[Updated March 21 with comment from Jaech, see below] Longtime Northwest tech entrepreneur Jeremy Jaech has left the chief executive post at Seattle-based Verdiem, Xconomy has learned. Experienced tech entrepreneur and executive John Scumniotales, now heading the company as president and CEO, says the change was amicable and will allow Verdiem to move more aggressively as it seeks to broaden its footprint in the IT energy management market.

Verdiem blends cleantech and computing by making software to monitor energy consumption and turn off computers when they’re not being used. We covered Jaech’s hiring at Verdiem in late 2008. Jaech was the co-founder of software powerhouses Aldus and Visio. More recently, he’d worked as CEO of Trumba and a director at RealNetworks.

Scumniotales’ resume includes a stint as a vice president at Pacific Edge Software, which was acquired by Serena Software. Scumniotales says he’d been working with Jaech for the past year and a half on company direction and strategy, and the board, company and Jaech agreed it was time to make the change.

The decision was tied in part to Jaech’s wide array of commitments outside his day-to-day work, including service with company boards and other organizations, Scumniotales says.

“There’s no real fundamental change to the direction of the company, to the mission and vision around IT energy management,” Scumniotales says. “If anything, you’ll see kind of more rapid innovation and product delivery under my leadership.”

Scumniotales says one of his main areas of focus will be delivering a Verdiem-branded product that expands the company’s energy management focus beyond individual computers and into other types of IT hardware, such as switches and routers. It’s already been available from Verdiem partner Cisco, but Scumniotales says Verdiem built the underlying technology and is excited to offer the expanded service under its own label.

That’s a big move for Verdiem, allowing it to branch out horizontally within IT networks. “It really broadens the business out from a PC power management-focused company to really an IT energy management-focused company,” he says.

Scumniotales says he also continues to see opportunities for overall growth in the field, with the expansion of  IT energy use outpacing even the latest gains in efficiency improvements. Verdiem currently serves about 600 customers, totaling about 1.6 million individual computers, Scumniotales says.

[Update] I spoke with Jaech about a week later for another story and asked about his immediate plans. Ed Lazowska and the folks at the University of Washington computer science department were happy to welcome the UW alum back to campus and have set Jaech up with an office while he figures out what he’d like to focus on. Jaech says he’s planning on taking some of his past lessons from successful businesses and seek out areas where emerging technological platforms present innovation opportunities. An example might be the work on low-power sensors that professor Shwetak Patel and others have done at UW. It’s not a job, necessarily—I said it sounded something like “thinker in residence” and Jaech said he liked that description, so we’ll go with that for a title.

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As Congress weighs legislation to address persistent concerns about high unemployment, the construction sector in particular demands urgent attention. With investment in new homes and commercial buildings stalled at historically low levels, the unemployment rate for skilled construction workers is now more than twice the national average. The Bureau of Labor Statistics estimates that 1.9 million construction jobs have dried up since December 2007, and even as the overall unemployment rate has dropped below 10 percent, about one in five American construction workers now face the frightening prospect of long-term unemployment.

Fortunately, a viable solution to this crisis is now moving through Congress. The Home Star Retrofit Act of 2010, which was approved by the House of Representatives in May and now resides in the Senate, was conceived as a cost-effective two-year plan to stimulate rapid job creation in construction and manufacturing while helping Americans save money on their energy bills.

The basic idea behind Home Star is to generate an immediate spike in the market for cost-effective home energy retrofits—insulation, weatherization, HVAC upgrades and the like—by offering short-term consumer incentives and longer-term energy improvement financing options. Participating homeowners would permanently reduce their household energy costs (and consequently contribute to lower overall generation costs for public utilities), while the increased demand for skilled home improvement work would create good, living-wage jobs for tens of thousands of construction workers who have been sidelined by the recession.

The benefits of this plan are numerous. First, energy retrofits require site-specific labor that cannot be outsourced overseas, and idled construction workers can easily and quickly be retrained to do the work. Second, the caulking, insulation, sheet metal, HVAC equipment and other manufactured goods used in energy retrofits are overwhelmingly produced by American mills and factories, so growth in this sector would create additional jobs in construction-related manufacturing and retail. And while Home Star was primarily conceived as a cost-effective way to breathe life back into the construction industry, the program also would help to control rising energy costs for American consumers, significantly reduce building-related greenhouse gas emissions, and promote national security by reducing our dependence on imported energy.

Home Star has the potential to create an estimated 168,000 new jobs in construction and related industries over the next two years, with the ultimate goal of jump-starting a prosperous private industry that can stand on its own two feet and continue to provide construction industry employment long after the incentives have been phased out.

This bipartisan legislation has gained strong support from a broad coalition of policymakers, business leaders, trade associations, environmental groups and nonprofit organizations, ranging from local contractors and HVAC services to the Sierra Club and the United States Chamber of Commerce. Much of the hiring would be done by small business owners in all 50 states who are already engaged in saving American homeowners money on their energy bills, and are poised to grow as soon as the Home Star program become a reality.

