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1. Beyond the Valley, GE is the Ultimate Green VC
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2. Bloom Energy Worth $1.45B? Fuel Cell Maker Seeks $150M Series F
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3. Smart Grids Go Island Hopping in Europe
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4. Quick Federal Action Could Prevent "Raft" of Cleantech Bankruptcies: Report
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5. GE and Google Discussing Energy Product
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6. What to Expect When You're Seeking Stimulus Funds
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7. LS9 to Start Building Demo Plant, Raising $65M
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8. When Not to Jump on the Stimulus Bandwagon
Beyond the Valley, GE is the Ultimate Green VC
Katie Fehrenbacher - Energy
GE’s got its massive Ecomagination green product line that churns out wind turbines, smart meters and water filtration technology, but the conglomerate has another green side: cleantech VC. GE’s VP of its Ecomagination division, Steve Fludder, told an audience at the Cleantech Forum this morning that GE will continue to look for investments in innovative green technology startups — so far GE has invested in 16 companies to the tune of $150 million over the past two and a half years, he said.
In such a difficult economic climate, scoring funds from GE is like winning the lottery — GE doesn’t just bring cash, it can connect a startup with its thousands of researchers and strong partnerships with industry and government. And given GE’s manufacturing history it can also aid in commercializing products on a massive scale. In 2009, Fludder says GE’s eight-member investing team will still be keeping busy. In the past, GE has invested in startups as diverse as smart grid company GridNet, lithium-ion battery maker A123 Systems and purification company Advanced Electron Beams.
There’s also the pot at the end of the rainbow: a GE acquisition. Fludder pointed out that GE developed most of its clean water business through acquisitions. This year, Fludder said it will keep the flow of acquisitions going. “We’re as hungry as we’ve always been,” he added.
Hear Microsoft, IBM, Dell and Cisco execs at GigaOM’s Green:Net.
Bloom Energy Worth $1.45B? Fuel Cell Maker Seeks $150M Series F
Josie Garthwaite - Startups
Bloom has never been forthcoming with details (unusually so for a company at this stage), and it didn’t confirm the one-to-two-year plan. But documents obtained by VentureWire now suggest the window was a lot wider than they needed. VentureWire (subscription) today reports that Bloom claims to have begun commercial shipments and plans to close a $150 million Series F round of financing by March 2. The offering is based on a pre-money valuation of $1.45 billion, according to VentureWire.
What’s the gameplan? For revenue, Bloom plans to not only sell and lease its 5 KW Bloom boxes (which the Kleiner site describes as “a flexible fuel cell system that produces clean, reliable and affordable energy from a wide range of fuels,” reducing carbon emissions by 50-100 percent per kilowatt) but also enter power-purchasing agreements. Those agreements will be made through an as-yet unnamed wholly owned subsidiary. Within 4-5 years, the company aims to build a multibillion dollar business, says VentureWire. True to stealthy form, Bloom chose not to comment on the dates, valuation or strategy.
Hear Microsoft, IBM, Dell and Cisco execs at GigaOM’s Green:Net.
Smart Grids Go Island Hopping in Europe
David Ehrlich - Automotive
IBM said today it joined a smart grid project in Denmark that’s aiming to upgrade the country’s electric transmission grid to handle the large-scale adoption of electric vehicles. The project will start off with test work on a small Danish island before tackling the whole nation.
The Denmark smart grid group, partly backed by the government, is called the EDISON project, a really long (and kind of silly) acronym for “Electric Vehicles in a Distributed and Integrated Market using Sustainable Energy and Open Networks.” IBM didn’t release a timeline for the project, and details on exactly what will be installed were scarce, but the 40,000 people that live on the Danish island of Bornholm will be the first to plug into the new smart grid.
IBM said creating a testbed on the island, which gets a big part of its energy from wind power, will allow the EDISON team to look at how the grid functions as more electric cars are plugged in. The company said its researchers plan to work on technologies that can synchronize the charging of electric cars with the availability of wind power in the system. It has also sent a hardware platform to the Technical University of Denmark for use in large-scale, real-time simulations of electric cars plugging into the grid.
