Ten clean technology predictions for 2010

Ten clean technology predictions for 2010
November 30, 2009 by Nicholas Parker, Executive Chairman, Cleantech Group

For several years now, as each year comes to a close, we’ve been issuing predictions for the coming one.

While we certainly acknowledge we’ve not necessarily gotten each one right in years past, a great number of our predictions have proved prescient (see Eight cleantech developments to watch for in 2008 and Nine clean technology predictions for 2009).

Why such a good record? We’re fortunate to be able to formulate these predictions from our unique position at the heart of the global clean technology value chain. The trends we’ve identified here are informed by the Cleantech Group’s global network of relationships, from our newsgathering, research and advisory activities, and from speaking at or attending dozens of high profile conferences internationally—including all five of the Cleantech Group’s own worldwide Cleantech Forums® every year. As a company, we speak to entrepreneurs, investors, corporate executives and service providers on a daily basis.

What we’ve heard in the marketplace has been synthesized and threaded together with our own data, collected on the cleantech industry since 2002, and our ongoing research to inform this mix of viewpoints on financials, politics, sectors, industries and geographies.

What follows is an abridged version of a more detailed document available to members of the Cleantech Network (see Ten predictions for 2010 – member login required). Members receive more context and data supporting the below.

Private capital growth recovers, record fund year
All in all, given the global recession, 2009 was not such a bad year for cleantech investing. Global cleantech venture capital flows (startups and growth) receded to around 2007 levels, still the second highest amount ever, and in the U.S., cleantech pulled ahead as the largest single venture investment theme in 2Q09 and 3Q09, surpassing biotech and software (it’s easy to forget that only a few years ago cleantech barely registered; it was only 3 percent of all VC/PE in 2004).

In 2009, the pool of investors focused on cleantech continued to widen, yet remained shallow as investors held back on deploying capital.

We predict global venture and private equity in cleantech in 2010 will exceed that in 2009, and exceed it by a healthy margin. We also think 2010 will be a record year for general partner fundraising. The sector has gone from $100M funds to $250M funds to $500M funds over the past six years since Cleantech Group identified and defined the asset category in 2002.

Further, watch for more blockbusters like Khosla Ventures’ September $1.1 billion new fund announcement. And watch for greater capital formation in Asia, particularly in China with domestic RMB capital joining with international counterparts. Above all, watch for greater innovation in fund strategies, for example those that bring “innovation and infrastructure” together or those that focus on cross-border plays.

Clean economies become the new space race
Agreement on a new global climate regime, as well as one in the U.S., will make halting progress over the coming year, likely disappointing many. Yet the race to dominate the emerging clean economy has already begun and will accelerate regardless. This race will become front-of-mind in 2010, simultaneously impeding, eclipsing and hopefully fostering attempts to reach climate accords.

Fueled by unprecedented quantities of “green and clean” stimulus money, cities, states, provinces and countries are now competing to grow cleantech businesses, to bring innovation to market, to attract inward investment and to brand themselves as hubs of cleantech growth. It’s no longer about trading our way out of the carbon crisis, it’s about inventing new industries.

Look out for changes in momentum, admittedly starting from very different starting points, from places such as Australia, Singapore, France, Germany, Scandinavia, Israel, parts of the U.S., Ontario in Canada, Maharashtra in India and numerous cities planting their flags in clean ground. The downside will be increased protectionism, so companies, investors and export agencies will need to navigate around this with bilateral deals involving research, manufacturing, investment and deployment.

Electric cars take the back seat to smart mobility
In 2009, electric vehicles and hybrids eclipsed fuel cell vehicles as the undeniable new center of gravity of the auto industry. Virtually every car company in Asia, Europe and North America announced ambitious clean car strategies, and many brought new models to market, in addition to startups funded by venture capitalists.

In 2010, clean cars will form part of a broader shift to smart mobility. Smart mobility will quickly permeate beyond simply the transport sector, and will be integrated into the new energy paradigm and influence the design of urban systems, even shipping ports. Look increasingly in 2010 for eco-city designs based on concepts such as “new urbanism.” Leading governments around the world will rethink tax systems, fiscal incentives and budgets to encourage greener forms of work and transport based on smart mobility concepts (SNCF, the French state-owned rail operator, set up a fund in 2009 specifically to invest in e-mobility.)

Resource constraints beyond carbon rise to the fore
While the world is understandably fixated with the challenge of moving to a low carbon economy, in 2010 we anticipate more attention will begin to be paid to other natural resource constraints.