Despite widespread national support for the proposal, Home Star has made little progress in the Senate since May, but the program will be in included in a pared-down Senate energy bill outlined this week by Senate Majority Leader Harry Reid. Speedy passage of this important legislation is key to getting our economy back on track, for the sooner we can get Home Star signed into law, the sooner we’ll be able to get hardworking Americans off the unemployment rolls and back in productive jobs that are good for the nation and good for the environment.

To learn more about the Home Star legislation and how you can support its passage, please visit www.efficiencyfirst.org/homestar and www.homestarcoalition.org.

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Ecohaus, the Seattle-based retail chain selling eco-friendly building materials, has raised $3.8 million in new financing, according to regulatory documents filed last week. CEO Rik Tokuno told Venture Wire that the funding, which came from existing investors Catamount Ventures, Mindful Investors, and Selby Ventures, will help to support the chain’s newest location, which opened this spring at 1090 Bryant Street in San Francisco’s SoMa neighborhood. Ecohaus sells sustainably produced flooring, kitchen and bath fixtures, and the like, as well as home energy efficiency and monitoring technology.

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One of MIT’s leading business professors, Richard Locke, came to Seattle yesterday to talk about the “S” word. Yes, we’ve been hearing a lot about sustainability lately, in the context of technology and business. Big companies like Microsoft, Amazon, and Boeing are talking seriously about the issue. Smaller Seattle-area companies like Verdiem, Powerit Solutions, and R.W. Beck have been making progress in important areas like energy efficiency and water management. To Locke, and many others, sustainability is much more than a corporate buzzword.

Locke is deputy dean of the MIT Sloan School of Management, and a professor of entrepreneurship and political science at MIT, based in Cambridge, MA. His research specialties include labor standards and practices, global entrepreneurship, and sustainable businesses. I sat down with him at the Westin Hotel downtown to get his perspective on Northwest companies’ green initiatives, and their possible partnerships with MIT. Locke was coming from meetings with Intel in the Portland area the previous day (the Santa Clara, CA-based chipmaker has manufacturing and development facilities in Hillsboro, OR). His other meetings in Seattle included a stop at Amazon to speak to Sloan School alums about the changing face of MBA education, and about sustainability in the corporate realm.

Locke defines sustainability broadly as “using resources today in a way that permits future generations to use them as well.” By this he means not just natural resources—energy, materials, water—but also social resources like people, jobs, and standards. “Let’s redefine sustainability in such a way that we can show the opportunities available, not just the constraints,” he says. “Once you broaden the definition, you expand the scope for individuals and organizations to try to do something about it.” (As I understand it, this definition of sustainability could include managing employees so they don’t burn out, creating jobs that last, and establishing fair labor standards that endure.)

Take Intel, for instance. Locke says the company is pursuing a series of initiatives to reduce its carbon footprint, improve its supply chain efficiency, and reshape the way it uses energy, water, and people. “Are there ways they can make, for example, new chips that might require less energy? They’re having a very interesting internal discussion about chip speed versus energy consumption. I find it fascinating that a large company in an extremely competitive sector, that still does manufacturing in … Next Page »

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I had the pleasure of attending the 2009 WTIA Tech Showcase Fast Pitch Forum yesterday. I was one of four panelists tasked with listening, reacting, and asking questions of the 23 Seattle-area companies that each had eight minutes to present. The day was divided up into six one-hour-long sessions, and I’m ashamed to admit I missed the last two sessions because I had some other meetings in Bellevue that I had to attend. However, after listening to 16 companies spread over four sessions, my brain was overflowing with new info and thoughts, so I’m not sure how much value I would have added during the final two sessions.

In a nutshell, I was very impressed by both the content and the form of the presentations. The presenters did a great job of condensing their pitch into exactly eight minutes. What also struck me was that despite the slow economic times, most of the companies were doing well in the marketplace. All of them had growing customer bases and rising revenue, and many of them were hiring.

It is a hackneyed phrase, but it is true—economic downturns are often the best times to build a startup company. In the chaos and confusion of turbulent times, there always lies opportunity. As industries change and contract, the marketplace is ripe for new solutions. Because despite the negative headlines in the media, people are still going about their daily activities and living their lives, and there will always be opportunities for new products and services, and for new technologies that reduce the cost and increase the efficiency of existing products and services.

Two examples in Seattle are Redfin and TeachStreet. Redfin is an online real estate brokerage. As we all know, the real estate industry nationwide is in a major slowdown. However, Redfin continues to experience strong growth, partly because I suspect that during tough times, people enjoy using technology to make their real estate deals a higher quality experience, not to mention a more efficient and cost-effective transaction.

TeachStreet was also interesting. They have built an online marketplace where people who want to learn can connect with the best teachers and classrooms; and where teachers and tutors can find students and clients. They also are growing nicely. During slow economic times, many folks want to learn new skills (either for professional or personal reasons), and many experts have more time on their hands to provide teaching services.

