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The brewing competition between Cisco and Silver Spring has just lost its subtlety.

The networking giant today bought Arch Rock, a privately held company that specializes in standards-based mesh networking technology for monitoring data centers and for connecting different assets on the grid. Yesterday, Cisco cut an alliance with Itron, the smart meter maker, that will lead to Cisco software in Itron equipment.

With these two deals, Cisco has created the foundation of a communcations platform for remote meter reading and, some day, demand management and possibly home automation. That's the same basic strategy Silver Spring has been following for the last several years.

Cisco has money, time and expertise. Silver Spring has signed contracts. It has also been trying to prepare for an IPO, according to sources. Who will win? It's hard to say at this point. The real challenge for both companies, though, is that the customer base is small indeed. There are only around 3,100 utilities in North America. By contrast, Cisco sells IT networking equipment to millions of different customers.

These utilities will typically, likely create their networks with technology from one or two vendors. Many of the smaller utilities will base their decisions on the test results from the larger ones. Thus, the fate of manufacturers will hang by a few contracts. Silver Spring's track record helps it. Then again, it has been embroiled in controversy in California. An independent consultant will deliver a report today to the CPUC on PGE's smart meters, which include networking software and components from Silver Spring.

"This acquisition makes a lot of sense to me. Albeit later to market than Silver Spring Networks, Trilliant and others, Arch Rock, in my eyes, is the most interesting start-up in the AMI Networking space," said Rick Thompson, president and co-founder of Greentech Media. "This acquisition provides Cisco with the targeted technology solution it needs to move its partnership with Itron from a marketing message to a market reality."

Cisco, however, has less extensive field experience in this specific segment. On the other hand, the company has a history of successfully absorbing acquisitions. Last year, it bought Richards-Zeta Building Intelligence for controlling AC and other appliances in buildings. If the company can weave all of these technologies together and absorb some more, it could become one of the first large companies to offer a comprehensive network for controlling and monitoring power consumption. The strategy--to make networking a greater part of everything from transportation to city planning to desktop support--came out in early 2009 with the announcement of the EnergyWise software platform.

Arch Rock in a way is a double-whammy for Cisco. The company first came to prominence for tools for monitoring and controlling power in data centers, an increasingly lucrative market. Although data centers only account for around 2 percent of the electricity consumed in the U.S. the total is growing and corporations have shown a willingness to invest in data center improvements. Arch Rock competitors include SynapSense, Sentilla and Power Assure. Hewlett-Packard resells SynapSense's technology.

Cisco, of course, already has several data center client. Potentially, this will give Cisco an easy, early route to monetize Arch Rock's technology. Over the long haul, it can then try to take the Arch Rock technology into building control and the grid. SynapSense in fact is already pursuing a similar strategy. Will Silver Spring try to get into data centers? That could be tough considering how crowded the field has already become, but you can't rule it out either. The company, according to sources, has been trying to broaden its customer base.

"GTM Research plans to release the definitive US-based smart grid market forecast in September. In that forecast, we look specifically at AMI Networking (smart meters and AMI network communications infrastructure) as a sub-segment of the larger smart grid market," Thompson added. "We see the AMI market in the United States reaching its peak of $3.5 billion in 2012-2013 timeframe and tapering off slightly through 2015."

The concentrated photovoltaic (CPV) market has been long on promise and short on results.  But there have been a few hopeful signs of late.

Kleiner Perkins saw fit to invest $130 million into CPV systems vendor Amonix.  And shortly after that fund raise, Cogentrix announced a 30-megawatt project with Amonix.  That's easily the largest CPV project in the history of CPV.

SolFocus recently said that it would have 10 megawatts in the ground by the end of the year.

Concentrix Solar, German-based CPV vendor, funded by Good Energies and recently purchased by Soitec, just announced the opening of a U.S. office and a CEC listing.

And today we saw JDSU, the optical networking, laser and coatings expert, announce that they were entering the CPV market as a chip supplier.  The firm has a market capitalization of $2.1 billion.

One of the chicken-and-egg problems that has long plagued CPV is the cost and supply of the triple-junction compound semiconductor solar cell that performs the actual photovoltaic conversion.  The low-volume supply chain for these chips has depended on somewhat dysfunctional suppliers Emcore and Spectrolab.   Emcore has a history of losing money, questionable management and flirting with entering the CPV system business. Spectrolab makes a quality product, but both of these firms, with a history of supplying the space and satellite market, have found the transition to commercial manufacturing a bit of a cultural stretch.

A few VC-funded startups -- Solar Junction, Cyrium and QuantaSol -- are aiming to provide chips to the system vendors.  But the market remains relatively low volume and has not taken off like the flat solar panel market with its increasingly massive volumes and plunging prices.

We have long claimed that if the CPV market ever did start to take off, larger semiconductor vendors would take notice and follow with their III/V material chip entries.  We had suggested that a fitting candidate could be an LED supplier, as a triple-junction solar cell is approximately a reverse LED.  But JDSU's entry, with its distinctive optical pedigree in lasers from a long-ago acquisition of SDL, makes a certain amount of sense.

I spoke with Jan Gustav-Werthen, the Director of JDSU's photovoltaic group, about the announcement of their entering the CPV market.  It's been a rather poorly kept secret in the CPV world, but at least it's official today.  Werthen arrived at JDSU through the acquisition of his company, Photonic Power, which delivered power over fiber optics.

Werthen said, "We aim to be number-one cell supplier in the world.  If we didn't think we could be number one, we wouldn't enter the market."  Werthen spoke of JDSU's "vast and deep" experience in III/V semiconductors and their internal capacity and strength in epitaxial growth for their lasers.

Werthen continued, "We're not going into this for fun or for the environment; this is a business decision."

Werthen expects that the CPV business "will be taking off in 2011 and 2012 and will be a substantial business by 2020."  He foresees 30 percent module efficiency on the horizon, with cell efficiencies increasing at about one percent per year -- cell efficiencies eventually will be in the 50 percent range.

CPV makes sense in particular geographies and circumstances: high sun and low water.  Werthen sees a day when "PV goes to where the sun is rather than where the money is" and when that happens -- "then CPV will really take off."

Cost remains the ruling fact of life in the solar market and it remains to be seen if Amonix and SolFocus, with the help of vendors like JDSU or Solar Junction, can keep up with the plunging cost of conventional solar. 

It also remains to be seen if JDSU can help enable the CPV market with innovation or cost savings.

Over the past few weeks, I've had a number of meetings with engineers, executives and investors and such, and I keep coming away with the same conclusion.

The fastest-growing and arguably most attractive segment in alternative energy and energy efficiency lies in hardware, software and networking equipment. Yep, green IT. Part of the conclusion is a historical and personal bias: I wrote about semiconductors and PCs for eleven years. But I still think green IT is a sustainable trend. Here's why:

1. Looser-Than-Normal Wallets.

Data centers continue to inexorably absorb functions once handled in the real world--shopping, shipping, etc.--and now and videoconferencing has begun to displace travel.

As a result, data centers are necessarily becoming larger and more power-hungry. Subodh Bapat, Sun's former green guru, has estimated that by 2020 some data centers will consume 50 megawatts and take up 500,000 square feet. Data centers and desktops account for 40 percent of the power bills in the corporate world and can account for 70 percent to 80 percent of the bills in financial services companies, according to Fujitsu.

To keep a lid on their onerous utility budgets, data center owners have resorted to swapping out servers at a more rapid rate, investing in environmental monitoring systems like those from SynapSense and Power Assure, and reconfiguring air conditioners. In the near future, they may begin to start swapping out hard drive arrays for ones with flash memory and chips from companies like Sandforce. Others are building data centers in mines and bomb shelters and harvesting the waste heat.

In short, you have a central corporate function with a "needed now" budget item that comes with quantifiable benefits. Compare that to a solar array -- the lights won't go off tomorrow if the company doesn't buy one.

2. The Fear is Real.

Forget operating budgets for a moment. Power could soon become a life-or-death matter, according to Mike Dauber at Battery Ventures. (Battery invested in Smooth-Stone, which has created a low-powered ARM chip that will compete against Intel chips in servers.) Transistors replaced vacuum tubes, in part, because it would have been impossible to build and run large computers using millions of hot, delicate tubes.

Unless you build new data centers next to the Hoover Dam, it will be tough to physically tap the amount of power that will be required, says Dauber, unless you change the basic architecture.

Potentially, the need means that science projects like HP's memristors, phase-change memory, Microsoft's future predicting algorithms, probability processors and even non-Intel-based servers stand a decent chance of participating in trials at big data centers. Again, compare that to solar. Banks, utilities, installers and large buyers aren't showing a lot of interest in experimentation. (The picture shows Google's first storage device. They've graduated since then.)

3. Everything Dies a Quick Death.

A single piece of equipment might chug along for five years before giving up the ghost. Solar panels, power meters, LED bulbs, wind turbines, and air conditioners must last for decades. Live fast, die young, sell replacement parts. It's a great way to make a living.

4. Bread and Circuses.

Check out this screen from Qualcomm: it lasts five times as long on a single battery charge because it doesn't require an internal light source. Philips and E-Ink have similar energy-efficient color screens. You're selling energy consciousness and consumer lust at the same time.