Already in 2009, while in a recession, oil prices have touched $80 a barrel, and prices for commodities and precious metals have moved upwards. There are even signs of food price inflation returning with companies such as Cargill calling policymakers’ attention to a looming crisis.

As and when the global economy picks up, the demand for commodities—especially metals, food and oil—will underscore that the natural resource problem hasn’t gone away. In 2010, watch for price spikes that affect cleantech industries, as well as for potential trade conflict over supplies of valuable natural resources. For example, with the rollout of a new generation of EVs in 2010, will there be a shortage of lithium?

With Argentina, Chile and Bolivia much of the known lithium supply, and China controlling some 95 percent of the rare earth elements used in wind turbines, will these become part of these countries’ competitive advantage?

Natural resource scarcities, manifested in rising prices, impact both cleantech industries and society more broadly. Watch for consumer companies, as well as industrial and utility enterprises, to drive more resource-efficient technologies into their operations, production facilities and supply chains in order to preserve or even enhance their profitability.

Commodity tradeoff debates intensify
Associated with rising concerns over the scarcity of natural resources are tradeoffs between how resources should be used. Watch for these tradeoffs to hit the headlines in 2010 and the hunt for solutions to intensify:

For instance, there are major tradeoffs in choices of transport fuels, with the internal combustion engine being far more water efficient than its fuel cell or biofuel alternatives, for instance. Similarly, in power generation, thermal plants require large amounts of water, and the mining of coal or bitumen is also water intensive. Power plants can substitute some water cooling for air-based systems but their fans can be energy hogs, thereby pushing up overall energy production costs.

The water factor is going to be an increasingly important variable in energy production economics, just as energy and electricity costs are with cleaning and piping water to urban centers, and dry agricultural lands. Indeed, in some places, such as Alberta and Australia, water for coal and oil mining may soon compete with that for food production.

In 2010, expect to see more environmentalists objecting to wind and solar farms for land use and other reasons, stalling more of these projects.

Energy efficiency, driven by ICT, eclipses solar
In the coming year, software-based innovations are going to make up a much larger proportion of cleantech venture and PE investment than they currently do in a wide range of areas related to more sustainable and efficient use of energy, materials and natural resources, from the smart grid to remote sensing to industrial design.

Indeed, information and communication technology (ICT), and smart systems with embedded intelligence everywhere will begin to drive even greater productivity in resource use while reducing toxicity and other pollutants. This will happen at both the macro and small scale, from cities to products.

Major ICT enterprises will further push to brand and position themselves as major solution providers in a carbon, energy and resource-constrained world, accelerating a process increasingly apparent over the past two years. This will be particularly true with anything to do with more efficient use of energy.

The boom in energy efficiency will reach frenzied levels in 2010, driven by increased policy support, such as broader decoupling of utility revenues from power generation, and even recognition of ‘negawatts’ as effectively ‘sources’ of power for regulatory and incentive purposes by the U.S. FERC and other bodies. Private innovation capital/finance in energy-efficient ICT products and services could even eclipse that in solar, we predict.

Marketing suddenly matters
Marketing will take on an increasingly important role in cleantech in 2010. For clean technology vendors in some vertical technology sectors, such as solar and biofuels, an increased number of competitors, commoditized products and ballooning inventories are going to drive investments in marketing. In 2010, it’s going to be important to be able to articulate certain clean technologies’ propositions and differentiation, to consumer or enterprise buyers alike, and telegraph them in shorthand in a brand that stands for something in the mind of the prospect.

Likewise, in 2010, as consumer cleantech goes from cottage industry to mainstream, watch for widespread use of leading edge marketing strategies to take cleantech from B2B to B2C. Companies such as Wal-Mart and Toyota will be joined by organizations ranging from electric utilities to financial institutions in bringing cleantech to the masses.

Finally, for large companies, attention will need to be paid in 2010 to the significant backlash forming against real or perceived greenwashing. Consumer concerns need to be met not just with messaging, but with concrete, meaningful action—for instance, by greening supply chains, sourcing clean technology products, and reinventing products and services.

Buffett leads the super rich into cleantech
In late 2008 and 2009, the world’s most successful investor, Warren Buffett, made four high profile investments that, when stitched together, paint a picture that suggests the super-rich are now ready to play big in cleantech related investments. And that will further increase the awareness of cleantech as an investment sector and decrease the risk of participating in it.

