Is the Sky Falling for Cleantech Investment?

As Henny Penny cried, "The sky is falling, the sky is falling."

And to look at the latest report on quarterly cleantech venture investment released last week by Cleantech Group, one might think the same is true for this sector.

"Measured by dollars invested, cleantech venture investment fell 14 percent compared to the previous quarter ($1.88 billion) and was off 25 percent from 2Q11 ($2.15 billion),” according to the Cleantech Group. “The number of deals recorded in 2Q12 was 155, compared to 197 in 1Q12. The tally may rise again once all investors have reported all deals."

But does it really mean the sky is falling?

“Despite headwinds facing the sector and global economic instability, we continue to observe top tier funds such as Khosla Ventures, Kleiner Perkins, NEA, and others actively investing into cleantech,” said Cleantech Group CEO Sheeraz Haji in a press release. 

“While some may be ducking ‘cleantech’ as a label in North America," Haji noted, "growth in technologies addressing resource and energy challenges remains strong and both corporate and investor interest remains high.”

"The dip in cleantech venture capital this year is not unexpected," Dallas Kachan of Kachan & Co., wrote in an email to me last week. "We forecasted a decrease in cleantech VC in 2012 due to a tightening in the investor fundraising climate, waning policy support in the developed world, perennial concerns about IRRs in cleantech and macro-economic turbulence and other factors.”

Another factor may be that investors who were dabbling in cleantech the past couple of years have fled the sector, which may have artificially inflated the numbers in previously quarters and years.

I've also been hearing from several investors and entrepreneurs with whom I speak to regularly, that there's still an overall belt-tightening in the investor world.

Other investors may not be convinced the sector will thrive without a carbon price, which we won't see any time before the November election -- if then!


The news isn't all grim, however, and venture capital is not the only money in the sector.

Increasingly, big companies are filling the gap from the venture community and those firms that are in it for the long haul are making follow-on investments. 

"The largest companies in the world are buying their way into clean technology markets," Kachan noted in the same email exchange, "supplementing the role of traditional private equity and evidencing a maturation of the cleantech sector. A decrease in venture is being made up for by a rise in corporate involvement in cleantech."

Still, there has been a shakeout in cleantech companies as subsidies get pulled and follow-on money ceases its flow.

"A lot of cleantech startups have been getting shaken out and will continue to do so," wrote Rob Day in his excellent take on the Cleantech Group findings.

Day also noted some positive news, however, that Limited Partners (LPs) "finally appear to be slowly getting   back into the habit of funding cleantech venture capital firms. So I think we'll see a pickup in deal flow in the second half of the year. But probably not enough to forestall the ongoing shakeout."

As Day and others have noted, deal counts may be more indicative than dollars when it comes to judging the overall health of investing in the sector.

The top two sub-sectors in terms of deal counts in the Cleantech Group report? Energy efficiency and water.

Contrarian Investors Take Stage at Mid-Atlantic Cleantech Investment Forum

"Energy efficiency is the cleaner energy option that pays for itself," suggested Mark Fulton to the large crowd gathered for the Mid-Atlantic Cleantech Investment Forum last Thursday evening. "It applies already existing technologies at scale with no government funding and a payback of 2-4 years." 

Mark Fulton

Fulton is Managing Director and Global Head of Climate Change Investment Research and Strategy with Deutsche Bank Climate Change Advisors, so he has the data and charts to back up his statements. 

His team is currently exploring financing models for energy efficiency, which they believe will generate over $1 trillion in savings over 10-20 years.

"The Empire State Building energy efficiency upgrade demonstrated 30 percent IRRs," offered Fulton. "So why isn't anyone investing in it?"

Perhaps it's the wise investor's contrarian outlook.

The Forum, now in its 4th year, co-hosted by the Cleantech Alliance Mid-Atlantic and Blank Rome's Cleantech Group, offered some contrarian suggestions from an investor panel.

The panel included Tucker Twitmyer of EnerTech Capital for whom "efficiency plays have been our bread and butter," and Lux Capital founder Josh Wolfe, who's refrain, "it's a great technology," belied the fact that not all great technologies make great investments.

It's such a contrarian outlook, too, that has led to successful investments for Lux, EnerTech, and NRG Energy's venture arm, and that has cleantech newcomer Edison Ventures looking to capital efficient "cleanweb" models as a way to play in the sandbox. 

The nascent cleanweb movement, initially launched by Sunil Paul at Spring Ventures, brings together web coders to tackle big energy problems. (You can read more about the cleanweb hackathons here.)

