[pagebreak:Top Ten Green Giants for 2011]
While startups have played a crucial role in getting the green industry off the ground, the future will likely be dominated by the green giants, i.e., large, sprawling conglomerates with decades of experience under their belts.
Why? Green technology essentially involves revamping the physical infrastructure of the modern world: replacing coal-fired power plants with wind turbines, building homes from materials concocted in chemistry laboratories, and swapping out engines for electric motors. Established companies are simply in a far better position to muster the capital, technological depth, and factory capacity that will all be needed to make the transition.
Familiarity plays a big role, too. Millions have flocked to play Farmville, but you won't see the same sort of giddy enthusiasm for unheralded newcomers among utilities and industrialists to try high voltage power lines or sewage-to-drinking-water plants. If the internet boom was embodied by a twenty-something billionaire, cleantech is a science teacher with a comb-over.
We came out with a Top Ten Green Giants for 2010. Here is this year’s list to watch, followed by an update on 2010's group. Click on the company names to read more.
- France
- ABB
- Samsung
- Waste Management
- NRG Energy
- DuPont
- Netflix
- Ford Motor Company
- Lockheed Martin
- Tata Group
- Update on 2010
[pagebreak:France]
1. France (ca. 20,000 B.C. Formerly named Gaul.)
Not many people realize this, but green technology is a contemporary of Victor Hugo.
In 1839, Edmond Becquerel discovered the photovoltaic effect while experimenting with an electrolyte cell. A year later, August Mouchet proposed the idea of solar-powered steam engines. Then, in 1859, 150 years ago, Gaston Plante invented the lead acid battery. He demonstrated it at the French Academy of Sciences a year later.
A wide array of companies has helped to bring France back to the forefront. Schneider Electric, the electrical services and equipment giant that served Napoleon III, has bought five companies since December. Saint-Gobain, supplier of mirrors to Versailles, invested $80M in energy efficient window-maker Sage Electrochromics.
Areva, the nuclear expert, is working in various nations on reactors. It also purchased Ausra and has retooled that company’s solar thermal technology to lower the cost. Soitec builds solar farms in the U.S. with Chevron and experiments with concentrating PV. With interest in high-speed rail growing, one can anticipate that French engineering firms will be able to export expertise. Renault Nissan became the first large automaker to strongly advocate all-electric cars.
Veolia, also from France, has begun to invest in and partner with water startups.
Why is this occurring? Europeans don’t specialize in startups. Instead, Europe tends to cultivate staid conglomerates with large research labs and employees that stay at the same company for decades. In other words, the kind of places where green ideas can get the room and time they need to develop.
Not everything comes from China.
[pagebreak:ABB]
2. ABB (1883)
Four years ago, ABB didn’t come up much in conversations in Silicon Valley. Now, the Swiss-Swedish equipment manufacturer and grid builder represents one of the best exit paths for startups in efficiency and grid equipment.
Over the past year, ABB has bought electric motor maker Baldor Electric for $4.2 billion, virtual power plant developer Ventyx for $1 billion, and Insert Key Solutions, which specializes in asset management software. And Ventyx, an independent ABB subsidiary, recently bought Obvient. The VC group has also plunked money into companies like car charger Ecotality. (Note: Andy Tang at ABB's VC arm is not the same Andy Tang who is associated with PG&E, but they do get confused for one another frequently, says Tang of PG&E.)
Despite the company's European heritage, it's also becoming one of the larger green employers in the U.S. All of those acquisitions listed above are companies based in the U.S. ABB this month broke ground on a high voltage cable factory in North Carolina. The $90 million factory will employ more than 100.
With the acquisition race on in smart grid, expect to see the name continue to pop up.
[pagebreak:Samsung]
3. Samsung (1938)
Back in 2009, Samsung announced that it wanted to be one of the world’s largest solar manufacturers by 2015. Some were skeptical. Green energy had been hot for a few years and the move looked opportunistic. Why would a company that can sell high-end TVs build factories to make solar panels, complex products that get sold for commodity prices?
It turns out Samsung is serious. The South Korean conglomerate plans to invest $20.6 billion and employ 45,000 to become a major player in solar, power plants, green electronics, LED lights and other markets. Samsung, sources have told us, actually bought more LED equipment in 2010 than most of the rest of the industry combined. Samsung Electronics alone has 111 subsidiaries and produces everything from components to household appliances.
Recently, it also lured Steve Fludder, who headed up ecomagination for General Electric, to run its energy efforts.
While many conglomerates often become saddled by bureaucratic inertia, internal politics and conservative product planning, Samsung has shown itself to be nimble and aggressive. It topped Sony in consumer electronics and moved from being a second-tier manufacturer to a premier brand.
The company is also adept at marketing -- it has already hired a phalanx of blogging moms to tout its appliances in South Korea.
Be afraid.
