a few smart meter installations that have had problems, but the actual technical problems with these rollouts (as opposed to the PR problems) have actually been extremely small.

Credit Suisse has estimated utilities will need to invest approximately $22 billion in AMI equipment – which is only about 1 percent of total industry revenues. While this sounds like a small investment, the average all-in cost of a smart meter in the U.S. is approximately $200.

If we see more linkage with power and transport fuels through increased natural gas and EVs, what do you think the future and role of OPEC is in this debate?

Charles Ebinger, Director of the Brookings Institution Energy Program, who is an OPEC expert, believes that OPEC is very aware of EVs and will respond to them somehow.  However, it may be a long time before EVs put a large enough dent in global oil demand to cause OPEC to worry a lot about them in terms of contemporaneous actions.  The demand for oil from Asia is still rising rapidly, and oil is trading in a range OPEC claims to be very happy with.

Shale gas vs. wind vs. nuclear – where will our key coal power replacement come from?

I think replacement power for any potential coal retirements would mostly come from gas natural gas plants. With the current low expectations for gas prices, wind and nuclear do not have much chance to compete even with new gas plants.

How concerned should we be that low cost dirty coal power in China gives them a fundamental advantage in trade that leaves us playing catch-up?

I would argue that China’s recent clean energy investments pose a greater threat to our global competitiveness going forward.  China is becoming one of the biggest wind markets in the world, with 40 GW of capacity and expected growth of 150-300 GW by 2020.  Chinese companies are seeking to expand abroad and their wind and solar exports to the United States have increased dramatically.  Many argue that this exponential growth has come at the expense of the U.S., whose exports of wind turbine sets and gears fell by 67 percent in 2009.  China’s strength in clean energy surpasses just these wind power examples- China’s total clean energy investments increased 50 percent last year to $35 billion.  This is twice our current level of investment.[4] There has also been a steep decline in U.S. wind and solar technology exports to Europe, illustrating our clean tech competitiveness is at stake on a global scale.[5]

DR. PETER FOX-PENNER is a principal and chairman emeritus of The Brattle Group and author of Smart Power: Climate Change, the Smart Grid and the Future of Electric Utilities (www.smartpowerbook.com).  The views expressed in this article are strictly those of the author.

Interviewer Neal Dikeman is the longtime chief blogger behind Cleantechblog.com and Cleantech.org a partner at cleantech and alternative energy merchant bank Jane Capital Partners, Chairman of ecommerce company Greenhome.com, and previously cofounder of Zenergy Power and founding CEO of Carbonflow.

[1] For more information on transmission investment and planning, see:

http://www.brattle.com/NewsEvents/NewsDetail.asp?RecordID=865

or http://www.brattle.com/_documents/UploadLibrary/Upload888.pdf

[2] 2008 Assessment of Demand Response and Advanced Metering, FERC, 2008. http://www.ferc.gov/legal/staff-reports/12-08-demand-response.pdf

[3] Peter Fox-Penner, “The Smart Meter Backslide,” Harvard Business Review Insight Center, October 4, 2010, http://blogs.hbr.org/cs/2010/10/the_smart_meter_backslide.html

[4] Judith B. Warrick, The Power of an Idea, Morgan Stanley, Energy Insights, October 27, 2010.

[5] Worldwide: USTR Initiates Section 301 Investigation into China’s Subsidies and Restrictive Practices on Green Technology Sector, October 19, 2010. http://www.mondaq.com/unitedstates/article.asp?article_id=113220

Report from the Berkeley-Stanford Cleantech Conference

The Berkeley-Stanford Cleantech Conference, a biannual conference organized by Berkeley and Stanford students, successfully brings some of the best and brightest minds together to discuss cleantech-related topics. Past themes have included Electric Vehicles, Big Solar, Energy Storage, and Smart Grid; this year the conference was organized around Distributed Generation. This year’s event took place at the PG&E General Office Conference Center in San Francisco.

The first panel of the afternoon, “Customers Turned Producers: The State of Distributed Generation,” provided a comprehensive introduction to distributed generation (DG) and the various issues and problems that may come with increasing adoption. The panelists covered a wide variety of backgrounds: Helen Priest from PG&E, Eric Dresselhuys from Silver Spring Networks, Sky Stanfield from the law firm Keyes & Fox, Chris Marnay from Lawrence Berkeley National Labs, Peter Asmus, a Senior Analyst at Pike Research, and Eric Wesoff from Greentech Media.

The first topic of consideration was the definition of distributed generation, for which there was considerable ambiguity. Sky Stanfield proposed a standard definition of 20 MW for SG, but participants were quick to point out there are varied definitions, depending on location and application (as Eric Dresselhuys commented, “the one consistent rule is that there is no consistent rule for DG”). Peter Asmus reminded the audience that DG is not necessarily just renewable energy, pointing out that diesel-based power (considered one of the dirtiest energy options) is a common DG source. Regardless of the energy source, distributed generation must align peak generation as close to peak load as possible.

Guest blog by Andrew Lonecker

The potential safety and legal issues of distributed generation were also discussed. For instance, although utility-scale and grid-connected systems can easily close all downstream components in case of accidents (e.g., inclement weather situations), for DG, with multiple input and output points, this is not possible. Panel participants mentioned situations in which live and dead connections of DG systems were confused, causing significant safety issues.

Finally, the panel began a discussion of microgrids, which are autonomous “island” grids that can be connected and disconnected to the larger grid. Peter Asmus estimated that there were 140 microgrids in existence, comprising over 1.8 GW, primarily at college campuses and in military applications. Helen Priest acknowledged that the prevalence of microgrids would currently be a “nightmare” for some parts of PG&E, although she was optimistic that PG&E innovation would be able to solve these issues. Billing was viewed as a consistent problem, particularly with the growth of intermittent solar and wind and electric vehicles.

