This week, the Seattle area has lived up to its reputation as home to the future of technology, with three local (or formerly local) innovators making the national media rounds in Technology Review, the New York Times, and Time Magazine. And not in just one field or sector either—the three span academia (smart sensors), a major online video company, and a pervasive viral humor blog startup.

—Jason Kilar, CEO of online video website Hulu and a former Amazon executive, wrote a personal essay for the New York Times about his journey into the world of Internet startups, including his first meeting with Amazon CEO Jeff Bezos, back when Bezos could be much more casual in presentation than he could probably get away with now. Kilar left Amazon in 2006 after becoming senior vice president of worldwide application software, to work for Hulu.

—Ben Huh, the Seattle-based owner of wildly successful humor websites like Lolcats (I Can Has Cheezburger) and FAIL Blog, was profiled in a Time Magazine story about his company Pet Holdings’ success with user-generated content. Starting with angel investor money in 2007, Huh bought the original Lolcats website and has since expanded to more than 20 viral humor blogs.

—Shwetak Patel, assistant professor in the departments of electrical engineering and computer science and engineering at the University of Washington made Technology Review’s list of top young innovators for developing a way to tell how people are moving around a house based on how they use electricity, gas, and water. Patel started with simple devices to monitor house utility use, but has since developed devices for sensing when people enter or leave a room based on air pressure. Monitoring resource usage could ideally lead to conservation of those resources, and help with keeping watch on elderly people who live alone. Patel recently co-founded a startup company in Seattle to generate appliance-itemized utility bills for consumers.

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Fido just might be a homeowner’s new best friend. The watchdog in question isn’t a vigilant Doberman or German Shepard, but rather the flagship product of EcoDog, a home energy-monitoring start-up based in Vista, CA. The device connects to a home circuit breaker and delivers real-time information on the home’s energy usage.

"Fido" keeps watch on your electric grid

One nifty aspect of the technology is that Fido does not use an internet data or wireless technology to transmit the data to your home computer. Instead, once Fido is installed, it automatically uses your home’s electrical wiring to send data. Fido delivers a detailed report on the electricity usage of the house, room by room, appliance by appliance.

Founder and CEO Ron Pitt, a software engineer by training, used to work in the alternative energy industry. But he became increasingly frustrated with the impracticality of solar and wind-generated power for the average homeowner. He thought there was an overemphasis on “how to generate one more kilowatt per hour.” Instead, Pitt decided that focusing on energy management “can make a much greater impact than any number of solar panels you put on roofs.”

EcoDog CEO Ron Pitt

This philosophy has translated into EcoDog’s marketing, which touts how Fido can save homeowners money by offering complete transparency of their utility costs. “Environmentally green is good, but money green is better,” says Pitt. “People want to do the right thing, but unless you make it financially advantageous to them, it’s never going to gain wide acceptance. Solar is not a compelling financial model.” It just so happens that by bringing down their electricity costs, homeowners simultaneously streamline their energy usage.

Other methods of measuring home energy consumption, Pitt says, are based on canned questionnaires, which offer little insight into the specific details of an individual residence’s electricity costs. “The beauty of Fido is that it is able to take actual usage data from your home, as well as the projected rate from the utility company, to deliver a report tailored to you.” A homeowner may find out that certain inefficient appliances are responsible for the bulk of the utility bill. Pitt cites one homeowner in the pilot program who discovered that a single dehumidifier in a storage room was responsible for $90 a month in electricity.

“The point of the system is to measure where the problem areas are,” he says. “You don’t have to guess.”

EcoDog has come a long way since 2005, when Pitt sodered his first energy …Next Page »

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I’m sure some of you have heard a version of this quote before: “In the 1950s, 60s, and 70s, large families in the U.S. sent their fifth or sixth child to work for the government or a utility company under the assumption that the later the child was born the less intelligent he/she was.” Even for most of us from the generation X (or Y or Z, whatever they are calling us these days) any mention of government or utility jobs brings visuals of diesel locomotives coughing dark soot and slowly chugging away to, well, nowhere. When was the last time you saw a glossy business school brochure highlighting how many students they place with the Bureau of Land Management or Pacific Gas & Electric? Exactly.

