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August 24, 2005

Conference review: 2005 Energy Innovators in the Pacific Northwest

Went to this conference yesterday in Portland. Put on by the Northwest Energy Technology Collaborative, good bunch of guys headed by Jeff Morris. The morning was split into a business track with fairly mature companies and an academic track talking about stuff in the lab. I went to the lab geek session since I had seen most of the more mature companies. The afternoon was dedicated to venture stage companies which I will review in detail in a moment. From the academic track, unfortunately there was nothing ready for commercialization within the next two years, so I won't bother to geek out on that stuff. Just a few comments on the later stage companies:
1. ADI Thermal Power out of Woodenville, WA is creating a sterling engine that they hope will achieve 50% effeciency. They are currently at 40% on their Alpha unit and hope to get it to 45% by field Beta in January. Currently running only on Hydrogen and Propane, no liquid fuels. Interesting, but far behind STM power.
2. Carmanah Technologies, Inc. Solar powered LED lighting products. Great combination of highly efficient LEDs and today's solar collection technologies. They have things like outdoor lights, flashers, etc. that you want to put somewhere and have self powered. I like the use of LEDs. I don't see anything proprietary.
3. Novus Power Corp. These guys have invented a new design for an electric motor that uses 1/4 the electricity to produce same amount of torque at any size. Very cool technology. Very smart guys. I am no mechanical engineer, so I couldn't make a technical analysis as to how good their invention is at all. The real issue is how do you sell a new engine design into a market that hasn't had a fundamental technology change in 100 years. You have to get OEM design wins into existing products. Products with warranties and lots of historical experience with other designs. The energy savings along are probably not enough to get you wins. You have to figure out which niches just CAN'T LIVE WITHOUT your power savings. I have no idea those are. I hope they do.
4. Prometheus Energy Company. They have a small scale production facility to extract LNG from landfills, stranded gas wells, anaerobic digesters and coal mines. The key to their business is putting the LNG manufacturing closer to the consumption (basically LA) and save transportation and reforming (from CNG) costs. The numbers work. Unfortunately the market is small and the sales time is VERY long.

Now on to the fun stuff. The Venture Companies.

1. Microstaq. I LOVE this one. They basically have a silicon flow control valve that is about 1/20 the size of the mechanical flow control valve it replaces. A picture says a 1000 words and I wish I had the one from their presentation with the old valve and the new one next to each other. My friends at Yaletown are in the deal and my old friend Russ Aldrich just became interim CEO. This is part of the overall solid-state-ization of the automobile. Look under your hood. There are hundreds if not thousands of analogue old mechanical things in there. Most everything outside the core engine itself could be made solid state and out of silicone with enough thought. There are already large locomotives and dump trucks with solid state drive trains. Their first target market is to replace the mechanical flow control valve in an air condition pump with an electronically controlled one, a $750M market. You get 4mpg better, save weight and have finer grain control. The issue is the long sales cycle. But fortunatley these guys came out of the auto parts industry and have the right contacts. I like it.

2. Columbia Energy partners. This was more a project finance, Real estate limited partnership pitch than a venture pitch. They are basically small scale (<10MW) wind developers taking advantage of the standardized interconnect contracts and requirements for utilities to buy power from these facilities. They basically need $1.5M in equity up front to put in a 5MW deal. These equity investors are really treated like loans and get a projected 12% IRR over a 20 year life. Basically they should be marketing this in $50K chunks to doctors and lawyers not to VCs. There is no invention here.

3. Sieber Energy Inc. Yet another wave energy company. But this one has an interesting technology twist. They basically put bobbers on plungers out in the ocean. As these go up and down they create compressed air, just like when you pump a bicycle pump. This compressed air is delivered by a LONG hose to the shore. There you can run anything pneumatic from an electricity generator to a nail gun. Their technology works in prototype lab scale at the university and they want to commercialize it. Too much of a wild ass swing for me, but intellectualy interesting. Will take ALOT of capital to commercialize.

4. Novinium. These guys have figured out a way to increase the lifespan of medium voltage electricity grid cables. The WW industry spends about $350M a year replacing cables they say. Inject their gunk into your cables and get another 40 years (good as new) they say. Their goo is second generation goo. The first generation was developed by the same team and is now sold by the leader in the field with about $60M in revenues. Looks like an interesting niche technology with a long sales cycle to me. Not great for venture sized returns.

Comments always welcome.

Posted by Martin at 3:06 PM | Comments (0) | TrackBack

August 5, 2005

NorthWest Energy Investor Forum August 23

I will be there.

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