Earth and Industry » Maria Surma Manka

Has the Recession Doomed Cleantech Startups?

Maria Surma Manka — Wed, 25 Jan 2012 10:05:16 +0000

It hasn’t sounded very promising for cleantech startups lately. As even the big guys fail and falter (think Evergreen Solar’s bankruptcy or Vestas’ lay-offs), one begins to wonder whether the little guys can weather the economic storm of this recession, not to mention Congress’ generally allergic reaction to any sort of federal renewable energy standards or goals.

Furthermore, the budget and debt crises here and abroad have led many venture capitalists (VCs) and investors to hunker down and hold on to their money. Some federal policies encouraging renewables have similarly slowed or are in danger of slowing: The production tax credit (PTC) for wind expires at the end of this year, as does the 1603 Treasury grant program that provides cash support to solar start-ups.

After reading all of this negativity, I figured cleantech startups were doomed…right?

But startups are nothing if not nimble.

Some mid-sized companies are taking extreme measures, like moving operations to China: The Chinese not only have a very friendly cleantech business environment, but are the top global market for solar power.

Some analysts predict a wave of buy-outs, mergers, and acquisitions in cleantech markets like solar, especially among panel manufacturers.

And still other start-ups are sitting in somewhat of a cleantech sweet-spot, being small and nimble enough to adjust to the downturn while taking advantage of the stimulus funds Congress invested earlier in the recession. Of course, we can all point to Solyndra as the poster child for what can go wrong, but there are many examples of what can go right when the government invests in an industry hungry for innovators.

Silent Power is a distributed energy storage systems company that manufactures and markets backup power systems for renewable energy, typically solar power. Located in perhaps the unlikely locale of northern Minnesota, the company has developed a battery that can store power for renewable energy and release it back onto the grid during peak demand times, and is one of the few companies that has a system compatible with an advanced battery chemistry, such as lithium-ion.

“The stimulus money invested in the solar and smart grid sectors has created a lot of projects that will keep us busy through 2012 and beyond,” explained Todd Headlee, CEO of Silent Power. “Many of the customers for our renewable energy storage units have been the smaller utilities, like the municipals and co-ops. They can move more quickly to create and implement cleantech pilot projects than the big investor-owned utilities.”

Headlee went on to explain that these storage pilot projects aren’t just free money from the government: Oftentimes utilities have to match half of the project cost. But the desire for renewable energy storage is great and utilities are willing to experiment. As these projects pan out and the successful ones get noticed, more and more utilities have shown interest in smart grid products like Silent Power’s.

Although funding is a priority and a challenge for any startup, Headlee is optimistic about the future because of a few key policies and because of utilities’ hunger for a more efficient grid. For example, Californians are now able to apply for a $2-per-watt rebate for an energy storage unit. This is a huge incentive in a critical solar market that will keep the demand for products like Silent Power’s going. Although it has fewer than 20 employees, the company counts an impressive list of partners and customers, including the Sacramento Municipal Utility District (SMUD).

So although many cleantech start-ups have fallen victim to the recession, it’s not all doom and gloom. Many sectors will look very different coming out of the recession than they did going in, while others are able to corner a market supported by government investment, helpful policies and a returning optimism from VCs in particular areas like the smart grid and battery storage. The future indeed may still be bright.

Photo credit: Some rights reserved by bisgovuk

The Three Tools to Transform the Developing World

Maria Surma Manka — Fri, 24 Sep 2010 16:29:19 +0000

As the Clinton Global Initiative came to a close yesterday, there emerged a stark thread of commonality running through all of the areas that CGI works in…a near-universal agreement on the three tools that the developing world needs to solve its problems in sustainability, health, education, and economic development:

Mobile devices
Mobile devices
Mobile devices

The stats are staggering: More than 80 percent of the earth has mobile phone coverage; More than 50 percent of people on the planet own a mobile device; 75 percent of refugees have access to a mobile device. Google CEO Eric Schmidt put it this way:

“The starting point [for addressing social and sustainability issues] is the mobile device. These inexpensive devices empower citizens to take control of their lives…Development of mobile devices is the single most important technology development in the last 20 years.”

