GreenMountain Engineering

Grant Opportunities in Cleantech

There are a number of grant opportunities in the renewable energy sector. While we typically do not develop our own technologies and products (our core focus is engineering design services for clients in the cleantech sector), we do work on grants in partnership with other companies, typically as a subcontractor.

Often, a small company will have a technology or product idea they want to develop, and we can strengthen the application by providing our company resume (covering engineering in areas such as solar, wind, batteries, and biofuels) as a source of engineering experience, prototyping facilities, and a path to scale-up.

Here’s a list of the grant programs we keep an eye on (primarily focused on US grant opportunities)— we hope some of you find this useful!

International Grants:

Two grant agencies of interest are:

USTDA (US Trade and Development Agency): The USTDA’s mission is to promote economic growth in developing and middle income countries, while simultaneously helping American businesses export their products and services. It funds a number of projects in renewable energy. GreenMountain is the current recipient of a grant (as a subcontractor to Aviastructure) to design renewable energy systems for Colombia’s civil aviation. Our role involves technical site resource assessment (which has involved our engineers traveling to remote jungle sites all over Colombia) as well as system design and modeling for combinations of solar, wind, battery, and backup diesel systems using tools including HOMER.

World Bank: The World Bank organizes a number of grant and funding activities. The Lighting Africa project is an example of where GreenMountain took on the product engineering and design responsibilities as a subcontractor for a product sales partner. We were selected as one of the winners for our solar lighting design, though our partner decided not to further pursue the project for business reasons.

Note that members of the GreenMountain team also have significant international renewable energy experience through involvement in Engineers Without Borders (including former presidency of the San Francisco Professionals chapter), solar and water project development work in Tanzania and Haiti, founding members of the Appropriate Technology Design Team, and significant early design involvement in the Darfur Stoves project.

National Grants:

Grants.gov: The central resource for federal grants. It allows searches by keyword, agency, and so on. More specifically, the DOE: Energy Efficiency and Renewable Energy (EERE): is a central location for announcements of most DOE Funding Opportunities.

ARRA Funding by the DOE: Funding opportunities authorized through the Recovery Act.

DOE: Advanced Research Projects Agency Energy (ARPA E): Inspired by the Defense Advanced Research Projects Agency (DARPA), ARPA-E was created to support high risk, high reward energy research for climate change and energy security in areas that industry is not likely to undertake independently because of high technical or financial risk.

DOE Loan Guarantee Program: This program provides large-scale loan guarantees (up to hundreds of millions of dollars) for renewable energy generation and scale-up projects such as wind, solar, biomass, geothermal and hydropower. GreenMountain can contribute to a client’s Phase II engineering assessment requirements, per section C.9 of the Renewable Energy / Efficiency Solicitation.

DOE: Small Business Innovation Research (SBIR): Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) are U.S. Government programs in which federal agencies with large R&D budgets set aside a small fraction of their funding for competitions among small businesses only. Small businesses that win awards in these programs keep the rights to any technology developed and are encouraged to commercialize the technology. There are regular solicitations on a variety of topics.

DOE: Solar Energy Technologies Program: SETP funding opportunities encourage collaborative partnerships among industry, universities, national laboratories, federal, state, and local governments and non-government agencies and advocacy groups. You can also look at past winners of the SETP PV Pre-Incubator and of the SETP PV Supply chain and Cross-Cutting Program to get a feeling for what types of applications have been successful.

DOE: Biomass Program Solicitations: The Department of Energy is a major provider of funding for basic and applied research for converting biomass resources to biofuels. Many financial assistance opportunities are available for small to large scale research activities

DOE: Wind and Hydropower Technologies Program: The program sponsors research and development activities to enable greater use of two abundant domestic resources for electric power generation that will help stabilize energy costs, enhance energy security, and improve our environment.

DOE: Hydrogen, Fuel Cells, and Infrastructure Technologies: The mission of the DOE HFCIT Program is to research, develop, and validate hydrogen production, delivery, storage, and fuel cell technologies.

DOE: Vehicle Technologies Program: The DOE Office of Energy Efficiency and Renewable Energy (EERE) provides funding opportunities for advanced vehicle technology projects that are aimed at removing technical and cost barriers.

DOE Office of Science Financial Assistance Grant Program: Grant applications submitted to the Office of Science must fit within their list of program areas. You are encouraged to call the program area contact, to discuss your research project before you submit your application.

NSF: Energy for Sustainability: The Energy for Sustainability program supports fundamental research and education in energy production, conversion, and storage.Note that NSF does not normally support pilot plant efforts, the development of products for commercial marketing, or a variety of other areas. You can also view abstracts of recent awards.

NREL: Business Opportunity Solicitations: Opportunities to work with NREL.

ORNL: Opportunities: Opportunities to work with Oak Ridge National Lab. They jointly apply for a number of SBIR grants. They don't give out their own money, but put out requests for proposals to collaborate in specific areas.

Biomass Research & Development Initiative (BRDI): The Biomass Research and Development Initiative (BRDI) is the multi-agency effort to coordinate and accelerate all Federal bio-based products and bioenergy research and development.

DOE: Inventions and Innovation: This program appears to be inactive in the past few years.

Regional Grants:

This list is by no means comprehensive, but a few notable grant programs at the state level in California and Massachusetts are:

Energy Innovations Small Grant (EISG): This California Energy Commission program is designed to fill a fairly narrow research niche that focuses on early "proof of concept" research of new innovative energy ideas to determine if they are technologically and economically feasible. The subject area must target one a few specific areas listed on the web site, and grants are in the range of $50k-$100k.