The second panel, “Scaling down to size: the technology landscape,” provided an overview of the technological opportunities and challenges in distributed generation. Panelists included Matt Lecar from GE Smart Grid, Carrie McLaughlin from Nordic WindPower (which provides 1 MW utility-scale turbines), Kevin Passalacqua from Bloom Energy, Liang Downey from Nextek Power Systems (which integrates native intermittent DC sources to provide uninterrupted DC power for load), and Ed Sappin from BP Solar.
The first topic regarded early adopters and potential customers segments for each company. Bloom Energy, whose first customers were Google, eBay, Adobe, and others, have searched for early adopters who are not risk averse and are very cost focused. Further, Bloom Energy has searched for large corporate partners that have an existing customer base, allowing for future expansion. Nordic WindPower’s end customers are usually schools or small business looking to “green” their business (in fact, ROI is often less important than the marketing opportunity). Nextek Power Systems’s first customers were building and facility owners in California, focusing on lighting (and move to LED), data centers, HVAC, and in emerging markets.

As a result, the technologies created by each of the companies are tailored to these customer segments. Bloom boxes, for instance, are modular 300 kW systems that can be combined for larger uses. Further, Bloom Energy designed their boxes to be extremely quiet, to minimize the NIMBY (“Not In My Backyard”) concerns. Also, Nordic WindPower must design their products and services to align with complicated safety issues (e.g., noise and safety guidelines). For each of the panelists, project financing and lack of certainty in US policy are their largest barriers to success.

The last panel of the afternoon, “Stories from off the grid: DG & Microgrids in operation,” provided an perspective on the operations side of distributed generation. Panelists included Olaf Groth from Monitor 360, Sheldon Kimber from Recurrent Energy (a solar provider), Ryan Levinson from Wells Fargo (involved in renewable energy investment), Matt Heling from PG&E, and Matt Singleton from Prologis (an industrial real estate developer involved in rooftop solar installations).

The primary topic of discussion involved the various operational challenges inherent in distributed generation. For instance, the primary challenge for PG&E is to devise system that supports DG but without raising costs for everyone else. As part of this topic, the panelists struggled with the tradeoff between being a business person, and rational developer of DG, and an advocate. Matt Singleton commented that Prologis has recently struggled with bank willingness to finance their larger, and multi-building, projects (for reference, approximately 200 square feet of rooftop space equates to 1 MW). Commenting on the involvement of Wells Fargo to finance these projects, Ryan Levinson explained the other side of the pendulum, in that small-scale projects (on the order of 100 kW) are also difficult to fund due to their lack of scale. To solve this, Wells Fargo works with developers to aggregate multiple projects together to standardize and save costs.

To end the conference, Scott Jacobs, the Head of McKinsey & Company’s cleantech practice, discussed the state of cleantech and McKinsey’s involvement in the industry. According to Jacobs, McKinsey is probably one of the top 10 largest cleantech companies in the world, by revenue. They have had over 1000 cleantech projects over the past two years and over 2000 consultants working in the industry. According to McKinsey estimates, the opportunity in cleantech is massive, comprising over $1 trillion in market potential by 2020. Renewable energy is becoming cheaper (while conventional energy is getting more expensive), governments are moving aggressively, and there is a huge need for human capital. In fact, according to Jacobs, McKinsey’s cleantech work can be seen as a signal that corporations of all sizes are prioritizing this in their strategy.

Guest blog by Andrew Longenecker.  Email him at alongene@stanford.edu

Cleantech Blog Power 5 – Top Investors in Cleantech

It’s been a long year and a half or so since we published our last Cleantech Blog Power 5 on the top investors in cleantech.  Time for round two.

As usual the criteria for inclusion.

  • Investor made a significant contribution to the cleantech investment sector
  • More smart looking investments than stupid looking investments
  • On balance, I’d like to have your portfolio.
  • I actually might like you.

And the middle two criteria have some wiggle room.

So our Power 5 this year:

  1. CMEA Capital – A long time player, with a slice of venture capital in last year’s top cleantech IPO, A123, one of this year’s top cleantech IPOs, Codexis, and this decade’s biggest cleantech gamble, Solyndra, real hard to leave them off the list.  They come in at number 1.  Hopefully Solyndra doesn’t take back all those profits when it’s solar cattle-guard finally gets caught out.
  2. CalPERS – Despite somewhat skeptical on the performance to date, CalPERS has certainly played its part, and really anchored the explosion of venture money in cleantech.  And it continues to support it with another $500 mm commitment this fall.
  3. Bayard Capital – Makes the list for 1 deal, that is all their deals in one company.  This is the Australian firm who turned their capital fund into Landis + Gyr through a series of acquisitions before anyone in the US had heard of smart grid.
  4. Us – I mean the US DOE – Single-handedly carrying the the entire cleantech venture sector on its back?  Wow.
  5. Foundation Capital – Makes it because despite a couple of deals in their portfolio that make me cringe, they’ve gotten a lot of kudos in California for sticking it out with Silver Spring in the early days, and with one of the better cleantech exits behind them in EnerNOC and multiple bets in both solar power development and financing, and smart grid, I have to like the strategy.

And the 5 for the Royal Questioner to Question:

  1. Advanced Equities – If I need to explain why, you shouldn’t be in investing.  Do your google search.  I’m not even going to give you some links to point to this time.
  2. Every single cellulosic biofuels investor – Hey you guys, start reading our blog and stop playing the “watch my magically shrinking cellulosic biofuels forecast and my oh so please don’t notice the bait and switch to bio-anything but fuels business plan”.  Let alone the, “we can be cheaper than gasoline” or “this process has solved the oh so tricky problems and it’s just a little engineering scale-up”.  And for the record, we think the Cello Energy debacle is hilarious.
  3. Kleiner Perkins – EEStor, Bloom Energy, I turn green 1/3rd of the way down their list.  They’re the originators of the fundamentally flawed “stealth in cleantech investing strategy.”  And they make me look humble (which is hard to do).  Even making a few dollars in Amyris, doesn’t come close to making it up.  Of course, maybe the latest news articles are right, and they’re pulling out of cleantech?
  4. The American Taxpayer/ errrrr, I mean US Department of Energy – Hmmmmmmh.  Who’s the genius who signed off on massive low interest loan guarantees to Solyndra, Tesla, Beacon, and friends?  But just wait until the conditional commitments in big project dollars get spent, I’m sure that will fix it.  But for the record, it’s not generally a good sign when the government brags about out investing the private sector.  How about you guys invest my share of the total in a real chief credit officer.  I’d apply for the job, but only if you term it chief workout officer.
  5. Ok, we’re stopping, now, my stomach is still churning after number 4.

