Black Coral’s Rob Day Talks Cleantech By Way of IT, Why Evergreen Solar’s Bankruptcy Isn’t the End, and Boston’s Energy Future

8/30/11Follow @xconomy

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early stage. It will come back. Investors move one way and then they’ll come back the other way.

I don’t think the industry has taken enough advantage of IT and Web-based tech, though.

X: Why is cleantech IT a more favorable bet than traditional cleantech for investors?

RD: The talent is available. It can be a lot more capital efficient. Particularly since you’re not going to have to reinvent an IT technology to make it work. You can take advantage of existing server technology. Costs are getting lower and lower, so it’s less risky.

It can be a lot faster to get into customers’ hands. Building new solar panels is hard to get to customers to test. If you’re building an IT-based solution, you can go test it somewhere.

The lessons of the consumer Web have decidedly not been applied to energy. At the end of the day they’re selling a commodity—you’re competing against a cost curve. It doesn’t have positive feedback loops, where every single customer that adopts your products makes previous customers happy. When a VC makes returns, it tends to be with those feedback loops.

For a VC to make the outsized returns they like to see, I don’t think its particularly on the back of patents. I don’t care how many different ways you turn your photons into kilowatt hours, there are going to be other ways.

I’m just starting to see companies taking advantage of those Web-based models (e-commerce, community based, market based) and apply them to cleantech. In some ways it feels very niche-y.

X: Why is this just starting to happen?

RD: In order to build communities around people doing building monitoring, first you have to have your monitoring technology. As we built out more intelligent hardware in these markets, now we’re going to see the ability to add software on top of them. We’re starting to get enough critical mass that we can start pulling people together in this way.

We’re still a long way from having such sufficient intelligent hardware out there that the market’s obvious. The better business ideas that will take advantage of it will come out before it’s an obvious opportunity.

X: What do those companies look like? Is it a matter of building Web-based communities surrounding cleantech adoption?

RD: I’m talking about things that form markets right now, in addition to everything I just described—the lack of channels, the need to reinvent existing channels. There’s value to people providing practical tips about energy usage. But it might be best served as being part of a … Next Page »

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  • noisetosignal

    I believe the following rational is poorly thought through …”It’s one on a long list of painful lessons learned by those who are investing. You need to look pretty far out on the cost curve, and make sure you’re not investing in a temporary part of the cost curve. It’s tough to do because you don’t know what other people are working on.”

    It is not so much about looking far out on the cost curve or worrying about what else someone is working on; it is more about understanding the fundamentals of the “who is writing the check?” For example, what is this entity’s (government, consumer, business) source of funding? Is the source of funding stable? Government funding should never be assumed as stable neither should financing provided by banks, which at this point are still heavily leveraged and continue to receive backing from government programs.

    Lastly, how do you propose consumers will have the CapEx to invest in solar or have sufficient disposable income to afford low OPEX options? Your premise fails the basic test for consumer spending.

    Consumers go into debt or stretch their dollars for the following: children’s education; entertainment, and productivity tools (communication). Solar is none of these.

    Have you forgotten that the majority of today’s homeowners struggling to do their best to not repeat the another great depression in their lifetime? Now you propose renewable generation with another form of debt. My question to you — why do you continue to build a business out of consumer debt?

    Lastly, it appears you know a lot about consumer behavior — what motivated you to install solar panels — assuming of course, you have installed solar panels? We’ve had solar for 11 years with local storage. And you?