February 14th, 2010 by JG
In 2006 Groom Energy engineers began testing the latest general illumination LED fixtures with our early adopter customers. Our demonstrations proved that these products were still too expensive, couldn’t produce enough foot-candles and had no track record to support their 100,000 hour operating life claims. More importantly, none of the them took advantage of what LEDs do best – intelligent control.
These early LED systems, designed by traditional HIF/HID lighting engineers, were burdened with bad design DNA. Their designers literally shape reflective metal around lamps and ballasts from GE, Philips and Sylvania, not layout circuit boards for a solid state lighting systems. Even the most basic HIF/HID control features need to come from third party companies.
High performance, intelligent LED systems require an interdisciplinary design team who can optimize the entire system, simultaneously considering optics, thermal, mechanics, power and control. It’s more like designing a computer than metal bending. No team like that existed.
So in 2007 Groom Energy set out to do this ourselves.
We recruited a small world class team into a separate company, initially calling it GroomLED, co-locating the team in our Salem office (later we renamed it Digital Lumens.) Our goal was to develop LED based lighting systems for high wattage applications in our customer’s commercial and industrial environments. We took the DL team on the road with our customers, confirming product requirements with each of them.
Our friends at Flybridge Capital took the risk with us, providing the initial seed venture capital in order to test the company idea. Since then the press has unconfirmed reports noting two follow-on DL venture capital fundings, one with Flybridge and Stata Ventures in May 2009 and a second with Black Coral Capital in December 2009.
Although DL continues to operate in stealth mode, we were excited this past week when DL was awarded a prize at a Next Generation Luminaires Solid State Lighting Design Competition, jointly sponsored by the Department of Energy SLL Lab , IESNA and IALD.
Stay tuned – there will be more DL announcements over the coming months, but at this point we wanted to give props to DL and answer the inbound questions we’ve been receiving…
Tags: Black Coral Capital, commercial led lighting, Digital Lumens, Flybridge Capital, Groom Energy, GroomLED, High Bay LED lighting, industrial led lighting, Stata Venture Partners, venture capital
Posted in Digital Lumens, LED lighting | No Comments »
January 19th, 2010 by JG
Today Groom Energy published our newly updated ECA research report, 2010 Enterprise Carbon Accounting, which also included our selections for the market’s 2010 ECA Emerging Leaders.
The basis for our research report started back in 2006. At that time, as Groom Energy engineers were working with a F500 customer to build a GHG reduction budget, it occured to us that GHG tracking and reporting would eventually represent a fundamentally new process within every large company. Even by then, staying on top of reporting for the EPA’s Climate Leaders was requiring more and more time for our customers. It was no surprise that spreadsheet tools were not going to scale – but it was the collaboration necessary to even gather and manage the data where the gap was most obvious.
What most people don’t know is that we even made a concerted effort to start our own Groom Energy spin-out GHG software company. We had surveyed the market through our customers, found only a few third party software packages, and thought we saw a path to a new class of enterprise software, calling it “enterprise carbon accounting” or ECA for short. (all new markets need a name, right?)
Within a few months we had detailed the basic software functionality and even recruited a software team to start building it. After several initial meetings with traditional software VC’s in Boston (most of whom couldn’t spell G-H-G, but all of whom understood enterprise software) we sensed it was going to be a long slog to get early stage funding based on our powerpoint-ware. Either we had bad breath, couldn’t convey the opportunity correctly or needed to live on Sand Hill Road…
Within a few months of our effort we starting uncovering more new ECA vendors, some established EHS vendors with GHG extensions, some VC funded pure start ups, some larger software companies who added GHG modules. It seemed each week we were adding a new entrant to our wiki list, which was more and more daunting. At 10 known players we were concerned. At 20, we knew were were too late and abandoned our effort. At 30, we knew that our customers were just as overwhelmed trying to understand the offerings, all while building their own strategies internally.
And hence the idea for our ECA research report was born. We saw that the best way to leverage our effort was to help our customers with a more concrete deliverable – customer based research which could be regularly updated as the market developed. Not as profound as an entirely new company, but worthwhile nonetheless. The good news is that market response has been a bit overwhelming…
Check out the latest report and, if you’re an entrepreneur considering your own ECA software start up, study the vendor list carefully – its up to 60 and still going….
