Executive Green

Carbon Offsets

noreply@blogger.com (Executive Green) — Wed, 24 Sep 2008 23:06:00 +0000

Companies that are quick to offset their "toe print" are costing themselves twice as much to decrease their GHG inventory: the company must pay for the offsets while squandering its opportunity to invest in developing a sustainable industry.
While carbon offsets seem noble, their effect on corporate leadership often is damaging. If the corporate goal is to state carbon neutrality, then it is in the best interest of the company to account for the smallest possible GHG inventory, subsequently paying for offsets to reach the target. Leadership should focus on how their organization can rethink, redesign, and/or rebuild their business to no longer assume for an infinite environment, instead of focusing on who has ownership of or responsibility for Green House Gases.
A business's emergence as a leader in the carbon-efficient economy requires company-wide commitment to developing, managing, and optimizing for the whole carbon picture.
Being GHG-responsible is crucial, and the idea that changing light bulbs and small-efficiency gains qualifies as a corporate climate strategy is misleading to stake holders. If the corporate goal is more holistic, then the business is more inclined to develop a comprehensive business strategy. For example: Interface is a leader in industrial ecology. With the vision of becoming the world's first environmentally restorative company by 2020, Interface is pioneering management and manufacturing processes that will achieve this goal. Carbon offsets cannot achieve this goal, because they are not business development. Instead, offsets are mere monetary atonements for a business strategy that needs improvement.

What is CO2e

noreply@blogger.com (Executive Green) — Tue, 26 Aug 2008 22:40:00 +0000

Carbon Dioxide Equivalence (CO2e) is a quantity that describes, for a given Greenhouse Gas, the amount of CO2 that would have the same global warming potential, when measured over a specified timescale (generally, 100 years).

Six examples:

carbon dioxide (CO2) = 1 CO2e

methane (CH4) = 19 CO2e

nitrous oxide(N2O) = 281 CO2e

hydro fluorocarbons (HFCs) = 500-4000 CO2e

perfluorocarbons (PFCs) = 5000-8000 CO2e

sulfur hexafluoride (SF6) = 21,682 CO2e

Why are companies accounting for Carbon?

noreply@blogger.com (Executive Green) — Sun, 29 Jun 2008 16:12:00 +0000

Considering the pace at which markets and governments are moving towards reducing the overall carbon footprint, an accurate enterprise account of a business’s green house gas exposure maters to stakeholders. In addition disclosure is increasingly expected, and failure to disclose can put a business at a strategic disadvantage.

Consumer Demand

Americans’ appetite for environmentally friendly technologies and consumer products is grossly underserved, with a potential $104 billion in sales this year (2007 National Technology Readiness Survey
Wal-mart (NYSE: WMT) announced that its customers have increased purchases of the five eco-friendly products tracked in its Live Better Index by 66% from last year. The retailer says this overall adoption rate, which measures sales compared to other products in the category, serves as a nationwide trend indicator of consumer demand for green products.
50% of US consumers would rather do business with a company that is working to reduce global warming than one that is not (Survey by GlobeScan 2007)

Cost savings

Examples of carbon ROI context for business decision making as illustrated with the following examples (Examples are illustrative and do not represent actual cases):

Should the company redesign lighting in a distribution center (a $50,000 investment will reduce lighting costs by 25% , and carbon footprint by 3 tons per year)
Should the company make a larger investment in package design to reduce distribution costs? ($100,000 design time, reduces shipment volume by 20% and saves 20 tons of carbon)
How do those alternatives compare to the cost of a ‘green’ re-design of a major product? ($250,000 in design time replaces a polymer with a bioplastic, enabling the announcement of a new green product and generating $1,000,000 in new annual revenue while reducing the carbon footprint by 40 tons.)

Domestic Policy

US Climate Security

California AB 2538: Greenhouse gas emissions: consumer product labeling

Global Environment

Kyoto II, United Nations Framework Convention on Climate Change

European Union Emission Trading System (EU ETS)

Green Washing

noreply@blogger.com (Executive Green) — Fri, 28 Mar 2008 22:52:00 +0000

In today's market there are many claims: Zero Waste, Carbon Neutral, Sustainable; yet there is limited agreement on what these statements mean. Businesses and consumers alike are in search of consensus on such statements. There is market demand for validation by trusted sources of how product offerings meet their claims of environmental value.

We will see the rise of new sources of green data collection (Lucid Design Group, Fat Spaniel), and green certifications across a range of offerings will help differentiate products. (LEED , SCS, CCOF)

Conversation with Ullas Naik from Globespan Capital

noreply@blogger.com (Executive Green) — Tue, 27 Nov 2007 16:18:00 +0000

Executive Green: How does Globespan approach investing across a theme as broad as CleanTech?

Ullas Naik: It is challenging to look across so many distinct business categories. Our approach is to look at the value chain within a category and place strategic investments in the leaders in each area.

For example with the Solar market, we have invested in three phases of the value chain:

At the raw material stage, Calisolar innovation focuses on addressing the global shortage in silicon. The company has introduced innovation in the area of “dirty silicon” in order to achieve competitive advantages in feedstock costs, wafer yields and solar cell efficiency.

