El Paso Solar Energy Association - EPSEA

In advance of the Clean Energy Summit 3.0: Investing in American Jobs next week, Senator Harry Reid brought together Pacific Gas & Electric Chief Executive Officer Peter Darbee, the Center for American Progress, and Energy Resource Management for a press conference today.

Reid emphasized Nevada’s focus on building out clean energy infrastructure as an investment geared to create more jobs.

“The Recovery Act planted the seeds, but what we need to do is make those seeds blossom,” Reid said. This is where private investment will come in.

California has its eyes set on getting one-third of its energy from renewable sources by 2020.

“This roadmap allows utility companies and others to plan for the long term and make major capital investments today. State leadership has provided a critical foundation, but the federal government can provide needed leadership. Private investment and job creation will follow,” Darbee said.

But the most important objective is creating policies that will attract more investment dollars into cleantech by making the market more consistent.

A report discussed during the call, the Center for American Progress and Energy Resource Management’s “Efficiency Works: Creating Good Jobs and Markets Through Energy Efficiency,” provides a roadmap for devising more effective energy policies in a number of states.

Bracken Hendricks, senior fellow from the Center for American Progress, stated that retrofitting 40 percent of the homes and businesses in America would spark 650,000 new jobs over a decade, usher in $500 billion in new investments, and save customers a whopping $64 billion.

“These kinds of opportunities will come from the private sector, through the construction of new windows and lighting. This isn’t going to happen without policy. We need to create a market for it,” Hendricks said. “We are at a critical moment to create a private sector market.”

The key to this market is to get banks to start lending and to bring more manufacturing activity to communities.

Bill Campbell, the chair of Energy Resource Management, said that the country needs to invest in energy efficiency as well as energy.

The report examined the policies in the top performing states:

• California: The California Public Utilities Commission created the Risk/Reward Incentive Mechanism. The state offers PACE bonds and includes a Long Term Energy Efficiency Strategic Plan.
• Connecticut: The state is good at leveraging private and public partnerships.
• Massachusetts: The Green Communities Act set the goal of reducing energy consumption by 10 percent by 2017, encouraging investment in energy efficiency. It has tough penalties for communities and entities that fail to meet the stated energy requirements. Private-public alliances established in June 2009 include a three-year plan to bring customers $4 billion in energy savings.
• New Jersey: The state is setting in place an Energy Efficiency Portfolio Standard. The energy efficiency projects will create 1,000 jobs.
• Maryland: The EmPOWER Maryland Energy Efficiency Act wants to reduce statewide consumption by 15 percent by 2020.
• New York:  Agencies and organizations at the state level and municipal level are working towards energy efficiency. By 2017, PlaNYC wants to reduce emissions by 30 percent. Also, the New York City Council passed legislation to make buildings more efficient.
• Ohio: They are using Utility Cost Test, plus building retrofit programs and transfer tariff schedules.

Establishing an energy currency is important. In Utah and Nevada, negative watt-hours are considered to be legally the same as additional wind or solar energy, the report said.

There's no doubt that the stimulus has created a number of renewable energy jobs in Nevada and in other areas around the nation, Reid said. The other parties on the call concurred.

The American Recovery and Reinvestment Act used public money to jump-start innovation in the clean energy space. But the policies will move that into the private market and make it more predictable.

“I think we need to look at this as the glass is half full, not half empty,” said Reid.

At a time when the unemployment numbers in the construction sector resemble those seen during the Great Depression, Reid’s 'glass half full' view might be a little too optimistic. Regardless, the upcoming conference will likely address these concerns about bringing investment to the clean tech field and creating more jobs.

San Francisco -- Lithium-ion batteries might not decline in price as fast as computer processors or memory, but an unusual combination of circumstances is nonetheless allowing for massive discounts at the moment.

Better Place, the company currently building car-charging and battery-swapping networks in Israel and Denmark, is purchasing batteries for cars at $400 per kilowatt hour for delivery in early 2012, according to company executives. Better Place and IBM held an informal dinner briefing with reporters last night in San Francisco. (IBM and Better Place? What are they doing together? That was a question everyone had on their minds.)

Compare that to the situation in October 2007. Then, battery packs for EVs sold for around $1,000, according to Lawrence Seeff, vice president of global alliances at Better Place. Thus, in a little under three years, the going price has declined by 60 percent. Earlier this year, Better Place's Jason Wolf said that EV batteries were approaching $500 a kilowatt hour. (Battery pricing and grid charging will be one of the main topics of The Networked EV taking place November 9.)

That's good news for the EV business. The high price of batteries has been one of the major problems for the electric car industry. The Nissan Leaf, for instance, has a 24-kilowatt-hour battery. If batteries cost $1000 a kilowatt hour, the battery alone would cost $24,000 and make it near impossible for Nissan to profitably sell the car for $32,800 before incentives. At $400 a kilowatt hour, the battery pack would only cost $9,600, according to multiplication conducted by Greentech Media.

Low prices, of course, are also good news for Better Place. Under its business plan, Better Place will own the batteries that power the cars on its network. Consumers will then pay the company a monthly fee for the batteries, electricity and any other ancillary services. Cheaper batteries thus will lower the company's capital and operating costs: the expense of owning all those batteries has been one of the big question marks hanging over the fate of Better Place.

Then again, cheaper batteries takes away some (but not all) of the need for consumers to lease the battery in services like this.

The prices are not likely to be plummeting strictly because of innovations with battery cells or packs. Lithium ion batteries have been in volume production since the early '90s and are a somewhat mature technology that progresses at a incremental rate. Many of these current gains likely come from higher production volumes, according to Dr. Wilfried Wilcke, senior manager of nanoscale science and technology at IBM. Manufacturers ramping up for volume production is not like chip makers turning the crank on Moore's Law: the process is not guided by engineering principles and may not repeat itself. Hence, it is uncertain whether or how long the pricing trend will continue. The Department of Energy has set a goal of getting batteries for cars down to $250 a kilowatt hour.

Other interesting tidbits from the dinner:

--IBM hopes to have a 10-kilowatt-hour prototype of a lithium air battery in about two years. Lithium air batteries will, ideally, hold far more energy than conventional lithium-ion batteries, said Wilcke, and even more than zinc air and lithium sulfur batteries. Lithium air batteries may also be more amenable to recharging than zinc air batteries and cost far less than those cells. Nonetheless, commercialization could take years.

"We have just left base camp" when it comes to lithium air batteries, he said. IBM last year described a membrane that it hopes to insert into lithium air batteries.

Lithium air batteries, Wilcke added, will be needed to mass produce EVs that can compete directly in terms of performance and range with gas-burning cars. Even with the recent price declines, "the steady state will not get us there," Wilcke said. In terms of energy density, lithium-ion batteries are seven to eight times worse than gasoline. (Side note: a kilogram of lithium ion batteries has a density of 100 to 200 watt hours, while kilograms of zinc air, lithium sulfur and lithium air have densities of, respectively, 400 watt hours, 500 watt hours and 1,700 watt hours.)

--Seeff said that it costs Better Place about $150 million to build a "cell," i.e., a network of charging and swapping stations complete with batteries to serve a major metropolitan network. Better Place only needs about 20,000 to 30,000 customers to break even. Put another way, that means Better Place needs to get $7,500 to $5,000 from each customer in a minimal situation over a four-year period to break even. That means in a cell with 30,000 customers, Better Place needs to get $1,250 per customer per year. Doubling the number of users drops that to $625. Whether that's perilous or promising is up for you, my readers, to debate. There is more on Better Place's financial strategy here.

--Better Place will have two to three kinds of batteries in its network. Different batteries will help get around the worry that swappable batteries will lead to homogenization. Ford, Nissan, General Motors, Volkswagen and others have rejected battery swapping to date due, among other reasons, to the fear that swapping would detract from a car's distinct design and personality.

--Better Place will formally launch its services commercially in Israel in the second half of 2011.

Just-emerging Light Detecting and Ranging (LIDAR) and Sound Detecting and Ranging (SODAR) systems are more cost-effective ways than anemometer-equipped meteorological towers to measure the power a site can really be expected to produce at the loftier heights at which wind is now being harvested.

In the five-stage wind information life cycle, a wind resource is first discovered via prospecting. A good site justifies more careful assessment. If there is real potential, the developer will need financing that will only come if a planned project's carefully measured data sets justify an investment of tens of millions -- or hundreds of millions -- of dollars.

The last two stages of the wind information life cycle come after the project is generating electricity. One involves ongoing monitoring. The other is optimization, in which the site's potential is critically compared to the monitored output.

Whether a wind project makes it to each successive stage is usually determined by data. If it gets built, good data can make it more productive. Leading LIDAR and SODAR authorities say as many as 98% of wind developers are only just beginning to understand the advantages of advanced measuring technology for obtaining data.

"Anemometers are certainly useful," Jim Adams, U.S. President of Natural Power, one of the most prominent LIDAR companies, said. "But there are limitations." Anemometers are familiar, but "you're measuring wind speed at a finite point." Because Federal Aviation Administration (FAA) regulations functionally limit meteorological (met) tower height, anemometer readings are essentially approximations.

Though used since the 1970s in aviation, infrared beam LIDAR wind measurement was first made more accurate than met towers in the 2004-2006 period, slightly sooner than SODAR. LIDAR was then shown to provide more, and more precise, data. "With LIDAR, you have the ability to measure turbulence, you're looking at both the horizontal and vertical components of the wind," Adams said. "You're seeing the wind the way the wind turbine will see the wind."

Natural Power's proprietary ZephIR system, developed and based in the U.K., is the most widely deployed wind-measuring LIDAR system worldwide. It projects a cone-shaped infrared laser beam straight up and reads the light's interaction with particles in the wind. It derives wind data from analysis of the particles' movements.