Note to all:  This list is waaaaaaaaaaaaaaaaaaaay too US centric.  I’m feeling very parochial.  More international suggestions please?

New Models For Clean Technology Incubation and Commercialization

By Sanford Selman

We live in an age of intense global competition for more sustainable ways of providing food, water, energy and transportation to a growing population against a backdrop of diminishing and deteriorating natural resources. And thus, the race is on to create the next generation of technologies, business models and companies to provide these essential services and commodities. At stake are new, high quality jobs, export earnings, reduced dependence on imported energy, improved quality of life and host of other positive impacts. Investing in R&D would seem a no-brainer.

And invest we do. According to the National Science Foundation, public and private sector R&D investment in the US was $369 billion in 2008 – over twice that of Japan (No. 2 at $148 billion) and over 3.5 times that of China (No. 3 at $102 billion).

According to the National Business Incubator Association, the US has over 1100 business incubators as compared to roughly half that number in China. In cleantech, however, the US is losing the race to China in important areas such as solar photovoltaics and batteries where the technology traces its roots to the US and Europe.

Why, then, does the US, with its much larger pool of venture capital funds, lag in moving clean technology from lab to market, especially compared to a relative latecomer to cleantech such as China? Both countries have first rate university systems and enjoy a culture of entrepreneurship. But there are stark differences which give China a distinct edge, especially in cleantech, including:

  • A more stable policy environment that unambiguously supports cleaner forms of energy supply and energy use.
  • More diffuse boundaries between government, academia and industry which allows for greater pooling of resources – commercial, financial and technical.
  • Lower costs of de-risking technology, due to the lower cost of highly qualified technical talent, and manufacturing.
  • Huge, state-controlled infrastructure markets (e.g. power generation, water/wastewater, hydrocarbons, etc.) where the playing field can be tilted in favor of domestic suppliers.

In today’s highly disrupted capital market, early-stage venture investment has dropped precipitously and this is especially true for cleantech – a sector which has struggled to demonstrate strong, broad-based financial returns. Additionally, scaling and deploying clean technologies often involves significant capital investment while venture funds are trying to do just the opposite – invest as little as possible to get to positive cash flow. This focus on “capital efficiency” also means early-stage companies are out of favor. Hence, the gap between the early-stage cleantech companies found in incubators and what venture investors are buying has widened while countries such as China plow ahead with their national priorities.

A new incubator model

One of the main roles of an incubator is to prepare their clients for presentation to outside investors and to help facilitate those introductions. But their clients often have little progress to show in technology scale-up or customer acquisition. Frequently, their business model has not been vetted, key members of the management team are not on board and a helpful, engaged Board is not in place. Another approach is needed to close the widening gap between incubator clients and the venture community.

By acting more like a seed-stage fund itself, an incubator can add the value required to make its clients marketable to outside investors. In this model, the incubator’s advisory board must be sufficiently qualified and engaged to undertake preliminary vetting of applicants so that only the most technically and commercially promising businesses are admitted. Once admitted, the incubator should “smother” the client with resources, including missing commercial and technical talent, access to strategic partners, access to prospective customers and the seed-stage capital necessary to pull the plan together. A more resource-intensive approach focused on fewer clients stands a better chance of achieving the longer-term goal of graduating more successful businesses out of the incubator, creating jobs and enhancing the opportunity for the seed capital to earn a return.

A new strategic partner engagement model
Early-stage companies need to conserve cash by leveraging relationships with strategic partners and suppliers who can help grow their businesses. Risk sharing or the more appealing term, “gain sharing”, is becoming more popular. Two examples are worth noting.

Autodesk, a leading global vendor of engineering and design software, launched the Autodesk Clean Tech Partner Program (www.autodesk.com/cleantech) to support early-stage clean technology companies by providing up to $150,000 worth of software for a nominal fee. Autodesk’s long-term objective is to build brand loyalty by giving participants with design tools they wouldn’t otherwise be able to afford, and thus help them become successful more rapidly.

PLUSHnyc (www.plushnyc.com) is a Manhattan-based post production audio/video company whose clients include some the biggest names in media, advertising and retailing. PLUSHnyc offers their excess design and production capacity to early-stage, venture-backed companies at a nominal rate and, in return, receives equity in proportion to the market value of their services. Similar to Autodesk, PLUSHnyc affords access to world class services their clients could not otherwise afford.

In order to maximize the effectiveness of US R&D spending, innovative business models must be called upon to more effectively that tap the vast talents and resources of the private sector and accelerate the commercialization of US-developed technology by American companies.

Sanford J. Selman is Managing Director of Asia West LLC in Oyster Bay, NY. Mr. Selman founded and managed the Asia West Environment Fund, an early-stage cleantech venture fund that invested in North America and Europe with proprietary technologies that are commercially and environmentally relevant to China and/or India. Mr. Selman has 30 years of experience developing and financing of energy and environmental infrastructure and technology globally. Mr. Selman holds a BS in Mechanical Engineering (with Distinction) from Worcester Polytechnic Institute and a MBA in Finance and Investments from The George Washington University.

Why Conservatives Are Bad on Energy: It’s All About the Costs

By Tom Rooney, CEO SPG Solar

Conservatives,  let’s talk about energy. And why so many conservatives are so wrong — so liberal, even — on wind and solar energy.

