Clean energy - to save or to generate ?

With all the brouhaha about clean energy, we need to look at some facts. Will we achieve our goal of reducing carbon footprint by significantly increasing renewable energy sources or reducing our energy usage or both? The simple answer is both but to surprise of many, we achieve significant savings by doing simple energy conservation.

The ability to conserve energy (electricity) in buildings is very significant. This is especially true for larger buildings such as concert halls, hotels, conference centers, etc. Simple energy control systems such daylight harvesting, demand control systems can result in upwards of 20-30% electricity savings. If these are applied across all buildings, these savings will not only result in more savings but reduction of greenhouse / non-renewable energy plants such as coal fired plants.

Currently significant focus of both venture community and govt is on solar, wind, and thermal power generation plants. This is but natural - its great photo op. However these are capital intensive businesses requiring very high upfront costs. And their impact on the total power grid is not be more than 7 to 9%. Case in point, a typical coal fired plants is in the order of 1.5 GW (1500 MW) while the average output solar plant is 50 MW .

So, my point is that our focus must be on energy conservation and saving which in effect is best way to reach clean energy goals in the short run.

PS: Chart from EIA - energy information authority (US govt) http://www.eia.doe.gov/cneaf/alternate/page/renew_energy_consump/rea_prereport.html

Clean tech venture investments

Another great session in TieCon, featuring whos-who of Clean/green tech media investing.

Attendees: Eric Weschoff of GreenTechMedia, Navin Chadda of Mayfield ventures, Andrew Chung of Lightspeed venture, Mattew Denesuk of IBM venture capital, Justin Label of Bessemer Venture

• Eric Weschoff - 2009 the money invested is $3 to $4B, compared to $300M in 2005.
• Navin - 80% of energy comes from fossil fuel, however 1-2% of the energy is coming from renewable market. The next gen renewable is an over funded/over capitalized market. 25% of total VC investment went into clean tech. We must focus on energy efficiency, management, and distribution vs. cap-ex heavy industry such as setup of renewable (e.g. solar) power plants.
• Andrew Chung - China has surpassed US in greenhouse gas emissions. We are now reaching cost competitive in fossil fuel and renewable energy sources - called grid parity. We are now seeing perfect storm as we are seeing all constituents - consumers, policy makers, and VCs invest in and be aware of clean tech issues. Looking at companies which can survive in these tough macroeconomic climate - tough capital market. So, can the companies partner with other companies for market entry.
• Justin Label - Bessemer decided to get into this space in 2005. They feel that all segments such as consumer, govt, ventures are creating the need to grow in this space. They have ventures in US and India. Growing middle class in the world (1B people being added to the global middle class), commodity crunch, and the need for energy.
• Matthew - not a traditional venture firm, IBM becomes limited partner in venture firms. IBM involved in Smart Grid project. Original smart meter roll out do not help more than give utilities a read out of the consumer's home.

Discussion

Why invest in commodity market like energy?

• Navin - we invest in LED companies which have high barrier to entry. There is huge opportunity in energy management - CPower is their investment : managing peak load consumption. Manage demand - in hotels, seminar hall. We need to do this intelligently - dim lights, switch off some lights.
• Mathew - commodity trading is defined as consumer is only concerned about price - e.g. gas. So the pricing pressures are high with very low margins. However, renewable energy is not a commodity - electricity which does not create greenhouse gases.

Opportunities in this space.

• Cleantech.org - read it.
• Tons of opportunities, come on in, look globally. In China and India its a survival driven demand.
• Energy management in buildings.
• Matthew - could be a bubble when companies goes around the utilities - straight to the consumer.

Smart Grid

• Substation monitoring - no systems monitoring is happening there.

Other questions-

• Carbon trading - monitoring and dashboard. Cpower is looking at it. Its going to be competitive but dependant on policy.
• Water - under invested sector. Not many ideas for making more efficient. Not an area of focus for Bessemer. Local problem as it cannot be transported as oil.
• Solar installer founded by folks who have no background in energy - improve the workflow.
• Mayfield will invest more money into this area compared to 2008.

Blogs to read up:

1. Greentechmedia.com
2. Cleantech.org.

Clean Tech - comments from the conference

I'm attending TieCon conference here in Santa Clara and jazzed about the interest that Clean Technology is generating. There was a session in the morning of May 15 from an esteemed panel of technologists, corporate, venture capatalists, academics, and policy makers. I came out quite impressed with the level of enthusiasm shown by the panelists.
Here are my very rough notes from the field (I'm going to try live blogging/twittering next time onwards)
Panelists

• James Sweeney - Distinguished professor of management science at Stanford Univ.
• Jim Davis - Chevron Energy Solutions
• Dr Richard Swanson - CEO Sunpower
• Steve Wiley - Wiley investments
• Chuck Reed - Mayor of San Jose

There was a general agreement about the fact that we are at a start of a new business sector - clean technology. Steve Wiley commented that clean tech is not a bubble but a sustained business phenomenon. He even went on to state that companies like Tesla and Silver Spring Networks will be the ones that will see 10X year over year growth and will take us out of this recession. Oh well! VCs have a way of throwing out projections!