Tags: ECA, ECA Emerging Leaders, Enterprise Carbon Accounting, EPA Climate Leaders, GHG accounting
Posted in Carbon Accounting, EPA's Climate Leaders, Enterprise Carbon Accounting (ECA) | No Comments »
January 4th, 2010 by JG
In the 1967 movie The Graduate, 21 year old Ben Braddock (aka Dustin Hoffman) received a famous bit of advice – “there is a great future in plastics.” The line has lived on since, like an insider stock trading joke – however, VC’s would call the character who delivered this line “a master of the obvious.” If plastics would be a big market, how would Hoffman have chosen the application area or the start up company that would win?
So over roughly the last seven years, new market categories within Cleantech have come into vogue with similar, layman speak descriptions – insert your favorite – “there is a great future in….” batteries – biofuels – carbon software – demand response – green building materials – LED’s – smart grid – solar PV – wind, and even water.
What’s stunning is how many of these now visible companies only received their Series A funding in the last few years. Companies like Hara (Series A in 5/2009), Silver Spring (Series A in 4/2008), Solyndra (Series A in 4/2007), Solar Power Partners (Series A in 9/2007) and SunRun (Series A in 6/2008) are all perceived leaders in big market categories, yet they’ve only been in existence for a few years.
Which makes it that much more fun to speculate on the next favorite hot markets. My votes for three new Cleantech categories which will become more visible (ie. early stage funded) in 2010 are: 1. nuclear power, 2. magnetics and 3. waste heat recapture systems.
Nuclear power, because it makes so much sense. In a market where there has been so little new R&D, one can only imagine what could be developed if entrepreneurs were given capital and support. The fun thing about this one is how real green advocates have a conundrum with the benefits and risks. A relevant company would be NuScale, but there are others as well.
Magnetics, because with so many spinning parts in both existing and newer energy systems the math favors reducing friction (ie. operating more efficiently) and lower lifetime maintenance costs. A relevant company might be Synchrony which recently introduced a computer controlled bearing.
And Waste Heat Recovery, because energy efficiency is in vogue and waste heat is becoming a more known, literally, as a waste of energy. Also we can expect, like cogen and fuel cells, these systems will be supported even more heavily with utility incentives going forward.
Oh, and if you want to follow the professionals who write on this stuff look at GreentechMedia with their top 2009 investment list. Or Jeffries Investment bank who speculates how much more $ will flow into Cleantech.
Tags: Hara, magnetics, new cleantech markets, nuclear power, Silver Spring Networks, Solar Power Partners, solyndra, SunRun, waste heat recovery
Posted in 2010 Cleantech trends, Combined Heat & Power | No Comments »
December 28th, 2009 by JG
During our 2010 business planning we’ve been speculating on trends that may affect our corporate customers (positively or negatively) in the coming 12 months. In 2009 Groom Energy delivered projects in 25 states and Puerto Rico. What’s stunning is how much time we spent confirming the incentives available in these states, through utilities, regional ISO’s and Clean Energy trusts. 2010 promises to introduce even great complexity to this already challenging game – in this regard here are four areas we think are worth watching:
1. PACE rollout across the US – this emerging energy tech financing program, which started in Berkeley, CA as a residential solar PV financing program, has now grown into a much more powerful concept. PACE (or Property Assessed Clean Energy) financing has broadened, becoming the poster child for enabling both residential and commercial property owners to invest more easily in renewable and energy efficiency upgrades. Legislation for PACE like programs has now been “enabled” in 17 states, but the devil will be in the details as to how each rolls out their own version, delivering low cost tax exempt debt to property owners. Regardless, in a market where commercial lending has ground to a standstill, PACE programs have the chance to catalyze lots of projects, providing significant energy and carbon savings – it remains to be seen how fast these programs can be rolled out in a scalable way.
2. The continued fragmentation of state level PV incentives - While for the past few years CA, NJ, MA and CT have led the nation with developed PV incentive programs, each state has had their formulas for distributing these incentives, and each has experienced intermittent funding for their programs, both for policy and economic reasons. 2010 will bring another level of complication, as incentive programs in several new states will become available. In these newer programs, confirming incentive formulas will part of the story – continued funding for these programs is a new risk to assess. As the economics for PV breaks without heavy state incentives, incentive commitment letters for these “approved” projects will be critical.
