Author: Katie Fehrenbacher

Amidst the slick, several-hour production that was the Bloom Energy launch event, which included a machine gun of celebrity endorsements (Gen. Colin Powell, Sen. Dianne Feinstein, VC Vinod Khosla, Mayor Michael Bloomberg) and a displaying of the refrigerator-sized fuel cell — the Bloom Box, itself — there was one notion that kept emerging: the idea that Bloom could be the Google of greentech. In the way that Google changed the web game and made a lot of its investors money in the process, Bloom could change the energy game and be one of the first greentech firms to bring riches to its backers — at least that’s what many at the event were talking about and hoping for.

Kleiner Perkins Caufield Byers venture capitalist John Doerr, who led an investment in Bloom Energy and also in search engine giant Google, made the comparison as he took the stage during the launch event on the eBay campus. “This is like the Google IPO,” said Doerr. Presumably, he meant the excitement and anticipation in the room, but also the potential for the type of returns that Bloom could bring to Kleiner.

VC Returns

For Kleiner, of course, Bloom is ultimately about Google-style money-making. Bloom could be Kleiner’s first homerun in its cleantech portfolio — something it sorely needs after making dozens of investments and having little, to no, exits in the space. Doerr has previously said that the eight-year-old Bloom will take “nine years to a successful public offering,” so clearly an IPO is in the minds of the investors. At the Bloom launch event, when a reporter asked Doerr if “Bloom is the next Google,” Doerr replied “I hope so.”

Will Bloom’s investors be able to make the kind of money off of Bloom that they made off of Google? Bloom has clearly taken — and will continue to take — a lot more money than Google to reach scale. Doerr said last year that it took Google $25 million to get to an IPO, and it had already taken Bloom $250 million to get to where it was last November when Doerr made that statement (since then it has raised close to $400 million in total).

But the market for energy is ultimately bigger than the Internet — in the trillions rather than the billions as Doerr likes to say. That’s what Bloom’s investors are betting on. That they might have to put more in, wait a lot longer, and get a smaller slice, but that a smaller piece of a larger pie will be worth it. If there was a “Google of greentech,” equivalent, that’s probably what it would look like.

Industry Game Changer?

If Bloom is able to deliver on some of its claims — and cut its costs — it could possibly make the kind of change in the energy industry that Google has made on the web. Bloom founder KR Sridhar and General Colin Powell (Bloom board member) spoke at length at the launch event, about how they could see Bloom boxes powering homes and businesses throughout the developed and the developing world, from rural Africa to the rapidly growing middle class in China. Distributed power that is cheaper than the grid, and cheaper and easier than other renewables, could be a real game changer.

Like Google has been the platform for the basis of countless businesses and services, Bloom’s distributed power could also work as a platform (perhaps why they went with the Bloom Home Server reference) that could compliment solar systems, and electric vehicles. Business, or homes, that could use the boxes to generate power cheaper than can come off the grid could lead to the creation of new business models, where third parties buy and sell power.

Of course it’s totally unclear at this point if Bloom will even be able to deliver on some of those world domination promises. For example it will be really difficult for Bloom to get the price of the electricity from the Bloom box down, particularly to be competitive without the California and federal subsidies. NEA’s Scott Sandell, who backed Bloom, explained to us how Bloom intends to try to cut some of these costs.

Buzz Factor

To me, Bloom and Google clearly share one thing at this moment: cool factor and attention. Bloom, quite frankly, is the biggest thing to happen to the cleantech industry to date. Any media site that has any back archives of articles on Bloom knows how much mainstream attention Bloom is getting — we’ve had record page views this week. A coworker complained to me this morning that there’s no news, as Bloom has sucked all of the air out of the industry this week. At the Bloom launch event eBay CEO John Donahoe said: “This is a good day for Bloom, but also for cleantech.”

Bloom is even cool enough for Google to want to align itself with the fuel cell maker. Google was Bloom’s first customer and is using some of the Bloom boxes to power part of its campus. Google Co-founder Larry Page, who spoke on stage at the Bloom launch event, said: “Distributed power is a big deal. I’m a big supporter of this. I’d love to see us having an entire datacenter running on this some day.”