That being said, I’m sure everyone in the room today would rather the economy was growing at a 3 percent rate as it did from 2002-2007, as opposed to shrinking dramatically as it is this year. However, many of the 23 startups that presented yesterday will emerge from this recession in strong shape and will be well-positioned when the economy starts growing again. I was an active VC investor before, during, and after the dot-com crash of 2000 and the telecom meltdown of 2001. Many of today’s most successful startups were founded during those dark days, and as Tim Draper noted during his lunch speech, many of today’s biggest companies were founded in prior recessions.

So hope springs eternal, and I won’t apologize for finding silver linings in the current clouds.

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Kent, WA-based Naverus, a maker of novel navigation software for airlines, announced today it has raised $4 million in funding led by Foundation Capital and East Peak Partners. Naverus has developed a performance-based navigation system, which provides precise flight paths that are faster and more fuel-efficient and reduce carbon emissions. The company has airline customers in the U.S., Canada, Australia, and China.

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“If you’re a technology junkie, cleantech is the candy store for you,” said Byron McCann, co-founder and managing partner of Seattle-based Ascent Partners, an investment bank that advises cleantech and software entrepreneurs. McCann, who also serves on the board of the Northwest Energy Angels, was talking about his own transition from software to energy, and about his fascination with the complexities of cleantech. “Three years ago, I was doing some research, and the whole cleantech industry was starting to take off,” he said. “Now it’s on fire.”

McCann moderated a breakfast panel yesterday entitled “Harnessing IT for Energy.” Organized by the Washington Technology Industry Association (WTIA), the goal of the Seattle event was to stimulate discussion about the strengths of Washington state in software and energy distribution, and how they can be used to further innovation in cleantech. “We felt there was a huge opportunity for our state to become a leader in the convergence of IT and energy,” said Ken Myer, the chief executive of WTIA, in his opening remarks.

There are certainly some serious opportunities to consider. McCann noted that the state’s allocation of federal stimulus funding for energy transmission is projected to come to $574 million for energy efficiency, with another $1.5 billion going to smart-grid technologies (figures quoted from Climate Solutions, a Northwest nonprofit). He also pointed to financial industry surveys (as recent as November) that indicate cleantech and life sciences have the “highest potential for stability and growth.”

“The big issue for me is, this whole opportunity is not lost on the rest of the world,” McCann said. “If we win here, the stakes are huge. They’re bigger than information technology. The energy industry is the biggest on the planet.”

With that, he turned the discussion over to a distinguished panel, made up of Randy Berry, managing director at Areva T&D, a French smart-grid firm with operations in Redmond, WA; Jim Kensok, vice president and chief information officer of Spokane, WA-based utility company Avista; Marc Cummings, director of public affairs at Battelle’s Pacific Northwest National Laboratory (PNNL) in Richland, WA; and Michael Butler, chairman and CEO of Cascadia Capital in Seattle. They hit on some key progress being made in energy efficiency and smart grid systems, as well as what Washington still needs to do to create a cleantech hub—all from the complementary viewpoints of technologists, utilities, policy, and finance.

Here are a few key takeaways from each panelist:

Randy Berry of Areva T&D, a computer scientist by training, clarified that a “smarter” grid means more efficient, reliable, and environmentally friendly energy transmission and management. The problem is no longer just getting electricity from A to B. “Flows are all changing—it’s any direction on the grid,” he said, in part because of the addition of renewable sources like wind and solar. “It requires a lot of technology.” Berry said he has challenged his team to be able to display in a control center, … Next Page »

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One of the distinguished panelists for our upcoming Xconomy Forum on March 26 (The Rise of Cleantech in the Northwest) is Mark Aggar, director of environmental technology strategy for Microsoft. Aggar has been at his current post for just about a year, having come over from the Windows Server product planning group to be part of the sustainability team run by chief environmental strategist Rob Bernard.

I spoke with Aggar yesterday to get his thoughts on Microsoft’s role in advancing energy efficiency and sustainable technologies. A native of England, Aggar has been in the IT industry for 20 years, having cut his teeth on network software at Portland, OR-based NCD before joining Microsoft in 1999. Aggar and the sustainability team work on ways to reduce the environmental footprint of IT, as well as how IT can help the environment. All told, they work closely with about 100 other people from different divisions within Microsoft such as Windows Server, Data Center Services, and Dynamics (a business management tool).

Aggar’s concerns range from making PCs, processors, and data centers more energy-efficient, to making car-pool transportation easier to arrange, to using sensors and intelligent monitoring software “to identify where big-value opportunities are,” he says. That means thinking about how everything from office buildings to large corporate campuses to the national electricity grid operate, and how to improve them using IT.

Here are a few of Aggar’s personal areas of interest (it’s not yet clear to me how much, if anything, Microsoft is doing in each of these areas—we’ll have to grill him on March 26):

—Building management. “We see a lot of potential in dramatically driving up the efficiency of office buildings,” he says. That includes using “smart systems” to continuously evaluate a building’s energy usage and other factors.