PIER: California Energy Commission: The Energy Commission's Research Development and Demonstration (RD&D) Division supports public interest energy research, development, and demonstration. RD&D activities include providing contracts and grants for research and development of energy technologies and related scientific activities. See also: http://www.energy.ca.gov/contracts/renewables.html

Massachusetts Clean Energy Center (CEC): Prior to 2008, the Massachusetts Technology Collaborative (MTC) awarded grants in the renewable energy sector, but this responsibility has been transferred to the CEC. GreenMountain has worked for the MTC/CEC over the past three years, performing technical assessment and due diligence on relevant applications in a broad range of technology areas (solar, wind, algae oil and other biodiesel, Stirling engines, and so on).

Good luck!

Solar Scalability: Critical Metrics for Technology Assessment

Recently, in discussions of solar technology, I've been hearing more and more talk of scalability. Being a skeptical engineer, I chalked most of it up to marketing hype. It did get me thinking however, so recently I dug into it a bit to see if anything meaningful could be pulled out. My goal is not a policy plan or pitch for solar, but the following: 1) to see what metrics can be used in engineering design and technology development to quantify scalability, and 2) to imagine extremely large scale solar and see what innovations this might inspire.

Ambitious Goals

The first questions that frame a discussion of scalability are “how big?” and “how fast?” Every policy wonk seems to have a different version of what is best. Al Gore's goal is 100% carbon free electricity in 10 years. NREL’s Ken Zweibel and Cal Tech’s Nathan Lewis have both discussed various aspects of the “Terawatt Challenge” and have established a rough worldwide goal of 20 TW by 2050.

This isn’t a political blog, so I don’t want to argue about policy; this is a discussion of solar scalability. To bracket the problem, let’s say, in round numbers, that the target is to provide 1/3 of the current worldwide total energy consumption (electricity, transportation, and industrial/residential heat) using solar power by approximately 2025. As of 2008, the world was using energy at a rate of 15 TW with the U.S. accounting for about 22% of that (3.3 TW). To meet our goal, we need around 5 TW of total installed capacity by 2025. Of course, since solar only produces power during the day, it suffers from a pretty lousy capacity factor, so we’ll have to install 20-35 TW of peak capacity depending on location and module characteristics. To keep numbers round and to put a stake in the ground, I’m going to use a target of 25 TW, which is about 3500 times the current worldwide installed capacity.

Constraints on Ultimate Size?

Before addressing scaling rate concerns, what about ultimate size?  Solar energy has the largest fundamental resource base of all types of energy, at 120,000 TW total and 600 TW practically available.  In the following sections, we’ll touch upon a few more potential technological constraints related to total size.

Scaling Rates

Now that we have a target and a timeline, we can establish the required “scaling rate.” Once this is in place, we can start to think about questions like “What constrains scaling rate?” and “What are the requirements that a technology must have to scale at this rate?”

Digging into this subject, one of the things that surprised me the most is how feasible this goal actually is. Everyone who has worked in the solar industry is familiar with solar’s historical growth curve – an exponential increase since 1975 averaging somewhere around 30% per year, which is pretty astounding on its own. What I had never seen until I made the graph myself is how the rate of increase correlates with annual production capacity. Intuitively, one would expect that as the industry grew, it would become harder and harder to maintain exponential growth. This is certainly true in the limit, or the entire universe would eventually be converted into solar panels. However, looking at the data over the past 35 years (especially the past 10 years), we see the opposite trend, i.e. as the industry has grown, the rate of increase has increased as well! This trend is due to both the rapidly dropping cost of solar power and more widespread public acceptance.

Based on this, what growth can we expect over the next 15 years? More importantly, what growth levels do we need in order to achieve our target of 25 TW installed capacity by (or soon after) 2025. Bearing in mind the old Yogi Berra quote, “It's tough to make predictions, especially about the future,” I invented 3 scenarios for discussion. The “aggressive” scenario is simply a best fit to the growth of the past 10 years. While interesting, looking at physical and societal constraints, this scenario is neither possible nor desirable. The “flat” scenario is continued growth at a steady rate equal to the average of the past 10 years. The “front-loaded” growth is something I made up, based on the growth level we’re at now and the desire to have a sustainable industry in the future, while conforming to the bounds of reality.

Photovoltaic industry historical growth and projections

The aggressive scenario reaches 25 TW by 2019, flat just after 2026, and front-loaded by 2025. However, for the front-loaded case the size of the industry in 2023 is about a third that of the flat case. The front-loaded scenario gets us to the goal in the most sustainable and realistic way, as we will see when we discuss scaling constraints.  Furthermore, the size of the industry (annual production) is much smaller in the front-loaded case (3.6 TW) than the aggressive (14 TW) or flat (9.6 TW) cases.  This is essential for the sustainability of the industry, as we don’t want to just stop making solar panels when we reach our goal.  In the front-loaded scenario, the industry can simply stop growing and produce at a level that eventually provides for our entire energy demand, along with replacing panels that have started to degrade after 30+ years.

Again, these aren’t necessarily “likely” scenarios. They are scenarios that both fit with what might physically be possible and achieve the stated scaling goals.