So now that we know mobile devices can help build sustainable, healthy and thriving societies, we just need to figure out how to arrange and organize the tool in a way that empowers the consumers to use it, shape it, and build their lives from it. Here are some examples of how CGI members are doing just that:

Google and the Grameen Foundation USA are working with telecommunications providers in Africa to bring apps to local farmers that provide information on sustainable and productive farming practices, health, and weather forecasting.
Refugees United’s app helps refugees find family members that have been separated from them because of war or natural disaster. Think of it as a super-super-private Facebook: Users create an online profile (typically anonymous, because of personal safety concerns) and input information that only other family members would recognize. Users do keyword searches, hoping to come across nicknames, or private phrases that only someone in their family would use. With the mobile provider Ericsson, the local telecommunications company MTN, and the UN High Commission on Refugees, the mobile app was tested in Uganda and was hugely successful by connecting thousands of refugees who had no idea where their lost family members were or whether they were even alive. The app will be scaled up to other countries across the continent, ultimately reaching 120,000 users by 2011. (This service had been available as a web-based app, but only 2 percent of refugees have interest access, compared to 75 percent with access to a mobile device.)
Freedom from Fake Drugs began after an Interpol study in Lagos, Nigeria found that 80 percent of the drugs for sale in shops and on the street were fake. This is a huge barrier to development; those who are sick can’t get access to the drugs they need or end up not trusting the health system because the drugs they took don’t have any effect. So the organization worked with pharmaceutical companies and the Nigerian government to create a scratch-off section on all drug labels. Consumers scratch off the label, revealing a code underneath that they text to a database. They get an immediate response back letting them know whether the drug is real or fake, based on the ID code. Since this effort began last year, 115,000 text messages have been sent and the NGO plans to add thousands of more users each month.

It boils down to the fact that mobile technology and access to this information has become a necessary building block for developing areas. It’s as important an infrastructure piece as electricity or roads. But among these great success stories, the issue of waste also came up: What about the materials used to create mobile devices? Isn’t there a lot of waste created because they become obsolete so quickly? In some cases, the answer is: Don’t let perfect be the enemy of the good. These devices are helping people launch businesses, get an education, and live healthier lives. It’s a tool that lets them do this all on their own and take control of their lives. But the mobile device manufacturers know this is a concern: Hans Vestberg, CEO of Ericsson, explained that his company is working on more efficient phones and on cutting carbon emissions from their manufacturing processes. Also, Ericsson and other phone manufacturers are in discussions to develop a universal charger: if people can share chargers or use the same charger when they get a different device, that will help remove a lot of material from of the production process.

This mobile revolution is fundamentally different than the technology of the past: Rather than companies creating technologies that they think consumers want, the power is in the hands of the consumer to demand and shape exactly what it is they want. In the context of CGI, that powerful consumer lives in the developing world. They are the ones adapting technology for their needs: to build successful businesses, lead healthier lives, get an education, and build a more sustainable society.

Photo: Bobby Bank/Getty Images via PicAPP

Group Therapy at the Clinton Global Initiative

Maria Surma Manka — Thu, 23 Sep 2010 11:07:44 +0000

[This is the fourth post in a series by Maria Surma Manka who is in New York City for the annual meeting of the Clinton Global Initiative. See her previous posts from this week about climate change and waste, opportunities in market-based solutions and the big CGI commitment to cookstoves. -Ed.]

Who would've thought that a convening of so many policy wonks, business suits, and serious-minded NGOs at the Clinton Global Initiative would result in some of the best entertainment I've seen in a while? Laughter! Tears! Rants!

Continuing the day's theme of market-based solutions, a discussion of this strategy to address environmental issues was held with Wal -Mart senior VP of sustainability Matt Kistler, Timberland CEO Jeff Swartz and The Nature Conservancy's lead scientist, M. Sanjayan.

Kistler and Swartz both discussed how flexing their corporate muscle can (or cannot) move business partners to green the supply chain. Most of us know the Wal-Mart story: The company set aggressive environmental goals and worked with suppliers to make those goals happen. Here's a great example from Kistler:

"We were looking at all of our products to figure out how to reduce packaging and fit more products into a trailer to make our transportation fleets more efficient. As one example, we worked with General Mills on strategies to reduce packaging on their Hamburger Helper products, which we sell a lot of. And we realized that if the noodles were made flat instead of curly, it would reduce the size of the box. And that's exactly what happened: With General Mills' flat Hamburger Helper noodles, we've cut that packaging by 1/3 . With all of the supply chain changes that we've made, our fleet efficiency is 60% better than it was in 2005."