Let’s start with a recent editorial from the home of ‘free markets and free people,”
the Wall Street Journal. Photovoltaic solar energy, quoth the mavens, is a “speculative and immature technology that costs far more than ordinary power.”

So few words, so many misconceptions. It pains me to say that because, like many business leaders, I grew up on the Wall Street Journal and still depend on it.

But I cannot figure out why people who call themselves “conservatives” would say solar or wind power is “speculative.” Conservatives know that word is usually reserved to criticize free-market activity that is not approved by well, you know who.

Today, around the world, more than a million people work in the wind and solar business. Many more receive their power from solar.

Solar is not a cause, it is a business with real benefits for its customers.

Just ask anyone who installed their solar systems five years ago. Today, many of their systems are paid off and they are getting free energy. Better still, ask the owners of one of the oldest and most respected companies in America who recently announced plans to build one of the largest solar facilities in the
country.

That would be Dow Jones, owners of the Wall Street Journal.

Now we come to “immature.” Again, the meaning is fuzzy. But in Germany, a country 1/3 our size in area and population, they have more solar than the United States. This year, Germans will build enough solar to equal the output of three nuclear power plants.

What they call immaturity our clients call profit-making leadership.

But let’s get to the real boogie man: The one that “costs far more than ordinary power.”

I’ve been working in energy infrastructure for 25 years and I have no idea what the WSJ means by the words “ordinary power.” But, after spending some time with Milton Friedman whom I met on many occasions while studying for an MBA at the University of Chicago, I did learn about costs.

And here is what every freshman at the University of Chicago knows: There is a difference between cost and price.

Solar relies on price supports from the government. Fair enough — though its price is falling even faster than fossil fuels are rising.

But if Friedman were going to compare the costs of competing forms of energy, he also would have wanted to know the cost of “ordinary energy.” Figured on the same basis. This is something the self-proclaimed conservative opponents of solar refuse to do.

But huge companies including Wall Mart, IBM, Target and Los Gatos Tomatoes figured it out. And last year so did the National Academy of Sciences. It produced a report on the Hidden Costs of Energy that documented how coal was making people sick to the tune of $63 billion a year.

And that oil and natural gas had so many tax breaks and subsidies that were so interwoven for so long, it was hard to say exactly how many tens of billions these energy producers received courtesy of the U.S. Taxpayer.

Just a few weeks ago, the International Energy Agency said worldwide, fossil fuels receive $550 billion in subsidies a year — 12 times what alternatives such as wind and solar get.

Neither report factored in Global Warming or the cost of sending our best and bravest into harm’s way to protect our energy supply lines.

Whatever that costs, you know it starts with a T.

All this without hockey stick graphs, purloined emails or junk science.

When you compare the real costs of solar with the fully loaded real costs of coal and oil and natural gas and nuclear power, apples to apples, solar is cheaper.

That’s not conservative. Or liberal. That comes from an ideology older and more reliable than both of those put together: Arithmetic.


Tom Rooney is the CEO of SPG Solar, one of the largest solar installers in the US.

Why My GridPoint Energy Audit Sucked

Bad day for energy efficiency the other day.  I have a new house (actually a new to me 55 year old house), and was all excited to have an energy auditor come out and energy audit me.  After all, I write Cleantech Blog, and did an article not too long ago urging all homeowners to get an energy audit – see What You Should Do if You Really Believe in Cleantech.  So after an admittedly limited job of looking around I went with Standard Renewable Energy.

Most of the big box home improvement retailers have a energy audit practice, as do tons of little companies, but I figured Sre3.com, owned by Gridpoint which is backed by investors like Altira who I know and like, would be a good “pure-play” choice for a cleantech blogger.

But perhaps I’m a naive chump who just expected too much.

I ordered a their $149 Essential Energy Audit (full details below) figuring if I liked the audit I could order a more expensive one complete with more toys and high powered analyses later. I’d get my audit done, get my plan, and then geek out for a bit thinking about all the marginally economic things I could do (windows have been done, insulation is coming).

“Which Home Energy Audit is Right for You?

An energy audit from SRE is an extensive home energy efficiency evaluation. It’s performed by an energy efficiency expert and shows you how your home uses energy and how it wastes it. The audit results in a customized plan that empowers you to make energy-saving choices that fit your budget and your lifestyle. And our energy efficiency experts can help make it easy for you to implement the recommendations you choose.


Essential Energy Audit ($149) – A great starting place to identify issues affecting your home’s energy efficiency.  The Essential Energy Audit is a 41-point detailed visual inspection of every part of your home including: doors, windows, walls, attic space, insulation, air conditioning equipment, appliances, and lighting.


Complete Energy Audit ($499) – Builds on the Essential Energy Audit by incorporating diagnostic tests that can pinpoint specific energy efficiency issues and identify your best money-saving improvements:

  • Duct blaster test to diagnose duct leakage
  • Blower door test to identify leaks in your home’s envelope such as around doors and windows
  • Thermographic infrared scanning to evaluate the flow of heat through your home and pinpoint problem spots due to leaks and missing insulation

Comprehensive Energy Audit ($849) – Combines the Essential and Complete Energy Audits with an analysis using energy modeling software that calculates your home’s HERS (Home Energy Rating System) Index. We’ll use the software to provide a cost-benefit analysis of each of our energy-saving recommendations so you can see which have the greatest payback.

The Energy Efficiency Experts

As environmentalists with a passion for finding ways you can use less energy in your home, we’re committed to mastering home energy efficiency:

  • We incorporate industry-leading building science knowledge to ensure a complete picture of how your home uses energy
  • Our extensive technological and practical experience helps us make the best energy efficiency recommendations
  • We use a total approach to evaluate your home’s individual performance and address all areas of your home’s energy use
  • We provide custom solutions tailored for you and your home”

Frankly what I was looking for was the “41-point detailed visual inspection” plus the “customized plan”. I will quote again in bold italics just for the record:

“The Essential Energy Audit is a 41-point detailed visual inspection of every part of your home including: doors, windows, walls, attic space, insulation, air conditioning equipment, appliances, and lighting.”

and


“The audit results in a customized plan that empowers you to make energy-saving choices that fit your budget and your lifestyle.”