Grid Parity

Before we jump into thinking about different constraints, a note about grid parity (the point at which solar power matches the cost of the current electric grid). Ever since I started working in solar, the incessant drumbeat has been “grid parity.” Somehow, I expected more of a D-Day type celebration when I read that First Solar had achieved this elusive goal (Not that grid parity is the sole possession of First Solar – I have seen convincing cases that string ribbon Si, high efficiency tracked Si, thin-film Si, CIS/CIGS, and CPV technology are there or will be there soon). So, congratulations everyone, we did it! However the reality is that grid parity is a sliding scale, depending on a huge number of factors, but that discussion is too big to get into in this post. In reality, we may have only achieved 20% grid parity, so the quest towards lower cents/kWh continues!

Now we return to the discussion of the path solar growth must follow.

Scaling Rate Constraint 1: System cost and bankability

Even at grid parity, there is a finite amount of investment and money flowing through the economy, which in some sense corresponds to the total amount of effort we as a society can collectively direct towards everything. One measure of this is the worldwide GDP. The main requirement here, simply put, is that the amount of money required for the up-front cost of all solar power systems should not make up a significant portion of the worldwide GDP ($69.7 trillion in 2008); if it does then this is an unreasonable amount of resources to expect.

If we look at the front-loaded growth scenario, $3-6/W system costs are sustainable for the next few years after which point costs will have to start dropping closer to $3/W (approximately current best practice for large thin film installations) However, by 2017 or so, system costs will need to start dropping closer to $1/W or growth will suffer.  This cost reduction roadmap (shown below) falls pretty well in line with solar’s historical cost learning curve.

Projected cost learning curve for solar

I should also note that these $/Wp numbers are for one set of assumptions (18.4% capacity factor, 4.5% discount rate, and 25 year life). As has been shown, actual $/kWh electricity prices can vary quite a bit for systems of similar $/Wp ratings. The point here is to bracket the problem: are we talking about 0.1%, 1% or 10% of the GDP?

Based on the $/W roadmap I mention above, solar energy power systems will consume between 0.1%-5% of the worldwide GDP in the front-loaded growth scenario.  Looking at the graph below, we can see why the aggressive and flat growth scenarios are undesirable – both the level and the rate of increase of total GDP seems effectively impossible near the tail ends of their growth curves.

 

Investment requirements for different solar growth projections

The question remains, is the front-loaded growth case reasonable? Technically, yes; therefore it is mainly a social priorities question – do we want to do it? The graph below shows how it compares with some other industries in 2008. I use U.S. GDP numbers, as these are easier to come by, but the picture is similar on a worldwide scale.  On one hand the 2025 GDP requirement is about 2.5 times as large as the current utility contribution to GDP. On the other hand, it’s interesting to note that it is approximately the same percentage magnitude as the decline in U.S. manufacturing GDP over the past 10 years. My take-away is that given positive political and popular sentiment it is well within the bounds of reality, but it is likely still one of the most limiting scalability factors. Grid parity is not enough.

Comparison of projected solar industry size with other US industries

Furthermore, in terms of securing financing, the concept of “bankability,” (in short, the certainty of making money) was discussed quite a bit at Solar Power 2009, as it is becoming increasingly important as the size of systems increase. For solar, this comes down to reliability (both demonstrated and perceived), as well as company balance sheets (a metric of the likelihood that module warranties will be honored). All emerging technologies will have to rigorously address reliability in one way or another to prove to the banking industry that their technology is the Will Smith of Solar. For example, CPV systems must contend with thermal and tracking issues, which is leading to the development of reliability standards; CIGS tends to be more sensitive to moisture ingress and corrosion, leading to innovative module packaging; CdTe must rigorously address life cycle management due to cadmium toxicity concerns.

Scaling Rate Constraint 2: Energy Pay Back Time

Although there was much discussion of high energy pay back time (EPBT) in the 70s and 80s, it is mostly a non-issue today as nearly all PV technologies have a EPBT less than 2 years (i.e. the power produced during the first 2 years of a panels 25+ year operating life will equal the amount of power required to produce it), with some technologies paying back in less than a year. However, when discussing scaling quickly to large portions of the energy supply, even 2 years can look like a long time. Consider if the industry doubled in size every year and the system EPBT was one year; in this case 100% of the energy of the panels produced would go into producing the power required for next year’s increase, thus no net power. I categorize this as power yield, or percent of produced power that is not consumed making and installing increasingly more power.

Based on the front-loaded growth curve, 1 year EPBT gives energy yields of 50-60% in the near term high growth phase, easing off to 70-90% in the longer term. I see this as a minimum metric for scalability. Ideal EPBT would be closer to 0.5 years, which keeps the energy yield in the 80-90% range even during the high growth years.

Scaling Rate Constraint 3: Capital expenditure per watt

This constraint is related to system cost, but also how fast a factory can be scaled up. For capital expenditures (CapEx) we can look at specific historical spending. Looking at government census data, average CapEx per year in the U.S. for all sectors is $1.2 trillion/year, including $200 billion/year for the “manufacturing” sector and $100 billion/year for the “utilities” sector.  With this in mind, CapEx costs <$1/W are almost certainly required, with CapEx costs less than $0.50/W much preferable.

There are a number of companies that have this argument built into their value proposition. For example, Skyline Solar plans to use a combination of already existing auto manufacturing capital and highly leveraged (via concentration) crystalline solar manufacturing capital. Another company which explicitly has this in mind is Nanosolar with their largely non-vacuum printing-based deposition.

Ultimate Size Constraint 1: Material Availability

Recently, some folks at Berkeley did a great study of resource bases and material availability for a whole host of potential photovoltaic materials. This study and others like it have shown that there are some device designs limited by material availability to less than 1 TW/yr (CdTe limited by Te, CIGS limited by In and to a lesser extent Se).  However, there are many other device structures that show effectively unlimited material availability.