However, few data points are worth noting.

• It is interesting to note that cost to setup solar panels is divided equally into R&D/manufacturing costs and installation.
• The stimulus money is going to the areas
• Smart grid systems
• Green vehicles
• Green building materials

However, a number of unexplored areas include utilities like water - its a scarce resource and getting scarcer by the year and garbage /recycling. So opportunities around water and recycling management and conservation should be explored.

Other trends -

• Use of LED lighting and mechanisms to control it. Note, that LED lights can be dimmed vs. fluorescent, so you can enable scenarios such as controlling light usage based on time of day.
• Changing user behavior by informing them of their utility and garbage use. An informed customer is a conservation customer. Sunpower CEO noted that how many of us are aware of the unit of measurement for electricity vs. that of gas (gallon). Goes a long way to show that display of relevant information is an important part of energy conservation efforts.
• Conversion of existing buildings into "green buildings". The energy saving potential is huge in all buildings but especially true for larger buildings such as conference halls, hotels,etc. These structure's energy usage is better controlled by limiting interior utility usage vs. controlling the external building envelope (e.g. doors, walls, etc). The latter is of greater relevance for smaller facilities (homes). LEED certification is key in this area.

The mayor was there to rally companies to setup shop in San Jose, but he also touted San Jose green vision - generate all electricity from clean energy (renewable) sources.

AMI in Depth

Automated Metering Infrastructure
AMI stands for Automated Metering Infrastructure and extends current Advanced Meter Reading (AMR) technology by providing two way meter communications, allowing commands to be sent toward the home for multiple purposes, including “time-of-use” pricing information, demand-response actions, or remote service disconnects.
AMI makes use of various technologies including wireless technologies to aggregate and send information via “Neighborhood Area Network” (NAN), aggregating a mesh configuration of up to thousands of meters for back haul to the utility’s IT headquarters.

What Problems does it Solve?
AMI is a core ingredient of Smart Grid infrastructure and its benefits map to that of Smart Grid. There are demand side (consumers) and supply side (utilities) benefits. For the utilities the key issues addressed are:

1. Lower electricity usage costs by limiting the use of spinning reserve (standby power to meet peak demands of the load curve).
2. Lower dependence on non-renewable energy power plants for electricity generation i.e. coal, nuclear, etc.

Utilities cater to spinning reserve that they have to keep on standby to meet the peak demand. Until now, utilities prefer using non-renewable electric sources (coal, nuclear) as their power generation is non-intermittent in nature – coal, nuclear can produce electricity at any time of day or night. However, renewable energy technologies are constrained by nature – one cannot generate electricity using Solar PV panels at night. The Smart Grid solves these by:

1. Allowing two way flow of electricity from and to the utilities – consumer producing and consuming electricity.
2. Having a networked system allowing for storage of energy and its usage in peak demand.
3. Creating a time of use pricing scheme – allowing market forces to control demand (higher pricing will incentize consumer to decrease consumption)
4. Limiting the use of/controlling high load devices during time of peak demand by incentizing consumers to reduce electricity usage and/or controlling their devices.

It is the last part of the solution that AMI plays a significant role.

For the consumer (demand side), the benefits are:

1. Time of use pricing – higher rate in peak usage time. Smart communicating devices connected to a NAN via AMI can operate in low energy periods.
2. Incentive of lower rates/rebates by taking part in the load monitoring and control programs.

Please note, Smart Grid and AMI are relevant for all utilities even though most of the discussion is around electric power.

Demand Response
The NAN used in AMI connects thermostats, load switches, lighting systems, and meters. When there is peak load, the utilities will use these networks to throttle high load devices such as changing the thermostat setting of HVAC system.

Who are the key players in AMI?

Itron is one of the leading provider of advanced metering and management devices for utilities (electric and water).

CleanTech revolution - AMR and AMI standards

Many industry reports talk about utilities spending $1.6 billion on Wireless Sensor Network (WSN) technology for smart metering and demand response systems by 2011. While most of the revenues over the next five years will be for the advanced metering infrastructure, in-home "Home Area Network (HAN)" applications and devices that interoperate with smart meters for energy savings and conservation have great developer potential.

For two way communications in AMI, many utilities are standardizing on ZigBee standard for wireless communication. So what will ZigBee enable ? First of all for some key definitions :

Difference between AMR and AMI -

1. AMR stands for Automated Meter Reading, which in effect are the meters being deployed today by utilties.


2. AMI of Automated Metering Infrastructure and extends current Advanced Meter Reading (AMR) technology by providing two way meter communications, allowing commands to be sent toward the home for multiple purposes, including “time-of-use” pricing information, demand-response actions, or remote service disconnects. Wireless technologies are critical elements of the “Neighborhood Area Network” (NAN), aggregating a mesh configuration of up to thousands of meters for back haul to the utility’s IT headquarters.

ZigBee is wireless communication standard for AMI enabled home area networks. Companies like Itron provide AMI solutions on top of Zigbee - http://www.itron.com/