Swartz of Timberland was blown away by the Hamburger Helper story ("Straighten the noodle and the world gets better?! That's the coolest story I've ever heard!"). But on the contrary, his experience trying to flex Timberland's corporate muscle was not so sexy of a picture. When Timberland approached their leather tanners, for example, with the request that they use more sustainable business practices, nothing happened. It boiled down to the fact that Timberland was just one (small) buyer of many, and the tanners had no real economic incentive to change. So, Timberland gathered together their "arch-competitors" to hammer our sustainability requirements from their common product sources, and then re-approached the tanners as one voice demanding more sustainable products. And, what do you know: it worked.

Sanjayan of The Nature Conservancy (TNC) agreed that using economics as a driver is the future of the environmental movement: TNC has not moved the needle much with their traditional approach of conserving land, he noted, and so they are looking at more innovative, market-based practices to get people's buy-in and protection of land and water sources. For instance, creating "water funds" in developing areas where those who need and use the water pay for the protection of the water supply. Saving land for land's sake doesn't necessarily move people, but saving it because their livelihood depends on it does move people.

But this is hard work noted Swartz. It took Timberland five years of grunt work to get their supply chain to think about the footprint of the materials the company purchased. "It's really frustrating and darn-near impossible to get these big systems to change. But we're still trying, because the consumer needs a product that they can feel good about and that performs."

Swartz continued:

"The private sector is not the answer, because there is no answer. The absence of leadership is the crisis – the government needs to do their job and set regulations. And NGOs think perfect is the enemy of good – if we [Timberland] stick our necks out, they [NGOs] chop it off. We can only have a conversation about solutions if government can unpuff its chest, if business can uncross its arms, and if activists can stop spitting on us all! I was at Copenhagen...it was all rhetoric. I'm afraid we're losing the war."

As Swartz took a breather from this (really insightful) run, Sanjayan jumped in to agree: "What moves players to get involved in partnership? Self interest...I don't think people really care about their grandkids, actually. We're too self-centered for that. I think maybe people care about their kids, but that’s about as far as they go."

As the session came to a close and the mood spiraled downward, Kistler of Wal-Mart had one of the last words about working together for sustainability and change. I couldn't catch all that he was saying, as he got very emotional and choked up at this point. But what was clear from this discussion - from the rants, jokes and tears - was that this sustainability work is damn difficult. Companies, NGOs and governments are working on it, but results can come painfully slowly in some cases, not at all in others, and in the end you question the overall impact of your years of sweat anyway. I'm not saying we should go easy on the big guys, but let's just take a breath and acknowledge that this work is rough. In the end, we all hope to make a difference...grandkids or not.

Photo: Sean Gallup/Getty Images via PicAPP

Making Market-Based Solutions, Green Solutions at CGI

Maria Surma Manka — Thu, 23 Sep 2010 02:45:03 +0000

Clinton Global Initiative: Markets as problem-solvers... with the chance of total failure

Here in the U.S., we hear the term "market-based solutions" often in the context of climate change, when we talk about economic tools like a carbon tax or cap-and-trade scheme to reduce pollution. But there are tons of examples of this approach being applied to issues all over the world. And today at the Clinton Global Initiative, there was plenty of discussion of what works, what doesn't, and why we need to embrace the possibility of failure.

Lotus Foods reported back on a commitment the company made at the 2008 CGI annual meeting to introduce to the U.S. food trade 3-5 sustainably grown rices by 2012. By the company's model, sustainably grown rice is grown using SRI methods. SRI is the System of Rice Intensification (I was ignorant of SRI until today, but after some research I've learned this is a big deal in agriculture and the developing world). In short, SRI methods give farmers the tools they need to increase their yields, use less seed, less water (rice farming uses 1/4 - 1/3 of the earth's freshwater reserves annually), and no agri-chemicals. Today, Lotus Foods reported that they are on their way to meeting that 2008 commitment and have connected thousands of family farmers in Africa and Asia with profitable food markets in the U.S. (consumers can find Lotus rice at Whole Foods, for example). Bottom line: Farmers have increased their incomes 25 percent, American consumers have access to healthy, organic and sustainable rice choices, and both groups are addressing problems like food security, climate change, and water scarcity.

These are the kind of solutions that really get me excited - the kind where nobody needs to be "convinced" of anything, but where the solution benefits both the producer and end-user immensely and tackles other global problems.

But how do you know when an idea for a solution is a good one? Do you just know it when you see it? Or only once it succeeds? New York Times columnist Thomas Friedman opined that market-based solutions must have two characteristics in order to survive: 1) They must be scalable (if not, then they're just a hobby); 2) They must be sustainable (they cannot live and die on government funding).