Globespan’s investment in Advent Solar is focused on increasing the performance of photovoltaic (PV) cells and modules. Bringing PV efficiency to a price point that is competitive with traditional forms of energy production (Coal and Nuclear) is crucial to building a sustainable solar market.

Solar Power Partners is a leader in driving the adoption of solar energy by reducing the initial capital costs required for a business to deploy solar by offering a power purchase agreement (PPA). The company focuses on deploying solar energy facilities that add real value to commercial businesses, institutions, and government facilities.

EG: Why did you invest in SPP?

UN: We are excited by SPP’s current customer base, and the company has a great pipeline of business. SPP has the third-highest number of PPAs in the solar market (behind MMA Renewable Ventures and SunEdison) and the company is closing the gap.

PPA companies are currently mostly aimed at the commercial sector and could emerge as the key driver for the adoption of renewable energy. The underlying providers are thinking creatively about how to accelerate and scale the growth of the solar market. PPA companies are reducing the financial barriers for businesses to enter the solar market, and increased amount of purchasing creates greater efficiencies downstream. For example SunEdison placed a billion dollar order with First Solar.

EG: How important are subsidies to the success of the solar market?

UN: Innovation will drive the price point of solar and other renewable energy sources down over time. However, for the next 3-5 years, subsidies are critical in order to let a new market grow.

The enormous uptake and positive impact in Spain and Germany are good examples of the benefits of subsidies and feed-in structures.

EG: What investment categories are interesting to you?

UN: We are dedicated to following a value chain-oriented strategy, similar to the one we have employed in the solar industry, to other markets. We are currently looking at opportunities in clean coal, wind, biofuels, building materials, etc.

EG: Are you concerned by the limited number of people in the marketplace with domain knowledge?

UN: Similar to some of the investments we made in the early days of the Internet boom, CleanTech companies will require executives that will adapt from new and adjacent industries.

When we look at investing an “A” round of capital, we prefer that the founding team have domain expertise; but as the company scales and needs professional managers, we look for executives with proven startup experience and will take a chance on managers who come from other domains.

EG: Is CleanTech investing important you on a personal level? Why?

UN: Yes, it is very important to me. Climate change is real, and as a global society we are seeing the detrimental effects of it almost every day. It is important to me to drive the creation of more carbon-neutral options and sustainable business practices for my two children as well as the next generations. I am privileged to be in a position where I can try to make a big difference and hopefully derive profits in the process by building new companies that will reverse the effects of decisions that were made in the past.

Al Gore joins Kleiner Perkins Caufield & Byers

noreply@blogger.com (Executive Green) — Tue, 13 Nov 2007 23:56:00 +0000

Further confirmation that Silicon Valley's new engine of innovation will be Green: diligent investor Al Gore joins KPCB, emphasizing the importance placed on insights into current and future policy.

Mr. Green will be calling the shots:
Mr. Gore’s part-time duties will entail investigating the growth potential of start-up companies focused on the alternative energy sector, and then weighing in on whether Kleiner Perkins should finance those companies. [NYTimes]

California Clean Tech Open

noreply@blogger.com (Executive Green) — Thu, 01 Nov 2007 05:06:00 +0000

Executive Green congratulates all the participants and winners of this years California Clean Tech Open (CCTO).

Hosted at the San Francisco Palace of Fine Arts, the CCTO featured the innovation of passionate entrepreneurs that are meeting the challenges of developing a more sustainable economy.

It was inspiring to see so many bright minds come together to be part of the solution. In attendance where different capital classes (Venture, Debt, Investment Banking, etc) strategizing on how to fund businesses to maturity, people identifying how their skill set can fit into the Green Frontier, and Exhibitors raising the public’s awareness about their offerings.

Winners and runners up are:

Smart Power Award

Winner - Lucid Design Group

Lucid creates real-time feedback on the environmental performance of buildings and homes to engage, educate and motivate occupants to better conserve environmental resources.

Runner Up - Federspiel Controls

Federspiel Controls provides a wireless control system called the Federspiel Advanced Control System (FACS). FACS performs supervisory control of HVAC systems, reducing energy consumption and improving maintenance and operations.

Air, Water and Waste Award

Winner - Microvi Biotech LLC

Microvi Biotech is leading a modern environmental biotechnology revolution that will make the decontamination of water resources cost-effective and conventional treatments obsolete, and forever change the current ways of providing pollution control, remediating water resources, and treating industrial and municipal wastewater.

Runner Up - EarthGuard

EarthGuard manufactures environmentally friendly plastic packaging.

Green Building Award

Winner - BuildFast

BuildFast is a building materials manufacturing company that has developed an innovative House Kit solution to help governments and nonprofits build low-income and post-disaster housing around the world - an untapped, multi-billion dollar market

Runner Up - Enverity Corporation

Enverity Corporation develops and markets web-based enterprise software applications that automate and facilitate improved corporate data management and reporting (initially focused on environmental, health, safety compliance and greenbuilding).