3. Carbon Cap’nTrade – Post Copenhagen it’s pretty clear we won’t see 2010 US Federal policy that has immediate economic consequences for Corporate America. What we’ll be watching is whether Federal policy institutes a “grandfather” clause which encourages action while the policy debate continues in the Senate and the House. (This grandfather concept was implemented successfully within the energy efficiency code in the EPAct2005). So in 2010, it could be that state policy overrides lack of Federal policy and defines carbon pricing with vehicles such as RGGI for pricing, although CA will likely not see their program live until 2012. Guidance for emitters at below the 25MW power plant level might also be forthcoming…
4. Utility and Trust sponsored Energy Efficiency rebate programs: While New England and CA have had consistent energy efficiency programs for a number of years, new states and utilities are rolling out more programs in 2010. Considering we’re still in the Great Recession, free money supporting fast returning energy efficiency investments is clearly worth studying on a state by state level.
So there you have it – maybe next year we can look back on this post and give ourselves a report card on our predictions 
Tags: cap and trade, Cap N Trade, carbon tax, Copenhagen, Energy Efficiency, energy efficiency trends for 2010, Investment Tax Credit
Posted in 2010 Cleantech trends | No Comments »
November 23rd, 2009 by JG
In my former life as a early stage venture capitalist I learned a traditional VC bias against investing in start ups where government subsidies were necessary to make the technology’s economic case work. Year’s later I’m scratching my head at how the VC market has thrown out this bias in cleantech investing, an example being their heavy investment in solar PV technology.
While one can’t dispute that the worldwide PV markets are getting larger, anyone who has run PVwatt knows that without significant subsidies the technology doesn’t work as an alternative to kWh from the grid. An incremental improvement in PV’s performance will not change this situation. In the US, the math says that without a relatively high kWh cost AND a belief that kWh cost will inflate at 5-10%/year AND a large State renewable grant AND a 30% Federal grant or ITC, PV just doesn’t pass a reasonable economic test.
Which means that when Federal or State policy makers contemplate any potential change to renewable grant levels, the market gets really bumpy. We experienced this at the end of 2008 when the Federal ITC extension was in question. We’re currently experiencing this again in Massachusetts where the PV incentive program is temporarily suspended as the State transitions to a REC model “sometime in 2010.“ Kind of makes it difficult on a small local solar installer while it’s customer prospects wait for new incentives….here, an absense of policy has slowed one of the fastest developing PV markets in the US.
Like State renewable grants, utility energy efficiency rebates are watched closely for the signaling effect of change. Earlier this year we saw one utility’s energy efficiency program introduce “accelerated” rebates, only to abruptly cancel the program four months later due to over-subscription. Customers who didn’t participate are left to wonder whether they should wait on the sidelines until another accelerated program comes back to the market. Here, the utility’s haphazard policy has stunted market growth.
As the US moves towards more incentives for both broader renewable and energy efficiency upgrades, Federal, State and utility policy makers need to better coordinate the management, introduction and changes to these programs. They should recognize the dual edged sword they hold – whenever they change the incentives, or worse, suggest they might change the incentives, the market adoption rate is slowed.
Just as the stock market rewards companies which produce predictable financial results with higher multiple stock prices, policy makers need to signal the market as they grow incentive programs, making them predictable and long term. The incentive programs need to reward action today, including grandfather clauses for those who would otherwise sit on the sidelines while new policies are being developed. Without this approach, human nature “wait and see” will rule the day.
Tags: Clean Energy grants, federal grant, incentives, Investment Tax Credit, utility rebates
Posted in Clean Energy grants, Federal Grants, Rebates | No Comments »
November 19th, 2009 by JG
I’m here in Los Angeles at the Beverly Hilton for the 26th annual NAESCO conference called Energy Efficiency, Kicks it up a Notch. Many of the attendees have been involved in the ESCO industry for a long time and yesterday’s discussions were a lot about “our time has finally come.”
With pending climate legislation, challenging economic times, a higher motivation for becoming energy efficient and a recognition that energy efficiency is lower cost than renewable energy, all the stars seem to be aligned. The consensus here is that over the next few years this industry could experience tremendous growth, heading from $5 billion to $15-30 billion depending on who you’re talking to….or maybe not.
In general, the ESCO industry provides turn-key energy efficiency upgrades for tax exempt customers such as states, cities, municipals, schools and hospitals. The ESCO identifies the savings through an investment grade energy audit, installs the energy efficiency upgrades, provides a financial guarantee that the energy savings will be achieved, and the customer pays the ESCO with proceeds from their issuance of tax exempt bonds.