It was within this context that Leila Chirayath Janah, founder of an organization called Samasource that connects those in the developing world with basic online job opportunities, made an interesting point that too many non-governmental organizations (NGOs), are afraid to fail. This leads to not enough risk-taking, which means innovation and solutions are moving fast enough, which means the world is left with lots of inefficient work that isn't having an impact. NGOs should start adopting what successful entrepreneurs do when implementing market-based solutions: Measuring their impact soliciting feedback.

In my experience, there is a growing awareness among NGOs that measuring success is critical for continued funding and, of course, as justification to the membership for continued dollars. So as we tackle more environment problems with market-based solutions and collaborative partnerships, NGOs are actually in a great position to learn about business best-practices (i.e. measurement and feedback) that could be shaped and adopted for their own use. And, knowing when to call it quits. "We have to get more comfortable with the idea of failure in the social impact sector," said Janah, in order to make way for those organizations with the best solutions that are having the greatest impact most efficiently.

PHOTO: Lucas Jackson/Reuters via PicApp

CGI Commitment to Clean Cookstoves Means Healthier Women, Climate

Maria Surma Manka — Wed, 22 Sep 2010 17:31:01 +0000

[Earth & Industry's Maria Surma Manka is reporting from New York City where she is covering the annual meeting of the Clinton Global Initiative.]

Underscoring President Clinton's point that CGI is about action and not just rhetoric, new commitments by member nations, companies and NGOs are announced before nearly every session or discussion. This year, about 300 new member commitments are expected ($2.5 billion alone was announced yesterday) - more than ever before.

So far, in the five years that CGI has been in existence, members have made 1,946 commitments, valued at $63 billion dollars, that have touched nearly 300 million lives.

Some commitments address problems we've heard a lot about: Haiti, Pakistan, the Gulf Coast. Others are not so high-profile but vitally important. I'll highlight them throughout this series (as well as status reports of previous commitments), but here's a big one that was announced yesterday by Secretary Clinton:

Global Alliance for Clean Cookstoves: The name doesn't roll off the tongue and I've seen some cynical Twitter chatter about whether this effort is really going to help "save the world" - but I beg to differ. "Smaller" projects like this - in addition to the sexier work like solar power in Haiti - are exactly what CGI aims to organize. Nearly 3 billion people - mostly women and often refugees - cook over traditional cookstoves. This means they have to forage for fuel (in conflict areas, this means exposing themselves to potential violence) and spend hours inhaling the toxic smoke from the fires. The toxins cause about 1.9 million premature deaths each year thanks to pneumonia, emphysema, lung cancer, and bronchitis. In fact, air pollution is the fourth biggest health risk in developing world, according to the Alliance.

In short, the Global Alliance for Clean Cookstoves will create a more robust market for clean and efficient household cookstoves that meet the needs of the local consumer and her cooking patterns. Partners in the private sector - the Shell Foundation, Morgan Stanley, and others - are working on developing industry standards for the simplest, most affordable and cleanest-burning stoves possible. They will work with NGOs (United Nations Foundation, World Health Organization, and others) and governments (Peru, Norway, and others) to get these stoves into the hands of those who need it and use financing mechanisms to help give the poor access to the stoves. By 2020, the Alliance hopes to have a product adopted by 100 million homes.

And yes, there's a climate change angle to this too: A little cookstove may not seem like much of a climate threat - especially when we tend to picture coal-fired power plants when we think of climate pollution - but multiplied by 3 billion users, there's a target here. According to the Alliance, the high-performing stoves can cut emissions 95%, while even the lower-grade ones can cut emissions 40-50%. That's a significant reduction in emissions, a significant increase in the health and safety of the poor, and a significant commitment by CGI members.

Photo: Eva Parey/ABACAPRESS.COM Photo via Newscom/PicAPP

Climate Change, Energy and Waste Take Center Stage at Clinton Global Initiative

Maria Surma Manka — Wed, 22 Sep 2010 04:55:30 +0000

After three bumpy flights and one nauseating cab ride (solved with a doughnut) AND one inadvertently canceled hotel room (solved with begging), I set up camp in New York City to report out from the Clinton Global Initiative Annual Meeting.

CGI was started by former President Clinton in 2005 to help “turn ideas into action” – too often, he saw commitments by governments and business to a particular cause or issue, but rarely did he see follow-through or hear reports on progress. So, CGI was founded to foster public and private sector collaboration on education, environment/energy, health and economic empowerment – with an emphasis on measurable progress.