So here’s what happened.

I ordered the audit.  It got scheduled quickly (though they were a little backed up so they came out a couple of days later).  My wife and I both worked from home that day so we could be audited, watch what he did and take notes.  As an environmental scientist she was almost as interested as I was.

On the appointed day our energy consultant showed up.  We spend a few minutes chitchatting about why we want an energy audit, how we use the home, what we like in comfort, that sort of thing.  At this time I do tell him that I’m a blogger in the sector and am excited to blog about my energy audit.  He’s a very nice, and knowledgeable guy.  He’s never heard of Cleantech Blog though.  We show him our utility bills.  He takes copious notes.

Then he says it won’t take him too long, he needs to go through the house, inside and out, and in the attic, and go through his checklist.  Then we will sit down and review it.  We say great.  We follow him some trying to watch, but he tells us not to worry, he will take us through it all when he’s done.

. . .

30 minutes or so pass.  He comes back, we gather in the dining room and sit down. Our auditor asks a few more questions.  Gives us some good information.  We discuss the advantages / disadvantages of insulation vs radiant attic barriers.  He tell us our duct work isn’t sealed well, but is still tight enough that it’s not worth worrying about yet.

Karen my wife, starts to take more notes.  Karen likes home constructor projects. He says don’t worry about notes he will send us his write-up afterward to make it easy for us.

We ask him what we should do.  He tells us a solar attic fan.  SRE3 sells them for an “excellent price”.  $950.  And radiant barrier or more insulation, price maybe a couple of thousand each.  SRE sells that too.  I say, but my utility bill in the heat of the summer in July was only $126, without insulation, and before the new double paned windows got put in.  We ask him how much each of those items is likely to save, he mentions 10-20% each at most, without lifting his pencil.  I’m thinking thousands out, and $10-$20 a month back?  He agrees. Then discusses how important a solar attic fan is.  I ask what about one of those cheap metal silver fans instead of a $950 solar attic fan.  He says they never work.  But the SRE3.com solar attic fan is warrantied and the price includes installation.

A few other things happen.

I say I’m not sure I’m interested in the solar attic fan (to save $20 bucks in June, July and August?), but we will need insulation and I’d like to know what a radiant barrier costs.

We end the conversation (on Friday) where he promises to send me a quote on Monday.  I did note that my detailed inspection and customized plan, became a write-up of his notes and now a “quote” on insulation/radiant barriers.

I say nothing except I’m looking forward to getting the write-up.

I then ask, as he’s about to leave, what about weather stripping around the doors.  He says, “Oh, I didn’t check that” – note to self to check, isn’t weather stripping like the standard everyone should do it home energy efficiency item?  He now takes us around to the doors and discusses the weatherstripping.  He gives us some good tips, but we notice he is no longer taking copious notes. Note to self, aren’t you also supposed to have your hot water heater wrapped in insulation?  Ours isn’t.

Energy consultant leaves.  Time allocation:  1/3rd chit chatting on what we want, 1/3rd walking around the house looking for expensive things they sell that we might buy, 1/3rd trying to get us to buy a $950 solar attic fan for an uninsulated house with a $126 July bill, interspersed with a few tidbits of useful info.  Ok, that’s flippant, but it’s close.

Energy consultant comes back.  Says he called the office and they asked him to get the $149 check.  I pay it.

Day 25+, still waiting for my customized plan, checklist on the detailed 41 point visual inspection, write-up of the energy audit notes, or sales quote, or whatever he actually intended to send me.  At least we know the Gridpoint sales management process is working.  They don’t bother sending quotes to cheap homeowners people who aren’t going to buy a $950 solar attic fan – even those who thought they bought an energy audit.  Maybe I’ll send this blog to their PR department and see how well that process is run.  I already found out their A/R department is well run.

PS I still believe in energy audits, obviously just not a Standard Renewable Energy, a Gridpoint company, energy audit.

Neal Dikeman is a Partner at cleantech merchant bank Jane Capital Partners LLC, chief blogger for Cleantechblog.com, the chair of Cleantech.org and a founder of cleantech ventures Carbonflow and Zenergy Power.  He is a Texas Aggie.

Big Week in the "Real" CSR – Climate Saving Regulation

It’s been a big week in Greenhouse Gas regulation land.  Huge boost for cleantech sales executives and afficianados everywhere.

EPA announces a slightly delayed and somewhat more limited GHG regulation rule.

Starting in July 2011, all facilities greater than 75,000 tons per year in emissions will have to get GHG permits.

And John Kerry and Joe Leiberman push ahead in the Senate with cap and trade and climate saving legislation.

Lots of good in here:

– Power sector gets capped early on
– Industrial/manufacturing gets phased in
– Transport included down the road as well
– Domestic offsets included (think massive cashflows to the ag belt)
– International offsets included
– International linkages included
– Phased in border tax for non participating countries

And then:

– Riddled with subsidies and wealth transfer and buy-offs, but isn’t that just par for the course with Washington? 
– Price collar ($12-$25/ton) – guts the heart of compliance (market based mechanism to set a “real” carbon price, but the Senate should tell the market what the right price should be?  Joe? John? You do actually WANT emissions reductions, right?)
– And no Republican support – guts the odds of passage.

All in all a good week, even though the EPA will get sued six ways to Sunday and without Republican support Kerry-Leiberman has zero chance of passage, we’ll give it a two thumbs up.  This is a drastic improvement.

Neal Dikeman is the editor of www.CleantechBlog.com, a partner at Jane Capital Partners LLC, and the Chairman of Carbonflow.

What’s the state of climate change policy these days?

To those you who missed it, below is the link to a web panel on the state of climate change policies and developments that I participated in for Brightalk today.