Is this about to change? Has it suddenly become sexy to work for the government and/or a utility company? There definitely are some signs here at the MIT Sloan School of Management that attitudes are changing. More than a handful of my classmates have accepted summer internship offers from utility companies and/or government agencies this year.

“How is this possible?” I’ve been asking myself. How can two such dissimilar worlds—the business schools that are the ultimate centers of capitalist education and the utilities and government offices that are the ultimate conservative workplaces—come together? Well, it turns out that we’re living in a new world in 2009.

Today, with $900 billion of stimulus capital being handed out, Washington, D.C. is being touted as the new Wall Street. After decades of inaction, there is suddenly urgent talk of building 220-volt electricity transmission lines all across the U.S. Today, consumers want an hour-by-hour update of their electricity consumption. Today, new business models are being talked about to get ready for carbon pricing. It’s in this environment that students from business schools are expected to thrive.

“Working at the US Department of Energy (DOE) today is like working at NASA during the Apollo program,” says Leland Cheung, a first-year Sloan student. Leland will spend his summer at the Advance Research Projects Agency-Energy (ARPA-E) in Washington. ARPA-E, under the DOE umbrella, has been tasked with dispensing $400 million to companies moving advanced energy technologies toward commercialization.

Cheung, with a pre-Sloan career in the venture capital industry, hopes to get valuable exposure to the energy sector and develop his network while at ARPA-E this summer. While he does not think a full time job in the government is something he would prefer, he says “I would try to adopt and incorporate best practices from the private sector in the government to make it more attractive for bright and energetic individuals.”

Obama Administration policies seem to be making government jobs more attractive. “Obama changed the tenor of what it means to pursue an energy career with the US government,” Christina Ingersoll, a first-year Sloan student, told me. “Under Bush’s administration, I would have felt different and probably more suspicious of working for the government.” Ingersoll will spend her summer at the National Renewable Energy Laboratory (NREL) in Golden, CO in the Technology Transfer Office.

Prior to starting at Sloan, she had not given any thought about working for the government. She changed her mind after talking to a faculty member at MIT Sloan and fellow MIT students. “NREL is a phenomenal place if you’re interested in renewable energy,” she says. “I knew I would work hard, but with smart interesting people. I have the chance to develop an expertise, and to have access to some of the leading scientists in the world on energy. Also, Colorado is a great location for the summer!”

Changes in regulations, including feed-in tariffs/decoupling/advance metering, seem to be making the utilities a sought-after destination for business school students. A group director at Massachusetts utility NSTAR told Pavel Gavrilov, a first-year Sloan student, that she felt change was coming due to the increase in MBAs coming through the organization. Gavrilov was one of those interested students. He has accepted a summer internship offer from NSTAR.

Gavrilov would like to see further changes at utilities. “For too long it’s been slow and steady growth as the only option for utilities and thus they just build rate base” he says. ” I think with changing regulations they are able to fulfill their shareholders needs in other ways–just look at decoupling.”

Veronica Metzner, another first-year Sloan student, agrees with Gavrilov and says that the utilities should go further. “It is critical for the utilities to asses how to best meet the needs of their customers by helping them become as energy efficient as possible while at the same time continuing to deliver sustained and respectable returns to shareholders,” says Metzner.

Metzner accepted a summer internship offer from the California’s largest utility, PG&E. She added that she always wanted to be in the energy field, but the support of MIT’s Energy Club and other campus resources helped her maintain a focus and get access to career opportunities.