Tucker Twitmyer

Twitmyer, who has been investing in clean energy companies and projects for over 10 years, sees parallels with earlier cycles in the space, "LP [limited partners] who haven't seen the kinds of returns they want have started heading for the exits."  

But that's not necessarily time to panic, suggested Wolfe. On the contrary, when the bulk are investors are chasing the next big thing, Wolfe and other successful investors see opportunities in what's left untouched.

Josh Wolfe

This thesis has paid off handsomely with one such investment, Kurion, which has a solution for addressing toxic nuclear waste, realizing $40 million in profit on $100 million in revenue last year.

The company was one of the few working to clean up the Fukushima nuclear reactors in the wake of the tsunami a year ago.

Another panel at the Forum on shale gas development revealed that there's a growing need for clearly defined regulations in the natural gas sector, especially around well-casing construction and fluids disclosure.  But the panel of experts concluded that sustainable natural gas development is achievable.

Presenting company pitches by new entries in the space rounded out the evening's program, including Green Power Technologies (the "BERT" people), Matcor, OmniWind, Primus Green Energy and XL Hybrids.

"We need to start talking about cleaner energy, not just clean energy," offered Fulton in his keynote. "Sixty to seventy percent of American voters support the idea of cleaner energy," which includes advances to make existing forms of energy better, cleaner and more efficient.

Recognizing there are no silver bullets or magic remedies, fora like this one are designed to call attention to the variety of solutions available. No matter how contrarian they may seem. 

(Disclosure: The author is a co-founder of the Cleantech Alliance Mid-Atlantic, which co-hosted the Forum.)

Lighting, Sensors and Lumens, Oh My | The Energy Collective

Let there be Light: Digital Lumens ILE-MB-3

From poor lighting in the Hilton's Trianon Room to the endless parade of LED products on display in the Exhibit Hall lighting was the word at Con Ed's Energy Efficiency Summit in New York on Wednesday.
 
I wrote about the changing nature of lighting and sensor technologies from this week's Con Ed Energy Efficiency Summit in New York.  Read my post on The Energy Collective blog.

Read more.

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Meet BERT, Your Energy Control Freak

Will Ernie be next?

Remember when your mom would shout at you to turn off the lights when you left a room?  Well, now there's an electronic mom that does it for you without the yelling.

They call it BERT, which stands for Best Energy Reduction Tools, and it's a new "smart plug" has the witty tagline that it's "your energy control freak." 

I've written before about smart plugs (see ThinkEco's Modlet and Israel's Greenlet) and other energy demand management solutions, but yesterday's announcement by Ben Franklin Technology Partners (BFTP) of Southeastern Pennsylvania that it was awarding a follow-on investment of $500,000 to Green Power Technologies of King of Prussia, PA, caught my attention.  (BFTP has already invested $250,000 in an earlier round.)

They call it BERT, which stands for Best Energy Reduction Tools, and has the witty tagline that it's "your energy control freak."

BERT eliminates wasted energy from devices that are turned off but still plugged in -- and let's face it, we're all guilty of leaving our devices plugged in when they don't need to be.  BERT software enables you to program up to 100 on/off commands per week, which gives you control of energy use day or night from your WiFi enabled computer or smart phone.

The company plans to manufacture in the US, which would make Jack Donaghy proud.  GPT has contracted with Millennia Group, a manufacturer in Cheswick, PA, to make BERTs.

I'm still looking for a solution that cuts off power to my phone charger when the charge is complete, such as when I charge it overnight, but this programmable smart plug gets closer to solving that problem. 

Why Does Energy Efficiency’s Promise Remain Unfulfilled?

Jon R. Luoma, a contributing editor at Audubon, tries to explain why the promises of energy efficiency haven't been fulfilled in latest Yale Environment 360:

Among the many measures the world can take to wean itself off fossil fuels, few match the benefits of making homes, business, and cars more energy-efficient. But financial and psychological barriers have kept individuals, businesses, and governments from realizing efficiency’s great potential.

Read the full post here: Energy Efficiency

President Obama Speaks at Penn State About Clean Energy

Last Thursday, President Obama spoke at Penn State about "encouraging and investing in innovation and clean energy technologies to create new jobs, grow the economy, and win the future."

Here is a video of the speech:




And here is a link to a transcript of the speech: Obama at Penn State

On Energy Transition, US Military Leads

Photo Credit: US Army

As Tom Friedman points out in his column yesterday, "the U.S. military loses one person, killed or wounded, for every 24 fuel convoys it runs in Afghanistan."