—Smart grids. “With new renewables coming onto the grid, you really have to be more integrated with the actual consumers of the energy,” says Aggar. Installing sensors and communications technology (plus software to coordinate it all) and being able to respond to energy demands in real-time is crucial to improving efficiency.

—Water management. “This may not be such a big deal in the Northwest right now, but it will be in 20 to 30 years’ time,” he says. “You could dramatically change the amount of water with more intelligent use, like not having sprinklers running when it’s raining.” Aggar points out that agriculture uses 70 percent of the world’s freshwater resources, and a lot of that gets wasted. Smarter monitoring systems could help.

—Electric vehicles. “Electric cars are an environmental paradox,” he says. “If you’re not careful, you’ll create more CO2, and have to build more roads,” because it might increase the number of drivers out there. Getting people to share vehicles instead is a huge opportunity, he says. Social software, combined with location and scheduling technologies, could help people carpool.

So how might Microsoft help with all of this? “We have a strong role to play in ensuring our products are both energy efficient and have minimal impact on the environment,” Aggar says. “We have very broad reach into all elements of people’s lives—homes, businesses. We have the platforms and the technologies to help accelerate systems to help us live a more sustainable life. Plus it’s the right thing to do. And there are a lot of people at Microsoft who feel that way.”

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Here are seven key questions and answers about the electricity economy and smart-grid technology.

1. What is “electronomics” and where does it fit in today’s energy world?

One of the best ways to understand the new electric smart grid of the 21st century is by applying electronomics, which helps you analyze the rapidly emerging electricity economy. Electronomics means jobs, progress and prosperity; but it also spells huge financial opportunities and brand new companies and industries that will be created on a vast scale, a scale we haven’t seen in the United States for many decades or more.

Electronomics is also one of the key underpinnings for the stimulus package currently being shaped and fashioned in Washington DC. There are lots of stimulus ideas that create jobs for a year or two and that refurbish aging infrastructure. That’s really important. We need new bridges and roads and highways.

But the smart grid infrastructure that we’re talking about is much more lasting in its impact. It is the development of a new infrastructure that will permit new forms of commerce to take place. It is akin to the transcontinental railroad, the phone system, the interstate highway system and the Internet in the way that it will help enhance new fortunes and spawn new Googles and Microsofts.

Building out this grid will also allow us to remain competitive in a world that is rapidly moving from a petroleum economy to an electricity economy. Right now, we’re falling behind. Many of the most exciting and aggressive smart grid initiatives are coming from overseas. Much of the Middle East is using its oil money to create a state‐of‐the‐art smart grid along with sustainable cities. Europe spends 10x what we do on smart grid research. And China is leading the world in high‐voltage transmission and next‐generation grid efforts. If we want to keep pace, we have to master Electronomics and really dig in here.

2. What is the current state of the U.S. electric infrastructure?

The electric infrastructure in the United States has been called the most complex machine on earth, and with good reason. There are so many moving parts. For starters, the system has 14,000 transmission substations and 4,500 large substations for distribution. And, just as importantly, there are over 3,000 entities—each with a competing agenda—that own a piece of this national electric infrastructure. Actually, it’s not a truly cohesive infrastructure at all. Many countries around the world have one national electric grid. We don’t. Ours is fragmented, to say the least, and this makes it hard to implement technical and political “repairs.”

In addition to being fragmented, our electric infrastructure today is aging, outmoded, underfunded and overstressed. Basically, we’re talking about a 19th century system from the days of Edison and Westinghouse that uses 20th century equipment in an effort to keep up with a 21st century economy. This is the digital age and our electric grid is using electro‐mechanics from the 1960s and 70s rather than microprocessors. Approximately 70 percent of the transformers and transmission lines are 25 years old; and 60 percent of the circuit breakers are 30 or more years old.

We are paying the price for this. Congestion within our current electric infrastructure costs ratepayers $2 billion a year, and commercial ventures are losing more than $100 billion to outages. That’s not all, though. We’re simply not investing in our electric infrastructure. In fact, when it comes to our electric grid, we have an embarrassingly low R&D rate—about 1/20th the average of all U.S. industries.

No wonder that communities with decaying electric infrastructure lose jobs that shift to places with low‐cost, high‐quality power; and no wonder that our country is losing clean‐technology jobs to other nations around the world. The regulators are well intentioned, but they are out of touch. They are still rewarding utilities for installing instantly obsolete equipment, and they are still allowing utilities to sell more power at a time when we need to use less. This is a demand issue—not a supply issue.

The bottom line is that the electric system, as it’s currently configured, is out of sync. Wholesale power transactions jumped more than 300 percent between 2000 and 2005; near misses in terms of outages skyrocketed by 1,000 percent between 1997 and 2002; and there’s no way we can release the pressure by using alternative energy like solar and wind because they require intermittent bursts of power that today’s infrastructure just isn’t capable of providing.

