Synthetic Biology Startup Cemvita Factory Edges Amperon and SkyCool for $100K Competition Win

We announced today that last night Texas based synthetic biology CO2 to products startup Cemvita Factory edged energy forecasting software startup Amperon and Stanford cooling materials startup SkyCool for the 2021 $100K GS Beyond Energy Innovation Prize. Jeff Wolfe of energy storage company Veloce Energy, and whose executive team comes from market leaders Tritium and Stem, was the crowd favorite pitch. The crowd also ranked Cemvita, Amperon, and SkyCool next as well. Judges reported that all 6 finalists including Sapphire Technologies, a spinout of Calnetix led by CEO Freddie Sarhan formerly an executive at Praxair, and Annette Finsterbusch, CEO of lithium ion battery manufacturing startup EnPower, and formerly head of Applied Materials venture arm, had strong showings and support to make the top 3. All 6 startups had 7 minutes to pitch, and 8 minute Q&A from judges.

Finals judges were Robert Linck, Chief Investment Officer of Shell Ventures, Deb Merril, President of EDF Retail, and formerly founder and CEO of retail energy powerhouse Just Energy, Rodrigo Prudencio, who began investing at pioneering energy venture firm Nth Power, and was CEO of carbon software startup Hara, now heading Amazon’s Climate Pledge Fund, as well as Kevin Hahm, GM of Investments at GS Energy Group, representing the prize sponsor, and my partner Q Song at Energy Transition Ventures.

Cemvita is located in the energy capital of the world, Houston, Texas, and edged NY and Texas based Amperon, and Silicon Valley based SkyCool. Veloce also has split executive teams in California and Texas, and EnPower is located in Phoenix. Lisa Ann Pinkerton, long time cleantech sector journalist and PR executive as well as the Chair of Women in Cleantech & Sustainability, gave a talk during the break on “Getting to Yes”, and Cemvita will be interviewed on our podcast partner

I haven’t organized a challenge or prize competition like this since launching Shell Gamechanger’s R&D innovation challenges some years ago as a Gamechanger project with, and was extremely pleased with the overall quality of competition. The incubator and accelerator partners for the competition helped dramatically increase the quality of applicants, and the 25 startups in the semifinals had raised well over a hundred million between them. The aggregate fundraising in process for the semi-finals group was well into the hundreds of millions. We had several billion in energy transition investment capital represented in the judging from a handpicked slate of experienced investors and executives, and the 6 finalists made their decision hard. I will post the finals video of the event up on the Energy Transition youtube channel shortly, and add to the LinkedIn page.

Cleantech investment 2010 YTD

Over $5 Bil in US Cleantech and Energy Transition Focused Venture Funds Raised in last Year

The market continues to move aggressively.  A number of notable new energy transition venture funds have closed despite the pandemic. We are tracking around $6-7 Billion in energy transition private venture capital raised since the pandemic started or expected to close this year. Tracking favorably to support venture investment even compared to the cleantech investing boom a decade ago.

In 1Q we announced the launch and 1st close of our Energy Transition Ventures fund, an early stage venture capital fund focused on energy transition related startups primarily at Seed and Series A stage.  It is backed by and partnered with two operating companies of Korean conglomerate GS Group, formerly the energy, power, construction, and retail business of LG.  GS Group in parallel launched a new CVC in the Silicon Valley in the area, GS Futures, and has been a highly active investor in tech venture funds in US and Asia in its own right, as well as a 50/50 joint venture partner with Chevron in GS Caltex, one of the largest refineries in the world. CNN – The last clean energy boom turned to bust. Will this time be any different? Bloomberg – Venture Capitalists bet on Houston as Gateway to the Post Oil World. Cleantechnica – Big Renewable Energy Bucks Head for Texas. My partner and I come from Accel Partners and Jane Capital and Shell, with significant success investing in earlier cleantech waves. We didn’t expect to be alone, and certainly aren’t.

Pandemic fund capital raising has been busy in cleantech and energy transition. A lot of it has been from energy teams or seasoned VCs who grew up in prior cleantech investing waves.

DBL Partners, long one of the earliest and leading cleantech investors who backed Tesla, Solar City and others, raised it’s 4th fund, $600 mm, for early and later stage venture deals in the sector. Though DBL today also includes Ira Ehrenpreis, formerly of Technology Partners, another long time cleantech investor who joined Nancy Pfund and team in DBL to put together the prior DBL III fund in 2015.

Amazon’s Climate Pledge Fund announced at $2 Bil in June 2020, though unclear how much that was already spoken for. Rodrigo Prudencio, formerly a Principal one of the other cleantech VC pioneers Nth Power, had moved to Amazon and help to launch this.

The Bill Gates led Breakthrough Energy Ventures – whose large investment team is heavy with people from startups and earlier venture funds, announced its second, $1 Bil climate and cleantech focused vc fund this year.

G2VP – the late stage Kleiner Perkins green growth spinout fund announced it raises $500 mm fund to focus on growth phase investments in the energy transition.

Congruent Ventures, whose founders came from longtime investors Prelude and Rockport, raised its second early stage fund $175 mm

Chevron Technology Ventures, the longest running corporate venture capital fund in oil & gas, closes a second climate focused fund with a $300 mm Future Energies Fund

A newer player, Blue Bear Capital, including a founder from energy PE fund Riverstone, has reportedly closed off on its second fund.

And in moves that also did not happen in prior cycles, Texas energy PE funds have been making moves into energy transition, joining long time player Natural Gas Partners. Well known energy focused PE funds like SCF Partners, Carnelian and CSL have all launched 1st time allocations for venture capital in the last year, focused on energy transitions as well as oil & gas technology.

In a sign of times to come, energy PE powerhouse EnCap also closed a dedicated $1.2 Bil Energy Transition Fund I infrastructure fund for energy transition, and long time infrastructure player Arclight hired my former colleague, ex Shell, Castile and Battery Ventures vc Carl Stjernfeldt to expand its fund offering in the area.

We are tracking another dozen or so funds in process in the area.

6 Finalists Named in Cleantech from CO2 to Storage for $100,000 Prize announced today that it has selected the 6 Finalists for our GS Beyond Energy Innovation Challenge in the following categories: Digitization of Energy, eMobility in Cities, and New Fuels.  The finalists will pitch in a virtual pitch event on July 21 with the top team winning the cash award of $100,000 with no strings, deliverables, or equity dilution.

Being on the selection team was a blast. We partnered with some of the largest accelerators and incubators in the sector for the Challenge:  Greentown Labs, Austin Technology Incubator, at University of Texas, Elemental Excelerator, Third Derivative, Techstars, though applications came from across a couple of dozen incubators and accelerators. Semifinalists and finalists were selected in a highly competitive multi-stage process of hundreds of startups, and range from first time startup teams to experienced executives, with solutions in software, carbon products, energy storage, distributed energy, new materials, and electric vehicle technology.  Getting down to the finalists was challenging, and I’ll say we had 4 more semi-finalists that we felt could have legitimately made an argument to be included in the finals and be competitive to win.

Each of these Finalists certainly can pitch well, and brings a different approach and technology to solving big energy and climate related challenges. Startuplandia is a fast paced, rough and tumble environment. If I had to give some free advice it would be this: nine months in a startup is a lifetime, and every startup that gets funded looks just as good on paper as yours to somebody – or it wouldn’t have gotten funding.  These six startup teams represent the top couple of percent of applicants and beat out a lot of good companies already.  They each have seen prior success and have had tens of millions in dollars invested in them from both investors and both government and corporate technology R&D grants.  The finalists have been through an average of 2.1 incubators and accelerators. But they each still have some rows to hoe to hit the bigtime and deliver.  The point of the Challenge was to find and showcase ideas that can change the world, and send a message that the challenges and opportunities in the energy transition are worth tackling, but you need to bring your A game.

I’m really excited about the group that made it this far, and looking forward to seeing who the judges pick as the winner on demo day.

Finalists are:


Amperon builds real-time electricity demand analytics for energy retailers, utilities, grid operators, and energy traders

At Cemvita Factory, we apply synthetic biology to reverse climate change. We do this by engineering microbes to use carbon dioxide or methane as a feedstock for the production of carbon-negative industrial chemicals.

EnPower, Inc.

EnPower, Inc. is a lithium-ion battery company accelerating the shift to a more sustainable future. The company is expanding production in Phoenix, AZ to build high performance batteries for various electric mobility applications.

Sapphire Technologies

Sapphire Technologies’ energy recovery systems convert the energy wasted in pressure reduction processes into clean electric power. Our vision is to improve the way the world harvests and utilizes energy, and our mission is to enable substantial financial returns for our customers by harvesting wasted: pressure energy while reducing the global carbon footprint.

SkyCool Systems

SkyCool Systems has developed a breakthrough cooling technology that passively rejects heat to the sky in order to efficiently and sustainably run air conditioning and refrigeration systems. Unique to SkyCool Systems’ innovation is a fundamentally different way of achieving cooling and harnessing an untapped renewable resource: the cold sky.

Veloce Energy

Veloce Energy is enabling the electrification of transportation by removing physical and financial barriers to EV charging deployment and the development of grid edge infrastructure. Our purpose-designed battery energy storage and ancillary systems are like Legos™ to leverage the existing grid to do more, faster, at lower cost across multiple sectors.

Viewers can register to watch the Finals pitches and judging at The finals judges are 5 highly experienced venture investors and executives from Chevron, Amazon, GS Group, Energy Transition Ventures, and EDF. 

What’s Changed in Cleantech Investing? Two things: Economics and Returns

I’ve been investing in cleantech since 2001, founded a bunch of startups, and have a good stack of exits to my name across every cleantech investing wave. In fact my last 4 investments have all exited. Not sure I’ll ever be able to say that again. And renewable power is cheaper than fossil. It’s fun to be able to say that now with a straight face.

Reflecting back, while a lot has changed, much has stayed the same. What has fundamentally changed are improved economics, and massively increased sizes of capital, exits, and returns, besides the obvious climate and policy pushes behind the energy transition. What hasn’t, is mispricing of risk. But hey, that’s what being a venture investor is all about, right?


Unlike a dozen years ago, when investing in cleantech was all about policy and we called it alternative energy because renewables were fundamentally more expensive than fossil: today it’s cheaper to build a renewable power plant than it is to even run a fossil fuel power plant. Policy frameworks are less the driver than energy economics. A decade ago policy frameworks were still a crucial minimum condition. Lazard research has been reporting for a while that in the US the average cost of solar and wind was cheaper than just the marginal cost of coal and gas generation. And shows energy storage within striking distance of peaking power plants at scale. If you haven’t read the Lazard report, it’s a must read. And in a great article on emerging markets, long a hard place for renewables to outcompete cheap coal, Bloomberg just noted solar is cheaper than coal in India.  Collapsing costs primarily in batteries and solar, have fundamentally and likely permanently altered the underlying economics of the key technologies in favor of cleantech and energy transition companies. This isn’t going away even if you think the policy frameworks are. And yes, on an unsubsidized basis.

Venture Returns – Is anyone making money?

The other change is increased raw size of markets, exits and returns.  A decade ago, returns in cleantech for venture funds still looked dicey, and while money was being made, the exist smaller, successes were much narrower, especially for mainstream venture funds who struggled to port their investment models from IT to cleantech. And I actually know a few funds from the early days that literally returned zero. Not just zero profits like 1x capital. Like awfully close to absolute 0x capital.  And for much of the last decade the private company unicorn phenomenon that drove a huge chunk of venture returns largely skipped cleantech deals, with only a handful of unicorns (C3 Energy as a rare example one of the few on the unicorn list for quite a while). In fact most of the key IPO and M&A exits were well in the <$1 Bil level – and the valley investor’s funds largely struggled with the sector. And aftermarket performance of cleantech IPOs in the pre 2010 timeframe was also choppy, even a rockstar company like First Solar is still 75% off its 2008 high (even though it’s at $92/sh vs the 2006 IPO of $20).