[pagebreak:Waste Management]
4. Waste Management (1894)
The General Electric of garbage. Recycling and refurbishing have lagged some of the larger green markets like solar and energy efficiency, but the tide may begin to turn. We’re up to our necks in garbage (each American generates an average of 4.5 pounds of waste a day), oil prices are rising, and new regulations like California’s carpet recycling tax are all conspiring to make reusing consumables and raw materials economical and interesting.
In this environment, WM is the undisputed leader. The company has begun to position itself as a resource management firm, rather than a trash hauler. Wal-Mart, for instance, contracted with WM to help it reduce the solid waste from its stores by 95 percent. Five years ago, that would have been viewed as a threat to the company's core business: WM, after all, manages 290 landfills.
Nonetheless, the company helped Wal-Mart come up with a recycling strategy. The solid waste stream from California Wal-Mart stores dropped from 1,200 containers to 60. Revenue from Wal-Mart's California operations, however, rose 28 percent and profitability went up 25 percent.
WM also worked with a famous doll maker to make its product more recyclable.
"If you told me when I went to Waste Management that I would give plastic surgery to Barbie, I wouldn't have believed you," CEO David Steiner told us last year.
It is also experimenting with technologies like landfill-to-methane systems. A few weeks ago, WM announced that it will work with Genomatica to develop microbes for recycling raw materials. It also invested in Harvest Power, which turns waste into mulch and power. Expect it to be on the forefront of regulatory change: Steiner is an attorney.
[pagebreak:NRG Energy]
5. NRG Energy (1989)
Need cash? NRG is there.
The power provider was founded in 1989, so it’s relatively young compared to others on this list, but its tentacles have spread far and wide. Overall, Princeton-based NRG has over 50 facilities and controls 26 megawatts of capacity. Yes, it has coal and nuclear facilities, but the portfolio sports district heating, solar and other types of projects. It’s also a big player in natural gas, which, like it or not, seems destined to become part of the U.S. clean energy portfolio.
Last October, NRG Solar plunked $300 million into BrightSource Energy, the solar thermal developer and money vacuum. Months later, NRG announced it would buy the 250-megawatt California Solar Ranch project, a PV farm inaugurated by SunPower, and the 290-megawatt Agua Caliente project from First Solar.
It is also a partner in Energy Technology Ventures, a venture firm that has invested in, among others, Alta Devices, which wants to make solar cells from gallium arsenide. Potentially, NRG could become a pipeline for novel solar cells or concentrators.
[pagebreak:Dupont]
6. DuPont (1802)
Material science is one of the fundamental disciplines of green technology. You wouldn’t see advances in desalination membranes, LEDs, solar wafers, wind turbines or electrodes without dedicated labs of chemists cooking tinkering with molecule sets.
Last year, we saluted Dow Chemical on this list for its activities in water, lithium-ion batteries and solar. DuPont participates in the same markets, but last year also purchased industrial enzyme maker Danisco for $6.3 billion. Danisco not only already makes a green rubber for tires, it produces a large number of additives for food.
Keep your eyes on 3M, which showed off an interesting thin-film solar concentrator at Solar Power International, and Monsanto, which invested in algae maker Sapphire Energy.
[pagebreak: Netflix]
7. Netflix (1997)
The obligatory weird selection for a top-ten list. I was going to name Autodesk for its software that allows others to design products with less embedded energy and packaging, but the miracle of being able to watch Dr. Dolittle 2 instantly got the better of me.
Netflix doesn’t make energy equipment. The company, though, has popularized a concept -- downloading movies -- that was discussed by futurists for years. In turn, the required bandwidth will put more pressure on computer makers and data centers to improve the energy efficiency of computing. Expect to see demand for flash memory, compression algorithms, new types of cooling systems, data center management tools and other technologies to get pulled in its wake.
The pipeline buildup will additionally help pave the way for arguably the world's most cost-effective green technology: videoconferencing. SAP says its $300,000 videoconferencing system paid for itself in a year. Microsoft has cut per capita travel costs by 30 percent. Getting rid of jewel cases for DVDs helps too: a Stanford study last year estimated that downloads cut 40 percent to 80 percent of the energy out of the music industry supply chain.
For the profligate number of computing cycles that you’ve inspired the public to consume for mammoth video files, we -- and the consultants from IBM and HP that will get hired to solve some of these problems -- salute you.
[pagebreak: Ford Motor Company]
8. Ford Motor Company (1903)
Like other large car manufacturers, Ford plans to wheel out an array of plug-in hybrids, all-electrics and plain hybrids. It even put an oversized charger in the coming all-electric Focus to cut down on charging time and help eliminate range anxiety. And like GM and others, it is tinkering with software and psychology to come up with apps to make electric cars more engaging. 25 percent of Ford's cars will be hybrids, electrics, or plug in hybrids by 2025 with the vast majority of the total being regular hybrids.