The state-controlled DONG Energy, Denmark’s largest energy company, is also involved in the project, along with regional energy company Oestkraft, the Technical University of Denmark, Siemens, Eurisco, and the Danish Energy Association.
The Danish government is already involved in a major electric car push with Palo Alto, Calif.’s Better Place. Last March, Better Place signed a deal with DONG to bring an electric car charging infrastructure to the country. In January, Better Place said the two closed €103 million ($135.8 million) in financing for the project. With electric cars from the Renault-Nissan Alliance, the charging network is expected to be fully functional by mid-2011.
This is the second island-based smart grid project for Big Blue. Earlier this month, the company said it was planning to build the world’s first national smart grid on the tiny island nation of Malta.
Hear Microsoft, IBM, Dell and Cisco execs at GigaOM’s Green:Net.
Quick Federal Action Could Prevent "Raft" of Cleantech...
Josie Garthwaite - Energy
Last night in his address to Congress, Obama promised to move “swiftly and aggressively” to end the credit crunch — a major obstacle for wind and solar projects — and repeated his goal of doubling the country’s clean energy output within three years. (You can read and watch the address on the White House blog.) Energy Secretary Steven Chu has also revealed a sense of urgency, pledging recently to disburse 70 percent of the DOE’s stimulus share by the end of 2010. In today’s report, PricewaterhouseCoopers, or PWC, analysts note an even tighter timeframe, identifying mid-2009 as a key benchmark for clean energy:
Urgency surrounds numerous cleantech companies, which saw a drying-up of tax equity-structured financing in 2008 and stalled new and expansion projects in solar, wind and biofuels. Swift disbursement of stimulus plan investment for such project financing—ideally, in the first half of 2009—could help avert a raft of potential bankruptcies or crippling retrenchments through 2009.
Despite the ticking clock, PWC strikes a largely optimistic tone in today’s report, noting that “there are always opportunities for companies with the next big ideas.” Furthermore, if short-term efforts to ease the credit squeeze succeed, then cleantech developers, investors and adopters (e.g. companies that cut costs through energy efficiency) will likely find strategic opportunities as federal legislation replaces state-by-state energy policies in 2009. This second phase, marked by the creation of “a sturdier framework for long-term investment,” could arrive as early as this summer.
PWC notes that key elements of that framework might include a federal renewable portfolio standard, a national auto emission standard, and the further extension of tax breaks for wind and other clean energy technologies. Although Obama and some Democratic lawmakers are pushing for a carbon cap and trade system this year, PWC expects debate over the cost to electricity consumers in the midst of a recession to stall this kind of legislation beyond 2009.
Hear Microsoft, IBM, Dell and Cisco execs at GigaOM’s Green:Net.
GE and Google Discussing Energy Product
Katie Fehrenbacher - Energy
The smart grid partnership between search engine giant Google and conglomerate GE could deliver a lot more than public policy changes and compelling discussion forums. Steve Fludder, VP of GE’s Ecomagination division, told us yesterday in an interview that the partnership could also result in a commercial product.
Fludder says GE and Google are working on “a couple of platforms” and exploring “how to take these concepts and ultimately turn them into a commercial proposition.” He tells us that the product could be a service that GE offers to utilities to help them manage the flow of information flow, or it could also be a web-based service consumers use to manage their home energy consumption. Fludder says the companies are discussing how to integrate GE’s smart meter tools and Google’s PowerMeter, the web-based tool that Google has been developing to manage home energy use via smart meters.
The concepts are all just discussions right now, Fludder tells us: “We're not ready to announce anything but what we did announce is that we were going to go in a room and try to figure out how we could leverage the strengths from GE and Google.” But it makes sense for the two companies to use the partnership to deliver an energy product — GE is one of the larger smart meter makers and Google has its own history of managing the world’s information.
Yet selling a GE/Google energy product would also further align GE with Google, who many in the energy industry see as an interloper that is focused on market disruption. Some smart meter makers and utilities are wary of Google’s strong pronouncements that energy data should be open, controlled by the customer, and free and easy to access. A Google/GE product could put GE in a tricky situation when its trying to work with less progressive utilities that don’t necessarily want customers to control their own energy data.
