SCOTT DUKE HARRIS and MATT NAUMAN, San Jose Mercury News, January 27, 2009
As President Barack Obama and Congress hammer out an economic stimulus package expected to be in the $825 billion range, Silicon Valley clean tech leaders are heartened by an energy agenda that starts with an emphasis on “smart grid” technologies that encourage energy conservation.That agenda will add jobs and bring dollars to several Silicon Valley companies, they say, especially those making smart grid components, solar panels, electric cars and green building materials.
It’s “a good start,” said venture capitalist Pascal Levensohn, whose portfolio includes clean tech investments. “There is a lot of optimism.”
Details of the new stimulus package are still being worked out, but talks suggest that about $60 billion will be applied toward promoting clean, efficient “energy independence” and creating jobs in the process.
Billions of dollars are expected to be applied to weatherizing government buildings, schools and homes. Billions more would go to loans and grants to promote renewable energy such as solar and wind. And still more billions would be spent upgrading the infrastructure of America’s power grids.
Bringing the power grid into the Internet age is a priority. The bill presented by House Democrats includes $11 billion to boost the IQ of electrical grids by employing sensors to maximize efficiency and minimize waste. An alternative bill introduced in the Senate would raise that sum to $16 billion.
“We’ve been swimming upstream,” said Peter Sharer, chief executive of Agilewaves, a Menlo Park maker of a product that monitors electricity, gas and water use in homes and businesses. “We’re finally swimming with the current. That’s what federal support means to us.”
While initiatives like solar power have cosmic cachet, upgrading the power infrastructure is the logical place to start, some clean tech investors say. “We know that efficiency is the low-hanging fruit,” explained Levensohn, of Levensohn Venture Partners in San Francisco.
America’s aging power grids now waste 10 to 30 percent of electricity from the generator to the plug, industry experts say. Foundation Capital partner Steve Vassallo likened the grid to a leaky bucket. Instead of simply putting more energy into the system, “the first thing you should do is fix the bucket,” he said.
The weaknesses in California’s energy grid and marketplace were starkly exposed in 2000 and 2001. Then, as Californians were hit by brownouts and ballooning electricity bills, President George W. Bush refused to support temporary price caps and blamed the energy crisis on environmental rules and a shortage of power plants. Only later was it discovered that energy dealers including Enron, a major supporter of Bush and adviser on Vice President Dick Cheney’s energy task force, were gaming California’s dysfunctional energy market, profiteering with schemes nicknamed “Death Star” and “Get Shorty.” Enron would later implode from its own culture of corruption.
The energy crisis inspired Silicon Valley entrepreneurs to seek solutions. Menlo Park’s Foundation started investing in clean tech in 2002, including smart grid companies Silver Spring Networks, based in Redwood City; eMeter, based in San Mateo; and EnerNOC, based in Boston.
The “smart grid” approach employs real-time monitoring and sensors to minimize waste and help identify parts of the grid that are leaking energy and need repairs. In an age of Internet connectivity, utilities typically remain unaware of outages until consumers call with problems, Vassallo said, and still rely on human meter readers walking door-to-door to check energy use “30 days in arrears.”
Pacific Gas & Electric plans to spend more than $2 billion to install 10.3 million smart electric and gas meters. Installations started in Bakersfield in late 2006, and are scheduled to reach the Bay Area by the end of this year.
This digital, wireless device will allow PG&E to get quicker notification of power outages, and also allow it to cut or reduce power during periods of high demand, if a customer agrees. Eventually, PG&E says, smart meters will allow it to better tap into energy that is put into the grid from solar panels installed on homes and businesses.
While California’s grid is “getting smarter,” Vassallo said, most states are served by power grids without the benefit of any information technology and, unlike California, have pricing structures that do not encourage conservation.
Valley companies are keenly scrutinizing the potentially devilish details. SunPower, the San Jose maker of solar modules, is pleased with the “wide, broad, deep effort” to promote cleaner energy as part of the stimulus, said Julie Blunden, a vice president. But she doesn’t think the effort will generate jobs until the second half of 2009.
SunPower, Blunden said, is ready to ramp up work in areas where it has expertise, such as putting solar systems on government buildings, as well as “beefing up areas where we don’t have strong, established channels.”
Weatherizing buildings and promoting new “green” development might benefit companies such as Serious Materials, a Sunnyvale maker of energy-saving building materials, such as heavily insulated windows and greener drywall.
Kevin Surace, the company’s chief executive, sees a lucrative market — 1 million to 2 million homes a year plus tens of thousands of government buildings. His company just bought two window factories, and Surace expects to grow his head count from 150 to 250 or 300 by year’s end.
Project Frog, a San Francisco company that builds green school buildings, is also encouraged. “We’re ready to help schools make use of these funds,” said Adam Tibbs, the company’s president.
Government support may help stimulate more private-sector investments in energy, says Agilewaves’ Sharer and other clean tech executives. But Lyndon Rive, chief executive of Solar City, which was expanding rapidly until the credit crunch hit, said the most important thing for clean tech is for financing to flow again.
“We want to get banks back into buying solar, wind and other renewable” energy assets, Rive said.