Transportation Award

Winner - Syncromatics

Syncromatics provides real-time bus tracking systems for transit operators; our services bring efficiency to routes and information to riders, while cutting the operating costs of bus fleets. Syncromatics uses GPS and cellular networks to transmit location, speed and passenger information from buses to your web browser in under 5 seconds.

Runner Up - Hum Cycles

Hum Cycles is the first production electric motorcycle to rival any gasoline sportbike. More importantly, the motorcycle and the company will be at the cutting edge of environmental sustainability. Hum Cycles is designed from cradle to cradle with recycled and recyclable materials, is non-toxic and amazingly efficient.

Renewables Award

Winner - 1-Solar

1-Solar, Inc., has patent-pending technologies, proof-of-principle prototypes and industry experiences to design, manufacture and market the next generation of inverters that have double to triple the life of current technology inverters, yet cost less.

Runner Up - Tahoe Water Systems

Tahoe Water Systems provides a self-contained solar/wind based solution that is competitively priced in acquisition, installation and operational costs.

Energy Efficiency Award

Winner - NiLA Inc.

The NiLA Lighting System uses 50% to 70% less electricity and generates 75% less heat than tungsten or high intensity discharge (HID) lights, thus substantially reducing air conditioning costs and creating a more comfortable working environment for its first target market - stage set lighting for the entertainment industry.

Runner Up - Ahwahnee Technology

Today, lighting consumes roughly 20% of our global electricity, wasting more than 70% of it as heat. This whole process causes nearly as much CO2 as that made by all cars. Ahwahnee energy-efficient lighting is the simplest way to cut 10% of global electricity usage and greenhouse gases.

Conversation with Ann Edminster on Green Building

noreply@blogger.com (Executive Green) — Mon, 29 Oct 2007 20:46:00 +0000

Ann Edminster
Co-chair
U.S. Green Building Council’s LEED Homes Committee
Ann Edminster, M.Arch., is an environmental design consultant and educator whose work focuses on investigation and evaluation of building materials and systems. She is co-chair of the U.S. Green Building Council’s LEED Homes Committee and past co-chair of the LEED Materials & Resources Technical Advisory Group. She is co-author of Efficient Wood Use In Residential Construction: A Practical Guide to Saving Wood, Money, and Forests and has been an invited speaker at dozens of regional and national green building conferences over the past decade. Her background includes more than 25 years of work as a residential designer.

Executive Green: How did you start thinking about Green Building?

Ann Edminster: The combination of my degree in Architecture and the fact that I cannot stand waste of any kind started me thinking early in my career about how to build more efficiently and sustainably.

EG: What are some the recent changes you have seen in Green Building?

AE: It seems like at the start of this year (2007), consumer awareness moved past Why should I build green? to Let’s find solutions on how to build sustainably. Finally we have momentum in the industry. LEED is a starting point for builders, architects, businesses, and consumers to agree on a measurement of quantifying resource efficiency.

EG: What is LEED?

The Leadership in Energy and Environmental Design (LEED) Green Building Rating System™ is the nationally accepted benchmark for the design, construction, and operation of high performance green buildings. LEED gives building owners and operators the tools they need to have an immediate and measurable impact on their buildings’ performance. LEED promotes a whole-building approach to sustainability by recognizing performance in five key areas of human and environmental health: sustainable site development, water savings, energy efficiency, materials selection, and indoor environmental quality.

EG: How are different government bodies using LEED to help create change in the building process?

AE: Governments are adopting LEED and using it as a standard. Some Local, State, and Federal bodies now mandate that construction of public structures complies with LEED guidelines. They incentivize sustainable building projects in the private sector with perks such as expedited permit processing and relief on fees.

EG: Do you have any concerns about all the recent attention to Green Building?

AE: The industry is in a very exciting time, and the increased attention to sustainable building practices will result in a net positive for the industry.

A building is a place where art meets science. For example the placement of a window can be viewed by the structural engineer for how it will affect the strength of the building, by the architect for the light aesthetics [MSOffice1] it will provide, by the facility manager for its affect on heating and cooling, and so on. With so many people involved and everything so interconnected, there are many areas where people can create ideal or sub-optimal results.

Green Building by the Numbers
Courtesy of U.S. Green Building Council

The value of green building construction starts is expected to exceed
$12 billion in 2007. (Source: McGraw-Hill Construction Analytics)

Size and Impact of the U.S.-Built Environment (all commercial, residential, and industrial):

* Represents 20% of 2001 U.S. economy (Source: National Institute of Standards and Technology and the National science and Technology Council: Construction Industry Statistics, 1995)

* Comprises 14.2% of the $10 trillion U.S. GDP (Source: 2006 U.S. DOE Buildings Energy Databook)

Energy consumption:

* Buildings represent 39% of U.S. primary energy use (includes fuel input for production). (Source: 2003 U.S. DOE Buildings Energy Databook)

Electricity consumption:

* Buildings represent 70% of U.S consumption. (Source: 2003 U.S. DOE Buildings Energy Databook)

