10 Greentech Companies to Watch in 2011

1Executive Summary

Will 2011 bring recovery or retrenchment for the greentech industry? Just how the following 10 companies do over the coming 12 months will help determine the answer to that question. We’re tracking companies that are both leaders and up-and-comers in the solar power, smart grid, biofuel, green vehicle and energy efficiency sectors, as well as one utility and one international energy conglomerate. These players help illustrate the role that the old-school energy industries are going to play in the greentech evolution.

First Solar. Every solar panel manufacturer out there is gunning to match First Solar’s low prices. The Tempe, Ariz.-based maker of cadmium telluride thin-film solar panels has driven prices down to under $1 per watt and captured top market share in PV panels. It’s also facing the same kinds of challenges of oversupply and falling prices as the rest of its competitors, as well as the need to diversify beyond Germany as that top solar market reduces its generous feed-in tariffs next year.

First Solar is targeting more expansion in the United States and is looking to new markets, including India. It also has plans to build a 2-gigawatt project in China’s western desert, although news reports indicate that the $5 billion project may be opened to competition from Chinese panel makers. As for its dominance in thin-film solar to date, First Solar may face competition from new entrants and thin-film efforts from giants such as General Electric.

BrightSource Energy. Can the startup-to-power giant model succeed? BrightSource Energy is giving it a try. The Oakland, Calif-based startup has taken a leap ahead of some of its solar-thermal power competitors with its Ivanpah project, a 392-megawatt mirror and tower installation being backed by a $1.37 billion Department of Energy loan guarantee. It’s also in the process of raising a $215 million series D round, with about $176 million raised to date, to add to its $330 million in investment so far. As for private capital, BrightSource got a boost from a $300 million investment from NRG Energy in October, on top of a previous stake from engineering giant Bechtel.

Ivanpah is only the first of a dozen or so projects BrightSource wants to build. It has agreements with Pacific Gas & Electric and Southern California Edison to provide about 2.6 gigawatts of power in California by mid-decade. Outside the U.S., it’s looking to projects in Israel (the company’s original home) and elsewhere in the Mediterranean in partnership with French power giant Alstom. It’s also on the short list of greentech startups most likely to IPO next year, according to anonymous reports. If that’s true, BrightSource may end up being the biggest solar IPO since First Solar took the plunge in 2006.

Silver Spring Networks. Will it or won’t it IPO next year? Silver Spring has raised some $275 million from venture capital investors, and it also has its wireless mesh networking in millions of smart meters being deployed in the United States — about 29 percent of the total of 57.9 million meters under contract as of November, according to Pike Research. It’s also networking smart meters in Australia, and has set its sights on Brazil in partnership with meter giant Landis+Gyr.

Silver Spring has done this without any huge DOE loan guarantees, though it is a beneficiary of some of the nearly $4 billion DOE has directed toward smart grid projects. And while company executives won’t comment on any IPO plans, sources indicate one could come in the first quarter of 2011. Whether an IPO goes well could be seen as a gauge of the potential success for a host of competing smart meter networking startups, including Trilliant and SmartSynch, that are adding technology capabilities to smart meters made by others.

One big question is how Silver Spring will expand beyond smart meters to other parts of the smart grid. It’s testing its networking for distribution grid management, and it has launched its UtilityIQ suite of software for utilities, which includes the home energy management technology it got when it acquired Greenbox last year and a new line of demand response management software. As for predicting its success, beyond keeping an eye on Silver Spring’s ability to ramp up production fast enough to meet its orders, smart grid watchers will mainly be asking whether there’s more customer backlash against smart meters to come in 2011.

Grid Net. This smart grid networking startup is useful to watch because it’s a stand-in for the potential for WiMAX to grab a significant portion of the smart grid to come. Company founder Ray Bell launched the company specifically to take advantage of the high speed, big bandwidth and low latency of WiMAX. Grid Net has linked close smart grid partnerships with General Electric on WiMAX-enabled meters being deployed in Australia and tested in the United States, and it also has a partnership with WiMAX 4G network booster Sprint. On the home front, Grid Net is working with Intel to test the chip giant’s new home energy management technology in Australia.

Right now the main barriers are cost and availability. WiMAX-enabled meters still cost more than those using wireless mesh technologies like Silver Spring’s. The new standard’s role in smart grid in the U.S. may also hinge on whether Sprint and Clearwire get their WiMAX 4G network up and running.