Like other organizations, government agencies and utilities expect students to have a grasp of both traditional management skills and cross-disciplinary concepts. A strong focus on energy related activities and quantitative skills help immensely, Metzner and Ingersoll commented. Gavrilov on the other hand thinks that while MBAs are becoming a more important part of utilities, there’s a long way to go for most of them. To apply skills learnt and using the MBA experience to help the organizations flourish in these changing times will require some time and patience.

What remains to be seen is whether the change that seems to be getting business-school students excited about working for government agencies and utilities will continue, or whether these organizations will settle back into the conservative status quo ante. Can a bunch of motivated business school students armed with management and quantitative skills catalyze this change? Stay tuned.

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Green Mountain Power—the Colchester, VT-based electrical utility that serves approximately one-quarter of Vermont residents—said today that it has joined the New England demand-response pool managed by Boston-based EnerNOC (NASDAQ: ENOC). Green Mountain customers who are already registered through the utility to receive payments or rate reductions in return for a commitment to roll back electrical usage during times of peak demand will now be able to participate in regional demand-response events through EnerNOC’s larger network. The two companies have also agreed to work together to sign up more demand-response customers in Vermont.

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[Updated with comments from Kelly Jo MacArthur on page 2]
In recent years, we have seen an explosion of alternative energy devices, yet most of these technologies remain out of the reach of the average homeowner. To outfit your roof with solar panels, you’d probably be out $10,000 to $20,000 as an initial investment. Clarian Technologies, a brand new, three-employee Seattle startup, wants to change all that. With its products slated to hit the market in 2010, the company aims to bring affordable wind and solar energy devices to the masses. I spoke with Clarian founder Chad Maglaque to find out more.

The two products that he hopes are coming to stores near you soon are the Jellyfish (wind turbine) and Sunfish (solar panels). Maglaque’s vision is that an ecologically-minded but not necessarily wealthy homeowner could pick up one of these at Home Depot, Best Buy, or Costco, set it up on their roof or in the garden, plug it into a regular power outlet, and start generating electricity—without having to bring in a contractor, electrician, or inspector.

The cost? The starting price for the Jellyfish is $399, and the Sunfish is $899. Clarian is already talking with Costco about stocking the devices, Maglaque said.

In currently available wind and solar technologies, a device called the inverter is a big cost hurdle, Maglaque said. That’s the part of the technology that converts DC to AC current that can be used in your home, and adds at least $3,000 to $4,000 to the price tag. “We wanted to tackle that with the view that smaller is better,” Maglaque said.

So Clarian’s products don’t actually need the inverter. This isn’t a new concept, Maglaque said. Large industrial wind turbines don’t use inverters either.

When Maglaque explains how few obstacles there are to a plug-and-go wind or solar energy generator, it seems like there’s a huge hole in the alternative energy market. The existing plugs in your house are coded to take an appliance up to 1,500 watts. But a 1,500 watt solar panel array would normally cost $15,000 to $20,000, Maglaque said. “There are not many people who can afford to do that,” he said. “That’s where there is this disconnect in the market.”

Enter the Jellyfish, which is three feet tall and can be mounted on a roof …Next Page »

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Ember, the Boston-based maker of wireless mesh-networking chipsets for communications between devices such as utility meters and thermostats, will announce today that it has topped off its coffers with an $8 million funding round from a group of venture firms and strategic partners. CEO Robert LeFort says that if government stimulus spending on energy efficiency measures translates into solid demand for Ember’s equipment, as expected, the new round (which brings the total the company has raised to $89 million) should be its last.

Many of the funds Ember has turned to in the past participated in the current round, including Polaris Venture Partners, GrandBanks Capital, RRE Ventures, Vulcan Capital, DFJ ePlanet Ventures, New Atlantic Ventures, and WestLB Mellon Asset Management, along with strategic partners Chevron Technology Ventures and Stata Venture Partners. In the past, Ember has also raised money from STMicroelectronics, Hitachi Corporation, and MIT. LeFort (whom I interviewed at length in January) tells Xconomy that the company has been working to assemble the round since late last summer, but that the global economic slowdown delayed negotiations.

