Jan. 30, 2009 SDF Clean Energy Entrepreneur’s Conference

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On January 30, 2009 at Sun Microsystems in Santa Clara SDForum and FountainBlue hosted “State of the Clean Green Industry”.

The opening keynote was San Jose Mayor Chuck Reed speaking on ‘How Policymakers Are Supporting Clean Green Entrepreneurship’. There are high hopes that green and clean technology can save the planet and the economy. It seems unrealistic that such goals can be achieved, but Silicon Valley has met such challenges in downturns before. It is too tempting to ignore the trillions of dollars in new markets.

The City of San Jose has 150 initiatives in support of the Green Vision for the next15 year. The city will work in with its residents and businesses to achieve a top ten list:

1. Create 25,000 Clean Tech jobs as the World Center of Clean Tech Innovation

2. Reduce per capita energy use by 50 percent

3. Receive 100 percent of our electrical power from clean renewable sources

4. Build or retrofit 50 million square feet of green buildings

5. Divert 100 percent of the waste from our landfill and convert waste to energy

6. Recycle or beneficially reuse 100 percent of our wastewater (100 million gallons per day)

7. Adopt a General Plan with measurable standards for sustainable development

8. Ensure that 100 percent of public fleet vehicles run on alternative fuels

9. Plant 100,000 new trees and replace 100 percent of our streetlights with smart, zero-emission lighting

10. Create 100 miles of interconnected trails

Quentin Falconer of SVB moderated panelists Kjerstin Barley of GE Commercial Finance, Steve Eichenlaub of Intel Capital, Nancy Pfund of CalCEF, and Laurie Yoler of GrowthPoint Technology Partners. They discussed ‘Where’s the Green in Clean?’

Is it worth the cost to switch to create and manufacture products and services for any new industry or new technology? To reach parity with existing approaches, we must consider the total costs of energy and resources when making new products or services. With these costs in mind, the adoption of new technology may accelerate.

Examples of educating customers showed their willingness to change. An IBM study of 1900 consumers worldwide showed 33 percent wouldn’t pay more for clean green services, 40 percent would pay 5percent more and 20 percent would pay 10 percent more. The City of Palo Alto had 60 percent of the citizens willingly signed up for a 15 percent premium for electricity that is more sustainable.

To speed up acceptance, help your partners, customers, colleagues and others change the way they think about what they staff, measure and buy. Help others consider the total cost of ownership, not just the up-front cost, but also the amount of savings and other benefits of ownership.

Government policy will impact the profitability and time to profitability for clean energy companies. Incentives will help consumers to better accept risk for early adoption of technologies. However, incentives must have a predictable time period and payback so that customers can understand the benefits and companies can plan based on these incentives. In addition, incentives should not be provided to oil companies, for example, who are making record profits.

When thinking about a profitable exit strategy for clean energy companies, consider the big buyers may be everyone from utilities to corporations to construction or transportation companies. Ask what would make them interested in your solution. Manage the risks that any early stage company has like a lack of technology, customers, undeveloped teams and your company will be a more attractive, less risky merger or acquisition.

The clean and green landscape of 8.4 billion in 2008 is comprised of 40 percent solar, 11 percent biofuels, 10 percent transportation, 6 percent wind, 4 percent energy efficiency, 2 percent agriculture and 2 percent water.

The panel agreed that there is tremendous opportunity for smart grid/energy efficiency solutions from software and IT companies or services companies, which are less capital-intensive. The challenge is that even in the energy efficiency companies, exits are on average around 14 years, rather than the 6-8 year average for software firms. There will be no quick dot-com-like exits here.