The panelists:

– Emilie Mazzacurati, Manager, Carbon Market Research North America, Point Carbon
– Chris Busch, Policy Director, Center for Resource Solutions
– Nicholas Bianco, Senior Associate, World Resources Institute
– Neal Dikeman, Jane Capital Partners

Enjoy and post any thoughts in the comments section back on this blog for the rest of us to read.

http://www.brighttalk.com/webcast/20657

The Impact on Cleantech of the Supreme Court Corporate Election Spending Decision May Not be so Hot

By Sanford J. Selman

In its majority opinion of January 21, 2010 (Citizens United v. Federal Election Commission), the US Supreme Court overturned decades-old rules prohibiting unlimited spending by corporations and unions on election advertising. This ruling is certain to have a far reaching impact as it gives complete freedom to corporate interests to use their considerable financial strength to influence voter opinions of political candidates and sets the stage for a rightward shift in US public policy.

The potential impact on the US cleantech sector is clear – the prospects for advancement of federal carbon legislation (i.e. cap-and-trade) or any other government-led clean energy initiative (e.g. renewable energy mandates) have just gotten much worse. Most negatively impacted by the passage of such rules would be energy companies and coal-fired utilities whose sheer size dwarfs that of their clean energy counterparts. With billions of dollars invested in existing fixed assets, these enormous enterprises can be expected to take an active role in future elections now that Citizens United has freed their hands to help their favored candidates win election.

But there are many potential losers.

For starters, failure to develop the US clean energy sector results in a loss of US jobs both in the manufacture of this equipment as well as construction and operation of the power plants and related systems. A 2009 report from the Pew Charitable Trusts noted that clean energy jobs in the US grew at an annual rate of 9.1 percent from 1998 to 2007 as compared to 3.7 percent annual growth for all US jobs over the same period. While many countries in Europe and Asia are looking to cleantech to drive jobs growth, comparatively weaker support for cleantech in the US could slow job growth in this historically strong sector.

Second, there is a trade balance issue. A recent front-page New York Times article (January 31, 2010) suggested that the US could trade its dependence on imported Mideast oil for dependence on imported Chinese wind turbines, solar panels and other energy-related hardware. Today, four companies out of each of the five largest wind turbine and solar cell manufacturers in the world are based outside the US. The rapid development of China’s battery and electric vehicle sectors, driven by central government policy, is impressive. Japan and Korea are likewise vying for leadership in battery technology. Citizens United will cause the US to fall further behind in key cleantech sectors where it once held dominance.
Third, consumers lose because we are less likely to have access to the fullest possible range of choices when it comes to purchasing and consuming energy.

And finally, the environment ends up losing since it will be impossible for the US to bring its considerable carbon footprint under control absent strong government leadership.

Implications for cleantech investment, which reached surpassed $5.5 billion globally even in a dismal 2009, are also significant. According to the Cleantech Group, North American venture funds accounted for almost two-thirds of global cleantech investment activity in 2009 – down about 10 percentage points from 2008. And increasingly, this money is finding its way to companies based outside the US. Chinese companies accounted for 72% of global cleantech IPOs in 2009 and Chinese cleantech M&A activity reached an historic high in 2009. Both statistics demonstrate the intense growth of the Chinese cleantech sector.

Cleantech investors’ US strategy will, by default, be forced to focus on sectors where economics are the primary driver and government support mechanisms are relatively less important. These sectors include energy efficiency and green building technologies, smart grid and distribution automation, water conservation and treatment, resource-efficient manufacturing and material technologies, and recycling and waste reduction.
Due to the “separation of powers” mandated by the US Constitution, there is no easy way to undo Citizens United although Democrats are hard at work drafting legislation to restrain its impact. Notably, President Obama took a swipe at the decision during his recent State of the Union address – a rare event by a sitting President. While the complexion of the US Congress won’t change overnight, Citizens United deals a blow to the US cleantech sector with potentially far reaching implications.
Sandy Selman is a longtime cleantech investor and the Managing Director of Asia West LLC.

What You Should be Doing if You Really Believe in Cleantech

Believing in cleantech should mean walking the walk.  Believing that technology can change the world, but that consumers have to play their part.  Not just believing that technology will fix everything at the same price or that we can offload our problems to policy makers who can’t stumble out of their own way.  Not slamming oil and power companies for providing us with exactly as much energy as we choose to consume.  The title says it all, how’s your score on the checklist?

Checklist:

If you own a house – get an energy audit. It will tell you to a) buy CFLs, b) blow in more insulation, c) seal your ducts, d) programmable thermostat, e) swap out the older appliances.  If you don’t own one (and in California you’re probably better off it you don’t), still buy the CFLs.  As a side note, I tried to get my wife to let me buy LED lights instead of CFLs.  $60 for 30,000 hour life and 12 watts (equivalent to a 65 watt incandescent).  And very cool looking. CFL was 6,000 hour life for 15 watts same equivalency.  Price $10.  Oh, but the CFL had a 5 year warranty vs. 2 year for the LED.  For some reason after seeing the warranty she didn’t believe the 30,000 hours were real.  That last part may well be a cleantech problem.  So get cracking folks, I am not permitted to buy LEDs until the warranty matches the rated life.

Turn off your lights – my Dad has been telling me this since I was 10.  Amazingly enough, it still works, and it still needs to be said.  And if you are too eye-hand coordination challenged, we’ve just invented these amazing things called motion sensors and timers.  Walmart has them by the dozens. 

Water your lawn anytime but the middle of the day.  Your Dad told you to do this growing up, and you still forget.  And can we say timer and drip system?

Learn to use, in this order – windows, curtains and fans before you use air conditioning.  And when you buy it, buy the most advanced and efficient window, thickest curtain, best fan, AC, heater, appliance whatever gadget is available.  It will be more expensive.  Cleantech usually is.  But it’s the right thing to do.

Buy as little processed foods as possible – everything from your carbon to water to energy footprint will thank you.  As well as your budget.  And your waistline.  Except for cakes and Girl Scout cookies.  You’re forgiven for those.  Box cakes and Thin Mints are still the greatest things ever.

