Cleantech startups are disrupting global industries. Not in ten years. Not in five years. Today. We are observing fundamental shifts in many key segments of the economy. New technologies and business models are turning things upside down. Right now. These significant system changes have inspired the theme for Cleantech Forum San Francisco 2014: Accelerating system change; towards a decentralized future. Let me elaborate.
The economy is experiencing a fundamental shift from centralized to distributed systems. Consumers are gaining power and are decentralizing decisions and processes. This is causing a massive change in customer experiences, and placing incumbent business models at risk. This change is remarkable, and the pace of this change is accelerating.
Examples are all around us.
Let’s start with energy. Consumers all over the world are increasingly opting to buy energy from Solar City or Solairedirect instead of their local utility. Big companies like Walmart are getting off the grid in order to improve business reliability, increase flexibility, and hedge energy prices: the retail giant is partnering with Solar City and Tesla for a combined solar panel + energy storage deployment. Data centers have joined the trend. Microsoft (who will be speaking at Cleantech Forum San Francisco 2014) has outlined a vision for their fuel cell powered data centers of the future. Apple, Ebay, and Verizon have invested significantly in distributed generation (for example, one of Ebay’s latest data centers is running almost completely on Bloom Energy fuel cells). IKEA is selling solar panel kits. The United States’ Military is increasingly seeking energy independence via a decentralized approach. While some utilities are fighting this change, other energy companies are embracing this shift to a distributed world. Edison International recently acquired SoCore Energy, a developer of solar systems. NextEra recently acquired Smart Energy Capital, another commercial solar project developer. General Electric recently invested in Sungevity, gaining valuable exposure to the downstream solar market.
Change is happening in energy.
It’s also happening in water. Our centralized water treatment and distribution system of yore is crumbling under the inefficiencies embedded in a system where over 90 percent of the treated water is used for purposes that don’t need treated water. What does that mean? It means customers are pioneering decentralized water systems. Nowhere is this more pronounced than in emerging markets. Consumers are not waiting for governments to build new centralized water treatment facilities. Instead, they are increasingly opting to buy water from decentralized vendors like Waterhealth International. Industrial customers are also investing in their own treatment and reuse technologies. Producers of oil and gas have figured out that installing local treatment systems can be much more cost effective than trucking water back to the central plant. Innovators like Fathom and WaterSmart are focusing on consumers, helping them understand their consumption and save water. The successful water provider of the future will be very different from the centralized utility of the past.
Change is happening in water.
It’s happening in energy efficiency. After decades of failed energy efficiency programs, Opower and Nest are showing the market that we can save quads of energy if we focus on the consumer. Conventional wisdom said consumers don’t care about energy savings. However, Opower got consumers to save by employing behavioral science wisely. With design excellence, Nest has demonstrated that consumers can care about their thermostats (and more) and are willing to pay for a sleek, useful product. Thanks to significant declines in cost and notable improvements in quality, customers are increasingly choosing LEDs over conventional lighting products. Enlighted is a nice case study of this trend, as it’s now busy expanding internationally. Global lighting markets are undergoing a transformation never seen before, and the change is picking up speed.
Change is happening in energy efficiency.
It’s happening in transportation. In San Francisco, among other cities around the globe, citizens are eliminating or reducing automobile ownership and are turning to on-demand solutions like Uber, Sidecar, Zipcar, RelayRides, Lyft, and others. Vehicle manufacturers, like Ford, GM, and BMW, and big rental companies are getting into the game. BMW recently launched DriveNow, and Daimler launched Car2Go. Ford, Toyota, Volkswagen, Renault, and Peugeot have all established their own car-sharing arms. Avis bought ZipCar, and GM invested in RelayRides. The transformation is happening, and the incumbents aim to participate in the shift. The resource sharing revolution extends beyond cars. Bike sharing programs are popping up in Washington D.C., San Francisco, New York, and all over the world. San Francisco now has a new scooter sharing service thanks to Scoot Networks. There’s also Getaround (peer-to-peer car rentals) and Local Motion (tech/web-enabled fleet management, displacing keys, saving time, and expanding access). Tesla is disrupting the automotive industry by (finally) making the electric car hip, and awesome (see Consumer Reports). And not only has Tesla redefined the luxury segment, it threatens to fundamentally change the prevalent dealer sales model.
Change is happening in transportation.
It’s happening in waste. The City of San Francisco believes zero waste is achievable and is making steady progress towards that goal. This represents quite a change from the status quo of sending tons of trash to the central landfill. Such upheaval requires significant consumer engagement and investment in distributed technology. Companies like Recyclebank and Enerkem are pioneering new models. Significant producers of organic waste are also investing in decentralized models. For example, Harvest Power has partnered with a major theme park in Orlando to build a biogas plant on its property. Incumbents are paying attention: Waste Management and other big companies are investing in startups and experimenting with creative models to capture energy and materials from traditional waste streams.
Change is happening in waste.
And it’s happening in other sectors, too. Even the financing of cleantech is taking a turn for the decentralized with the onset of crowdfunding models like Mosaic. And the construction industry is meeting the internet, modular manufacturing, energy efficiency, and advanced and recycled materials in new and exciting ways. Indeed, Project Frog (who will be speaking at Cleantech Forum San Francisco 2014) is a good example of the success smart design and a new business model can achieve.
What does this inflection point look like? Explore where, why, and what this decentralized shift means by joining me and industry leaders from across the globe in San Francisco next March. Participate in the conversation. Participate in the change.
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