"What's really brought it into the mainstream," Adams said, "is that it's small, compact, easy to install, and does the job it's supposed to do."

Natural Power has just announced a new test site for advanced wind measuring systems in the U.K. where the industry will be able to compare the capabilities of anemometers, SODAR and LIDAR systems. Though a similar undertaking has been proposed by the U.S. National Renewable Energy Laboratory (NREL), this will be the first such field of comparison.

"There's a place for SODAR," Adams said, acknowledging there are customers who tried SODAR and went to LIDAR, as well as "a lot of happy SODAR customers."

Massachusetts-based Second Wind, in the business of measuring meteorological data for more than 25 years, saw a growing need to replace estimates extrapolated from met tower measurements with precise data.

"There's really nothing wrong with anemometers," Larry Letteney, Second Wind's CEO, said, "with the exception of the fact that you can't get them high enough cost-effectively to give you accurate data."

Second Wind's engineers chose a sound wave-based system.

"In the last few years, we've become hailed as this very advanced wind measurement," Letteney said, "largely because of the combination of this ground-based sensor called the Triton and this web-based service called SkyServe that deals with data."

Triton scatters sound waves from what Letteney described as "a very clean beam of sound" into the flow of the wind and reads the patterns the waves follow.

"It listens all the way up the beam," Letteney said, describing the sound as "slightly audible" and "like the faint 'cheep' of a bird." But, he said, "It doesn't have to be loud to get readings." Software algorithms using the Doppler Shift  -- the change in sound waves as they move toward and away from their source -- derive wind characteristics at any vertical height. 

Correlation studies show SODAR, LIDAR, and met towers have generally comparable accuracies. But a met tower requires permitting, making it significantly more time-consuming and costly.

"LIDAR has accuracy," Letteney admitted. But, he said, "it ends up costing a couple hundred thousand dollars." Second Wind's SODAR unit is a quarter of that. "The cost of a Triton, installed," Letteney said, "is about $50,000 to $60,000." Natural Power stays competitive with an affordable rental rate.

LIDAR may be less durable than SODAR, but SODAR's noise may be problematic in some settings. Reading sound may be difficult if there are surrounding obstacles but SODAR requires only the power of a pair of solar panels while LIDAR needs a more substantial power source.

Natural Power proudly points out that many turbine warranties and some project financing decisions are based on ZephIR assessments, and Second Wind proudly points out that NREL has verified the accuracy of its Triton. The larger points are that met towers will no longer do, and there is a budding opportunity in advanced devices.

 "We're very much in favor of remote sensing," Jim Adams said. "We think that both SODAR and LIDAR have a purpose."

"People fear change," Second Wind's Letteney said. But, "the industry has come to a consensus that they want the information and now the technologies are starting to catch up," he said. "We've tripled our manufacturing space. We're in growth mode."

I ran into a venture capitalist colleague coming out of Palo Alto's Whole Foods yesterday evening.  I mentioned a VC-funded solar startup CEO I had just interviewed, and this VC, let's call him Sanjay, just rolled his eyes and said, "Solar is done."

Sanjay pointed out, in-between bites of raw fawn hearts, the logic that now made solar investing, at least in solar panels, a lost cause for venture capital investors.  He explained, "Let's say your capex is $1 per watt for your solar panel factory. Given the moving freight train that is the current solar industry, you're going to have to ramp up to half a gigawatt or a gigawatt.  That's $500 million to one billion dollars just to build your factory."

(Note that Suntech, Yingli, Trina Solar, First Solar, SunPower and others are all going to exceed one-or-two-gigawatt-capacity levels in the next year or two, if they haven't already.)

Sanjay took a deep drink of baby tears in a chilled human skull and added, "I'm not saying there's not a business in solar panels -- it's just not VC territory any more.  It's hard to hope for 10X returns when you've put a billion dollars into a company in a $40 billion market.  And if you're an early-stage investor or angel -- it's almost impossible not to be washed out in later rounds."

He mentioned the troubles at Solyndra, Nanosolar and MiaSole, wiped his mouth on some founder's stock, and said, "That's not to say there aren't any opportunities in, let's call them adjacent markets, like inverter electronics such as Enphase, or efficiency enhancements such as Innovalight or financing and integration like SolarCity or Clean Power Finance." 

Sanjay then kicked a puppy, clotheslined an old man using a walker, got in his Maybach and sped away.

The take-away from this conversation: PV panel startups looking to raise their next round for factory build-out (and there are quite a few looking for funding as of this writing) are going to encounter deep-seated reluctance from the venture capital community -- unless they have a truly disruptive capex number, a novel sales channel or a big fat loan guarantee from the U.S. government.

***

Based on a true story.  Apologies in advance to the VC Anti-Defamation League.

A new electric vehicle will hit the streets of Southern California later this week that has a larger battery pack than a Tesla Roadster and which can be fully charged in ten minutes or less.

It also holds up to 68 passengers.

Foothill Transit, a public transportation agency serving San Gabriel and Pomona, has purchased three EcoRide BE35 all-electric buses and two charging stations from Proterra. If the initial launch goes well, Foothill may expand to a fleet of 12 electric buses. San Antonio will also soon put Proterra buses on its streets. Contracts with transportation agencies in North and South America may follow by the end of the year.

Proterra showed off a prototype of its bus and charging station in San Jose last year (see video) but the Foothill contract marks the first commercial deployment.

Why electrify buses? Predictability. Buses are the mules of the road, driving fixed routes at moderate speeds. The Foothill Transit route the EcoRides will ply is eight miles long and the buses will lumber along at an average speed of around 12 miles an hour. As a result, Foothill only needs two chargers -- which hang on poles similar to telephone poles -- to make sure the buses can complete their circuits. Limited range means limited range anxiety.

"It is a well-matched situation," said CEO Jeff Granato. "We know exactly how far it is going. You can predict how much range a vehicle will need."

The minimal number of charging points will in turn give Proterra the economic wiggle room to come to market with rapid, high-speed charging. Most electric car companies and car-charging outfits will start with standard chargers, which can take hours to fully charge a car. A Proterra bus can completely be charged in ten minutes or less.

Quick, on-road charging was a requirement, according to Felicia Frieseman at Foothill. The agency earlier had a requirement that an electric bus would have to go 30 miles on a charge. Buses could do that, but recharging would then take several hours.

"Having a bus that we had to take out of service after one run was not practical," she said.

This predictability further permits Proterra to minimize the size of the battery. The buses on the Foothill circuit will have 72-kilowatt-hour battery packs. That's just 50 percent bigger than the one in the two-seater Tesla Roadster (53 kilowatt hours).

"It will run for three hours," said Granato. "We consider that to be oversized."

The San Antonio buses will have 54-kilowatt-hour battery packs and charge more frequently. While the Foothill buses will likely spend 10 minutes every hour charging and do several laps, the San Antonio buses might take small sips of power on nearly every lap.

Minimizing the battery pack reduces the cost and increases the mileage without reducing the functionality, thanks to the rapid chargers. Proterra designed the battery pack and battery management system. The batteries come in 550-pound, 18-kilowatt-hour modular units. Altairnano supplies the cells. Granato further added that the batteries get one-third of their power from regenerative braking.

The buses, he added, also fare well against the diesel hybrids gaining in popularity. Those buses get about 4.5 miles a gallon, only slightly better than the 2 to 3.8 miles per gallon of regular diesel buses. Proterra's early buses get the equivalent of 17 to 18 miles per gallon and the figure will rise to 25 miles per gallon. (Side note: as a passenger, I can also confirm that the silence of the electric buses is more pleasing than the cacophony of engine noise one is subjected to while sitting on a diesel bus.)

Some startups and transportation agencies in China are experimenting with swappable batteries. With swappable batteries, a public charging infrastructure isn't required. On the other hand, buses have to go to centralized swapping stations during the middle of the day -- sometimes several times each day -- for batteries. Whether an agency goes with swapping or charging depends on geography and other issues.

But unlike cars, not everyone is a potential customer. The three buses and two chargers Foothill bought cost $5.6 million. Municipalities and the occasional large fleet owners constitute the buying public. Still, regulations will help. By 2012, 15 percent of the buses purchased by municipal agencies in California will have to be zero-emissions vehicles. Some of the large mega-cities of Asia have passed diesel regulations, as well.

Frieseman noted that the buses cost more than regular diesel buses, but added that maintenance will be lower. The agency will gather data to determine the total cost of ownership.

Global Solar has been shipping flexible CIGS solar cells for years for applications in portable solar charging, as well as selling PV cells in strings for other vendors to assemble into modules.  Global Solar has also supplied CIGS cells to Dow's solar shingle endeavor.

But today the company is announcing that it is in the module business -- the flexible module business.

I spoke with Jeffrey S. Britt Ph.D., the company's CEO, and Jean-Noel Poirier, VP of Marketing & Business Development, about their newly announced product.

Global Solar is targeting the commercial and industrial flat-roof market with applications that favor a lightweight, non-penetrating solar solution with a very large flexible panel -- 5.75 meters long by half a meter wide.  The lighter weight makes installation easier and reduces the cost of balance-of-system components.

The firm claims this is the highest efficiency module on the market.  Their largest module, according to Poirier, is 300 watts and 12.6 percent efficient.

The argument is that about 30 percent of flat industrial roofs would be structurally challenged by the weight of the glass and metal used in flat-panel c-Si and mounting equipment.  It's similar to the case made by firms like UniSolar, SoloPower, Ascent, and now Global Solar.  (UniSolar's product is lower efficiency and based on triple-junction amorphous silicon, not CIGS.)  Another firm, HighFlex Solar, is working on flexible solar using crystalline silicon.

According to Poirier, 30 percent of flat roofs can bear no more than than an extra ten kilograms per square meter.  If that's accurate, it's still an enormous market.