Ultimate Size Constraint 2: Energy Storage

The other potential limitation of scale is energy storage.  Energy storage is a huge topic which deserves its own discussion, so I will only touch on some of the strategies being pursued which would enable 25 TW peak electricity to be supplied to the grid.  While some studies in Germany have found that up to 30% of peak electrical demand can be supplied via solar energy without significant modification of existing infrastructure, much deployment beyond that will depend on a number of energy storage technologies.  Some envision the widespread use of compressed air energy storage. CSP with massive amounts of thermal energy storage appears to be another potential solution.  Yet another viable strategy is vehicle-to-grid, or V2G.  The idea is to use the distributed storage capacity that will come with increased deployment of electric cars and plug-in-hybrid vehicles, especially with newer advanced battery technologies. Finally, the holy grail of energy storage technology is direct solar fuel.  The basic idea is: instead of converting solar energy into electrical energy, convert it into chemical energy in liquid or gaseous form, enabling temporal and spatial separation of generation and use.

Ultimate Size Constraint 3: Labor

While less of an inherent constraint than the others listed, this is certainly something to consider. At the cycle time session at Solar Power 2009, Laks Sampath mentioned that “best practice” large scale ground mount installations took about 4 h/kW to install. If we look at the growth projections, this number will have to come down by an order of magnitude by the end of the next decade, otherwise somewhere around 7 million people (worldwide) will have to be employed simply installing panels. Although this number is not completely absurd (in the U.S., the entire construction industry employs around 11 million people), it seems likely and desirable that this number can be drastically reduced. This could be accomplished in ways similar to the innovations shown by Applied Materials with their gen 8.5 module, SunPower with their T20 tracker, or SunTech with their Reliathon module. As a reference number, the Apollo program at its peak employed 400,000 people.

Ultimate Size Constraint 4: Land

Most studies on this issue have concluded that it is not a constraint. To make this easier to think about, we’ll only consider the United States’ portion of energy use. For the United States’ energy needs, depending on efficiency, array packing density, insolation, and other factors, this number is somewhere around 1-2% of the land area of the U.S.. It is similar in magnitude to the total paved area of all roads and parking lots in the U.S. It is also the same order of magnitude as the total area reserved for U.S. military bases and bombing ranges.

So, on one hand, using this amount of land to provide for a significant portion of our energy needs seems like a relative non-issue. On the other hand, it is huge! On average, just for the U.S. portion of energy demand, we will need to install 10 square miles (~6,700 acres) every single day for the next 15 years (assumes 10% AC module efficiency and 40% packing density). Thinking about installing PV over an area of that size in a day is admittedly quite daunting. Not insurmountable, but daunting.

To look at it on another scale, I spread the 5 TW of PV to be installed in the U.S. into 50 evenly sized installations across the nation (square installations 34 miles on a side). I put a few more in the sunnier states, but the distribution is mostly random, trying to avoid national forests/parks. Somehow, visually, this seems more doable, as I can imagine 50 separate teams working for 15 years rather than 1 team of a few hundred thousand working in the same place. Or, in the (admittedly silly) extreme case, over the next 15 years, each of the 304 million people in the U.S. would have to go outside and install one 220 W panel every other month. People between 16-65 would have to pick up the slack for those who couldn’t install solar panels, but it is still about the same magnitude of effort as a regular household chore. In one sense, the beauty of solar (at least PV) is that it works on anything from kW scale to GW scale.

  Land area of solar needed to provide 5 TW peak power to the US

Parting thoughts

There is no doubt that solar power at this scale will be mind-bogglingly huge compared to its current scale. However, it is entirely within the realm of physical and societal constraints. Cutting through the hype, I’ve found there are a few fundamental metrics of scalability to keep in mind when assessing technological innovations and strategic directions.

To quote a solar pioneer (MIT Professor Ely Sachs), "The science is understood, the material abundant, the product works, all that is left is to build the biggest manufacturing industry in the history of human kind. Time is a-wasting."

Highlights from the 5th Conference on Clean Energy in Boston

Matt, Jon, and I went to the Conference on Clean Energy at the Hynes Center in Boston today. This morning, I watched a series of investor pitches from a group of cleantech startups. The mix was interesting-- smart grid startups were dominant, which is a big change from the last few years, where solar, wind, and biofuels were the big players.

To my ear, the most interesting pitch was from the least clean of the startups-- Silicon Basis. They're an integrated circuit company; the "clean" angle is that their chips will have lower power consumption.

Dave Richards, a charming Englishman from the University of Bath, spoke in place of CEO Rob Beat. Silicon Basis is trying to implement a new type of chip that has lower power consumption and better performance (600 MOPs/mW) than the typical chips used in cellphones, ipods, and the like, but with a reconfigurable technology that will reduce development time and cost substantially below the usual 18-24 months and $10M. In technical terms, they say they've figured out how to manufacture FPGAs that reconfigure themselves between clock cycles. If they have actually pulled this off, they are insanely smart. About 2 months ago, they were issued patent GB2457912 in the UK. Silicon Basis also announced a partnership with Actina Imaging, who will help them test their first chips.

Here are brief summaries of the other startups that pitched.

Jason Hanna, President and Founder of Coincident Smart Energy Technology

Jason is a computer engineer out of EMC. I talked with him for a few minutes after the talk; he seemed like a smart engineer. Coincident is developing two things: an online marketplace for HAN devices and services and a hardware gateway. From my perspective, the hardware gateway was more interesting-- an embedded Linux board with a Zigbee wireless module. On looking at their website, I realize that I had found it a few months ago-- I'm impressed that they managed to get coincident.com.