5. The Trojan Horse Effect.

Is there any reason that the environmental control systems being deployed in data centers can't be used to control the air conditioners or lights in buildings and industrial sites as well? No. SynapSense, in fact, has already begun to talk about transforming its data center control technology into a building management system. Some other building management companies are getting their first contracts to help control energy in data centers, which are the highest-value real estate most companies own. The IT department, therefore, will become the early adopter and guinea pig for green building management.

6. Solar and Smart Grid Need It.

From a certain perspective, the smart grid isn't a revolutionary means for changing how the world consumes power. It is the land of misfit networking technologies.

ZigBee and Z-Wave struggled for years to find a home. Back in 2003, the most promising applications for these wireless protocols were home security systems and wireless keyboards. Then came the smart grid and home energy management. Suddenly companies began to talk about incorporating ZigBee into household appliances and utility meters.

LTE and WiMax? No one would have ever spent the hundreds of millions required for development on these if the estimated customer base consisted solely of the 3,100 North American utilities. The smart grid industry needs telecom to develop its components.

Solar manufacturers, meanwhile, are turning toward equipment from the hard drive industry to curb manufacturing prices and to embedded semiconductors to boost the efficiency of panels. To advance, solar will rely heavily on the work being done inadvertently on its behalf.  

7. Quantity is Quantity.

The underlying rule in corporate life is he who quantifies wins. The inherent nature of hardware and software means that the benefits are often relatively easy to measure. Hara has landed a large number of accounts -- Coke, Apple, News Corp. -- with its dashboard that meticulously measures consumption. In its new five-year plan for ecomagination, General Electric said it will emphasize improving existing technologies with hardware and software.

So what's the downside? IT equipment is actually somewhat efficient. Remember a few years ago when Google announced it would tackle the urgent problem of inefficiency in power supplies? The search giant unleashed a power supply (like the brick on your notebook) that was over 90 percent efficient. Power supply makers told me at the time that they were already in the 80-percent range.

Computers are really only a minor irritant in the grand diet of electrons. Data centers only account for close to 2 percent of electricity consumption. In commercial buildings, computers consume four percent of all energy used, according to the Buildings Energy Data Book from the Department of Energy. Refrigeration also consumes four percent, while lighting consumes 24 percent. You'd have to put six PCs on each desk to match lights. Even if you ran every PC in the world on The Clapper, the power saved would be tough to get excited about.

High efficiency, more profligate applications elsewhere: spending could easily flow into these other areas first, negating everything said above.

Utilities and state governments have not been as active in the rebate department as they could be. NetApp has built a state-of-the-art data center with funds from PG&E. Nonetheless, feed-in tariffs or monster-sized tax credits don't exist.

Nonetheless, think about the world of work. The CIO has gone from being a functionary to a strategic player. His or her budget might sink, but it rarely gets slashed.  Multibillion-dollar technology vendors continually concoct new devices for them.

Inside corporations, IT is the equivalent of the Department of Defense.

Beware the sticker price.

Propel Fuels, which wants to build 75 alternative fuel gas stations in California, unveiled one in Oakland yesterday, according to several news reports. The company already operates stations in Oakland and Seattle.

One of the big problems with ethanol has been the availability of pumps dispensing E85, the 85 percent ethanol/15 percent gas blend. While General Motors and others have sold thousands of flex fuel cars, the U.S. only has a handful of ethanol stations. In 2008, there were 1,400 compared to 170,000 gas stations. Propel is trying to solve that problem by installing and paying for the pumps, tanks and other infrastructure (it can run up to $150,000) itself. Gas station owners mostly just have to have available real estate for Propel to do its work.

But there is another issue with cost. Look at the price in that first link. E85 at the Oakland station sells for $2.49 a gallon. E85 only has about 70 percent of the energy of a gallon of gas. Divide $2.49 by 0.70 and you get $3.56 a gallon for fuel. That's more than a gallon of gas costs currently in Oakland. The retail price also already reflects subsidies paid to refiners.

Elsewhere:

--The California Public Utilities Commission just released its periodical efficiency report. The agency reiterated its goal of getting builders to shift to a "net zero" energy standard for homes by 2020 and a net zero standard for commercial buildings by 2030. The technology exists to build net zero homes now -- Zeta Communities has built a net zero home in Oakland -- and the prices for some technologies will continue to fall. More coming from the CPUC at this link.

The CPUC will also hear an independent evaluation from the Structure Group on PG&E's smart meter program tomorrow at 10:00 a.m. We will cover it.

--General Motors is trying to trademark "range anxiety" according to Jalopnik. Why not trade mark "scabies" or "unsightly twitch" while you're at it? Tesla has scoffed. Will GM succeed? "Possibly," says the Magic 8 Ball.

Recurve, the energy efficiency retrofitter and software developer, is getting a retrofit itself.

The company has hired Andy Leventhal as its new CEO, replacing Pratap Mukherjee. Leventhal co-founded Planet Metrics, a carbon accounting company, in 2007, and sold it off to Parametric Technology in February.  

The change in CEO will also usher in some organizational changes. The most important is that Recurve will spin off its operational group -- which conducts home energy audits and retrofits -- into a separate subsidiary with separate offices at some point in the future. Recurve proper will then become a full-fledged software developer.

Recurve (initially called Sustainable Spaces) started as a home energy retrofitter. As the company progressed, it began to amass data on best practices for retrofitting and curbing energy, which it then condensed into a software package.

In 2009, the company began to realize that the software package could be licensed and sold to large, existing construction companies. (See the first story on Recurve's software strategy here.) Becoming a developer would in turn allow Recurve to scale rapidly and avoid the costs and headaches of building local offices and obtaining contractor's licenses in different states.

Google alumni started to work at the company while the executives formed alliances with large contractors and others like Lowe's and Grupe Homes to beta-test the software. (See Post-It notes diagramming a decision tree in this photo of co-founder Matt Golden.)

"We've been trying to operate two very different businesses," said Leventhal.

Earlier this year, Recurve had to lay off employees after the PACE program, which eased the process of financing retrofits, got suspended.

Data and results from the beta program will come in the near future. Lowe's will start to use the software to conduct audits and retrofits in and around 20 Bay Area stores starting this week. Pacific Gas & Electric, the large utility in northern California, recently announced that homeowners can obtain $3,500 in rebates from the utility for conducting retrofits on top of the $1,500 already offered as a federal tax credit. (That means a $5,000 discount on retrofits, according to addition analysts at Greentech Media.)

Homes and the appliances and fixtures inside them consume 20 percent of all of the energy used in the U.S. That energy isn't used in a particularly efficient manner, either. Matt Odynski, who owns a Victorian-era home in San Francisco, says he expects to save $3,600 on his annual utility bill via retrofit.

Leventhal said that Recurve will also flesh out its pricing strategy for the software. Right now, the company is leaning toward charging contractors a per-audit fee and a monthly subscription fee for using the software. The software fees will not likely be tied to the size or scope of the audit.

"We have gotten pushback on a retrofit fee," he said.

In part, the concerns revolve around the potential conflict between an audit and a retrofit. An audit, ideally, exists to identify ways a homeowner can save money. A retrofitter might be more interested in expanding the project. (See Neal Dikeman's experience with retrofitter GridPoint for more on this issue. Disclosure: we had Recurve do a small retrofit on our house earlier this year, but we paid the standard price, were mostly interested in insulation issues, and my wife made all the decisions. Everything worked out fine.)

While Recurve's software, conceivably, could be ported to help study commercial buildings, Recurve will stick with residences for now. The commercial market is already somewhat crowded. The complexity of commercial buildings and the way they operate also puts more emphasis on continuous commissioning -- i.e., constantly resetting air conditioners or lights -- than retrofits.

And, of course, the data behind Recurve's software comes from homes.

***

Eric Wesoff contributed to this story.

"You can have a Model T in any color, as long as it's black."  The automotive world has come a long way since Henry Ford made this statement while introducing the revolutionary Model T Ford in 1908.  Today, paint color and quality both play major roles in car-buying decisions.

However, automotive paint is not just about looks. It is also the vehicle's first line of defense against scratches, abrasions and parking-lot dings.  Over the years, automotive paint has greatly improved, and more recent breakthroughs have boosted the quality of paint application, while also reducing its environmental impact. And plastics are playing an integral role in making this new technology possible.

Chemists have developed a colored plastic paint film that adheres directly to vehicle body frames and panels. The process saves time and energy compared to the traditional multi-layer application of liquid paint. Using paint films also reduces by 98 percent the emissions that are typically associated with traditional automotive paint processes.

Here's how it works:

Plastic body-color film, a thick plastic sheet of color, is applied by thermo-forming the material to an automobile part, such as a hood or fender.  The film is made by feeding a sheet of paint film, which looks like a giant roll of kitchen wrap 60 inches wide and 15,000 feet long, through a mechanism that resembles a printing press. This machine applies a clear coat, followed by a pigmented layer of colored paint and then an adhesive layer that bonds the film to the part when it is molded.  The base film is then stripped away, leaving a flexible, durable, high-gloss coating.  The resulting product is a higher quality color adhered directly to your vehicle's body that can be matched to any color in the rainbow; it can even be infused with metal flakes for a chrome-like finish.