Factors such as global warming, AB32, Al Gore, and the economic stimulus package will impact and hopefully accelerate exit times and margins. Investors and entrepreneurs must be very creative to make progress. Utilities may also drive needs for upgrading infrastructure and standardizing technology

Deborah Gage of the San Francisco Chronicle moderated panelists
Subodh Bapat of Sun Microsystems, Peter Graf of SAP, John Skinner of Intel Corporation, Rich Lechner of IBM, and Anne Marie Feldhusen of Hewlett Packard. They discussed ‘Doing Well While Doing Good’ or what they are doing internally to minimize their carbon footprint, and how their products and services are better serving their customers, how their efforts will stimulate innovation in clean technology.

Ultimately they must make sustainability a priority and a challenge within and outside the organization. Corporate leaders do well while doing good by managing their own internal energy usage. This can range from on-site usage of energy, facilitating virtual work stations, facilities and systems automation, better measuring and managing manufacturing practices, finding business opportunities in providing cleaner, greener options, and to proactively managing water usage at work and at home.

Corporations are spearheading bottom-up sustainability drives, while also promoting top-down clean-green policies. Working with different groups and partners and others to ensure coordinated and integrated sustainability practices with measurable targets on specific goals on carbon footprint, on energy usage.

Companies can negotiate with and support federal and state government to establish corporate policies and energy standards.

The economic downturn is impacting everyone, and that what was true before the downturn is truer today. Know what you are spending, what is the payback time period and investment. The economy is pushing everyone to be better consumers and better vendors. The Internet changed our culture with the boom and with the bust. The clean green industry may help us adopt better sustainability practices, practices which just might impact cultures post-downturn, and may even help pull us out of the downturn.

Dan Lankford of Wavepoint Ventures moderated panelists Tom Balkum of Balkrete, Donnie Foster of Power Assure, Matt Golden of Sustainable Spaces, Jason Wolf of A Better Place, PR Yu of Optony. They discussed ‘Clean Green Success Stories’.

Other panels today alluded to that fact that ‘a recession is a terrible thing to waste’ and that it is up to the entrepreneurs who are clever enough to see the opportunities, nimble enough to execute on a good business ideas, and an understanding of markets to lead the way. This panel spoke about what they have done with their varying companies and business models and what it will take for them and others in their clean green sub-industries to succeed.

Each panelist spoke eloquently about how providing a clean green service/solution was attractive at the individual level for personal reasons (everyone wants to do their part) and at the corporate level for business reasons (it’s a good business practice to choose the clean/green option). Here are some ideas for what we need to do to support clean/green entrepreneurship. Create a standard infrastructure for storing and distributing energy. Work together to build an understanding of the total cost of ownership. Create policies that support R&D, not just consumer purchasing. Encourage accurate ongoing measurement of energy usage in the home, in businesses, and encourage people and companies to make more sustainable energy choices on usage and purchases; Leverage technology to automate energy management, where appropriate. Use practical solutions to manage energy usage – like opening a door rather than using air conditioning.

The panelists also agreed that it’s a great time to be a clean energy entrepreneur. There is concrete evidence of the need to focus on sustainable solutions, from the recent energy price volatility to the water access and shortage problems to the extreme storms to the melting of the polar ice caps. In addition, there are tremendous opportunities with the change in administration, and there is already proven dedication to take specific measures in support of the clean energy industry.

In addition, the clean energy industry to beginning to mature, expanding beyond the supply-only side to provide demand side solutions. One upside of this trying economic climate is that there is less noise out there, and the ‘real’ entrepreneurs and investors are actively committed to creating value, especially during a down cycle when there’s less corporate investment in R&D.

Policy makers can support this entrepreneurial talent in Silicon Valley by providing performance-based rather than prescriptive incentives.

They should stop subsidizing dirty energy, but support research and development for alternative energy sources instead. Governments can impose taxes to encourage more thoughtful usage of coal and petroleum. They can encourage a fact-driven society, with clear measurable and obtainable goals for sustainability, without the hype and politics. Most importantly they can encourage innovation.

As one panelist put it, these are ‘anxious and giddy times of change’, and we are challenged to leverage it to our advantage.

Special thanks to Linda Holroyd for this post.

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Copyright 2009 DJ Cline All rights reserved.