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©2010 Foley & Lardner LLP • Attorney Advertising • Prior results do not guarantee a similar outcome • Models used are not clients but may be representative of clients • 321 N. Clark Street, Suite 2800, Chicago, IL 60654 • 312.832.4500
Rewards and Risks of “Green”
Web Conference Series
Where Innovation is Meeting Investment
May 11, 2010
©2010 Foley & Lardner LLP
Featured Guest Speaker
Greg Kats
Senior Director and Director of Climate Change Policy, Good Energies, a multi-billion dollar global clean energy investor
Served as the Director of Financing for Energy Efficiency and Renewable Energy at the U.S. Department of Energy
A founder of the New Resource Bank and the American Council on Renewable Energy
Author, Greening Our Built World: Costs, Benefits, and Strategies (available on Amazon.com)
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©2010 Foley & Lardner LLP
FeaturedFoley Speakers
Presenter:
Edouard C. LeFevre, Partner and member, Private Equity & Venture Capital and Transactional & Securities Practices
Series Moderator:
Leon Radomsky, Partner and Chair, Nanotechnology Industry Team, and member, Green Energy Technologies Team
Presenter:
John M. Lazarus, Senior Counsel and Chair, Green Energy Technologies Team
©2010 Foley & Lardner LLP
Today’s Program
Innovation landscape — white space versus over-saturation How investors assess investment opportunities Which green technology sectors appear likely to attract investment in the near to mid-term Financing and IP strategies for green technology companies at different life cycle stages
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©2010 Foley & Lardner LLP
Innovation Landscape –Investment
Good Energies Investment Portfolio
Solar6N Silicon; Konarka; NorSun; Q-Cells; Resolar; Solarcentury; Solarfun; SolarReserve; XJet; Endurance Energies; Enecsys; Enviromena; Agile Energy
Turbine-Based Renewables3TIER; C-Free; CWP; Dummuies Wind Farm; Eolectric; Geilectric; Jasper Wind; Relight; Second Wind; Sequoia Energy; Western Bio-Energy
Energy Efficiency and Green BuildingsAlertMe; Ice Energy; Microstaq; SAGE Electrochromics; Tendril; Nexamp
Investments in the Developing WorldEmergence BioEnergy
Research and Development / Game ChangersActaCell Innovation Landscape
©2010 Foley & Lardner LLP
Additional cost to build green: Evidence from 146 green buildings
0
10
20
30
40
50
60
0-1%
1-2%
2-3%
3-4%
4-5%
5-6%
6-7%
7-8%
8-9%
9-10
%
10-1
1%
11-1
2%
12-1
3%
13-1
4%
15-1
6%
16-1
7%
17-1
8%
18-1
9%
Range of reported premiums
Median in the data set: < 2% added cost
Public misperception: 17% added cost*
*2007 opinion survey by World Business Council for Sustainable Development
Cost of Building Green
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©2010 Foley & Lardner LLP
Costs and Benefits of Green Buildings: Present value of 20 years of estimated impacts based on study data set and
synthesis of relevant research*
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
addit
ional
cost
bene
fit to
owne
r/occ
upan
t
bene
fit to
socie
ty
addit
ional
cost
bene
fit to
owne
r/occ
upan
t
bene
fit to
socie
ty
$/Sf
increased building costhealth water savingsenergy savingsindirect energy savingsemploymentemissions
Green School Green Office
Additional benefits not estimated:+Productivity and student performance+Property value impacts+Indirect water systems impacts+Brand improvements+Operations and maintenance savings+Embodied energy savings
*There is significantly greater uncertainty, and less consensus around methodologies for estimating health and societal benefits.