The returns improved in the succeeding 5 years. I was asked by one of my colleagues at Shell in 2015 what the best cleantech venture backed exits were. At the time, it was the Tesla IPO ($226 mm raised /$1.6 Bil IPO 2010), 60% Acq of Sunpower/Total ($1.4 Bil 2011), and Nest/Google ($3.2 Bil 2014), with a couple of dozen solid return venture backed exits mainly in the $50mm to $500 mm range.  Including a few nice IPOs like Sunrun ($251 mm raised/$1.36 Bil IPO 2015), OPower ($116 mm raised/$1 Bil IPO 2014), Silver Spring ($81 mm raised/$750 mm IPO 2013) and a few others. There were good exits, and plenty of money getting made for disciplined investors, but soon crowded out by other venture markets. However capital returns in cleantech in the last decade have not looked back, with a fatter tail post exit for long term holders than often in the early exit, and recent dramatically rising exit values.

Turns out that was just the beginning.  My favorite example now when asked did VCs make money in cleantech in the first wave? That single 2004 vintage venture backed deal and 2010 IPO, Tesla Motors, currently at $675 Bil in Market Cap, has alone carried insane venture like returns even if calculated on all the capital invested by the entire cleantech venture capital sector over its entire history, ignoring every other exit. 


The latest exit trend du jour is of course SPAC heaven, and while we all know this is likely to end rather badly, they have driven significant venture exits and returns, perhaps at the risk of poor aftermarket performance. But all is not forlorn, many of even the early IPO wins like Tesla, Sunrun and Enphase have literally seen venture like multi X growth and returns post listing – were investors to hold on.  And that’s likely to happen again – for the good companies. I had a great chat with an old friend Ira Ehrenpreis, an early Tesla investor, the other day on this very topic of when to hold and when to sell. Ira put his money where his mouth was and held Tesla. In that case it was definitely the right call – and not one I would have made as I’d likely have taken those awesome profits at or around the IPO in his shoes. Holding would also have been the right call with Sunrun and Enphase, which didn’t hit their stride until well post IPO, but not Opower, which peaked near its IPO at just under a billion, and was acquired by Oracle for about half of that a bit later. Will it be for the army of cleantech SPAC deals that don’t yet have product or revenue?

But what about non tech assets? When we turn to the global asset scale the numbers get just even more mind numbingly large. Just consider the global wind and solar asset investments which have been averaging just under a $1 Trillion every 36 months, at a relentlessly increasing MW/$. The industry is now up to the entire annual GDP of Germany spent on renewables generation globally in aggregate, and adding at the rate of one Philippines or Pakistan GDP every year, or one Italy every 3 years. Put in energy $ terms, annual renewables investment is already at about 2/3rds of the world’s annual E&P investment in oil & gas, and total renewables assets are now equal to total assets in BP, Chevron, ExxonMobil, Shell, Total, plus the top 10 national oil companies combined, and adding at the rate of a new major oil company by assets about every 365 days. And see paragraph above, power from those renewables is cheaper per kwh than the power from those fossil assets. Put in Silicon Valley terms, global renewables power generation alone, not technology, or anything else in cleantech, is adding just in assets the equivalent to the aggregate market cap of 100 average new tech unicorns each year.

These investments and exits and returns are not just PPP (“Paris, Policy, and Prayer”). And they have driven new corporate and financial investors into the sector.  Amazon for $2 Bil here, Bill Gates for a Billion there, Chevron, Shell, Aramco, etc for a few hundred million each in venture, and finally you’re looking at real money. Check out the fun WSJ article SPAC Demand to Draw VCs to Cleantech, for another take.  While writing this, two more, Quanergy and Embark, just announced in the last week. The returns aren’t just SPAC fodder of course. Solar products and services company Shoals Technologies, a 2021 IPO, and the most recent clean energy unicorn Aurora Solar, providing software to the industry, highlight the growing strength outside of SPACs.

However, like in the 2005-2010 time frame, risk is again getting mispriced by investors on a grand scale. That time it was thin film solar and cellulosic biofuels, and this time again SPACs are our perfect whipping post. Cases in point include Lordstown Motors, following on the Nikola debacle. Here are my favorite Lordstown articles:

Lordstown Motors warns investors it may go out of business – CNN.

Lordstown president dumped his stock to reportedly expand his turkey hunting farm – Yahoo! Finance

Watch the CEO on Jim Cramer discussing all his “orders”, and then Squawkbox discussing the meltdown, Jim Cramer discussing “where’d the orders go and I can’t help you anymore“.

Does anyone really want to bet against a sea change in mobility? Probably not. But did anyone not see the Nikola and Lordstown implosion coming? Anyone? And yet they are still at $7 Bil and $2 Bil market caps. Which would rank somewhere pretty high on the list of the top cleantech exits of all time up until like 24 months ago. A quote from an investor friend, “I know we should short it, but who really wants to take that risk?” I’ll let you decide whether the risk in those two are still mispriced…

This also highlights that no one in cleantech talks about the valley of death in cleantech financing anymore. A huge topic at every conference a dozen years ago. Good, and even no so great companies have access to later stage, corporate, and public capital that wasn’t visible a decade ago. Opening of course, the need for someone to fund some early stage companies to grow up and sell to the rest of the SPACs, right?

But bottom line, this is not 2008. It’s 2021, and the hype may be back, but the things that really matter in cleantech investing are very, very different.

24 Semifinalists Selected for’s $100,000 Innovation Challenge, the first, and one of the top portals for technology commercialization in cleantech, has hosted an innovation challenge competition, with a $100K cash prize for the best energy startup product in Digitization of Energy, eMobility in Cities, and New Fuels. The semi-finalists were announced today. As founder and Chairman of and one of the selection committee members (along with my day job in my new fund, Energy Transition Ventures), I’m excited at the list of semi-finalists, and had a blast meeting so many of the applicants. Thanks again to GS Beyond for hosting and funding this challenge, and to all the sponsors, partners, and project team. has been quiet for a while, and I’m, excited to get it back in the game and looking forward to seeing the network get more engaged again in solving the Energy Transition issues of our time. Please join our Linked In group, which is over 40,000 members, or our Carbon Professionals Networking Group if you want to network with like minded people, or be involved in the next challenge.

5 of the semifinalists will be selected to pitch in the virtual pitch event on July 21 to win the cash award of $100,000 with no strings, deliverables, or equity dilution. The judges for the finals are absolutely lights out top notch, Kemal Anbarci, Vice President and Managing Executive at Chevron Technology Ventures, Rodrigo Prudencio, Amazon Climate Fund, Deborah Merril, President, Retail, EDF Energy Services, Kevin Hahm, Head of Investments for GS Energy, and my colleague Q Song from Energy Transition Ventures.

We had support from competition partners Greentown Labs, Elemental Excelerator, Third Derivative, Austin Technology Incubator, and Techstars. But current and alumni startups participated from almost every major accelerator and incubator in the sector, including competition as well as NREL Innovation Center, Cyclotron Road, Cleantech San Diego, Cleantech Open, CleanStart, Plug & Play, LACI, and BMW Urban-X among numerous others.  The semifinalists collectively have raised well in excess of $100 mm in equity and non-dilutive funding to develop products for the next generation of energy.  They range from pre-seed to late stage companies, and have been backed by over a hundred different venture capital funds, corporations and investors. I will say, we had a hard time convincing some startups that the $100K was actually cash, and actually no strings and no dilution. But it is. The GS Beyond executive director intends to wire money after the judges select. We are currently expecting as many as 7 or 8 pilots on our sponsor, GS’ assets will get run sometime in the next 6 months as well.

Semi-finalists are:

AllumeDigitization of EnergyLos Angeles, CA & Melbourne, Australia
AmperonDigitization of EnergyNew York, NY and Houston, TX
Blue Planet EnergyDigitization of EnergyHonolulu, Hawaii
Brimstone EnergyNew FuelsOakland, CA
CemvitaNew FuelsHouston, TX
DianomicDigitization of EnergyMenlo Park, CA
EnergyHawkeMobility in CitiesBoston, MA
EnPowerNew FuelsPhoenix, AZ
Hygge PowerDigitization of EnergyBoulder, Colorado
KUHMUTEeMobility in CitiesFlint, MI
LuminDigitization of EnergyCharlottesville, VA
MekaworkseMobility in CitiesAustin, TX
Origen HydrogenNew FuelsSan Carlos, CA
Packetized EnergyDigitization of EnergyBurlington, Vermont
PantoniumeMobility in CitiesToronto, Canada
QubitekkDigitization of EnergyVista, CA
ReJouleeMobility in CitiesSignal Hill, CA
SaaSChargeeMobility in CitiesNew York, NY
Sapphire TechnologiesNew FuelsCerritos, CA
SkyCoolNew FuelsMountain View, CA
South 8 TechnologiesNew FuelsSan Diego, CA
Switched Source LLCDigitization of EnergyVestal, NY
TeratonixNew FuelsPittsburgh, PA
Veloce EnergyeMobility in CitiesLos Angeles, CA, & Houston, TX

A few thoughts on the mix of startup applications and semi-finalists. I hadn’t done a challenge like this since launching Shell’s 1st Gamechanger Challenge a number of years ago, which actually started as a project idea in 2013 (Shell Gamechanger startups did very well in this challenge, by the way). So we weren’t sure what to expect. Thanks to all the many investors, incubators and accelerators who assisted with getting the word out and coaching their applicants.

We ended with 9 in Digitization of Energy, 8 in New Fuels, and 7 in eMobility in Cities, though many startups could fit in multiple categories. Applicant quality was skewed, the top end of applicant quality was very high, likely from the focus on incubators and accelerator partners, though many of the strongest startups in the market do skip that step if they can attract funding without it, and we saw a number of high quality candidates apply directly. We ended up downselecting to a small group of approximately 60 candidates for the semi-finals, and a selection team member heard the pitch or interviewed almost all of those. There were a number of strong candidates that did not get in, thought we increased the semifinals from 21 to 24 to accommodate the quality of applicants. Primary selection criteria included team quality, uniqueness, product concept, and technical strength, traction, and fundability, though allowances were made to ensure inclusion across stages, and across technical and product categories. Several subcategories especially in areas of energy storage and electric mobility infrastructure were very crowded.

The geographic distribution was pretty typical, and with strong submissions from tech hubs in the West Coast and Northeast. Southern California and Texas were overrepresented from market statistics, as both regions had strong pushes from accelerator and incubator partners, Boston and was underrepresented. Major metros represented 3/4ths of the semifinalists, meaning small market startups were somewhat overrepresented compared to market statistics. Cleantech, energy tech, Constructiontech, and climate tech were well represented, Agtech was very limited, given the published topic areas. The submissions were heavy on batteries, storage, and EV and electric mobility infrastructure, and lighter on hydrogen and carbon than expected – possibly from the focus on product and MVP components in the application process, or the focus on incubator and accelerator applicant pools. We saw a good mix from materials to hardware to software. Consumer facing products and solar were underrepresented in applications. Biofuels applicants were almost non existent. All of our accelerator and incubator partners, Techstars, Greentown Labs, Third Derivative, ATI, and Elemental Excelerator placed semifinalists, and well over a dozen incubators and accelerators placed startups in the semi-finals, many of the startups had done more than one.

A significant number of the applicants had raised significant non-dilutive capital, and had prior investment rounds, though we saw, and included in the semis, a number startups that were smell of an oily rag pre seed level as well. Over 100 investors and funding sources were behind the semi-finalists, representing well over $100 mm in funding (though the median funding was lower). We did not track a full funding data set. While we didn’t track the data or use team diversity as a selection criteria, the diversity distribution looks like it punched well relative to the typical startup market, 1/4th of the semi-finalists had a female executive or cofounder, and 1/3rd had a non Caucasian executive or cofounder. Submissions from African American founders were very limited, and none scored well enough to be considered for the semi-finals.

All-in a great challenge launch, and I’m really looking forward to finalist selection and watching them pitch the lights out on July 21st for $100K, and you can find more details on the GS Beyond Energy Challenge competition website.

What Will Happen in the Energy Transition?

Co-published with Energy Transition Ventures

The Energy Transition is the term of art that arose out of the climate and cleantech sector in common use in corporate board rooms and policy circles around 2015 to 2020 to describe the shift, and the secondary effects and impacts, from changing the source of the majority of the global fossil fuel based energy system to non-fossil energy or low carbon sources and systems, in the face of pressure on corporate, national and local responses to address climate change post financial crisis and the failure to replace the Kyoto Protocol with a global climate framework.