With a bias for the energy and the environment topic, I was excited to hear what was being done and what new commitments would be made this year at CGI. I also had some skepticism that I was going to hear the same buzzphrases like: “public-private collaboration,” “building partnerships,” or “the time for action is now.”

But President Clinton made it abundantly clear that, to solve a problem like climate change, people outside of CGI have to be engaged. Governments, businesses and rich foundations can’t do it on their own. They have to respond to the needs and direction of local communities in order for any initiative to take shape and achieve measurable progress.

Example: Electricity in the Caribbean is the most expensive of anywhere in the world (35 cents per kilowatt hour – that’s about five times what I pay in St. Paul, MN). NRG Energy (a U.S.-based power generation company) is working with Haitian NGOs, governments and neighborhood groups to set up $1 million worth of solar panels to bring down that cost. And bringing down the cost of electricity doesn’t just mean cheaper bills and clean energy for clean energy’s sake: it means better infrastructure and a cheaper business climate to grow the private sector and help rebuild the country. What’s more, the Dominican Republic is connecting its electric grid with the Haitian one, which Clinton pointed out is pretty astonishing given the nations’ historical relations.

Another interesting point of discussion today: landfills. Clinton noted:

“If you want to fight climate change, improve health, foster entrepreneurs and create opportunities for the poor, the closest thing to a silver bullet is to close all the landfills in all the cities around the world…Almost every landfill is a goldmine…glass and plastic can be recycled, food can be used as organic fertilizer and almost everything else can be used as a biogas fuel… [landfills] are an enormous source of wealth if they are recycled, converted, or burned for energy. They’re an enormous waste but also a staggering opportunity.”

I considered myself knowledgeable in the use of landfills as an energy source, but I hadn’t thought about the greater potential of all we could be scavenging from them. Looking at it in this light, it calls to question how waste companies in the U.S. could be looking at their current landfills as additional sources of revenue (working with markets abroad in need of the materials we discard?) and perhaps avoiding the need for new landfills or expansions if the current ones could be capitalized and minimized. I’d love to hear from any companies who are doing this or something similar.

What’s up for Wednesday: Discussions on market-based solutions to protect the environment. And, hopefully, I can score an interview with one of the many smart people here.

Irreconcilable Differences: Utilities Leave U.S. Chamber of Commerce, Cite Climate Change

Maria Surma Manka — Mon, 28 Sep 2009 13:01:12 +0000

[Editor's note: Just hours after we published this story on Monday morning, another utility announced its intention to leave the U.S. Chamber of Commerce over the group's position on climate change. Chicago-based Exelon, one of the largest electric utilities in the country, joined the growing chorus of companies speaking out against the Chamber's staunch opposition to climate legislation. Speaking at a press conference today, Exelon CEO John Rowe said that "Inaction on climate is not an option. If Congress does not act," said Rowe, "the EPA will, and the result will be more arbitrary, more expensive, and more uncertain for investors and the industry than a reasonable, market-based legislative solution." -TH]

Just as the environmental community can be split on climate change issues, businesses interests can't be painted with the same brush either. To wit: In the last week, two major utilities - California's largest utility, Pacific Gas and Electric (PG&E) and New Mexico's largest utility, the Public Service Company of New Mexico (PNM) - have left the U.S. Chamber of Commerce because of its stance on climate change.

Many of the largest utilities in the country support legislation that limits carbon dioxide (CO2) emissions and have been anticipating the regulation for years by investing in renewable energy and efficiency measures, as well as technologies for carbon sequestration and more nuclear power. On the other hand, the Chamber spent $7.4 million on climate change and other issues in the second quarter of this year and has threatened litigation if the EPA doesn't reexamine its findings of climate change's effects on the public.

An excerpt from PG&E CEO Peter Darbee's resignation letter to the Chamber read:

"We find it dismaying that the Chamber neglects the indisputable fact that a decisive majority of experts have said the data on global warming are compelling and point to a threat that cannot be ignored. In our view, an intellectually honest argument over the best policy response to the challenges of climate change is one thing; disingenuous attempts to diminish or distort the reality of these challenges are quite another...I fear it has forfeited an incredible chance to play a constructive leadership role on one of the most important issues our country may ever face."

If more continue to leave, it could threaten the Chamber's credibility as a voice for business - especially when those disagreeing with its stance are some of the largest polluters in the country (electric utilities are responsible for about 40 percent of climate change pollution). The Chamber has said it supports the reduction of climate change pollution on principle, but rejects any approach that it believes would drive up the price of energy and send American jobs overseas.

via the Associated Press, New York Times and Next 100