However, it’s unclear to me whether or not Bloom will be able to keep the type of attention going that Google has been able to maintain over the years. Bloom might be the cool kid this week, but that buzz will die down pretty fast unless Bloom is able to rapidly innovate, sign up new customers, and make high-profile moves. For a manufacturing company, that’s making power components and working on margins and cost cutting (like chip makers) that’s going to be really difficult. As Bloom founder KR Srindhar said at the Bloom launch event, “this is not software, it’s manufacturing, similar to building a car, and that takes time.”

Bloom’s device also won’t be consumer-facing any time soon, which handicaps it from all of the attention that consumer customers generate. While some publications have been concentrating heavily on Bloom offering a less than $3,000 Bloom Home Server to power residential homes, make no mistake such a power device is more than a decade away and still very much an “if.”

At the end of the day it will only be the months and years ahead that will be able to determine if Bloom will truly be as revolutionary as it’s claiming. And to be able to claim the title the Google of greentech — or to make the same kind of impact on the web, and generate the same kind of wealth that Google has delivered — are very large shoes to fill.

By this summer you can expect to find the first energy devices — smart meters, energy management dashboards, connected thermostats — that can link with Microsoft’s online energy management tool Hohm. Troy Batterberry, Microsoft’s product unit manager of its Energy Management & Home Automation division, told us in an interview on Tuesday that Microsoft has just released the software developer kit for Hohm to third party device makers and he is expecting Hohm to connect with devices– likely smart meters first — this summer. Batterberry also told us Microsoft “might” even one day develop its own Microsoft-branded energy hardware, but for now is focused on connecting with third party gadget makers.

That timeline means that about a year after Microsoft officially launched Hohm to the public, consumers will likely be able to get more granular and real-time data off of in-home devices. Google took about the same amount of time between when it first launched its online energy tool PowerMeter and it announced its first energy device partners.

Batterberry, who is speaking at our Green:Net conference on April 29 in San Francisco, tells us that connecting with third party device makers is part of “phase 2″ for Hohm. Phase 1 was launching the consumer-facing web portal and connecting the site with utility data — so far Hohm has officially announced partnerships with 4 utilities, but Batterberry says more are in the pipeline. Phase 2 is connecting Hohm to devices, including smart plugs, connected thermostats, smart meters and even electric vehicles, and Microsoft already has strategic partnerships with smart meter makers Itron and Landis + Gyr.

Phase 3 of Hohm is opening up the platform to utilities to enable them to have more ability to control devices and load shift. By then the idea is for Hohm to not only be a consumer portal but also a utility interface, and utilities will then be customers, too, not just partners. In that vein Hohm could act as sort of the distributed operating system for energy. Phase 4 for Hohm is a little more fuzzy, but Batterberry described it as connecting to the digital home, and other services like security monitoring.

How long will all this take? Batterberry says it will take a good decade before the operating system for utilities and energy is sorted out, and Microsoft has the size — and patience — to wait it out. “That’s our competitive advantage,” said Batterberry.

One of the most interesting angles to the future of Hohm, is how Microsoft could be involved with electric vehicle smart charging. Batterberry tells us that he thinks “electric vehicles are the killer app for the smart grid,” and because electric vehicles will consume so much electricity and will need so much intelligence to manage, they will help usher in important intelligence services for the smart grid. The plan is for Hohm to eventually connect with EV, home and utility data and help manage the rules, scheduling and conditions for smart electric vehicle charging. Batterberry says Microsoft is already talking to some big automakers, but declined to name potential partners. (For more on smart EV charging, see California Rules Show Opportunities in EV Charging, on GigaOM Pro, subscription required).

