California Clean Tech Open 2008 Launch

The California Clean Tech Open (CCTO) 2008 competition was launched at the San Jose City Hall Rotunda last Wednesday, April 9th afternoon led by San Jose Mayor Chuck Reed and David Rodgers from the US DOE. What was significant about the event was that this was the first time since its inception that the event was held in San Jose.

Maybe San Jose wants to show that the center of gravity for clean technology is in Silicon Valley. The venue was appropriate. It was the steel and glass rotunda of the gleaming new San Jose City Hall. This was my first visit to the new building and I must say it is quite stunning. You can check out pictures of the new City Hall here. There was a glittering reception with the usual Silicon Valley crowd of entrepreneurs, VCs, investment banker, attorneys and the like.

Mayor Reed issued a challenge to solar installers to enable zero upfront cost solar installations for homeowners within 60 days. Seemed like a tall order to me. But, SolarCity seems to have responded to the challenge with a proposal today which eliminates all up front payment for new installations in San Jose. But, unfortunately, the program only lasts for slightly more than 60 days, till the end of July :-) Solar City is funded by Draper, Fisher, Jurvetson and Steve Jurvetson was one of the speakers at the event. Its always interesting to listen to Jurvetson speak. His rapid fire delivery has a high content density and you can lose a lot in a minute if you are not listening. :-) In any case, he believes that the future is clean tech from a VC perspective.

Marc Gottschalk gave an overview of the 2008 competition. Eric Cummings of Cool Earth Solar talked about his company's success and his team's experience during the 2006 CCTO competition. Cool Earth Solar was the first runner-up in the Renewable energy category in the 2006 CCTO competition. They just raised $21M in Series A funding in February 2008. Gunther Portfolio has an even more detailed writeup on them from February. Hopefully, GP will be back in action with more interesting posts soon.

I had a chance to talk with Eric Cummings at the CCTO event. He remembered our meeting during one of the CCTO events in 2006. They have come a long way since then and the competition has helped them build a successful company. There was a poster at the Cool Earth Solar booth which implied that current renewable energy technology was inefficient and would lead to losses by the utility companies who invested in them. Eric seemed to imply that Dr. Borenstein's comments along these lines, a few months back were valid and more efficient alternatives were a few years out.

Overall it was a fun event to kickoff an exciting 2008 competition. Maybe this year's competition will breed more companies along the lines of Cool Earth Solar. The stakes are huge, if the latest award by PG&E to Brightsource is an indicator. The award is for 900 MW of electricity from five solar thermal plants to be built in the Mojave desert. If several of the other clean tech startups in the Valley start delivering on their promise, Silicon Valley will drive yet another global industry after semiconductors and the internet.

Madan

Solar Seismic Shift prediction

Green Tech Media's Jennifer Kho has an excellent post on the chances of a shakeup in the solar power industry and what that might mean. Greentech Media's Solar Market outlook panel seems to think a shakeup is inevitable and the only remaining question is one of timing. It almost seems like yesterday that the buzz started :-) Some of the predictions show the shakeout lasting two to three years and being driven by the massive capacity addition and subsequent price competition. The general feeling is that the companies which can ride out the shakeup will be in a great position five or so years out.

Jennifer Kho's post also identifies some of the largest trends affecting the industry such as aggregation, partnerships/acquisitions, cost reductions, cross over from semiconductors to clean tech and others. The posts covering these trends make interesting reading, especially the one showing executive crossover from high tech to clean tech including such luminaries as Bob Metcalfe(inventor of Ethernet) and Vinod Khosla.

Speaking of Vinod Khosla, he is making bold predictions, (again?). He predicts that India will be the next greentech hub, due to the availability of a large pool of scientists and technologists and a potential large market for clean energy. Since India has very little oil and gas resources within the country, historically they have made early attempts at building nuclear power plants and quite a few hydroelectric power plants. In fact, my father was an engineer who was involved in the construction of three or four major hydroelectric projects. As a kid I remember living near those construction sites in the rainforests of Kerala, and visiting several of the dams and the first underground powerhouse in India which he helped construct.

However, India's energy needs are growing by leaps and bounds with the country's progress as also the environmental impact from fossil fuel use. India probably needs clean energy more than most other countries, but Khosla probably is right that mass adoption may not come till prices come down.

