MENLO PARK, Calif.--The practice of playing up a company's green policies for show was the new black for the past few years. But now actually making and selling green products is what's hot because of its potential to put a business in the black.
At the 2008 Consumer Electronics Emerging Technologies Summit held here in Silicon Valley, venture capitalists, business consultants, entrepreneurs, and representatives of some of the largest consumer electronics companies in the world discussed the new wave of innovation in a rapidly commoditizing industry. It basically comes down to two words: energy efficiency.
And the reason it's important? Because it can make a product stand out. And if consumers can see a real benefit to using products that are environmentally conscious, they'll buy it. And that's potential profit for vendors and manufacturers.
"Before it was something (consumer electronics companies) just said to make themselves look good. Now it's a business imperative," said George Bailey, general manager of IBM Microelectronics.
That's because flashy, visible new breakthroughs in technology in the CE space aren't providing the same profitable bump for as long as it used to. High-definition televisions are a prime example.
"TV manufacturers are troubled in terms of profit," said Bailey. "They're asking, 'How can I add value, recapture profit?' Before it was larger format LCD screen. If yours was bigger you'd make more money. Now we know that's not true."
When the big TV manufacturers come to his division of IBM he says they are all looking for greener, more energy-efficient chips that will make their TVs consume less power because that's a way they can differentiate their product from others on the shelf. New technologies include High-K Metal Gate chips that IBM is working on that "leak" less power and can power smaller devices for longer.
But green-friendly products can be more expensive, which can deter certain types of consumers. A representative from Samsung in the audience said the company has yet to see that consumers are willing to pay for products just because they are "green."
That's why you have to give them a real benefit, not an imagined one that makes them feel good, said Steve Westly, who runs the clean tech venture capital firm The Westly Group.
"You have to give customers a real value proposition. A 'green' truck that gets 16 miles per gallon? Consumers will see through that," he said. A green product "has to have an added benefit."
Even if energy efficiency doesn't attract consumers in the numbers that these manufacturers and investors hope, businesses will be forced to green their products one way or another, Westly said.
"You'll see (environmental standards) dialed up in a government-mandated way," he said. "Government regulations and mandates are only going to increase. Not just here, but globally."
Chipmaker Intel has doubled down on China, announcing Tuesday that it has launched its second venture capital fund for the region.
Intel Capital China Technology Fund II is a $500 million fund that will focus on investments in start-ups doing work in areas such as wireless broadband, media, telecommunications, and "clean technology."
Over the past five years, the Chinese government has been trying to promote innovationand is working on developing a Nasdaq-like market for young companies.
"Given the success of the original China Fund--with investments in more than 28 companies--it is time to renew our commitment," Cadol Cheung, Intel Capital Asia Pacific managing director, said in a statement.
Intel plans to use the new fund to participate in larger rounds and even serve as the lead investor, Cheung noted.
Under its China Technology Fund II, Intel has funded two companies: Holdfast Online Technology and Newauto Video Technology.
Holdfast hosts third-party console games that allow gamers to compete against each other over a wide area network, while Newauto develops and markets video equipment, networking software, and system integrations for Chinese TV stations.
The chip giant's latest fund is more than double the size of its original $200 million Intel Capital China Technology Fund, which was founded in 2005.
Intel Capital, prior to creating a fund in China, had been investing in Chinese companies since 1998, either in specific areas such as communications in or regional funds.
Updated 2:30 p.m. PST with funding amount.
Khosla Ventures, the venture capital firm of Sun Microsystems co-founder Vinod Khosla, has invested in Pax Streamline, maker of turbines, heating and air-conditioning systems, and aerospace technologies.
Khosla and Pax Streamline CEO Jay Harman did not disclose the amount of the investment, which was formally announced Friday, but Harman said the funding is "substantial." According to a source familiar with the deal, Khosla invested an estimated $6 million in a series A round of financing; and if the company meets certain business goals, the VC firm will put in another $6 million.
Khosla partner Ford Tamer will sit on the board of Pax Streamline, and Harman will serve as interim CEO.
Jay Harman
Pax Streamline is a relatively recent spinoff of Pax Scientific, an 11-year-old research and development company based in San Rafael, Calif. Pax Scientific was founded on the premise that design in nature could improve the efficiency of industrial design of everything from air conditioning fans to water pumps to and computer cooling systems. Harman's design for fans, pumps, and propellers mimic the geometries of spiraling whirlpools--and industry experts believe these designs can reduce friction, wasted energy, noise, and unwanted heat.
