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Digital Solutions to Building Efficiency: Exploring a Cleantech VC Bright Spot

kerry cebul

The preliminary release of our 2Q12 numbers confirmed what many have been talking about for months…significantly lower global cleantech VC investment by both deal count and dollar amount.

Yet, the Energy Efficiency sector remains a bright spot amidst the gloomy discussions of shakeouts and a transition away from the term “cleantech.” And, as both VCs and corporate strategics reassess the broader cleantech landscape and refine their approaches, there is renewed interest in understanding the potential of this continuing bright spot. As Rob Day of Black Coral Capital put it in this great review of the numbers yesterday, “even while the overall cleantech sector is in a down period, it’s clearly still an exciting time to be investing in energy efficiency and related plays.”

Within energy efficiency, digital solutions to building efficiency continues to be a particular area of investor and entrepreneur interest. From enterprise energy management and lighting control systems, to remote auditing and benchmarking, entrepreneurs and investors are developing scalable digital solutions to tackle the building efficiency market. Some of the industry’s hottest companies like Redwood Systems, Gridium, Adura Technologies, Vigilent and essess have raised recent rounds from some of the industry’s top investors including Draper …

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CVT Corp: What does Groupon have to do with variable transmission?

Josh Gould

The recent buzz is that cleantech is losing its “sex appeal” thanks to the huge valuations of tech companies like Facebook, Twitter, LivingSocial, and of course Groupon.  We’ve refuted the false notion that cleantech companies are somehow fundamentally different than or inferior to web or IT companies.  But don’t just take our word for it.  One important characteristic shared by Groupon and our pitch of the week company CVT Corp is something that has real sex appeal in these current economic times: saving money. 

The Problem

Oil, natural gas, and agricultural companies all require diesel generators to provide power in remote locations off the grid.  Used heavily, each machine can burn up to 500,000 liters of fuel (costing roughly $400,000+ in total) in its average lifetime of 2.5 years.  (Interesting side note for you finance/accounting folks out there: some companies who use generators 24/7 simply record them as an expense, and don’t include it in their balance sheets, since their useful life is so short).  Roughly 90% of a diesel generator’s total cost of ownership is fuel, not the machine itself.  Such high operating costs means that the addressable market for diesel generators is estimated at over $2B annually by CVT Corp.  

High fuel consumption is caused, in part, by generators that run at maximum speed whenever the machine is turned …

Data & Cleantech: Fewer Adjectives, More Verbs

Josh Gould

As the many attendees of our recent Cleantech Forum know, the buzz around cleantech for quite some time has been about the convergence of cleantech and data.  All kinds of people – myself included – have described (using adjectives) all the ways in which this will be the next major cleantech wave.  But I wanted to use this post to drop some of the adjectives, and focus on the verbs (the doing).

At our forum, I hosted three panel discussions – each of which touched on specific actions in integrating data into cleantech:

1. Intelligent Buildings

“Version 1.0″ of the intelligent building was about swapping out old, inefficient light fixtures and HVAC systems for newer, more efficient ones.  Certainly 1.0 still has a long ways to go but lighting controls and software companies like Lumenergi, efficiency consulting and implementation firms like Ecos, and traditional HVAC companies like Trane are all increasingly shifting their focus to managing and optimizing data around energy building use, rather than just providing more efficient devices.  

2. Financing Energy Efficiency

Traditional energy efficiency financing is based on the ESCO model.  While certainly a profitable business for companies like Johnson Controls, this model has …

Insight of the Week: Is Commissioning the Killer App of Building Management Systems?

Whitney Michael

Lawrence Berkeley National Labs projects that if the entire non-residential building stock of the United States were to undergo conservative building commissioning, it would yield $30 billion in potential energy savings and avoid 340 megatons of CO2 emissions annually by 2030.  Currently, it is reported that less than 5% of existing building stock in the US has been commissioned.  Think of the impact this could have if commissioning were increased worldwide.

This is why venture investors and corporations have become interested in companies like Scientific Conservation – a GE Ecomagination Challenge winner.  Scientific Conservation is one of a growing group of energy efficiency services companies like BuildingIQ and EcoFactor that provide a Software as a Service (SaaS)-based model to promote dynamic and real-time energy efficiency for commercial and residential buildings.

Taking a look at our venture investments database, venture investments into the software and services sectors of energy efficiency has increased by more than five times since 2006.

Investment in Energy Efficiency Software and Services

Source:  Alphabet Soup in the Building: How to Get from BAS to IP by David Cheng, Senior Manager, Research & Advisory, Cleantech Group
(available only to subscribers)

This Insight of the Week was originally featured

You Call This “Cleantech”?

Guest Analyst: David Gold

Invest in a solar, biofuels, or LED lighting company, and nobody will question the company’s cleantech pedigree.  Invest in a manufacturer of network switch upgrades for telephone companies, then call it “cleantech” and you’ll see a lot of raised eyebrows.  I know, because we did just that.

We are investors in Aztek Networks, a company that makes replacements for the TDM switches that handle much of the phone traffic from standard landline phones.  Telecom companies are excited about Aztek’s product because it enables them, for the first time, to incrementally switch out their old TDM switches rather than doing an extremely expensive complete system overlay. Aztek’s technology also enables them to provide IP-based functionality.

Aztek’s switches are IP-based but can co-exist in the network architecture with both IP-based and “old world” GR303-based switches.  Our cleantech company, Aztek, is enabling telecom companies to accelerate their entry into modern IP-based technology.

