March is always a key month for cleantech in California. It starts the season of pre Earth Day events like the ECO:nomics conference in Santa Barbara. A first quarter into the year, the cleantech community gathers in San Francisco at the Cleantech Summit to discuss the new trends. The CEO of Cleantech Group opened the 10th Summit with a keynote on the power of global partnerships in cleantech.
One evidence of that is the multiplication of green business and networking events around the world. Agrion is an organization with offices in San Francisco, New York City, Paris, Frankfurt, and Beijing. They animate the local debate in energy, cleantech and corporate sustainability by offering almost daily webinars and monthly gatherings in each city. I attended their symposium on smart cities last week, and San Francisco remains a key hub for them.
Agrion started in 2006 with the backing of Steve Balmer of Microsoft, Sir Martin Sorrell of WPP, Francois-Henri Pinault of Gucci Group. Wu Jianmin of the Beijing Institute for Diplomacy, and Gerhard Zeiler of RTL. The industry networking has now 200 company members and their social network online reaches 100,000 individuals.
It is particularly valuable to connect local government officials, company executives, entrepreneurs and researchers around key local infrastructure issues. For example, various city representatives in the Bay Area discussed with company executives how to "green" their infrastructure and integrate innovation faster during the one-day symposium.
Several cities in the Bay Area are quite progressive. The City of San Jose for instance launched a key initiative to leverage LED's in order to achieve zero-emission street lighting. In addition to the cost savings, there is an opportunity to provide better illumination. "We know we provide too much lighting, causing glare in some instances", explains one city official, "But it takes time to get the designers on board before we can release a call for proposals."
Bridging the divide between government infrastructure and private enterprise is not a small task. It is is not just a question of culture, which regular networking events help addressing, it is also a different business model. Many municipalities, and utilities, look at cost avoidance rather than profits. The difference between Return On Assets (ROA) and Return On Investment (ROI) has practical implications.
In the case of San Jose, the money saved in lighting is going to pay for a new Ethernet network backbone on their own fiber. It is a smart move for the city that can control its infrastructure but the money is not leaving the city hall. How can private companies capture efficiency benefits when municipalities want a public-private partnership? I connected with a data analytics entrepreneur at the Agrion symposium, and he struggled to develop an innovative service with a municapility while making a reasonable profit. "We have more success with municipalities in the Mid West who needs help".
Government entities can sometimes function as a "black hole". Tax payer's money gets often sunked in without seeing the day of light, indepently of innovation. Bringing efficiencies while protecting privacy is not easy but it can be done. Changing the way transactions are done is a different story. It is easier when private companies have access to consumers, hence several announcement in car sharing services and charging stations.
In those scenarios, private companies have access to end-consumers and can offer a monthly subscription. That is the business model of eVgo backed by solar power company NRG. After settling its case with the State of California, the company already operating in Texas is building a $120M charging station infrastructure in California powered by clean energy. The company is also planning to be in DC as well by year end.
eVgo was one of the companies displaying its technology at the Cleantech Summit in San Francisco in the last two days. The Bay Area still attract a lot of international interest because of its VC capital. Several delegations -- from Canada, Ecuador, Korea and the UK -- presented some of the most promising cleantech start-ups during the three day conference.
I connected with an innovative company from Calgary over lunch who talked to me about their electric profile management technology. The founder of dTechs was a former police investigator who filed a process patent on how to make measurement on mid-voltage transmission lines and connect them to meter measurements in order to identify electricity theft.
You would think it is a small market. Well, a number of weed growers in Alberta steal power to stay under the radar and tehy consume ten times more power than residences. That costs the State of Alberta and the local utility more than $200M a year. And it is also an issue in Northen California and Oregon. "When clean technology is fighting green" the entrepreneur and I joked around coffee. dTechs was happy of their Cleantech Summit as they were able to connect with some Fortune 500 companies.
A new wave of technologies using sensors on infrastructure and data analytics is coming. It is not always clear to define the demarcation point between the utilities and the private service providers. I talked about that with Silver Lake who invested in Solar City. They took part in the $81M equity round in Solar City ahead of its IPO because its financial metris are sound. They view the downstream side of solar (installation, financing, etc. )as a healthy market compared to the upstream market (solar cell manufacturing, etc.).
Silver Lake does see a big upside though for Solar City, which announced that will go after more home services than just solar. Like cable in the Telecommunications industry, Solar City can provide other services once it has a foot in the door. Because they have access to the real estate, they might be in a better position to enter in the home management business than Microsoft and Google who had to jump back last year from their earlier ambitions.
The investment fund primarily based in the Bay Area raised its Silver Lake Kratzwerk growth fund last year. It set it up so it can invest on a global scale. The partners are also looking at investments in Israel and India. Cleantech is definitely going global. As a result, the Cleantech Group is growing its software platform solution, called i3, to provide insight to their investor, government and start-up clients.
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