Today’s energy transition is a success dividend and natural evolution of the cleantech explosion of the last two decades which saw the dramatic improvement in, and lowered costs of, cleantech, and development a of dozen world class industries in Renewables, EVs, Sharing Economy, Agtech, Biofuels, Smart Grid, Consumer Energy, et al, accelerating as cleantech began to penetrate through early adopter markets, and reach and exceed cost parity with conventional sources and technologies. 

We are in the early stages of a global shift in how the world produces and uses energy, driven by:

  • Substantial cost reductions in new energy technologies, including solar, wind, and storage
  • Decarbonization efforts by countries, corporations, and consumers
  • The consumerization of energy and the rise of the engaged consumer
  • Network, computing, and intelligence technologies impacting and enabling the energy sector

This disrupts incumbents across large segments of the economy and presents a unique opportunity for new entrants.

Not only is the energy transition very real, it is now.  It will have much more imminent business disruption impacts than corporate strategists believe, it has much more potential for the private sector and technology to solve climate problems more rapidly than climate solution advocates believe, has broader origins and drivers than just climate as we seek to innovate and make a better energy base for the economy for the next 100 years well beyond simply solving global CO2 emissions, and given that almost every major sector of the economy and aspect of life rests on energy, will have close to ubiquitous, asymmetric, exciting and unpredictable first order and secondary impacts across massive swaths of our economy and lives on every country on the planet.

Some of the areas likely to see business impacts include Distributed Energy, Electrification, Mobility, Resource Efficiency, and Enabling Technologies.

Our energy system has been robust and worked amazingly well for power for 100 years, enabling the broad rise of industrial economy, and in many cases dictating economic comparative advantage for industries.  In the energy transition, that will change in unique and interesting ways.

We expect the continued rise of Distributed Energy in a range of forms, both true distributed generation, and growth of Smart Buildings and Smart Cities, as well flexibility in consumer demand and consumerization and decentralization of choice and power in virtual power networks, and eventually leading to a rewriting of the gird and energy supply networks that will change how, and where energy is created, supplied, and consumed and impact all aspects of the economy and people’s lives.

We expect a general trend towards increased Electrification throughout the economy, benefiting Renewables, Smart Grid, Energy Storage, changing Transportation and driving Building Electrification. Electricity is the ultimate “flex fuel” fairly easy to decarbonize, generally solid state, no moving parts, simpler, safer, and cleaner than combustion and liquid or gas fuels, as it reaches improved efficiencies, costs and addresses storage and fuel source.

We expect a complete rewriting of mobility as technologies continue to emerge and come down in cost, all well in the works from EVs, ridesharing, and urbanization. We see this benefiting sectors like Electric Vehicles, EV Infrastructure, Hydrogen, Fleet Management, Autonomous Vehicles, and Shared-Use Mobility, as well as creating whole new categories.

We see tremendous and unrelenting growth in Resource Efficiency, including Carbon Capture and Utilization, particularly carbon to products, Waste-to-Energy, Energy Efficiency in general, sustained growth in Agricultural Technology and Sharing/Circular Economy products and services.

And across and underlying all of this includes growth and opportunities in enabling technologies like Artificial Intelligence, Machine Learning, Advanced Sensors, Internet of Things (IoT), Virtual Reality and Augmented Reality, and Blockchain.

In short, as the energy transition occurs, everything is fair game.

It is a Long Lane that Never Turns – Agtech Angel Investing 100 Years Ago

100 years ago my great grandparents were also angel investors – in Infrastructure, Media and Bee tech

They invested in media, ag / cleantech, and infrastructure.  Lest you think angel investing is new or VCs are smart – it really hasn’t changed much in a century.
In the 1920s my great grandparents were active angel investors in the Rio Grande Valley of Texas. The portfolio, that I know of, included a newspaper, a yacht club, a toll bridge over the Rio Grande, and a Bee business, called Ault Bee Co. I’ve actually got the “offering memorandum” for the follow-on into Ault Bee.  As you’ll see, not much has actually changed in the venture business in 100 years.  Take a read, and see if you’d have written the check!  Ault Bee appears to have been my great grandmother’s deal (or maybe she just handled all the money!)   Ok, maybe that’s changed, not many women venture investors these days.
The deal:
Ault Bee provided queens and bees to the local and North American market from south Texas by catalog sales.  The company had patented technology, including IP on cage designs to help keep bees alive during transit (a major yield issue as this was back before the refrigerated bee shipping of today).
Each Shareholder was asked to put up 3% of their original investment for a 10% short term 6-month bridge note to be paid back out of revenues from growth, with 10% attorney’s fees if sent to collection.
The deal timeline would impress anyone, and was all handled over the mail in <3 weeks to close after a meeting, presumably of shareholders or the board.
  • Oct 8th shareholder letter goes out
  • Oct 21st note paid that check sent
  • Funds receipt dated Oct 25th.
  • November 1st Promissory Note returned – deal closed.
 Legal was all handled on a promissory note taking less than half a page – sounds a hell of a lot better than a big Series A legal bill.
The offering memorandum itself totaled 2 pages. 1-page letter detailing the offering terms, and 1-page business summary and financials. Curiously, the income statement and detailed forecasts were left out, and the balance sheet is not in a typical GAAP format for today, how many times have we seen one of our startups do that!
The pitch is strikingly familiar, and includes almost everything you’d expect in a deal today:
A great call to action – it is a long lane that never turns, hinting at the same pivot issues our startups deal with today.
Use of funds: fund opex and capital to serve international and channel growth
Reason for the need – poor performance due to weather, timing, inability to serve orders etc.
A major growing channel – Montgomery Ward which they needed capital to serve. Montgomery Ward in 1926 would have been the equivalent of Tesla’s new Home Depot partnership announced this week, or a startup closing its Walmart or Amazon deal.
A pivot to a new international growth market – Canada, and need to move production to stem losses caused by environmental issues.
A note that opex had already been cut, and the founding CEO highlighting that he was working for less than market.
A call to investors for help recruiting top talent.
Her $500 original investment is about $7K in today’s dollars, out of a $70,000 round, which equates to about $1 mm in today’s dollars. But in 1924 average earnings were about $1,300, vs $50K today, and a model T cost $290. So they were investing about the equivalent of $20-$50,000 on that basis in relative terms.  This is not too far off the size and typical investment for 10-25K/person angel round today. She would have had a little less than 1% of the company’s equity. The company appears to have spent – c 6 years in – about 5% of its capital base on IP and 64% on capital equipment – not too far off numbers you might see today.
Even the topic is not dated – ag tech is a hot thing again, and bee hive losses have been in the news for several years as a major problem statement. One of the Ault Bee patent was even cited as recently as a 2013 patent on bee hive design!
In 2017 a small startup actually secured a small A round after a few hundred thousands in grants, to build decision support software to stem bee hive losses.
It is fascinating to me how little the venture business – supposedly invented in the last few decades – has actually changed. As for the portfolio returns – the data is lost to history, but my uncle recalls that the toll bridge and yacht club made good money (and both are still there 100 years later), Ault Bee and the newspaper did not. In fact, my grandparents acquired the newspaper CEO’s personal library as partial compensation for their investment in that business. But a 50% 100 year survival rate would not be bad. Interesting that media and “tech” deals did poorly, but the two infrastructure ones lasted a century.

Is Tesla Really the EV King?

by Neal Dikeman, chief blogger, Cleantech Blog

Tesla Motors (NASDAQ:TSLA) has been the electric vehicle darling since almost the day it launched.  I’d argue there are some really neat aspects to its product and strategy, but it is far from a resounding market leader in EVs.

The Range and Battery Scale Advantage

There are a couple of really exciting things to like.  Pulling a quick summary of the prices of all the pure electric vehicles currently selling in North America, I ranked them by EV Price/ Range.  Tesla is and always has been the leader here.  Down in the <$300/mile range, half of the  i3.  Quite frankly it’s been the only game in town for a 200 mi electric car.

And as lithium batteries are the big ticket item in an EV, and Tesla loads up on them, that confers some advantage to go with that high ticket price.   It drives up its price and its range, and puts it still in a class by itself on range. But as you see when graph range vs price, packing all those batteries in also gives Tesla a huge nominal advantage over its competitors compared to where one would project it to be on price.  Tesla talks like this is all technology and battery management that is hard for competitors to match, I think it may be just as much a combination of purchasing scale and simply an illustration of relative cost absorption in a high range EV (at the lower 70-90 mi range of everyone else, the car cost swamps the battery cost, and differential cost of a few mi in range is much less important than the luxury premium).  You can see this illustrated in flatness of the PHEV version of the curve, and the wide differential between the i3 and LEAF, both very close in range.  Of course, as we are largely comparing prices not costs, some dirt in the numbers is also certainly present.

EV $ per Mileage

EV Price vs Range







PHEV $ per eMileage

Plug in hybrids as you’d expect show a much less dramatic differential and flatter curve, with most of the differential driven by luxury vs mass consumer car class than range.  The game in PHEV’s appears to be minimize battery for maximum consumer taste and performance output.




Future Impacts of Scale?

The interesting bet however, is what happens in the future.  Lithium ion batteries are one of the few fast falling cost items in a car, Tesla ought to be able to ride that curve down faster than the others, since it has both more purchasing power than its competitors (several x more battery kwh per car and one of the volume leaders in cars adds up), as well as a larger exposure in its vehicle unit cost structure in batteries than any of its competitors as the batteries make up such a major portion of its vehicle cost.

However, its attempt to vertically integrate upstream into  batteries with the gigafactory might well work against it here, as it gains leverage on the materials in the value chain, but loses leverage against the manufacturing cost, locks in on a single battery design, and has to recover significant capital outlays its competitors do not.

If the rest of the lithium ion industry can cost down as fast or faster than Tesla, it loses out quickly.  Alternately, when another car company rolls out a high range vehicle, Tesla’s advantage can erode fast.  And finally, it is unclear whether either the PHEV or short range EV strategies, requiring fewer costly batteries, simply continue to outpunch Tesla with consumers.  Like its zero emission credit advantage supporting profits when it first launched, this battery scale advantage may also be more short term than sustainable.

North American Market

But possibly most disturbing is trying to tie out this advantage to how Tesla is actually doing with this strategy in its core North American market.  It’s now been hot and heavy in North America for a couple of years.  Should be delivering results, but  things are not quite that rosy for a $20 billion market cap “market leader”.

It was not first, Nissan with the LEAF and GM with the Chevy Volt beat it to the market.

Its core initial US market has seen basically flattish sales growth YoY going on 2 consecutive years now, ostensibly as it scrambled to open new markets overseas, including its struggling Asian market.  But struggling to drive high growth in your first core market is never a good sign.  One wonders how much excess demand per month actually exists for an $80K electric sports car, and if some of Tesla’s shift of production to seed overseas markets is simply a strategy to keep its domestic demand levels pent up, out of concern that there is not adequate growth possible at this price point in one market to satisfy Wall Street’s valuation.  Not a bad idea, but does have implications.  In counter point, while GM and Toyota also struggled for growth, Ford and Nissan delivered strong double digit growth in Tesla’s home market while it stayed flat, and BMW has started to chew the mid luxury market in between.  One wonders if the strategy of twinning a low range low cost EV with PHEVs doesn’t simply deliver better product line punch than the high mileage high cost strategy.

Tesla is not the largest, and has never worn the crown of most EVs sold for a year, coming in 3rd and slipping to 4th in 2013 and 2014, and only barely edging out Ford so far for 2 months of 2015 and helped by weak Chevy sales months so far. Also probably helped as Tesla apparently had to shift about a month’s worth of car production into Q1 from production issues according to its annual letter.

NA EV Company Ranking

NA EV Company Ranking







Source: tracker 

Also pictured is the results from a second tracker with slightly different estimates claiming Tesla is actually ahead so far this year.

But almost as interesting to me has been the rise of the BMW.  That i3 which is almost double Tesla’s price/mile is doing rather well.  By some trackers has edged Tesla in sales of its i3 and i8 EV and PHEV in North America in 3 of the last 7 months, with less than a year under its belt.  Arguably the i3 was aimed more at the Volt and LEAF than the Model S, but getting even remotely close to caught by an upstart short range BMW product this early in its cycle was I am sure never part of Tesla’s plan.