Pax's projects take a cue from a design theory called biomimicry, coined by Janine Benyus. Biomimicry argues that nature uses only the energy it needs, fits form to function, and recycles everything.
Pax Scientific, which has numerous private investors, has already spun out companies for computer systems (PaxIT), wastewater management systems (Pax Water Technologies), and car cooling systems (PaxAuto). Paul Hawken, co-founder of garden retailer Smith and Hawken, is CEO of three Pax spinoffs. The company formed Pax Streamline within the last two months to address new markets for turbines and aerospace technologies, according to Harman.
He said that Khosla's investment will open doors for the company.
"There's no one that doesn't answer Vinod Khosla's phone call," he said. "It's very helpful when you have new technology and are looking for attention from Fortune 100 companies. He is a real visionary."
The clean-technology revolution will likely make a lot of people in Silicon Valley rich, but it's also going to help bring back some of the factory jobs that have disappeared.
Why? Weight, for one thing, explains Kevin Surace, CEO of Serious Materials, which recently landed $50 million in funding to build factories for its eco-friendly drywall.
Although labor is cheaper in China, shipping costs are going up, primarily because of fossil fuels.
"You could spend $2 to $3 a panel just to ship it (drywall), and that's just to get it to the dock. You'd then have to spend another $3 to $4 to ship it by rail," he said. "You can't do that if you plan to sell it for $10 to $20 a board."
As a result, Serious Materials will open its first factory, which will be capable of churning out 400,000 square feet of drywall a year, in the United States. It will likely also build its next two factories in the States as well, regionally spaced out to serve different markets.
Shipping materials from China also "blows the whole point about zero carbon dioxide," he added. "You're on the wrong side of the energy curve."
State governments are also offering substantial incentives--free rent in industrial parks, tax holidays, loans, grants--to woo these companies. "States do not want to be left out of the next industrial revolution," Surace said.
Some of the most aggressive states include New York, California, and New Mexico.
The heartening part of all of this is that Surace isn't alone. Bruce Jamerson, CEO of Mascoma, which wants to make cellulosic ethanol, has said the same thing. Mascoma is building plants in Michigan, New York, and Tennessee because that's where the wood chips and vegetable matter are. Several analysts have said shipping is one of the big barriers for Chinese solar-panel makers.
Granted, it's not like these companies are staying in the States because the CEO woke up one day to a Bob Seger song playing on the radio and started getting misty-eyed over the disappearance of the industrial heartland. They are being encouraged to stay stateside in part because of subsidies.
But other factors--like shipping costs, the low prices of their products, and the proximity to local markets--could conspire to get the manufacturing arm of the country moving again.
NISKAYUNA, New York--General Electric will spend $1 billion in research and development this year on clean energy technologies, part of its Ecomagination environmental initiative.
The industrial giant announced the investment on Tuesday at its Global Research center here, where it also said that it will put $6.8 million of that into plug-in hybrid vehicles as part of a U.S. Department of Energy project.
The company hosted a day-long presentation at its labs to showcase technology developments in solar electricity, plug-in hybrid components, water desalination, high-efficiency lighting and home energy dashboards, and materials for wind turbines and aviation.
GE will invest about $1.1 billion of research this year, and it is on track of meeting its internal goal of spending $1.5 billion yearly by 2010 on cleaner technologies, said Lorraine Bolsinger, GE's vice president of Ecomagination.
Lorraine Bolsinger, vice president of GE's Ecomagination initiative, presenting at its upstate New York labs.
(Credit: Martin LaMonica/CNET Networks)"While I'm delighted to hear about all the venture capitalists and entrepreneurs (in clean tech), we have our own clean tech fund going on right here," Bolsinger said.
Started two years ago, Ecomagination is a companywide initiative to create cleaner energy and water-related products and services. GE CEO Jeffrey Immelt tapped Bolsinger to lead the program which also covers the corporation's efforts to reduce greenhouse gas emissions.
It has become a high-profile campaign within the company. Publicly, Ecomagination has garnered the bulk of the company's advertising and marketing dollars.
Financially, Ecomagination is yielding results, Bolsinger said during a presentation. She said that the company's revenue from Ecomagination products is growing at 12 percent a year, faster than the company's overall revenue growth rate of 8 percent. The company is on target to make $20 billion a year by 2010.
"It is starting to get talked about in the (financial) analyst community, and I think it's because they see the 12 percent annual growth rates," Bolsinger said.