With the introduction of the American Recovery and Reinvestment Act (ARRA), these same customer prospects are now the potential recipients of lots of grant $$$$$$. This additional “free” money means they should be doing even a greater number of projects, right?
Today there remains a lot of confusion about how exactly they can spend these grants if they receive them. Maybe they should use the ARRA money just to buy these upgrades instead of borrowing to pay for them? Can they co-mingle the ARRA grants with State grants through the EECBG program? Can they buy down part of the project cost and issue less debt? And, by the way, the reporting and administration hooks that come with any of these grants are even more confusing. All of which has contributed to the slowing of decision making….
Which leaves the ESCO’s thinking maybe this wasn’t such a good thing after all.
Tags: American Recovery and Reinvestment Act, ARRA, energy service company, ESCO, NAESCO, performance contracting
Posted in ESCO, Stimulus | No Comments »
October 30th, 2009 by JG
On Thursday I participated on a panel at the Northeast Campus Sustainability Consortium Conference in Burlington, VT. Our panel hosted a discussion about how universities and colleges (650+ of whom have signed the Presidential Climate Commitment (PCC)) should consider financing their efforts to become carbon neutral.
Not surprisingly, at the time they signed up most institutions didn’t focus of the financial costs for going carbon neutral - now a few years later it’s becoming more clear that the big issue (beyond behavior change) is where is the money to make this possible?
Today, getting an entire institution close to carbon neutral can only be achieved by purchasing REC’s or offsets. This is probably a reason why Harvard and Yale have yet to sign the PCC, as they would be perceived as buying their way to neutrality with their now smaller, but still large endowments.
The good news is that the PCC goals are LONG TERM – when you’re an institution with plans to be around for the next 100 years, you can talk about the year 2050 in academic terms. However, each year that passes after making a PCC announcement it will become more clear how unprepared these institutions are to make significant progress, except through buying REC’s and offsets. There’s no silver bullet for Mr. University (or anyone else) to pay for new solar arrays, CHP systems or all new EV fleet. An extra green student fee won’t do it. Most have already attacked the “low hanging fruit” early on – so their respective annual report cards will be pretty hollow without some serious investment.
Which is why I’m a bit skeptical about the chance of success for the PCC.
Compare the PCC to the EPA’s Climate Leader (CL) program. CL has had similar signup momentum with over 250 large companies committing to reduce their climate impact over a multi-year period. Where the PCC talks about Carbon Neutrality in the next 20-40 years, the Climate Leaders’ goals are typically for 10-15% reductions over a 3-5 year period. Where the PCC members chose to require a profound multi-decade goal, CL members chose Kyoto-like targets. The CL annual reduction targets are being tracked and several corporations are now preparing their next targets, having achieved their initial targets in the last year.
The climate problem isn’t going away in a few years. While both goal systems can work, only CL can be measured and reported in a way that allows for learning, revising and setting new direction in an iterative fashion. Even grand challenge goals need to give folks a more likely chance of success in reasonable timeframes…
So we spent our time in the panel talking about lifecycle costs, energy performance contracts, taxable vs tax-free capital and power purchase agreements. My expectation is the the university/college market will come quickly to the right decision – the only way to make a near term dent in their GHG emissions is to finance there way there.
Tags: carbon neutral, EPA Climate Leaders, PCC, performance contract, Presidential Climate Commitment
Posted in Cap N Trade, Carbon Accounting, EPA's Climate Leaders, Presidential Climate Commitment | No Comments »
October 11th, 2009 by JG
So first off apologies that I’ve been remiss in updating our blog the last few months – it’s Columbus Day weekend and I’m finally catching up….
Since our Wal-Mart Supplier Readiness Seminar a few weeks ago the broad impact of this program is clear – we’ve seen multiple suppliers rushing to learn how to respond to the Wal-Mart Sustainability Index (WSI) and how to boost their performance once they’ve completed the initial fifteen question survey.
As with any new Wal-Mart initiative, even companies not in it’s retail supply chain are studying the WSI’s relevance to their own business and industry. These companies are left wondering whether the WSI is a precursor to their own industry’s environmental report card or whether this is just another Wal-Mart false start RFID project.