At the height of the economic crisis in the U.S., Buffett invested in Goldman Sachs and GE, the former being arguably the largest institutional investor in cleantech, the later being the most audacious industrial company to embrace cleantech through its highly successful ecomagination initiative. In 2009, he invested in BYD, the Chinese car company that seeks to be a major player in electric cars using its advanced battery technology, turning BYD’s founder into the country’s richest man. His recent acquisition of Burlington Northern Sante Fe was at least partly informed by rail’s superior carbon and energy efficiency over other freight forms, which could be especially significant in a future when fossil fuels powering transport trailers that haul commodities worldwide become increasingly more expensive.

In 2010, Warren Buffett is likely to be joined by other super rich and super savvy, some partially motivated by worries over global warming, to make large scale commitments to cleantech innovation, directly and indirectly. George Soros is but one recently example, joining early players such as Virgin’s Richard Branson.

Acquisitions and consolidations accelerate
Not all will be pretty in cleantech during 2010. There will be losers as well, particularly in sectors and geographies where there has been overinvestment in recent years.

Germany and China are two countries where overcapacity will be most keenly felt and a bloodbath of consolidation and liquidation will surely result. We expect, for example, many wind and solar equipment manufacturers in China to be consolidated or out of business by the end of 2010. That’s despite dramatic growth still expected in the Chinese renewable energy market, and strategic central government support of cleantech crown jewels such as Suntech, Yingli or JA Solar.

The coming year will also likely see an overbuild of capacity in some cleantech sectors that will drive consolidation in 2011. LEDs (light emitting diodes) are poised, for instance, to follow the same bubble and bust seen in the solar PV manufacturing sector.

In 2010, we also expect to see not only corporate acquisitions of nascent cleantech companies but also more corporate acquisitions of other corporate assets. Panasonic’s $4.5B acquisition of Sanyo, first announced in November, 2008 and cleared regulators in 2009, is a leading example of what to expect. Panasonic is seeking to combine its strong balance sheet with Sanyo’s leading market position in solar cells and batteries for electric vehicles. Many such M&As will be seen as corporations create business unit platforms for the emerging cleantech economy by combining a range of tech and non-tech assets acquired from both large and small competitors.

The rise of waste-to-energy, geothermal and aquaculture
Forecasting specific hot cleantech investment segments for 2010 is challenging in light of the broad secular megatrends driving toward a clean economy that touches every mainstream industry and sector—from cement to consumer electronics. We see investors, corporations and consumers continuing to focus on clean energy, but with an awareness of a bigger range of opportunities represented by the cleantech category.

While we think well-known clean energy technologies such as waste-to-energy and geothermal power will receive greater attention in 2010, in addition to the more visible renewable energy segments of wind and solar, we also believe increasing attention will be paid to nutrition-related investments, with sustainable aquaculture being one such area, as part of a shift to more sustainable agriculture and food production.

With current approaches to aquatic farming proving largely unsustainable, and increasing concerns over ocean toxicity and species imbalance, new thinking and technologies are emerging about how to sustainably harvest food from the sea. Areas such as Hawaii and Oman are emerging as hubs of acquacultural innovation. The Scripps Institute in California, for instance, and corporations such as Unilever are doing important work in the area. We believe aquaculture is poised to become a breakout agriculture category, in much in the same way biology-based natural pesticides have become an important area of focus for innovation and private investment.


Roundup: 2010 Predictions for Cleantech

Roundup: 2010 Predictions for Cleantech
By 3p Guest Author | January 1st, 2010

Based on the rash of predictions for cleantech in 2010 from investors, consultants and media (see the full list at the end of this post), I’ve pulled together a “trend of trends” list below that attempts to synthesis the broader, over-arching themes. As always, I’m amazed that water isn’t on the top of every list, every year, although there are some positive signs on that front. So here are the 12 things that filtered to the top:

Energy efficiency will have a big year, with buildings and information and communications technology (ICT) front and center (nice to see the “wow” factor over technologies like solar being tempered by the realization that there are a lot of cheaper ways to meet immediate goals for reducing emissions)
Private investment will revive (with one prediction for a record-breaking year), but fears persist that the pending end of stimulus dollars will cast a long shadow over the market
Differentiation – i.e. marketing – will increase in importance as we move from a technology-heavy phase to a commercialization-focused phase (something I’ve called attention to in the past).
Consolidation and industry shake-out will accelerate, as will increased involvement of major corporates. Many VC-backed firms need an exit (especially in smart grid, solar and biofuels), so expect a few IPOs, but mostly M&A or failure as scale becomes more important and winners and losers emerge. And as the market grows and the issues being addressed become more complex, big multinationals with vested interests will try to play a larger role
Smarter transportation – especially electrified – continues to gain traction, while next generation liquid fuels (cellulosic in particular) takes baby steps
It’s more than energy, stupid. Land, water, rare earth metals, etc., take more mind share as understanding grows that the issues we face go beyond energy and carbon
Importance of carbon measurement and management will increase, but folks seem pretty skeptical over whether climate legislation/treaties get be enacted–and even if they do, whether they’ll be aggressive enough (some expect sector-specific carbon regulation – i.e. aviation and shipping – instead of economy-wide measures)
Distributed solutions continue to erode the power of centralized systems (in energy generation, building, transportation, etc.)
Some technologies expected to garner attention: Waste to energy, waste biomass, power storage, geothermal, aquaculture, ultracapacitors, desalinization, building materials, large-scale solar
There is a lot of expectation around advancements and interest in upgrading the electric grid; although there was a warning to expect at least one major failure of a smart grid rollout (not to mention that people have been predicting an intelligent grid for many years)
Standards gain a higher profile – whether building codes, water or carbon labeling, unified standards for the smart grid, etc, creating a clear marked playing field grows in importance, including communicating the rules to consumers as needed
International competition to be the cleantech leader intensifies (again this is something I’ve written about in the past, so not really news in my opinion)
If you want to read for yourself, the various predictions I’ve pulled from are here: Energy stocks to watch from Seeking Alpha; Overall industry outlook from the Cleantech Group; Clean energy predictions from Deloitte; Two different VC perspectives, one from Lightspeed Venture Partners and the other from Rob Day at Black Coral; Five biggest hurdles from Earth2Tech; IT and corporate green from Greenmonk’s Tom Raftery; Green building trends from Earth2Tech; Top 10 promises from cleantech companies from Cleantech Group; Smart grid from Earth2Tech.

William Brent heads the Cleantech practice at Weber Shandwick, a leading international marketing communications and PR firm. Formerly a serial entrepreneur and news correspondent during a 15-year stint in China, he now works to promote technologies that will power a clean economy. He is also a founder of the Clean Economy Network, and can be found online at http://www.mrcleantech.com and on Twitter @mrcleantech


KP’s Water Investment, APT, Seeks Funding

ERIC WESOFF 01 04 10
KP’s Water Investment, APT, Seeks Funding

2009 and 2010 – The Years That Water Broke

APTwater’s Upcoming Investment Round

APTwater is a ten year old firm making water treatment technology that removes agricultural nitrates (fertilizer) and difficult to treat contaminants from ground water and other water sources.

APTwater was venture firm Kleiner Perkins’ initial water investment. Although the investment cannot be found on the KP website, the APT website lists a “multimillion dollar investment from investors including Seacor Holdings, Miller Environmental Group, Teijin Limited, XPV Capital, and Kleiner Perkins.” (XPV Capital, uniquely, is a VC investor solely focused on the water sector. Their site is a good source for facts on water issues).

APT is now out looking for their Round B according to an inside source. KP and XPV will invest but they are seeking strategic investors who could add value for international market expansion, amongst other things. The source said that Kleiner wants to scale the company and go IPO. As of last July, APTwater had already brought in $10.5 million in equity, according to VentureBeat.

Ray Lane, a partner at KP has said that every year the partners at KP list areas they’d like to consider investing in and water always make the list. The problem is “You have to kiss a lot of frogs” to find the right investment in water.

According to their website, APTwater’s process technologies are based on Advanced Oxidation Process chemistry which produces the hydroxyl radical, the most powerful oxidant available for water treatment, capable of destroying a wide range of organic chemicals via an oxidative chain-reaction. Depending on the treatment objectives and contaminants, the oxidation process may destroy compounds to harmless intermediaries for treatment by another process, or be oxidized completely to dissolved CO2 and oxygen enriched H2O. APTwater claims its process produces zero waste water (compare that to energy and water intensive reverse osmosis).