BMW vs Tesla







Do note that all Tesla monthly numbers are somewhat suspect, as the company does not publish anywhere near the detail that other automakers do. Charitably it is just playing cards close to the vest?  Not just making it harder to analyze hidden growth misses?

All in all, a quite decent performance for a new auto maker, but far from the dominance you’d expect from a $20 billion market cap brand name.

The author does not own a securities position in TSLA.  Any opinion expressed herein is the opinion of the author, not Cleantech Blog nor any employer or company affiliated with the author.

EV King Tesla – Where Did the Cash Go?

by Neal Dikeman, chief blogger

Since it’s launch, cleantech darling Tesla (NASDAQ:TSLA) has delivered huge revenue growth in the electric vehicle market.  With a market cap of over $20 billion, it’s more than a 1/3rd of that of the massively higher volume GM or Ford.  Largely the market cap has been driven by phenomenal growth numbers, 60% YoY revenues last in 2014, and the company forecasts 70% increase in unit sales YoY in 2015.

But let’s take a deeper look.

The Company trades at 7.5x enterprise value/revenues, and 26x price/book.  At the current market cap, it needs to deliver the same revenue growth for another 4-5 years before normal auto net profit margins would bring it’s PE into line with the the other top automakers.  Of course, that assumes no stock price growth during that time either!  Our quick and dirty assessment test:

Take 2014 revenues, roll forward at the YoY growth rate of 60%.  Take the average net profit margins and P/Es of the major autos (we used two groupings, 2-3% and 20-25, and 7-8% and 12-17), roll forward until the PEs align, see what year it is (2018-2020).   That’s our crude measure of how many years of growth are priced in.  And it puts Tesla at between a $20-$50 Billion/year company (7-15 current levels) before it justifies it’s current market cap.  Or c. 300,000-1.5 mm cars per year depending on price assumptions.  Up from 35,000 last year.

Does it have the wherewhithal to do that?

Tesla Financials

 Well, looks awfully tight.  The numbers technically work, continued growth will cure a lot of ills.  But while nominally EBITDA positive now, the company has been chewing cash in order to sustain future grow.  2014 burned nearly $1 billon in cash in losses, working capital and capex to anchor that growth, almost as much in cash burn as the company delivered in revenue growth.

Positive progress on working capital in 2013 disappeared into huge inventory and receivables expansion at the end of 2014, and interest on the new debt for the capital expansions alone chewed up 10% of gross margin, while both R&D and SG&A continue to accelerate, doubling in 2014 to outpace revenue growth by more than 50%.

The cash needs this time around were fueled by debt, which rose over $1.8 bil to 75% of revenues.  Overall liabilities rose even more.  Current net cash on hand at YE was a negative half a billion dollars, seven hundred million worse than this time last year.

The company will argue it is investing in growth, and you can see why it better be.  With almost every cost and balance sheet line currently outpacing revenue growth, at some point a company needs to start doing more making and less spending.

So yes, continued growth outlook is still exhilarating (depending on your views of the competition and oil price impact), but the cost to drive it is still extremely high.  I think we will look back and see that 2014 and 2015 were crucial set up years for Tesla, and the really proof in the pudding is still probably 24 months in front of us.  And my guess is Tesla will be back hitting the market for equity and debt again and again to keep the growth engine going before it’s done.

 The author does not own a securities position in TSLA.  Any opinion expressed herein is the opinion of the author, not Cleantech Blog nor any employer or company affiliated with the author.

Seafloor Carpet Turns Surf’s up to Lights On

At the University of California, Berkeley, a team of engineers is pioneering ocean-source energy technology by using “carpet” to capture the energy generated by ocean waves.

The team, which includes wave energy guru and Assistant Professor Reza Alam, and Ph.D. Marcus Lehmann, an engineering researcher, aims not only to capture the kinetic energy contained in the ocean, but eventually to use it to purify seawater – drinking water being an increasingly diminishing resource on planet Earth.

This is particularly true where ever-growing populations living in coastal cities like Los Angeles demand greater and greater quantities of non-saline water for drinking, bathing, washing dishes and clothing, and for irrigation. (Re that latter, it’s disturbing to know that more than half America’s produce begins life in the warm, fertile and currently drought-stricken Central Valley).

As the United Nations Environment Programme (UNEP) notes, half the Earth’s population (about 3 billion people) lives within about 35 miles (or 60 kilometers) of a seacoast, and 75 percent of the globe’s largest cities are located on ocean shorelines. By 2025, that figure is expected to double.

The reason? Man has, since ancient times, migrated to the edges of oceans to take advantage of the edible wealth of sea life, which is more easily captured by fishing than land-based animals are by hunting. Coastal cities also capitalize on one of the oldest transportation modes known to man, namely shipping (which is less energy intensive than freight trains, trucks or airplanes).

Moreover, the Berkeley team has conducted experiments showing just how energy-rich ocean waves are. For example, less than 11 square feet (or one square meter) of their ingenious “carpet” – which is able to capture more than 90 percent of wave energy – is enough to power two U.S. households, or about 1,800 kilowatts of energy. One thousand eighty square feet, or 100 square meters, would generate the same amount of energy as a soccer field covered in solar panels. And all that energy would be generated in or near the world’s coastal cities, where the energy demand is greatest.

The system itself consists of a network of hydraulic actuators overlaid with a rubber mat whose future composition, presumably a durable and salt-water-resistant elastic composite, remains a secret at this point, according to Lehmann.

The cost of this energy is calculable. The cost of desalination can’t be estimated, since the wave energy project is still in its infancy vis-à-vis wave power conversion and absorption, but in its tertiary stages should surpass current desalination costs (from $.40 to $.90 per barrel in Saudi Arabia). A barrel is 31.5 gallons or 119.5 liters.

In these initial stages, however, Lehmann and colleagues are banking on a report from Carbon Trust which indicates that wave energy could produce more than 2,000 terawatt hours (or a phenomenal 2 billion kilowatt hours, or kWh) per year. This is enough to power two million U.S. homes, each using 1,000 kWh, which is well above the average.

Lehmann and his colleagues have also thought ahead to the environmental and sustainability issues. Unlike offshore wind (notably Cape Wind, the recipient of a $600 million loan that will not make it less of an eyesore from the Kennedy Compound in Hyannis Port, or less of an irritant to gas and oil tycoon, and Nantucket shoreline owner, Bill Koch), wave energy production is invisible.

This is because the project(s) rests about 60 feet under the surface, and in otherwise useless sea floor areas, or dead zones, like the Gulf of Mexico. This, forming at the mouth of the Mississippi River, in Louisiana, is the largest in the world. In addition, such projects will, in no location, impinge upon the visual and physical world dominated by fishing or recreational boating, or sea life.

The Alam/Lehmann team seems to have come upon the perfect recipe for “clean” energy. Still, as a rational person, I know nothing is perfect. Lehmann agrees:

“The exact location is part of our research. The downsides are more material needed for the same absorption efficiency at deeper water locations, and (the fact that) the ideal location will not be directly on the ocean floor to minimize environmental impact, sand erosion and sediment residue.”

Within the next two years, Lehmann anticipates testing the system in the field, in either Hawaii or Newport, Oregon, both of which provide wave test centers. (I expect the team to vote for Hawaii, as who wouldn’t?)

In the interim, Lehmann and colleagues continue to use the wave-testing tanks at UC Berkeley, the results of which were presented at the 10th European Wave and Tidal Energy Conference, Aalborg University, Denmark, September 2013.

One of the biggest hurdles to wave energy, according to Lehmann, may be the fact that each wave energy siting will require different materials, tools, and techniques, from the “carpet” material to the height of the hydraulic actuators.

“The challenge of wave energy is to design specifically for every individual characteristic of the designated wave site. Our system allows a lot of parameters to easily adjust.”

An accommodation which wind and solar seem unable to grant. For example, the Mojave Desert solar project mandated the removal of native (and seriously endangered) desert tortoises. And it’s now common knowledge that wind energy companies have filed at least 14 separate applications that would allow them to kill eagles, albeit inadvertently through turbine blade rotation.

Boeing’s SBRC Makes Biofuel from Agricultural Rejects

A decade ago, biofuels were considered the Holy Grail of combustion-engine fuels.

Measurably cleaner than fossil fuels, they were the proverbial light at the end of the tunnel, at least according to some clean energy experts.

Fast forward to 2008, when the biofuel industry’s withdrawal of food crops such as corn, rice, wheat and palm oil caused a world-wide food crisis that affected almost everyone, but the poor most of all. Prices jumped from 102 percent (for rice) to 204 percent (for corn). Food riots spread from Haiti to Bangladesh, and from sub-Saharan Africa to Egypt.

Closer to home, but no less desperate, the most impoverished residents of Mexico and South America were reduced to eating nothing but corn tortillas, since the cost of the cornmeal precluded also buying vegetables on the little money they could scrape together at the end of the day.

It was Darrin Morgan who said, “Corn ethanol is a perfect example of how not  to do things.”

Morgan, who is the Seattle, Washington-based Director of Sustainable Aviation Fuels and Environmental Strategy at The Boeing Company, is refreshingly blunt. Sometimes that directness seems the only way to reach people bombarded by the deluge of 21st century information sources.

And Morgan’s news is exhilarating: Boeing’s research consortium (Boeing, Honeywell UOP and Eithad Airways; known jointly as the Sustainable Bio-Energy Research Consortium (SBRC) at the Masdar Institute of Science & Technology in Abu Dhabi has found a class of plants that can grow in the desert, on salt water.

These plants, known as halophytes (or xerohalophytes), have been adapted by Nature over thousands of years to survive harsh growing conditions, notably saline water and desert soils. These halophytes are also nearly indifferent to high temperatures and water shortages, making them ideal for the purpose.

Nature also, and perhaps unintentionally, made these halophytes low in the lignites that make plants grow upright and bind their structure. This means that it takes much less energy to extract the highly useful sugars that go into making of superior biofuels – a discovery that seems to be a first, since no one else appears to have patented the process.

The final step of the equation, notes the SBRC, is incorporating aquaculture; the raising of plants and fish in a cooperative, water-based environment. This final stage provides a perfect complement to halophytes, which thrive on fish wastes comprised of the very ingredients found in chemical fertilizers. The entire pilot project fits on a two-hectare plot within the Masdar City limits, and bears the name “integrated seawater energy and agriculture system”, or ISEAS.

Is it sustainable?

“Yes!” says Jessica Kowal, Boeing Commercial Airplanes Environment Communications representative. “In fact, that sustainability awareness is what a colleague of mine called ‘the triple bottom line; economic, social, and environmental.”

Kowal also reminds me that Boeing has other partners around the globe, most recently with South African Airways, or SAA, and the Roundtable on Sustainable Biomaterials (RSB), an enterprise which aims to help small landowners enter the biofuels marketplace.

But Boeing does not follow in the path of some other multinational monopolies like Monsanto, which requires that farmers grow a single, genetically modified and licensed crop.

“What we are seeing is that, in some cases, there may be opportunities to develop new biofuel crops. That is, to add a crop to a farmer’s itinerary.  It’s not an either/or scenario, it’s an ‘and’.” Kowal notes, adding that Boeing and its partners are very much committed to the idea that this initiative has to be productive on many levels, including the environment, in countries where they roll it out.

The fact that the initiative relies on two resources that are considered worthless in most locations – salt water and desert soil – is a big plus. The addition of fish or shrimp, as in aquaculture, is clearly a value-added proposition. The fact that Boeing’s consortium is also looking at a newer and even more energy-efficient fuel conversion technique puts the initiative well over the top. That both the FERC (United States Federal Energy Regulatory Commission) and the UAE, or United Arab Emirates, are offering their leadership is, in Kowal’s words, “very exciting!”

“The aviation industry has been looking at biofuels for a long time, and there is a real desire to find an alternative to petroleum.”

Welcome to the real Holy Grail. And for those who cite the aviation industry as being highly pollutive, Kowal is quick to note that it accounts for only about two percent of transportation industry emissions according to a 2013 fact sheet from the IATA, or the International Air Transport Association.