But now investors see the Obama Administration’s economic stimulus package, which includes $17 billion for improvements to the U.S. electrical grid, as a strong plus for the company. Part of the stimulus money will go toward so-called advanced metering initiatives, in which utilities are equipping customers’ homes with new electrical meters that communicate wirelessly with utility control centers and in-home thermostats.

The devices will help utilities by allowing them dial back home electrical usage during peak hours remotely, and they will help customers by showing them exactly how much money they’re saving by conserving energy and switching to more efficient appliances, and the like. Inside almost every smart meter is a radio that uses ZigBee, the industry standard for short-range, low-data-rate radio communications—and the leading maker of ZigBee chipsets is Ember.

So far, California and Texas are the two states with the most smart-metering pilot tests underway. “I’ve heard about up to 20 different pilots going on around the country…of anywhere from 500 to 5,000 homes apiece,” says LeFort. “It’s very encouraging that people are spending real money, either to deploy or to do detailed investigations, with statistically significant samples, of how the technology will work.”

Research firm In-Stat predicts that sales of ZigBee-enabled devices will increase from their 2007 level of 7 million units to nearly 300 million units by 2012. The stimulus money won’t necessarily boost of Ember’s chipsets above the levels already expected, since “the utilities are saying they’re already going as fast as they can go,” says LeFort. “But we’re getting added emotional support, if you will, from the stimulus. The administration is saying, ‘keep on the path you are on, and if there are areas to accelerate, let’s leverage those.’”

Since a radio is needed on both ends of a wireless message, Ember is able to sell its chipsets both to manufacturers of wireless meters and to makers of programmable thermostats—essentially home energy control panels that display how much energy consumers are spending or saving. Later on, the company also expects to supply radios for smart plugs, devices that fit into electrical sockets and communicate with the control panels to conserve energy.

All of that prospective business reassured investors enough to make it possible to raise the latest $8 million. The money will be used “to support volume customer deployments and take us into maturity, meaning financial sustainability,” says LeFort.

It’s been a long road for Ember, which got its start in 2001 selling wireless temperature sensors to factory and refinery owners. “One of the questions has always been, is there a killer app out there” for wireless mesh networking, LeFort says. “It was always a fragmented market, and it was always a question of are you going to be able to get the volume up there. And then about two years ago, the utilities got behind ZigBee as the technology of choice for getting information into the home. Our investors see that it’s not a matter of if anymore, it’s a matter of when. Of course, if you’re a startup, when is an important question, because you have to have enough oxygen to get to the promised land. But we are finally past the point of asking whether there is a big enough market.”

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Redmond, WA-based Global Smart Energy has released guidelines for evaluating proposals for smart-grid projects that seek federal stimulus funds. The “stimulus scorecard” recommends proposals should be specific about how they impact things like consumer choice and energy bills, utilities’ desire for open, secure, and replicable systems, and job growth and other economic factors. The report is being distributed to state and local governments, policymakers, regulators, and utility executives around the country.

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Sick of cleantech yet? Rick LeFaivre certainly isn’t. In fact, he’s just getting started.

The managing director at Kirkland, WA-based OVP Venture Partners leads the VC firm’s investments in alternative energy and cleantech, together with fellow managing director Gerry Langeler, who is based in Portland, OR. To date, OVP has made five investments in cleantech—Carbonflow, Verdezyne, Tigo Energy, M2E Power, and Seattle-based EnerG2. It is also in the process of closing an investment deal with Arzeda, a University of Washington spinout that designs enzymes that could (among other things) make cellulosic biofuels feasible.

LeFaivre joined OVP in 2004 and originally comes from the world of computing. He was previously a vice president at Apple, and held other senior management positions at firms like Borland, Silicon Graphics, and Sun. Before that, he was a professor of computer science at Rutgers University. LeFaivre sees parallels between some aspects of today’s alternative energy technologies and information technologies, including the rise of the Internet (more on that in a minute).