Madan

Green versus Clean

You might think this is about the semantics of green tech versus clean tech. That is an interesting question in itself, but this is about a neighborly spat between two Sunnyvale residents and Santa Clara County and state laws and redwood trees and solar panels. Sometimes truth is stranger than fiction. See here for the Mercury News story. Its complete with a Google Earth map :-) A Sunnyvale couple has been found in violation of the California Solar Shade Control Act ( I bet you did not know that it existed), a law signed signed in 1978 by Gov. Jerry Brown. See, the solar movement in California has a long history :-)

The problem - eight Redwood trees in the Sunnyvale couples' home cast a shadow on their neighbor's 10kW solar panel system. So, the Santa Calara County and courts are asking them to cut down their trees or face hefty fines. The spat has been going on for a few years and has already cost the tree owning couple a fair amount in legal expenses. In any case, its a very interesting dilemma - would you cut down trees to save the environment with solar panels ? Its almost a philosophical question, let alone a purely economic and environmental one. The Mercury News ran a Web Vote on this question and today's (Jan. 27th) newspaper shows that 144 people thought the tree owners should trim the trees and 372 people thought they should not. Probably not a scientifically valid poll, but still, an interesting result.

Madan

Green Tech for the Consumer Market

If you were looking to find out how hot clean technology is in Silicon Valley these days, you only had to attend the Green Tech for the Consumer Market panel session hosted by the MIT/Stanford Venture Lab at Stanford's Bishop auditorium on Tuesday, January 22nd. As a volunteer for the event, I got to attend for free and it was well worth it :-) The Bishop auditorium was filled to its capacity of 324 with people standing in the aisles. VLAB events usually attract a good crowd, but this was exceptional. Of course, there was the usual gang of Stanford MBA students, but there were also a lot of VCs, investment bankers, lawyers and, of course, entrepreneurs.

The panel was moderated by John Rockwell of DFJ Element (Draper Fisher's clean tech investment arm) and included two VCs - Steve Westly of the Westly Group and John Denniston of Kleiner Perkins Caulfield and Byers and three Clean Tech entrepreneurs - Ron Gonen, CEO of RecycleBank, Michael Murray, CEO of Lucid Design Group and Frank Paniagua, CEO of Green Plug. Each of the entrepreneurs gave a brief introduction of their companies and product ideas and then the moderator posed a set of questions to the VCs on clean tech investments.

Ron Gonen talked about how RecycleBank works with cities to help increase their recycling rate and share the savings with the company. They have deployed pilots in Vermont and other East Coast cities, where they partner with a city and offer homeowners incentive points to increase their recycling. The recycling bins are outfitted with RecycleBank chips which calculate the weight of recycled material and award points to the homeowners which they can use to buy goods and services on the Internet. Sort of like airline miles, but based on the weight of material they recycle. This increases recycling in the city and saves the city landfill and other garbage costs. RecycleBank takes half the savings the city gains in this manner and also makes money off the advertising for the products sold off their awarded points. They have investment from partners like Coca Cola. You can view their demo here. In India, there were (still are?) people who used to come by your house to collect your old newspapers, bottles etc and sell these to shopkeepers and others for reuse. This is a fancier, scaled up American version of the idea with virtually no competition today and from the looks of it, destined to be a very successful company.

Michael Murray, CEO, presented for the Lucid Design Group. They make a Building Dashboard, which is an internet based application which monitors real time energy usage in a building. The idea is that if you are aware of how much energy is being used at various times in different areas of a building you will look for ways to reduce the usage. The implementation is rather impressive. There are various real time demos on their website which show off the capabilities of their software at various installations. The demo he showed of a dorm at Emory University was impressive in the range of options it had. I could not find it on the projects page, though. I am not surprised that Lucid Design Group won the CCTO's Smart Power Award this year.

Frank Paniagua, CEO of Green Plug described how his company is solving energy and material waste in consumer electronics products and other battery powered equipment by enabling an intelligent universal power supply. Today the DC power supplies for cell phones, laptops, iPods and a variety of devices are all different, and as a result a single family has a host of different power supplies. This is inconvenient for most people, not to mention redundant and expensive. Further, when these are discarded they generate toxic waste. Green Plug's intelligent power supply concept communicates with the devices which use DC power and supply only the exact power required. They also prevent overcharging and supplying power when not needed. Green Plug defines a digital protocol which makes realtime communication possible between devices and their power supply. It is implemented on a programmable microcontroller, but its also embeddable. They also license their Green Talk protocol and universal connector free of charge. A cool idea, but a tremendous challenge to implement since they have to not only support a wide range in AC voltage on the input side, but also a wide range of DC current and voltage on the output side. They also have to get a wide range of manufacturers and their devices to incorporate Green Plug technology in their power supplies. But, Frank Paniagua has solved a similar challenge before as co-founder of the Video Electronics Standards Association (VESA) which produces display standards to enable a wide range of devices to connect to displays worldwide. As a former Board member of VESA, I know how valuable that organization is today.