It’s hard to imagine, but in the not-too-distant future major airlines may operate in a very real near-zero-emissions framework, without having to buy into carbon credits or ecosystem “fixes”.

Not that that’s a bad thing.

Cliff Majersik, IMT, Identifies Efficiency as Energy’s Biggest Asset

The Institute for Market Transformation (IMT) is a Washington, DC-based nonprofit working in the areas of energy efficiency, green building, and environmental protection. Much of IMT’s effort goes toward correcting inadequacies in the construction/remodeling vertical that prevents investors from taking a stake in energy efficiency and sustainability in the United States.

Cliff Majersik, Executive Director, referred in this interview to a guest post in another clean tech blog which details the 2013 end of a former U.S. – Russian nuclear energy program called Megatons to Megawatts.

As Majersik points out, the diminution of nuclear fuel stocks is not as disconcerting as it initially seems on paper, even though nuclear energy now provides about 20 percent of America’s electrical energy. The reason is simple: where nuclear energy historically leaves off, energy efficiency takes over.

This, as noted by John A. Laitner, a researcher at the American Council for an Energy-Efficient Economy (ACEEE), has been the case since 1970. In fact, Laitner observes, efficiency has met 75 percent of new service requirements in the nation.

For Laitner, the information is a selection of graphs and charts. In layman’s terms, between 2004 and 2010, the U.S. upped its energy efficiency spending by 80 percent, or about $574 billion in 2010. In that same year, energy providers spent 170 billion on infrastructure, but investment in energy efficiencies topped $90 billion, or more than half that amount.

Majersik stresses the importance of efficiency.

“The fact is that (since 1970) our economy has fundamentally transformed. Everyone used to drive around in clunkers that got 15 miles to the gallon, and everyone used to live in homes that were completely uninsulated and had incandescent lights and antiquated leaky ductwork serving furnaces and air conditioning.

“That has changed, and as a result energy use occupies a far smaller portion of the overall economy, even as population rises and engineering develops more and more products which run on that energy use.”

Majersik hesitates to pinpoint the largest area of potential future energy conservation, but suggests that buildings, both commercial and residential, are the likely – if often unsung – heroes.

“But don’t ignore the whole landscape. Homes, businesses, offices, cars, heavy vehicles, and industry; all have become more energy efficient.”

On a city-by-city basis, Majersik favors New York City, and is it any wonder given its energy conservation policies from benchmarking through mandatory sub-metering for large tenants? Not to mention the mandatory audits that provide information to occupants, building departments, energy providers and a host of other interests on the real cost of energy. New York even has retrocommissioning – a long name for a building “tune-up” which evaluates the total structure and suggests ways in which owners and landlords can increase efficiency without breaking the bank.

Tack on a mandatory decadal lighting upgrade, from incandescents to compact fluorescents, or CFLs – and then one more step to the LED technology that is taking the industry by storm – and you have one of t he world’s biggest cities sipping energy instead of gulping it.

The  result? New York now spends considerably more money on people, by making buildings more comfortable, than it does on energy, which often has to be imported, at considerable expense and without the attendant job creation if the same energy were generated in the U.S.   

Even so, there’s a long way to go. Majersik points to mortgage underwriting, which may evaluate the thickness of the glass doors in front of your future home’s fireplace, but not the thickness of the insulation in the attic.

“At the federal level (Fannie Mae or Freddie Mac),  mortgage loan guidelines tell the lender to look at the potential borrower’s income, credit score, mortgage payment, home insurance and real estate taxes.  They do not look at the new home’s potential energy bills, even though those bills are larger than either insurance costs or property taxes.”

Not surprisingly, an IMT-generated study has shown that people who choose energy efficient homes are better at paying their mortgages in a timely fashion. This might simply be the result of having more money in their bank accounts after the energy bills are paid. But it might also tie in to their higher sense of what is good for the planet.

Whatever the cause, these eco-neighbors are 32 percent less likely to default on their mortgage, and 25 percent less likely to prepay a mortgage – which is good for homeowners, but bad for lenders.

Majersik sums it up:

“By not factoring energy efficiency into mortgages, we are under-investing in energy efficiency. This initially provides hopeful homeowners fewer options for financing. It also forces them to eventually deal with their energy-hog dwellings as the price of electricity skyrockets on the back of natural gas supplies (which peak oil supporters say was reached in the 1990s).”

This dealing is prohibitively expensive. While a builder can buy and install solar panels and efficient windows at a discount from retail because they buy in bulk, a homeowner will be forced into top-dollar negotiation or into less energy efficient alternatives, whether windows,  solar panels, or an Energy Star furnace and air-conditioning unit.

“More than 90 percent of new mortgages are issued following federal mortgage underwriting guidelines.” Majersik notes.

But that is changing, as people from all walks of life and all lifestyles see the looming danger in an earth overheated by burning fossil fuels. In fact, it would be fair to call these initial decades of the 21st Century “The Race to the Finish”, as clean energy technologies struggle to replace a century’s worth of fossil-fuel excess before we pass the climactic point of no return.

LEED v4, the Evolution of Green

It’s particularly troubling to those of us watching the energy efficiency marketplace to see one program or another take a hard hit. That’s why the 2010 class action lawsuit by Henry Gifford against the US Green Building Council – the parent organization of LEED (Leadership in Energy and Environmental Design) – had such wide-ranging responses from both efficiency experts and the public.

When Gifford led the charge – for fraud, wire fraud, unfair competition, unjust enrichment, deceptive trade methods, and false advertising (with Sherman antitrust and RICO violations thrown in just to make sure nothing was missed) – the building energy efficiency movement turned into a flooded anthill. Some professionals couldn’t get far enough away from the maligned USGBC: others kept going back to try and close the floodgates of criticism.

Did the USBGC deserve to be dragged through the mud? Yes, said Gifford, who admitted that LEED criteria had cost him lucrative efficiency work because he doesn’t participate in the system. No says the USBGC, which pointed out that Gifford capitalized on the difficult metrics of LEED before 2009, and then persisted in the same vein even when LEED made requirements stricter and began demanding proof.

Moreover, Gifford isn’t an engineer, and his efforts were more damaging to “green” building – the real focus behind LEED – than an entire cohort of anti-greens wearing funny hats and carrying placards.

Not to mention that much of the pressure behind the controversy was the result of LEED standards (e.g., Cradle to Cradle materials certification) which plastic industry professionals say left them out of the green construction loop. In fact, it was this bias that inspired the U.S. Chamber of Commerce to support another green building leader, the American High-Performance Buildings Coalition, which reportedly manages to mesh green building with chemically-derived materials.

Enter Brendan Owens, Vice President of LEED technical development, who works with volunteer committees to elaborate and streamline LEED rating systems. In this role, Owens is also focused on LEED’s newest evolution, LEED v4. Owens liaises, via USGBC’s executive committee, for ASHRAE/IES/USGBC Standard 189.1, a 2011 metric for “total building sustainability” that can be applied to all but residential low-rise buildings. He is also a representative to the International Code Council for the International Green Construction Code, and on the board of directors for the New Buildings Institute, where his qualifications as a licensed professional engineer help craft new green-building developments.

It would be wrong to suppose that the 2011 lawsuit turned LEED into the ugly stepsister. In fact, according to Owens, LEED recently crossed the 20,000 certified commercial project mark globally, with another 45,000 buildings in the pipeline. On the residential side, 16,000 homes meet LEED standards, and another 30,000 to 40,000 are in the queue.

But Owens refuses to get into the minutae of green. Instead, he says:

“What LEED v-4 represents to me is the natural evolution of the green building market over the past 10 to 15 years, and the increasing ability of the construction industry to engage in high-performance green building both domestically and around the globe.”

As the causative agent, he cites a significant transformation in the status quo of the building marketplace.

“We have seen technologies that were considered “fringe” 10 years ago become mainstream strategies that are popping up in building codes all over the world.”

From Owens’s perspective, V-4 advances the definition of high performance by focusing on green verification, where significant design-to-operation performance gaps create precisely the kind of seeming obscurantism that Gifford complained about. Unfortunately, Gifford’s lawsuit merely muddied the waters and left an undefended frontier that anti-green (and anti-climate change) individuals used to their advantage.

Fortunately, LEED’s four certification levels (Certified, Silver, Gold and Platinum) have not changed, and the use of formerly “brown” materials (like plastic) will get a pass of sorts. That is, LEED hopefuls will be encouraged to use green materials, but will not be penalized for using ‘bad’ ones (Owens’s word, not mine).

“The materials market, as much as any other venue, has experienced significant transformation. The revisions that were made in November of 2013 were a complete reworking of the way that we think about the materials from which we make buildings.”

LEED’s Cradle-to-Cradle lifecycle assessment of materials remains very important, but it may not be the deciding factor in certification. As Owens notes:

“We also encourage builders to focus on the other things that the lifecycle assessment – and the way it is currently practiced – isn’t very good at exposing. For example, what kind of impact a product has on human health, or its effect on the ecosystems from which it is extracted.”

For example, bamboo – used in everything from floors to furniture, and even in eating utensils – is billed as ultra-green (fast to replenish itself, needing only a little water, easy to process). But if the bamboo grove being harvested is also the habitat of beloved panda bears – not really bears and symbolic of peace rather than the occasionally lethal aggressiveness of real bears – the product is definitely not green. One would be better off using real oak parquet.

It is this significant shift in the way project teams are encouraged to think about materials that Owens feels is most important. For example, when asked about biofoam, an insulative agent derived from soybeans, he replied that ‘there is no such absolute as a “green” material (or a red one, or a brown).”

“It’s a question of how you use it, and the alternatives. We are encouraging product teams to focus on materials for which disclosure activities have occurred. This includes not only a green profile, but a human health profile and a sourcing profile. When you have all three, you have a complete picture of the product.”

Bottom line, says Owens, LEED v-4 is focused on “intregrative processes, design and operation” – a wholesome approach that most would agree supports and furthers the aim of green building.

Now if we could just get everyone to agree on what those aims are ….

Silent Guardian: Drones without the Scare Factor

Over at Bye Aerospace, Inc., Founder George Bye and colleagues are designing drones. But don’t worry. The Denver, Colorado company, founded in 2007, isn’t the site of the next Evil Empire, and the drones which will eventually start going out the door (here or elsewhere, but not under their own power) are meant for peaceful occupations, including defense and security operations aimed at hardening borders, for example – a worthy cause given the recent incursions by Mexican drug cartels.

What other peaceful occupations, you might ask? For me, what immediately comes to mind are African elephants, whose herds have been thinned almost beyond breeding potential thanks to constant poaching by small groups of men illegally killing them for the ivory in their tusks.

Once the ivory is collected, from mature animals which would otherwise serve to teach, constrain, and lead the herd to safety, the rest of this amazing animal is often left to rot, even though malnutrition is ubiquitous across the continent. Nor is there any doubt that the culling is accomplished to the sights, sound and smells of terror and pain, with infants left to die when the herd is wiped out. In fact, with poaching figures rising about the same percent annually and threatening to reduce breeding populations by at least 25 percent over the next decade, experts are beginning to panic. According to Tom Milliken, an Ivory Trade expert and wildlife trade monitoring executive at TRAFFIC, “We’re hugely concerned.”

But perhaps less so now that drone technology has proven itself useful in guarding endangered animal species in Kenya. As Bye and team point out, their Global Range Solar/Electric Hybrid Surveillance Aerial Vehicle is low maintenance and high performance, delivering advantages that park rangers – no matter how well-intentioned – can’t.

Going by the name Silent Guardian, these solar-electric hybrid unmanned aerial vehicles (UAVs) beat out all the competition when it comes to surveillance. Unlike manned vehicles, this solar-powered craft can stay aloft almost indefinitely, almost anywhere around the globe, using the power of the sun and the science of solar photovoltaics (PV) to achieve what is known as ISR, or “persistent Intelligence, Surveillance and Reconnaissance.”

Speaking from Bye Aerospace headquarters at Denver’s Centennial Airport, due south of the Family Sports Center Golf Course, George Bye is quick to note that the company is well-prepared to offer not only scalable aeronautical engineering consulting services, but to integrate those concepts with advanced technologies, notably clean energy.

