Since Vice President Joe Biden announced the Department of Energy’s plans to deliver $3.4 billion in grants for smart grid technology development back on the 16th, the cleantech world has been rampant with both big players and startups announcing their different approaches in hopes of grabbing a slice of the pie.
Within the program, grants ranging from $500k-$20m will be distributed for deploying smart grid technology, while $100k-$5m will go towards grid monitoring devices, covering as much as half the applicant’s investment costs. An additional $615 million will go towards smart grid demo-projects displaying storage, monitoring, and technology.
One of the largest efforts within the cause is the deployment of smart meters, which apparently the government feels to be paramount as Obama’s already called for the installation of 40 million smart meters across the nation. The current utility business model where an employees needs to physically visit a location to read the meter is completely outdated and inefficient. Smart meters will facilitate the two-way communication between utilities and the end users delivering energy when and where it’s needed. Google’s been recently pushing the DOE to make large investments in smart meter deployment, which makes sense because they invested almost $11 million last summer into EGS technology, which they say has “the potential to deliver vast quantities of power 24/7 and be captured nearly anywhere on the planet.”
Smart meters currently make up a measly 4.5% of all installed meters, and considering the cost between $100-$250 a pop, this shows room for some big-money deals to go through. As of current, the top players are Itron, Landis+Gyr, Sensus, Elster, and GE with Itron leading the back both nationally and globally. Itron’s already locked down utility contracts with Southern California Edison, San Diego Gas & Electric, and CenterPoint Energy. Only problem with Itron is the smart grid will eventually become reliant on the software that runs the product, and since Itron focuses exclusively on hardware, it may become difficult for them down the line. Landis+Gyr have been big players for decades in Europe, and now hope to take advantage of the stimulus to enter the US market. They’re reportedly already working with Oncor and PG&E. US player, General Electric, is currently working with PG&E, American Electric Power, and Oklahoma Gas & Electric. Even more recently, Florida utility FPL announced it is teaming up with Cisco, Silver Spring Networks, and GE to provide them with 1 million smart meters for a test run called Energy Smart Miami. If the test goes well, FPL will expand to the rest of its 4.5 million customer-base.
The competition doesn’t end there, as cell phone companies are now jumping in to play. Texas utility TNMP just teamed up with AT&T and SmartSynch, rolling out 10,000 smart meters throughout Texas homes. AT&T will provide the network upon which SmartSynch’s smart meter technology will communicate with TNMP and the home. T-Mobile just announced a partnership with Echelon, a smart meter producer, and that their developing a durable SIM card that’ll be embedded in smart meters to assist in the communication process.
The only real backlash we’ve seen from utilities is that the $500k-$20m grant offered by the government isn’t going to be near enough for projects of significant size. PG&E’s budgeted $1.7 billion, FPL at $700 million, and Duke Energy’s budgeted $1 billion over the next five years. Even smaller utilities are planning on spending upwards of $200 million, so you can see why $20 million might not help as much as one would think.
No matter the case it’ll be atleast a year or so before we see results of these buildouts, but one can definitely picture the lucrative horizon ahead for players in the smart grid. Cisco’s CEO, John Chambers, refers to the smart grid as an “instant replay” of the internet. One thing is for sure, companies that can provide high quality forms of software-based demand management and home energy management network services will likely become the long-term beneficiaries of this necessity to our country’s future.
It’s without a doubt the long-term sustainability and financial aspects of cleantech investment are promising. However, due to the current state of the economy mixed with an uncertainty in production efficiency, investment in 2009 will continue to grow, but at a slower rate than 2008.
Cleantech VC, @Ventures go further to say that there’s really no way to gauge the cleantech market’s future. Their reasoning behind this is although there’ve been very few failures with venture backed cleantech companies, there’ve also been very few exits. Isn’t this to be expected with a relatively new market in general? As investment grows, startups weed eachother out, leaving only the ones with the most efficient practices. We’re still in that weeding-out stage, and I can imagine as we dive deeper into this recession, those top companies will become more prominent.
