Clean Tech Companies Get Smart with Energy Plans

Most would agree that smart grid is the most happening sector in the clean tech industry right now. It is trying to revamp our outdated and inefficient electrical grids through digital technology. The goal is a green grid which will bring us power savings and lower carbon dioxide emissions. The savings come at a steep up-front cost though –- an estimated $520 billion, according to a McKinsey report.

The transportation sector wasn’t included in the study, and neither was a value set for carbon emissions. The savings could be considerably greater if a value is pegged to carbon emissions, an additional 8 percent at $30 a ton.

Of late we have seen many companies trying to take on the energy management challenge from the user’s end. Home energy management products that control appliances at consumers’ homes to save energy, reduce cost and increase reliability and transparency is an integral part of smart-grid strategy.

At the 2010 Consumer Electronics Show, smart grid appliances like smart plugs and wireless thermostats were all the rage. Panasonic’s presentation was particularly impressive with a monitoring system that can be viewed through TV sets.

Microsoft and Cisco as well as telecom companies such as Verizon have said that they expect to make energy monitoring an extension of existing home networks. Companies with two-way monitoring grid concepts are receiving a significant injection of money. Out of this segment has emerged a new category of products called smart grid “enabling technologies” that combines communications; sensing, measurement and control; distributed generation; and distributed storage.

In the works: As with any evolving concept, the industry is coming together to set communications standards that are not yet prevalent. There is a one in play right now from the American National Standards Institute (ANSI) called “C12.22” that defines how to transmit standardized tables of meter data across wired or wireless networks.

While energy conservation is no doubt the primary goal, it is only natural for private corporations to take advantage of this huge investment opportunity and public interest to put some green in their pockets as well. And it certainly does not hurt that energy efficiency is a top priority in the current Obama government with a $28.3 billion allocation in the 2009 American Recovery and Reinvestment Act for alternative energy production.

Out of this amount, $3.4 billion in grant awards is dedicated to modernize the U.S. energy grid. The U.S. market for these emerging “smart” technologies was $16 billion in 2008 and is projected to grow at a compound annual growth rate (CAGR) of 14 percent, increasing to $42 billion in 2014. This presents a significant market potential that has sparked a spate of projects, private initiatives and realignment of major business plans.

For example, PPL Electric Utilities has a smart grid project underway that won a $19 million Department of Energy federal grant funded by the stimulus bill. The grant falls in the “Smart Grid Investment Grant” funding category.

In today’s macroeconomic conditions where opportunity increases with data, smart grids have not failed to deliver. In fact they have exceeded expectations and combated ferociously the initial skepticism they encountered. The sector has become one of the favorites of clean-tech venture capitalists, spawning numerous start-ups in a bid to modernize the grid and integrate more solar and wind power.

The potential is much bigger than mere installation of transmissions lines or smart meters. It’s a giant information drive. The big wigs like IBM, Cisco, Intel, and Google have been taking fast notes. The Fortune 500 IT companies are extending their reach beyond the United States to upgrade power infrastructures around the globe. While this places smaller firms at a disadvantage, those that have gained traction with cutting edge research have become potential acquisition targets. That translates to money for the venture capital firms funding these start ups. In that sense, green-tech start ups would amount to “green bills” for the investors.

A list that is by no means exhaustive of some recent gigantic global partnerships and initiatives includes:

• Korea to build a Smart Grid “pilot complex” to integrate renewable with existing energy sources by 2011.
• General Electric to provide wireless communications for a Houston, TX, utility and will supply thousands of WiMax-based MDS Mercury 3650 radios to CenterPoint Energy for their smart grid construction. The radios will transmit data from consumer smart meters to utility data centers.
• IBM joined forces with EnergyAustralia for SG build out, the largest electricity distribution network in Australia. It has signed a $2.2 million deal with IBM as part of their SG expansion where IBM will provide system IT architecture to support EnergyAustralia’s Intelligent Network upgrades.
• Google is investing an undisclosed amount in Smart Grid technology developed by an extremely promising startup Silver Spring Networks which develops network boards for smart meters.
• REGEN and Fat Spaniel partnered for demand-side management. The JV will integrate REGEN’s demand-side controllers with Fat Spaniel’s monitoring system.
• Smart grid software provider GridPoint Inc announced partnership with three new electric vehicle supply equipment (EVSE) manufacturers — CabAire, eVco, Coulomb Technologies & Plug Smart Intelligent energy Solutions.
• Smart Grid initiatives are also being considered with due diligence from Utility firms like Xcel Energy, Duke Energy, Austin Energy, Progress Energy and Seattle City Light.
• EnergyAustralia is spending $170 million to install and integrate about 12,000 devices from companies like Denmark’s PowerSense on its distribution grids.
• Virginia utility Dominion Power has a smart grid pilot underway.

We wouldn’t want to leave the smaller players out ‘because they are by no means small when it comes to the quality of their offerings. Many seem to be concentrating on providing IP-enabled energy sensors to help companies spot and fix enough energy waste. Some that have grabbed headlines recently are:

• Redwood City, Calif., based Sentilla Corp raised $13.5 million to commercialize its Sentilla Mini wireless energy sensors for use in data centers.
• Hayward, Calif., based Dust Networks has developed ultra-low power wireless devices that are embedded in industrial sensor and control devices made by companies such as Emerson and General Electric. Now the startup, which has raised about $46 million from investors including Foundation Capital, Cargill Ventures, Crescendo Ventures and the CIA’s venture arm In-Q-Tel.
• Wireless sensor device maker Crossbow may be entering this space soon as well. The San Jose, Calif., based company makes wireless sensors for customers like Honeywell, BP, and a host of military and government clients.
• Toronto-based Regen Energy has developed wireless energy sensors that use “swarm logic” to manage individual devices’ energy usage automatically, and says a typical system can be installed for about $10,000.
• Arch Rock has raised $15 million in two rounds of venture capital funding from investors including NEA Ventures, Intel Capital and Shasta Ventures. Their complete Energy Optimizer system – including Internet protocol-based wireless energy sensors, the router that collects their data, and a one-year subscription to the company’s new Energy Visibility Portal – will cost about $10,000.

The smart grid is in the process of creating value up and down the clean tech chain, akin to what the Internet has accomplished in the last decade. As the Web has brought in a universal communications method that has given way to a variety of new business models such as online advertising and Web-based cloud services, smart grids are all set to revolutionize the way we take note of energy.

As we attempt to redo our grid infrastructure, there will be several innovations in hardware, communications and implementation practices that vow to lower the environmental impact and our electricity bills.

photo: S Migol