For Bye, who has always been in the thick of aeronautics, his previous and lengthy experience as a former Air Force pilot (think Desert Storm), and his immersion in the industry for 40 years, signal the type of experience that can sort viable alternatives from pie-in-the-sky proposals. This is perhaps why the company’s flagship offering, Silent Guardian, goes one step further than the typical offering – high-altitude, long-range mission persistence – by promising to deliver global range mission persistence.

This ‘higher and longer’ offering is what Senior Vice President (Government Programs) Kerry Beresford describes as “the next evolution in aircraft design, offering a level of performance and capability that will re-define the typical ISR mission.”

And what is a typical ISR mission? Bye and Beresford see it expanding into a social safety net in the near future. Citing Hurricane Katrina as an example, Bye compares the actual use of P3 aircraft to the potential (future) use of Silent Guardian, which could have provided 24/7 monitoring of both Katrina’s movement and its effect in minute detail – a role the P3s were unable to fill since they had to be landed, refueled and provided a new pilot at regular intervals.

“We could have monitored Hurricane Katrina from a weather forecasting and detail of movement 24/7 operation instead of sending up P3s. Then, of course, taking Katrina to the next step, we have overhead the potential ability to locate survivors and resources, and use communications on drones to recover cell phone connectivity immediately.”

Katrina isn’t the only scenario to benefit from “persistent, global” flight ability. Besides wildlife and natural resource monitoring, these Silent Guardian prototyped drones – which can stay up for weeks, at 10 percent of the cost of typical solutions like Cessna or Piper Cub planes – will also accurately trace the location of piped resources like oil, gas and water, and measure suitability for wind turbines, for example, by recording and calibrating wind flow.

The same is true for mapping power lines, examining terrain for water resources, checking the moisture content of the soil in areas plagued by forest fires, and even monitoring such fires to predict the sort of anomalous windstorm that killed 19 firefighters in Arizona in the summer of 2013. And UAV’s can do this without the cost of an expensive airplane, fuel, a pilot, and continual maintenance.

The one clear advantage of drones in wildlife surveillance, according to Bye, is that poachers see there is no longer a place to hide. Where the Piper Cub must fly over a swathe and then turn back to keep the area under observation, or return to base for refueling, Silent Guardian can simply hover. Imagine how nerve-wracking that would be if you were planning to kill a bunch of wild animals for their tusks, fur, flesh or fat!

Taking advantage of its “crosswork”, which incorporates individuals from other companies like Boeing and United Launch Alliance, LLC (a joint venture of Boeing and Lockheed Martin), Bye and colleagues maintain a finger on the pulse of the aerospace industry. As Bye notes:

“The applications and missions for UAV aircraft appear to be growing as airborne persistence is enhanced. Silent Guardian is a unique hybrid platform to serve these growing mission requirements.”

But Bye Aerospace isn’t flying on one wing. Two other UAV programs with close ties to Bye Aerospace, Silent Falcon and Starlight Lighter than air Solar Electric UAV, are being designed to circumvent the fact that most UAVs are “defense oriented, mission specific and not well suited to civil use”.

Perhaps most important, Bye Aerospace is committed to providing scalable services ranging from product development to complete aircraft assembly. And it is this wide-ranging flexibility that promises aerospace innovations fit for the 21st Century.


Has a Cleantech crash spurred the need for Bluetech innovation?

The recent CBS 60 Minutes documentary, The Cleantech Crash, was an apocryphal tale of wasted government funding and failed companies, and left one feeling sorry for a much maligned Vinod Khosla, deemed to be a prime architect behind the ‘failed cleantech revolution’. Khosla has rallied with a strong and stirring rebuttal in open letter to CBS.

Cleantech, (if narrowly defined by in terms of renewable energy technology), is indeed in the doldrums.

The figures quoted by Michael Liebrich, founder and chairman of the advisory board for Bloomberg New Energy Finance, at the Ceres 2014 Investor Summit on Climate Risk support this. Global investment in clean energy fell for the second year in a row to $254Bn last year with investment in Europe falling from $98Bn to $58Bn, a drop of 41%.

The vision for a green revolution has not materialized and this is primarily as a result of two things: shale gas and the global economic crisis.

Shale gas, and unconventional fossil fuels in general, have pushed the timeline for a cleantech transition towards low-carbon energy systems out by at least 50 years. As a result, energy security has ceased to be a political driver in North America as a result of unconventional fossil fuels.

Indeed, the global economic crisis has impacted projects in many industry sectors. The downturn halted the upward pressure on oil prices and sidelined the economic viability of renewables, which must compete with and are benchmarked against an incumbent energy system with an ever-changing and volatile canvass.

The economic viability of renewables are linked to oil prices. In fact one of the single biggest challenges to building a stable economic platform for renewable energy, is the volatility of fossil fuel energy, where the goal-posts keep moving.

Appetite to address climate change is gone, but climate change is not

Whatever appetite there may have been in the good times to address climate change and spur a move towards a low carbon economy with feed-in tariffs and production tax credits is now gone. Both of these support mechanisms are under pressure and the very notion of a carbon tax seems like a distant out of context idea from the pages of a history book.

There is no money, political will, or need (in terms of primary energy needs) to fund the transition to a low carbon green energy economy.

While climate change may have disappeared from the political agenda and the media, it continues to do its work quietly, and occasionally loudly, as we experience extreme weather events.

The ascendancy of unconventional fossil fuels and resulting demise of cleantech renewable energy are working in tandem to compound water pressures

Ironically, the ascendancy of unconventional fossil fuels and the resulting demise of cleantech renewable energy create more pressure on water resources and hence more water technology opportunity than would have been the case if we had transitioned to a low carbon economy.

From an operational perspective, solar PV and wind energy use essentially no freshwater and they help mitigate climate change.

On the other hand, both conventional and unconventional fuel energy sources require water in the extraction process and create produced water, which has to be treated.

Currently, we meet almost 80% of our primary energy needs through fossil fuels and that looks set to continue for the coming decades. It’s been reported that the world average freshwater intensity for conventional on-shore oil extraction is 21m3/TJ, while shale gas freshwater intensity ranges from 3-17m3/TJ.

The subsequent carbon emissions from combustion accelerates climate change, which again, puts more pressure on water resources and leads to intense rainfall events which have to be managed.

The cleantech energy revolution was never going to solve our water issues, but its absence exacerbates them.

Water is now more than ever inextricably linked to the future of how we provide energy for the planet and feed the people on it.

Cleantech is alive and well in areas of energy efficiency, resource recovery and water re-use

The cleantech umbrella includes more than renewable energy, and is alive and well when it comes to areas such as energy efficiency and resource recovery.

There is still a compelling business case and opportunities in saving energy and recovering resources and in general doing more with less. There are opportunities to convert waste and wastewater to energy and to recover nutrients and other valuable materials.

Based on recent analysis, we estimate there is 49 million MW hours of energy potential present in municipal wastewater each year in the USA and 1.1 million tonnes of phosphorous entering municipal wastewater plants in Europe, equivalent to 34% of total EU phosphorous imports each year.

All of this creates for opportunities for value generating innovation and re-evaluating systems efficiencies to create cleantech opportunities.

This is reflected in the fact that in 2013 27% of the water investments tracked through the BlueTech Innovation Tracker mapped to energy and resource recovery. When we look at highly disruptive technologies by theme, again there is a concentration and clustering around energy efficiency and resource recovery, with 29% of Disrupt-o-Meter™ highly disruptive companies in the energy and resource recovery area, 13% in low energy desalination.

All of these have a compelling value propositions in their own right, as does water re-use.

Interesting times ahead for water

There is a Chinese saying – may you live in interesting times – which is regarded as both a blessing and a curse. Whether we like it or not, we are living through such times, and I believe the changes we will see in the water system in the next two decades will represent a very unique period in our history in terms of how we manage water.


Eco Pro 2013

This December, I had the pleasure of attending Eco-Products Exhibition (Eco-Pro) 2013 in Tokyo, Japan. Though not well known outside of Asia, Eco-Pro is the largest event of its kind in this part of the world. In its 15th year, 185, 000 visitors attended this years event with 711 participants showcasing their environment-oriented products, services, and technologies. Though a majority of them are well-known big companies, mid- or small-size enterprises (SMEs), NGOs, and universities had a large presence as well.

Every year, Eco-Pro features a particular theme. With the recovery of Fukushima on everyone’s mind and the uncertainty in fossil fuel supply, the focus on 2013 was on renewable energy.  In July 2012, the government of Japan introduced a feed-in tariff (FIT) to promote energy generation from renewable resources including solar, wind, geothermal, and biomass. As a result, the application for the development of renewable energy reached 13 GW (million kW) in February 2013, only six months after the introduction of the FIT scheme. For investors in these projects, this policy guarantees 100% purchase of all power at a fixed price for electricity generated by solar PV systems larger than 10kW.

In spite of this monumental achievement, only about 10% is actually generating power. Japan still gets less than 2% of its energy from renewable sources (excluding hydropower).

The key to integration of renewable energy sources, which are highly intermittent, is it the deployment of energy storage systems to store energy when it is not needed and release it when demand is higher.

As one of the largest solar PV panel maker in the world, Kyocera is also operating a utility scale solar plant (so-called mega-solar projects) with a rating of 70 MW, enough to power 22,000 households in Kyushu. To store the excess energy produced during the daytime, the company has developed 14.4kWh lithium ion batteries at the household level. The capacity is sufficient to operate a refrigerator and TV simultaneously for 24 hours during power outages. While these units cost $24,000, smaller batteries from Panasonic can be purchased for as low as $9000.

The interface between renewable energy generators and the grid or battery system is an area of technology that is undergoing rapid innovation and is one of the barriers to deploying widespread renewable energy systems. In Japan, NEC has developed inverters that requires no power conditioning. That means direct current from a solar panel can go directly into a battery without being converted into alternating current (AC), which is how electricity is generally transmitted on a grid. This eliminates power loss and boosts overall efficiency.

While the technologies demonstrated here are inspiring, the institutional aspects of solar projects was also highlighted at this year’s Eco-Pro. Developing the market conditions to properly manage solar projects remains a big challenge. In Japan, mega-solar projects are typically profit-driven rather than as CSR. There is a concern that after the 20-year FIT period is over and the initial costs have been paid off, the operators may lose interest in maintaining these facilities, which would be a detriment to the local community it serves.

Nevertheless, these projects can contribute to the well-being of society if managed appropriately. For example, in Inami town in Wakayama prefecture, the local government is working with private businesses and its university to develop their solar project. This is the first public-private partnership of its kind of Japan and is operated by Plus Social. The company will take in the revenues under this scheme while supporting local activities in Wakayama prefecture and Kyoto. At the same time, Ryukoku University will play an important role in educating the public in Inami town.

Innovations in Vehicles

Another major area of innovation for the environment is in cars and other vehicles in the transportation sector. Complementing the integration of renewable energy are electric vehicles that could not only use emission-free electricity from the sun or wind, they can act at storage mediums to accommodate the variable nature of these sources on the grid. Below are three automotive technologies featured at this year’s Eco-Pro. They demonstrate new innovations that not only use less energy, but also reduce pollution.


toyotaToyota’s Prius has set the standard for hybrid vehicles with not only domestic sales but also a formidable international market. At this Eco-Pro, they showcased the new Prius HPV, which can be wirelessly charged when parked. By parking properly over a power source, the vehicle is charged by a system consisting of an on-board charging unit, a wireless communication control, and a secondary coil. It relies on resonance between the oscillating magnetic field between the two coils so that power can be transmitted to charge an exhausted battery. With the 4.4kWh lithium-ion battery pack, the car can be charged in 90 minutes.


BridgestoneAs one of the world’s largest producer or tires for vehicles, Bridgestone has begun development of next generation Air Free (non-pneumatic) tire. Today’s conventional tires requires an inner tube. Although their durability and use have improved substantial since vehicles first came on the road, their disposal has been problematic. Often they are left in landfills where the results could be toxic if they catch on tire. On the other hand, Bridgestone’s new concept tires have no inner tube or metal components inside.