However, Fludder says GE agrees with the energy information requirements that Google has touted, and he says for a truly smart grid to work, the energy industry needs regulatory, technological and cultural changes. On the regulatory front, decoupling — the policy that separates a utilities’ revenues from profits and incentivizes energy conservation — needs to happen, Fludder says. Once that happens, utilities can embrace an open architecture that would empower people to take control of their energy usage and deliver a truly smart grid, says Fludder.
Open architecture is a concept that is routinely bandied about in Silicon Valley, but the energy industry hasn’t been quick to embrace it, so it’s surprising that GE, with its long history in the energy industry and its numerous divisions, has landed squarely on the same page as Google when it comes to the future of the smart grid. Fludder even sounds like an exec schooled in information technology: “This is directly analogous to phones and other types of computing systems. At the end of the day open architecture wins and provides scale, which ultimately drives down cost.” That sounds like a direct quote from Google’s CEO Eric Schmidt.
Hear Microsoft, IBM, Dell and Cisco execs at GigaOM’s Green:Net.
What to Expect When You're Seeking Stimulus Funds
Josie Garthwaite - Policy
Distributing $787 billion from the federal government is bound to get complicated. As the Department of Energy and other agencies in line for big sums hunker down to draft implementation plans and application procedures, we’ve rounded up the key dates to note and sites to watch if you plan to apply for stimulus funds — or if you want to keep an eye on how the government spends them. For those of you with an appetite for nitty-gritty details, check out the recent memo from the Office of Management and Budget (PDF).
Sites to Know:
- Recovery.gov - Here you will find links to agency-specific information as it becomes available — starting next month. Individual agencies will create pages on their own sites, i.e. agency.gov/recovery. You can also share feedback on how the economic crisis and the recovery program are affecting you or your business.
- FBO.gov - For contract awards, the FedBizOpps site is where to find pre-solicitation and award notice. Search tip: All pre-solicitation notices will have “Recovery” as the first word in the Title field before the actual title.
- Grants.gov - Agencies will post synopses of funding opportunities here, linking to full announcements on their respective web sites.
- GovLoans.gov - For loans and loan guarantees, this is where you’ll find funding opportunity notices and/or funding allocation information.
Timeline:
- March 3 - Federal agencies must begin submitting weekly reports on the breakdown of funding, major actions planned and taken (to be posted on recovery.gov).
- May 1 - Agencies must submit to the Office of Management and Budget a plan for each program named in the stimulus legislation, describing broad plans, cost effectiveness, public benefits and schedule.
- May 3 - Federal agencies to make Performance Plans publicly available, begin reporting on allocations for entitlement programs.
- May 8 - Agencies must begin submitting monthly financial reports providing obligations, expenditures, and other financial data.
- May 15 - Detailed agency financial reports to become available.
- May 20 - Federal agencies to begin reporting their competitive grants and contracts
- July 15 - Recipients of federal funding to begin reporting on their use of funds, including the number of jobs created and a detailed list of all projects or activities funded by stimulus awards.
Hear Microsoft, IBM, Dell and Cisco execs at GigaOM’s Green:Net.
LS9 to Start Building Demo Plant, Raising $65M
Jennifer Kho - LS9
LS9 started up its first plant, a 1,000-liter pilot plant in its hometown of South San Francisco, Calif., back in September. The company is already producing vehicle-ready, ultra-clean diesel from the plant, although at this point, most of it is being used for testing and development, said spokesperson Jon Ballesteros.
LS9 is also planning to raise a smaller third round of funding than it previously said it was seeking. CEO Haywood said LS9 plans to raise around $65 million, which it will use to build the demonstration plant and reach commercial production, vs. the $75 million-$100 million he said the company was looking to raise back in October.
LS9 which raised $15 million in its second round of funding in 2007, plans to tap its internal investors for the money, and may also take funds from strategic partners or new follow-on partners, Haywood said. LS9’s current investors include Lightspeed Venture Partners, Flagship Ventures and Khosla Ventures.