Steven Filler, Director of Business Development, Prism Solar

Prism Solar is building holographic concentrators for solar panels by replacing 70% of the silicon with strips of holographic film. I was inclined to like Filler's presentation because it included a lot of numbers. Their holographic film selects part of spectrum for efficient heat rejection, which results in 10 C cooler cells at high noon in Tucson as compared to a conventional solar panel. Filler claimed that their holograms have better acceptance angle and can use bifacial cells. He claimed a 70% increase in energy production. Prism is selling modules domestically, but really wants to sell holographic film under license. They think they can hit 1.04 $/W by 2012.

Rory Gaunt, CEO, Lifecycle Renewables

The most interesting part of Rory Gaunt's presentation was the bullet: "negligible technology risk." Lifecycle Renewables' plan is to convert waste vegetable oil into fuel for commercial electricity and heat.
Whole Foods Market will be their first oil supplier and customer in 2010 when they bring up a 500 kW station, taking a 45,000 ft² kitchen facility off the grid. Their claimed advantages over other biofuel heat/power startups are low cost processing, efficient logistics technology, and state and federal incentives. They're seeking $750k and plan to be profitable in year 2. I like Mr. Gaunt's straight-forward style: "Funds will be used to get the oil."

Roselyn Romberg, Electronic Housekeeper

Founded in Denmark in 2005, Electronic Housekeeper launched in Europe in Q1 2008. They plan to establish a new headquarters in the US shortly. They make smart grid hardware hub for apps and services with backend database. They've had $1M in sales so far, and they claim that their customers' have seen usage reductions of 10-15% in electricity, 15-25% in gas, and 20-40% in water. I thought it was interesting that Ms. Romberg emphasized their device's passive nature: "We don't rely on behavior modification."

Roger Faulkner, Electric Pipeline

Cost-effective underground power transmission. I'm afraid don't know much about power transmission, so I didn't listen to Roger carefully. Sorry, Roger.

Dave Howell, COO of Practical Solar

Practical Solar is making heliostats with a total cost of $200/m². Howell viewed the proprietary firmware in their controller as a strength, and he boasted about how difficult it would be to reverse engineer it, taking more than a year and a million dollars to do so.

Mitch Wondolowski, Grid Solutions

Weather, market prices, and utility rates integrated into a residential demand response system.
"Enabling residential load balancing for the grid"

Richard Chase, Future Solar Systems

If I understood Mr. Chase correctly, Future Solar will install solar panels using an arrangement similar to that used by the City of Berkeley in California-- they put up the capital to put solar panels on your roof, and then you pay them for the electricity over the next 20 years. (Not exactly the same as Berkeley, but similar.)

That was all in the first session on Thursday. If i have the time, I'll add more summaries from the rest of the conference tomorrow.

VC feedback on startup pitches (notes from the NREL Industry Growth Forum)

For the past few days, I've been in Denver at the NREL Industry Growth Forum, where cleantech companies ranging from pre-seed startups to more funded companies present to panels of investors, get feedback on their pitches, and network and try to raise money. As in my previous blog post about the 24th EU PVSEC, this post will focus on information and impressions you can't just get from press releases after the fact, distilled from Q&A sessions and informal one-on-one discussions with companies and investors. In fact, I won't even talk about any of the specific companies that presented.

Let's jump right in:

The questions VCs most frequently asked included: 

Who are your customers?

• Do you have a clear idea of what the primary product and target market are? Or are you a 'technology in search of a problem'? 
• Do you have specific feedback from potential customers on your product or technology? ("The best way to answer a VC's question is with the customer's words.")
• Is this a need-to-have or nice-to-have for your customers? If you're selling to businesses, who gets a promotion, makes money, or doesn't get fired because they choose to work with you or buy your product? Does anything negative happen to companies if they don't work with you?

What is the exit strategy?

• How much capital will really be required to get the company to an exit (IPO, or more commonly these days, M&A) for the VC? Are significant manufacturing scale-up or project development finance part of your path to exit? (Requiring significant future capital isn't necessarily a bad thing long term, just be ready to defend your value pitch compared to less capital-intensive investments the VCs will be considering.)
• How many years will this take? (VCs have seen their timelines from first investment to exit steadily increase over the past decade.)

Do you have an experienced team, especially on the executive side?

• Do you have anyone with experience running a company (not just experience at the MBA level or in a sales organization)?
• Do you have people with experience scaling up R&D and manufacturing organizations?

VCs know they're always taking technology risk; they don't want to also be taking basic risks in the areas of ability to run a company, make deals with large organizations, and execute on sales. In particular, VCs gave positive feedback to a technical founder who said he would step down as CEO in a few years once the company grows.

Less common investor questions included: 

Who are your competitors? Do you understand the competitive landscape, who has momentum, and where competitors will be in the several years it takes you to get to market?

Do you have a strong IP position, and are you working in a market where customers and competitors will respect this? 

What are your cost models, margins, and 5-year revenue projections? When do you hit first revenue? When do you become profitable? 

What market and % penetration are built into these projections?

Finally, some of my personal opinions: 

Feel free to take the following with a grain of salt-- my focus is really more on engineering and technology development than business. That being said, I've worked with dozens of startups and other cleantech companies, and worked full-time at two early-stage startups in the past. And my recommendations are: 

Pick one technology and product, and do it well. Sure, you have to be flexible and willing to make a major course change if an early path doesn't pan out, but don't spread yourself thin by pursuing many products in parallel, or pursuing a low-value, unexciting product in the near term "just to generate some revenue". It will take longer than you think to develop even a first product, and delay your long-term focus.