And like the other flexible panels, Global Solar's product eliminates wind load and penetrations.  Because it is laid flat and not tilted, Poirier claims that more of the roof can be utilized and more power harvested from the same given area.  He claims that in Northern latitudes like Munich, up to 96 percent more energy can be harvested versus tilted flat panels and 45 percent more energy in Rome-level latitudes due to avoidance of shading issues.

The encapsulant material was once a sticking point for flexible panels, but the CEO assured me that, "We've scoured the earth for producers of vapor barriers for our product" and that the manufacturers have "gotten much more savvy about vapor barriers."  Global Solar has also devoted efforts to "mitigate the susceptibility of the PV material to moisture" -- an always-looming threat to CIGS panels.

Flexible panels like Global Solar's that are intended for flat warehouse roofs don't go through the typical solar installer channel.  This is not the domain of solar installers, according to Poirier, but rather is the territory of roofing professionals.  The channel to market is the roofing companies -- manufacturers of  polymer, metal or bitumen roofing membranes.

Considerations like high-power density, no penetration and no wind load are "on the top of the list for the roofing companies."

Stating "we are a private company" that doesn't have to divulge such details, the CEO declined to specify the firm's dollar-per-watt cell and module pricing.

It's fair to say that no company has really figured out the CIGS PV materials system yet.  Yes, companies like Solar Frontier, Solyndra, Global Solar, Wueth and to a lesser extent, MiaSole, Nanosolar, SoloPower are shipping product.  A few others firms like AQT are on the cusp of shipping. But none of these firms have yet proven that they can compete head-to-head on a cost basis with the leaders in photovoltaics, such as First Solar and some of the Chinese module companies like Suntech, Yingli and Trina Solar.

Here's a partial list of CIGS vendors and some of their recent news:

• ISET is coming out of its 20-year quiet phase and making some pilot line announcements for its ink-based and printing-style process.
• Stion unstealthed as a CIGS startup -- with a bit of a twist. They've made some waves with their funding and manufacturing arrangement with TSMC.
• SoloPower, equipped with a new CEO and with some boardroom nastiness behind it, is looking to close a government loan "in the low hundred millions" to help finance the factory build-out of its CIGS-based, flexible thin-film photovoltaic modules.
• MiaSolé looks to ship 13% efficient modules by the end of the year.  The firm just announced a large-scale supply agreement with juwi for 600 MW over several years.
• Solyndra continues to win large rooftop installations such as Anheuser-Busch, Coca-Cola and Frito Lay.  Inside sources say that the firm is sold out for years to come despite their troubles.
• Nanosolar's most recent announcement was the replacement of its CEO and a visit from Arnold Schwarzenegger.  
• Global Solar Energy has 75 megawatts of production capacity at two sites and has recently completed a large rooftop CIGS installation.
• Solar Frontier (the former Showa Shell Solar) sold approximately 43 megawatts of CIGS PV in 2009 and could ship more than 100 megawatts this year according to Shyam Mehta, one of our esteemed solar analysts at GTM.  The firm will be investing heavily in capacity ramp up.  The firm has big backing and big plans.
• AQT won $10M in funding and entered an agreement with Intevac. The firm also announced its first customer and the launch of its first 15 MW of production.
• Dow invested in Dave Pearce's NuvoSun. 
• Daystar got its fifth CEO in twelve months and announced some less than stellar financials.
• Ascent Solar began production at its FAB 2 production plant (video here).
• Q-Cell's Solibro CIGS facility claims the highest CIGS production capacity worldwide, according to their website.
• HelioVolt announced, well, nothing.  Their last press release was in June 2009.  Some bad news here.
• Solarion's flexible solar cells
• Wuerth Solar's CIS panels
• Odersun partnering on CIS in China
• Sulfurcell's CIS cells 
• Johanna Solar supplied panels for a Bosch building façade.  Bosch is an investor in Johanna.
• Saint-Gobain subsidiary, Avancis set a 15.1 percent small aperture efficiency record early this year and just announced a new factory build.
• Illies Renewable will be starting up their CIGS turnkey line from centrotherm, targeting annual production of 36 megawatts.
• Nexcis has an electrodeposition-based CIS cell process in France.
• Other CIGS manufacturers include PV Sunshine (Centrotherm turn-key), Jennfeng, Tokyo Ohka Kogyo (TOK) together with IBM, Ritek, nanowin, and Axuntek.

(DALLAS – Aug. 31, 2010) Today, the U.S. Environmental Protection Agency (EPA) disapproved aspects of the Texas Commission on Environmental Quality’s (TCEQ) clean-air permitting program that do not meet federal Clean Air Act requirements

Cars coming out in the 2012 model year are going to get graded.

The Department of Transportation and the Environmental Protection Agency unfurled the new window stickers that will grace cars in the near future to better inform prospective customers about their fuel consumption. In a nutshell, the cars get grades. Electric cars will generally get an A+ while plug-in hybrids will get A's.

Regular hybrids -- which will constitute the largest percentage of cars with electric propulsion -- will get A minuses.

Gas-burning cars will then get grades ranging from A minus to D, depending on their mileage. Supercars from Ferrari and a wide variety of SUVs will be sitting in the back of the class.

The ratings have come about in part because it has become difficult to compare the mileage of plug-in cars with all-electric cars. Electricity is measured in kilowatt hours, while gas is measured in gallons. Mileage varies according to how you drive, too. In 2008, there was a comic interlude when Google saw the mileage on its plug-in hybrids jump from the 60-plus-miles-per-gallon range to more than 100. How did they do it? The company hired professional drivers and kept the cars on fixed courses.

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Mississippi Governor Haley Barbour has managed to attract a third large greentech company to his state.

Kior, which says it can make synthetic petroleum from biomass, will build five commercial scale facilities in the state. Three of the five will be built in the next five years. By 2015, Kior will have created 1,000 direct and indirect jobs in the state. The company received a $75 million loan, among other assistance, from the state.

Mississippi earlier persuaded Soladigm, which makes electrochromic windows, and secretive solar maker Twin Creeks Technologies to build facilities in the state through generous loans and incentives. Interestingly, Soladigm and Kior are Khosla Ventures companies.

Barbour, by the way, is a Republican, a party on the national level which is excoriating President Obama for loans and stimulus programs directed toward alternative energy. Maybe it's not an election year for Barbour. Or maybe he's a closet Socialist. Or maybe he is concerned about job creation. We will try to get to the bottom of it. Who knows? Maybe Haley, who is actually one of the more interesting politicians in the U.S., will come out to Silicon Valley. Tony Blair, the former British PM, also works with Khosla. (Momentarily, we wrote that Twin Creeks was a Khosla Company. We were misinformed. It has received money from Crosslink and DAG, however.)

Kior CEO Fred Cannon said recently that the company is producing about 15 barrels of synthetic crude a day. That's up from a few liters per day a year ago.  At commercial scale, Kior can produce oil at around $75 a barrel, he added. The process can work with a variety of feedstocks. More in this video:

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On other notes,

Art Buckland--formerly an exec at concentrator company Soliant but also Texas Instruments and Fairchild--is the new CEO at Sunovia.

Sunovia is trying to break into the cadmium telluride solar cell market. First Solar remains the dominant fact of life in that market through its relentless cost-cutting (First Solar modules now cost 76 cents a watt to manufacture) and ability to steadily improve efficiency. First Solar recently broke the 11 percent efficiency mark.

Competition, however, is finally coming. General Electric will come to market next year with cad tel modules and a host of start-ups say they have technology that can compete. It will be an uphill battle for these start-ups, but you have to make a living somehow, I suppose. The company also has a line of LED lights, another fast-growing but crowded field. Start-ups with mixed and divergent product lines don't have a great history. PetroAlgae, which recently filed for a controversial IPO, emerged from a start-up think tank. Still, it's not impossible.

Finally, Ecology Coatings, which makes ultraviolet-curable coatings that result in fewer emissions, has received $2.4 million in conditional funding. It also has a version of waterproof paper.

Cheap, plentiful biofuels could ameliorate a host of global problems: carbon emissions, trade imbalances, the need for agricultural employment in the middle of the country and in emerging nations.

And there is no doubting the demand. The world consumes the equivalent of 1.06 cubic miles of oil globally a year, according to A Cubic Mile of Oil, the new book by Hew Crane, Ed Kinderman and Ripu Malhotra at SRI International. That’s close to 1.1 trillion gallons a year, or more than enough to fill 1,500 sports stadiums. Today, Kior, a company in the Khosla Ventures portfolio, announced it has received $75 million in loans from the state of Mississippi.

The problem is the 'cheap and plentiful' part of the equation. Many current biofuels are expensive and rely on food crops grown on valuable arable land. Thirty percent of the U.S. corn crop goes toward corn ethanol, which only marginally reduces greenhouse gases. Subsidies are mandatory.

The high costs and high risks of the industry are already apparent. While investors flocked to alternative fuels in 2007 and 2008, the subsequent dip in oil prices has sucked a significant portion of the life out of the industry. To survive, biofuel companies now claim they will concentrate on green chemicals, aircraft fuel or even oils for the food industry for the meantime.

Electric cars, meanwhile, have zoomed in popularity.

Nonetheless, a trillion gallons -- the figure represents an almost unfathomable opportunity. So what will it take to get biofuels flowing to the mainstream?

Read more on this topic in a joint effort by General Electric Ecomagination and Greentech Media, and join the conversation here.

Conservatives,  let's talk about energy -- and about why so many conservatives are so wrong (so liberal, even) on wind and solar energy.

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

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

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

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

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

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

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

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

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

But let's get to the real boogie man here: the contention that solar "costs far more than ordinary power."

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

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

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

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

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

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

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

Neither report factored in global warming or the cost of sending our best and bravest into harm's way to protect our energy supply lines.

