Top 10 Greentech Companies of 2010

1Executive Summary

Before we ring in the new year, let’s take a moment to note the greentech companies that made the year that’s ending what it was. For good or for ill, 2010 marked a watershed year for the greentech industry. We saw Tesla Motors emerge as the first electric vehicle startup to take its dreams of challenging the automaking giants at their own game to the public markets. And we saw other greentech startups stumble in their race toward exits. Tens of billions of dollars in government stimulus funding helped lay the groundwork for battery factories, solar power plants, electric car charging networks and smart grid deployments around the globe, but corporate giants like General Electric, Cisco and Google also stepped up their investment and acquisitions in the sector. Any list attempting to name only 10 significant companies will fall short, but I hope the following helps outline some of the key developments and themes of the past year.

Tesla Motors. Tesla Motors’ June IPO set forth an electrified challenge to automaking giants vying for green vehicle dominance. Now comes the challenge of turning a profit. The San Carlos, Calif.-based startup has seen its stock price soar to nearly double its $17 per share opening price. That’s despite Wall Street’s knowledge that profits aren’t likely to emerge until 2012, when Tesla plans to launch its cheaper Model S sedan to go with its $100,000-plus Roadster. No doubt investors are heartened by Tesla’s $465 million Department of Energy loan guarantee, but whether it deserves its high-flying valuation is in question, by short sellers as well as by industry analysts. Still, Tesla has racked up a significant share of accomplishments since its IPO, including closing a deal to buy the Fremont, Calif. factory where it plans to make the Model S, as well as landing a $30 million investment from battery cell supplier Panasonic and inking a deal with Toyota to collaborate on its electric RAV4.

Solyndra. Thin-film solar panel maker Solyndra has raised just over $1 billion in venture capital and has a $535 million DOE loan guarantee to boost production of its unique, tube-shaped CIGS (copper-indium-gallium-selenide) solar panels. But there’s been nothing but bad news from the Fremont, Calif.-based startup since it ditched its plans for an IPO in June. The company lost founding CEO Chris Gronet in July and has struggled with manufacturing costs that are much higher than competitors. In November it announced it would close its flagship factory and lay off dozens of employees, putting the wisdom of DOE’s $535 million loan guarantee in question.

To be sure, Solyndra promises that new products from its new factory — as well as some financing benefits from targeting commercial rooftops as a niche market — will make it cost-competitive. But the company’s troubles also highlight the challenge faced by other well-funded solar startups trying to challenge the likes of First Solar, Suntech, Sharp, SunPower and other giants in the field. Rival CIGS competitors such as Nanosolar have struggled to meet lofty production goals, and falling prices for silicon have undercut one of their primary rationales for their alternative, thin-film approaches. Solyndra’s lessons seem to be getting applied in the solar startup world, where software, services and off-the-shelf manufacturing shortcuts are gaining more interests from investors.

Amyris. With its September IPO, Emeryville, Calif.-based Amyris launched its ambitions to turn its biotechnology expertise into a full-fledged biofuel production play. How it fares may well serve as a bellwether for a whole host of “next-generation” biofuel companies looking to do the same. Amyris raised $84.8 million in its IPO, bolstering the $242 million it had raised from VCs including Khosla Ventures and Kliener Perkins. Its secret sauce is genetically engineered microbes that turn sugar into different chemicals, from malaria medicine to what it claims is a drop-in replacement for diesel fuel. It plans to open a biofuel plant with Brazilian ethanol company Grupo São Martinho in the second quarter of 2012 to prove that point. But as of year’s end, Amyris was still losing money and relying on reselling ethanol made by others to generate most of its revenues. It was also placing increased emphasis on non-biofuel chemicals for 2011 production — something a host of would-be biofuel barons have shifted to, given the challenge of building up production and infrastructure to challenge oil giants at their own game. Amyris has its own oil industry connections with investment from French oil giant Total, similar to deals that biofuel catalyst maker and fellow 2010 IPO holder Codexis has with Shell.

Bloom Energy. The once secretive fuel cell startup certainly earns an award for one of 2010’s most hyped greentech unveilings. The question is, will the hype be matched by the performance? Bloom raised some $400 million and worked for years on its solid oxide fuel cell technology before its February gala public unveiling. But amidst the 60 Minutes coverage and praise from the likes of Arnold Schwarzenegger and Colin Power, Bloom’s product — a 100-kilowatt, natural gas-fueled fuel cell — tended to underwhelm fuel cell industry analysts. Bloom CEO and founder K.R. Sridhar said that Bloom’s fuel cells can pay themselves off in three to five years; that’s assuming both California and federal subsidies lower the units’ estimated 24-hour generation costs. What’s more, Bloom’s claim to be an emissions-free source of electricity comes only if it uses biogas, which is hard to source in today’s natural gas market.

In October, Sridhar said Bloom hopes to be making one Bloom box per day by year’s end, compared to the mere 50 or so units then deployed. Whether it can expand its sales beyond high-profile test clients like Google, Wal-Mart and Adobe will depend on whether it can achieve the 60 to 70 percent cost reductions its aiming for over the next few years, as well as maximizing regulatory support and tackling the financing issues that come along with the distributed power generation business.