Soldiers and others are put in harm's way as part of convoys, hundreds and hundreds of them, needed to transport fuel to run air conditioners and diesel generators in remote bases all over that country.

But what if the "U.S. Navy and Marines could replace those generators with renewable power and more energy efficient buildings, and run its ships on nuclear energy, biofuels and hybrid engines, and fly its jets with bio-fuels"?  One out-come, Friedman argues, would be to "out-green the Taliban."

The military is making a strategic move to alternative energy and energy efficiency, in part because it recognizes the national security issues associated with dependence on fossil fuel energy and the potential impacts of climate change. 

In its 2010 Quadrennial Defense Review Report, the Department of Defense (DoD) found that climate change "may act as an accelerant of instability or conflict, placing a burden to respond on civilian institutions and militaries around the world.”

This threat, coupled with an energy budget of $20 billion, has led the DoD to take steps to reduce is dependence on fossil fuels, strive for energy efficiency, and reduce its carbon emissions by developing and deploying clean tech innovations.

They have also recognized the potential threats from so-called "peak oil," warning last spring "that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact," according to a report from the US Joint Forces Command.

The US military has long been a leader in biodiversity conservation as well, with partnerships with organizations such as the Nature Conservancy, NatureServe, and others around the US.  The DoD even has a special "Conservation Conveyance," which allows closed military bases to be transferred into permanent conservation status.

It should come as no surprise that the US military is becoming a leader in green tech innovation.  Defense led much of the global technological innovation of the last half of the 20th Century after the creation of the Advanced Research Projects Agency (ARPA) in 1958. 

ARPA, or DARPA, as it is known today, developed the weapons that transformed warfeare in the last century, but also led to the electronic computer, robotics, the Global Positioning System (GPS), and the Internet.

The new green economy may in fact be led by a green revolution in the military, giving new meaning to DoD's mission of deterring war and protecting the security of the US.

As Friedman points out, the green innovations being fostered by the military "could save lives, money and the planet, and might even help us win — or avoid — the next war."

End of Carbon Credit Market? The Green Skeptic on FOX Business

I spoke this morning with Stuart Varney on FOX Business about the end of the Chicago Climate Exchange and the Obama administration's newly announced program to encourage energy efficiency upgrades.




If your browser doens't support this video format, here is a link: Green Skeptic on FOX Business

Philadelphia Innovation Cluster Seen as "Key to Future"

Rendering of Greater Philadelphia Innovation Cluster at Navy Yard

"I'm a bit like Ryan Howard," Philadelphia Mayor Michael Nutter told the crowd at the Navy Yard. "I get to bat clean-up and take us on to the championship."

The Mayor's reference to the city's major league baseball team seemed a good analogy for a championship he has long wanted, the title of "Greenest City in America."

The sentiments weren't lost on the other dignitaries, academics, industry leaders, and cleantechies gathered in a tented area on the pier of the Navy Yard's Cruise Ship Terminal to celebrate the launch of the Greater Philadelphia Innovation Cluster for Energy Efficient Buildings (GPIC).

The Mayor opened and closed the ceremonies, which also featured speeches by Pennsylvania Governor Ed Rendell, US Secretary of Energy Steven Chu, Assistant Secretary of Commerce John Fernandez, and Vice President Henry Foley of Penn State.

Penn State led the application for the energy efficiency hub, marshaling a consortium that featured other universities, major corporations such as United Technologies and Turner Construction, as well as a panoply of associations and other businesses.

The result was a successful bid for the nation's only energy efficiency cluster, and $129 million in funding from the Department of Energy (DOE) and other agencies.

The Navy Yard has plenty of old buildings on its 1200 acres and its own micro electricity grid to test new technologies. And the list of players and supporters of the proposal were just too hard to ignore, remarked Secretary Chu, who said that it was "a dream in my eye long before I was at DOE for such a center."

The Secretary confessed that he would have liked the Lawrence Berkeley National Laboratory win the bid, where he worked prior to becoming the 12th US Secretary of Energy. "But the fact that two of my former grad students are at Penn State makes up for the fact that they didn't get it," Chu quipped.

The GPIC is expected to develop and test new technologies for energy efficiency in buildings, first by renovating an existing structure on the campus.

Poor cooling and ventilation in the facility where the announcement was held provided a good example of the issues that will be addressed by technologies developed at the new innovation cluster.