How likely is it that Microsoft will one day deliver a Microsoft-branded energy management gadget? Batterberry only said that the idea might be a possibility in the future. But Microsoft has entered the hardware space in several markets, with mixed success, including the entertainment player market with Zune, and the video game player market with the X-Box. If a company like Microsoft — which has tried-and-true consumer brand recognition and consumer electronic making experience — did release energy gadget hardware, it could provide an important way to perk consumer interest in the space. I made a similar argument for the idea of Apple developing a home energy management gadget.

For more on electric vehicle software charging and home energy management see GigaOM Pro:

The App Developer’s Guide to Working with Ford Sync

New Opportunities in the Smart Grid

How to Build Better Apps for Electric Vehicles

It’s only taken the ultra-secretive fuel cell maker Bloom Energy 8 years and close to $400 million to get it to where it is tonight: finally unveiling its refrigerator-sized fuel cell called the Bloom Box to the public in an exclusive behind-the-scenes interview with 60 Minutes on Sunday night. Bloom Energy founder K.R. Sridhar shows 60 Minute’s Lesley Stahl the innards of the Bloom Box, which takes in oxygen and fuel (natural gas, biomass, etc.) to create electricity and costs between $700,000 to $800,000. Google, Bloom Energy’s first customer, has already been using 4 Bloom boxes to power a datacenter. The company, which is backed by Kleiner Perkins and others Valley VCs, will be unveiling its Bloom Box to the media more widely on Wednesday and Earth2Tech will be there.

<br/>Watch CBS News Videos Online

This is secretive fuel cell company Bloom Energy’s big week. Tonight 60 Minutes aired an exclusive look inside the Bloom Box, and on Wednesday the company is officially launching, after operating for 8 years and having reportedly raised around $400 million from investors like Kleiner Perkins.

Watch the video clips, embedded below, to see what the Bloom Box actually looks like — kindof like an industrial-sized refrigerator, that sucks up oxygen on one side and fuel (natural gas, biomass, etc) on the other. 60 Minute’s reporter Lesley Stahl takes a look at the “secret sauce” behind the Bloom Box, and reports that Bloom bakes sand and cuts it into little squares that are turned into a ceramic, which are then coated with green and black “inks.” Using a special process Bloom creates these ceramic discs and stacks them together interspersed with metal plates of “a cheap metal alloy.” The bigger the stack the more power the Bloom Box will create.

<br/>Watch CBS News Videos Online

For those of you less familiar with fuel cells, they’re like a chemical battery, which combines solutions to create a chemical reaction that creates electricity. Fuel cells have been under development by hundreds of manufacturers in the consumer electronics and auto industries for decades, but have remained too expensive and have been unable to break into the mainstream.

Stahl dug up some interesting tidbits beyond being the first reporter to get a glimpse of the device. Like the fact that Bloom Energy CEO K.R. Sridhar originally came up with the idea for the Bloom Box after developing a device for NASA that would be able to create oxygen on Mars. After NASA ditched their Mars mission, Sridhar had the idea to reverse the oxygen-creating Mars box and use oxygen as the input instead.

Stahl also reports that a Google datacenter has been using 4 Bloom Boxes for the past 18 months. Google was Bloom’s first customer and while Google’s Bloom boxes use natural gas, they use “about half as much as would be required for a traditional power plant,” reports Stahl.

Now that Bloom is starting to talk publicly, it’s also interesting to see how they are starting to market and position the Bloom boxes: as replacing the power grid. Here’s how 60 Minutes reports it:

The idea is to one day replace the big power plants and transmission line grid, the way the laptop moved in on the desktop and cell phones supplanted landlines.

<br/>Watch CBS News Videos Online

When word broke last month that Google had created a subsidiary called “Google Energy,” which was looking to buy and sell electricity on federally regulated wholesale markets, the Internet and energy industries alike were confounded. If Google got approved to buy and sell energy, what exactly would the search engine do? Well, the issue is no longer one of speculation — the U.S. Federal Energy Regulatory Commission (FERC) has approved Google’s application to buy and sell energy, reports PC World.