EnerNOC. Long cited as one of the first smart grid companies to go public, Boston-based EnerNOC is more accurately defined as a demand response aggregator. That’s a big business, but the smart grid to come may well supplant the traditional service model with technologies that can let utilities and their customers manage those functions without a middleman. EnerNOC seems prepared for this transition. Over the course of the past several years it has bought up companies specializing in building energy efficiency, energy procurement, carbon accounting and wireless networking for office sensors. In November it relaunched them under the EfficiencySMART label, offering energy management technology and services from buildings to enterprise level.

Cisco Systems. Cisco’s been talking about going big into green industries since early 2009, but it’s taken the company a while to get more specific. But 2010 was the year for Cisco to start unveiling its products, with the launch of its own line of hardened routers for grid substations, a home energy controller device with hosted demand response service, and new iterations of its Building Mediator server and EnergyWise protocol for managing power use in commercial buildings. On the smart meter front, in September Cisco inked a partnership with big meter maker Itron and bought wireless mesh networking startup Arch Rock. Cisco also invested in Grid Net, a startup championing WiMAX for the smart grid, indicating it’s keeping its options open when it comes to extending its planned end-to-end smart grid network into homes. Of course, startups aren’t Cisco’s only smart grid partners, and the company is working with the likes of IBM and General Electric, power gear suppliers Siemens and Schneider Electric, and network providers such as Verizon.

OPOWER. There’s a lot of hype around home energy management networks, dashboards, displays, web interfaces, mobile apps and the like, but very little business to be had in home energy management. In the meantime, Arlington, Va.-based startup OPOWER has made a name for itself by applying advances in data mining and customer behavior analysis to influence homeowners to save energy and money through the medium of the U.S. mail. OPOWER has about 2 million homes under management and has gotten those homeowners to cut their energy use by about 2 to 3 percent without any gadgets in the home. Of course, more sophisticated in-home systems may well outperform those figures, but for the time being, OPOWER seems to have made a pretty strong case to the utility sector, as well as to other home energy management startups that are focusing anew on the consumer interaction side of the equation. It’s rumored to be working with Pacific Gas & Electric as a new big client, and in November raised a $50 million investment to more than triple its previous $14 million series A round.

Renault-Nissan Alliance. Nissan has a lot riding on its all-electric Leaf sedan, but it and the rest of the electric vehicles Nissan and alliance partner Renault are planning to build over the coming years will need lots of places to charge up. To that end, the Renault-Nissan Alliance has been setting up charging infrastructure partnerships around the globe, including Israel, Portugal, Denmark, the Japanese city of Yokohama and states including Tennessee and Oregon. In the past 12 months, it launched similar initiatives in Ireland (and Northern Ireland) and the Chinese city of Wuhan. The companies will need to work hard on this, given that EVs are still viewed somewhat skeptically by the car-buying public. Agreements with the national utilities of France and Spain call for longer-range planning on issues including charging and reuse of partly-depleted EV batteries for storing renewable energy. The alliance is also taking a role in Better Place’s scheme, with Renault planning to have electric cars with swappable batteries available next year. And in November, Nissan said new Leaf buyers in Houston would be tied into a forprofit car charging project with NRG Energy, the first of its kind in the country.

State Grid Corp. of China (SGCC). We could leave China’s massive state-owned utility out of 2010’s list of most influential greentech players, but that would be like leaving out the U.S. government. SGCC is leading a massive grid modernization effort estimated to be worth some $100 billion over the next five years, including high-voltage transmission, substation automation, distribution grid optimization and smart meters. While Chinese companies are expected to take most of the business, China’s smart grid opportunity is expected to be more open to entrants that can offer “system of system” smart grid integration expertise. Cisco, HP, ABB, Siemens, GE and IBM are all working in China, and IBM says it wants to see $400 million in revenues from China over the next four years. Rising trade tensions between the U.S. and China may complicate these pan-Pacific relationships, however. And when it comes to smart grid cybersecurity, commercial partnerships may run afoul of national security conflicts.

Google. What do Internet searches and green technology have to do with one another? Google intends to find out. The company was already a noteworthy investor in renewable power projects when 2010 got underway. Since then it’s added a host of new initiatives and investments, including the launch of its own energy trading subsidiary, which has started buying wind power from a wind farm Google has invested in. Google’s wind power plans extended offshore in October when it made an undisclosed investment in a project meant to lay a 350 mile-long transmission cable under the Atlantic from New Jersey to Virginia to link up future offshore wind turbines. Further down the road, Google is researching solar-thermal mirrors, geothermal resources in West Virginia and prototype robotic-driven cars. It has made its Google Earth maps and cloud-computing resources available to climate scientists, and weather forecasting for better power grid management may be next for the algorithm masters at Google, according to one of the company’s clean tech advisors. What’s motivating Google beyond altruism? Perhaps its need to find both cheap and green ways to power its own data centers. But the company may find a tougher challenge in getting consumers to get involved with PowerMeter, the free home energy platform that’s had less than stunning uptake among utility customers who’ve had a chance to test it.

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