The GPIC will be led by Penn State in partnership with the City of Philadelphia through its Philadelphia Industrial Development Corporation, along with Ben Franklin Technology Partners of Southeastern Pennsylvania, the Delaware Valley Industrial Resource Center, the Wharton Small Business Development Center, and numerous other public, private, and academic partners.

"This is the type of research and technologies that will propel the US going forward," Secretary Chu said. "And this type of broad cooperation exemplified here in Philadelphia will make it work."



(Disclosure: The author is co-founder of the Cleantech Alliance Mid-Atlantic, which provided a letter of support for the Energy Innovation Hub application and is an industry association partner in that effort.)

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Philadelphia: Birthplace of Energy Independence?

Image via Wikipedia

Philadelphia Navy Yard, Robert N. Dennis collection

Can Philadelphia become the birthplace of another kind of American independence: energy independence?

Two developments this week add to the Greater Philadelphia region's bid to become a regional powerhouse, if you will, of energy efficiency, clean technology research and commercialization, and entrepreneurship.

The location of these new developments is the old Philadelphia Navy Yard, the "city within the city" that is rapidly becoming an economic center with the headquarters of URBN, TastyKake, and the Aker Philadelphia Shipyard.

On Tuesday, Ben Franklin Technology Partners of Southeastern Pennsylvania (BFTP-SEPA), announced the launch of its Energy Commercialization Institute (ECI), which it describes as "the region's first partnership for accelerating alternative and clean energy technology development and commercialization, through translational research and sponsored research funding."

The ECI is a partnership between Drexel University, the University of Pennsylvania, and BFTP-SEPA, which created the ECI with $1.2 million from the Commonwealth of Pennsylvania. A host of other area universities will also participate.

"The Energy Commercialization Institute is a catalyst for regional energy-based economic growth," said RoseAnn B. Rosenthal, President & CEO of Ben Franklin.

The Institute will implement "common intellectual property protocols among the participating institutions and by provide capital at the earliest stage of technology commercialization," according to Rosenthal.

The other development tackles another energy and economic opportunity: efficiency.  A research consortium led by Penn State University announced yesterday that it won a competitive grant from the Department of Energy worth $129 million to develop an "energy innovation hub" at the Navy Yard.

The hub will fund research into energy efficiency for buildings and train workers in both retrofitting and new construction.

"Our goal is to create the building equivalents of super low emissions vehicles (SULEVs) in buildings – call them SULEBs!" said Dr. Henry Foley, Penn State's vice president for research and dean of the graduate school, who is leading the effort.

"With this kind of support we can realize the vision of Philadelphia becoming America’s greenest city and we can put Pennsylvanians in the lead of this technological revolution," Foley said in an email.

The Navy Yard, with a land footprint of 1,200 acres, has some unique qualities suitable for such a research facility, including its own unregulated power grid, allowing for testing technologies in a way that won't impact the larger, city-wide power grid.

The campus also has over seven miles of waterfront, more than 100 companies with a workforce of 8,000, 5.5 million square feet of buildings, and more than $500 million of private investment, according to an article in the Philadelphia Inquirer.
 
Critics question the assertion that the energy hub will create 100,000 jobs and note that other top-down efforts have failed to deliver results.

But Foley dismisses such criticism, saying in an email that "this effort will be driven by science and engineering for innovation. This HUB is highly focused in one incredibly important area. The outcome will be technology-based economic development."

As for comparing this to other top-down efforts, Foley said, "it sounds to me like a comparison of apples to bowling balls – they’re both spherical."

The combination of this hub, the energy commercialization institute, and existing business incubator-style efforts at the Navy Yard, which houses such promising companies as OxiCool that is developing a cutting-edge air conditioning technology, makes the case for a growing support infrastructure for the region.

What's needed next is more opportunities for ground-up entrepreneurial efforts, attracting some later stage companies that will provide jobs, and an investment ecosystem to support the best emerging technologies in the region.

Philadelphia still has a long way to go, but it is slowly building momentum to ramp up to full power. If these efforts succeed, Philadelphia may become the birthplace of another American revolution, that of energy independence.


(Disclosure: The author is co-founder of the Cleantech Alliance Mid-Atlantic, which provided a letter of support for the Energy Innovation Hub application and is a partner in that effort, along with other efforts supported by BFTP-SEPA.)