Water use:

* Buildings use 12.2% of all potable water, or 15 trillion gallons per year. (Source: U.S. Geological Service, 1995 data)

Materials use:

* Buildings use 40% of raw materials globally (3 billion tons annually). (Source: Lenssen and Roodman, 1995, “Worldwatch Paper 124: A Building Revolution: How Ecology and Health Concerns are Transforming Construction,” Worldwatch Institute

Waste:

* The EPA estimates that 136 million tons of building-related construction and demolition (C&D) debris was generated in the U.S. in a single year. (Source: http://www.epa.gov/epaoswer/non-hw/debris/about.htm and U.S. EPA Characterization of Construction and Demolition Debris in the United States, 1997 Update)

* Compare that to 209.7 million tons of municipal solid waste generated in the same year. (Source: U.S. EPA Characterization of Municipal Solid Waste in the United States, 1997 Update. Report No. EPA530-R-98-007)

EG What business opportunities do you see in Green Building?

AE: Many different products go into a building, and we will see innovation across the board in the efficiency of how materials are sourced and developed.

Businesses and Governments have begun to measure resource efficiency (CO2 emissions, Water consumption, etc.). We eventually will see an application that will take the LEED checklist and move it to translatable metrics.

Conversation with Leif Langensand from The Angels Forum

noreply@blogger.com (Executive Green) — Mon, 08 Oct 2007 22:27:00 +0000

Executive Green: What does a typical investment for Angels’ Forum look like?

Leif Langensand: Our ideal investment is with a business that needs a total capital investment of $50m or less. The company’s offering should be ready for commercialization with a management team that can bring it to market.

EG: What segments in CleanTech best match your investment criteria?

LL: Different market segments lend themselves to angle investing. For example, clean water can make sense if the offering is a physical product with good patent protection and does not require the support of municipalities. We have looked at clean water systems and products that address the consumer market.

Another area that has promise is green building. There are many different components in a decentralized market that go into buildings. Areas of interest include sensors, lighting, recycled building materials, water heaters, and generators, to name a few.

EG: Any recent investments you can share with us?

LL: Light Engineering (LE) is a recent investment in more efficient generators and motors. The company produces improved energy density at lower weights. We are excited by LE’s progress. Appliances, factory automation, and consumer electronics are promising segments because of public demand for ecologically-aware products and government mandates for energy efficiency

Researching and Defining CleanTech

noreply@blogger.com (Executive Green) — Fri, 05 Oct 2007 16:19:00 +0000

Quality research must encompass the complex picture of how consumer behavior, business strategy and policy must work together to create a sustainable future. The right outcome will include choices for consumer, new markets and forward thinking leadership.

The Business of Climate Change

Summary
Many (of Lehman Brothers) clients have asked for (the company’s) view on the argument that, even assuming that scientists’ projections of the likely effects of climate change are broadly correct, the effects will be felt only slowly, with little effect on asset prices over most investors’ time horizons.
(Lehman Brothers) judge this argument as flawed, for three, linked, reasons. First, markets anticipate even slow-moving variables, such as climate change. Second, policy made in the name of climate change could have an almost immediate, up-front effect on
asset prices. And third, markets anticipate policy itself. In this way, expected future effects of climate change become
brought right forward to the present.
Fundamentally, the economic case for considering climate change ultimately depends on the science. (Lehman Brothers) judgment is that the science will increasingly be seen as broadly correct; that this view will be progressively accepted by the weight of market opinion; and that, while the adjustment of asset prices has begun, full adjustment will take years, rather than months.

Curbing Global Energy Demand Growth: The Energy Productivity Opportunity In-depth sector case studies covering buildings, transportation, and industries highlight how the right policies and investments in existing technologies that yield an internal rate of return of 10 percent or higher could contribute to a reduction in global energy demand growth by at least half to 2020.

CLEANTECH Venture Capital:
How Public Policy Has Stimulated Private Investment

The clean technology, or “cleantech,” industry has the potential to be a major economic driver for the United States – one that can also provide competitive solutions to environmental challenges. We focus on the connection between cleantech and public policies at both the national and state levels. America’s current advantage in cleantech is a huge asset, and one that must be protected and cultivated carefully. New research by Environmental Entrepreneurs (E2)and the Cleantech Venture Network shows continued strong growth in the U.S. cleantech industry. Smart public policy can help secure this advantage, while also addressing environmental and climate issues though solutions that will create jobs and provide significant economic benefits.
This is the third report on cleantech venture capital by Environmental Entrepreneurs (E2) and the Cleantech Venture Network®, a Cleantech Group™ company. A full copy of the report can be found online at www.e2.org. Previous reports from 2004 and 2006 can be found at www.e2.org and www.cleantech.com

Conversation with Justin Label from Bessemer Venture Partners (BVP)

noreply@blogger.com (Executive Green) — Mon, 01 Oct 2007 17:22:00 +0000

Executive Green: CleanTech is an investment theme. How does Bessemer Venture Partners (BVP) describe CleanTech?