Because the color is built into the color film, small scratches and dings do not show up as readily as they would with traditional paint. In fact, plastic paint film is equivalent to 15 coats of traditional automotive paint. The film is sealed with a thick clear coat, further protecting it from wear and tear. Plastic paint film is resistant to UV fading and retains a showroom shine longer than traditional paint. Additionally, the film can be applied to automotive parts through a variety of processes, including a low-VOC adhesive, which allows this innovative technology to be easily adapted to many different types of manufacturers. 

So when can we expect to see this technology in action? Well, the future is now. While mainstream adoption is still on the horizon, independent companies are already performing this process, though in limited-scope applications.  Major automakers are applying this technology on parts that see the most wear and tear, like doors, bumpers and panels. 

Companies such as Soliant Paint Film are currently working with GM, Chrysler and Saab to use this technology in various automotive paint applications, from fascias to skid plates and rocker panels.  In time, mass adoption could lead to a very significant emission and energy savings -- something we can all get behind.

For more information on how plastics are helping to make today's cars greener, safer and better designed, check out http://www.plasticsmakeitpossible.com/c/today-in-plastics/cars-trucks/.

***

Jim Kolb is Senior Automotive Programs Director at the American Chemistry Council.

Cisco and Itron are joining forces to go after the smart grid together.

The companies announced a somewhat far-reaching agreement under which the two will work to develop IP-based communication standards for the smart grid. Itron will then bundle and resell Cisco's technology. In short, what you have is an alliance between a company (Cisco) with experience, heft, deep wallets and lots of technology in networking and communications and another (Itron) that has landed deals to sell smart meters to several major utilities worldwide. If all works well, Itron will be a gateway for Cisco into utilities and Cisco will help Itron accelerate its product roadmap.

Just as important, if the alliance works, the cost of implementing smart grids will decline because standards-based communications will replace some of the proprietary standards found in early smart meter deployments. Itron will shift over toward IP communications as this evolves.

The alliance will not likely be completely exclusive. The two, in fact, will promote the communication technologies as open standards and Cisco says it will seek other partners. Alliances in technology also wax and wane in importance, depending on how customers receive them. General Electric and other smart meter manufacturers, meanwhile, have alliances of their own.

Nonetheless, it could be imposing. Itron will embed Cisco's IP into its OpenWay meters and resell Cisco equipment. Cisco and Itron will also work to develop reference designs for equipment based around the communication technologies coined in this alliance.

In the future, a substantial portion of these alliances will likely focus on equipment and technology for improving communications between all of the different assets -- meters, substations, transformers, etc. -- in the field. The data coming from smart meters will likely soon become overwhelming. To manage this problem, utilities will likely begin to allow different field assets to process and store this information and communicate among themselves. SmartSynch, Motorola, IBM and others have all said field communications and processing will constitute a major market.

A press conference with vague statements of goodwill ("We will strive to make a positive impact...") is underway at the moment.

Water is an enormous issue around the globe -- for drinking, farming and industry.  

There is a looming water crisis facing everyone on Earth as populations rise, pollution increases and climate and weather patterns change.  There is already a water crisis in many developing nations and in some not-so-developing regions, like Australia and California.  The stats for "embedded" or "virtual" water are sobering -- for example, the production of 1 kilogram of beef requires the use of 15,500 liters of water (see WaterFootprint.org).

And water is inextricably linked to energy -- California uses an extraordinary amount of power to move water around the state. In fact, a fifth of the electricity used in California is intertwined with water. So is 30 percent of the natural gas, according to the California Energy Commission. Most of that power is actually used to heat water for hot showers and clean hospital equipment, but around five percent to six percent of all of California's energy gets consumed simply by moving water.

Venture Capital Investment in Water

Business growth opportunities in the water market seem obvious. The water market is:

    • Huge and expanding
    • In a crisis that cries out for innovation and efficiency
    • Deeply enmeshed with energy usage
    • In urgent need of a variety of new technology approaches

But VC lore and conventional wisdom has it that you can't make money in water; it's too long a design cycle, too regulated, and too fragmented a market. The main players in water are large conglomerates like General Electric, Veolia, Siemens -- and they dominate the market.

Flying in the face of this theory is the fact that Energy Recovery, a water desalination company, went public a few years ago.  In fact, the Voltea investment covered below is just one indication that VCs are indeed investing in water across a variety of water sectors.  And there has been a robust M&A scene for water companies -- it just doesn't get a lot of press.

Here's a quick list of of the more than $150 million in water investments in 2009. Note that while Israel has its share of water startups, U.S. VCs seem to be waking up to the water market, as well. Watch out for a surge in water investments this year and next.  It's still a small percentage of total VC in greentech -- but it's not negligible.

VC Investments in the Water Sector (2009)

Some Venture Capitalist Views on Water

Susan Preston at CalCEF is "looking hard" for an investment "at the intersection of energy and water."

Peter Nieh, a partner at VC investment firm Lightspeed Venture Partners said via email, ”Water is an alluring market because the need is clearly there and the opportunity is large.  [There is] some great technology out there. The issue for us is that economically attractive distribution is hard to achieve because the market is so fragmented.”
 
“[I] definitely agree that water is a challenging sector... and as such, it's sort of the Rodney Dangerfield of cleantech investments,” observed Steve Vassallo of Foundation Capital.  “That said, we have invested in this area and are actively looking for opportunities to invest in capital efficient businesses that address the needs of commercial, industrial, and agricultural users of water.”  PurFresh was one of Foundation’s first cleantech investments. Purfresh has an ozone purification system that many bottled water vendors use to sterilize their bottles.
 
Will Coleman of VC firm Mohr Davidow Ventures is also looking carefully at water deals and states. “As for water, yes, we have had an interest in water for quite a while, but it has always been hard to identity venture opportunities in the space.  The market is huge. The "water" market in the U.S. alone is over $100 billion annually, but a significant portion of that is in earthworks and pipes. When you slice it a little finer you find that a third of the market is driven by residential, where the cost of water to the end customer is really not a driver” [emphasis mine].

Rachel Sheinbein was a water expert at Intel, dealing with the flood of wastewater produced in the fabrication of Intel’s semiconductor products.  Today, she’s at CMEA Ventures and part of the investment firm's Energy & Materials team. She vets the VC firm’s cleantech deals but has a particular thirst for water startups, and states, “I believe there’s an opportunity in water but I haven’t found the investment yet.”
 
Sheinbein added, “We’re good at materials and membranes,” adding, “We would look to get to market through the commercial and industrial space first, as opposed to the conservative municipal water channel.”

A Recent VC Investment in Water

Voltea, a 20-employee U.K.-based startup founded in 2006, just closed a $5.5M investment from Rabo Ventures and Pentair, a U.S. water technology company, for water desalination via capacitive deionization.  Initial investment for Voltea came from Unilever Ventures.

Capacitive deionization (CD) is an electrical process that combines oppositely charged electrodes with anionic and cationic selective membranes.  When salt water flows into the cell between an electric field, the ions move through the selective membranes to the oppositely charged electrodes and desalinated water leaves the cell.

When the surface of both electrodes is covered with ions, the electrodes are cleaned by reversing the electrode polarity. The ions are pushed from the electrodes and are trapped between the membranes.  The concentrated brine that forms between both membranes can then be removed from the cell.  When the polarity of the electrodes is reset to normal, the cell is ready for use again.

The predominant technologies used to desalinate water are reverse osmosis (RO) and electrodialysis reversal (EDR), and they both tend to be costly, environmentally unfriendly, and energy-intensive processes that produce large amounts of wastewater.

CD would seem to most closely resemble EDR, but Voltea claims that CD has a higher recovery water rate, requires less maintenance and pre-treatment, and is not as sensitive to scaling and fouling.  The company also claims that CD requires much less energy than RO and fewer chemicals than either RO or EDR.

Current applications for the Voltea technology are in cooling towers, water softening, and desalinating brackish groundwater.

Profiles of a Few Other Water Companies

NanoH2O, a well-funded water startup, is commercializing a new membrane material for reverse osmosis based on technology developed by UCLA's Eric Hoek.  

"It all comes down to the performance of the membrane," claims Jeff Green, the startup's CEO. "A more productive membrane allows less energy to be used or provides higher throughput." 

A higher-performance, more permeable membrane allows more fresh water to cross the barrier with less pressure from a pump -- a pump that needs to be driven by an energy source, be it natural gas, diesel, or coal.  The high pressure pump consumes 35 percent to 60 percent of the process' energy budget.  According to the company, municipal and industrial plants optimized for NanoH2O’s membranes can expect up to a 20 percent reduction in energy consumption, a 70 percent increase in water production, or a 40 percent smaller plant footprint.

According to Green, seawater desalination comprises about two-thirds of the desalination market.  Another 20 percent is for desalination of brackish water and the remainder is for desalination of wastewater streams.

The industry standard membrane module is a cylinder 8 inches in diameter and 40 inches long.  A flat sheet of membrane is spiral wound in the cylinder.   Under pressure, the desalinated water moves through the membrane into a tube on the inside, while the waste stream or brine stream remains on the outside.  A typical pressure vessel contains a number of the membrane modules. 

Green said, "We will be able to produce the entire product, from fabricating the membrane to the membrane module itself."  The goal is to make a membrane module that fits into RO systems with an identical size and shape to the existing product. 