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Green Skeptic Friday LinkFest - 08/20/10

Jonny's Not Rotten (Photo by Amado Garcia)

Dog Days edition of the Green Skeptic LinkFest.
So, I'll start with Sunday's cover story in PARADE magazine on the "Vick dogs" - the dogs that football player Michael Vick abused and Vick-timized in his Virginia compound. Some were forced to fight and some were traumatized for life. But most of them survived to be rehabilitated and have been given a second chance: Can You Teach a Bad Dog New Tricks?

Efficiency is finally getting it's due as investors are picking energy efficiency 'low-hanging fruit.'

Single malt or blended, sir? Yale360 reports on a New Whisky Waste Biofuel Developed by Scottish Scientists: Scotch Drink & Drive.

Sharon Begley in Newsweek writes about how we're "Green and Clueless."?

Energy China Forum (ECF) reports on how the U.S. and China Are Vying for Clean Energy Leadership.

Fisker's Karma plug-in hybrid is still a mystery, but it promises much: Fisker Do?

Eric Wesoff of GreentechMedia published a Greentech IPO Report: Past, Present and Top Ten IPO Candidates.

Fabian Pattberg listed his Top Five Sustainability/CSR Communication Examples.
 
And finally, A123 spin-off company 24M gets charged up by $10M from North Bridge + CRV for grid-scale batteries: 24M.

 
(Disclosure: I hold a long position in $AONE This post is for informational purposes only and is neither intended to be investment advice nor an offer, or the solicitation of any offer, to buy or sell any securities. I also hold a long position in an adopted pitbull named Calvin and I do advocate that you do the same.)

MIT Energy Conference Influences National Legislation

A fun note for a Friday: The MIT Energy Conference, which I covered in March here, here, and here was cited by US Senator Jeff Bingaman when he introduced Supply Star Act of 2010, a bill designed to bring about energy-efficiency improvements in supply chains, much like Energy Star has done for appliances.

The Senator indicated that the idea for the bill came from this year's MIT Energy Conference, where he and his staff were particularly influenced by a panel discussion titled, "Supply Chain Energy Use: Exposing Opportunities for Innovation in a Global Economy. (link to video)"

Bingaman specifically mentioned the MIT conference, saying that the hurdles surrounding optimization of supply-chain energy consumption "were discussed in some detail by an expert panel. The hurdles include a lack of information and analysis tools for important parts of far-flung supply chains, which often lie far upstream or downstream (and therefore out of sight) of a particular firm, as well as a lack of leverage with which to drive global suppliers toward more efficient practices."

The bill, Bingaman said, is aimed at helping to address this lack of tools and information.

Kudos to the student organizers of the energy conference for making an impact.

For more information: Student-run MIT Energy Conference influences national legislation

CREE LED Market Leader, Continues to Impress

I've been long LED lighting manufacturer $CREE for a long time, as readers of this blog know. Today, Cree continued to impress me with its quarterly earnings release, beating estimates and generating record revenue.

They announced record revenue of $199.5 million for its second quarter of fiscal 2010, ended December 27, 2009, which is a "35 percent increase compared to revenue of $147.6 million reported for the second fiscal quarter last year and an 18 percent increase compared to the first quarter of fiscal 2010," according to a company press release.

“We continued to execute very well in Q2, as we delivered record revenue and net income,” stated Chuck Swoboda, Cree chairman and CEO. “LED lighting adoption continues to gain momentum and our near term focus is on factory execution and capacity expansion. Our strong balance sheet further enhances our leadership position and supports our mission of leading the LED lighting revolution.”

Here are other highlights from the press release:

Q2 2010 Financial Metrics:

* Cash and investments increased $65.6 million from Q1 of fiscal 2010 to $954.1 million.

* Cash flow from operations was $21.5 million. Free cash flow (cash flow from operations less capital expenditures) was ($19.9) million as we spent $41.4 million on capital expenditures.


* Accounts receivable (net) increased $20.3 million from Q1 of fiscal 2010 to $113.4 million, resulting in days sales outstanding of 51, an increase of 1 day from Q1 of fiscal 2010.

* Inventory (net) increased $7.3 million from Q1 of fiscal 2010 to $93.3 million and represents 80 days of inventory, a decrease of 1 day from Q1 of fiscal 2010.