3. What should / could the U.S. electric infrastructure look like if we really focused our energy and resources?

Infrastructure has always been the key to prosperity in the United States—whether it’s been the transcontinental railroad, the interstate highway system, rural electricity, or the telephone or Internet network. And building a smart electricity grid for the 21st century is no different. What we need to aim for is pretty clear. Our goal should be one vast, interconnected, intelligent system that is … Next Page »

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A new startup company is in the works at the University of Washington, based on inexpensive, portable solar cells that could go far beyond the standard rooftop model. Conventional solar cells are made from expensive silicon, but the UW group, led by materials science and engineering professor Alex Jen, has come up with a way to harness solar energy using thin polymer film—akin to really thin cling wrap.

“You can potentially make it to cover a large area,” said Jen, an expert in nanomaterials and organic polymer-based electronics. “It’s low-cost, lightweight, flexible, and could be conformed to any substrate you would like to use.”

The “large area” part of that equation is especially important, Jen said, as energy experts have estimated that solar cells covering 150 square miles in the Southwest working at 10 percent efficiency could generate enough electricity to power the entire United States. Jen’s technique could eventually help meet that goal.

The plastic film, which Jen said can be printed in a similar process to newspaper printing, is highly adaptable. It can be made in a semi-transparent form, so you could sandwich sheets of it between two glass plates and have tinted windows on your home or office building that double as solar panels.

It could even be used to power portable electronic devices, Jen said, just by sticking these thin films to the back of a computer or iPod. His group has made several versions of the polymer solar cells, and is in the process of scaling it up to make a prototype for large-area use. “Sunlight is very abundant,” Jen said. “The exposure of sunlight in one hour contains the amount of energy equal to the whole human population’s use in one year.”

But conventional solar panels are costly. Solar energy currently costs about four or five dollars per watt, compared to less than one dollar per watt for fossil fuels, Jen said. His group’s technology could bring the costs of solar energy down to similar prices as fossil fuels, in part because the manufacturing process could be done on a much larger scale than silicon solar cells. The challenge is to … Next Page »

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In our current economy, one of the biggest challenges for American lawmakers—at both the state and federal levels—is to do what they can to minimize the impact and shorten the duration of the recession.

A cornerstone of our return to prosperity should be a program designed to establish energy independence, with a focus on improving the efficiency of our electrical grid, reducing energy losses, and speeding the adoption of renewable energy sources.

Grid modernization is critical, but very expensive. A recent report from the Department of Energy’s Pacific Northwest National Laboratory (PNNL), estimated that we’ll need $450 billion in grid infrastructure investment between now and 2020 just to keep up with anticipated U.S. electric demand.

A seldom-reported fact is that up to 67 percent of our electricity we generate from fossil fuels is wasted from the point where it is generated and enters the grid to the point where it is consumed by the end-user, according to the Department of Energy. That means if we can save a kilowatt-hour (kWh) on the consumption side by making the grid more efficient, we don’t have to generate 3 kWhs! This equation has potentially dramatic effects on greenhouse gas emissions. We believe that making the grid “smarter,” with digital tools that monitor and manage loads while balancing generation sources, can save energy, lower electricity bills, and substantially reduce greenhouse gas emissions.

Recent studies support this view. Department of Energy studies show that if we can flatten the electric grid’s demand peaks, we can avoid spending $50 billion on new generation. Bringing smart technology to the grid can also generate substantial economic benefits, including the creation of tens of thousands of green-collar jobs.

There are hundreds of companies working to expand generation from wind, solar, and other renewable sources. These are a critical component in our quest for energy independence. However, there are relatively few companies working on what we see as the low hanging fruit: improving the … Next Page »

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EnerNOC (NASDAQ: ENOC), the Boston-based company that pays factory operators, store owners, and local governments for the right to dial back their electricity usage during times of peak demand, announced today that the City of Boston is finally diving into the local “demand response” pool. Under a new agreement negotiated with the office of Mayor Thomas Menino, Boston City Hall, the Boston Public Library, and Boston Police Headquarters will be equipped with remote-controlled meters that allow EnerNOC to reduce non-essential electricity usage whenever local utilities need a buffer. In return, the city will get periodic payments—whether or not it’s ever called upon to cut usage—plus additional money for every actual demand response event.

EnerNOC had previously landed clients seemingly everywhere on the Eastern Seaboard except its home city. As we’ve reported, the State of Rhode Island, the State of Vermont, the State of Connecticut, and even the Pentagon have joined EnerNOC’s pools, whose willingness to contribute “negawatts” by cutting electricity consumption during heat waves or other emergencies means utilities don’t have to build additional fossil-fuel plants. But Boston wasn’t a participant, until now.

“The City of Boston is a hub of clean tech innovation, and EnerNOC is a shining example of Boston-based companies that are making an impact on the way the world uses energy,” Mayor Menino said in a statement released today. “Demand response allows the City to implement smart energy saving measures and make an immediate contribution to the overall reliability of our region’s electric power grid. This is a win-win strategy that puts dollars back into our budget.”