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

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

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

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

 

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Tom Rooney is the President and CEO of SPG Solar, in Novato, California, one of the larger solar integrators in the country. His commentaries have appeared in the New York Times, Los Angeles Times, and the Miami Herald, and he has appeared on CSPAN and Fox Business News recently -- talking about the real costs of energy. 

You really don’t need to own your light bulbs. You don’t even need to lease them.

You just need the light that emanates from them.

That is the premise underlying a new crop of startups such as Skyline Innovations and Metrus Energy that hope to transform energy efficiency and building management through creative financing, service contracts and software.

These companies essentially retrofit commercial and industrial buildings. But rather than selling solar thermal hot water heaters or new networked lighting systems to the owners or tenants, Skyline and Metrus retain ownership of the equipment. They then charge a  fee for the energy avoided -- measured in kilowatt hours or therms -- as a result of the retrofit. (Another name to watch in commercial retrofits: iReuse, which has racked up an impressive list of clients in a short time.)

“We guarantee a fixed percentage of savings,” says Zach Axelrod, a former GridPoint employee who is the founder and CEO of Skyline.

In virtually all cases, the fee will be less than the cost of the energy avoided. Under a lengthy 12-year contract, a customer might pay Metrus 9 cents per kilowatt hour for energy avoided in a jurisdiction where it costs 13 cents a kilowatt hour, said Metrus CEO Bob Hinkle. In a shorter contract, the price will be closer to 13 cents.

Maintenance costs are baked into the fees as well, so customers generally see secondary savings. New air conditioners and other appliances also increase the value of the property. More importantly, the structure of the deal paves the way for improvements that might not otherwise have occurred.

“The big issue is cost,” said Hinkle. “They will typically fund projects themselves if there is a one-year, or maybe a three-year, payback, but a lot of the real energy savings can take five to seven years.”

In many ways, these companies are bringing a financing mechanism to building management that companies such as SunEdison and SunRun have used to popularize solar panels. Without a hefty up-front bill for capital, solar looks a lot better. With the PACE program for commercial retrofits now in limbo, paying for energy efficiency through a service contract becomes even more attractive. The contracts offered by Skyline and Metrus, in fact, involve less bureaucracy than a PACE deal would.

But there are differences betwen the solar and building worlds. The solar companies can take advantage of federal and state tax credits that greatly reduce the cost of the equipment. The tax benefits also allow these companies to fund their projects and solar panel purchases through tax equity funds.

Energy efficiency retrofits don’t enjoy the same level of support. Solar thermal hot water systems can only qualify for state-level tax credits in Washington, D.C., California and a few other places, but they aren't universal, according to Axelrod. General efficiency retrofits for commercial buildings often fail to qualify for credits. (Efficiency loses out in the residential market, too—homeowners get a 30 percent tax credit, but only up to $1,500.)  

As a result, Metrus and Skyline have to pay for the equipment with their own money, or enlist strategic partners in lease-back arrangements. The fact that these companies can turn a profit without the tax credits, however, shows how retrofits can be more cost-effective than PV panels.

Skyline right now concentrates on solar hot water systems, but will expand into offering a wide variety of efficiency services. The only service it may avoid is installing solar panels because of the cost of solar panels and the existing, crowded state of the market.

“Hot water is the Trojan Horse,” said Axelrod. “People care about heat and hot water. They don’t care about the source.”

The heart of Skyline’s business is a software application that explodes a potential customer’s utility bills and can attribute consumption to different appliances and/or fixtures. The data then helps the company determine whether an efficiency retrofit makes sense, which appliances to swap out, and how much to charge. The software also monitors the performance of the building over time. The risk Skyline assumes is that the customer's behavior will change over the length of the contract.

“It recreates what your utility bill would have been” if the retrofit had already taken place, Axelrod said.

So far, the company has completed seven projects and is in negotiations to take on several more. The typical customer might be an apartment complex or a mid-sized commercial building that consumes 2,000 to 3,000 gallons of hot water a day and does not have a facilities manager on site.

Metrus was incubated by CalCef, the organization set up in the wake of the state’s 2001 power crisis. The company has conducted a retrofit for defense contractor BAE Systems in New Hampshire, and more BAE contracts will likely follow. More deals are on the way, says Hinkle.

Metrus coordinates projects with Siemens; Siemens installs the equipment and often manages the building afterward. Metrus’ main role is to serve as the financing and procurement vehicle.

What works best? It depends on the building, but generally Metrus tries to mix short- and long-payoff tasks in one retrofit. Lighting and networking lights can have a rapid payoff, says Hinkle. A new chiller for an air conditioner, however, is a capital-intensive assignment that can require years to see a return. Combining short and long payoff projects can lead to a blended payoff of seven to ten years.

Interestingly, Metrus has yet to install LED lights in a building. Instead, the company is obtaining its savings in this realm by putting in lighting networks and more efficient versions of conventional lights. CalCef's angel fund also has an investment in Lumetric, which networks high-bay lights like you see in stadiums and warehouses. Once known as HID Labs, Lumetric’s technology can curb lighting energy consumption by up to 40 percent by strategically dimming lights. Hinkle didn’t say whether Metrus works with Lumetric, but you can imagine the two companies know each other.

What happens if a building gets sold? Do Metrus or Skyline ever have to call in the repo man? No. Generally, the contracts have an accelerated buy-out clause. The companies get a fee and title transfers to the new owner.

Whether you call it "cleantech," "greentech," or "envirotech," environmental and sustainable technologies are an inevitable growth market.  Even in the midst of an unprecedented downturn, the commitment to clean technology is firm, and indeed, is considered by many -- including the present U.S. presidential administration -- as an integral part of our recovery. In January of 2010, USA Today reported that while venture-capital funding for clean-technology fell in 2009 from the previous year, it still performed better than other technologies.

Despite the current economic situation, investors are keeping a sharp eye out for investment opportunities in alternative energy and sustainable technologies. 

That said, cleantech development is fraught with uncertainty. Both the innovator and the investor have ample incentive to investigate due diligence issues required prior to a significant investment. In an emerging commercial market where technological innovation is a key driver, the significance of IP is exponentially higher, and accordingly, the depth of the IP investigation is proportionally more important in answering questions for risk assessment.

Clean technologies rely heavily on innovations. Yet these innovations occur in a fairly well-developed technological environment. Indeed, from cellulosic biofuels to wind to solar, many of the core technologies for alternative energy sources have been seriously pursued for decades, and are now long established. Thus in clean technology, the potential profitability and return from an investment in a breakthrough innovation may turn on a set of improvements in a crowded technology field.

Moreover, the innovation itself, once discovered and reduced to practice, may be very easy to replicate by a competitor. Even if the inventive technology is not easy to replicate, the more successful it is, the more competitors new and old will attempt to implement it themselves. Strong IP is the best defense against those who would profit off another's inventive success -- and a good business plan will account for this truth.

Finally, failure to anticipate and identify IP risks ahead of time can stop a company in it tracks -- no matter the size.  For example, over the past two years, GE and Mitsubishi have been engaged in "the Turbine Wars," a series of patent litigations in the ITC and federal courts.  Both GE and Mitsubishi had invested hundreds of millions of dollars to develop wind farm infrastructure for its turbines.  Yet GE filed a complaint in the ITC and Federal District Court to block Mitsubishi from importing its turbine components.  Although the complaint in the ITC suit was tossed out in January of 2010, Mitsubishi's lawyer recently agued in the federal district court that Mitsubishi's annual U.S. sales of variable speed turbines went from $2 billion to nearly nothing since GE filed the suits. 

Despite the power of IP to shape markets, even sophisticated investors and innovators sometimes treat intellectual property as an afterthought, or as a last-minute affair. As explained below, the well-advised clean technology investor knows that IP is central to securing, protecting, and profiting from cleantech innovations. Moreover, the failure to properly evaluate IP can leave risks to profitability or market entry undiscovered -- thus importing more uncertainty into the investment.  Finally, well-planned IP due diligence can identify and help secure untapped sources of potential revenue. 

IP Due Diligence: The Basics

IP includes patents, trademarks, copyrights, and trade secrets. IP protections allow the company to exclude, control, or limit the ability of others to operate in the market for its products and processes. For example, patents, the prime focus of this article, confer on their owners a right to exclude others from practicing the invention claimed in the patent.  IP thereby allows an innovative company to secure higher profitability in two key ways: 1) by blocking competitors large and small from entering into the company's market space carved out by the IP, and 2) by licensing or cross-licensing the technology covered by the IP to other companies.  There are, of course, many other benefits to strong IP, but when a company's technology becomes successful, these two are of key importance.

IP due diligence, broadly speaking, is an investigation into a company's patents, trademarks, copyrights, and trade secrets to assure that a strong proprietary "fence" surrounds the innovative products and methods that will drive the company's future profitability.  It can also involve a "Freedom to Operate" investigation, which looks at the IP landscape staked out by other entities to assess what risks of infringement of other IP may exist.

During an IP due diligence investigation, IP counsel will make inquiries and do independent research and analysis to verify the existence and scope of a target's IP, its strength, ownership thereof, agreements related thereto, as well as related litigation. For example, an IP due diligence investigation of patents and patent applications will determine, among other things:

• The scope and content of a target's patent portfolio, national and international;
• Whether the target owns all the patents;
• Whether the patents cover the target technology, as well as ancillary inventions;
• How readily can potential competitors "design around" the patented invention;
• If the patents are valid and enforceable;
• How the patent portfolio related to the company's business plan;
• Does the target have the freedom to operate without infringing other IP.

In the course of the investigation, counsel thereby assesses the risks posed by uncovered weaknesses in the IP, and any remedial action, if available.