Despite the speculation — or fear — that Google could act as a utility one day, buying and selling electricity at will, Google has clearly stated why it says it wants to achieve “market-based rate authorization.” Google’s Niki Fenwick told us last month that Google has no plans to become an energy seller but that the creation of Google Energy is an attempt to proactively address hurdles it could face in its plans to go carbon neutral. Given the legal permission to act as a utility — basically buying and selling clean energy (it owns a large rooftop solar project at its headquarters) — Google could help offset its carbon emissions that result from its large power needs.

It’s actually not all that crazy for a large company — particularly one that consumes a lot of energy and has high energy bills — to seek that status. Last month Nathaniel Bullard, an analyst at Bloomberg New Energy Finance, pointed out to me that Wal-Mart created Texas Retail Energy, which allows it to procure its own power and get the lowest-cost electricity for their warehouses and retail stores. When news about Wal-Mart’s energy firm came out in 2007 there was a lot of speculation that Wal-Mart would get into the electricity selling business, too, and Wal-Mart said, at the time, that it hadn’t fully ruled that out for the long term.

Well, now Google, like Wal-Mart, has managed to gain approval to buy and sell energy. And specifically, the application says: “Google Energy states that it intends to act as a power marketer, purchasing electricity and reselling it to wholesale customers.” Interestingly enough, the California Public Utilities Commission also filed a motion to intervene in the application, shortly after Google filed it. The document doesn’t elaborate on why. I’m really eager to see what Google does with its newly achieved power.

Love him or hate him, California Governor Arnold Schwarzenegger represents large shoes to fill. Particularly from the perspective of companies building clean energy, and energy efficiency technologies — I haven’t seen a governor make as many personal appearances at greentech events, or tout climate change regulation and call for green jobs more than Schwarzenegger. But with the upcoming gubernatorial election in November of this year, Schwarzenegger will be replaced by a leader that will be tasked with shaping one of the most aggressive states in the nation in terms of regulation that promotes clean power and energy efficiency, and is also the home of Silicon Valley’s greentech community.

How are the current contenders shaping up in terms of their greentech leanings? At an event at Stanford on Thursday night the advisors of three potential California gubernatorial candidates — Jerry Brown, Steve Poizner and Meg Whitman — weighed in on how their candidates stand on clean power and energy efficiency regulation and the best incentives to spark greentech innovation.

Well, they gave it a try anyway. The most clearly-articulated stance on the candidate’s positions was delivered when the moderator asked the advisors — Julia Levin, who represented Brown, Amisha Patel, who represented Whitman, and Ken Stalter, who represented Poizner — how their candidates felt about the state climate change regulation law AB-32.

Levin said Brown has always supported AB-32 and would continue to support it going forward. Stalter said that Poizner’s position was that AB-32 could add on thousands of dollars more to families’ cost of living (citing a study that James Sweeney of the Precourt Institute later shot down) and that Poizner, if elected, wouldn’t let AB-32 do that. Patel said that Whitman’s stance was that AB-32 was filled with goods and bads, and that Whitman had called for “a moratorium on specific aspects of the regulation.” As the moderator of the event, Don Kennedy, Woods Institute senior fellow and former president of Stanford, put it, “so that sounds like a win, lose and tie.”

Beyond the advisors’ strong takes on AB-32, the rest of the panel was largely spent on agreeing with each other on points like ‘greentech innovation is good,’ and ‘we need to make California a better place for business.’ There was also a lot of non-answers and apologies, as the advisors hadn’t gotten a chance to yet learn about their candidates position on more specific issues like feed-in tariffs, cap and trade auctions, or specifics in the state renewable portfolio standard. That’s OK — the candidates still have about a month before they have to declare they’re running, and Jerry Brown hasn’t even officially jumped into the race yet.

But while much of the positions on climate change regulation were still hazy, expect the candidates to start getting much more vocal and aggressive on their stances over the next few months. Given the overwhelming desire to add jobs in the still weak economy, I would bet that the candidates will take a cue from President Obama and call for many more incentives and policies that will promote greentech firms and green jobs. To fill Schwarzenegger’s footsteps and compete with China’s greentech ambitions (which was a major topic at the event) the candidates are going to have to, to win.