Costs and Benefits of Green Buildings
©2010 Foley & Lardner LLP
Advanced energy savings and green premium: 18 buildings from the study data set
0%
20%
40%
60%
80%
100%
120%
140%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Building ID #
% e
nerg
y us
e re
duct
ion
0%
2%
4%
6%
8%
10%
12%
14%
% g
reen
pre
miu
m
energy savings (yellow bars indicate the use of onsite renewables)
green premium
Energy Savings
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©2010 Foley & Lardner LLP
FERC REPORT: Demand Response Potential
source: source: FERC FERC Assessment of Demand Response & Advanced Metering Assessment of Demand Response & Advanced Metering 20092009assumptions: assumptions: smart meters, dynamic pricing default, enabling technologiessmart meters, dynamic pricing default, enabling technologies
©2010 Foley & Lardner LLP
SageGlassSageGlass®® ECEC
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0% 10%
20%
30%
40%
50%
60%
70%
80%
Visible Light Transmission
Solar
Hea
t Gain
Coe
fficie
nt
ReflectiveReflective
Tinted LowTinted Low--e2e2
TintedTinted
LowLow--e2e2
Performance Comparison
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©2010 Foley & Lardner LLP
Innovation Landscape – Technology Trends
2010 Cleantech Energy Patent Landscape Report
– Focused on all U.S. utility patents that issued in 2009 and weredirected to one of eleven different cleantech energy categories
SolarWindHydro / wave /tidalHybrid vehiclesFuel cells for vehiclesGeothermalBiomass / biogas / biofuelNuclearUtility meteringSmart grid technologiesCO2 storage or sequestration
– 823 U.S. patents studied
©2010 Foley & Lardner LLP
Innovation Landscape
In 2009, the three sectors that produced the most patents and the most claims were solar, wind, and hybrid vehicles
In 2009, the three sectors that produced the least patents and the least claims were smart grid, geothermal and C02 storage
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©2010 Foley & Lardner LLP
Innovation Landscape
In 2009, the top five innovation categories in which the most patent claims were granted:
1. Photovoltaic solar cell construction and/or materials (remains in first place from 2008)
2. Control systems for hybrid vehicles 3. Blade/rotors for wind turbine generators4. Automated meter reading and/or load control
systems5. Wind turbine generator operational control
©2010 Foley & Lardner LLP
Low Cost & Power Density: Low Cost & Power Density: BroadStarBroadStarWindWind
• The AeroCam Type I turbine is a low-noise, low vibration 12kW cycloidial turbine that can be deployed on a rooftop or ground mounted at point of use
• Unlike many small wind systems, self-starting The AeroCam’s technological advantage is that it maximizes aerodynamic lift forces that provide driving torque and power production
• Superior power density in relation to other distributed generation turbines and solar PV
• Power Density = Amount of Power Produced X Length of Turbine’s Frontal Cross Section
• Footprint of AeroCam turbine is 1/4 that of a same-sized solar array
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©2010 Foley & Lardner LLP
High Capacity Factor
Ice Bear® Distributed Energy Storage
Low Capacity Factor
•6 hour on peak resource
•Insulates Utility Assets From Hot Weather Related Events
©2010 Foley & Lardner LLP
CO2 Impact
Green Scenario EmissionsWith Additional Policy Actions
0
500
1000
1500
2000
2500
3000
3500
2010 2015 2020 2025 2030 2035 2040 2045 2050
MM
T C
O2
1990 Building CO2Emissions
BAU CO2 Emissions
Green - Efficiencyand All Renewables(50% offsitereduction)Green - Efficiency andRenewables (Full)
Green - GreenerConventional EnergySupply
Obama AdministrationGoal
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©2010 Foley & Lardner LLP
Investment Opportunities
VC Investment CriteriaMarket positionClear IP differentiationOutstanding management teamInvestor/Company “fit”Attractive valuation Active contribution to management Strong growth potential
©2010 Foley & Lardner LLP
Investment Opportunities
Cleantech Patent Venture Capital Index: Ratio (multiplied by 100) of (a) the percentage of VC investment in a Cleantech technology category to (b) the percentage of patents granted for the Cleantech technology category
Example: in 2009, 29.3% of cleantech VC investments were made in Solar and 31.3% of patents were granted in Solar – Patent VC Index is 93.6 (29.3 divided by 31.3 multiplied by 100)
Higher patent VC Index may reflect higher value placed by VC’s in a technology category
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©2010 Foley & Lardner LLP
Investment Opportunities
2009 Cleantech Patents and Related VC Investment
©2010 Foley & Lardner LLP
Hot Investment Sectors
In 2009, the three sectors that had the highest Patent VC Index were biofuels, smart grid, and fuel cells for vehicles
In 2009, the three sectors that had the lowest Patent VC Index were nuclear, wind and geothermal
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©2010 Foley & Lardner LLP
Hot Investment Sectors
2009 Cleantech Patent Activity by Patent VC Index — Geographic Comparison
©2010 Foley & Lardner LLP
Greening = Wealth and Jobs Creation
NPV of Net Benefits of BAU and Green
($400)
($200)
$0
$200
$400
$600
$800
$1,000
$1,200
GreenPremium
NPV onlydirect
energy
Plusw ater
Plushealth
Plussocietalenergy
Plussocietal
CO2
Bill
ions
BAU
Green
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©2010 Foley & Lardner LLP
Financing and IP Strategies
Strategies at different life cycle stagesStartupProduct DevelopmentCommercializationGrowthProfitabilityExit
©2010 Foley & Lardner LLP
ConclusionWhile solar, wind, and hybrid vehicles continued to be the top three innovations 2009, investment and licensing opportunities may arise in new areas throughout 2010:
– Geothermal– Biomass / Biofuel– Utility Metering
Geographically, the West Coast dominates in solar; the East Coast dominates in wind, hydro, geothermal, nuclear, and smart grid; the mid-U.S. dominates in hybrid vehicles and biofuels. The three sectors that had the highest Patent VC Index in 2009 were biofuels, smart grid, and fuel cells for vehicles.
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©2010 Foley & Lardner LLP
Contact Information
www.goodenergies.com
Greg Kats -- [email protected]
www.foley.com
Edouard C. LeFevre – [email protected]
John M. Lazarus – [email protected]
Leon Radomsky – [email protected]
Attending TechConnect / CTSI in Anaheim on June 21 - 24, 2010? To meet with Ed LeFevre at the conference, please email him in advance at [email protected] to schedule a time.
©2010 Foley & Lardner LLP
Rewards and Risk of “Green”- Next Session
Safeguarding against questioning by the FTC and competitors on the basis of unfair trade or false advertising as a green technology company
Details will be announced soon