Can Start-ups Transform the Power Industry for the 21st Century?

Germany’s Power Plus Communications, a smart metering company with  utility company clients across Europe and the Middle East, is one of 25 companies set to present at a Cleantech Summit in Switzerland June 17-19. Smart grid and energy efficiency companies like PPC are attracting venture capital investment as demand for cutting energy costs increases across the globe.

There is one major difference. Silver Spring Networks, a Silicon Valley start-up in the same space as PPC has attracted  $100 million in investment. PPC has raised just €10 million  in venture capital from Climate Change Capital Private Equity.  “There is 90 million missing,” says PPC chief Ingo Schoenberg (pictured on Informilo’s home page).

Like most European start-ups, PPC is finding it challenging to raise the volume of money needed to become a powerful global player.  But the company hopes to attract follow-on financing at the Cleantech Summit, the first event targeting so-called green technologies organized by the European Tech Tour Association. The CleanTech Summit is expected to attract some 150 delegates from 15 countries, including venture capitalists and big companies scouting for technologies.

A key topic on the first day of the clean tech summit will be “Smart Grid, Smart Meters: Can Start-Ups Make a Difference?” Mr. Schoenberg will argue that PPC already is.  The eight-year-old company, a pioneer in the field of broadband powerline technology for Internet access, is using the same technology to turn “dumb” electric meters into smart devices. It has connected  more than 300,000 households in Europe and the Middle East, including about 150,000 in the German cities of Mannheim, Dresden and Linz. “We have a good chance to become a major player in the market,” says Schoenberg.

While competitors are gaining traction in the U.S. market, he argues that Europe requires a different technology approach because of the alternative way power networks and consumers’ homes are structured. Another difference  is that in the U.S. the meters are usually placed on the outside of homes while in Europe they are often found in the basements of buildings.  PPC, a spin-off of MVV Energie in Mannheim, is uniquely positioned to cash in on compulsory smart metering infrastructure requirements being introduced across Europe, since its approach relies on the energy provider’s own infrastructure and does not require approval from home-owners or external support from service providers, Schoenberg says.

Around the world, utilities and government agencies are looking to create smart grids that will help drive down power consumption and reduce costs for both the companies and their customers. It is no surprise, then, that PPC is one of a number of companies devising ways to better control the demand for electric power. Google, for example, has developed a free Web service called PowerMeter that consumers can use to track energy use in their homes or businesses as it is consumed. AlertMe, a British company which will take part in the Cleantech Summit, is offering a similar service in Europe.

Remote metering will provide end customers with a very detailed, real-time summary of their actual power consumption.  For energy providers, smart metering will mean new, more flexible rate models and offers for energy management: power can be made available at a lower price at low load times for consumer applicances such as washing machines. Load equalization through temporary central power storage from the grid is another potential smart-grid application.

In 2008 the energy efficiency segment of clean tech, which will help companies develop the next generation of sustainable energy technologies for areas such as the smart grid, recorded the second highest levels of venture capital and private equity investment after solar, according to New Energy Finance, a London-based company which tracks the global clean tech sector. It reports that energy efficiency also attracted more than 33% of the estimated $180 billion in global green stimulus measures.

Europe continues to dominate sustainable energy new investment with $49.7 billion in 2008, up 2% over the previous year, according to New Energy Finance. This investment is underpinned by government policies supporting new sustainable energy projects, particularly in countries such as Spain, which saw $17.4 billion of asset finance investment in 2008.  Some of Europe’s most promising start-ups in solar,  wind, marine and biofuels will be presenting at the Cleantech Summit. “This event is going to be a proof of the innovation and ingenuity of European entrepreneurs,” says Cleantech Summit President Bernard Vogel, a managing partner at Geneva-based Endeavor Vision.

In the solar sector in 2008 Europe represented 81% of the global photovoltaic market, with Spain taking 45% and Germany taking 27%, says Vogel.
In wind, Europe represents 50% of installed wind capacity, with the U.S. representing 20%, Germany 20% and Spain 14%. European companies represent about 50% of the global market share, Vogel said. In Europe, wind is the highest electricity generation source in terms of new installed capacity, at 36% of all new energy production, exceeding all conventional sources including natural gas and coal. Higher risk, but potential game changers, are biofuels and wave energy, which, unlike solar and wind, can provide continuous energy generation, he added.

Some of the most successful clean tech companies, such as Germany’s Q-Cells are European.  However, “the U.S. are trying to catch up, they have bigger means and strong willingness to become a leader in clean technology,” said Vogel. “We have a head start but we have to start worrying if we are running fast enough.”

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