Don't Wait Until the Last Minute

Proper IP due diligence takes time. For instance, an investment target may have a significant number of patents, including "key" or "core" patents or patent applications, in its portfolio that require a "validity and enforceability" analysis. In patent law, there are numerous bases by which to invalidate a patent or render it unenforceable: from a lack of novelty or obviousness to fraud on the Patent Office. Even if the target is cooperative and accurately identifies to the investigator what it regards as its most important patents, the time required to search, analyze, and prepare a report on just validity can be, to say the least, extensive. 

What's more, any such report would be subject to the uncertainty that all last-minute projects endure. When considering that a validity analysis is but one part of a comprehensive IP due diligence investigation, it is clearly evident that IP due diligence is not to be put off as a last-minute concern. 

So how early should investors start addressing IP issues?  In the clean technology space, from the outset. Beginning IP due diligence early allows investigators sufficient time not only to assess the basics (are the patents valid and do they cover the core technology), but also to allow the IP counsel to create solutions for the issues that invariably arise in every investigation.

For instance, an investigation may reveal that an inventor demonstrated an invention at a gathering, along with distributing a PowerPoint presentation or displaying a poster explaining the invention.  In the U.S., an inventor has one year from the date of certain public disclosures to file a patent application, after which they are time-barred from obtaining a patent on the disclosed matter. Thus, such a demonstration could frustrate potential patentability, if not caught in time.

As another example, one aspect of evaluating a patent is whether a competitor can "design around" a patented technology by copying it with some key changes. An IP due diligence may reveal that the "claims" of a patent, which are used to define a patent's coverage, are very narrow, and relatively easy to design around.  If caught early enough, there may be actions available to attempt to get broader claims.

As a final example, a potential competitor or other company, even a small one, may have a patent or patent application that could serve as a barrier to entry into market (see the "Turbine Wars" discussed above).  Identifying the IP landscape early on can allow a company to prepare any of a number of strategies, from "designing around" a patent to initiating certain procedures in the Patent Office to frustrate any attempt to enforce the patent, or to get the upper hand should any enforcement actions ensue.  It is true in IP as it is elsewhere: forewarned is forearmed.

By engaging early, many a problem can be fixed or prevented by having an objective look at a target's patent portfolio (and other IP), as well as that of the competitive landscape.  On the other hand, if the IP diligence is started too late, an attorney may not be able to cure lost protections, or worse, may not ever have the time to identify discoverable problems to begin with.  Accordingly, bringing IP due diligence in early saves money and can assist in keeping the costs of investing in a potential target commensurate with the progress of the investment itself.  To put off such IP due diligence until the last minute is penny-wise and pound-foolish. 

Another reason to begin the process early is to secure a cooperative working relationship with the target.  An innovator seeking investment needs to be wary of disclosing competitive intelligence or trade secrets about its technology. By starting early, IP counsel can set out the rules of engagement for the investigation, the disclosures and the attendant agreements early on, thus allowing the target to cooperate with the investigation, while at the same time being confident that its interests are protected. 

Starting early allows IP counsel to become intimately acquainted with the target technology and the IP landscape.  A good IP firm will have a force of scientifically astute attorneys and scientific advisors, and investors will seek those that also have experience in clean technology diligence. That said, with each fresh project, the investor is well-served when an IP diligence team can augment their own technical expertise with those who are working in the field on the cutting edge.

Diligence on such technology will demand a cross-disciplinary team of attorneys and scientific advisors, along with an attorney who has experience in clean technology due diligence and patent work. Such a team, assembled early, can interact with practicing experts in the field -- including the target themselves -- to best understand the company's specific technology and its expected contribution to the industry.

Moreover, the attorneys have time to familiarize themselves and properly assess how well the target's IP aligns with the strategic goals of the company. And, unlike an army of attorneys formed for a last minute project, a smaller team can handle the same amount of work, thus creating an important efficiency; this streamlined group's accumulated experience with the technology allows them to perform the analysis swiftly and efficiently -- but not hastily -- and with the benefit of a penetrating understanding.  This is especially the case in clean technology, when inventions and improvements can come both fast and like a swarm, and with myriad host of impacts. 

In short, strategic IP due diligence of clean technology requires engaging early. At the last minute, an army of attorneys and support staff can perform an IP due diligence that uncovers liabilities and strengths -- up to a point. But doing so comes at great expense, both financially and in lost opportunity. On the other hand, involving IP counsel early gives the investor an assurance and an edge in identifying and preserving a potential lucrative investment, and can enhance the quality of the protection of the targeted technology.

Clean technology promises to provide rich and just rewards to investors who can identify the innovators who will shape the energy field in the next decade.  As before in the biotechnology and information technology fields, analysts are expecting cleantech to be the next forefront for growth.  As the market grows, a company's IP portfolio is a primary tool for capturing and holding the markets generated by its innovations.  It also can provide additional sources of revenue as a company identifies and seeks protections for innovations both inside and outside its core business.

Additionally, the attention an innovative company pays to its IP can act as a bellwether for its business acumen.  Thus, IP due diligence into a cleantech investment target can identify companies that will be best positioned to protect profits from innovations.  In this vein, a robust and efficient IP due diligence begins early in the investment process.  An early start saves costs and enhances the quality of the risk analysis.  Most importantly, an early evaluation of the IP portfolio of a potential target forestalls risks, as well as preserves and creates new sources of value.  By carefully attending to IP due diligence, an investor goes far in assuring their green investment will grow.

 

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Brian M. McGuire is an associate at Frommer Lawrence & Haug LLP.  His practice focuses on procurement and enforcement of intellectual property rights, including patent prosecution, litigation, the preparation of patent infringement, validity and freedom-to-operate opinions, intellectual property due diligence, and client counseling on intellectual property matters. 

Grid Net, which develops software and other technology for broadband communication on the grid, has netted another notable friend.

Landis + Gyr has agreed to resell Grid Net's software for meters, switches and other devices in Australia and New Zealand. Conceivably, this could lead to the development of Landis + Gyr WiMax-based smart meters loaded with Grid Net's software in deployments down under. Landis + Gyr also has an option to expand the relationship globally.

"They are licensing the entire product line," said Andres Carvallo, Grid Net's chief strategy officer.

General Electric already resells Grid Net's software and licenses the company's reference design for meters. GE has deployed the technology for a smart meter rollout with SP Ausnet. The total market for smart meters in Australia is around 20 million meters, according to Carvallo. The next step will be to try to expand to other geographies.

"We are about to come out with a new product line" in the U.S., he added.

Of course, landing strategic partners and going global is the strategy of everyone right now in the smart grid market. In North America, utilities thus far have gravitated toward low-bandwidth mesh networking -- the sort of technology promoted by Silver Spring Networks and others -- for meters. Some companies, such as CenterPoint Energy, use WiMax for communications between transformers and field assets but use mesh for communication to meters. Powerline networking, meanwhile, still remains popular in Europe, despite complaints that the system can be costly.

Together, GE and Landis + Gyr control about 45 percent of the market for smart meters. Only a small fraction of that total actually revolves around WiMax smart meters. Still, landing an alliance is sometimes the most difficult part, so having a foot in the door is a good sign for Grid Net.

Grid Net makes software compatible with ZigBee, HomePlug, Ethernet, fiber and WiMax. 3G and LTE are missing at the moment.

"Stay tuned," said Carvallo.

 

 

If you attend enough cleantech events or are pitched by enough startups, you start to see the same few PowerPoint slides over and over again. Here is a collection of the best or at least the most notorious and historically significant slides in our industry.

After publishing this list to an overwhelming response, we heard from the original architects of some of these iconic greentech slides and we made sure to give them their overdue credit.  We also added a few additional slides that we left out during the first, second and third go-rounds.

 

Lawrence Livemore's classic Energy Flowchart:  A good slide provides a wealth of information in an intuitive, understandable way -- and this slide certainly does that.  This one slide shows energy inputs and outputs and really drives home the tiny foothold that renewables have in the American energy mix.

By the way, Americans are using less total energy and more renewable energy, according to LLNL.  The U.S. used less coal, petroleum, and natural gas in 2009 than in 2008, and increased its use of wind, solar, hydro and geothermal, according to the LLNL energy flow charts.  This probably has as much to do with reduced economic activity as it does a shift in energy sources.

EPRI's Prism Chart.  EPRI, the Electric Power Research Institute, is almost entirely funded by incumbent power companies, so their information has to be viewed through that lens.  Nevertheless, the "Prism" slide has found its way into many greentech presentations, mine included.  It conveys the challenge involved in reducing CO2 emissions from the electric sector down to 1990 levels.  According to EPRI, this task will require significant amounts of CCS (Carbon Capture and Sequestration), as well as another 64 gigawatts of nuclear power by 2030.

 

Carbon Wedges.  Princeton's Carbon Mitigation Initiative and the NRDC can both play the EPRI CO2 reduction game, as well.  The NRDC, though, does it without the nuclear wedge.

 

 

The Keeling Curve.  Regardless of the flaws of An Inconvenient Truth, the movie, or those of Al Gore, the man, the movie and the man present this CO2 data in a variety of compelling ways.  The graph shows the variation in concentration of  CO2 in the atmosphere over the last fifty years based on Charles Keeling's measurements at the Mauna Loa Observatory in Hawaii. Even if you don't subscribe to the theory of anthropogenic global warming, this chart is pretty stark evidence that something is happening and it's happening fast.

 

 

This slide from the CEC illustrates the "Rosenfeld Effect." California's per-capita electricity consumption stayed flat while consumption in the rest of the U.S. went up.  Why? Largely because of the California Energy Commission leadership of Art Rosenfeld.  During his tenure, California instituted utility efficiency programs, appliance standards and building standards that saved the state billions of dollars, millions of kilowatt-hours, and avoided the building of a large number of power plants.  It's not all about high technology.