Traditional membranes have been made from a polyamide material for decades, but they had a propensity for fouling. “Fouling can severely degrade the productivity of the process or cause a complete shut-down of a system,” said Green.

"If you want to move this forward, you need a better membrane.  We have added nano-particles to the synthesis of the membrane -- it is not a coating; it is a nanocomposite. That allows these systems to have much lower operating pressures or much higher throughput."  And that translates to less energy consumption or greater productivity.  The firm claims that NanoH2O's technology is the first materials breakthrough in RO membranes since the 1970s.

Initial VC funding for NanoH2O was a $5 million Round A from Khosla Ventures, followed by $20 million from Oak Investment Partners and Khosla Ventures.   That funding has taken them from an academic research project to the cusp of manufacturing a commercial product.

The goal now is to scale-up manufacturing.  The firm has 26,000 square feet of manufacturing infrastructure in the Los Angeles area and looks to come to market with a commercial product this year. 

Other firms working on membranes for water applications include the industrial plumbing giant Danfoss, while Novozymes and a startup called Aquaporin are doing similar work. The challenge, said Aquaporin CEO Peter Jensen to Greentech Media, is making the membrane durable.

Desalitech's pilot testing has purified Mediterranean saltwater, using a Closed-Circuit Desalination saltwater reverse osmosis method (SWRO-CCD).

Using common components, without energy recovery, running a high-pressure pump at 81 percent mean efficiency and circulation pump at 37.5 percent mean efficiency, the pilot achieved 48 percent recovery at 2.05 to 2.40 kWh per cubic meter of fresh water. For comparison, Perth's desalination plant using Energy Recovery from ERI achieves 43 percent recovery at 2.32 kWh/m3.

Desalitech aims to increase the mean efficiency of the off-the-shelf, high-pressure pump to 88 percent, to provide recovery at 1.75 to 1.95 kWh/m3 on Mediterranean saltwater. The same pumps used on ocean water could produce equal recovery at 1.5 to 1.7 kWh/m3.

Desalitech's implementation reduces the cost of powering desalination processes. It also decreases capital expenditures. Nadav Efraty, CEO of Desalitech, said, "This technology is reducing energy consumption by up to 50 percent when we utilize about twice the membranes, reduces energy by about 10 percent to 15 percent when we use only 40 percent of the membranes compared to a conventional plant, or reduces energy about 30 percent when we utilize the same amount of membranes, but in this mode, since we don't utilize any form of energy recovery, we still see a reduction in capital expenditures"  (reporting on Desalitech was provided by Galen Sanford).

Microvi Biotech, led by CEO Fatemeh Shirazi, a fifteen-year industry veteran, believes it has a solution to one of our water problems -- pollution from nitrogenous compounds stemming from natural or agricultural sources.  Almost any wastewater has a nitrogenous element.  “Nitrogenous compounds in drinking water continue to pose a serious health risk, yet traditional treatments are too expensive. They also create byproducts that degrade the environment and are difficult to remove," said Shirazi.  High levels of nitrogenous compounds in drinking water can cause a deficiency of oxygen in organ tissue and have been linked to a dangerous condition in infants called methemoglobinemia, also known as "blue baby syndrome."

The problem is global and the United States alone spends $4.3 billion a year to remove nitrogenous compounds and phosphorous from water.

One of the problems with traditional water treatment is that you end up with a secondary waste stream of concentrated pollutants.  What happens to that toxic waste stream?

Microvi's process encloses microbes inside a semi-permeable membrane, using strains that can assimilate pollutants like chlorinated hydrocarbons, phenols, perchlorate, nitrogenous compounds and pharmaceuticals.  Shirazi said, "Microvi tackles every pollutant in the water industry."

The startup claims that its technology yields water that meets drinking standards with no waste stream, in contrast to the sludge created by conventional wastewater processing.

According to the CEO, the system is easy to handle and operate, and once you set it up, it's almost maintenance-free.  The firm is targeting waste waster in industrial and municipal markets, as well as surface water, ground water and water in the oil and gas industry.

"The technology is fundamentally different than anything on the market," claims the CEO.  Microvi's bioreactors employ microorganisms that have the ability to utilize the pollutants as a food source.  The billions of organisms in the reactor "have been trained" and the conditions in the reactor tuned so that there is no waste stream, according to Shirazi, who adds that "other folks have tried but have not been successful" in this endeavor.  The organisms are not genetically modified, nor are they pathogenic, were they to escape the bioreactor. The CEO was not willing to identify the microbes doing the work.

Shirazi's claims aside, others are aiming at similar goals. Emefcy has created a biological fuel cell that cleans water and generates electricity.

Microvi raised more than $1.25 million in initial funding, and the technology received about $1.8 million in government funding from the National Institute of Health.

***

There are a “scary number” of pollutants in our water supply, said Gayle Pergamit, the CEO and founder of Agua Via, an early stage membrane developer.  These pollutants include “natural” poisons like boron and arsenic, nitrogenous wastes from humans and farm animals, and “other goodies” like hydrocodone and estrogen disruptors. “There can be any of 500,000 different interesting and entertaining chemicals in the water supply,” she said.

“Nanotechnology-based water filtration could deliver completely pure water from any source at vastly reduced energy usage and lower total costs,” added Pergamit. 

”The discouraging thing about this is that [VCs] really don’t understand that we [the U.S.] are entering an era of water scarcity [as opposed to large chunks of the rest of the world, who are already in the midst of water scarcity],” said Pergamit of AguaVia in an email. “Maybe they don’t buy the concept of climate change -- anthropogenic or otherwise. But it also means that they don’t understand aquifer exhaustion and the fact that even if there wasn’t one whit of climate change, we are still going to run out of water.”

Michael Kanellos covered water purification here and I profiled a few Israeli water startups here.  We covered Canadian water innovation here and even more water startups: APT, and water/IT play TaKaDu.

Contrary to popular belief, VC investment in water technologies is alive and well.  In fact, there's actually a pent-up investment demand for the right water technologies and entrepreneurs.

Debate was still going on when midnight rolled around.

The California Legislature last night failed to pass SB 722, a bill that would have required California public utilities to obtain 33 percent of their power from "new renewables," i.e., solar, wind, geothermal, and biomass, but not large-scale hydroelectric dams. Debate was proceeding on a companion bill when August 31 turned into September 1 and the session ended.

The failure is a blow to environmentalists, but also to outgoing Republican Governor Arnold Schwarzenegger, who has made growing California's green economy one of the major pillars of his administration. A.B. 32, the carbon regulation passed by the state years earlier, has created 500,000 jobs, according to Bill Weihl, Google's green energy czar.

But that's the good news: Arnold still has time before the election to call a special session of the legislature to get it passed. He's done it before. Think of the movie tie-ins. "What is good? To see the state senators driven before you and hear the lamentations of the women."

The bill has widespread support among Silicon Valley executives. There are exceptions. Two semi-retired Valley executives -- former eBay CEO Meg Whitman and fired Hewlett Packard CEO Carly Fiorina -- are against it and are, respectively, running for Governor and the U.S. Senate. Whitman has also vowed to suspend A.B. 32, which former eBay exec turned VC Steve Westly calls a "colossal mistake."

California currently requires that the public utilities get 20 percent of their power from new renewables by 2010. The three big utilities -- PG&E, SDG&E, SCE -- will not make it. However, the law has a built-in extension and most will likely comfortably meet the expanded requirement. All three utilities have been aggressively signing contracts to get energy from solar thermal power plants and other renewable power providers. Independent power providers, though, have been having difficulties getting permits and funding for the projects.

Despite bills like A.B. 32 and a thriving startup culture, the bureaucratic tangles have hurt California's efforts to build a green industry. In this year alone, Mississippi and its Republican Governor Haley Barbour have wooed three green companies -- Soladigm, Twin Creeks Technologies and Kior -- with loans from the state and other ARRA-like stimulus packages to build factories in that state. (The bipartisanship on the state level in many areas is actually quite heartening.) The costs are lower and the permits are easier to obtain. Michigan, some VCs have told me, has become attractive for similar reasons, along with the added bonus of a large population of process and mechanical engineers.

"We are extremely disappointed and bewildered that the Legislature could not pass a 33-percent-renewable energy bill this session, despite the unquestionable need to finish the job on the Renewable Portfolio Standard this year," said Laura Wisland, energy analyst at the Union of Concerned Scientists, in a prepared statement.

"A slew of recent studies," energy writer Robert Bryce wrote in a recent Wall Street Journal essay, "show that wind-generated electricity likely won't result in any reduction in carbon emissions -- or that they'll be so small as to be almost meaningless."

Bryce acknowledged in an interview that this claim is "counterintuitive." It is also, on closer examination, dubious.

For his "slew" of studies, Bryce offered three, all from the United States Association for Energy Economics. Bryce identified Wind and Energy Markets, by Ross Baldick of the University of Texas, as the most recent and most significant. The study does not, however, argue that wind cannot reduce climate change-inducing carbon dioxide emissions. It argues there is a significant cost to building up the wind infrastructure that will be required to do so.

Asked directly if the studies show wind won't reduce emissions, Bryce quoted Baldick's conclusion that "even assuming wind does displace fossil emissions, it is not worthwhile to reduce greenhouse emissions."