Justin Label: BVP describes CleanTech as any technology or service that improves sustainability (examples: wind, solar, construction).

EG: Why is CleanTech an interesting investment category?

JL: This is a 30+ years’ trend that will roll out incrementally. The immediate drivers are related to the carbon crisis (i.e., the demand for fossil fuels and the need to decrease CO2 emissions).

EG: What types of investments do you find interesting?

JL: Types of opportunity will evolve. Only a handful will map into venture investing.

There are a number of venture investment opportunities in companies that help produce or manage clean energy solutions. Consumer, government, and business are looking for solutions today.

Also in the near term, investments in companies that innovate more Green Building practices will gain momentum. The thin wedge of leading decision makers that are driving the growth of clean energy will also move to Green Building.

EG: Do you have concerns that the market for CleanTech investing is overhyped?

JL: I do not have a strong view on the market as a whole; we are at the earliest stages.

Decades from now when we look back we will see that the investments made in innovation today are just a small percentage of the solutions that will be delivered.

The investment community is operating in the dark. The outcomes to date do not prove that we are in a solid state for venture investing.

EG: What is your personal interest in CT?

The investment category is intellectually fascinating and an area that is still developing. Following long-term trends with a firm like BVP and helping solve really big problems that will address society’s needs is exciting.

ConsumerPowerline (CPLN)

noreply@blogger.com (Executive Green) — Fri, 28 Sep 2007 04:26:00 +0000

According to Venture Wire
New York based ConsumerPowerline Grabs $17M For Demand-Response

Start-up companies with demand response technologies and services continue to attract investor interest, with WebEnergy.net Inc., which does business as ConsumerPowerline, emerging as the latest beneficiary.

Information is on the way

noreply@blogger.com (Executive Green) — Fri, 28 Sep 2007 03:46:00 +0000

Greentech Media is a welcome publication entering into the expanding number of CleanTech/GreenTech information portals. ExecutiveGreen attended Greentech Media’s launch party and was happy to see the resources they are aggregating.

The publication will compete for advertising dollars with Cleantech Network (which acquired 10-month-old Inside Greentech in August), incumbents of the High Tech world (example: Red Herring) that are expanding their coverage, and the Greener World Media network of publications.

Now rebranded Cleantech Media, LLC, the former Inside Greentech’s coverage is similar to Greentech Media. Greener Media World is more targeted at coverage of events at the f2000. The competition should bring higher quality information to a broader audience.

The public’s thirst for quality reporting and the companies’ desire to reach a green audience will support the growth of this category. I expect to see more entries.

KQED Forum "Clean Tech Economics"

noreply@blogger.com (Executive Green) — Fri, 07 Sep 2007 22:27:00 +0000

KQED Forum "Clean Tech Economics" is an informative conversation

The program explores the economic and policy side of Silicon Valley's boom in clean technology.
Host: Dave Iverson
Guests:

Dan Kammen, director of the Berkeley Institute of the Environment

Ira Ehrenpreis, general partner of Technology Partners and chairman of the Clean-Tech Investor Summit

James L. Sweeney, director of the Precourt Institute for Energy Efficiency at Stanford University, professor of Management Science and Engineering and fellow at the California Council on Science and Technology

Vindu Goel, business columnist and blogger at the San Jose Mercury News

Mike Gordon ConsumerPowerline

noreply@blogger.com (Executive Green) — Tue, 28 Aug 2007 14:36:00 +0000

Conversation with Mike Gordon Founder/CEO of ConsumerPowerline (CPLN)

Executive Green: Please tell me about your company.

Mike Gordon: ConsumerPowerline (CPLN) is a full service strategic energy asset management firmthat assists Fortune 1000 companies with large power needs gain greater control over their energy expenditures and assets By utilizing real-time data to optimize and manage energy consumption, we help our clients reduce demand for electricity during periods of system-wide peak. This increased control not only creates new sources of revenue, but also improves property values, creates a funding mechanism for building improvements, and helps our client contacts become thought leaders in both their company and the industry.

EG: Why are Demand Response Solutions (DRS) important?

MG: DRS is essential because of the market’s failures to build adequate power plants, invest in upgrading transmission, and deploy renewable energy solutions. We will never have a perfect energy infrastructure unless we apply DRS.

As larger companies show successful implementation of DRS, the technology will move down market to smaller businesses and eventually into the residential market.

EG: Why did you start CPLN?

MG: I’ve recognized energy efficiency and cleaner power production as a critical market for 25 years now. In today’s market there is great opportunity to build sustainable valuable energy solutions for end user customers.

EG: Have you had difficulty hiring? Why?

MG: It is challenging to find innovative thinkers in an industry that has shown little transformation in 30+ years.

EG: How sophisticated is the investment community’s knowledge of energy services?

MG: The venture industry is catching up, and research in the public market for companies like Comverge and EnerNoc gets wiser each month. I have found no real difference in the quality of venture investors on either coast. There is no geographic center of investors focused on energy services.