As he sees it, the cleantech sector breaks down into three main tech categories: energy generation, storage, and management. Generation encompasses all the different ways to produce energy—wind, solar, nuclear, geothermal, and so forth. The storage aspect is what he calls the “time shift”—ways to save the energy you produce for later, when you need it. And the management side has to do with energy transmission and control— including the idea of a “smart grid” that directs energy flow to consumers in a more efficient and reliable manner than our conventional electric grid.

From a venture perspective, LeFaivre says now is the time to make new investments in cleantech, despite the financing risk. “Our attitude is, every VC has slowed down,” LeFaivre says. “It’s a pretty good time to invest. Prices are down, that helps us. The deals we invest in now—we’re in normal venture times—they’ll take five to seven years for an exit. The ones we worry about are the ones we invested in five to seven years ago, and the exit climate is lousy.”

In terms of what he looks for in new deals, LeFaivre says, “I don’t think of a cleantech deal as different from anything else. There’s a core concept that’s protectable and leverageable. It’s picking the right companies with venture economics.” By that, he means companies that are in the …Next Page »

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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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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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It was another busy week for deals in the Northwest, with a steady drumbeat of fundings, acquisitions, and partnerships in software, biotech, mobile, and energy.

—Puget Energy, the Bellevue, WA-based public utility company, completed its $7.4 billion purchase by a syndicate of private investment firms, and was de-listed from the New York Stock Exchange. The new entity, called Puget Holdings, is owned by Macquarie Infrastructure Partners, Macquarie Capital Group, CPP Investment Board, British Columbia Investment Management, Alberta Investment Management, and Macquarie-FSS Infrastructure Trust.

—Portland, OR-based FreeRange Communications was acquired by mobile media firm Handmark, which is based in Kansas City, MO. Financial terms were not disclosed. FreeRange makes mobile publishing software and works with companies like The Wall Street Journal, Associated Press, and CBS.

—Luke reported on how Bothell, WA-based Seattle Genetics’ underwritten stock sale for $55.8 million went down on January 27, and what has happened to the company’s stock since. It’s an intriguing tale of how to raise money in biotech in a very difficult time.

—Redmond, WA-based Mobui, a mobile software firm, teamed up with Nickelodeon to deliver an iPhone application based on the SpongeBob cartoon character. Terms of the deal weren’t announced. It is Nickelodeon’s first foray into iPhone apps.

—Bothell, WA-based Snowblind Studios, a maker of role-playing video games, was acquired by Warner Bros. for an undisclosed price. Snowblind will team up with Warner Bros. Interactive Entertainment, the publishing division, to produce new games.

—Coaxis, the Portland, OR software company, has sold off its Insight Distribution Software business to Eden Prairie, MN-based High Jump Software, a provider of supply chain and logistics services. Financial terms were not given. Insight Distribution specializes in software for the food and beverage industries.

—Portland, OR-based RNA Networks, a memory virtualization software firm, said it had raised $7 million in Series A funding, led by Menlo Ventures. The round closed in April 2008, but had not been reported previously. RNA Networks develops software that makes memory in servers and data centers faster and cheaper for customers in the financial services, content delivery, and gaming industries.

—Seattle-based Mixpo, an online video-advertising startup, raised $4 million in a Series B round of funding, led by Seattle’s Madrona Venture Group. Other investors included Yaletown Venture Partners and Growthworks Capital. Founded in 2005, Mixpo has raised a total of $10.5 million in venture funding.

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Bellevue, WA-based Puget Energy announced the completion of its $7.4 billion acquisition by Puget Holdings, a syndicate of Macquarie Infrastructure Partners, Macquarie Capital Group, CPP Investment Board, British Columbia Investment Management, Alberta Investment Management, and Macquarie-FSS Infrastructure Trust. Puget Energy has been de-listed from the New York Stock Exchange.