Bryce obviously did not want to say his references actually question the economics of wind, not its effectiveness at reducing emissions. Whether building wind is "worthwhile" therefore depends on a "slew" of economic factors.

Bryce said he believes nuclear energy and natural gas, not renewables, are the energies of the future because they are scalable and available 24/7. Economic studies and recent investment patterns demonstrate that new nuclear is much more costly than wind. The volatility of natural gas prices makes its value uncertain against wind's pre-contracted long-term price.

In the WSJ piece and in the interview, Bryce relied heavily on "How Less Became More; Wind, Power and Unintended Consequences in the Colorado Energy Market," a study carried out by Bentek Energy LLC that was funded by the Independent Petroleum Association of the Mountain States (IPAMS). But Xcel Energy, a major utility in Colorado that has launched 1,300 megawatts of wind and is planning 700 megawatts more in the next five years, completely dismissed the IPAMS study.

"Wind is not perfect," Frank Prager, Xcel's Environmental Policy Vice President, wrote in the Denver Post. "Wind turbines generate electricity only when wind blows," he went on, explaining how utilities manage wind's variability. "Generally, we prefer to ramp gas-fired plants. If we ramp coal-fired units, the plant's efficiency may decline, causing its emission rate to increase for short periods."

But, Prager wrote, the Bentek study "implies that small, short-term emission increases associated with ramping result in significant increases in the total emissions. This is simply wrong. Since 2007, we have added hundreds of megawatts of wind generation, and our overall emissions have declined."

Asked about Prager's statement, Bryce pointed out that recent studies show U.S. energy consumption and emissions decreasing and ignored the fact that Prager specifically cited declining emissions as far back as 2007, when energy consumption was rising.

"There are about a thousand ways to interpret emissions data," Bryce asserted. "That may be true that overall emissions for Xcel or for any utility may have fallen," Bryce went on contentiously. "The Xcel guy has his opinion, the Bentek study arrives at a different conclusion. I honestly don't know who's right. The purpose of writing the Journal piece ... [was to point out] that you have to be careful with the assumption."

The Department of Energy, typically careful with assumptions, concluded that "achieving 20% wind would cut electric sector carbon dioxide emissions by 25%," pointed out American Wind Energy Association (AWEA) CEO Denise Bode. "As Bryce's own book shows on page 111," Bode went on, "Denmark has cut their CO2 emissions nearly in half since 1991 in large part because 20% of their electricity now comes from wind.  Any claim that adding wind energy to the electricity grid would not reduce carbon dioxide emissions violates the laws of physics."

The only substantial reference in Bryce's Journal piece was the Eastern Wind Integration and Transmission Study (EWITS) from the U.S. National Renewable Energy Laboratory (NREL). It modeled the impact of building 20 percent to 30 percent wind power capacity by 2030.

"If you look at the EWITS study, under their scenarios, this massive investment in transmission and massive investment in wind in the eastern two-thirds of the U.S. will result in a reduction of CO2 of about 200 million tons," Bryce said. "I stand behind the Journal piece; that's the bottom line." Bryce then quoted his thesis statement from the piece's opening paragraph. "Wind-generated electricity likely won't result in any reduction in carbon emissions -- or they'll be so small as to be almost meaningless."

The 200-million-ton emissions reduction, he said, "in the grand scheme of things is almost meaningless."

The NREL study actually projected five different scenarios. A chart from the study specifically referenced by Bryce shows the least aggressive developments of wind would, by 2020, see eastern U.S. emissions reduced four percent to five percent.

Other EWITS scenarios found that more aggressive development of wind and new transmission would reduce emissions by 18 percent to 33 percent. And it is, of course, what a nation would logically do if climate change was a threat, nuclear power was prohibitively expensive, reliance on ecologically devastating fossil fuels was a threat to national security, its antiquated grid was unreliable and renewable energy development held the key to economic rejuvenation and international competitiveness.

Bryce repeatedly referenced the high cost of building wind capacity, yet made no mention of the even higher costs of building other new sources of electricity generation. He also made no reference to the returns on such investment. Other studies -- a "slew" of studies, in fact -- have shown that renewable energies provide more jobs and more economic returns than the natural gas and nuclear sources Bryce touts.

But Bryce's attack on wind has to do with the subject of emissions and the only really credible reference he offered was the NREL study. Dave Corbus is an NREL senior engineer and the project manager/technical monitor for that study's ten-author team. "The electrical grid is one of the most complex systems there is," Corbus explained. "Complex systems take a lot of study and a lot of education" to understand.

Asked if he knew of anybody who fully understands transmission and would argue that wind doesn't reduce emissions, he simply said: " No." After a pause, he went on. "I think there's room for people to say it reduces emissions 60% versus 80%. There's certainly room for disagreement and uncertainty because it's such a complex system. But nobody that I know that understands the grid is going to say that it doesn't reduce emissions."

How much power do computers use?

Data centers, desktops, printers and other IT equipment now accounts for around 40 percent of the power bill of large corporations, according to Kartik Ravel, practice director of Green IT at Fujitsu America. At hedge funds and financial services firms, where complex transactional software churns constantly, it can be 70 percent to 80 percent of the bill.

To that end, Fujitsu is taking an energy efficiency program developed in Australia three years ago on a worldwide tour. Under the program, Fujitsu consultants examine your entire organization and trim down the IT assets for efficiency. Some of the more obvious solutions involve getting employees to print on both sides of a sheet of paper or resetting the sleep functions on their PCs, but there are more subtle recommendations (load shifting, de-duplication) as well.  The program came out of Australia because the country was implementing a series of energy efficiency regulations at the time.

As obvious as some of the answers sound, they apparently work. Fujitsu says it can curb IT power spending by 20 percent in eight months. Toyota Australia retained the firm and cut its IT power bill by 43 percent. IBM, NEC, Verdiem, Cisco and others offer additional services and software for these tasks.

Fujitsu hopes to also take these tools and consulting methodologies to  tackle facilities management, i.e., over-air-conditioned offices and lighting management.

A "quick start" evaluation runs $25,000. The company will also do longer, more detailed engagements.

If you're a photovoltaic module startup that has received venture capital funding in the last few years -- it's time to start showing results.

The solar market is no longer the domain of scientists and hobbyists -- the industry will ship more than ten gigawatts this year.  It's about scaling big, scaling fast and driving down costs.  Suntech, Yingli, Trina Solar, First Solar, SunPower and others are all going to exceed one- or two-gigawatt-capacity levels in the next year or two (if they haven't already) and are scrubbing cost out of every process step.  If you're not able to play in this league, why bother showing up?

Striding into this bloodily competitive landscape are the scores of solar module companies hatched by investors in the last ten years. 

Solexant is one of the more interesting of them, and I just spoke with the CEO, Damoder Reddy.

The fifty-employee firm recently raised Round C funding from Olympus Capital Partners, DBL Investors, Brichmere Ventures, Trident Capital, Firelake Capital and Medley Partners.  An SEC filing shows that they closed $41.5 million of a $64-million-dollar round.

Reddy said that Solexant synthesizes "semiconducting nanoparticles" on a "scale never done before."  The nanoparticles are applied to a flexible metal foil substrate using an ink-type solution, and although the current photovoltaic material is cadmium telluride, the process is materials-agnostic.  Roll-to-roll coating is a 50-year-old technology according to the CEO, and "the secret sauce is in the ink."   

Solexant's panels are lighter since they use a single sheet of glass, rather than the typical 'glass sandwich.'  Efficiencies are expected to be in the 11-percent range. 

The company plans to commercialize solar cells based on other higher efficiency printed nanocrystal materials over the next few years.  The goal is to find materials (other than silicon) that are "terawatt materials." 

Solexant was founded in 2006 by Dr. Damoder Reddy along with Prof. Paul Alivisatos of U.C. Berkeley, Prof. Paras Prasad of SUNY Buffalo and Prof. Sue Carter of U.C. Santa Cruz.  (Paul Alivisatos inherited DOE Secretary Steve Chu’s old job in running LBNL.)  Solexant's CFO, James McNicholas, VP of Engineering Craig Leidholm, and VP of Product Development Paul Adriani all served at Nanosolar prior to joining Solexant.  The firm had previously raised more than $20 million in venture funding.

On a recent panel, the CEO claimed that Solexant endeavors not to depend on government subsidies to be competitive, and that the company is targeting a fifty-cent-per-watt cost and a sales price of one dollar per watt.

California seems to gestate firms like Solexant, Twin Creeks, and MiaSole, but cannot offer them the incentives necessary to convince them to stay.  According to Oregon Live, "Damoder Reddy, chief executive of Solexant, confirmed...that the San Jose company plans a solar plant in the Portland area."

Solexant is seeking a $25 million loan from the state of Oregon to finance a solar-cell plant that could grow from 100 megawatts to 400 megawatts of annual module manufacturing capacity.  Here's another article on the Oregon move.

The CEO understands the scaling challenges, saying "If we stay at 100 megawatts -- that's not even enough to be taken seriously."