But the biggest push at the company will revolve around improving gas and diesel engines and that's why company made the list. EcoBoost, Ford's efficient gas engine that acts sort of like a diesel, can boost mileage by 10 percent to 15 percent and EcoBoost engines have been popping up in more models. More technology will follow. CAFE standards will require auto makers to boost their average fleet mileage from the low 20 mile per gallon range to 35 miles per gallon by 2016 and may further require them to hit 42 miles per gallon or more by 2020. Considering that electric cars will only constitute a small percentage of overall sales by 2020, achieving the higher standard will likely have to be accomplished hrough things like microhybrid technology, novel opposed piston engines and devices that can recover waste heat from engines to power air conditioners.
Advanced engine companies like Achates Power hope big automakers will license their technologies. Ford might license, but it is also in better shape than many competitors development-wise. CEO Smilin' Alan Mulally reorganized the company after coming to Ford in 2006 and placed a particular emphasis on ensuring that the best-of-breed ideas at the company percolated globally. The old days of producing good cars in Europe and questionable ones for the U.S. effectively began to end.
Additionally, Ford has also been at the forefront on incorporating recycled materials into its cars. Just a few days ago, it announced it would convert 4.1 million pounds of carpet into cylinder head covers.
[pagebreak: Lockheed Martin]
9.Lockheed Martin (1912)
Back in 2009, we predicted the rise of the Utility-Industrial Complex, or an increasing number of partnerships and deals between utilities and companies like Boeing, Raytheon, Bechtel and Lockheed often associated with DoD contracts.
These companies continue to participate in green markets, but the trend hasn’t become as big, or moved as fast, as we expected. Some have speculated that the pecuniary budgets of utilities and the ‘build first, budget later’ attitude of some military contractors were not a perfect fit.
Still, the intermingling goes on and Lockheed generally has one of the more diverse portfolios in the industry. It is working on microgrids at Fort Bliss, Texas and trying to figure out ways to better tie home networking into demand response systems with Tendril.
It also examines technologies from startups like Power Tagging, and, in the “might be crazy, but it might work” department, it is working on ocean thermal technology for producing power. (Look, we even almost got through an entire article without mentioning it also has looked at EEStor.)
[pagebreak: Tata Group]
10. Tata Group (1868)
Like Samsung, but more sprawling. The Indian conglomerate is known to many in the West for producing the Nano, the $2,500 car. But it also produces steel, chemicals, energy, beverages, composites, electronics, owns hotels and has consultants around the world. Jaguar and Daewoo are two sub-brands.
Thus, it is both a big consumer and a producer of energy. The current goal is to replace 25 percent of its own fossil fuel consumption with renewables by 2017. Like others on the list, it has startup investments: It owns a piece of Sun Catalytix, the MIT spinout that wants to convert water to hydrogen with sunlight and proprietary catalysts.
On top of that, the conglomerate -- and the Tata family behind it -- remains one of the most important and influential in India when it comes to pursuing social goals through technology. (The family built the Indian Institute of Science.) As green grows in India and Southeast Asia, so will this group.
[pagebreak:Class of 2010]
How did the class of 2010 fare?
The companies on this year’s list didn’t knock off the 2010 nominees. Instead, they are additive. But here’s an update on what happened with the inaugural group of green giants.
1. People’s Republic of China. No comment needed. One interesting development is China’s willingness to embrace Western technology. Innovalight signed a number of deals for its solar ink with Chinese solar makers. Both Johnson Controls and Honeywell also announced plans to help develop building efficiency there.
2. General Electric. The sprawling conglomerate last June said it will spend $10 billion on research and development for products for the ecomagination group over the next five years, doubling the $5 billion spent in the inaugural five years of the program. This next five-year plan will pay particular attention to exploiting hardware and software.
3. Siemens. The acquisition juggernaut slowed a bit, but Siemens still found time to scoop up SiteControls for building management. It also signed a deal with Enphase Energy.
4. Nissan. The Leaf made it out. Not many have been produced, but it’s out and the hoopla seems to have convinced others like Mitsubishi that electrics can be affordable and attractive.
5. Dow Chemical. See above.
6. Panasonic. In October, Panasonic president Fumio Ohtsubo told a group of us reporters in Tokyo that the company would become the top supplier of green electronics by 2018, the company's 100th anniversary. Earlier this year it finalized the acquisition of Sanyo to expand its reach in solar and batteries. We've been talking up Panasonic since 2008, so hats off to us for this early prediction.
7. Johnson Controls and Honeywell. Along with the Chinese deals, JC and H both snapped up companies in building management.
8. Wal-Mart. Last year it announced its green supply chain initiative. Hopefully, results will come over the next few years. On a personal note, I actually shopped at one for the first time recently when I needed snow boots in a pinch.
9. Veolia. Go team France.
10. Cisco. We’re waiting. Maybe it’s the lull before the storm.