An investor colleague informs me that Advanced Oxidation is the “new rage” in the water world. It is basically a chemical treatment process that removes organics and inorganics from waste water through oxidation. Contaminants are oxidized through a number of inputs (ozone, hydrogen peroxide oxygen, air) and a number of sequential stages/steps (dosing, oxidation, settling, etc). The IP comes in on the system engineering side which maximizes efficiency, decreases costs, and minimizes footprint allowing you to beat out incumbents with outdated systems or less effective/efficient AOP processes. Purfresh has been promoting a ozone purification system for years–many bottled water vendors use it to sterilize their bottles and a good portion of the bag lettuce you eat has been run through its ozone system as well.

APTwater looks to address the full scope of water usage – drinking water, environmental remediation, process water, and industrial wastewater markets. The firm claims that APTwater’s Environmental Remediation systems have been installed at more than 120 remediation sites around the world. Wastewater can also serve as a source of materials: Ostara Nutrient Recovery Technologies and Oberon have concoted systems that extract solids from purification streams and repackage them as fertilizer or animal feed.

Venture Capital Investment in Water

Opportunities in the water market seem obvious. The water market is:

-Huge and expanding
-In a crisis that cries out for innovation and efficiency
-Not experiencing a bubble
-Deeply enmeshed with energy usage
-Needing a variety of new technology approaches

VC lore has it that you can’t make money in water; it’s too long a design cycle, too regulated and too fragmented a market. The main players in water are large conglomerates like General Electric, Veolia, Siemens that can undertake multi-year contracts. The best shot for a VC investment, say some, lay in building up a company to sell it to GE or IBM, another company with a big interest in water.

Flying in the face of this theory is the fact that Energy Recovery had one of the few recent and successful Greentech IPOs last year. And it turns out that VCs are indeed investing in water across a variety of water sectors.

Here’s a quick list of of the more than $150 million in water investments in 2009. Note that while Israel has its share of water startups, U.S. VCs seem to be waking up to the water market as well. Watch out for a surge in water investments in 2010 and 2011.

Some Venture Capitalist Views on Water

Peter Nieh, a partner at VC investment firm Lightspeed Venture Partners said via email, ”Water is an alluring market because the need is clearly there and the opportunity is large. [There is] some great technology out there. The issue for us is that economically attractive distribution is hard to achieve because the market is so fragmented.”

“[I] definitely agree that water is a challenging sector… and as such, it’s sort of the Rodney Dangerfield of cleantech investments,” observed Steve Vassallo of Foundation Capital.” “That said, we have invested in this area (PurFresh was one of Foundation’s first cleantech investments) and are actively looking for opportunities to invest in capital efficient businesses that address the needs of commercial, industrial, and agricultural users of water.”

Will Coleman of VC firm Mohr Davidow Ventures is also looking carefully at water deals and states. “As for water, yes, we have had an interest in water for quite a while, but it has always been hard to identity venture opportunities in the space. The market is huge. The “water” market in the US alone is over $100 billion annually, but a significant portion of that is in earthworks and pipes. When you slice it a little finer you find that a third of the market is driven by residential, where the cost of water to the end customer is really not a driver.”

Rachel Sheinbein was a water expert at Intel, dealing with the flood of waste-water produced in the fabrication of Intel’s semiconductor products. Today she’s an associate at CMEA Ventures and part of the investment firm’s Energy & Materials team. She vets the VC firm’s cleantech deals but has a particular thirst for water start-ups and states, “I believe there’s an opportunity in water but I haven’t found the investment yet.”

Sheinbein added, “We’re good at materials and membranes,” and, “We would look to get to market through the commercial and industrial space first, as opposed to the conservative municipal water channel.”

Water Crisis

There is already a water crisis in developing nations and in some not-so-developing nations. Additionally, there is a looming water crisis for everyone else on the globe as populations rise, as pollution increases and as climate and weather patterns change.

There are a “scary number” of pollutants in our water supply, said Gayle Pergamit, the CEO and founder of Agua Via, an early stage membrane developer. These pollutants include “natural” poisons like boron and arsenic, nitrogenous wastes from humans and farm animals, and “other goodies” like hydrocodone and estrogen disruptors. “There can be any of 500,000 different interesting and entertaining chemicals in the water supply,” she said.

“Nanotechnology-based water filtration could deliver completely pure water from any source at vastly reduced energy usage and lower total costs,” added Pergamit.

Other firms working on membranes for water applications include the industrial plumbing giant Danfoss, while Novozymes and a startup called Aquaporin are doing similar work. These companies have produced samples and hope to be in the market by this year or next. The challenge, said Aquaporin CEO Peter Jensen to Greentech Media, isn’t so much in creating artificial proteins. It is making the membrane durable.