Be ready for resistance to capital-intensive business plans. In the past, some VCs haven’t fully understood energy businesses or appreciated the magnitude of capital and time required for scale-up compared to IT/software/web businesses. So expect a near-term backlash against business cases that will require $100M to execute (one investor was overheard asking a company if they could develop some sort of software related to their industry instead). At the same time, this is a backlash and not a fundamental reason to avoid this type of business: energy is a huge, growing industry, and building anything large and physical at scale takes a lot of capital.  Ten years from now when you look at the energy companies that grew orders of magnitude and became billion dollar businesses, behind them will have been investors with a vision. But VCs may not always be the best investment match for these types of businesses.

When presenting to investors, confidence is key. But there's a fine line between projecting confidence and ignorance.

Do positively present your value proposition, cost models, team capabilities, and timelines. If you can't don't believe that your company is a huge win for everyone involved, why should investors believe you, and believe you'll do whatever is needed to succeed?

Don't appear ignorant of the competition (including established companies and other startups, even stealth-mode ones), or of history and past investments that did not pan out. As just a few examples to illustrate the point:

• To be blunt, if you're starting a solar photovoltaics company, what is your competitive proposition compared to First Solar's 2012 projections? Sure, their projections are just that, projections, but they and other competitors have track records of executing operationally and growing a business year after year.  
• If you're working on a non-Lithium battery technology, how do you stack up against future improvements in Li batteries, and are any weaknesses of Li batteries you mention fundamental ones that you can be confident won't be solved? 
• If you're pitching in the area of algae biofuels, what is your explanation for why the large amount of investment to date has not led to any runaway successes? How are you different?
• If you're working in medium-concentration PV, what were the fundamental issues with EUCLIDES and how does your technology address them? 

I think all of the above questions have reasonable cases that can be made as answers, and not always technical ones, but they aren't trivial.

Conclusion

Overall, the conference was positive. While the current economic situation is still very challenging for investors and companies, and we are still below the levels of investment and valuation in 2007 and 2008, cleantech investment has been rising over the past six months. In addition, several investors mentioned that there is significant additional capital “waiting on the sidelines” for conditions to improve, so it seems possible that once the market recovers further, there will be an inflection point and sudden uptick in investment.

As always, I welcome feedback here or by email to mdavis at greenmountainengineering.com

Hello smart grid, goodbye stupid grid

The east coast office of GreenMountain in Cambridge, Massachusetts, has a reasonably impressive array of electrical meters. They're all Elster A3 "Time-Of-Use" meters, meaning that they record not just the amount of electricity used, but also the time it was used. In theory, the utility can then use a rate structure to encourage their customers to use less electricity at peak times. The meters have the typical ANSI optical port, so you can hold an ANSI reader up next to the meter and read data locally. The meters in our building also have Itron's 50ESS ERT radio transmitter, which is a separate module that slides into the side of the stock A3 meter. I'm not sure how NSTAR (the local electric utility for most of the towns around Boston) is actually reading the meters, but they're probably driving around with vans containing short-range radios to read the data. That's about as smart as our grid gets in 2009.

I first worked on smart grid hardware in 2002. (We didn't call it "smart grid" back then.) Now, we'd say that I was working on AMI, "automatic metering infrastructure." At the time, I worked on a line of power distribution units for data centers.

We used an embedded processor with no operating system, just our own firmware written from scratch in C. Early on, we decided to use a proprietary TCP/IP stack; the next closest competitor was an IC called "i2chip," which implemented TCP/IP entirely in hardware and cost $12 in quantity 100. (This is now the Wiznet W3100; I believe in a box somewhere I still have a sample from the first batch of silicon the gentlemen from Wiznet made.)

Our web-based monitoring interface used Javascript in a hidden iframe to refresh the interface automatically without reloading the entire page. We measured current with PCB-mounted current transformers; I remember looking at datasheets for the first high current Hall effect sensor ICs and thinking that our upgrade path had finally been invented.

Less than a decade later, the same system would hardly be recognizable. Our latest remote monitoring deployment (actually for use in the photovoltaics industry, not smart grid) uses an entirely open source stack. We run Python on Linux with the Yahoo User Interface library to make the front end smooth. That all the components are open source is a sign that we're working in a domain where the benefits of interoperability outweigh the costs of open development.

I suspect that the same transition to open technologies developed to interoperability standards will occur in the larger world of smart grid, but it needs help to happen. The development of such standards has been underway for years, but since NIST received a mandate to coordinate the development of smart grid interoperability standards in the Energy Independence and Security Act of 2007, it has accelerated. In a roadmap workshop in late April, 2009, NIST released the first draft of the list of smart grid standards they will recognize in their framework. The revised release is expected at Gridweek this Thursday.

NIST's list gives only a few words to explain what the standards are, so for those of you new to the industry, here's a summary with a little background on each item.

There are 16 standards on the list so far, but the upcoming revision will probably add more. The links that start each section point to the canonical source. You'll notice that the Open Smart Grid subcommittee is a big player.

AMI-SEC: A task force was formed in 2007, but they haven't released a standard yet. The standard will relate to security for advanced metering infrastructure, i.e. how do you prevent miscreants from sniffing your meter data, while still allowing the power company to do it? At first blush, this seems like an inconsequential problem, but it's not. For example, if you wanted to figure out whose house was ripe for burglary because they're on vacation, and you could read data from electric meters, you could do it with a few trips through a neighborhood with a van that records usage data and compares it to the past. Hey, looks like the folks in Suite 100 of 5395 Pearl Parkway aren't home; let's rob them!