Recent Business Highlights:

* Awarded $39 million in tax credits as part of the American Recovery and Reinvestment Act to support our investment to build energy efficient LED lighting

* Announced that Cree LED lamps have been selected for an initial deployment in approximately 650 Walmart stores

* Set a new standard for indoor LED lighting with the XLamp® MX-6 LED, the industry’s first lighting-class PLCC LED

* Demonstrated an A-lamp LED light bulb with the highest lumen output and efficacy reported in the industry

* Achieved industry-best reported R&D results of 186 lumens per watt from a white high-power LED

* Purchased a facility for manufacturing expansion in Huizhou, China


Business Outlook:

For its third quarter of fiscal 2010 ending March 28, 2010, Cree targets revenue in a range of $215 million to $225 million with GAAP net income of $37 million to $40 million, or $0.35 to $0.37 per diluted share. Non-GAAP net income is targeted to increase quarter-over-quarter to $44 million to $47 million, or $0.41 to $0.44 per diluted share, based on an estimated 107.5 million diluted weighted average shares. Targeted non-GAAP earnings exclude expenses related to the amortization of acquired intangibles of $0.02 per diluted share, and stock-based compensation expense of $0.04 per diluted share.

Here's a link to the full press release: CREE Earnings Q2 2010
 


(Disclosure: I hold a long position in CREE. This post is for informational purposes only and is neither intended to be investment advice nor an offer, or the solicitation of any offer, to buy or sell any securities.)

The Green Skeptic on Fox Business: "Cash for Caulkers"

President Obama launches yet another "Cash for..." program, this time "Cash for Caulkers" for weatherization and retrofitting.

The Green Skeptic wonders when the "Cash for Stash" anti-drug program is going to start, but thinks perhaps this program may just put contractors and construction crews back to work.

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Why I like CREE to meet or exceed earnings: bright future for LEDs

I had a funny little exchange with a StockTwits friend about Cree (NASDAQ: CREE) a week or so ago. He and I both like the stock, but for different reasons:

I like that Cree is the market-leading innovator in energy-efficient, environmentally friendly LED lighting and innovations. They also develop semiconductor solutions for wireless and power applications.

I like the fact that they recently announced the first water-proof, 3-color LED for large displays. This will revolutionize outdoor ads, JumboTrons, and maybe even Times Square.

I also like their area and street lighting applications for which I see all sorts of uses with municipalities, campuses, and the like.

My friend "likes the price strength."

We don't disagree. I like the price strength too, and the moving averages have been trending higher for some time. But its the longer-term product strength, innovation, and product adoption that will make Cree a leader for some time to come.

Others seem to like Cree too: Merriman Curhan Ford recently upgraded Cree from Neutral to Buy, saying "the LED outlook is getting brighter."

Merriman Curhan commented that the company "recently raised its June quarter outlook and we believe the company could meet or exceed the high end of its recently revised guidance. LEDs are rapidly replacing CCFLs in TV backlighting and quickly gaining acceptance in the general lighting market that is benefiting Cree in both the near and long term."

They also think "Cree could exceed $1 billion revenue withing 2-3 years and thinks CREE should trade at 35-38x our FY11 EPS estimate of $1.12 for a $39-$43 price."

According to a report in Reuters, "the change was not enough to move the Zacks Consensus Estimate from its current level of 11 cents per share, it did result in a more bullish most accurate estimate of 14 cents per share."

There are others who think the stock may be overbought and that is something to keep an eye on. And the recent volatility in the stock may give some heartburn.

But, as Zacks pointed out, "projections for fiscal 2010 have gradually been rising, suggesting that guidance could be good. CREE has topped expectations twice and matched forecasts twice during the last 4 quarters."

Cree is reports today (Tuesday, Aug 11), after the close of trading. The stock was up in early trading this morning ahead of the earnings call.


(Disclosure: I hold a long position in CREE. This post is for informational purposes only and is neither intended to be investment advice nor an offer, or the solicitation of any offer, to buy or sell any securities.)

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So What's a Smart Grid Anyway? It's More Power to Ya.

Image by horizontal.integration via Flickr

What is a Smart Grid? Perhaps it is easier to start with what a Smart Grid is NOT.

A Smart Grid is not a bunch of one-way meters spinning around as you consume and a guy who drives around checking the meter periodically, sometimes correcting assumptions made by your electric company about your energy consumption and sometimes not.

A Smart Grid is not a grid that is subject to the whims of weather, mischievous squirrels, bird strikes or spikes in consumption by millions of users.

So, what is a Smart Grid, then?

The good folks at Inhabitat.com put it this way:

A smart grid delivers electricity using digital technology that tracks power consumption with smart meters, special electrical meters that instantly transmit energy usage information to utilities via wireless networks. Smart meters also let us track our own energy use hour-by-hour on the Internet and with third-party computer programs.