Obama just appointed an accomplished energy team including LA’s own, Nancy Sutly. Before being appointed to Obama’s cabinet, she served as Los Angeles’s debuty mayor of energy and the environment. Considering Obama could invest near $100 Billion within his first year on energy infrastructure and green job creation, the future of cleantech appears to be shining bright.
It’s safe to say that like almost all markets, including cleantech, growth will slow in 2009. This takes nothing away from the whole reason behind cleantech itself; long-term sustainability with the goal of preserving the environment. As we progress and bounce back from this slight dip in the economy, leading green companies will grow, as will invesments in the sector.
UPDATE: According to a report released yesterday, a National Venture Capital Association survey has shown that although VC investment will slow in 2009, greentech will receive more venture capital than any other sector.
Today launches the latest addition to Jason Calacanis’s human edited search and discovery destination, Mahalo. I had the chance to stop by the office on Friday and check out what was happening. Project A as it has been secretly known for the last couple months, turns out to be Jason’s twist on Yahoo Answers; Mahalo Answers. Since it’s inception, Mahalo has gone through many iterations, trying to integrate and improve upon popular concepts from the most powerful destinations on the web.
Mahalo Answers is a community-driven knowledge market (or Question and Answer) engine, first implemented by the #1 search company in Korea, Naver in 2002. The Korean engine has had wild success with the product and is the top way people search for things on the web in the country. The concept was finally brought to the US by Yahoo! on December 13,2005 with the launch of Yahoo Answers.
How does Mahalo play into this? Calacanis thinks that he can beat Yahoo Answers at their own game, since the search giant has paid little attention and offered few incentives/new features to the more than 60 million members that occupy the site.
One specific problem he addresses, the point systems. Users are given points on Yahoo Answers when they answer questions, get selected as the best response, log-in to the site, etc. The points and levels have no real world value, cannot be traded, and serve only to indicate how active a user has been on the site. A notable downside to the points/level side is that it encourages people to answer questions even when they do not have a suitable answer to give, in order to gain points. Mahalo Answers will let people that are asking questions offer a monetary incentive to people who answer their question the best. In addition, people offering illegitimate responses will have their content removed from the response system by the Mahalo team (who will also be helping generate responses). Yahoo has constant spam responses.
The real question is, would someone want to pay to have a question answered? Well, in the week that Mahalo Answers has been in closed beta, it certainly proves that some are. Calacanis‘ strategy to ensure that people will want to fork out some money has been to get experts from all industries to answer questions about certain topics. Imagine for a few dollars you can ask a legal expert how to deal with a specific issue rather than browse through pages and pages of content through Google. Or, for another few dollars, asking Mark Cuban how to go about buying a baseball team? (Mark is actually going to be answering questions along with other web personalities and celebs). The ‘Expert’ strategy is very smart and will certainly keep people pouring money back into the system. Some of the beta testers have already made over $100 answering questions. Calacanis thinks it’s perfect timing to offer something like this, saying “many people are out of work, and this is an easy way to make some extra money”. In the end, Mahalo takes a 25% cut of the asking price.
Another feature Yahoo Answers doesn’t have is the ability to syndicate your questions directly into micro-blog services like Twitter. This will surely make the question and answer based system a lot easier to get quality answers from crowds that you trust.
All in all, the product is very impressive. The goal is to double traffic for Mahalo to 10 million uniques a month within the year, which should happen even if the concept gains the slightest bit of traction from it’s giant competitor. They think the double in traffic will get them on someone’s radar for an acquisition sometime in the next couple years. Nice job guys.
Since Obama was elected, there’s been a lot of press regarding his plans to develop sustainable energy infrastructure, which in the long run will help to create jobs and ultimately affect climate change in a positive manner.
In the above video, Obama describes what his efforts will entail. His first step is to make federal and public buildings more energy efficient. Although details are a little weak, he does say that to start with, energy efficient lighting and the replacement of old heating systems is paramount to the climate change effort.