ANSI C12.19: This is a standard that describes structure of data that can be transferred by the ANSI optical port I mentioned above. The standard was originally released in 1997; a revised version, ANSI C12.19-2008 was released last year. This standard isn't likely to play a big role in smart grid because optical ports are slow and short-range.

BACnet: BACnet is a standard that specifies a communication protocol for building automation and control. The standard was created by ASHRAE, the HVAC experts, in 1995. The most recent release is ANSI/ASHRAE 135-2008. By now, there are open source implementations of BACnet in at least three languages: C, Python, and C#.

DNP3: A protocol for communication between SCADA equipment at electrical substations. If you're interested, the DNP User's Group has a good primer.

IEC 60870-6/TASE.2: Protocol for communication between electric utilities.

IEC 61850: Covers automation within individual substations.

IEC 61968/61970 These standards define APIs for use by utilities. The former is for automatic meter reading, the latter for energy management systems.

IEC 62351 Parts 1-8: A security standard for power systems, published in eight parts. The first 6 parts have been released; part 7 is expected in 2010; and part 8 is aimed at late 2013.

IEEE C37.118 This standardizes communication about phase information between different parts of the grid. The title is "IEEE Standard for Synchrophasors for Power Systems." The word "syncrophasor" refers to the concept of using absolute time references for phase information, rather than just assuming that two systems are operating at exactly 50.0 or 60.0 Hz. The standard also mandates minimum reporting frequencies. The standard is managed by the IEEE Power System Relaying Committee Working Group H11. NIST would like to see IEEE C37.118 harmonized with IEC 61850, mentioned above, which covers phase information relaying within substations.

IEEE 1547 Standard for connection of distributed resources, meaning small, non-centralized power producers like solar panels or wind turbines (though they need not use renewable sources of energy), to the grid.

IEEE 1686-2007 Security for the ill-named intelligent electronic devices (IED's) in substations. This standard is produced by the IEEE Power Engineering Society Committee on Substations. (Alarmingly, the password used to secure the committee's "Protected Files" is stored in plaintext in the webpage source code, and the files are hidden with only an obfuscated URL. Perhaps even more alarmingly, the only document they've seen fit to secure is an announcement about a Halloween costume party. And they're generating a secuity standard?)

NERC (North American Electric Reliability Corporation) CIP 002-009: Another security standard, CIP 002-009 lays out 8 different topic areas that must be addressed when setting up network equipment for bulk electric systems. These range from what hardware can be used, to how to train personnel, to physical security of the site. For the purpose of the standard, NERC has defined the "Bulk Electric System" to be the electrical generation resources, transmission lines, interconnections with neighboring systems, operated at or above 100kV.

NIST Special Publications SP 800-53 [PDF] and SP 800-82 [PDF]
These NIST special publications are also security standards. The first, SP 800-53, makes recommendations about security controls for computer systems used by federal executive agencies. The second, NIST SP 800-82, is broader, covering industrial control systems. It's not specific to smart grid, though certainly all grid systems use industrial controllers. Further, the standard does list the SCADA controls of the grid as the primary example of an industrial control system that needs security.

Open Automated Demand Response: OpenADR is a communication protocol for transmitting demand response signals from utilities to electric customers' appliances, which presumably will react to use electricity at off-peak times. The refrigerator that Tendril announced today with GE at GridWeek uses price signals to figure out when it should make ice (at night, when it's cheap); based on an earlier press release, I'd bet it's using OpenADR.

OpenHAN: First released in 2008, OpenHAN describes a framework for secure communication over a network with consumers' devices to implement, among other features, load-shedding and metering. The acronym HAN is an unpleasant bastardization of the already-odd "local area network" (LAN) into the truly nonsensical "home area network." (Not as bad as the bizarre SAN, "storage area network.")

ZigBee/HomePlug Smart Energy Profile Zigbee is a standard for wireless communication based on IEEE 802.15.4. Implementors must pay a fee, not just for a copy of the standard, but $3500 annually for a membership in the Zigbee Alliance, plus an additional fee for each Zigbee product released. The smart energy profile allows wireless devices to adjust to price signals and deliver usage statistics, among other features.

Those are the 16 NIST-approved standards we've got so far. We'll see what Commerce Secretary Gary Locke announces on Thursday.

Two Opportunities to See Us

Two Mountaineers will be speaking at events in the Bay Area in the next few days.  We hope you can join us for one of these engaging discussions!  On Thursday, Brian Atchley is speaking on the changing landscape of renewable energy infrastructure at a one-day seminar presented by the Society of Manufacturing Engineers, An Engineer's Guide to Green: New Rules - New Tools.  Then next Wednesday, David Hague will be participating in a panel exploring innovation and financing for clean technologies, Clean Tech Companies in Growth Mode: Challenges, Opportunities, and the Competitive Landscape in a Global Marketplace. Full details and registration information are included below.