EnerNOC chairman and CEO Tim Healy says the Boston contract has both practical and symbolic importance for the company. “There’s a lot of great discussion and dialogue about what the Commonwealth of Massachusetts and the City of Boston can do to create green jobs and green initiatives, but the fact that the city has decided to step forth and participate and find innovators right here in its backyard, while putting more revenue back into the city’s pockets, is important to us,” Healy told me last night.

“Also, we have so many people who work for us who live in the South End or the North End, and they like the fact that the very city they live in has chosen us—it’s another testament to them being at the right company at the right time.”

Like all EnerNOC clients, the city will get free access to a proprietary EnerNOC software package called PowerTrak. Using data collected by the monitoring and metering equipment installed at each EnerNOC client site, PowerTrak helps business and institutions identify ways to cut energy use.

How much money the city will get back through the demand-response payments and the efficiency monitoring depends on … Next Page »

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While capitalist systems are, in theory, open to any entrepreneur with an idea for a better mousetrap, most investors are pragmatists. They aren’t likely to pony up for a garage tinkerer with a way to build passenger jets better than Boeing’s or supercomputers better than Cray’s. The reality, in other words, is that certain high-tech industries are essentially closed to small businesses—and that includes the American automobile industry, as the litany of failed rebel carmakers, from Tucker to Delorean, attests.

So how were Jay Rogers and his nine employees at Local Motors, a tiny startup in Wareham, MA, able to raise $4 million to test the idea that car design can be crowdsourced to Web-based communities and that consumers will want $50,000 “mass-customized” vehicles built in small batches at a network of micro-factories?

It wasn’t because of Detroit’s recent travails—Local Motors collected its two investment rounds well before the Big Three started passing the hat in Washington. More likely, it was because of Rogers’ impressive resume—Princeton undergrad, investment analyst, startup entrepreneur in China, Marine company commander in Iraq, Harvard MBA—and his passionate intensity when it comes to talking about cars. And not just about car design (though he loves his classic 1971 Mercedes 280SL) but about the auto industry’s carbon footprint, and what you might call its geopolitical footprint.

“Being on the ground in Iraq showed me that the war is really about our reliance on Middle East oil,” Rogers told me after a whirlwind tour of the startup’s headquarters yesterday. (I had scheduled the visit immediately after learning about Local Motors from the company’s unusual presentation at the December 9 Web Innovators Group meeting.) “The problem of oil end-use is absolutely being missed here,” he says. “We were helping the Iraqis to rebuild their oil ministry, but thinking deeper, thinking to myself as a businessman and an entrepreneur, I would have liked to just shut this whole apparatus down. Friends of mine had been killed. Global warming was weighing heavily on my mind. I really had a moment of ‘What should I be doing with the rest of my life? What can I do to make a difference?’”

His musings took him back to his love of cars—which could well be genetic, considering that he’s the grandson of Ralph Rogers, who helped develop the United States’ first diesel passenger car and took over the famous Indian Motorycle Manufacturing Company in Springfield, MA, in 1945. (The elder Rogers went on to chair PBS and co-found the Children’s Television Workshop.) After the Marines, Jay Rogers, who’s now 35, briefly considered starting a company to build cars powered by hydrogen fuel cells. “But making a bet on the science was not going to be a sure-fire way to change things,” he says. He wanted to make cars that people could actually buy, and soon.

“I looked at the supply chain and I saw that there are people who make great engines, great batteries, great lightweight materials—but the people who make cars can’t use them, because they’ve gotten stuck in their enormous apparatus.” For Ford, Chrysler, and GM (and, to be fair, for Toyota, Honda, and BMW too), bringing out a new car model is a five-to-seven-year process that can cost a billion dollars or more. Which means as much as the Big Three might want to respond to consumers’ changing tastes—their newfound disdain for trucks and SUVs, for example—they simply can’t, in any reasonable amount of time. It also means that bailout or no, any serious contribution Detroit can make to scaling back the nation’s petroleum consumption is likely half a decade away.

“I want to change how the system itself works,” Rogers says. “So I thought, maybe we’ll just make a system.”

The system Rogers and his colleagues have built so far is 50 percent Web 2.0 social community and 50 percent rapid-prototyping workshop. The first half of Rogers’ big idea is to … Next Page »

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Oil prices have recently dropped well below $100 in response to slower economic growth around the world. But this decline doesn’t necessarily mean that the utilities industry will be able to provide cheaper power to millions of American consumers and companies.

In fact, utilities are going to face huge and upward price pressure on the electricity they deliver over the course of the next decade because of environmental clean-up costs, rising world market prices for energy sources like natural gas, much-needed infrastructure improvements, and an eventual restoration of economic demand. All of this will lead to larger energy bills—at least triple what we’re paying now—for citizens across the country.

Fortunately, there’s a significant new business model coming of age in the utilities industry today, a localized energy distribution system that will gradually replace the centralized approach that has somehow managed to stand the test of time in American cities and towns since the 19th century.