But the round isn’t a sure thing, according to Ballesteros, who said the company might end up getting money from strategic partners and existing investors instead of completing a formal venture round. “We're working on strategic partnerships and they are going to be imminent, and we already have commitments from internal funders and some follow-ons, so we don’t really know if we will need to go for a full-blown raise,” he said. “We’re looking for some sense of that and exactly what we will be needing in the second half of this year.”
In any case, the company isn’t planning to take on any debt financing until at least 2011, and it may be able to avoid it all together, Haywood said. “By then, we hope to have a strategic relationship with someone with deeper pockets,” he said. LS9 hopes to start commercial production by 2012 and then plans to build a dozen or more plants to reach a capacity of 1 billion barrels.
The company also is considering the possibility of buying distressed assets — such as defunct biofuel plants — to reduce its cost of adding capacity, Haywood said, although he added that most of the equipment at those plants aren’t applicable to LS9’s technology.
Hear Microsoft, IBM, Dell and Cisco execs at GigaOM’s Green:Net.
When Not to Jump on the Stimulus Bandwagon
Josie Garthwaite - Startups
The economic stimulus package opens up a world of opportunities to clean technology startups. With billions of dollars in grants, direct loans, loan guarantees and a host of incentives for smart grid and efficiency technology, renewable energy, and electric-car battery research, development and manufacturing, it might seem like there’s something for everyone. But despite its massive scope and staggering $787 billion size, the stimulus may be a source of financing best left untapped by some startups.
Most companies would be well advised to take federal aid if they qualify, according to Michael Omotoso, a J.D. Power and Associates analyst specializing in alternative-fuel vehicles and powertrains. “But there are some companies better off going their own way,” he said in an email, offering examples such as companies that have solid contracts in hand or hefty state-level tax breaks. “No strings attached, no need to answer to Big Brother (i.e. the government).”
According to Erik Straser, who leads cleantech investment for the Silicon Valley venture capital firm Mohr Davidow Ventures, loans and guarantees allotted for clean technology in the stimulus package are best suited to companies with one thing in common: strong balance sheets. While the legislation is friendlier to startups than many earlier federal programs, Straser said, young companies that are struggling financially will face an uphill battle getting through the evaluation process. That’s because stimulus is meant to accelerate growth at healthy ongoing ventures, Straser said, not bail out weaker companies on the brink of flaming out.
“It’s not, ‘I can’t raise any more money, give me a loan guarantee.’” he said. Rather, loans written into the stimulus can bridge the funding gap that exists for startups “between where venture capital can take you, and where project financing takes off,” Straser explained – building large-scale demonstration plants, for example.
And if you need capital in a hurry? Unless you’re an investment bank, forget about the feds. “You’re dealing with the federal government,” Straser said. “There’s no easy process there.” It’s not uncommon for federal loans to be awarded months before the funds are actually appropriated. A loan guarantee may be granted quickly, but then the loan itself must be sought elsewhere (as the Department of Energy emphasized in its recent announcement about agency reforms). “We are in a turbulent financial time,” Straser wrote in an email, “so timeframes can extend.” As a result, he says startups seeking savior financing should turn to private equity markets.
Of course, there’s more to the stimulus than loans and guarantees. There are also block grants for states and local governments, which will also take some time to filter down from the Department of Energy. According to executives at the consulting firm National Strategies in Washington, D.C., having a narrow focus is key for these programs. “Align your projects by issue area and geography,” advises National Strategies President Tim Onoff. “Then identify specific opportunities to go after.”
In other words, take it one region at a time, and stick with what you know — rather than trying to become all things to all stimulus administrators. Kevin Matthews, vice president of National Strategies’ energy and environment practice, explained that this will allow companies to grease the wheels with local regulators, potential partners, residents and other groups, helping to speed the evaluation process when check cutting begins. “Make contacts,” Matthews said, “so you’ll be ready when the money comes in the door.”
This article also appeared on BusinessWeek.com.
Hear Microsoft, IBM, Dell and Cisco execs at GigaOM’s Green:Net.
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