Secondly, although not nearly as passionate as previous VP Al Gore, Obama has already met with him to discuss way in which to “create jobs all across [the] country in all 50 states to repower America.” Gore already laid out his plan of 100% clean energy in a decade back in mid November. Obama obviously doesn’t agree on the time line, however must feel that Gore’s five steps are very important as he included a few of them in his national address regarding the economic recovery plan in the above clip.
UBS Investment Research and the Center for American Progress just released a report detailing that Obama could spend near $350 billion in his first year as president. Even more exciting for the cleantech world is that both the groups suggest nearly 29% ($100 Billion) go toward energy infrastructure invesments and green job creation.
Here’s a nice little factoid for you, since we went into the recession about eleven months ago, we’ve lost 2 million US jobs….Yikes!
When things were running fairly smooth in the financial markets for the last few years, clean energy technology was on everyone’s radar from world leaders all the way down to the average consumer. That widely spread optimism is now taking a back seat due to the financial crisis, which is not good in the face of a potential global catastrophe, not to mention billions of dollars in venture capital money pouring into clean tech companies. Venture investments in North America, Europe, China and India across 158 companies reached $2.6 billion in the third quarter of 2008, a record quarter for clean tech investments.
The recent global summit on climate change in Poznan, Poland outlined the fears of green supporters surrounding the growing apathy for clean tech solutions while we fight through the tough financial crisis. Moreover, their survey shows less support from high level adopters for wind energy, solar power, biofuels, biomass and hydrogen energy as technologies with “high potential” to reduce carbon levels in the atmosphere over the next 25 years. It’s not just the adopters however, climate experts now have less faith of finding a ubiquitous solution for the masses that will reduce the carbon emissions to appropriate levels in time. The survey below shows the breakdown in the drop of what experts feel will make a difference over last year (this year in blue).
The biggest drop in optimism was for first-generation biofuels from crops. Only 12 percent of respondents saw high potential there, down from 21 percent last year. This was an obvious one. Last week I broke down the math equation to why it’s physically impossible to use biofuels to come close to alleviating a major nation like the US off of standard oil. Energy conservation and more efficient technology wins everyone’s vote, but the problem is no one knows what technology that is yet.
Electric cars are certainly not the end all solution to the problem. Even if everyone in the US drives an electric car (which won’t happen), that’s still only 33% of U.S carbon dioxide emissions. Not to mention electricity burns coal, which emits around 1.7 times as much carbon per unit of energy when burned as does natural gas. (also, there is no such thing as clean coal)
Let’s talk about the political side of things holding up clean tech. The Kyoto Protocol is about to expire, and we are in desperate need of finding a new one that includes China and India as well as puts regulations on other developing nations (not to mention ourselves). Currently, the European Union is struggling to reach agreement on its own climate rules with conflicting arguments happening between Eastern European (and Italy) and Western European governments. Especially in the financial crisis, the climate measures being proposed upset the developing nations due to high costs, which stunts growth. They also feel that the regulations are unfair considering that the Western countries producing the majority of the emissions like the US are the ones proposing regulations, yet have barely complied with green policies, ’saying actions at this point can be voluntary for citizens’. Such a joke.
The next few years for cleantech could prove devastating for clean tech companies, venture capital firms and the polar ice caps as we try and agree upon a sound solution to how everyone will work together and with what technology. Obama should be picking out the best of the clean tech companies come the start of his term and make stiff regulations to mandate them throughout the country. This will inject the VC’s who backed the ideas with more money to go out and fund further projects and it will put us on our way to lower emissions. If we can’t inspire hope in the eyes of the experts and the scientists, then a layer of apathy across all green minds will surely lead to far greater problems for our ecosystem than sub-prime mortgage woes. All the experts want to see is some sort of adoption happening around the nations causing the large portions of emissions. Our current technologies may not be the best it will get, but its a start and things need to change in the face of an unhealthy environment.
(An overview of the survey, along with PowerPoint slides, is available here.)
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