The famously private investor David Gelbaum, founder of The Quercus Trust, and who by his own estimates has between 40 and 50 cleantech investments, as a rule hasn’t done interviews for years. According to the last comprehensive story on him, published in the LA Times in 2004, the former math whiz, hedge fund manager and philanthropist, is so anonymous he’s sometimes mistaken for his gardener. But this afternoon, on the heels of Gelbaum accepting the role of CEO of one of his portfolio companies Entech Solar (the first time he’s taken over as CEO), Gelbaum got on the phone with us to chat about the potential of solar, how he’s lost money in greentech so far, and his focus on making some returns.

1). Why did you take the job as CEO of Entech Solar?

David Gelbaum: I have always been active with our portfolio companies, but this is the first time I’ve been CEO. But I’m passionate about the company, I’ve got an understanding of it and it turned out the board agreed with me. This is a company which I’ve been the most closely involved with — I’ve been working with the team and I know a lot of the people and I’ve been functioning basically as an executive already.

2). Can you tell me a bit more about the process of starting the Quercus Trust? What inspired you?

DG: The Quercus Trust is just an estate planning fund, and I picked the name Quercus Trust because I like oak trees (quercus stands for oak). In 2006 I decided to get into cleanech investing. I was looking around to start making some money and I had some understanding of solar, so I looked at that. It looked really promising, particularly when I realized we were close to solar being at economic parity with fossils.

3). So your cleantech investing through Quercus Trust is meant to make money, in contrast the your philanthropy work?

DG: Yes, I don’t need to make money on this in order to live, but yes, the goal is to make money off the investments.

4). Have the returns in greentech been what you expected — do you have exits yet and if so what?

DG: I havent had any exits and I’ve lost money in this business. It’s just part of the general shortage of credit.

5). Kleiner Perkins’ John Doerr said a couple months ago that if he’d foreseen the credit crunch and the recession, he’s not sure if his firm would have gotten into cleantech back when it did. Have you had similar thoughts?

DG: No, I’m glad I’m in this. I’m very optimistic.

6). What are the sectors you’re most bullish on?

DG: I think most of my investments have huge promise, and many of them are intertwined. Solar can’t go forward without the smart grid, because of the intermittency measures of solar. They all have huge upsides.

7). Are there any areas that you’ll be making more investments in going forward in 2010?

DG: Mainly follow-on investments and focus on getting the current ones to make money.

8). How many cleantech investments have you made to date?

DG: Somewhere between 40 to 50.

9). How have the stimulus funds affected the industry and your investments?

DG: Well, for the companies that got government funding, it’s been good. But for the ones that haven’t it’s been negative. I’m glad that they’ve continued to extend the tax credits for years.

10). You’re just starting to open up and do interviews now that you’ve take on the CEO role. What was the reason for being so quiet and do you expect you’ll be talking to the media more going forward?

DG: It’s just been about being a private person. I expect I’ll be doing more interviews — I’ve done more interviews today than I have done over the past five years.

If you can’t recall the collective anxiety that is attached to the emergence of digital and networked technologies just take a peek back at the news headlines of yesteryear. The fear over computerized voting systems started soon after the 2000 U.S. presidential election debacle, while worry about online banking began when the first bank put its customer accounts on the web. But as the latest systems, including vehicles and the power grid, crossover to the digital and computing world, and get connected to communication networks, expect the same, if not more, fear.

The Transformation: Grid, Vehicles

Both vehicles and the power grid are undergoing massive transformations involving IT. The so-called smart grid industry has emerged to sell utilities infrastructure based on communication networks, and companies are building software and services to help utilities manage energy data. The smart grid is projected to generate $210 billion in investment between 2010 and 2015, and President Obama has called for the installation of 40 million smart (digital and connected) meters in the U.S.