With a unique structure of spokes stretching along the inner sides of the tires supporting the weight of the vehicle, there is no need to periodically refill the tires with air, meaning that the tires require less maintenance. At the same the worry of punctures is eliminated. The spoke structure within the tire is made from reusable thermoplastic resin, and along with the rubber in the tread portion, the materials used in the tires are 100 percent recyclable.

While the R&D and have only been going on a couple years, the company expects to commercialize them in a few years. They will first appear on light vehicles and those that travel short distances in the city.


mazdaAs companies around the world are now touting their efforts to improve the energy efficiency of their products but also in their production process, the car industry is not standing still.

Car companies have poured enormous investments in building vehicles with better mileage but some are also developing new technologies to lower the energy consumption during the production process.

Mazda demonstrated their superlight aluminum engine, but they also showed how the manufacturing could be improved. It turns out that the most energy intensive part of automobile production is not the assembly itself, but the painting process. That’s because it consists of multiple coats of paint that have to be baked. By applying a new process, Mazda has been able to paint their cars with fewer steps, less volatile chemicals, and less energy in the coating process.

Predictions For Cleantech in 2014

Continuing a tradition since 2007, once again we bring you some end-of-year thoughts about where we think the cleantech investment theme is going.

Our cleantech-specific analysis and advisory firm Kachan & Co. focuses on this space. We publish research reports. We get briefings from companies introducing new technology. We publish a cleantech analysis service. We’re quoted in the press. We pore over what’s going on in the world in clean/green tech markets and have made some informed calls over the years, like China’s cleantech dominance, the rise of efficiency technologies and the downturn in cleantech venture capital funding.

This year, we’re of the opinion that industry-watchers should take heart. Especially if you’ve been on the page that cleantech is past its prime or otherwise unworthy of your attention of late. Why? Because we’re more optimistic about the year ahead in cleantech than in our last two years of predictions (read 2012 and 2013), which were uncharacteristically negative for a firm that’s often been something of a cheerleader for the cleantech space.

What’s different this year? As you’ll read below, we believe the world turned an important corner in cleantech in 2013.

Gradual recovery in 2014
If you’ve not been looking carefully into the tea leaves this past year, you may have missed the quiet recovery already underway in cleantech, a process we expect will gain even more momentum through 2014.

We had the chance to take a close look at the fundamentals of cleantech this fall in co-authoring a new (and free!) 38-page research report. Titled Cleantech Redefined: Why the next wave of cleantech infrastructure, technology and services will thrive in the twenty first century, the paper analyzes the most recent investment research available across a number of industries and major impact areas.

One section of the report compares the cleantech wave to other technology booms of the last 50 years, like the dot com boom, the networking craze, biotech, the PC and the microprocessor. We found a number of parallels and a number of reasons for optimism comparing the cycles. After 20 years in technology, personally, the more I looked at the data, the more it felt I’d seen this movie before. After an initial frothiness and correction, there’s always a resetting of expectations and execution and a gradual “climb out” of the trough. Gartner calls it a hype cycle. And climbing out of the trough is where we are today in cleantech.

The recent downturn in venture capital investing in cleantech doesn’t mean the sky is falling. The dip becomes less threatening when viewed in the historical context of how venture capital always spikes early in emerging categories, later to be augmented with other sources of capital, such as often-unreported corporate and family office investment, as industries develop. It happened in the dot com, networking, biotech and PC eras, and this transition is now well underway in cleantech, as shown below. We offer a lot more detail, with additional figures and graphs, in our report.

Venture capital playing a lesser role

While venture capital was the dominant source of clean technology financing in California in 2008, it played a lesser role in 2012. Source: CB Insights, Collaborative Economics. Excludes project finance and unattributed investments.

Another takeaway from the above: Pay less attention these days to venture capital investment as an indicator of the health of the cleantech space. You risk not seeing the real picture.

In addition to an analysis of patterns in venture funding in previous bubbles vs. what’s occurring today in cleantech, our 38-page analysis on the state of cleantech today also looks at overall investment levels into clean and green innovation and projects. It contemplates what’s to be learned from models like the technology adoption life cycle (of “chasm” fame.) It factors in the recent recovery in publicly traded cleantech funds and other metrics.

In all, based on what we learned writing this report, we forecast a continued recovery in cleantech. Not an exuberant one—we’re betting those days are over—but look for a clear upward trend in many things cleantech in 2014, i.e. corporate, private equity and family office investment, venture debt, project finance, M&A, interesting new innovation, new product announcements, etc. But don’t hold your breath for classic venture investment to increase appreciably.

Term cleantech to stay alive and well
There’s been speculation about whether the term ‘cleantech’ that my previous firm is credited with coining will, or should, persist. My colleagues sometimes suggested the phrase should quietly go away—that our job was to ensure that clean and green propositions are eventually added to all products, that all forms of energy become clean, that all synthetic chemistry and toxins be replaced with natural, biological solutions because these are ultimately the less expensive and potentially only real ways to accommodate more people on the planet.

My current cleantech research & consulting firm Kachan & Co. worried further about the future of the term cleantech this summer. I, myself, had something of a crisis of confidence after a set of cleantech power players I interviewed in Silicon Valley shared the extent to which they’ve been distancing themselves from the phrase. It seemed this summer that many of the investors, lawyers and global multinationals I’d worked shoulder-to-shoulder with for years had started considering cleantech a dirty word.

But today, at the end of 2013, we now predict the term cleantech to persist through 2014 and beyond. We have come to appreciate how our datapoints from the summer were very regional, and how the rest of the world is still enthusiastically embracing the term as shorthand for environmental and efficiency-related technology innovation.

We also now suspect that investors and service providers who recently distanced themselves from the phrase may have been too quick to do so, and anticipate a restoration of the cleantech-related teams at many of these firms. Why? Call it what we will in the future, the fundamental drivers of resource scarcity, energy independence and climate change aren’t going away. The largest companies in the world are demanding more and better clean and green products and services than ever before. And that’s driving a recovery.

Cleantech term search history

The peak in global search traffic for the term cleantech and its subsequent decrease and stabilization mirrors the Gartner hype cycle. Is a gradual climb up again in the cards, as the hype cycle suggests? We predict yes. Source: Google Trends.

Realistically, cleantech teams at private equity investors, law and consulting firms may rebuild in 2014 under the auspices of “energy,” “advanced materials,” or other related monikers drawn from the taxonomy of cleantech. But massive funds earmarked for this space are being raised again (e.g. just this week: Tata/IFC: $400 millionIndustry Ventures: $625 millionthe UN’s Green Climate Fund: $TBD, expected to be massive) and these sort of numbers are representative of opportunity. And we think it’ll still mostly be called cleantech.

Crowdfunding emerges as viable in unexpected ways
Forget what you know about Kickstarter and Indiegogo. Donation-based crowdfunding only has limited usefulness for companies seeking seed or other early stage funding in cleantech.

In 2014, look for equity and debt-based crowdfunding platforms to catch their stride and serve as legitimate ways for cleantech vendors and project developers seeking to raise relatively modest amounts of capital. (Which isn’t to say we expect the U.S. SEC to sort out all regulations in 2014 around Title III raises under the country’s Jobs Act. We expect that equity and debt-based crowdfunding plays in cleantech will leverage Reg D in the U.S. and other similar regional constructs worldwide in the short term to help companies raise money.)

In 2014, expect selected efficiency, “cleanweb”-style big data, collaborative consumption and other capital efficient plays to be able to raise hundreds of thousands of dollars for themselves in equity or debt via horizontal crowdfunding platforms like AngelList or FundersClub, or industry-specific debt and equity portals like MosaicSunFunder or a host of other emerging platforms. Under current regulations, such crowdfunded raises may ultimately be feasible up to $1 million per company per year in the U.S.

Which will likely make crowdfunding less attractive in 2014 for big, capital-intensive cleantech plays.

Underperformance in EV sales, and risks to growth rates
Betting that the future of transportation will be all-electric, and that 2014 will be THE year of the electric car, finally? Think again.

Enthusiastic bloggers breathlessly paint the picture that electric vehicles (EVs) are flying out of the showrooms (as in here and here), but they’re selling slower than expected by analysts, with only 150,000 expected sold worldwide in 2013.

Most industry watchers believe EV adoption will be spurred by governmental support in the form of subsidies, infrastructure funding and concessions such as free parking, access to high-occupancy vehicle (HOV) lanes and congestion-zone toll exemptions, along with broader adoption of wireless charging and smart-grid innovations. But, in our analysis, there are other forces causing risk to the growth rates of electric vehicles.

As we forecast last year (read “The internal combustion engine strikes back”), there have been innovations taking place in internal combustion engines (ICE) that could forestall the timing of an all-electric vehicle future. Even more surprising to us have been the substance and volume of fuel cell vehicle announcements this year from the world’s leading automakers—which are likely at least partially responsible for the quiet doubling of certain fuel cell companies’ share prices in 2013. Yes, you read that right: Automotive fuel cell companies’ shares are UP!

In 2010, my line to journalists that “the jury was in, and the future of transportation was to be all-electric.” In 2012, my talking point was that the near-term future of transportation was to be all-electric. In 2013, I started talking about fuel cells possibly succeeding all-electric in the far future of transportation, once costs come down. In 2014, fuel cell approaches may get even more ink and undermine the aggressive uptake expected for electric vehicles.

And that’s not necessarily a bad thing, for if their fuel (hydrogen, methanol, or in some cases formic acid or others) can be created in low-cost, sustainable ways, fuel cell vehicles could ultimately have less of an impact on the planet, given that the power required to drive EVs often comes from dirty sources.

Rare earth profits to be made in unexpected places
Fortunes will not be made in 2014 in rare earth element mining companies. Reconsider buying into rare earth element mining companies or associated funds. If holding rare earth mining investments hoping they’ll return to stratospheric levels of yore, consider getting out of them.

Why? In the short term, we think recycling will be one of the few rare earth plays with upward motion. Much of the industry has been focused on new mines to meet growing demand for rare earths. But recycling of rare earths is gaining momentum quietly, and stands to accelerate in 2014 given the increasing costs of mining and cost and schedule overruns at high profile sites like Molycorp’s Mountain Pass California mine.

  • Brussels-based company Umicore is at the forefront of recycling technologies for critical metals. At its site in Hoboken, Belgium, the company recycles about 350,000 tons of e-waste every year, including photovoltaic cells and computer circuit boards, to recover metals like tellurium. In 2011, it started a venture to recycle rare earths from rechargeable metal hydride batteries (there’s about a gram of rare earths in a AAA battery) at its Antwerp site, in partnership with the French company Solvay.
  • Japanese car company Honda announced this March that it has developed its own in-house recycling program for metal hydride batteries, which the company plans to test using cars damaged by Japan’s 2011 quake and tsunami.
  • The Critical Materials Institute of the U.S. Department of Energy is developing a method that involves melting old magnets in liquid magnesium to tease rare earths out.

Watch for more and more companies to be introducing rare earth recycling plays. And watch for a near future trend encouraging electronics manufacturers to design their products to be easier to break apart for rare earth element recovery in the first place.

Getting rare earth metals out of modern technology is hard, since they’re incorporated in tiny amounts into increasingly complex devices. A circa-2000 cell phone used about two dozen elements; a modern smart phone uses more than 60. Despite the relatively high concentrations of rare earths in technology, it’s traditionally been easier to chemically separate them from the surrounding material in simple rocks than in complicated phones.

Recycling is perhaps the best route forward for elements where demand is expected to level off in the long run. Expect demand for terbium and europium, for example, to fade as fluorescent bulbs are eventually replaced with much smaller LEDs. But for other elements, like neodymium, new supply is needed. Currently only tiny amounts of neodymium are required for ear-buds of smartphones—but high-performance wind turbines need about two tons each. But it’s only these sort of large quantity applications that are expected to drive the need for new mines.

Other potentially appealing rare earth plays in 2014 include new processes at existing mines to improve processing yields, and the development of alternative materials to obviate the need for rare earth elements.

More on the subject in a brief on rare earths to our analysis service subscribers.

And so concludes our predictions for cleantech in 2014. What do you agree with? What do you disagree with? Leave a comment on the original version of this post on Kachan’s website.