Book Review

noreply@blogger.com (Executive Green) — Tue, 21 Aug 2007 23:33:00 +0000

The Clean Tech Revolution (by Ron Penick and Clint Wilder) provides clear language into the complexity of defining CleanTech. The authors identify the big industry trends and how both economic and social pressures will force the adoption of technologies designed to support more environmentally benign production. Successful companies -- old and new -- will follow their customers along that path.

Conversation with Warren Weiss from Foundation Captial

noreply@blogger.com (Executive Green) — Wed, 15 Aug 2007 00:20:00 +0000

To continue to gain insight into how VCs are thinking about CleanTech, I spoke with Warren Weiss from Foundation Captial.

Executive Green: Since CleanTech is such a broad investment category, how do you focus your investment strategy?

Warren Weiss: We look at supply and demand.

For example, much of the investment activity in the energy sector today is focused on the supply side, or energy production (solar, biofuels, clean coal, etc.). Foundation Capital investments are focused on innovations on the demand side, or energy efficiency (smart grid, etc.).

Foundation Capital’s current investments: EnerNOC, eMeter, Silver Spring Networks.

EG: How does demand side investing fit with Foundation’s investment philosophy, and what do you see as big market drivers?

WW: Investments on the demand side are generally more capital efficient (lower capital requirements to get to market), and as a firm, we can leverage our IT expertise.

The market is being driven by corporate mandates to reduce carbon footprint and regulator initiatives to become more energy efficient.

There are huge untapped markets to make energy efficiency work on a large scale. Utilities need to leverage their data to gain more insight on how to better generate, manage, and deliver power.

EG: Is CleanTech investing overhyped?

WW: “CleanTech” as a term is overused to describe a diverse investment theme. As with the maturation of any investment category, there will be sectors that prove unsuccessful, which I hope will not hurt CT overall.

EG: Where have you learned the most from your energy investments?

WW: In two areas primarily:
Understanding sales distribution channels with utilities
A more in-depth understanding of how utilities rate recovery works

EG: What is your personal interest with CleanTech?

WW: We are in a very exciting market! Energy markets present a great opportunity to use IT to lower costs and improve operations. We invest in companies that offer consumers the ability to clean up the environment and do good for the planet.

Renewables Market

noreply@blogger.com (Executive Green) — Tue, 07 Aug 2007 03:01:00 +0000

Below is the end of an email exchange between Executive Green and a recent software refugee who joined a CleanTech company.

Andrew

I took the opportunity to transition my career from high tech into the renewables market and joined Tioga Energy. The company boosts the adoption for F1000 companies of enterprise-scale renewable energy by installing and owning solar electric facilities and selling green electricity back to the “hosts” (through so-called “power purchase agreements or PPAs). We fast-track their path to clean power by eliminating upfront purchase expenses and ongoing maintenance responsibilities.

The process of finding the right deal was similar to the decisions I made in the mid 90s when I jumped into an Internet company. I was able to leverage my successful track record of developing b2b go to market strategy while learning from and teaming with industry experts.

I find the challenges ahead in the renewable market to be bigger and even more meaningful than the start of the Internet generation. There will be many innovations in the renewable market, and I look forward to being a part of it all.

CleanTech Job Search

noreply@blogger.com (Executive Green) — Tue, 19 Jun 2007 21:52:00 +0000

I always advise people actively managing their career path to use the process of changing jobs as an opportunity to market their skills and expand their professional network. New and better employment isn’t the only goal: a dynamically managed job search also yields a clearer picture of your own value in the marketplace, as well as relationships that may prove helpful down the road.

When moving into CleanTech, prepare for your search by packaging your accomplishments into sound bytes relevant to a wide interviewing audience. As you interview, listen for recurring themes and ideas that resonate best with your skills and interests. The relationships you make can spark an idea that creates your new job.

Below is the end of an email exchange between Executive Green and a recent software refugee who joined a CleanTech company.

Andrew

Thanks for your advice in the beginning of my search
process. I am excited about my recent transition to a water management company, HydroPoint. The company gives me
an opportunity to stay on the cutting edge of a burgeoning industry, has
significant financial upside, and meets my social agenda to “do good” for the
planet.

Early in the interview process it parked in my brain that a
job in CleanTech would be great, but I did not know where to look or whether I
was qualified. After a while I found a common thread in that the
interviewers at Internet companies were interested in how I could take my
knowledge of scaling businesses and implement similar strategies for them.
Once I focused on selling my skill set on how companies scale, it played well
into CleanTech deals.

NGOs and Global Businesses

noreply@blogger.com (Executive Green) — Fri, 15 Jun 2007 22:54:00 +0000

Jason

I was reading about how Leverage Buy Out (LBO) firms are using Non Government Organizations (NGOs) to assist them in deals.
I would like to learn more about how NGOs and Global Businesses are working together. It is evident that business that previously thought of the environment as an unlimited resource (CO2 emissions, clean water, etc.) have challenges with their business model and real finical liability over the next 10+ years. NGOs seem like a natural link between policy, the environment, consumers, and businesses. Do you see initiatives by NGOs to position themselves as thought leaders that can help businesses decrease their risk and increase profits?