Following the excellent startup presentations, the moderator and audience posed a series of questions to the VCs on the panel. Steve Westly and John Denniston felt that the US was far behind Western Europe in adopting clean technology and alternative energy. They felt that Government subsidies were absolutely necessary to boost the emerging industry. They also felt that removing subsidies for fossil fuels and transferring them to alternative energy technology was a viable option.

They discussed what the VCs were looking for in funding companies. VCs are motivated by return on investment and looking at the companies which presented at this event, they noted how each one of them offered a unique advantage in waste reduction, energy awareness or convenience, but also strove to do it profitably. Different VCs have differing strategies for investment ranging from early stage and higher risk to later stage and lower risk. However, they agreed that most VCs today have a strong emphasis on clean technology investments. I could almost hear a room full of entrepreneurs whipping out their business plans :-)

Steve Westly commented that the opportunities in clean technology were just beginning and we are at a point of time similar to 1996 when the Internet boom had just started. Probably because of Steve Westly's political connections (he ran for Governor of California against Arnold Schwarzenegger) the questions and discussion centered on the political aspects of support for clean technology. In general, the panelists seemed to agree that regardless of who won the US Presidential election this year there would be more support for clean technology in the coming years. They also believe that in addition to new consumer devices using clean technology, many existing consumer devices will become more energy efficient and use cleaner methods of packaging and disribution.

Overall a most excellent panel and event.

Madan

The changing face of Silicon Valley

Intel announced closing of their last Silicon Valley fab this year. It is as fitting a marker as any for Silicon Valley's transformation, from a focus on silicon to a focus on all emerging technologies. This has been in the making since the late nineties, actually, when the Valley focus shifted from hardware to the Internet and its applications.

Perhaps, the birth of Internet giants like Yahoo, Google, Ebay, Amazon and others, in Silicon Valley gave us an indication of things to come. The Valley has kept up a hectic pace of technology advances in the last fifty years, and though the early days were clearly silicon chip dominated, it has never really been about silicon only. Where other areas like Michigan focused on automobiles and stayed with that focus, the Valley is relentless in its pursuit of change. Intel spokesman, Chuck Mulloy, is right - Silicon Valley is less about silicon and more about technology development.

The latest indication of yet more change headed our way is in the rise of clean tech investments by Silicon Valley VCs to over a $1B/year. Silicon Valley had $1.05B in 43 clean tech investments in 2007 compared to a total of $1.79B for all of California and $3.95B for all of North America. In this case, though the VCs reside here and many of the firms are based in Silicon Valley, not all the money stays in the Valley. But, the numbers clearly show that this is the place where much of the action originates. Though some of the investors worry about a bubble, they are resigned to the fact that they cannot do much to stop it. All they can do is to make sure they make the right bets and come out ahead.

The Valley does not just embrace change, it pursues change, and that is probably the biggest difference between Silicon Valley and the rest of the world.

Madan

Solar Energy thrives in the shade ?

That's essentially the hypothesis which Jim Jubak makes on MSN money. His column posted yesterday makes the case that US energy policy largely ignores solar energy, and that in turn will boost prospects for solar energy and for investors in solar energy companies ! Intrigued ? - I certainly was. I really enjoy reading Jubak's column. He translates complex economic theories into simple language and his stock picks aren't bad either :-)

In any case, the argument he makes is as follows. Today, solar energy is silicon wafer supply constrained. Worldwide solar power production climbed only 13% in 2007 compared to 57% in 2004 and 35% in 2006. Much of the demand today is driven by countries such as Spain, Portugal, Germany and others which offer subsidies. If the US too had offered subsidies, the excess demand would have pushed the price of solar power up even more. Hence the solar energy industry is better off now without US subsidies :-)

He further notes that the silicon shortage has had the effect of bringing many more companies into the solar panel business and has driven existing companies to expand their production. This in turn will increase silicon production 40 to 50% in 2008 and 2009. Solar cell efficiencies are also expected to increase. Maybe pure silicon alternatives from the likes of Nanosolar and others will also hit the market in this time frame ?

If the price of energy from fossil fuels continues to rise, they will soon reach parity with solar power and that would touch off a real boom in solar energy. This is projected to be in the 2012-2013 time frame. A most excellent theory from the perspective of all the solar energy companies and solar investors :-)

However, I am not sure that the assumption that the price of energy from conventional sources will continue to rise monotonically is a given. This is the only problem I see with the theory, though. This may somewhat affect the equation and timeframe, but overall its still good news for solar, unless oil prices drop dramatically.