When asked, "Why Oregon?" for the next manufacturing site, Reddy said that this was "a topic close to his heart."  The CEO spoke of spending a lot of time in the last 18 months travelling to Sacramento and getting a tepid response from California lawmakers.  Yet when he traveled to Ohio or Michigan or Oregon, politicians and senators were willing to give Reddy time and try to figure out ways to get the firm to relocate to their state.  Not so in California.  In the CEO's words, "There's something fundamentally wrong in the way California does business."  The firm expects to spend $40 million in capital expenditures and Oregon made the winning overtures in their effort to build a solar manufacturing hub in the state.

Reddy seemed to want to keep the firm in California, but said, "I had to do what was right for my company."  The new Oregon factory will be about 100,000 square feet and will employ as many as 200 people.

In advance of the Clean Energy Summit 3.0: Investing in American Jobs next week, Senator Harry Reid brought together Pacific Gas & Electric Chief Executive Officer Peter Darbee, the Center for American Progress, and Energy Resource Management for a press conference today.

Reid emphasized Nevada’s focus on building out clean energy infrastructure as an investment geared to create more jobs.

“The Recovery Act planted the seeds, but what we need to do is make those seeds blossom,” Reid said. This is where private investment will come in.

California has its eyes set on getting one-third of its energy from renewable sources by 2020.

“This roadmap allows utility companies and others to plan for the long term and make major capital investments today. State leadership has provided a critical foundation, but the federal government can provide needed leadership. Private investment and job creation will follow,” Darbee said.

But the most important objective is creating policies that will attract more investment dollars into cleantech by making the market more consistent.

A report discussed during the call, the Center for American Progress and Energy Resource Management’s “Efficiency Works: Creating Good Jobs and Markets Through Energy Efficiency,” provides a roadmap for devising more effective energy policies in a number of states.

Bracken Hendricks, senior fellow from the Center for American Progress, stated that retrofitting 40 percent of the homes and businesses in America would spark 650,000 new jobs over a decade, usher in $500 billion in new investments, and save customers a whopping $64 billion.

“These kinds of opportunities will come from the private sector, through the construction of new windows and lighting. This isn’t going to happen without policy. We need to create a market for it,” Hendricks said. “We are at a critical moment to create a private sector market.”

The key to this market is to get banks to start lending and to bring more manufacturing activity to communities.

Bill Campbell, the chair of Energy Resource Management, said that the country needs to invest in energy efficiency as well as energy.

The report examined the policies in the top performing states:

• California: The California Public Utilities Commission created the Risk/Reward Incentive Mechanism. The state offers PACE bonds and includes a Long Term Energy Efficiency Strategic Plan.
• Connecticut: The state is good at leveraging private and public partnerships.
• Massachusetts: The Green Communities Act set the goal of reducing energy consumption by 10 percent by 2017, encouraging investment in energy efficiency. It has tough penalties for communities and entities that fail to meet the stated energy requirements. Private-public alliances established in June 2009 include a three-year plan to bring customers $4 billion in energy savings.
• New Jersey: The state is setting in place an Energy Efficiency Portfolio Standard. The energy efficiency projects will create 1,000 jobs.
• Maryland: The EmPOWER Maryland Energy Efficiency Act wants to reduce statewide consumption by 15 percent by 2020.
• New York:  Agencies and organizations at the state level and municipal level are working towards energy efficiency. By 2017, PlaNYC wants to reduce emissions by 30 percent. Also, the New York City Council passed legislation to make buildings more efficient.
• Ohio: They are using Utility Cost Test, plus building retrofit programs and transfer tariff schedules.

Establishing an energy currency is important. In Utah and Nevada, negative watt-hours are considered to be legally the same as additional wind or solar energy, the report said.

There's no doubt that the stimulus has created a number of renewable energy jobs in Nevada and in other areas around the nation, Reid said. The other parties on the call concurred.

The American Recovery and Reinvestment Act used public money to jump-start innovation in the clean energy space. But the policies will move that into the private market and make it more predictable.

“I think we need to look at this as the glass is half full, not half empty,” said Reid.

At a time when the unemployment numbers in the construction sector resemble those seen during the Great Depression, Reid’s 'glass half full' view might be a little too optimistic. Regardless, the upcoming conference will likely address these concerns about bringing investment to the clean tech field and creating more jobs.

San Francisco -- Lithium-ion batteries might not decline in price as fast as computer processors or memory, but an unusual combination of circumstances is nonetheless allowing for massive discounts at the moment.

Better Place, the company currently building car-charging and battery-swapping networks in Israel and Denmark, is purchasing batteries for cars at $400 per kilowatt hour for delivery in early 2012, according to company executives. Better Place and IBM held an informal dinner briefing with reporters last night in San Francisco. (IBM and Better Place? What are they doing together? That was a question everyone had on their minds.)

Compare that to the situation in October 2007. Then, battery packs for EVs sold for around $1,000, according to Lawrence Seeff, vice president of global alliances at Better Place. Thus, in a little under three years, the going price has declined by 60 percent. Earlier this year, Better Place's Jason Wolf said that EV batteries were approaching $500 a kilowatt hour. (Battery pricing and grid charging will be one of the main topics of The Networked EV taking place November 9.)

That's good news for the EV business. The high price of batteries has been one of the major problems for the electric car industry. The Nissan Leaf, for instance, has a 24-kilowatt-hour battery. If batteries cost $1000 a kilowatt hour, the battery alone would cost $24,000 and make it near impossible for Nissan to profitably sell the car for $32,800 before incentives. At $400 a kilowatt hour, the battery pack would only cost $9,600, according to multiplication conducted by Greentech Media.

Low prices, of course, are also good news for Better Place. Under its business plan, Better Place will own the batteries that power the cars on its network. Consumers will then pay the company a monthly fee for the batteries, electricity and any other ancillary services. Cheaper batteries thus will lower the company's capital and operating costs: the expense of owning all those batteries has been one of the big question marks hanging over the fate of Better Place.

Then again, cheaper batteries takes away some (but not all) of the need for consumers to lease the battery in services like this.

The prices are not likely to be plummeting strictly because of innovations with battery cells or packs. Lithium ion batteries have been in volume production since the early '90s and are a somewhat mature technology that progresses at a incremental rate. Many of these current gains likely come from higher production volumes, according to Dr. Wilfried Wilcke, senior manager of nanoscale science and technology at IBM. Manufacturers ramping up for volume production is not like chip makers turning the crank on Moore's Law: the process is not guided by engineering principles and may not repeat itself. Hence, it is uncertain whether or how long the pricing trend will continue. The Department of Energy has set a goal of getting batteries for cars down to $250 a kilowatt hour.

Other interesting tidbits from the dinner:

--IBM hopes to have a 10-kilowatt-hour prototype of a lithium air battery in about two years. Lithium air batteries will, ideally, hold far more energy than conventional lithium-ion batteries, said Wilcke, and even more than zinc air and lithium sulfur batteries. Lithium air batteries may also be more amenable to recharging than zinc air batteries and cost far less than those cells. Nonetheless, commercialization could take years.

"We have just left base camp" when it comes to lithium air batteries, he said. IBM last year described a membrane that it hopes to insert into lithium air batteries.

Lithium air batteries, Wilcke added, will be needed to mass produce EVs that can compete directly in terms of performance and range with gas-burning cars. Even with the recent price declines, "the steady state will not get us there," Wilcke said. In terms of energy density, lithium-ion batteries are seven to eight times worse than gasoline. (Side note: a kilogram of lithium ion batteries has a density of 100 to 200 watt hours, while kilograms of zinc air, lithium sulfur and lithium air have densities of, respectively, 400 watt hours, 500 watt hours and 1,700 watt hours.)

--Seeff said that it costs Better Place about $150 million to build a "cell," i.e., a network of charging and swapping stations complete with batteries to serve a major metropolitan network. Better Place only needs about 20,000 to 30,000 customers to break even. Put another way, that means Better Place needs to get $7,500 to $5,000 from each customer in a minimal situation over a four-year period to break even. That means in a cell with 30,000 customers, Better Place needs to get $1,250 per customer per year. Doubling the number of users drops that to $625. Whether that's perilous or promising is up for you, my readers, to debate. There is more on Better Place's financial strategy here.

--Better Place will have two to three kinds of batteries in its network. Different batteries will help get around the worry that swappable batteries will lead to homogenization. Ford, Nissan, General Motors, Volkswagen and others have rejected battery swapping to date due, among other reasons, to the fear that swapping would detract from a car's distinct design and personality.

--Better Place will formally launch its services commercially in Israel in the second half of 2011.

Just-emerging Light Detecting and Ranging (LIDAR) and Sound Detecting and Ranging (SODAR) systems are more cost-effective ways than anemometer-equipped meteorological towers to measure the power a site can really be expected to produce at the loftier heights at which wind is now being harvested.

In the five-stage wind information life cycle, a wind resource is first discovered via prospecting. A good site justifies more careful assessment. If there is real potential, the developer will need financing that will only come if a planned project's carefully measured data sets justify an investment of tens of millions -- or hundreds of millions -- of dollars.

The last two stages of the wind information life cycle come after the project is generating electricity. One involves ongoing monitoring. The other is optimization, in which the site's potential is critically compared to the monitored output.

Whether a wind project makes it to each successive stage is usually determined by data. If it gets built, good data can make it more productive. Leading LIDAR and SODAR authorities say as many as 98% of wind developers are only just beginning to understand the advantages of advanced measuring technology for obtaining data.