Basically, we're talking about real-time, two-way communication between you or your business and your utility provider. This helps manage usage and flow and consumption, can help predict spikes and shift sources rapidly in response to changing needs.

And if you have solar panels, wind turbines, plug-in hybrid vehicles or any other potential generating source, smart grid technology will help you feed that into the mix, so that you become a generator, not just a consumer.

Toronto Star energy writer Tyler Hamilton describes it this way:

The true vision of the smart grid is a self-healing, automated grid that can manage complex flows of electrons, from the hundreds — potentially thousands — of large and small sources of power to the millions of homes, businesses, industrial customers and, potentially, electric cars that require that energy.

Okay, so basically, a Smart Grid is like a brain for energy distribution. Nerve endings all over your body send information back to the brain telling the brain when you are too hot or too cold; that you need more energy in one part of the body or another (exercise and eating, for instance, have different requirements in different regions of the body); and helps you regulate your every action.

Many players are getting involved in the act, from the federal government, which recently allocated $3.3B to Smart Grid technology development, to start-ups and even large companies like IBM and Google.

Google's PowerMeter, which they describe as being in prototype, will receive information from utility smart meters and energy management devices and provide anyone who signs up access to your home electricity consumption right on your iGoogle homepage.

Imagine being able to track and manage your own energy consumption so that you know when it will be least expensive to do your laundry or watch that episode of "Lost" that you Tivo'd. (Of course, that time is probably overnight when you are asleep, but nevertheless...)

Essentially a Smart Grid will put more power in the hands of consumers and make them partners with utilities rather than simply customers or rate payers. In the last analysis, a Smart Grid is just what it sounds like: smart.

Here are more resources on the concept of a Smart Grid:

Wired article from March 2009

Earth2Tech.com FAQ, which includes a list of companies working on various components for making the grid smarter.

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Philly to be America's Number One Green City by 2015, Says Mayor Nutter

Philly Mayor Michael A. Nutter and the Mayor’s Office of Sustainability today announced Greenworks Philadelphia, an ambitious, comprehensive framework to make Philadelphia the greenest city in the United States of America by 2015.

It sets goals in five areas — energy, environment, equity, economy and engagement — and encompasses more than 150 initiatives. Together, they will reduce the city’s vulnerability to rising energy prices, limit its environmental footprint, and reposition its workforce and job development strategies to build upon Philadelphia’s competitive advantages in the emerging green economy.

"Greenworks Philadelphia is a vision for how Philadelphia can and should seize this moment, building on the assets of the city left to us by the past and creating a better future for ourselves, our children and generations to come," said Mayor Nutter.

Greenworks Philadelphia seeks to make more homes and buildings weather-tight, increase recycling and minimize trash, give residents better access to parks and fresh food, and capture the benefits of solar and geothermal energy. It envisions planting thousands of trees, equipping the municipal fleet with less-polluting engines and expanding green job training, so plenty of Philadelphia’s workers have the skills to retrofit buildings and install solar arrays.

For more info: www.phila.gov/green/mos.html or www.greenworksphila.org or a full copy of the report.

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Energy Use in Buildings Can Be Cut by 60 Percent, WBCSD Study Says

The World Business Council for Sustainable Development (WBCSD) announced the results of a study that shows how energy use in buildings can be cut by 60 percent by 2050, but noted that it will require immediate action to transform the building sector.

The four-year, $15 million research project released its report today in Paris at the Alliance to Save Energy’s EE Global Forum and Exposition. Transforming the Market: Energy Efficiency in Buildings, as the report is known, uses new modeling techniques and provides a roadmap to transform the building sector.

"Energy efficiency is fast becoming one of the defining issues of our times, and buildings are that issue's 'elephant in the room'," said Björn Stigson, president of the WBCSD, in a press release. "Buildings use more energy than any other sector and as such are a major contributor to climate change."

According to the WBCSD, the "project took a bottom-up, market-driven approach to understanding the barriers to lower energy use, based on the most detailed view ever of the current state of energy demand in buildings. Energy use by building type was analyzed for millions of existing and new buildings and projected out to 2050, accounting for differences such as climate and building design."

Researchers used computer simulations to show the market response to various financial, technical, behavioral, and policy options, identifying the optimum mix to achieve transformation for each market studied, according to WBCSD.