”The discouraging thing about this is that [VCs] really don’t understand that we (the U.S.) are entering an era of water scarcity (as opposed to large chunks of the rest of the world who are already in the midst of water scarcity),” said Pergamit of AguaVia in an email. “Maybe they don’t buy the concept of climate change – anthropogenic or otherwise. But it also means that they don’t understand aquifer exhaustion and the fact that even if there wasn’t one whit of climate change, we are still going to run out of water.”

For Green Building Design, We Need to Go Open Source

Chu: For Green Building Design, We Need to Go Open Source
By Josie Garthwaite

Posted July 2nd, 2009

The Department of Energy just opened up $346 million in stimulus funds for boosting the energy efficiency of new and existing buildings — but ultimately the agency’s chief, Steven Chu, wants energy efficiency, and other elements of green building, to be incorporated into structure designs from the get-go by way of an open-source software platform.

In other words, in addition to funding tech investments and retrofits with tax dollars in the near term, he wants the DOE to provide advanced design tools at affordable prices or for free so companies can implement them at a relatively low cost.

“We should be inventing a new way of designing buildings — just like we engineered airplanes,” Chu said, offering as an example software for how to integrate passive shading into a building. He didn’t go into many details, but it seems like the idea would be for architects and engineers to be able to run a program that pinpoints things like the most efficient window orientation for a particular site, and then tweak their designs to maximize a building’s energy performance.

“We’re talking about an open-source software platform,” Chu said. “You begin to develop a method, just as there is Windows or Linux…There is still incentive for private commercial development, but you set the building industry on a new commercial path.”

Anno Scholten, vice president of business development for NovusEdge, told us recently that it’s time for the commercial building energy management industry — which is now controlled by a few large companies and “limited by the small number of gateway technologies available” — to start taking a cue from the IT industry and develop open-source projects. The DOE may be taking similar cues to advance and distribute its green building tools.

This idea isn’t entirely new. The DOE already provides energy modeling software called EnergyPlus, which simulates building heating, cooling, lighting, ventilation and other energy flows. The program and source code can be licensed at no charge or up to $2,500, depending on whether someone is the end user or planning to distribute the technology.

There’s also a free plug-in for Google’s 3D Sketchup drawing program, called OpenStudio, which helps integrate the program with EnergyPlus, and a program for lighting design and rendering called Radiance, which the Lawrence Berkeley National Lab (which Chu used to direct) developed in partnership with the Swiss federal government. The DOE began offering an open-source version of that in 2002.

As Worldchanging noted back in 2007, researchers at the national labs have been working on these green building simulation tools for years, but with limited funding. With all of the money now flowing into developing advanced, efficient buildings, we may see advances coming out of the national labs that could help make these programs more effective.

Carving that new commercial path for the building sector quickly — and making more advanced green building design tools widely available at low or no cost — may be particularly important in China, where Chu noted there will be “a huge buildout in the next couple years.” The silver lining to that rapid expansion is that we can learn from it. China, Chu said, can serve as a kind of “test laboratory.”

That doesn’t mean he expects the U.S. to fall behind. “Once the American innovation machine gets properly motivated and properly revved up,” he said, “the United States should become the leader in this new industrial revolution.”


The Big Green Market: Schools

The Big Green Market: Schools

Stimulus funding and a host of other factors are making schools the customers of choice for green builders.

SAN FRANCISCO — The American Institute of Architects is holding its annual conference this week and the topic that seems to come up in every meeting is schools.

“For the next few years, commercial is where it is at – schools, federal and government buildings,” said Don Ernst, green products director for Timber Holdings, which is releasing a new line of sustainable flooring and molding for the inside of buildings at the show. Traditionally, Timber has focused on high-end sustainable hardwoods from South America for exteriors.

“K-12 will continue no matter what,” said Noah Eckhouse, vice president of the global building performance group at Bentley Systems, which specializes in complex simulation and planning software for HVAC and construction engineers. The company recently also participated in a large project for the Los Angeles County Community College System.

Chalk it up to the American Recovery and Reinvestment Act (ARRA). A lot of attention has been paid to how the ARRA will funnel money into transportation, solar and smart grid, but it also contains billions for retrofitting government buildings. In all, $4.5 billion will be spent retrofitting federal buildings and another $6.3 billion goes to grants for improving the energy efficiency of state agencies. A substantial portion of that money will likely go to buildings.

