21 February 2014

My Key Take-Aways from the Cleantech Innovation Summit 2014

"There's more optimism than ever for cleantech,"according to Raj Atluru of SilverLake Kraftwerk. 

Atluru was speaking at the Cleantech Innovation Summit in Newport Beach, California last week.

His was not the only optimism to be heard on the dais, in the breakout rooms, and in the halls. In fact, it seemed optimism was at an all-time high after several years of a perpetual negativity death-spiral.

The optimism comes, in part, from the announcement of NEST's acquisition last month by Google for $3.2 billion. That certainly changed the mood. 

Yet also because there are other successes to point to, including Tesla -- whose stock surged in after hours trading on Wednesday after the company announced increased production of the Model S -- and Solar City and others that seem to be riding the current wave of good sentiment for the sector.

In addition, there is the growing understanding that we'd been talking about "cleantech" all wrong before. 

As Brook Porter of Kleiner Perkins said on his panel, "Cleantech is not a sector, cleantech is an attribute."

And that's exactly how others seem to be looking at it today. The buzzphrase at the Cleantech Innovation Summit was "Cleantech Done Right," rather than Cleantech 2.0.

"What Nest proved is that 'sexy' and 'cleantech' can belong in the same sentence," said Andrew Chung of Khosla Ventures. Tesla does too, with its emphasis on design, and making the best car possible, not just the best electric car.

Companies like Nest and OPower make energy data more personal, and as with Tesla, design and ease of use for consumers helps drive their success. But as much as it is about design, it is also about data.

And that points to a not-so-subtle shift in the way investors are talking about cleantech, if they're even mentioning the term. 

It's now all about big data, collaborative consumption, sustainability, waste-to-value, and food production. These are new cleantech investment areas and, as RockPort Capital's Abe Yokell said, "The data rich world of our future is ripe with investment opportunities."

Meanwhile, water issues continue to bubble-up as potential areas of risk and need, especially around shale gas development. Water recycling, reuse, and clean-up is all essential for companies focused on fracking for bountiful natural gas.

"We need to do more with less: less water, less trucks, less impact," said Steven Hall of Schlumberger.

Jeff Guild of BlueTech Research confirmed the need for investment in water, citing energy from wastewater, nutrient recovery, and reuse as key investment areas.

As for utilities, Thomas Brill of San Diego Gas & Electric suggested utilities need to look at how Canon addressed the challenge of digital photography versus how Kodak reacted or how Verizon pivoted from hard assets to wireless services. "There are lessons there for utilities," said Brill.

The challenges to big utilities from renewables appear to be very real and can no longer be ignored.

"Solar is freaking us out," said Colleen Calhoun of GE Ventures, "It is growing so fast, it is getting so big." 

Calhoun added that when she talks to GE's CEO Jeff Immelt, they talk about "solar, energy storage, and oil and gas -- drilling deeper, farther offshore."

A mystery remains about how energy storage will contribute to the mix, but Cheryl Martin of ARPA-E had some encouraging things to say about the agency's progress on that front.

"We're finally going to make grid-level storage a reality," Martin told the audience in her keynote.

And energy efficiency technologies -- beyond consumer solutions like Nest and OPower -- are increasingly gaining traction. 

"Building automation was a $35 billion business in 2012," according to Will Coleman of OnRamp Capital. "And it's only going to grow."

The question from a commercial building perspective seems to be how to replicate what Nest accomplished with design, user interface, and distribution. How does one translate that success to commercial buildings?

Having problems like that to solve are what leads to innovation, and perhaps that's another reason for investor optimism at the Cleantech Innovation Summit this year.