This 21st century distributed model is facilitating the development of exciting new alternative energy technologies, which will ultimately lower electricity prices for business and residential customers while allowing them to customize and control their energy intake in the home or at the factory or warehouse. When it takes hold, the localized model will even enable companies and consumers to generate their own energy, or sell it to a utility.

Clearly, this is a profound and sweeping technology transformation in the making. For over 100 years—ever since Westinghouse and Edison fought over AC and DC current standards—utilities have functioned like mainframe computers; hulking and centrally located power plants have done all the work and then sent the electricity out along a tangle of old, antiquated transmission lines. Unlike the one-way central-station-to-customer model, the new distributed model puts energy users in charge, thanks to smart grids, digital meters and intelligent appliances that talk to each other the way PCs do in a distributed computing network.

Next-Generation Biomass Furnaces

Producing energy—and greater efficiency, economy and green-collar job growth—at the local level is the wave of the future for the utility industry. And one of the most under-estimated and under-publicized delivery systems for this decentralized but potentially large-scale approach is the new generation of clean-burning and cutting-edge biomass furnaces. These state-of-the-art mobile furnaces, which are based on the latest breakthrough technology, utilize readily available and tremendously inexpensive feedstock like wood and wood waste. [Disclosure: The author is the founder of Greenwood Technologies, which develops clean-burning, biomass furnaces---Eds.]

Our recent analysis of available fuel sources in a cold-weather region like New England shows just how cost-effective these wood-burning biomass furnace systems can be. Assuming that home heating oil is currently about $3.50 a gallon, we calculated equivalent prices that range from $0.26 a gallon to $0.90 a gallon for cord wood, utility-scale wood and wood waste.

We believe that the new “biomath of biomass”—which reflects a considerable pricing differential between wood / wood waste and just about any other fuel possibility—is sustainable, structural and solid for the long haul. And our projections for future energy production confirm this. Indeed, after crunching the numbers, we anticipate that overall domestic energy production will grow 0.8% annually between 2006 and 2030 versus 4.3% for biomass.

The story behind these production numbers revolves around regulatory uncertainty, the cost of technology, and global energy flows and pricing. Carbon capture, for example, is a very well understood process, but no one is certain if it will really work on a large scale. These doubts, plus the government’s ambivalence about a carbon cap-and-trade program or tax of some sort, have effectively taken new coal plants off the table. Even without carbon capture, the costs of a new coal plant are massive, on the order of $2 billion, so very few utilities can afford to make a financial commitment this large—especially in a credit-constrained environment.

If coal is a no-go, then what about natural gas? Natural gas plants are relatively … Next Page »

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Xconomy had the great privilege last week of hosting energy guru Amory Lovins, the cofounder, chairman, and chief scientist of the famous Rocky Mountain Institute resource think tank in Colorado, for a “fireside chat” with local venture community leader Paul Maeder of Highland Capital Partners. There was no real fire or other unwarranted carbon emissions, of course—it was all part of Xconomy’s latest forum event at the British Consulate General in Cambridge, MA, focusing on the role of technological innovation in rebuilding the U.S. energy economy.

We published a summary of the forum’s opening panel on Thursday, and today we wanted to bring you a transcript of the conversation between Maeder and Lovins. Energy has been on Maeder’s mind a lot lately: he’s leading his firm’s effort to branch out from healthcare, consumer, Internet, and communications investments into the world of energy efficiency technologies. And he quizzed Lovins—who was on his way to the other end of Cambridge to give a speech as part of the “Future of Energy” series at the Harvard University Center for the Environment—on a dizzying variety of issues, from the role of oil prices in energy innovation to the inefficiency of today’s building and construction industry and the best way to resurrect U.S. automakers.

But while the discussion was wide-ranging, Lovins returned over and over to the message that is at the center of the Rocky Mountain Institute’s advocacy and of his own consulting work for automakers and companies in other industries: that tapping market mechanisms to bring about the more efficient use of resources isn’t simply a good thing for the global environment, it generates greater employment, wealth, equality, and national security.

Paul Maeder: Let’s begin with how you got here. You grew up in Washington, D.C., and went to Harvard and Oxford. Neither school is known as an energy powerhouse.

Amory Lovins: Neither was any other place. There was no university in the world where you could study energy. It was always the engineers, the lawyers, and the accountants who created energy policy. Just two years before the Arab energy embargo, schools were still saying “Energy, what’s that? It’s not a real subject. We don’t have a chair in it.”

PM: How did you come to the conclusion, even before the first oil shock, that energy was the crux of so many issues?

AL: From reading books by John Holdren and others, it was pretty clear that energy was as close as anything to being the master key that would teach us about other issues like water and climate and minerals. And that turned out to be true. Then I wrote a paper that was published in Foreign Affairs in 1976 ["Energy Strategy: The Road Not Taken"], and I’ve been real busy since then.