"Anemometers are certainly useful," Jim Adams, U.S. President of Natural Power, one of the most prominent LIDAR companies, said. "But there are limitations." Anemometers are familiar, but "you're measuring wind speed at a finite point." Because Federal Aviation Administration (FAA) regulations functionally limit meteorological (met) tower height, anemometer readings are essentially approximations.

Though used since the 1970s in aviation, infrared beam LIDAR wind measurement was first made more accurate than met towers in the 2004-2006 period, slightly sooner than SODAR. LIDAR was then shown to provide more, and more precise, data. "With LIDAR, you have the ability to measure turbulence, you're looking at both the horizontal and vertical components of the wind," Adams said. "You're seeing the wind the way the wind turbine will see the wind."

Natural Power's proprietary ZephIR system, developed and based in the U.K., is the most widely deployed wind-measuring LIDAR system worldwide. It projects a cone-shaped infrared laser beam straight up and reads the light's interaction with particles in the wind. It derives wind data from analysis of the particles' movements.

"What's really brought it into the mainstream," Adams said, "is that it's small, compact, easy to install, and does the job it's supposed to do."

Natural Power has just announced a new test site for advanced wind measuring systems in the U.K. where the industry will be able to compare the capabilities of anemometers, SODAR and LIDAR systems. Though a similar undertaking has been proposed by the U.S. National Renewable Energy Laboratory (NREL), this will be the first such field of comparison.

"There's a place for SODAR," Adams said, acknowledging there are customers who tried SODAR and went to LIDAR, as well as "a lot of happy SODAR customers."

Massachusetts-based Second Wind, in the business of measuring meteorological data for more than 25 years, saw a growing need to replace estimates extrapolated from met tower measurements with precise data.

"There's really nothing wrong with anemometers," Larry Letteney, Second Wind's CEO, said, "with the exception of the fact that you can't get them high enough cost-effectively to give you accurate data."

Second Wind's engineers chose a sound wave-based system.

"In the last few years, we've become hailed as this very advanced wind measurement," Letteney said, "largely because of the combination of this ground-based sensor called the Triton and this web-based service called SkyServe that deals with data."

Triton scatters sound waves from what Letteney described as "a very clean beam of sound" into the flow of the wind and reads the patterns the waves follow.

"It listens all the way up the beam," Letteney said, describing the sound as "slightly audible" and "like the faint 'cheep' of a bird." But, he said, "It doesn't have to be loud to get readings." Software algorithms using the Doppler Shift  -- the change in sound waves as they move toward and away from their source -- derive wind characteristics at any vertical height. 

Correlation studies show SODAR, LIDAR, and met towers have generally comparable accuracies. But a met tower requires permitting, making it significantly more time-consuming and costly.

"LIDAR has accuracy," Letteney admitted. But, he said, "it ends up costing a couple hundred thousand dollars." Second Wind's SODAR unit is a quarter of that. "The cost of a Triton, installed," Letteney said, "is about $50,000 to $60,000." Natural Power stays competitive with an affordable rental rate.

LIDAR may be less durable than SODAR, but SODAR's noise may be problematic in some settings. Reading sound may be difficult if there are surrounding obstacles but SODAR requires only the power of a pair of solar panels while LIDAR needs a more substantial power source.

Natural Power proudly points out that many turbine warranties and some project financing decisions are based on ZephIR assessments, and Second Wind proudly points out that NREL has verified the accuracy of its Triton. The larger points are that met towers will no longer do, and there is a budding opportunity in advanced devices.

 "We're very much in favor of remote sensing," Jim Adams said. "We think that both SODAR and LIDAR have a purpose."

"People fear change," Second Wind's Letteney said. But, "the industry has come to a consensus that they want the information and now the technologies are starting to catch up," he said. "We've tripled our manufacturing space. We're in growth mode."

I ran into a venture capitalist colleague coming out of Palo Alto's Whole Foods yesterday evening.  I mentioned a VC-funded solar startup CEO I had just interviewed, and this VC, let's call him Sanjay, just rolled his eyes and said, "Solar is done."

Sanjay pointed out, in-between bites of raw fawn hearts, the logic that now made solar investing, at least in solar panels, a lost cause for venture capital investors.  He explained, "Let's say your capex is $1 per watt for your solar panel factory. Given the moving freight train that is the current solar industry, you're going to have to ramp up to half a gigawatt or a gigawatt.  That's $500 million to one billion dollars just to build your factory."

(Note that Suntech, Yingli, Trina Solar, First Solar, SunPower and others are all going to exceed one-or-two-gigawatt-capacity levels in the next year or two, if they haven't already.)

Sanjay took a deep drink of baby tears in a chilled human skull and added, "I'm not saying there's not a business in solar panels -- it's just not VC territory any more.  It's hard to hope for 10X returns when you've put a billion dollars into a company in a $40 billion market.  And if you're an early-stage investor or angel -- it's almost impossible not to be washed out in later rounds."

He mentioned the troubles at Solyndra, Nanosolar and MiaSole, wiped his mouth on some founder's stock, and said, "That's not to say there aren't any opportunities in, let's call them adjacent markets, like inverter electronics such as Enphase, or efficiency enhancements such as Innovalight or financing and integration like SolarCity or Clean Power Finance." 

Sanjay then kicked a puppy, clotheslined an old man using a walker, got in his Maybach and sped away.

The take-away from this conversation: PV panel startups looking to raise their next round for factory build-out (and there are quite a few looking for funding as of this writing) are going to encounter deep-seated reluctance from the venture capital community -- unless they have a truly disruptive capex number, a novel sales channel or a big fat loan guarantee from the U.S. government.

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Based on a true story.  Apologies in advance to the VC Anti-Defamation League.

A new electric vehicle will hit the streets of Southern California later this week that has a larger battery pack than a Tesla Roadster and which can be fully charged in ten minutes or less.

It also holds up to 68 passengers.

Foothill Transit, a public transportation agency serving San Gabriel and Pomona, has purchased three EcoRide BE35 all-electric buses and two charging stations from Proterra. If the initial launch goes well, Foothill may expand to a fleet of 12 electric buses. San Antonio will also soon put Proterra buses on its streets. Contracts with transportation agencies in North and South America may follow by the end of the year.

Proterra showed off a prototype of its bus and charging station in San Jose last year (see video) but the Foothill contract marks the first commercial deployment.

Why electrify buses? Predictability. Buses are the mules of the road, driving fixed routes at moderate speeds. The Foothill Transit route the EcoRides will ply is eight miles long and the buses will lumber along at an average speed of around 12 miles an hour. As a result, Foothill only needs two chargers -- which hang on poles similar to telephone poles -- to make sure the buses can complete their circuits. Limited range means limited range anxiety.

"It is a well-matched situation," said CEO Jeff Granato. "We know exactly how far it is going. You can predict how much range a vehicle will need."

The minimal number of charging points will in turn give Proterra the economic wiggle room to come to market with rapid, high-speed charging. Most electric car companies and car-charging outfits will start with standard chargers, which can take hours to fully charge a car. A Proterra bus can completely be charged in ten minutes or less.

Quick, on-road charging was a requirement, according to Felicia Frieseman at Foothill. The agency earlier had a requirement that an electric bus would have to go 30 miles on a charge. Buses could do that, but recharging would then take several hours.

"Having a bus that we had to take out of service after one run was not practical," she said.

This predictability further permits Proterra to minimize the size of the battery. The buses on the Foothill circuit will have 72-kilowatt-hour battery packs. That's just 50 percent bigger than the one in the two-seater Tesla Roadster (53 kilowatt hours).

"It will run for three hours," said Granato. "We consider that to be oversized."

The San Antonio buses will have 54-kilowatt-hour battery packs and charge more frequently. While the Foothill buses will likely spend 10 minutes every hour charging and do several laps, the San Antonio buses might take small sips of power on nearly every lap.

Minimizing the battery pack reduces the cost and increases the mileage without reducing the functionality, thanks to the rapid chargers. Proterra designed the battery pack and battery management system. The batteries come in 550-pound, 18-kilowatt-hour modular units. Altairnano supplies the cells. Granato further added that the batteries get one-third of their power from regenerative braking.

The buses, he added, also fare well against the diesel hybrids gaining in popularity. Those buses get about 4.5 miles a gallon, only slightly better than the 2 to 3.8 miles per gallon of regular diesel buses. Proterra's early buses get the equivalent of 17 to 18 miles per gallon and the figure will rise to 25 miles per gallon. (Side note: as a passenger, I can also confirm that the silence of the electric buses is more pleasing than the cacophony of engine noise one is subjected to while sitting on a diesel bus.)

Some startups and transportation agencies in China are experimenting with swappable batteries. With swappable batteries, a public charging infrastructure isn't required. On the other hand, buses have to go to centralized swapping stations during the middle of the day -- sometimes several times each day -- for batteries. Whether an agency goes with swapping or charging depends on geography and other issues.

But unlike cars, not everyone is a potential customer. The three buses and two chargers Foothill bought cost $5.6 million. Municipalities and the occasional large fleet owners constitute the buying public. Still, regulations will help. By 2012, 15 percent of the buses purchased by municipal agencies in California will have to be zero-emissions vehicles. Some of the large mega-cities of Asia have passed diesel regulations, as well.