GE's industrial divisions manufacture a wide range of energy products, from nuclear power plants to solar electricity and engines for airplanes and trains. GE has a process to certify that Ecomagination products and services are more energy efficient and perform better, Bolsinger said.
She said that energy efficiency in its products, like GE's hybrid locomotive train engine, makes them more cost-effective.
It is likely that regulations will be put in place in the United States and other regions to limit greenhouse gas emissions, which will make the financial decision to purchase cleaner technology products easier, she added.
"We like to think about (carbon emissions reductions) as risk abatement as well as cost reduction," Bolsinger said. "We are in carbon management...Every one of our businesses are impacted to some extent."
Editor's note: Later this week, CNET News.com will be running a photo gallery of some of the energy and water technologies GE is working on at its Niskayuna lab as well as a transcript of an interview with Lorraine Bolsinger about its Ecomagination program.
Investors are betting clean technologies are good for their pocket books. The economic potential of the clean industries is not lost on policymakers either.
On Monday, two Boston-based lobbying organizations--Clean Energy Council and the New England Energy Innovation Collaborative--announced that have merged, creating the New England Clean Energy Council.
The goal of the group is to provide a more unified and louder voice to policymakers as they look to encourage development of clean energy companies, organizers say.
New England is one of several areas vying to create a vibrant clean tech "cluster" of companies. Silicon Valley is already in that category. Austin, Texas, which has a progressive utility in Austin Energy, also is.
The new England Clean Energy Council wants to focus on getting policies that support job creation. Several people with experience in IT have jumped into the green technology area, but it can be a tough transition because the skills and industries are different, said Nick D'Arbelloff, the co-executive director.
"The good news is that, unlike some tech sectors, the jobs in renewable energy and efficiency are applicable to workers at ever level of skill, from people with Phds to installers," said co-executive director Annie Johnson.
CAMBRIDGE, Mass.--Society-impacting technological change will increasingly come from physical sciences, such as chemistry, physics and mechanical engineering, rather than information technologies, said Matthew Nordan, the president of nanotechnology research firm Lux Research.
Nanotech at work.
(Credit: LifeStraw.com)Nordan on Monday provided an overview of nanotechnology at the firm's annual conference here, arguing that material sciences will fuel technological development and economic growth in the coming years in much the way that information sciences did in the last 20 years.
These hard sciences are also critical to addressing the global problems of providing fresh water to billions of people worldwide, as well as energy to growing economies.
Nanotechnology deals with very small-scale materials--a nanometer is a billionth of a meter. A human hair is about 80,000 nanometers wide.
A wide range of industries are already using nanotechnology in everything from consumer skin care products to golf balls. By designing custom materials, product manufacturers can create new pharmaceuticals or surfaces that are harder, yet lighter.
Nordan pointed out a few examples where nanotechnology can play a disruptive role in the economy.
The Boeing 787 plane has 15 percent titanium in its body because the material is lighter than other metals. But the worldwide supply of titanium will not be able to meet the projected orders of Boeing's planes, Nordan said.
Instead, new materials using nanotechnology are being developed, and that has significant implications for titanium suppliers and its customers.
Nordan showed off a ping pong ball covered in a nano-nickel material engineered by Integran Defense Systems. He smashed the ball between two pieces of wood with a hammer and wasn't able to dent it.
This material, which is cheaper than titanium, could be worth tens of billions of dollars, he said.
Taking a look at the global economy, Nordan said nanotechnologies are set to play an integral role in economic growth and environmental sustainability.
He argued that material sciences in fields such as chemistry, physics and mechanical engineering are increasingly the source for new technologies that fuel worker productivity and job creation.
In energy, solar photovoltaic companies are using nanotechnology to improve the efficiency of solar cells. The blades on wind turbines, meanwhile, can be covered with water-resistant material to prevent ice from forming, which slows down power generation.
Because of rising energy demand, companies with expertise in materials will increasingly make energy applications, such as large-scale storage.
"No one of these energy technologies will be required--all of them will be," Nordan said.
Water is another area where nanotechnology can be brought to bear with great impact. Companies such as Nano H20 developing membranes that act as filters to clean water.
Nordan showed off the application of nanotechnology in water purification. He had a bowl of water he got from a local pond and drank it through a straw-shaped water filter. Called LifeStraw, the filter is designed for the developing world where lack of access to clean water is a huge health problem.
"Access to water and energy have sparked wars in the past. There are big implications if we don't develop alternatives," he said.