PM: In Europe, which has a culture of doing more with less, there has been sensitivity to energy prices for a long time. Here, the acuteness of the problem only jumped to the forefront when gas prices were starting with a 4. Now they’re back to starting with a 1. Where are we now? Was this just a flash of awareness, or was it a secular change?

AL: I think there is a secular change, because we still have acutely the security and the climate problems around energy. And those will be with us for quite a while, and that will help us to keep our eyes on the ball in a way that didn’t happen after energy prices crashed in the late 1970s. That said, oil is a commodity and its prices have been perfectly random since 1859. There is no reason to believe they won’t … Next Page »

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I pinged energy expert Jesse Berst, the managing director of Redmond, WA-based GlobalSmartEnergy, to get his take on EnerG2, the venture-backed energy-storage startup we profiled earlier today. EnerG2 has developed a nanotech approach to building better batteries and “ultracapacitors” for storing electricity. Berst, an Xconomist, replied with some insights into the startup’s prospects for becoming a major player in the electricity economy (you can read more about this here and here), and the main challenge it faces.

Berst first emphasized the importance of EnerG2′s core market. “Energy storage is the choke point of the electricity economy,” he writes. “Whether you want electric vehicles, a smarter, more reliable grid, or simply a laptop that lasts all day on a single charge, it is the lack of cost-efficient storage that stands in your way.”

He then gave a bit of context to the problem EnerG2 is solving. “Although we’re making progress, it is largely incremental—squeezing out more efficiency from approaches that have been known for decades. If EnerG2 has found a new way to store energy, and a way that can achieve industrial scale, the world will beat a path to its door.”

“That said, it should be prepared for skepticism,” Berst writes. “Every few years a new startup appears claiming radical improvements in storage. So far none of them have been able to move to real-world applications in quantity.”

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There’s no such thing as a free flop.

A “flop,” or floating-point operation, is a calculation involving a decimal number; engineers often measure the performance of computers in terms of the number of “gigaflop/s” (billions of floating-point operations per second) they can sustain. In the supercomputing community, it’s a longstanding ritual to compare various machines’ maximum gigaflop/s as they tackle standardized math problems called benchmarks. The world’s fastest computer—a 122,400-processor IBM machine at the Los Alamos National Laboratory called Roadrunner—can run at just over a million gigaflop/s, or 1.026 petaflop/s, according to Top500, the most prominent list of top supercomputing sites.

But as a general rule, the faster a computer runs, the more power it consumes—and the more waste heat it generates, and the more additional power is needed to run cooling systems. If current trends continue, according to McKinsey & Company, then by 2020 the electric plants needed to power the world’s data centers will be churning out more greenhouse gases than the entire airline industry. The problem is getting so serious that some organizations are having to scale back plans to upgrade their data centers with faster machines—not because they can’t afford them, but because local utilities can’t supply any more electricity.

Maynard, MA-based SiCortex serves the high-performance computing market, so it’s naturally obsessed with the gigaflops game—but with a twist. The six-year-old startup builds massively parallel computers with thousands of processors. The processors themselves aren’t very fast. They run at around 700 Megahertz, slower than the chips inside most desktop and laptop PCs, which saves a lot of electricity. But they’re wired together in a way that makes SiCortex’s computers extremely zippy nonetheless. And today SiCortex is proposing an overhaul in the way the performance of high-end computers is measured and ranked, one that would take a machine’s power consumption into account and reward machines that use it sparingly.

The company calls its new measuring system the Green Computing Performance Index, and it’s urging managers of government and academic supercomputing centers and corporate data centers to use it to evaluate the full benefits and costs of owning high-performance computing systems from companies like Cray, SGI, Hewlett-Packard, IBM, and of course, SiCortex itself.

When evaluating the full cost of owning a high-performance computer, SiCortex argues, organizations should divide its performance in gigaflop/s by its power consumption in kilowatts. When you do that, a number of machines that are nominally faster than SiCortex’s machines—such Cray Inc.’s XT3 and XT4, IBM’s Blue Gene, and SGI’s Altix 8200EX—come out looking like power hogs. When running the standard Linpack benchmark, for example, an 1,100-processr Cray XT3 machine at the Swiss National Supercomputing Centre gets just 17 gigaflop/s to the kilowatt, while a 1,458-processor SiCortex machine gets a comparatively huge 253 gigaflop/s to the kilowatt.

“If you look at the high-performance computing benchmarks that Top500 produces, it’s great stuff, but it doesn’t give you a measure of the actual energy efficiency of the computers themselves,” says Christopher Stone, SiCortex’s CEO. “Everyone in the high-performance computing business is running around talking about being green or wanting to be green, so we thought why not … Next Page »

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San Diego’s Qualcomm introduced a new fuel manager program yesterday as part of its truck fleet performance monitoring service. Qualcomm said the addition to its OmniVision Transportation software enables trucking fleet managers to identify patterns of unnecessary fuel use, such as speeding, idling and over-revving their engines.

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