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


A former managing director of the Cleantech Group, Dallas Kachan is now managing partner of Kachan & Co., a cleantech research and advisory firm that does business worldwide from San Francisco, Toronto and Vancouver. The company publishes research on clean technology companies and future trends, offers cleantech data and analysis via its Cleantech Watch™ service and offers consulting services to large corporations, governments, service providers and cleantech vendors. Kachan staff have been covering, publishing about and helping propel clean technology since 2006. Details at

Skyonic, It’s Not Your Parent’s Carbon Capture Technology

It should come as no surprise to those of us who follow environmental issues vis-à-vis climate and pollution that Norway this week walked away from the longest-running and most disappointing carbon capture plant in the world.

Norway, sadly, is not the first, but its abandonment of Mongstad follows a familiar pattern of enormous hope and dismal acceptance: carbon capture and sequestration, or CCS, is an unachievable ideal at this time given the current technology.

Or, to put it more bluntly (as global energy/carbon capture firm Aker Solutions does), “The carbon sequestration market is dead.” A sentiment reiterated by Environmental News Network (ENN), which as recently as 2012 wrote: There are several ways to remove CO2 from a stack gas. None have reached a commercial basis yet due to the expense of the processing.

And nowhere is it more dead than in the United States, where the 2003 Bush brainchild called FutureGen – built on the hopes and limited success of NexGen, among others – was abruptly canceled in January of 2008 because of concern about cost overruns.

The definition of insanity is repeating a consistent failure in expectation of success. CCS currently falls under that definition. Unfortunately, it will be close to impossible for any new coal power plants to meet the climate regulations proposed by the Obama administration without using carbon-capturing technology. And, putting money where its mouth is, Energy Secretary Ernest Moniz has announced $84 million in grants to make CCS technology a reality.

The technology behind Austin, Texas-based Skyonic is already well ahead of the pack. Plants called Skymine pull carbon dioxide and other elements from flue gas in a patented technique called Carbon Capture and Utilization (CCU) or, alternatively, Carbon Capture and Mineralization.

And that, says Skyonic Director of Communications Stacy MacDiarmid, is precisely what happens. Carbon dioxide, or CO2, becomes sodium bicarbonate, or baking soda (NaHCO3), an almost ubiquitous chemical used in medicine, in personal hygiene, as a household cleaning agent, in baking and cooking, in  industry (as an amine or nitrogen-based hydrocarbon neutralizer), a corrosion inhibitor and rust preventative, for hydrolysis (hydration) of concrete, in water treatment plants to balance water pH, in the manufacture of fabrics, leather, glass, and plastic, as the suppressant in fire extinguishers, to control air pollution from burning waste, as well as in foundries, aluminum production, ethanol production, brick making and in drilling operations, where it keeps drilling fluids and the like within the proper pH range. In effect, Skyonic is talking millions in consumer and industry spending for a very basic but widely useful chemical. To say nothing of other chemicals like sulfur and nitrous oxides, which can also be drawn off flue gases.

Skyonic, which is currently operating its test plant, broke ground on a commercial-scale plant this summer. It will, according to MacDiarmid, begin operations in the last quarter of 2014, “…at full production of all anticipated products and byproducts.”

Skyonic Skymine plants, each roughly the size of a dual-axle semi-trailer truck, cost about $125 million for a 75,000-ton direct capture plant, which also delivers 225 tons of carbon offsets for a yearly total of 300,000 tons of offsets. This includes all construction and equipment, and the immediate prospect of capturing chemicals to sell to the marketplace.

For those firms wanting to capture more than 75,000 tons, the Skymine plant is also scalable. Not infinitely scalable, of course, but enough so that factories and power plants can capture enough to more than meet their mandates under the Environmental Protection Agency’s, or EPA’s, Acid Rain Program.

Moving forward thanks to U.S. Department of Energy (DOE) loans – $3 million for the R&D phase, another $25 million to bring the venture to commercial scale – Skyonic is also funded by major energy industry players to the tune of $128 million.

Skyonic’s advantage over CCS plants is that its operation is monetized. All the byproducts extracted from flue gases via slipstream operations have an immediately tangible value, including the sulfur and nitrous oxides already regulated by the EPA.

Thus, while the commercial cost per ton of flue gas “cleaned” via CCU is $45, the cost to utilities and other carbon emitters for CCS is, according to a Harvard study, $150 per ton in 2008 dollars. Other estimates put CCS costs as high as $300 per ton.

It would be nearly impossible for any new coal power plants to meet stringent climate regulations as proposed by the Obama administration without using carbon-capturing technology. And, putting money where its mouth is, Energy Secretary Ernest Moniz has announced $84 million in DOE grants to make CCS technology a reality. Really.

Unlike CCS, Skymine costs include transportation. In fact, according to the DOE, CCS increases coal-fired electricity costs by 70 percent, and that’s before the additional cost of building pipelines and establishing reservoirs. For consumers, this means a doubling (or more) of current energy costs.

Are there any future limits to CCU efficiency? Yes, says MacDairmid. “Our process is most efficient at 90 percent. Thus, even in a complete carbon capture and conversion, we would probably never get more than 90 percent of carbon and other emissions.”

CCS can’t do that well, even at best estimates. In fact, in what sounds like a final death knell for CCS, SmartPlanet puts the cost of carbon capture via fossil fuel plants (coal, oil and natural gas) so high that consumers will end up paying more for coal-fired electricity  than they will for renewables, which are already approaching parity.

To MacDiarmid, who detoured from a professorship in her post-grad world to working for Skyonic because it offered her an actual mission – what she cheerfully describes as ‘something impactful’, the one takeaway she wants people to remember is that Skyonic carbon capture and utilization is profitable, retrofittable and scalable.

Which sounds to this writer like a recipe for success. Baking powder biscuits, anyone?

Smart Cities

Two events I attended this month brought home the importance of cities as centers of solutions for urban sustainability and climate change. In the absence of a global agreement to limit greenhouse gas emissions, cities around the world have already made efforts to decarbonize their economies. Global networks like the C40 include energy and climate as major issues that cities need to tackle if they are to be responsible stakeholders.
LockeMy colleagues at Cypress Rivers invited me to attend the China 2.0 Forum at Stanford University. The keynote speaker was one other than US Ambassador to the PRC, Gary Locke. While the focus of his talk was on the need for financial reforms in China, Ambassador Locke made note of country’s crucial role in the climate problem and how local governments were already taking the initiative there. Every week, the US embassy in Beijing is being contacted by city and country officials who are finding a wide variety of technologies from waste management to transportation solutions.

Indeed, the opportunities are enormous for win-win as American companies can provide the necessary know-how to help these cities find appropriate solutions for their energy and environmental challenges.

SCWOver in Asia, the concept of smart cities have been promoted for several years. Although there is no standard definition, a smart city is characterized as one that uses well designed planning and advanced ITC to create conditions that are conducive to economic growth comfortable lifestyles, and responsibility for the environment.  As a technology driven country, Japan has made enormous efforts in this area with several model cities. Among them, Yokohama is considered one of the “smartest” and has been the host of the annual Smart City Week. These include innovations for local energy production and delivery, water procurement and distribution, and waste management and recycling.

Another highly touted model in Japan is the Kitakyushu Model, which offers know-hows in urban development by integrating waste management, energy management, water management, and environment conservation. Case studies include Kitakyushu Ecotown which has high concentration of recycling plants. In a toolkit in the package, it also has a checklist for making a master plan. They are available on the web.

This year, the discussion at Smart City Week focused on the concept of public-private partnerships (PPPs). Also known as business to government (B2G), it is a framework at the city and municipal level for facilitating, and in some cases, financing the implementation of infrastructure projects. Not only do technology providers play an important role in these relationships, real estate are often promoting these types of projects from energy efficient buildings to urban restructuring. Moreover, these projects must also look at how to better engage residents as stakeholders in their communities. While technology plays an important role, awareness and behavior play as important of a role.

What makes innovation at the city so important in the global scheme is that successes at this scale can be easily learned from each other. These experiences to share ideas and what works can build the confidence and trust needed towards building a global consensus to limit greenhouse gas emissions. Indeed, smartening our cities will be an ongoing process but meetings like Smart City Week give leaders and implementers to discuss what works, what doesn’t, and why.


At Solar Skies, It’s Always Sunny

Randy Hagen, CEO of Solar Skies LLC (Alexandria, MN., in the heart of the Upper Midwest) is justly proud of his company’s newly purchased laser welder.

Not only is it the only one in North America, but it is one of only two on the North American Continent, which spans an area from Panama to the Arctic.

The other laser welder, in Guadalajara, Mexico, was formerly kept quite busy manufacturing the solar panels used to generate hot water. But that production capacity is now coming back home, where it belongs, proudly stamped “Made in America”.

Unlike the biggest ball of twine, another Minnesota highlight, the laser panel welder really is rocket science, and Hagen was only too happy to outline the company’s progress in this area while on his way to Solar Power International (in Chicago this year, from October 22-24).

Solar Skies – manufacturer of world-class solar thermal collectors and mounting hardware – will use the convention to showcase its ability to provide solar hot water collectors, stainless steel hot water storage tanks, and related items to homes, businesses and institutions not merely locally but across the nation, from the Twin Cities to Illinois and even Massachusetts.

Solar thermal, the neglected and often forgotten stepsister of the solar photovoltaic (PV) energy market, shared in the global solar energy nadir reached in the first decade of the 21st Century – before the Chinese blew out the market in 2011 with a glut of cheap solar panels. Fortunately, it didn’t suffer the same crash-and-burn as solar PV, largely because it has always been the most energy- and cost-efficient way to take advantage of the enormous power of sunlight.

As Clean Tech Blog editor Neal Dikeman pointed out back in August, while Canadian Solar remains strong, the U.S. is still working through the solar doldrums, where the backstory continues to be about project development and new financing vehicles in a leaner, meaner market where serious competition has shaken loose all the overripe fruit.

In spite of millions of dollars of stimulus money, solar PV continues to struggle with costs and the Shockley-Queisser limit (the theoretical maximum efficiency of solar cells) in an attempt to reach grid parity, loosely defined as the point at which renewable, alternative energy venues can compete with the price of electricity from traditional fuel sources (coal, natural gas and nuclear, for example).

This continues to be generally true in spite of announcements from Motley Fool that the U.S. is selling green energy below spot prices. Fortunately, solar thermal hot water – not to be confused with utility-scale or high-temperature solar thermal energy – doesn’t have to worry about theoretical efficiency limits (typically 18 percent and theoretically 33.7 percent). It operates at a predictable and praiseworthy 70-80 percent, and never more so than from the carefully designed and manufactured collector panels made at Solar Skies.

Hagen, who got his start in solar PV using thin film to operate a ventilating fan in an aviation application, started Solar Skies in 2006 and a year later launched commercial manufacturing capability.

“Solar thermal costs didn’t plummet with the solar PV glut in 2011; it was already cost efficient. In fact, there never has been much wiggle room.” Hagen noted.

And even though wind is the really big thing in the Upper Midwest, solar thermal hot water stands a good chance of catching up just because of prevailing weather conditions. For example, even in January, when it’s absolutely frigid outside, the skies are clear and the sun shines.

“This means that a couple of 4 by 8 or 4 by 10 panels producing about 40,000 Btu’s per day will deliver about 65 percent of a home’s hot water needs. In the summer, it will be 100 percent.”

At a cost of about 10 grand, with a federal tax credit of 30 percent (which can be built into a mortgage on new homes), the cost is very affordable. Add in any utility, city or state incentives available in some areas of the U.S., and you get an easy 6- to 10-year payback. Coincidentally, this is also about the lifetime of the average hot water heater.

And the best part? There is very little that a homeowner needs to do to maintain a well-made and properly installed solar thermal installation (properly being a 45-degree tilt). Hagen doesn’t even recommend clearing snow.

“I have never cleaned our collectors. I let Mother Nature take care of that. All it takes is a little bit of open space to start the process of melting.”

It’s the kind of carpe diem attitude Minnesotans are familiar with. Life is short; eat dessert first. For Hagen, who has two daughters in grade school and an architect wife who works out of Glenwood, it meant rescheduling an interview to synch up family life and work life, with family coming first.

Which is just the way it should be, right?