The wind power flying spaghetti monster. If you've ever attended an event pertaining to energy storage, it's not unheard of for every presenter to flash this one.  It's originally from a 2007 CAISO (California Independent System Operator) report on Integration of Renewable Resources and shows the scary variable nature of wind power.  It speaks volumes on the intermittent nature of wind and the challenges of integrating renewable energy onto the grid without energy storage or fossil-fuel backup.

 

The solar variability slide is just as scary in terms of the ramp-up and ramp-down rate, with cloud cover causing voltage sags.  This slide makes the rounds and comes originally from Jay Apt and Aimee Curtright's Working Paper, "The Spectrum of Power from Utility-Scale Wind Farms and Solar Photovoltaic Arrays."

 

The McKinsey Efficiency Study "finds that the U.S. could reduce annual GHG emissions by as much as 3.0 gigatons in the mid-range case to 4.5 gigatons in the high range case by 2030. These reductions from reference case projections would bring U.S. emissions down 7 to 28 percent below 2005 levels, and could be made at a marginal cost less than $50 per ton, while maintaining comparable levels of consumer utility."

The thrust of the McKinsey study is that there are pollution reduction choices that can be achieved at “negative cost.”  This flies in the face of economic theory, which would have us believe that companies and consumers would not willingly pass up profits by making changes in lighting, fuel efficiency, industrial process improvements, etc.  Turns out consumers aren't always entirely rational.

 

 

NREL's solar cell efficiencies slide.  The slide that launched several hundred solar startups is also partially responsible for the great concentrating photovoltaic (CPV) scare of 2008.  It does show the lag between hero experiment efficiencies and real-world PV performance and must be included in every solar presentation -- by law.

 

There are a lot of complicated ways to graphically illustrate the consumer side of the smart grid. This concise slide is not one of them.  EPRI claims authorship of this one.

 

The cubic mile of oil. The world uses about 30 billion barrels of oil per year. That is 1.2 trillion gallons, which works out to just about 1 cubic mile of oil.

And another way of illustrating the same concept:

 

This slide from the leading renewable energy utility PG&E of Northern California (by way of Nissan) shows that fast charging a plug-in electric vehicle places a load on the grid equivalent to the average peak summer load of a single home.  Except that these loads move around from place to place and charge up whenever they feel like it, in the middle of the day or the middle of the night.  It means that widespread EV usage can't happen without a smart grid vehicle infrastructure.

 

Germany has the same solar insolation as the U.S. state of Alaska.  Yet Germany is the global leader in solar installations.  Why is that?  Three words -- policy, policy, policy.  Mr. Colin Murchie Director, Federal Government Affairs at SolarCity and performer at Washington Improv Theater originally produced this slide for SEIA.

 

Khosla Ventures' Green Portfolio.  This slide was immensely improved when the VC firm got a new graphic designer and got rid of the light bulb design.  In any case, it shows what you can do if you have a grand vision, sizable cojones and several billion dollars of your own and other people's money.  And time for board meetings, lots of board meetings.  The slide lists 35 green startups, intelligently parsed, and we would bet there are a few more not being shown.  One of these might be the black swan.  Vinod only has to be right one time out of ten or twenty to reinforce his genius status.

 

Bonus shameless self-promotion slide: Downloaded tens of thousands of times, this slide from Greentech Media's smart grid analysts smartly lays out the layers and players in the smart grid ecosystem:

 

And a final word on PowerPoint from Mr. Tufte...

 

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Michael Kanellos contributed to this article.  Actually, he thought up the title and then went on vacation.

(This is an excerpt from our larger recent review of the Greentech IPO Landscape: Past, Present and Future.)

These companies to follow actually have real products, serious revenue and the prospect of profits in high-growth markets. 

Here's a list of ten potential greentech IPOs coming in late 2010 through 2012:

Bloom Energy has a great story, revenue from the sales of its Bloom Boxes and marquee customers including Cypress, Google, FedEx and San Francisco's SFO Airport.  The company's Solid Oxide Fuel Cells (SOFCs) are an alternative to diesel gen-sets in the off-grid world and to the electric grid in the developed world.  The fuel cells run on natural gas which, in the view of some, makes the value proposition fragile.  But a strong team, veteran investors and a big narrative make this a firm to watch, profitability and value proposition notwithstanding.

Bridgelux has emerged from the pack of LED start-ups with a solid product roadmap and a CEO (Bill Watkins) familiar with the scale-up issues surrounding tech companies.  The firm is aiming at the commercial market, avoiding the coming residential bulb bloodbath. Still, Bridgelux must compete against Philips, Osram, GE and other companies with over 100 years of experience and mature sales channels all over the world.  Reliable sources at the Director level inform us that revenue is in the high tens of millions.

BrightSource Energy is the leader in the solar thermal startup world -- now that the Ivanpah CSP plant has been given the green light.  That's hundreds of megawatts of power under contract and gigawatts of power in the pipeline.  An enormous $1.37 billion federal loan guarantee has been won and investors, developers and EPC personnel are in place.  But revenue doesn't flow until power flows which explains the company looking at Thermal Enhanced Oil Recovery (TEOR) as a shorter term revenue source.

Enphase has shipped more than 300,000 of their microinverters, carved out more than a 10 percent US market share in Q1, according to the CEO, and has a strong balance sheet -- partially from a recent funding infusion from Kleiner Perkins. The inverter and microinverter market is growing fast and Enphase is the microinverter leader.  Reliability issues seems to be well-addressed although gross margin questions remain.  They have made a tentative foray into the consumer-facing smart grid with an automated thermostat, looking to leverage their platform into other markets.

Intematix produces a product that makes LEDs work. Their phosphor materials enable LEDs for general illumination to achieve good quality light and efficiency.  Reliable sources indicate that the company is generating revenue in the "tens of millions."  And the LED lighting market is at an interesting tipping point.

OPower is an energy efficiency company focused on customer engagement and behavior modification, currently providing tens of thousands of homes with in-home energy data and efficiency advice via paper reports or online.  The platform is described as advanced customer engagement. The firm says about 85 percent of their customers will cut power consumption by around 3.5 percent. The customized data lets people know much energy they're using in comparison to their neighbors and then follows it up with a course of action.  Revenues exceed $30 million according to sources at the firm.

Serious Materials has yet to build a commercial-scale factory for its green drywall but is selling tens of millions worth of thermal windows. Rumors are that it will try next to move into other markets for building products such as insulation and home management controls.  CEO Kevin Surace has talked about this for years, and an IPO would give him the cash to expand.  2009 revenue was reported in the $50 million range.

Silver Spring Networks' S-1 filing is rumored for the fall of this year.  Silver Spring has won multimillion-dollar contracts in California, Texas and Australia for the mesh networking systems that connect meters to utilities.  They've hit a few speed bumps with the PG&E smart grid backlash and there are profitability concerns but the revenue bar seems to be reached to allow serious consideration of the public offering.

Solar City has raised $60 million in tax-equity financing from PG&E, a $90 million fund with U.S. Bancorp and the backing of premier VCs.  The firm started its existence looking to add efficiency to the solar installation process.  It then moved into financing and leasing the solar systems for residential rooftops.  And it has just added energy efficiency services to its competencies through its acquisition of Building Solutions.  It has significant revenues from its operations in Arizona, California, Colorado, Oregon and Texas but, like other service industries, is faced with the challenge of how to efficiently and profitably scale the business.

Suniva, as reported by GTM Research analyst Shyam Mehta, began commercial production of its monocrystalline cells in late 2008 and "unlike many struggling PV startups that entered the market around that time, the company has gone from strength to strength over the last 18 months" with "one of the quickest production ramps of any Western PV company."  Suniva went from an initial 32 megawatts to 96 megawatts to a current 170 megawatts of cell capacity, and is sold out for 2010. The company has its own paste and texture recipes, is able to customize and optimize every layer of the cell design to its own specifications, and has leveraged its considerable R&D experience to optimize each processing step to a high degree.  While Suniva is clearly not going to overtake SunPower or Sanyo any time soon, reports suggest that the company has a much better cost structure compared to these two players, one that is more in line with low-cost manufacturers. That, combined with its current efficiency advantage over other firms, makes it competitively positioned for right now. A 19-percent-efficiency cell is in the works and should maintain competitiveness in the near future as well. "The key question is whether the company can maintain this advantage going forward, given that major Chinese players are hell-bent on playing catch-up," according to Mehta.

***

Michael Kanellos contributed to this article.

Update August 27: AB 2514 was just voted out of the Assembly (concurrence with Senate amendments) 44 ayes -25 noes.  Next (and final) step: The Governor's Office. The last day for the Governor to sign any new legislation into law is September 30, 2010.

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Utility-scale energy storage is a game-changer but it can't happen without the proper regulatory environment. 

A step in that direction was taken today.  California's AB 2514, a bill mandating utility-scale energy storage, made it through the California Senate (22 ayes to 12 nays). 

Next, the bill returns to the Assembly for concurrence in Senate amendments (the Assembly must agree/disagree with amendments made to the bill while it was heard in the Senate).  If successful in concurrence, then the bill goes before the Governor.  The Governor must sign the bill into law by September 30 of this year.

The Senate floor analysis is here.

Here's a brief excerpt from the bill:

This bill would require the CPUC, by March 1, 2012, to open a proceeding to determine appropriate targets, if any, for each load-serving entity to procure viable and cost-effective energy storage systems and, by October 1, 2013, to adopt an energy storage system procurement target, if determined to be appropriate, to be achieved by each load-serving entity by December 31, 2015, and a 2nd target to be achieved by December 31, 2020.

And here's a comment, just received by email from Edward G. Cazalet, Ph.D., Vice President and Co-Founder of Megawatt Storage Farms:

The passage of this bill is a major step forward for reliable, clean and lower cost electric power for all Californians. Electricity storage will enable more clean, local renewable wind and solar power supported by clean storage. With storage, Californians will have clean power when and where they need it and with less need for new transmission lines.
 