Additionally, $95 billion goes to schools. Most of this money will go toward educational programs, but those grants potentially ease the pressure on capital improvement budgets.

In many ways, the ARRA is more generous to state-owned buildings than homes. Under the bill, homeowners can quality for a 30 percent tax credit on home energy retrofits. However, the credit is capped at $1,500. A similar provision for solar is not capped. Thus, homeowners can get $8,000 or more in credits for solar systems that might have a longer payoff period.

But there are others as well, added Eckhouse. Schools, like other government buildings, own their own buildings. Thus, the party that owns the building and pays for retrofits is the same person that pays the power bills.

“The owner/operator message has gotten through,” he said.

In commercial buildings, by contrast, the owners are often motivated to flip the building as soon as possible and thus aren’t motivated to retrofit. In “class A” office building space, owners may retrofit and improve energy efficiency in order to seek high-end tenants and higher rents.

In class B office buildings, “there is a lot of mediocrity,” he said.

The there are demographic and historical factors. Many of the elementary schools and community college buildings in the U.S. were erected in the ’50s, ’60s and ’70s. As a result, they are old, and likely inefficient. You also often don’t have the same worries or concerns about historical integrity that you might when retrofitting a college.

The economic squeeze may also increase the attractiveness of community colleges. For all of those reasons, communities are actually a more attractive market than colleges, Eckhouse said.

Technology is also coming to the rescue. Several companies – Serious Materials (drywall that requires little energy in manufacturing), Aspen Aerogels (highly efficient insulation); E2E Materials and Timber (green flooring and wood) – have begun to release products in time for the big retrofit.

Timber, for instance, has 100,000 square feet of green flooring and laminates under production with a partner in Germany. It will start coming to the U.S. in the next 30 days.

Ernst added that green building product makers also understand that they have to be cost-effective. Timber’s traditional hardwoods are premium products. They are bought for architectural showcases and come from trees that need to sit 100 years in the Amazon rainforest before they can be harvested. The flooring products grow quickly and come from more familiar species like walnut.

“We [Americans in general] want sustainable but we also don’t want to see a green upcharge,” Ernst said. “If these products cost 30 to 40 percent more, they aren’t going to do it.”

Timber hopes to keep any premium on its interior products at a five percent or less.

Style and aesthetics, though, can also play a role within the price envelope, added Eckhouse. One company to keep an eye on, he said, is Project Frog, which specializes in pre-fab schools and small commercial buildings. The company raised $8 million last year and also wowed Massachusetts officials with a 1,200 square foot “school of the future” erected last year. It’s been getting a lot of buzz.


OPower Separates Heat, Light in Home Energy

JEFF ST. JOHN 12 17 09
OPower Separates Heat, Light in Home Energy

The startup says its patent-pending analytic software can nose out how much power and natural gas utility customers are using for heating and cooling relative to their other needs – all without smart meters.

Let’s face it. Most of us aren’t going to have high-tech, gee-whiz home energy management systems anytime soon.

But we might still want to know how much electricity – and natural gas – we’re using in our homes, and how to reduce that consumption and save money – even if we’re not willing to work that hard to get there.

OPower – a software startup that relies on the good old U.S. mail to communicate with utility customers – says it can bridge that gap. The idea is to analyze utility energy data, along with a whole host of third-party data covering such topics as customers’ income levels, rent-or-own status, and the weather they contend with, to give them tips to save energy that actually fit their lifestyles.

On Thursday, the Arlington, Va.-based startup announced a new feature – separating energy used for heating a home from the rest of a household’s energy use. OPower is now singling out that information for customers of Puget Sound Energy in Washington state, the company said.

In the case of Puget Sound Energy, OPower will be using daily reads from electricity and gas meters – not smart meters, per se, but an older version of meters that can only send out usage data, not take utility commands, said Ogi Kavazovic, OPower’s senior director of marketing and strategy.

But OPower’s strength lies not in metering every household water heater or HVAC system, but in combining a statistical regression analysis of energy usage information and overlying weather patterns to hit close estimates of energy used for heating – or cooling – versus other needs, he said.

“We’re the only people who’ve been able to figure this out, as far as I can tell, without any devices in the home,” Kavazovic said in a Thursday interview.

OPower plans to roll out similar functionality to some of its other roughly 20 utility partners, which include the Sacramento Municipal Utility District, Dominion, Xcel Energy, Seattle City Light and Commonwealth Edison (see Green Light post).