Frieseman noted that the buses cost more than regular diesel buses, but added that maintenance will be lower. The agency will gather data to determine the total cost of ownership.

Global Solar has been shipping flexible CIGS solar cells for years for applications in portable solar charging, as well as selling PV cells in strings for other vendors to assemble into modules.  Global Solar has also supplied CIGS cells to Dow's solar shingle endeavor.

But today the company is announcing that it is in the module business -- the flexible module business.

I spoke with Jeffrey S. Britt Ph.D., the company's CEO, and Jean-Noel Poirier, VP of Marketing & Business Development, about their newly announced product.

Global Solar is targeting the commercial and industrial flat-roof market with applications that favor a lightweight, non-penetrating solar solution with a very large flexible panel -- 5.75 meters long by half a meter wide.  The lighter weight makes installation easier and reduces the cost of balance-of-system components.

The firm claims this is the highest efficiency module on the market.  Their largest module, according to Poirier, is 300 watts and 12.6 percent efficient.

The argument is that about 30 percent of flat industrial roofs would be structurally challenged by the weight of the glass and metal used in flat-panel c-Si and mounting equipment.  It's similar to the case made by firms like UniSolar, SoloPower, Ascent, and now Global Solar.  (UniSolar's product is lower efficiency and based on triple-junction amorphous silicon, not CIGS.)  Another firm, HighFlex Solar, is working on flexible solar using crystalline silicon.

According to Poirier, 30 percent of flat roofs can bear no more than than an extra ten kilograms per square meter.  If that's accurate, it's still an enormous market.

And like the other flexible panels, Global Solar's product eliminates wind load and penetrations.  Because it is laid flat and not tilted, Poirier claims that more of the roof can be utilized and more power harvested from the same given area.  He claims that in Northern latitudes like Munich, up to 96 percent more energy can be harvested versus tilted flat panels and 45 percent more energy in Rome-level latitudes due to avoidance of shading issues.

The encapsulant material was once a sticking point for flexible panels, but the CEO assured me that, "We've scoured the earth for producers of vapor barriers for our product" and that the manufacturers have "gotten much more savvy about vapor barriers."  Global Solar has also devoted efforts to "mitigate the susceptibility of the PV material to moisture" -- an always-looming threat to CIGS panels.

Flexible panels like Global Solar's that are intended for flat warehouse roofs don't go through the typical solar installer channel.  This is not the domain of solar installers, according to Poirier, but rather is the territory of roofing professionals.  The channel to market is the roofing companies -- manufacturers of  polymer, metal or bitumen roofing membranes.

Considerations like high-power density, no penetration and no wind load are "on the top of the list for the roofing companies."

Stating "we are a private company" that doesn't have to divulge such details, the CEO declined to specify the firm's dollar-per-watt cell and module pricing.

It's fair to say that no company has really figured out the CIGS PV materials system yet.  Yes, companies like Solar Frontier, Solyndra, Global Solar, Wueth and to a lesser extent, MiaSole, Nanosolar, SoloPower are shipping product.  A few others firms like AQT are on the cusp of shipping. But none of these firms have yet proven that they can compete head-to-head on a cost basis with the leaders in photovoltaics, such as First Solar and some of the Chinese module companies like Suntech, Yingli and Trina Solar.

Here's a partial list of CIGS vendors and some of their recent news:

• ISET is coming out of its 20-year quiet phase and making some pilot line announcements for its ink-based and printing-style process.
• Stion unstealthed as a CIGS startup -- with a bit of a twist. They've made some waves with their funding and manufacturing arrangement with TSMC.
• SoloPower, equipped with a new CEO and with some boardroom nastiness behind it, is looking to close a government loan "in the low hundred millions" to help finance the factory build-out of its CIGS-based, flexible thin-film photovoltaic modules.
• MiaSolé looks to ship 13% efficient modules by the end of the year.  The firm just announced a large-scale supply agreement with juwi for 600 MW over several years.
• Solyndra continues to win large rooftop installations such as Anheuser-Busch, Coca-Cola and Frito Lay.  Inside sources say that the firm is sold out for years to come despite their troubles.
• Nanosolar's most recent announcement was the replacement of its CEO and a visit from Arnold Schwarzenegger.  
• Global Solar Energy has 75 megawatts of production capacity at two sites and has recently completed a large rooftop CIGS installation.
• Solar Frontier (the former Showa Shell Solar) sold approximately 43 megawatts of CIGS PV in 2009 and could ship more than 100 megawatts this year according to Shyam Mehta, one of our esteemed solar analysts at GTM.  The firm will be investing heavily in capacity ramp up.  The firm has big backing and big plans.
• AQT won $10M in funding and entered an agreement with Intevac. The firm also announced its first customer and the launch of its first 15 MW of production.
• Dow invested in Dave Pearce's NuvoSun. 
• Daystar got its fifth CEO in twelve months and announced some less than stellar financials.
• Ascent Solar began production at its FAB 2 production plant (video here).
• Q-Cell's Solibro CIGS facility claims the highest CIGS production capacity worldwide, according to their website.
• HelioVolt announced, well, nothing.  Their last press release was in June 2009.  Some bad news here.
• Solarion's flexible solar cells
• Wuerth Solar's CIS panels
• Odersun partnering on CIS in China
• Sulfurcell's CIS cells 
• Johanna Solar supplied panels for a Bosch building façade.  Bosch is an investor in Johanna.
• Saint-Gobain subsidiary, Avancis set a 15.1 percent small aperture efficiency record early this year and just announced a new factory build.
• Illies Renewable will be starting up their CIGS turnkey line from centrotherm, targeting annual production of 36 megawatts.
• Nexcis has an electrodeposition-based CIS cell process in France.
• Other CIGS manufacturers include PV Sunshine (Centrotherm turn-key), Jennfeng, Tokyo Ohka Kogyo (TOK) together with IBM, Ritek, nanowin, and Axuntek.

Cars coming out in the 2012 model year are going to get graded.

The Department of Transportation and the Environmental Protection Agency unfurled the new window stickers that will grace cars in the near future to better inform prospective customers about their fuel consumption. In a nutshell, the cars get grades. Electric cars will generally get an A+ while plug-in hybrids will get A's.

Regular hybrids -- which will constitute the largest percentage of cars with electric propulsion -- will get A minuses.

Gas-burning cars will then get grades ranging from A minus to D, depending on their mileage. Supercars from Ferrari and a wide variety of SUVs will be sitting in the back of the class.

The ratings have come about in part because it has become difficult to compare the mileage of plug-in cars with all-electric cars. Electricity is measured in kilowatt hours, while gas is measured in gallons. Mileage varies according to how you drive, too. In 2008, there was a comic interlude when Google saw the mileage on its plug-in hybrids jump from the 60-plus-miles-per-gallon range to more than 100. How did they do it? The company hired professional drivers and kept the cars on fixed courses.

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Mississippi Governor Haley Barbour has managed to attract a third large greentech company to his state.

Kior, which says it can make synthetic petroleum from biomass, will build five commercial scale facilities in the state. Three of the five will be built in the next five years. By 2015, Kior will have created 1,000 direct and indirect jobs in the state. The company received a $75 million loan, among other assistance, from the state.

Mississippi earlier persuaded Soladigm, which makes electrochromic windows, and secretive solar maker Twin Creeks Technologies to build facilities in the state through generous loans and incentives. Interestingly, Soladigm and Kior are Khosla Ventures companies.

Barbour, by the way, is a Republican, a party on the national level which is excoriating President Obama for loans and stimulus programs directed toward alternative energy. Maybe it's not an election year for Barbour. Or maybe he's a closet Socialist. Or maybe he is concerned about job creation. We will try to get to the bottom of it. Who knows? Maybe Haley, who is actually one of the more interesting politicians in the U.S., will come out to Silicon Valley. Tony Blair, the former British PM, also works with Khosla. (Momentarily, we wrote that Twin Creeks was a Khosla Company. We were misinformed. It has received money from Crosslink and DAG, however.)

Kior CEO Fred Cannon said recently that the company is producing about 15 barrels of synthetic crude a day. That's up from a few liters per day a year ago.  At commercial scale, Kior can produce oil at around $75 a barrel, he added. The process can work with a variety of feedstocks. More in this video:

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On other notes,

Art Buckland--formerly an exec at concentrator company Soliant but also Texas Instruments and Fairchild--is the new CEO at Sunovia.

Sunovia is trying to break into the cadmium telluride solar cell market. First Solar remains the dominant fact of life in that market through its relentless cost-cutting (First Solar modules now cost 76 cents a watt to manufacture) and ability to steadily improve efficiency. First Solar recently broke the 11 percent efficiency mark.

Competition, however, is finally coming. General Electric will come to market next year with cad tel modules and a host of start-ups say they have technology that can compete. It will be an uphill battle for these start-ups, but you have to make a living somehow, I suppose. The company also has a line of LED lights, another fast-growing but crowded field. Start-ups with mixed and divergent product lines don't have a great history. PetroAlgae, which recently filed for a controversial IPO, emerged from a start-up think tank. Still, it's not impossible.

Finally, Ecology Coatings, which makes ultraviolet-curable coatings that result in fewer emissions, has received $2.4 million in conditional funding. It also has a version of waterproof paper.