I urge the signing of this bill by Governor Schwarzenegger and timely implementation by the California Public Utilities Commission.  More than a year ago I first advocated such legislation. Based on my analysis, California will require about 4,000 megawatts of clean, fast storage mainly from grid scale batteries located close to loads on the distribution grid with the capability to store several hours of energy.

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Maurice Gunderson, senior partner at CMEA Capital, believes that grid-scale storage is a "game-changer" in the alternative energy battle.  Gunderson has been working in the energy industry for more than 30 years and co-founded the first greentech investing firm, nth Power.

CMEA Capital’s portfolio companies include A123 (lithium-ion batteries), Contour Energy (advanced battery technologies), Solaria (solar panels) and Codexis (biofuels).

We spoke to Mr. Gunderson about technology, policy and the investment landscape for energy storage.

Greentech Media is no stranger to this topic; we understand its importance in renewable energy and have covered it extensively.  Here are some recent storage-related articles:

• Energy Storage Medley: Hydrogen, CAES, Li-ion, NaS, NiCad…
• Energy Storage Needs Better Utility Policy, Language, Culture to Succeed
• Gravel-based thermal storage from Isentropic Energy -- Thermal Energy Storage Breakthrough?
• Compressed Air Energy Storage (CAES) part 1, part 2, part 3  
• Ice-based thermal storage
• Ultracapacitors -- Maxwell and the Promise of Ultracapacitors
• Xcel Shows it Can Catch Wind in a Big Battery

 

"Large-scale energy storage can turn renewables into dispatchables"

Gunderson believes that grid-scale storage is the next frontier in renewable energy investments.  CMEA does not yet have an investment in this sector, but Gunderson says, "we are looking at three of them now."  Expect to see an announcement in the coming months.

Gunderson continues, "At CMEA, we're looking at novel chemistries -- they won't be lithium-ion or sodium-sulfur (NaS) and they will be suitable for utility applications."

"The holy grail is very large-scale batteries, but they have to work at grid lifetimes and duty cycles."  Unfortunately, at present, "There are no batteries that last decades."

As for flow batteries, Gunderson said that there are fuzzy distinctions separating fuel cells, flow batteries and batteries.  There is plenty of research on various materials for flow batteries. People get them to work, they look promising, but after a few years they get a show-stopper problem. That issue eventually gets solved, but then new problems arise.  "We've never gotten to the point where they're reliable enough for utility use,"  he said, adding, "There are a lot of people working on this and I think we're going to get there in the 5-to-10-year time frame."

"I've been looking for this for thirty years"

Gunderson continues, "There are lots of folks working on energy storage ideas, but most of them are half-baked. Most storage on the market is not really market-ready -- the economics are unknown. It causes increased costs and uncertainties."

He adds, "If I were a wind power developer and had a reliable battery that I could install behind the fence, it might double the price, but I can sell the power when people want it and triple my revenue by selling at peak."

We already have as much wind as we can use in California, yet all of the capital budget is going towards wind and solar and "we can't use it."  He adds, "Interestingly, in California, we have a very high quality Public Utility Commission and Energy Commission, but they often are not listened to."

Other Storage Technologies

Gunderson cited other energy storage schemes: ice storage, for instance.  Ice is cheap, it works, and there are no environmental hazards.  "Imagine a convention center: you make the ice at night and melt it for cooling during the day."  A convention center that has little activity at night would be a good fit for this type of solution versus a building like a hospital that has energy loads both day and night.

Sodium sulfur (NaS) is "a bit of a headache because of high temperature and could be replaced by new battery concepts."

As for compressed air energy storage (CAES) and pumped hydro, Gunderson had this to say: "If nature gives you a canyon, you should use it [for pumped hydro]. If you happen to have that, you're lucky: you can put in as much wind as you can finance.  When the wind blows, you pump the water uphill."  Unfortunately, the ability to do that varies widely, and in California, "we're taking down dams not putting them up."

Energy storage is a "baby industry" according to Gunderson, and there are a number of potential business models, such as Megawatt Storage Farms' Independent Storage Provider concept, as well as "inside the fence" applications.

Gunderson is an optimist, a necessary quality for a venture investor.  He concluded, "We can go to Mars, we can go the the Moon, we can do this.  All we have to do is focus."

Energy Storage Policy

In late July, the U.S. Senate introduced new legislation, known as the Storage 2010 Act, that will provide up to $1.5 billion in tax credits to storage energy projects connected to the U.S. electric grid. The initiative is intended to support intermittent energy sources, including wind and solar power, which can moderate demands during peak hours and facilitate a “smart grid,” using the power when it’s actually needed.  This might provide a boost for the energy storage industry, broadening the potential for better returns and increased investments in this area.

AB 2514 is a bill currently in the California legislative process that has been, in part, suggested by Ed Cazalet of Megawatt Storage Farms and recently championed by California gubernatorial candidate Jerry Brown. It has gone through some changes as it has made its way through the legislative sausage maker but nevertheless, the measure remains a mandate for energy storage.  

Differing Viewpoints on Storage

Amory Lovins of the Rocky Mountain Institute challenges the concept of baseload power and the roles that renewables can play.

We have a commenter on Greentech Media's comment boards who, when I write about storage and dispatchability, seldom fails to to inform me of the following: "Large-scale energy storage co-located with VERs [Variable Energy Resources] is unlikely ever to be commonplace.  It is irrational and based on a fundamental misunderstanding of variability and grid integration.  For a good summary, I recommend this recent report out of NREL (this means you, Eric Wesoff):

Here's the URL for the NREL PDF:  http://www.nrel.gov/docs/fy10osti/47187.pdf

Here are a few excerpts from the cited report's conclusions that the commenter might have in mind.  The report's conclusions don't seem to match the commenter's vehemence:

• The increasing role of variable renewable sources (such as wind and solar) in the grid has prompted concerns about grid reliability and raised the question of how much these resources can contribute before enabling technologies such as energy storage are needed. 

• Fundamentally, this question is overly simplistic. In reality, the question is an economic issue: It involves the integration costs of variable generation and the amount of various storage or other enabling technologies that are economically viable in a future with high penetrations of VG. To date, integration studies of wind to about 20% on an energy basis have found that the grid can accommodate a substantial increase in VG [variable generation] without the need for energy storage, but it will require changes in operational practices, such as sharing of generation resources and loads over larger areas [emphasis is mine].

• Beyond this level, the impacts and costs are less clear, but 30% or more appears feasible with the introduction of “low-cost” flexibility options such as greater use of demand response. However, these studies have not necessarily focused on storage and generally do not attempt to determine the optimal system (including the amount of storage) that provides the lowest cost of energy.  There are technical and economic limits to how much of a system’s energy can be provided by VG without enabling technologies based on at least two factors: coincidence of VG supply and demand and the ability to reduce output from conventional generators.

• At extremely high penetration of VG, these factors may cause excessive (and costly) curtailment, which will require methods to increase the useful contribution of VG However, the concern regarding how much VG can be used before storage is the most economic option for further integration currently has no simple answer, primarily because the availability and cost of grid flexibility options are not well understood and vary by region.

• It is clear that high penetration of variable generation increases the need for all flexibility options including storage [emphasis mine], and it also creates market opportunities for these technologies.

• Historically, storage has been difficult to sell into the market, not only due to high costs, but also because of the array of services it provides and the challenges it has in quantifying the value of these services – particularly the operational benefits such as ancillary services. The challenge of simulating energy storage in the grid, estimating its total value, and actually recovering those value streams continues to be a major barrier. 

• VG complicates this issue because variability adds additional analysis challenges. The ability to simulate the cost impacts of VG and benefits of storage is still limited by the methods and data sets available. It is understood that VG increases the need for flexible generation and operating reserves, which can be met by energy storage. However, the value of energy storage is best captured when selling to the entire grid, instead of any single source.  Evaluating the role of storage with VG sources requires continued analysis, improved data, and new techniques to evaluate the operation of a more dynamic and intelligent grid of the future [again, emphasis mine].
  

The report doesn't say that storage is unlikely; rather, it is complicated and has to be carefully assessed, economically, technologically and from a regulatory standpoint.  On that we agree.

Despite objections from our commenter, utilities and power providers are incorporating storage into the grid.  Note that Tres Amigas chose Xtreme Power to furnish energy storage and power management at the Tres Amigas SuperStation, a PE-backed transmission facility linking the Eastern, Western and Texas Interconnections.  The storage is being implemented, in part, to integrate variable generation.

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We welcome you to weigh in on the importance of energy storage in the smart grid and to attaining a high penetration of renewables.

The 7,400 people living on the island of Molokai share a special bond. That was the sense Francois Rogers got during his many visits to the small island.

As special project director of The Blue Planet Foundation, Rogers depended on the fact that these people talk to each other and influence each other through word-of-mouth recommendations.

That's why Blue Planet's program, Go Green & Carbon Clean, was successful. On the most fundamental level, one inefficient light bulb was exchanged for a more efficient one through the power of suggestion.

Let's face it: you're more likely to do something if your neighbor is doing it, said Rogers.

The island has one of the priciest electricity rates in the nation, with electricity costs soaring at $0.37/kWh. That's why switching out incandescent light bulbs for compact fluorescent light bulbs (CFLs) was a big deal to this community — one that ultimately will save $6.5 million and eliminate the need to import 24,000 barrels of oil.

The residents save $200 per swap, based on the life of the bulb. Do that calculation during this three-month engagement with the community and this translates to a savings of 17 gigawatt-hours of electricity. What's more, it prevents more than 16,000 tons of carbon dioxide from ever being emitted.