In the past two years, OPower has raised $14 million to develop its combination of powerful analytical software and savvy utility customer marketing techniques, Kavazovic said. According to its pilots, OPower can encourage about 85 percent of the customers it contacts via utility mailings to cut up to 3.5 percent from their energy use over the course of a year.

That’s on the low end of the 5 percent to 10 percent energy reduction credited to more high-tech in-home energy monitoring and management systems from the likes of Tendril, Control4, Greenbox, Onzo, and the dozens of others that have emerged in the overcrowded home energy management space (see Green Light post).

But OPower’s back-end analysis, front-end mailer tip sheet method only costs about $10 per customer – a fraction of the $100 and up it costs to install in-home energy displays and control systems available today.

“We like to say, information and analysis actually trumps real-time energy feedback,” Kavazovic said. The high costs of more hands-on, real-time home energy systems has traditionally been a barrier to their adoption, and utilities are eager to find ways to bring down their costs so they can be rolled out to more customers (see Utilities Mull Price Points, Policies for Home Energy Management).

OPower also doesn’t rely on smart meters to give it data, a trait shared by Microsoft’s Hohm home energy management platform. Though, in both OPower and Microsoft’s case, getting data in daily, hourly, or 15-minute reads from smart meters that do exist only helps improve the accuracy of their systems.

Smart meters are being rolled out in the millions across the world, and Pike Research estimates that just over half of American households will have them by 2015 (see Green Light post).

But that still leaves a lot of utility customers needing some kind of dumb meter-compatible way to drive energy efficiency in the years to come, Kavazovic noted.

Still, OPower isn’t ignoring the emergence of IT as a tool to connect utilities with their customers. Like many of its home energy management rivals, the company has a Web-based portal to bring information to people, and is planning a version that includes direct control of “smart” thermostats some time next year, he said.


Building Value: How Energy Efficiency Measures Enhance Real Estate Portfolios

Building Value: How Energy Efficiency Measures Enhance Real Estate Portfolios
By GreenerBuildings Staff
Published December 24, 2009

Boston, MA — Proven, existing efficiency technologies — in everything from lighting to climate control and more — can unlock the untapped reserves of efficiency gains buried in many real estate holdings, according to a new report.
Those gains would be a boon to real estate investors’ bottom lines — both direct property owners like large pension funds and smaller investors who primarily hold real estate securities — even as they make our buildings far less power-hungry and a big part of America’s efforts to combat climate change.
The report, “Energy Efficiency in Real Estate Portfolios: Opportunities for Investors” (PDF), was commissioned by Ceres and authored by the responsible investment group of the investment consulting business Mercer.
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The global trend toward putting a price on greenhouse gas emissions — thus ending the practice of disregarding the cost of polluting — tacks a strong business case for limiting buildings’ emissions onto the strong environmental case.
But while there are clear opportunities in unlocking efficiency gains, the report also cites a flip side for real estate investors who fail to factor in efficiency: the same trend toward ending free pollution may expose unprepared investors — and fiduciaries of investment portfolios — to unnecessary investment risks. That’s because expected higher energy costs, existing and possible legislation demanding increased efficiency, and competition from more efficient buildings could drag down the profits of less efficient portfolios.
“That message needs to be taken seriously by both direct investors in real estate and those who invest through real estate investment trusts and other securities,” said Craig Metrick, Mercer’s U.S. Head of Responsible Investment.
The report draws on key industry and academic research on building efficiency’s economic impacts. It also outlines key steps and best practices for leveraging efficiency in real estate investments, and includes case studies from leading investors that show the possible positive impacts of efficiency upgrades.
For instance, in 2008 financial services giant TIAA-CREF established a goal of reducing energy use in its real estate portfolio 10 percent by 2010, and the company is well on its way to meeting that goal. The effort is already yielding $4 million a year in reduced energy costs across the portfolio, and all new buildings TIAA-CREF develops will be LEED certified.
The California Public Employees’ Retirement System (CalPERS), the world’s largest pension fund, is also on target to meet a 20 percent energy use reduction goal in its real estate by the end of this year,
Other major real estate managers pursuing significant efficiency initiatives include Jones Lang LaSalle (JLL) — whose ongoing retrofits of New York’s famed Empire State Building will translate into $4.4 million in annual energy savings – and Deutsche Bank’s RREEF Alternative Investments.