Cars are going digital and connected, too. Vehicles are now “packed with up to 100 million lines of computer code,” and have “at least 30 microprocessor-controlled devices,” points out the New York Times this weekend. Many automakers offer services based on network connections, like location-based navigation (enabled by a GPS system) or GM’s OnStar System which is based on a cellular connection.

As electric vehicles emerge in the coming years there will be even more uses of software and communication networks to manage the vehicle’s charge. Utilities will have to manage the collective charging of customers, so that EV charging doesn’t take down their grids. Electric vehicle infrastructure player Better Place will be offering its customers “a comprehensive suite of in-car services designed to provide drivers with the best possible EV driving experience,” when it launches commercially in 2011. Those types of services include directing drivers to available and nearby charge points, and rely heavily on software, computing and communication connections.

The Anxiety

Before electric vehicles even hit the mainstream market, though, consumers are already getting anxiety over computer and software dependent cars. Last week Toyota said that a software glitch is responsible for the braking problem in its Prius hybrid 2010. That’s led to a new round of media headlines taking a hard look at the trend of software and computing in cars (like the New York Time’s this weekend: The Dozens of Computers That Make Modern Cars Go (and Stop)).

I’ve experienced software glitches when driving a Smart Car that’s networked in the car sharing service City Car Share, and believe me it wasn’t fun. The Smart Car has a lot of embedded software, and the City Car Share service has its own software and IT systems, and I’ve had to call customer service several times in order to restart the computing system (kinda like rebooting a computer) to get the car to work properly. As the drivers of the Toyota Prius’ with glitchy software found: beta software just doesn’t cut it at 60 mph.

The smart grid has also had growing pains. “The Bakersfield issue,” emerged when residents in Bakersfield, Calif. filed a suit against utility PG&E for smart meters that they claimed boosted electricity bills. The problem was a combination of unusually hot weather and a lack of proper customer outreach, but at the heart of the issue was anxiety surrounding the introduction of the new digital meter.

When Digital Meets High Impact

Both vehicles and the power grid have different relationships with consumers, compared to entertainment, communications and some types of information. When your wireless network drops or your browser crashes and you’re sitting in front of a computer, it’s annoying but not life threatening. Software problems and dropped communication connections could have much more serious consequences in a vehicle (crashing, being stranded somewhere, not being able to get to work, etc), and for the power grid (outages, surges, etc).

Problems with reliability of software and computing in high-impact areas has been studied for years. For example, health care — last month I read this New York Times article that investigated faulty software that caused a string of medical errors for radiation treatments and lead to several deaths. It’s terrifying to think software that controls radiation shot at someone’s chest, could freeze as easily as my Firefox browser. The aviation and defense industries have long been dealing with the impact of software and communication systems on their high-impact technologies.

There’s also the worry over networks being more susceptible to security concerns. Adding a two-way network connection, means something, or someone, can access the data — that’s the whole point of connecting it to a network. But that also means the connected system can be hacked and used in ways that it wasn’t intended. The smart grid is no different, and computer security firm IOActive has shown a virtual demo of how a worm or virus could infiltrate connected digital smart meters and crash a power grid. The U.S. government is paying particular attention to smart grid security, following warnings from the Internet industry. How long until we see headlines about hacked cars?

The companies building the future of digital, connected vehicles and the power grid will be smart to look at the lessons learned through the digitization of some of these high-impact area, like aviation, defense and health care. These companies will just have to realize how sensitive the transition is to digital, connected systems and remain hyper vigilant. But expect to see a lot more headlines about digital anxiety over vehicles and the power grid in the future.

But ultimately the transformation to digital, connected vehicles and the power grid can’t slow down due to digital anxiety. Digitizing these 2 sectors — which are two of the biggest factors that contribute to the world’s carbon emissions and global warming — is fundamental to fight climate change.

Image courtesy of FlickrJunkie’s photostream Creative Commons.

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What was the big news that happened in your sector in Q3? Catch up with GigaOM Pro’s, “Quarterly Wrap-ups.”

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What was the big news that happened in your sector in Q3? Catch up with GigaOM Pro’s, “Quarterly Wrap-ups.”