The project's report makes six principle recommendations:

• Strengthen building codes and energy labeling for increased transparency.
• Use subsidies and price signals to create incentives for energy-efficient investments.
• Encourage integrated design approaches and innovations.
• Develop and use advanced technology to enable energy-saving behavior.
• Develop workforce capacity for energy saving.
• Mobilize for an energy-aware culture. (Whatever that means - GS)

The full report is available on the World Business Council for Sustainable Development website: EEB Report

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Energy Expert Sees a Perfect Storm of Opportunity in US Mid-Atlantic Region

Tom Tuffey, an energy expert with 35 years in the environmental field, spoke to a rapt crowd of 225 clean energy enthusiasts at the REBN, Mid-Atlantic's second event last night.

Tuffey, who runs the energy and environment practice at PennFuture, talked about a perfect storm of opportunity, incentives, and capital coming into the region's burgeoning clean tech sector.

The crowd, gathered in the upstairs room of Maia Restaurant in Villanova, PA, consisted of entrepreneurs, investors, and service providers who hope to benefit from the scenario Tuffey described.

"You need to be vigilant," Tuffey cautioned. "Lest your boat spring a leak or get swamped by the sea of competitors in this storm."

As an example of what Tuffey sees in terms of opportunity is the region's nascent solar development.

"We're behind on solar," Tuffey said. "But I believe solar installations in the state will grow from the current 600-700 to 13,000-14,000 in the next few years."

State legislation passed last year, designed to reduce electricity demand in Pennsylvania will also contribute to alternative energy development in the state.

"It's just coming fast and furious from every side," Tuffey said. "The opportunity is tremendous and you need to figure out your piece of it, concentrate on that, and be diligent."

Those who do, Tuffey suggested, will thrive.

Many in the crowd hope to be among those who thrive. And their excitement was palpable as Tuffey reported a litany of numbers that grew to upwards of a billion dollars in alternative-energy and efficiency investments he expects to pour into the state over the next few years.

This is a perfect storm that stands to raise all boats, according to Tuffey, from the entrepreneurs in the room to the guys with hammers and caulking guns Tuffey met with earlier in the day.

"It's a terrific opportunity for the region and a great thing to see," Tuffey concluded.

The Renewable Energy Business Network (REBN), Mid-Atlantic Chapter, was launched in February to help build networking opportunities and build momentum for the clean tech sector throughout the region. (For more info, visit http://rebn.org/mid-atlantic)

[Disclosure: The author is the co-Chair/founder of the REBN, Mid-Atlantic Chapter and serves on its board.]

On Obama's Address to Joint Session of Congress and His Energy Investments

Tonight President Barack Obama addressed concerns that many of us were feeling the past few weeks, that the President who rode in on hope had changed to the steed of despair.

His address tonight was to the Joint session of Congress, but he was also delivering a message to the American people: "We will rebuild, we will recover, and the United States of America will emerge stronger than before."

He needed to reassure us that his economic solutions were not a pump and dump play, that he remains confident and hopeful that the American people have the wherewithal to succeed.

"It begins with energy," Mr. Obama said. "We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy efficient. We invented solar technology, but we’ve fallen behind countries like Germany and Japan in producing it. New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea."

All valid points and something a number of us have been saying for some time: we need to lead in this space and others are already at the table.

President Obama sounds much like candidate Obama on this point, "I do not accept a future where the jobs and industries of tomorrow take root beyond our borders – and I know you don’t either. It is time for America to lead again."

He is still calling for doubling the US supply of renewable energy in the next three years, and for laying down "thousands of miles of power lines that can carry new energy to cities and towns across this country."

Even energy efficiency got its due: "We will put Americans to work making our homes and buildings more efficient so that we can save billions of dollars on our energy bills."

He pushed the point further by saying that "to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy."

He asked Congress to send him legislation that "places a market-based cap on carbon pollution and drives the production of more renewable energy in America."

In support of that, he outlined how the US "will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks."

I got some flak for defending clean coal in Obama's list. (It's okay, I'm used to it.) I simply think we need to invest in figuring out whether clean coal technologies CAN be developed before we dismiss it outright. (Someone on Twitter reminded me of GreenFuel Technologies Corporation, which "recycles" CO2 emissions using high-yield algae farms. The CO2 recyclers seemed to get stiffed in the StimPack, which is unfortunate in my view.)

I'd like to see more details and look forward to tracking this as it develops.

For now, the message was positive: "We can and will," rather than, "Holy Shit, this is worse than I thought." Thank you, speechwriters!

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