As with most things, there is a right way and a wrong way to go about electric vehicles. Last Friday, Ian Wright and I spent a couple of hours around my conference table discussing our philosophies on electric cars. Wright knows something about this topic, as he was formerly an executive at EV start-up Tesla Motors, and is now the founder and CEO of Wrightspeed, a Silicon Valley-based start-up whose first car is going to be a high-performance electric supercar, price tag just shy of $200,000. And as it's electric, Wright expects it should out-start, outrun, out-turn, and generally outperform anything in its class.
The Wrightspeed X1 prototype.
(Credit: Michael Kanellos/CNET Networks)Cleantech Blog has written extensively about EVs. I am known among my friends as being a real skeptic when it comes to EVs, but behind Wright's business plan he got my attention with two ideas that are worth repeating: payback and plug-ins.
First, Wright doesn't care about gas mileage per se; he cares about performance, power, and most importantly, payback. Focus on the vehicles actually burning the most gas, irrespective of fuel efficiency. That is, instead of making tiny, compact, fuel-efficient target cars more efficient with EV and hybrid technology--focus on the gas guzzlers. Wright's point is well taken. A small, fuel-efficient car that gets 35 mpg and drives a typical 12,500 miles per year only uses about 350 gallons per year. A large pickup truck that gets 12 miles to the gallon uses over 1,000 gallons for the same mileage--nearly 3 times as much. And if that truck is a work truck driven 25,000 miles per year, it would use over 2,000 gallons of fuel per year, nearly 6 times the little car. That truck owner may spend upwards of $50,000 in fuel over its life, where the commuter car owner may spend a small fraction of that.
When I asked him for comments on my example, Wright added: "The special case of congested city driving might be worth mentioning, since everyone thinks a lot of fuel is wasted there. But if you drive a Prius 10 hours per week in congested city traffic, it's only about 150 gallons per year! Not much point in trying to improve on the Prius for that use. (The arithmetic: Congested traffic is defined as 12 mph average; 10 hours per week would be 120 miles per week, or 6,240 miles per year. The Prius shines in this application, getting maybe 40 mpg, so 156 gallons per year.)"
Putting expensive hybrid and EV technology in the small car not only has a worse financial payback--compounding the perennial problem of EVs being too costly, but the same 20 percent efficiency improvement does very little to reduce overall fuel consumption for society compared to the same efficiency gains in a big truck that drives a heck of lot of miles.
So Wright asks, if we want to both find a way to save car owners money, and save the world--wouldn't we focus on applying technology to where the problem is the worst and the returns are the best?
When Wright looked at the automotive landscape and asked the question, where is the most fuel being burned, and how do we reduce that with technology? The answer? Performance cars and big work trucks. Not surprisingly, these are his target markets.
And why are high-performance vehicles like sports cars and Ford F350s so fuel-inefficient anyway? Take this as an example answer. If you need a big truck to have lots of power for short periods of time (for instance, in towing), then the truck engine and systems have to be sized to deliver the maximum power. But anytime you're not using all that power (i.e., most of the time), the truck is usually running well below its optimum--and burning lots of fuel for no extra gain. It's the same rationale for a sports car designed to run optimally at 90 mph, which performs worse at the average driver's speed of 50 mph to 60 mph.
Wright's more detailed explanation to me put it very elegantly: "Roughly speaking gasoline engines are most efficient at wide open throttle and the rpm that gives max torque. If you try to operate a supercar at wide open throttle, it will be doing 200 mph, and of course you'll be losing most of the energy to aero drag. The engine will be operating efficiently...but if you operate the car down where aero drag is reasonable--50 mph--then the engine will be operating at a few percent of rated power, and very inefficient. Why is it inefficient? The simple answer is that since the throttle is almost closed, there is almost a vacuum in the intake manifold, and the effective compression ratio is very low. You are trying to compress a vacuum. Engine efficiency is very dependent on compression ratio.
"Eighty years ago, there were cars that could transport a family of four at 50 mpg. The Austin 7 comes to mind. Engine technology has improved dramatically since the '30s, yet the best modern cars don't do any better than the Austin 7. Why is that? One big reason is that the Austin 7 had, well, 7 horsepower (actually about 10 hp--the "7" was "RAC hp"). So it was working hard most of the time. The family car that my wife drives makes 250 hp, and that's just an average family car these days.
The X1's license plate, which makes the car street-legal in California, indicates how it compares in energy consumption with a regular car.