Keep your car another year.  Don’t be fooled.  Going hybrid does NOT equate to doing the right thing (though it does make you feel better, and it is a way cool status symbol).  Driving your car longer does do the right thing.  And next time, just buy one car size smaller.  That combo can cut your transport costs in half AND save the world.  (Of course, if you work in cleantech PR, I might recommend the hybrid anyway.)  My car was built when Netscape went public.  I think I can get 5 more years out of it.  I may be able to get away with only one or at most two more cars in my entire life.  Which is good, because I’m going to need the savings to pay for rising health insurance costs and my share of the new, new national debt.  But seriously, if I could get a 25 year Corolla with 35 mpg for <$17K, do you really think the planet wants me to buy two $25K 50 mpg Priuses instead?  Keep in mind the average car in the US is half of that 25 years, and the average consumer keeps a car for only half of that, and your average hybrid payback is longer than either your average hold period, the car’s warranty, or the manufacturer’s rated life.  But that’s ok, just tell your neighbors that compared to your option ARM home loan, the hybrid is a very, very good deal.

Stop b*%^hing about smart meters.  Heaven forbid we should drag our power company into the 21st century.  Heaven forbid the power company that supplies you electricity should actually know how much you used.  And bill you for it.  I think they have term for the anti-smart meter movement – luddite.  Or the super highly technical term “whiner head case”.  I’ll paraphrase a favorite quote of mine from the Duke Energy CTO from sometime back – “why is it again that our power meters aren’t just software in our PCs”?  Hmmmh, it couldn’t be because, gasp, we’re regulated?  Or maybe because we like little round spinning dials.  Kind of like bringing 50s retro style back?

Buy your power green.  In real states like Texas, you can choose from different vendors what mix of power you want.  Real grid, 8.4 cents/kwh.  All wind? 12 cents/kwh.  All natural gas? 20% wind?  Take your pick.  Can we say, everywhere else in world can figure out how to do energy deregulation, why can’t California?  Jerry? Meg? How about taking a run at doing it right this time?  Or we could just do it California style and try and replace an IOU monopoly with a municipal monopoly.

And possibly of most importance, just because you drive a hybrid and put solar on your roof does NOT mean you’re doing your part.  Especially if you tell your friends it’s cheaper while you neglected the other items.  What’s the technical term, “it ain’t”.  It may be, however, better.  This is cleantech.  Go for better.  Make a difference.

Neal Dikeman is a partner at cleantech merchant bank Jane Capital Partners, and has cofounded several cleantech startups from carbon to superconductors.  He is a Texas Aggie.

An Open Letter to Ban Ki Moon on Climate Change

An open letter to Ban Ki Moon in support of an extraordinary friend

Dear Mr. Secretary General,

I am sure that in your position, the volume of unsolicited outreach you receive must be truly breathtaking. I will not add to your never ending inbox, but rather will simply post this note on a friendly blog, with the hope that some of the messages within find their way to you via the osmosis of modern communication.

The climate crisis is no longer confined to the geophysical state of our planet – it has now metastasized into an even more virulent form of crisis involving our collective political and sociological ability to manage this complex issue. The UN has done tremendous work in defining the climate issue for more than 20 years and the accomplishments it has achieved are inspiring. However, there is little doubt that the Copenhagen conference broadly underperformed against the needs we face today.

Copenhagen’s underperformance is having an insidious effect on perceptions of UN effectiveness among even many supporters. It is increasingly considered conventional wisdom that the UNFCCC’s day has passed – that the climate issue must now center on a series of bilateral or regional negotiations and perhaps be centered in more focused organizations like the WTO.

I, for one, do not believe those arguments. I began my accidental career in climate finance in 1993. I was fortunate enough to bear witness to the euphoria of Kyoto, the despair of the Hague and the last second save of Bali. And, of course, Copenhagen – where the sheer enormity and heterogeneity of the issue finally truly stared one and all in the face. Yes, humanity collectively blinked and deferred.

But throughout, the UN process that has tried to manage and coordinate the world’s response has been honorable, dedicated,. You specifically should be commended for making climate the pre-eminent issue of your tenure as the Secretary General. And, it must be recognized that what the UN has been able to accomplish is strictly reflective of the mandates it has been handed by the community of nations. Those mandates have often been halting or ambiguous. However, let us also recognize it’s a two way street – the strength of those mandates is also partially reflective of and the confidence that nations have in the UN, its processes, its leaders and its managers in being a key player at the table in the climate issue.
In this light, you have a major decision to make – one that will set the tone for the crucial coming decade of the climate crisis. You have to hire somebody. As you know, Yvo de Boer announced his resignation from the UNFCCC Secretariat earlier this year. And, as might be expected, there is an emerging horse race among several candidates and I am sure all would serve the post honorably and with energy and enthusiasm.
But to be very frank, at this moment in time, we don’t need adequate, we need extraordinary. We need charisma, we need inspirational leadership. We need somebody who can think outside of the box, – but also somebody with a deep experience of the inner workings of the climate negotiating and regulatory process . And there is only one candidate, in my estimation, who remotely meets that elevated criteria – my good friend, Christiana Figueres of Costa Rica.
Yes, indeed, she is my friend – we have known each other for more than ten years as I built a business around emissions mitigation and she built a formidable reputation as a thinker, advisor, negotiator and regulator across the climate space. Even on paper, I cannot see how any other candidate can match her personal experience in all aspects of the climate conundrum – government, civil society, regulator, private sector, negotiator.
But it is off the sheet of paper where Christiana truly shines – she inspires all who meet her through her intelligence, her humanity, her strength. Most of all, she has a great senses of humor and perspective – which one could argue might be the most important job description components of all, in this hour of need.
To achieve transition to a global, low carbon trajectory, people and governments will need to go the extra mile. With all due respect to the accomplished and dedicated individuals who have run the UNFCCC since its inception, vision, inspiration and leadership rarely seemed part of their portfolio. If it’s really a war on climate, more than anything we need a general who will inspire the troops to do the extraordinary. Those of us who have been in the trenches on this issue for a decade or more are tired and dispirited – in our minds, we have moved mountains, but we step back and it looks more like molehills. I have never seen the climate community as downtrodden as in these few months since Copenhagen. And – again to be honest – you need us fired up and moving mountains.
To the contrary stands the promise of Christiana Figueres – a rallying general from a country without an army (and a country that aspires to full carbon neutrality by 2020). All you need to do is go the the Facebook group that supporters of hers created and that has grown up very quickly over the last few days and scroll through the wealth of testimonials that Christiana has inspired throughout a huge cross section of the climate and development community. Thousands of people from all walks of the climate world know in their hearts that she is the one who can make a difference at this crucial moment. And their voices are raising to be heard by you.
There is only one choice that can deliver that promise. Please make the right one and appoint Christiana Figueres as the next Executive Secretary of the UNFCCC
Marc Stuart was the founder of EcoSecurities, where he worked for 13 years prior to its integration into JP Morgan in early 2010. He is currently engaged in early stage private equity in the carbon and alternative energy space.