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If you’re a glass-half-empty person, you might say the mesh networking technology pioneered by Boston’s Ember Corporation is a solution in search of a problem. If you’re a glass-half-full person, you’d probably call the company’s eight-year history a case study in flexible thinking. Regardless, after years of market struggles, Ember seems to have found a niche where its technology for self-organizing digital radio networks will shine: smart-energy systems designed to give utilities and consumers more control over how they use energy.

Andy Wheeler and Robert Poor, who built experimental wireless sensor networks for the U.S. Defense Advanced Research Projects Agency while they were students at MIT, founded Ember in 2001 with $3 million in seed funding from Polaris Venture Partners, DFJ New England, Stata Venture Partners, and Ethernet co-inventor Bob Metcalfe. (In subsequent funding rounds over the years, the company has raised an additional $78 million.) The idea was to find applications for the concept of ad-hoc mesh networking, in which pairs of transceivers in a network set up two-way communications as conditions allow, and messages hop from node to node until they reach their destination (roughly the same way they do inside the Internet).

In its early years, Ember made mesh-networking software for other companies’ microchips, usually equipment designed to be embedded in temperature sensors for petroleum refinery pipes and other similar devices. But over time, the company has evolved into a chipmaker in its own right—just one that happens to have a special expertise in the software running on its chips. And it has gone open-source, investing heavily in ZigBee, an open industry standard for low-power, low-bandwidth mesh networking.

Wheeler and Poor have both moved on to other companies. Meanwhile, Ember has moved on to new application areas—with the biggest near-term payoffs likely to emerge from a utility industry initiative called the Advanced Metering Infrastructure. In pilot AMI projects in states like California and Texas, computerized “smart meters,” or energy gateways, are being attached to utility customers’ homes. The devices communicate wirelessly both with utility control centers and with in-home thermostats, displays, and smart appliances, allowing utilities to dial back electrical usage during hours of peak demand and giving customers more information about their energy consumption patterns. The home side of these communications depends on technology from Ember, which is the leading supplier of communications chips for AMI devices.

“The core technology is not that different from what Andy and Rob had in mind,” Ember’s president and CEO, Robert LeFort, says. “But it’s being used in applications they never had in mind when they were developing it.”

LeFort joined Ember in 2006 from semiconductor maker Infineon Technologies, where he had spent four years as president of the company’s North American operations. I interviewed him about Ember’s development and its business opportunities last week at the company’s headquarters in the Fort Point district of South Boston. An abridged version of our talk follows.

Xconomy: How did Ember evolve from a software company into a chip company?

Robert LeFort: It’s just very hard to make a business case for embedded software. You typically earn a royalty on a per-instance basis, and you don’t usually cover even the cost of developing the software. So you need to be doing more than just software. The end devices and modules [using Ember's software] were interesting to us, and chips seemed to be a better fit. So in 2003 we introduced our first chip, the 2420, which we still sell today. And in 2004 Ember acquired RF [radio frequency] technology and the chip team that developed it from Cambridge, UK-based Cambridge Consultants. [The company's main products today are newer microprocessor models called the EM250 and EM260, both announced in 2006.] We monetize our software through the chips. I think it’s fair to say that there’s nobody who uses our software who doesn’t also buy our chips. And if you look at our competitors from the 2000 era, the ones who went up the chain and sold just software have not fared so well.

X: Talk a little about the company’s recent turn toward smart energy applications.

RL: There were a variety of things that converged, and some other things that fell off the table. When I first came, we were very excited about commercial buildings and lighting. Wireless mesh networking is perfect for that application, but we learned that it is a very fragmented market that moves very slowly. It’s still a good market for us, but it’s incremental. The home automation market is also good, but somewhat limited until they get the costs down and the maturity up.