Executive Green,

There is a wide array of environmental consulting firms out there that assist businesses in strategizing in the sense you are suggesting more than NGOs do. NGOs are positioning themselves as thought leaders, but they don't always keep the focus of helping businesses decrease risk and increase –profit—they often are too "cause-based".
Smart NGOs take some of the consulting business and combine it with what is that "right" thing to do. For example, Conservation International has a number of programs. They never lose sight of the reality that business’s first concern is the bottom line, so the only good conservation sense will be the changes in practices that don't lead to reduced profits.
As you suggest, companies that are proactive about reducing their global footprint (carbon) may reduce risk and/or create significant profits. To reduce risk, a number of companies are making investments through a variety of voluntary mechanisms, such as power companies making private deals with NGOs to reforest an area and claim a carbon credit.

Conversation with Vincenzo La Ruffa at Susquehanna Growth Equity

noreply@blogger.com (Executive Green) — Fri, 18 May 2007 15:21:00 +0000

To continue to gain insight into how VCs are thinking about CleanTech, I spoke with Vincenzo La Ruffa at Susquehanna Growth Equity (SGE)

Executive Green: What are your thoughts on CleanTech as an investment category?

Vincenzo La Ruffa: CleanTech as an investment category needs to mature further before we see a full ecosystem of successful companies with diverse business models. The capital flowing into companies is still greater than the number of liquidity events. Companies that have gone public now need to perform and continue to grow.

One change that is beginning to occur is the rate of corporate implementations of energy technology solutions (ETS).
In the traditional corporate model, the employee responsible for power management owns the buying decision for ETS. This person would face consequences if the power were to go off, but has no incentive to find incremental ways to save resources. Therefore they are focused on making sure the power stays on, rather than on looking for solutions like demand/response and real-time energy monitoring.

Companies like Wal-Mart and GE began using resources more efficiently and have measured success in both cost savings and positive PR. Subsequently, leading companies in other business sectors (e.g. IBM, Google, Yahoo!) are adopting similar initiatives and further developing the market for new solutions to measure, manage, and conserve resources.

EG: How do you analyze the role that policies (not subsidies) can play in your investment?

VL: If the root of the business is air quality standards, then it is probably safe to predict that emissions standards on cars may fluctuate, but will not go away. Business models that address broader air quality initiatives around power plants and industrial sources are more volatile if legislation has been approved but not yet implemented. Policy has the most radical effect on a business built on legislation that has not yet passed, such as a trading company for CO2 cap regulation

EG: What advice would you give someone looking into the CleanTech space?

VL: The team is always first. Look for serial winners more than just experts in the sector.

When you look at a company, determine that they can sell to customers across different industries, have a reasonable sales channel, and sell a solution that does not require a massive capital spend. Companies that sell exclusively to utilities often are challenged with an industry that does not embrace change and must endure long sales cycles and test cycles. Businesses that figure out how to package their solution and can sell them to consumers and/or a variety of other company sectors have a better chance of success.

EG: What are some of your current interests in CleanTech?

VL: Emissions credits and financing solutions for distributed generation or renewable projects are interesting.

Financial Services firms use large amounts of computing power to process, store, and transmit a rapidly increasing amount of data. Solutions to lower energy consumption of these systems are much more on people’s minds then they were 3 years ago.

Factoid

noreply@blogger.com (Executive Green) — Sun, 13 May 2007 23:14:00 +0000

In 2006, China built coal-fired power plants with capacity for 90 gigawatts. To put the size of China's energy demands into perspective, the United Kingdom uses 77 gigawatts of power per year. In comparison to the coal plants built, the world's total amount of energy that can be produced using wind turbines is 60 gigawatts. Since wind patterns are variable, the average production is 20 gigawatts. (Factoid from Jeremy Carl Research Fellow Stanford)

EnerTech Capital on CleanTech

noreply@blogger.com (Executive Green) — Mon, 07 May 2007 22:51:00 +0000

To continue to gain some insight into how VCs are thinking about CleanTech, I spoke with Dean Sciorillo at EnerTech.

ExecutiveGreen: How has the investment landscape changed over the last few years?

Dean Sciorillo: While there have been a lot of changes I still find many investors wanting proof that the industry is not in a bubble and money can be made with a CleanTech business model.
EnerTech has been investing in the CleanTech space for over the last 10yrs. In the last 2 or 3 yrs there has been much more capital flowing into the sector. Our deal flow has more then doubled. The valuations have not changed too much, but the underlying value propositions have changed. For example, in the past a company selling a clean technology had to show a significant savings (15%-20%) to get a customer interested in their product. Now we are seeing customers buying products and services that only offer a 5-10% savings, but the product has environmental benefits that the customer can market for PR purposes.

EG: Why?

DC: There are two big market drivers:
The first is global warming. Environmental stewardship is becoming a part of many companies buying decisions. For instance, Wal-Mart has shown it is important to their corporate agenda to consider lowering their carbon footprint.
The second is energy costs. As everyone knows energy prices have increased dramatically over the past few years. Energy budgets are a bigger % of a company’s cost structure and saving a few percentages on an energy budget is more meaningful today than it was a few years ago.