(Credit: Michael Kanellos/CNET News.com)"So if you displace the Prius with an EV, you can get maybe a 2x efficiency gain. But if you displace a high-performance vehicle that operates most of the time at low power settings, you can get a 10x efficiency gain. That's the main reason that 18 wheelers aren't a good target. They have powerful engines, but their power/weight ratio is very low (when fully loaded) and the engines work pretty hard. So in fuel per pound mile, they are pretty good already."
To deal with this issue, Wright isn't all about the all electric. He's pushing plug-in electric hybrids, PHEVs, aka gridable hybrids. Electric motors powered off of batteries charged from the wall or with an onboard diesel generator. The generator also acts as a booster for those times when extra power is required. Hybrids are really good at solving these power versus efficiency problems, since you can essentially design a system that can optimize for either performance or efficiency much easier than a straight gas or electric engine could.
Wright's vision also addresses one of the long-running Achilles' heels of electric cars--the lack of fueling infrastructure. Regardless of your feelings on the matter, it's generally bad business to try to bet on an expensive infrastructure rollout. And if it means slower and lower uptake of fuel-efficient vehicles, then calling for infrastructure change that's not going to happen is bad for the environment, too.
That's why I've been such a big fan of plug-in hybrids. We can have our cake and eat it too. It's all about payback and plug-ins. And it's good to see electric car gurus finally getting this message.
I'm a big fan of solar power. But as with anything, I like to know exactly what I'm getting. One of the big unspoken issues in the solar sector is the difference between the rated or estimated potential output of a solar system--and the actual production of kilowatt-hours. A range of factors from the margin of error in the modules, to temperature, dust and losses from wiring, conversion to AC power and any batteries all can contribute to as much as 30 percent lower actual power production--even in the first year.
Compounding this problem in my mind is that in California only about a third to half of our solar installations are actually independently monitored, according to one of my friends at Fat Spaniel, one of the leading monitors of solar systems.
The California Energy Commission did some good thumbnail analysis of solar in the real world several years ago.
Here's the punch line from their analysis:
"So the '100-watt module' output, reduced by production tolerance, heat, dust, wiring, AC conversion and other losses will translate into about 68 watts of AC power delivered to the house panel during the middle of a clear day (100 watts x 0.95 x 0.89 x 0.93 x 0.95 x 0.90 = 68 watts)." From A Guide to Photovoltaic System Design and Installation (PDF) by the California Energy Commission. If you are interested in solar, you need to read their report.
But this 68 watts is only part of the story. If you have battery storage on the system they say it could reduce the power another 6-10 percent. They then stated that poor installation layout problems--including shading can take an additional toll. Another big issue is the angle of the roof and the direction it faces (in California, where your roof faces can affect the power output up to another 15 percent for many roofs). And interesting enough, for all the talk about making windows out of solar in what is typically described as Building Integrated Photovoltaics (BIPV), a vertical installation can reduce the power output up to about half all by itself!
Their bottom line: if the system is perfectly installed under perfect conditions the best case scenario for San Francisco would be 1,724 kwh, or electricity per year for each kilowatt installed and for Los Angeles would be about 1,758. But that's before all the "real-world" adjustments. When you make all those real-world adjustments--take another 25-30 percent or more off the top, even for a well designed system. This fits with our best San Francisco benchmark, our major 675 kW rooftop solar facility in the San Francisco at Moscone Center, which produces around 1,200 kilowatt-hours per year per rated kilowatt installed.
So when it comes to solar, let's make the right choice for solar power, but make it with our eyes open to the real world.
Remember those fairy tales about trolls in the forest with magic potions that could make the hero invisible or someone fall in love? That's sort of what it is like to cover the clean tech world some days.
A number of start-ups have emerged promising a molecule that can simulate photosynthesis, a way to turn wood chips into ethanol, or materials for converting much more of the sun's energy into electricity.
Naturally, they never tell you what it is. Take GreatPoint Energy. The Cambridge-based company has come up with a catalyst that can convert coal, one of the dirtiest fuels out there, into clean-burning natural gas fairly efficiently and cheaply. The process is 65 percent efficient, says co-founder Aaron Mandell. So what's the secret? A catalyst, and he doesn't say much beyond that.
EE Stor, based outside of Austin, Texas, has a battery that many claim can revolutionize how power is stored. Good luck in trying to figure out the formula. They won't talk.
It's the Rumplestiltskin business model. (Ron Epstein, a principal at IPotential, came up with that metaphor first, to describe some patent companies.)
Some of these ideas will succeed and many will fail. Over the years, the basic formulas will likely emerge. But right now, the companies all have the same line. Believe me, it's magically delicious.