"They worked together towards one common goal," said Rogers. "This island struggles with water shortages and simple lack of funding on every level. By working on energy, they can now use that money for education or other issues."

Rogers sees Molokai as a role model for other places. Students and community leaders put in more than 200 volunteer hours: 5th graders and senior citizens alike put in their time. "The leg work was done by the community," Rogers said.

Certainly, having the kids nag their elders helped even the most stubborn to change behavior. Word-of-mouth with a little bit of peer pressure thrown in for good measure was enough to penetrate the community.

In three months, 36,000 incandescent light bulbs were replaced with ENERGY STAR CFL light bulbs.

Based on a survey from 300 homes, 60% of participants exchanged bulbs and reported a decrease in their energy bill (about $10 a month). Each participant swapped an average of 15 bulbs. Nearly 90% of the participants felt that the program was effective.

"They are tight and they talk to each other. We hardly advertised — maybe we put one ad in the local paper," he said. Blue Planet wanted to show how one small change can make a huge difference. Citing the 2008 McKinsey and Company study that identified residential lights as the most cost-effective way of cutting energy costs, the CFL project was born.

In truth, Hawaii has been pondering life after oil for the past couple of years to kick its oil addiction. The U.S. Department of Energy and the State of Hawaii established The Hawaii Clean Energy Initiative to set a goal for the state to use 70% clean energy by 2030.

Howard Wiig, energy analyst at Strategic Industries Division, said, "It's going well. Blue Planet wants to make Hawaii as energy efficient as possible. The prices of electricity on Molokai are incredibly high and you couple that with the fact that most of the people on the island are low income — the cost of living is high. That's what makes Molokai an excellent pilot project."

Every action that we take is a step towards that goal, Wiig said.

"We have a whole bunch of demonstration projects. We want to show builders that you can be extremely efficient in a cost-effective manner. And a lot of people are offering us demos on LED lights, indoor and outdoor. This will reduce outdoor lighting by 50 percent," Wiig said.

GTM has previously covered other notable renewable projects deployed throughout the island state: Hawaii weighed undersea cable to deliver wind power, Honolulu is putting its next air conditioners in the oceans depths, and Kauai is facing some PV challenges.

Light Bulbs: A Buying Guide from Francois Rogers on Vimeo.

Sunnyvale, Calif.--That whooshing, whirring machine in the video is how solar will one day compete directly against fossil fuels, according to AQT Solar.

The company, which makes copper indium gallium selenide (CIGS) solar cells, has come up with a manufacturing process that the company says allows it to produce relatively high efficiency solar cells fairly cheaply. AQT's cells right now exhibit a 14-percent efficiency, which leads to CIGS solar cells that are around 12 percent efficient. That's average to above-average in the context of the CIGS space. Miasole is around 11 percent and won't get to 13 percent in modules until the end of the year.

The cells cost around $1 per watt on the prototype production line, said Kirk Hayes, an Applied Materials alum that now works as the equipment and site operations engineer for AQT. CIGS cells for $1 per watt isn't competitive with First Solar, which can churn out modules for 79 cents a watt. But this is a prototype production machine -- the price will drop when AQT moves into mass production. To be this close already is somewhat intriguing.

"We already have most of our product sold for the next year and a half," he said during a factory tour in Sunnyvale yesterday. The first commercial shipments begin next month. The single machine now produces around 300 cells an hour and will crank up to 1,000 an hour.

The relatively low cost comes because AQT did not--unlike Nanosolar, Solyndra, Miasole, Solopower and a few other CIGS players--design its own manufacturing equipment. It adapted equipment from the hard drive industry. It took less than $15 million and two years to get the prototype machine in the video running. It took other CIGS vendors hundreds of millions and five years, said Hayes.

If AQT is right, then we can expect to see a proliferation of inexpensive CIGS manufacturers. In fact, Telio Solar and Nuvosun (which got money from Dow Chemical) are already pursuing off-the-shelf equipment strategies for CIGS. Miasole's Joseph Laia argues that generic equipment leads to generic solar cells. Miasole recently signed a deal to supply 600 megawatts worth of panels to juwi Solar in Germany; clearly, they must be doing something right, too. This manufacturing debate turns out to be a big issue in the thin-film solar world.

In any event, enjoy the debate in the video and the machine in action. There's some really interesting footage toward the end.

There are a few paths to the consumer-facing smart grid.  You can go device-crazy and try to arm every appliance in the house and building with a sensor and radio to go along with a controller, an in-home display (IHD) and an internet gateway (that in some cases connects to your smart meter in cooperation with your utility).  This will allow you to monitor and shut off your appliances remotely.

Tendril, Energy Hub, and apparently, People Power (and others) look to be going that route.  Add Alarm.com, ControlPoint, Lucid Design, and Microsoft's Hohm to that list in varying degrees. That's going to be expensive and complicated for the consumer and utility.

The indications on the challenges with this type of solution are the small numbers of in-home displays and home area networks actually deployed by utilities.  We've spoken to some industry experts who estimate that the total number of all IHDs deployed is probably less than 10,000 to 20,000 units.  Leading utilities are only doing tests in the hundreds or low thousands of units.  In any case, it's a relatively small number. 

What price and level of difficulty are people and households willing to accept to deliver unknown levels of savings?

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Let's take a quick look at People Power.

Gene Wang is the CEO and founder of "still in stealth" People Power, a startup focused on energy efficiency. It's Wang's fifth startup and he's been very successful in his previous companies which he sold to Agilent and HP (Photo Access and Bitfone, respectively), and with another, Computer Motion, that went public in 1997.  Mr. Wang calls himself a serial-entrepreneur and he doesn't hesitate to say that he has made millions, if not tens or hundreds of millions of dollars for himself and his investors.  Here's Wang's Hillary Clinton video and NY Times write-up.

Despite the stealth identity, Wang speaks at a lot of industry events.  I've watched Gene speak on a number of panels, he's been on at least one panel that I've moderated, and I still have no clear idea of what his company actually does.   The startup is VC-funded by New Cycle Capital along with angel investors and already has 70 employees, many from Wang's old team at Bitfone.  Although I'm not sure if Gene has divulged the stealthy business plan to his VCs or employees yet.

This might be an example of investors betting on the rider, not the horse.

According to the website, People Power is helping consumers save money on their energy bills while helping to save the planet by reducing carbon pollution. Wang said, "We dedicate an entire coal-fired plant to power the nation's TVs while they are turned off."

People Power just received a $1 million SBIR grant. Their first SBIR money was to "enable automated energy management and conservation within the residential community." The Phase II Grant was to "empower the consumer with "actionable intelligence" using demand response services and simple, internet-enabled consumer dashboards and scorecards." 

[Pop quiz time: Name an example of a workable residential demand-response business model -- other than a rolling blackout.]

Wang is looking for a Series B funding round and said that it's been very challenging to raise money despite the "capital efficiency of the firm" and the "great team."  He mentioned that Vinod Khosla of Khosla Ventures chose to pass on this opportunity.

In a conversation I had with Wang in March, he said, "People Power is accessing the low-hanging fruit of energy efficiency."  He calls the firm "a multi-faceted energy efficiency and smart grid company," adding that "the smart grid starts in the home" and "the consumer has to be educated."  Press releases mention that People Power will "monitor and control energy consumption at the appliance level."

The firm has not announced their consumer products, although they have announced their $150 developer's kit.  According to the CEO, "We intend to create an ecosystem."  Wang also said, "We needed to build this platform to enable our products."  Wang hints at the consumer product by saying, "It needs to be drop-dead simple to let the house or building shut off devices, to learn the activity in the house and to dashboard the activity of the home."

The main idea seems to be a multi-mode 900MHz HAN that has extreme reliability and extended range.  Wang claims that this network will have twice the range of the 2.4GHz ZigBee spectrum while consuming half the power, and will be the only HAN that directly connects orphan appliances like the dryer in the basement with the outdoor electric meter -- without repeaters.  In Wang's view, ZigBee won't work well enough for intra-home communication (despite the fact that the firm joined the ZigBee Alliance in March).

People Power's SuRF (sensor ultra RF) set of open source developer's boards is based on OSHAN (Open Source Home Area Network), with wireless sensors enabled by TinyOS.

Wang claims that "energy management is just like device management," though I say that's debatable.  Consumer entertainment devices have a different value proposition and behavioral profile than the world of energy usage.  The cost and complexity of networking the home's "internet of things" may not be worth the cost savings.

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You could go the minimalist route like OPower.

With more than $30 million in revenue, OPower is a successful energy efficiency company focused on customer engagement and behavior modification, currently providing millions of homes with in-home energy data and efficiency advice via paper reports or online.  The platform is described as advanced customer engagement and the firm says that about 85 percent of its customers will cut power consumption by around 3.5 percent. The customized data lets people know how much energy they're using in comparison to their neighbors and then follows it up with a recommended course of action.

And OPower has done it without having to place any hardware in the home. 

***

There might be a middle path, as well.

EcoFactor goes after the major energy-drawing culprits in the home, heating and cooling, with a smart thermostat and some software.  That takes care of more than half of residential energy usage.  Most of the company's value is in the software (as a service), not the thermostat itself.  And they are working toward being agnostic with regard to hardware and protocol.

Powerhouse Dynamics tries to focus on power-hungry appliances by monitoring residential electrical circuits.

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Which leaves us with the most pressing residential smart grid question:

How much hardware and attention is the consumer willing to devote to save ten percent or twenty percent on their electric bill?  How long before those displays and devices wind up in the kitchen junk drawer?

And the uneasy conclusion:

Home energy monitoring motivations and energy usage pain-points are very different than those for smart phones or consumer entertainment gadgets.  Many device-heavy consumer smartgrid startups with consumer-oriented entrepreneurs and their investors are going to learn that good and hard in the coming years.