Jubak goes on to pick some solar stocks which will benefit from this trend and interestingly they are all non-Silicon Valley companies. However, I will venture a guess that there will be a few companies from the Valley to pick from soon, given the attention the Silicon Valley technology industry and VCs are paying to alternative energy. :-)

Madan

A Great Day for Clean Tech in the Valley

Today was a great day for Clean Tech. NanoSolar announced that they are shipping their first commercial panels for field deployment at Luckenwalde in Eastern Germany. Of course, Gunther Portfolio had tipped us off about this in their post on December 10th. As the CEO, Dr. Martin Roscheisen, discusses in his blog they are expecting to enable 99c/Watt panels. It is interesting that they have donated one of the first three panels to the Tech Museum in San Jose. I am sure the NanoSolar IPO, when it happens, will be one of the best the Valley has seen.:-)

The other interesting news, which did not quite get as much coverage, was that PG&E had agreed to buy 2MW of power from wave energy from a Canadian company, Finavera Renewables. Wave energy has always been a promising and challenging source. As the data I presented from Dr. Amit Kumar's talk in October showed, the theoretical potential for geothermal and ocean power is 70 TW, but feasible capacity is expected to be on the order of 2TW and significant technical challenges remain. Good to see that PG&E is driving the leading edge of wave energy. Clearly compared to the practical possibility of 1200 TW from solar (again from Dr. Kumar's data), this is small, but we may need all the sources we can get, if we are to stem impending doom in the form of catastrophic climate change. :-)

Lest you think I exaggerate, listen to what NASA scientists had to say yesterday in San Francisco (video clip from ABC News). The report says that by 2012-2013 the Arctic will be ice free at the end of summers. This was not expected to happen till 2040, previously. Let us hope that alternative energy is still in time to save the planet.

Madan

Clean Tech VC funding skyrockets

The Mercury News reports that the first three quarters of 2007 saw $2.6B in clean tech funding in 168 deals. This compares to $1.8B in 2006 and $235 million in 2003. As I discussed in my post in January 2007, clean tech funding accounted for about 9% of VC funding till late last year. It will be interesting to see what fraction it is going to be this year. The interesting comparison was with funding for software, biotechnology and biomedical devices. With the highest rate of growth for clean tech funding, we could see clean tech being the largest sector for VC funding in 2008 ! That would be massive change in just 5 years. Whether this will be in time to reverse global warming remains to be seen, but its a good start :-)

One big difference I see between clean tech funding and funding for the other areas is that the size of the deals is very large. However, one deal listed for $500M to Delta Hydrocarbon, a Dutch company, to enhance oil field production did not seem to me to be particularly clean tech. But, maybe there is a clean tech angle to it :-). If at least some of the clean tech funding sticks in the Valley, it certainly will drive the level of activity up.

On Tuesday, Google made a splash with their announcement targeting 1 GW of renewable energy at prices cheaper than coal. This is an ambitious target and they are willing to spend millions chasing it. Though there are differing views of it, I for one, hope they make it. They have the deep pockets to try and if they achieve the target it will make a significant difference. To understand how difficult this is, read my post from last month where I quote Dr. Amit Kumar's data which shows coal at 5c/kWh compared to the cost of other renewable energy sources.

Madan

Silicon Valley and Globalization

Today's Mercury News has front page coverage on Silicon Valley's gains from globalization. The article discusses the gains for Cisco, HP and other major multinationals based in Silicon Valley from global growth. The article also discusses the return of VC money flow to the Valley and points out that the valley is at the crossroads of venture capital with money flowing into the valley from all over the world and being invested worldwide.

There are some interesting statistics on the flow of venture capital to and from the rest of the world in the print edition. The charts don't show up in the link above for some reason. Perhaps, this is the most striking change from the '90s, when money flowed into the valley and stayed here. This led to the tech boom and the bust, of course. The Valley has recovered somewhat, but its far from the affluence of 2000. Perhaps, the return to glory for the valley will be in the form of the clean tech boom.

The Valley however, is still very attractive to the rest of the world. One other trend the Mercury News discusses is the ramping of the Valley presence of big tech companies like Nokia and Microsoft who seek to be closer to ideas, partners, investors and customers. As the column says, it appears the world is flat and Silicon Valley is at the center of it and the next wave appears to be clean technology. I will root for that.

Madan