An Engineer's Guide to Green: New Rules - New Tools
Thursday, May 21 8:30 AM - 3:30 PM
Santa Clara, CA

Clean Tech Companies in Growth Mode
Wednesday, May 27 6:30 PM - 9:00 PM
San Francisco, CA

The DOE and the Stimulus: Digging into the Numbers

When I broke down the $33.5 billion allocated to the Department of Energy in last month's American Recovery and Reinvestment Act it was no surprise that it provides a huge shot in the arm for the DOE's Office of Energy Efficiency and Renewable Energy (EERE). The $16.8 billion marked for EERE is a tenfold increase over their 2008 appropriation of $1.7 billion. (EERE)

David Hague also pointed out that overall federal energy spending (adjusted for inflation) has remained flat over the last twenty years. The adjusted DOE outlay only increased from $20.3 billion in 1988 to $21.9 billion in 2008. (USGPO)

We're happy to see that the stimulus package provides a much needed boost to the agency responsible for one of the most pressing issues of our time. EERE has already announced the first few funding opportunities, in the vehicle technologies program.  We'll be keeping an eye out for further announcements in the coming weeks.

Slides from Business and Society Conference

David Hague and Brandon Stafford spoke at the Business and Society Conference at Dartmouth on Thursday, the 15th. After the panel, there was some interest in slides Brandon presented. Some thoughts from Brandon:

The panel on which I spoke was intended to focus on sustainability in supply chains, but my presentation covered the Jevons paradox and the relatively low power density of renewable energy as compared to the high power density requirements of contemporary civilization (click images below for full size).

The other gentlemen on the panel-- Peter Girard from Timberland, Chris Hacker from Johnson and Johnson, and Paul Ligon from Waste Management Upstream-- were from large companies that are faced with the enormous challenge of figuring out how to square their genuine interest in reducing the environmental impact of their businesses, with the reality that they operate in market sectors where their impact scales directly with their sales. (Arguably, this is not the case for Waste Management, but it's certainly true for J&J and Timberland.)

I was heartened to see the leaders of industry professing genuine environmental concern. I was particularly struck by Johnson and Johnson's credo (PDF), which is even more impressive given that it was written in 1942. Even the most honorable of sentiments do nothing to reduce the impact of commerce based around the sale of newly-manufactured goods, but those sentiments are certainly a prerequisite for developing more sustainable business models. I look forward to continuing the debate about how we can balance our need for jobs and consumable goods against the finite supply of resources available.

Images above are based on charts in Vaclav Smil's Energy At The Crossroads, 2003.

GreenMountain at Business and Society Conference, Dartmouth College

David Hague, Vice President of Business Development, and Brandon Stafford, Principal Engineer in GreenMountain's Boston office, have been invited to speak on panels at the 2009 Business and Society Conference on Thursday, January 15th. The conference, which takes place each year at Dartmouth's Tuck School of Business, has a different theme each year; this year's theme is, "Is Capitalism Sustainable?"

David is on the panel entitled "Clean Tech: Overcoming Barriers to Economically Sustainable Renewable Energy"; Brandon will speak on "Product Innovation and Supply Chains: Creating Value for the Next Generation." Both panels start at 5 pm on Thursday, January 15.

Panel descriptions

Clean Tech: Overcoming Barriers to Economically Sustainable Renewable Energy

Expected exhaustion times for almost all forms of non-renewable energy capital are in the 40 to 150 year range, making "non-sustainable" economics for renewable energy simply not an option. Yet, in the face of economic, technical, and legal barriers, the question remains: What must happen in the next ten years to ensure the success of renewable energy? This panel will present perspectives of business, engineering, and regulatory experts on short term barriers to renewable energy proliferation and the market forces affecting the industry.

Product Innovation and Supply Chains: Creating Value for the Next Generation

What drives innovation and growth? In the 1980s, the concept of Total Quality Management exploded the myth that products had to be either high quality OR cheap. Today, the trade-off between cost and sustainability is disappearing. Soaring energy and commodities prices drive up the cost of resource inefficiency while science brings into focus the health risks from toxic chemicals released into the built and natural environment. This panel will examine how green products and processes drive innovation and long-term value.

Vote for the Future of Renewable Energy on Nov. 4

As renewable energy professionals most of us in the San Francisco office at GreenMountain have received requests from our friends, family, or associates for information on the two alternative energy propositions on the California ballot November 4th.  So one week before the election I’m offering my perspective on Propositions 7 and 10.

Proposition 7
It’s unusual to see Democrats, Republicans, conservation groups, utilities, and leading solar power companies agree on anything, but opposition to Proposition 7 is that rare exception.  It's because Prop. 7 is so flawed that it would likely hurt the cause of renewable energy more than it would help.  Prop. 7 discourages development of small-scale distributed generation, sets pricing policies that would most likely lead to high consumer costs for renewable energy, utilities, and is too inflexible to successfully function as a part of the diverse policy mix we need to support renewable energy growth in California.  For more information, Vote Solar and the Union of Concerned Scientists both offer insightful analysis on the issue.

Proposition 10
Proposition 10 is a little bit less clear-cut, though I personally oppose it.  The bulk of funding from Prop. 10 would go to subsidies for natural gas transportation technologies.  A primary concern, voiced by the Union of Concerned Scientists and the opposition coalition, is that these subsidies will give natural gas an immediate financial advantage over other transportation technologies that might under other conditions provide greater improvements in energy efficiency and carbon emission reduction.  Opponents also point to the proposition’s prominent financial support by Oklahoma businessman T. Boone Pickens, who stands to garner significant financial benefit from its passage (and also happens to have funded the “swift boat” ads against John Kerry in 2004.)

On the other hand, proponents argue that this is a step in the right direction towards decreasing dependence on oil.  In addition to natural gas, Mr. Pickens supports major wind developments in the western US as the other key component of his Pickens Plan.

California needs strong renewable energy leadership, so it's unfortunate that these ballot propositions provide more public confusion than solid solutions.