Eyebrows raised yet?  Now, for the rest of the story…

Aztek’s switches also reduce energy consumption by 90%.  How big of a deal is that?  The roughly 16,000 TDM switches in the U.S. and Canada alone consume about 15,000 gigawatt-hours each year – roughly 0.4% of all electricity used in …

Guest Analysis: Meet the Rodney Dangerfield of Cleantech

Guest Analyst: David Gold

Wind turbines stand tall and mesmerize with their motion. Solar cells bask in the sparkling sun.  Meanwhile, hidden down in the dark dirty underworld, a compelling technology sits quietly and gets no respect.  Once installed it largely goes unseen and, it seems, it’s equally invisible in the world of clean technology press, venture funding and government R&D funding.  Yet this technology provides some of the most intriguing economic returns available for reducing a building’s net energy consumption and I would welcome the right opportunity to fund an exciting business in this category.

What is this Rodney Dangerfield of cleantech?  Geothermal heat pumps, also referred to as ground source heat pumps or geoexchange.  Anyone who has gone down a hundred feet or so in a cave on a hot day probably noticed how nice and cool it was down there.  That is because in most geology, a zone of nearly constant 55-degree Fahrenheit temperature exists 50-200 feet below the ground we walk on.  Even at shallower depths the temperature hovers within a much narrower range than on the surface. Geoexchange is technology that uses the constant temperature and huge heat sink that the earth represents to generate heat in the wintertime …

The key to industrial energy efficiency

Lisa Sibley

Market opportunities to meet growing electricity needs, especially in the U.S., lie in energy efficient clean or combined heat and power (CHP) and waste heat to energy or electricity (WH2E) technologies, or recycled energy.

I’m not as concerned with the precise terminology of what it’s called or should be called, but what kind of impact it could have. Large industrials—places that live in thin margins and are energy intense—are the most likely place where this is poised to take off. Though the market has yet to reach its full potential due to factors such as cost and industrials operating on deeply subsidized electricity to date, it is progressing with developments in newer Organic Rankine cycle (ORC) and thermoelectric technologies from companies big and small, such as Ormat Technologies (NYSE:ORA) and Alphabet Energy.

In terms of project developers, leading U.S.-based companies include Recycled Energy Development (a nominee for the Cleantech Group’s Global Cleantech 100 list to be unveiled in October) and Integral Power, LLC.

Why it matters?

If the United States were to adopt high-deployment policies and achieve 20 percent of efficient electricity generation from CHP and WH2E by 2030, it could generate $234 billion in new technology …

Enzymes help wastewater plant in India drop chemicals

Emma Ritch

Kerala, India-based Synthite said it has adopted a new enzyme technology from Sydney, Australia-based BiOWiSH Technologies to eliminate chemicals, reduce energy use, and eliminate the production of sludge at its industrial wastewater treatment plant in southern India.

The production of spice oleoresins uses a variety of raw materials, creating wastewater with a wide range of acidity levels. Previously, Synthite would monitor the pH and correspondingly adjust the lime dosing, but the process was imperfect.

“Anytime we got the pH wrong, it would take days to recover from a spike in suspended solids,” said B. Shavanas, Synthite’s engineering manager, in a news release.

The chemical use made the company’s sludge into hazardous waste subject to regulatory controls. In addition, an energy-intensive aeration processes was necessary to sustain the microbial population digesting the sludge.

In a three-month trial, Synthite used specialty high-speed enzymes from BiOWiSH to break down the organic waste. The plant was been able to eliminate lime dosing and sludge, and reduce energy consumption by limiting the use of aerators. In al, Synthite reported a 50 percent reduction in operating costs of the plant.

BiOWiSH’s enzyme technology also has applications in agriculture, solid waste management, livestock farming and consumer products …

Dairy plants to disinfect water with UV systems

Emma Ritch

Har Tuv, Israel-based Atlantium Technologies is seeing an uptick in interest for its proprietary technology that serves as a substitute for the energy-intensive heat pasteurization process.

During the past two years, the company worked with the dairy industry and U.S. regulators to win approval to use ultraviolet light to eliminate microbial contamination in water at dairy plants and processing sites.

The U.S. Food and Drug Administration recently gave its stamp of approval—an endorsement that Phyllis Posy, Atlantium’s vice president of strategic services and regulatory affairs, says could boost the market for UV purification of water across a number of industries.

“It’s not just a question of the dairy market. This is the first time UV has been put on the map with specific, clear and measurable criteria. I think this will make a big difference for the overall [UV] industry,” Posy told the Cleantech Group. “It helps people feel more comfortable with the use of UV for disinfection as an alternative to chemicals.”

Pasteurization is used to eliminate bacteria, making milk safe to drink. But the milk can be contaminated if the equipment and pipes that handle the milk are flushed with water that hasn’t been properly disinfected.

Typically, dairy …

Alarming energy use in emerging industries

Emma Ritch

A new study from the Massachusetts Institute of Technology says modern manufacturing systems are energy hogs, using between 1,000 and 1 million times the energy of traditional manufacturing to produce the same amount of output.

The study by Professor Timothy Gutowski of MIT’s Department of Mechanical Engineering compares the energy use per pound of output of 20 manufacturing processes.

The study casts light on the soup-to-nuts energy consumption of clean technologies such as solar panels. Solar was singled out in the study as being extremely energy inefficient, detracting from the technology’s lifecycle energy balance (the energy it takes to produce versus the energy it can generate).

“Claims that these technologies are going to save us in some way need closer scrutiny. There’s a significant energy cost involved here,” Gutowski said. “Each of these processes could be improved.”

The study is comparing widely disparate methods and end products, but Gutowski said the results still have resonance. Cleantech needs to improve the energy efficiency of its processes before ramping production, he said. Liquid phase processing, for example, has the potential to be a more energy efficient solution if it’s further developed.

“The seemingly extravagant use of materials and energy resources by many …