Meanwhile, I think smart energy will work really well. It’s something we saw from being so tightly involved with the ZigBee Alliance, just from being down in the trenches and talking to guys about what they were doing. I would say smart energy only made up about 10 percent of our revenue in 2008, but we expect it to be 40 or 50 percent in 2009.

X: You mentioned the ZigBee Alliance. As I remember it, when ZigBee started out years ago it was mainly pitched as low-bandwidth alternative to the Bluetooth standard for home entertainment and automation applications. The one that sticks out in my mind was a remote control for opening and closing your blinds, which seemed kind of frivolous to me at the time. But Ember became instrumental in adapting the standard for more advanced applications, like monitoring devices for their energy usage. How did Ember help to advance that standard, specifically?

RL: We were big proponents of the ZigBee Pro networking standard, and fundamental to that is true ad-hoc routing. We believe that RF links are inherently unreliable. Unlike a Bluetooth device or a cell phone, a temperature sensor that loses its signal can’t move six inches to the right to get a better signal. You need a network that can handle that efficiently. We wanted to build a network where you wouldn’t be constrained by …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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On a grey winter day, it might not seem like Seattle has much to contribute to the solar power industry. But cleantech and IT are converging in the Northwest these days. And what we lack in sunshine we make up for in software developers, according to Jeff Ressler, head of the software division of Clean Power Research, a small renewable-energy company that expanded to Kirkland in September.

The company, which consults and writes software for solar power and other clean energy industries, is a small group of 15. Their Kirkland office has a whopping total of two people so far. But they clearly have staying power. Founded 11 years ago in Napa, CA, the self-funded company is profitable and growing, and all that growth will be happening here in the Northwest, said Ressler, who heads the Kirkland office.

Clean Power Research plans to hire six more employees in Kirkland by this spring. “We’re really excited to be in Washington, just in terms of the job candidates we’re seeing,” said Ressler, a former Microsoftie. “There’s a kind of built-in awareness in many people up in the Northwest of environmental issues, and a real passion for that. That’s what we really want to tap.”

The company has five products on the market right now, all Web-based software applications that calculate energy output or cost of solar panels. The applications range from Clean Power Estimator, a general tool to estimate solar energy available in your area for individuals considering installing solar panels on their roofs, to SolarAnywhere, a database developed in collaboration with researchers at the State University of New York that uses U.S. government satellite photos to calculate the precise amounts of solar radiation across the country at any given time. The database can tell you hourly amounts of solar rays for every 25 to 35 square miles in the United States.

“If you wanted to know how much solar radiation hit downtown L.A. yesterday afternoon, we could tell you what those numbers were,” Ressler said.

While it might sound cool to know the exact amount (or lack) of sunlight shining on your …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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Bellevue, WA-based utility Puget Sound Energy, announced today it has purchased 22 wind turbine generators from turbine manufacturer Vestas, which has U.S. headquarters in Portland, OR. The order is for an expansion of the utility’s Wild Horse Wind and Solar Facility in eastern Kittitas County, WA, and it accounts for most of the project’s $100 million budget. Initial construction is scheduled for mid-2009.

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The State of Vermont has joined the New England “demand-response pool” managed by Boston-based EnerNOC, meaning that EnerNOC will be able to dial back power usage at state office buildings and other facilities during times of peak electrical demand on regional power utilities. “Demand response is a solution that makes good business sense while delivering positive community and environmental benefits through increased efficiency and reliability of the electric power system,” said Gerry Myers, Vermont’s Commissioner of Buildings & General Services, said in a company statement released today. EnerNOC signed up the State of Rhode Island for its demand-response pool in July.

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GridPoint, an Arlington, VA-based cleantech firm, announced it has acquired Seattle-based V2Green as the first step in its acquisition strategy. The terms of the deal were not disclosed. V2Green makes software and other technologies for integrating plug-in vehicles with the electric grid.

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