Saving Cleantech: Bloom town Silicon Valley?

Just on the eve of the industry headliner San Francisco Cleantech Forum, Bloom Energy finally blooms?

Solid Oxide Fuel Cells (SOFC) like the Bloom Box have been under development for a couple of decades, and many of the major firms both in the US and abroad are still at it. The issues, questions and performance/cost/longevity triangle constraints are well known. So far Bloom Energy has answered none of them. Though we congratulate them on getting into what looks like significant first field trials. That puts them in small company with the maybe twenty or so other companies out of 1,000 plus who have tried. All of those handful took well over $100 mm plus to do it (though $400 mm is rather a lot of money, I must say, that’s taking one for the team). All of them took 5-10 years plus. At one point as an industry we were spending $1.5 Billion per year in annual R&D on fuel cells. Perhaps two companies, Fuel Cell Energy and Smart Fuel Cell, are arguably shipping commercial product today, with UTC, Plug Power and ClearEdge Power other possible contenders for “commercial”.

Of course, none of them have shown as little evidence of what progress has actually been achieved as Bloom. And while it’s a great list of customers, I’m not certain that eBay or Google are necessarily seasoned fuel cell buyers whose judgment I’d trust (especially after reading the rather suspect financial cost effectiveness analysis Google subjected their original solar PV pilot to).  Where’s the Department of Defense and Department of Energy who has bought and/or validated virtually every fuel cell in existence?  But view the quality of the information provided for yourself:

Bloom Energy;
http://www.cbsnews.com/video/watch/?id=6228923n

The major SOFC SECA players’ peer reviewed reports:
http://www.netl.doe.gov/publications/proceedings/09/seca/index.html#core

I’ve been asked numerous times this week what I think of the Bloom unveiling. My answer was simple, I’m excited at the promise, but since they haven’t actually shown anything yet, the skeptic in me says beware the devil who asks for the check before showing the details.

I have sent an inquiry to the “press” button on Bloom’s website. We shall see if I’m one of the privileged reporters who gets a call back. I won’t hold my breath. Because I’m just a blogger who once helped found a fuel cell company, right? Not exactly Lesley Stahl.

And I hope the $800,000 price quoted in this week’s media was for something larger than the 25kW unit the Kanellos reporting machine was crediting as the Bloom Box size last year. I imagine it must be. Somebody check me on my math, but that would be ugly. Perhaps it’s for a 100 kW size (one of the 400 kW total 4 unit installation Google reportedly has), which is a more manageable but still ugly $8,000/kW a bit better (as it should be) than ClearEdge’s 5 kW residential unit of 1/20th the size, or maybe it’s $800,000 for the full 400 kW and then would be close Fuel Cell Energy’s $2,000-$3,000 /kW larger MCFC units (for which they lose 30 cents on every dollar and have stated they need to double to c $150 mm in revenues before the gross margin will be positive)? Have to be careful here, the fuel cell /DG industry makes the solar and hybrid car industries look like choir boys when it comes to economic analysis statistics.

So on the technology itself, any one who has been around fuel cells for long, before answering any question like, “what do you think, is it exciting?”, would hope you’d get the basic questions people ask of all serious fuel cell technologies answered. Questions like these:

On the technology:

What’s the basic design of the cell and stack?

What are the cell/stack/system performance and efficiency curves?

How many cells/stack, stacks/unit, cell and stack size/performance?

How many of the current generation of cells, stacks, systems have they built and when?

What’s the production yield of the cells/stacks? Is it automated?

What’s the metal alloy they use?

How do they do the sealing?

How do they handle the metal to ceramic junction?

What’s the history of cracking?

What do the cell degradation curves look like (in the lab and the field)?

How many hours do they have on cell/stack/system/field trials?

How many thermal cycles?

What are the results of the 1,000 and 5,000 hour tests in the lab, and how do the field trials stack up against the lab results? How many of each is the sample size/distribution of results?

On the system:

What is the operating temperature, normal operating condition specs, fuel/air flow rates, electrical and thermal output?

What are charging, and what’s the installation cost? Is it turnkey?

How long to start up/cool down the system?

Are all the stacks in the field trials the same? Have any of them been replaced?

How does the system move the gas/air/exhaust? What’s the history with that BOP system?

What’s the actual system level field performance across the fleet in the field?

And how much of this is externally validated?

Then we’ll get to the real questions.  First, just the basics please.  The same questions I’ve personally asked executives at dozens of fuel cell companies over the years.

And then let’s hope this week’s launch is because the technology is actually ready, not because the company’s last round came in short and Kleiner Perkins has been after them to try and float it. Fuel cell companies have a long history of doing that, too.

Neal Dikeman is a partner at cleantech merchant bank Jane Capital Partners, LLC, and a long time entrepreneur in cleantech.  And yes, I did my time in fuel cells, too.