EG: What is your view on the Smart Grid?

DS: The cleanest mega watt is the one never used. An EPRI report indicates the implementation of a smart grid could reduce power consumption by 5% - 10% and reduce CO2 output by up to 25%. This could have the biggest environment impact of any technology on the market.

“EnerTech Capital managing partner Tucker Twitmyer, whose firm invested in Comverge, said he expects other so-called grid management companies in his portfolio to make a run on the public markets. Those companies include Current Communications, Enerwise Global Technologies, and Intellon. (Comverge Shares Energized in IPO )“

EG: Will similar Smart Grid technology be adopted in the water industry?

DS: I am not as close to the water industry as I am to the smart grid area. Though, many water deals focus on the municipality market and those have long market adoption cycles, so we have not made an investment in a deal in that space. The water investment we made is Altela, whose initial market in the O&G (Oil and Gas) sector. The market adoption time frame is much quicker in this sector and more closely matches what we look for.

EG: What advice would you give a job seeker evaluating a company in CleanTech?

DS: The people are always number one. Be sure to join a team that has the expertise to execute its business plan. I have seen a few plans where I believe somebody read a WSJ article and immediately decided he/she was going to start up an ethanol company and really didn’t understand much else about it. I am not sure how many of these plans will be funded, but there could be some.
Market size and growth - how big is the market opportunity and what is the growth rate of the market? Niche markets can present interesting opportunities, but job seekers may find their options limited afterwards.
Look for sustainability. Some projects are only viable due to subsidies and therefore are subject to high variability. (For example most wind projects are developed only when tax credits are available Graph on page 29). Some job seekers may not be comfortable with that amount of uncertainty.

EG: What resources do you find helpful?

DS: Electric Power Research Insitiute (EPRI)

Trinity Ventures on CleanTech

noreply@blogger.com (Executive Green) — Thu, 03 May 2007 14:22:00 +0000

To gain some insight into how VCs are thinking about CleanTech, I spoke with Alex Osadzinski, Venture Partner at Trinity Ventures.

ExecutiveGreen: What notable changes have you seen in CleanTech?

Alex Osadzinski: What changed in CleanTech over the past two-three years is that the deals moved from research projects to challenges around development. We started to look closely at CleanTech a little over four years ago. The deals we looked at back then mostly had too much risk involved because they were predominately scientists and entrepreneurs studying new technologies. Research inherently means that some technology will work and some will not. The VC Model works much better at the development stage, where investing is still challenging, but we can evaluate the risks that go along with production, distribution, and sales/marketing.

EG: Why is now a good time to invest?

AO: We are seeing leading edge technology have success in the market. Entrepreneurs we meet today are looking for capital to take proven research to market. One such company is Practical Instruments a recent investment of ours.

The world energy budget will demand a heterogeneous mix of methods for power production. The likely outcome for renewable energy sources in the global Market is that solar will be important, wind will be important, and harnessing energy from waves may work. Coal, Oil, and Natural Gas will become more efficient and less polluting over time, and it is interesting to speculate what role nuclear will play.

EG: What criteria do you use for investments?

AO: “CleanTech” is a vague term. We focus most on the solar market, next on other energy sources (wind, wave, and nuclear) and some on water deals. Trinity’s lens is on companies that are based in the US. To evaluate a deal, we look at the team, product readiness, and the real economics of the company.

The team must have good technical people with credentials in the space and business people with a track record of success. Without the science, it is a risky business. In addition, the marketplace is so early and dynamic that for a company to be successful, the leaders must be able to adapt.

By nature all entrepreneurs are optimists. Since some of our investments are made before product is shipped, we must evaluate the risks of development. It is always difficult to verify that the product is really ready for mass distribution.

At this point in the evolution of the solar market, ascertaining the real economics of a company is tricky. To simplify, I try to determine the gross cost per watt to the end customer. No two solar companies use the same metrics for costs and pricing. Just to determine installed cost per watt, you must clearly see the cost of manufacturing, installation, inverters, maintenance on the system, etc. In addition, it is important to make sure you are comparing current pricing and future pricing. One should also take into account the effect of volume discounts, net energy costs across the entire value chain, performance degradation over time, etc.

EG: What resources have you found helpful?

AO: NRDC analysis is very thoughtful and is a good free resource. There are a number of newsletters and analyst groups that are building a name for themselves. Eric Wesoff produces a helpful newsletter. In addition, I found good information at CleanTech.com.

Smart Grid Technology Companies

noreply@blogger.com (Executive Green) — Wed, 18 Apr 2007 16:55:00 +0000

Smart Grid technology companies that are creating the category

BPL Global
Comverge (Recent IPO)
Current Communications
EnerNoc (Recent IPO)
Enerwise
Fat Spaniel
GridPoint
Intelliburn
Itron
Miartech
Orion Energy Systems
Prenova
Serveron
WebGen Systems

And a helpful dot org
Gridwise