While the US considers its climate position going into Copenhagen, the SEC ponders whether to force climate reporting on financial statements, and CDP offers an emerging standard for voluntary corporate reporting, the WSI has already become today’s most important mandated environmental reporting trend for US corporations. Unlike these other programs, this reporting has near term and real business consequences.
Like with the CDP, large companies are already set up to respond to something like the WSI. However, mid-sized and smaller companies are struggling to figure out how fast they need to gear up for their own industry’s version of the WSI. Most of these companies care a lot more about their current cost of energy than their carbon emissions, much less their sustainability costs. But Wal-Mart is a leading indicator they cannot dismiss….
Three years from now we may look back at the WSI as having initiated regular sustainability reporting for Wal-Mart’s entire supplier base. More profoundly, WSI’s bigger legacy might be having jump started industries outside of retail to develop their own sustainability reporting indices. And, if that reporting leads to more proactive management of environmental impact, our friends at Wal-Mart will deserve a lot of the credit.
Tags: Enterprise Carbon Accounting, greening the supply chain, sustainability, Wal-Mart Sustainability Index
Posted in Cap N Trade, Carbon Accounting, Wal-Mart Sustainability Index | No Comments »
August 23rd, 2009 by JG
Not long ago we were all adjusting to an extraordinary increase in the price of a gallon of gas. As prices accelerated economists speculated on how devastating it could be to our economy if it continued…
Here we are a year later and the world looks quite a bit different. The economy has cracked, but fuel prices, which started coming down heading into the September 2008 Lehman bankruptcy, were not the principal culprit.
However, there is a lot to be learned from the period in 2008 when our gas prices briefly stayed above $4 per gallon. At this price level something very logical occured. Behavior changed. People started driving less. Visible energy pundits like Thomas Friedman encouraged us to study this accomplishment.
So now in 2009, with the economy struggling and the US debate on carbon cap-n-trade in full swing, the same economists are debating the potential impact of this carbon utility tax on the price of electricity.
It’s interesting to consider what would happen if the cost of electricity suddenly accelerated. Like gas, electricity in the US costs significantly less than other developed countries and we have historically taken its availability and low cost for granted. So, if kWh prices were to accelerate, do you think we might see the same logical result – ie. behavior change?
Tags: cap and trade, Cap N Trade, carbon tax, energy prices, Enterprise Carbon Accounting, kWh prices
Posted in Cap N Trade, Carbon Accounting | No Comments »
August 10th, 2009 by JG
When considering a new roof-mounted commercial solar project our engineers need to quickly address key financial questions such as “in which state is your facility? (ie. is there a strong state rebate) and “will you be buying or financing it?” (ie. solar PV still sits outside normal corporate ROI hurdles). If both these answers are affirmative the next question we focus on is the age and type of the existing roof.
A few years ago we performed site visits for adding solar thermal to a series of multi-unit homes. We had gathered data on their historical fuel costs, the type and efficiency of their existing boilers, had a design for the pipe runs connecting the panels and heat exchanger, had determined the optimal orientation of the panels relative to tree shading and had run our energy models with all this data.
In the end their 10 year old EPDM roof made the whole project hard to pull together. At 10 years their roof was too new to require a replacement but too old to support an additional 25 year life span for a solar thermal installation. The project would be burdened with the new roof cost but there would be no financial return for this upgrade. These days we’re a little more sophisticated before we get in a truck for a site visit!
Recently we’ve seen solar technologies which can have an added financial incentive addressing this roof issue. With commercial thin film solar, because a new roof membrane comes with the installation, a portion of the system cost can be included in the Federal Investment Tax Credit – effectively a tax incentive for a new roof. This can also be the case with technologies like Solyndra, which require a white roof for the system to operate effectively and hence take this pro-rata tax benefit when calculating their financial return. Of course, you must be careful to confirm with your (or your financier’s) accountants on their interpretation for your installation.
So perhaps going forward there will be a better opportunity to apply this value in the corporate financial analysis for adding solar. In addition to solar PV systems serving as a (1) a long term energy price hedge, (2) a greening corporate statement and (3) a potential mechanism for carbon tax savings, perhaps our corporate customers will soon begin to look at this opportunity principally as a cheaper way to replace their aging roofs?
Tags: commercial solar pv, commercial solar thermal, Investment Tax Credit, Solar PV, solyndra
Posted in Renewable Energy, Solar PV, Solar Thermal DHW | No Comments »