People Power. This chameleon-like energy management startup has given industry watchers a snapshot of the evolution in consumer energy management over the past two years. Serial high-tech entrepreneur Gene Wang founded the Palo Alto-based startup as an open source-based software and semi-open networking provider for home energy-watching devices, complete with plans for products of its own. But the company recently said it would shift to supplying its technology to manufacturers of home devices, whether appliances, set-top boxes, routers or more specialized energy management gear. As for the brains behind it all, People Power offers a cloud-based platform meant to interoperate with devices and protocols from across the spectrum. It could gain traction even if People Power’s technology has trouble getting a foothold in the crowded home energy gadget field. Office equipment maker Ricoh has said it’s testing People Power’s tech for suitability of an office energy management system that’s built in to its copiers, printers and fax machines, giving one example of how it might expand beyond the home.

Better Place. Most of the plug-in electric cars of the future will have removable batteries, according to Better Place. If they don’t, it’s despite the best efforts of the Palo Alto, Calif.-based startup, which has announced billions of dollars worth of plans for its line of battery swapping stations that can reduce EV repowering time from hours to minutes. Israel, Denmark, Australia, Hawaii and the San Francisco Bay Area are all on Better Place’s list. The company, founded and led by SAP exec Shai Agassi, has raised $750 million to get the ball rolling, but must still raise billions more to build to its plans. Israel alone is expected to cost $200 million.

But who will build cars with swappable batteries? Renault has said it will launch an EV with takeout battery next year in partnership with Better Place’s rollout of swap stations in Denmark. But plenty of automakers, including Tesla, don’t want to build new cars around a switch-out battery. Better Place has always made charging stations alongside battery swap stations, and seems increasingly to be hedging its bets along those lines. How its unique vision will compete in the increasingly commoditizing market for plug-in car charging remains to be seen.

NRG Energy. How will utilities adapt to new greentech paradigms? NRG Energy provides an interesting test case. The New Jersey-based power generation giant bought its way into the Texas retail electricity market last year via its acquisition of Reliant Energy. Last month, it launched a car-charging partnership in Houston that offers customers flat monthly fees in exchange for all the power they want, an example of how deregulated power markets can open up new pricing models for services not already part of a traditional utility’s business portfolio. NRG also took a deep dive into marketing and selling renewable power and carbon offsets with its $350 million acquisition of Green Mountain Energy in October. It has also been making bit investments into California solar power projects in partnership with companies such as SunPower and BrightSource Energy. Other energy providers are making similar moves, as the example of Constellation Energy’s purchase of demand response provider CPower indicates.

Serious Materials. Palo Alto, Calif.-based Serious is the flagship for a family of green building startups incubated by entrepreneur Marc Porat, including green brickmaker CalStar Products and green home builder Zeta Communities. Serious has raised about $120 million to build and retrofit factories to turn out its eco-drywall and energy efficient windows. But with the construction market in the doldrums, Serious has launched its Serious Energy Manager and Serious Insight software packages, meant to improve on existing building energy management systems in commercial buildings. The move highlights trends in the commercial and industrial building efficiency market, where software is supplanting equipment as a low-cost way to improve operations of buildings’ existing HVAC and lighting systems. Software that can improve both the design of and maintenance of energy efficiency retrofits could be quite valuable as well — after all, there are billions of dollars of financial support for efficiency retrofit projects out there, much of it from the federal government. DOE wants technology to measure how effectively it’s being spent. Add that to energy efficiency’s known role as the cheapest, fastest return on any green investment, and you’ve looking at what the Cleantech Group predicts could be the hottest greentech sector of 2011.

Calxeda. Most of the energy efficiency gains coming out of the IT industry have been due to overall improvements that keep crunching processing power and memory into smaller, less power-intensive packages. Virtualization has yielded green benefits by consolidating servers, but more as a side effect than as a main driver, and it’s rare when a new technology emerges to challenge that status quo. Calxeda, however, is trying. The company formerly called Smooth-Stone is building servers using chips based on the ARM architecture and being tweaked for energy efficiency by the likes of SeaMicro. Calxeda promises its ARM package will yield 10x efficiency improvements, and has received $48 million in funding to bring that promise to fruition. Still, there’s little doubt that performance, rather than power, will remain the chief concern for data center operators around the globe.

General Electric. What do you get for the conglomerate that has everything? Greentech entrepreneurs are pondering this question as they eye General Electric’s green goals over the coming years. GE has poured some $5 billion into its own energy R&D over the past five years and plans to double that to $10 billion over the coming five years. It’s also poured some $175 million into more than 20 greentech companies that run from thin-film solar and data center efficiency to more efficient airline flight patterns. As government stimulus shrinks, corporate investment from the likes of GE is likely to pick up some of the slack in 2011, Kachan & Co. predict. As to what GE is looking for from greentech startups, many are keeping an eye on its Ecomagination challenge, a partnership with prominent green VCs to invest about $200 million over the coming years. In November it named 12 winners of a combined $55 million in investment, and said it intends to back up those relatively small stakes with ongoing partnerships. GE will also be a huge customer to the greentech industry, as its plan to buy 25,000 electric cars for its corporate fleet over the coming years testifies.

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