ENERTECH QUARTERLY VOL 5 • October, 2015
“Thought Leadership in Energy Technology”
ECP IV
EnerTech Update We are pleased to bring you our fifth edition of the EnerTech Quarterly Newsletter. We have been busy over the past quarter both with our existing portfolio and new deals in EnerTech IV. We have now invested $45.6 million from ECP IV into 10 companies with one new pending Wally Hunter transaction (outlined below). Should Managing Director this new transaction close, we will EnerTech Capital have invested $49.6 million in ECP IV and completed one exit (Distech Controls).
EnerTech Capital
Closing of the sale of Distech Controls to Acuity Brands for $318 million CDN and distribution of proceeds to LPs Follow-on investments totaling $2.8 million in two ECP IV portfolio companies - N-Dimension and EnergySavvy We are currently in the closing process on a new deal in the Power Quality space (Power Factor Correction and Harmonic Filtering). We expect to close this deal in November 2015 (Total EnerTech investment will be $5 million CDN, with a $10-12 million CDN reserve for acquisition opportunities)
We continue to see strong deal flow from Canada and the The major investment highlights since our last report US with nearly 500 deals seen so far in 2015. include:
ENERTECH QUARTERLY Our investment landscape in ECP IV continues to broaden in the Energy Technology sector (see picture below) seeking Portfolio company OwnEnergy was sold to EDF innovative technologies from “The Well Head to the Wall Renewable Energy and we have distributed initial socket”. We are seeing interesting opportunities in our proceeds to LPs investment landscape including: ECP III
Acquired by (August 2015)
Behind the Meter technologies including device control Building automation, lighting and energy efficiency
Obvious Ventures invested $3 million in Enbala Power
Networks. Enbala raised $11 million earlier in the year led by GE Ventures and Edison International EnerTech closed on aggregate follow-on investment of $275 thousand USD in OwnEnergy in the quarter and this investment was returned as part of the sale to EDF outlined above
technology Digital Oilfield and Oil & Gas technologies focused on reducing the cost of oil production
ECP IV Opportunity Landscape: From the Well Head to the Wall Socket
In ECP IV we continue to focus on revenue generating companies or companies that are embarking on growth rounds of financing with proven technologies and an established customer base. EnerTech Team Updates We are pleased to announce that we have promoted Gian Vergnetti to Associate. Gian is a valuable member of our team and an extremely hard worker who has continued to do great work for us. Please join us in congratulating Gian on this promotion!
We would also like to congratulate Gian and his wife Alexis on the birth of their first child, Phoenix, who was born on September 3rd. The 2015 EnerTech Capital Forum and LP Meeting will take place in Miami, FL December 1 – 3. If you have not already registered, you can do so below. We hope to see you all there! Click here to register for the EnerTech Capital Forum and LP Meeting. 2
ENERTECH QUARTERLY The Changing Utility Model and Its Impact on Engaging Residential Customers by Dean Sciorillo Director EnerTech Capital
would spike and potentially cause system reliability issues for the utility.
Before I joined EnerTech Capital in 2004 I was with an electric and gas utility company for 16 years. During that time when we internally discussed customers (called ratepayers at that time and in some areas still are referred to as that) the focus was primarily on large, or key, accounts. There was not much focus on residential customers, and when discussed it often focused on not upsetting them enough where a customer would lodge a complaint with the public utility commission (“PUC�) (note: I recall customer complaints as a metric for part of the corporate bonus).
However, since 2008 power prices have decreased due to the unexpected increase in natural gas reserves and resulting low sustained prices. In addition, there has been a precipitous drop in solar PV prices, and efficiency gains, along with price decreases, in lighting and other areas have offset the increase in electricity consumption. Power demand is still below the highs set in 2008. Contributing to the reduced demand is the fact that 26 states have programs in place around energy efficiency, which also lowers emissions (the cleanest megawatt is the one not used).
Utilities started to engage with residential customers in a somewhat meaningful way in the early to mid-2000s when programs like demand response started gaining traction (note: these programs were primarily being pushed by PUCs). Under demand response programs customers would receive an annual payment for allowing their utility to control their air conditioner or pool pumps on extremely hot days when the total electricity consumption on the grid
Regulation has also played a role in utilities engaging more with their residential customers. Some areas of the country have seen deregulation, which means there is competition on the commodity portion of the bill (T&D services are still regulated). The new entrants, or competition, are taking on the role of the trusted energy advisor for the residential customer, a position long held by the incumbent electric utility.
Other trends, like a steady increase in power prices, from the early 2000s until about 2008 and more environmental awareness provided an opportunity for innovative companies to capitalize on the changing landscape. As historically has been the case, many utilities did not view this as a threat to their business, and many just ignored it.
EnergySavvy’s (EnerTech Portfolio Company) Engage Direct - an intelligent, cost-effective, and integrated engagement solution 3
ENERTECH QUARTERLY In addition to deregulation, PUCs have been revamping the utility business model by implementing new rate structures like decoupling and lost-revenue adjustment mechanisms, as well as some performance incentives. All are designed to incentivize utilities to embrace efficiency and other solutions that lower the utility’s revenue without affecting profitability. Thirty three states have some form of decoupling or lost-revenue adjustment mechanisms, and 26 states have some form of performance incentives.
Utilities have been partnering with venture backed start-ups (e.g. Opower, Nest, EnergySavvy) over the past few years to help them better engage with residential customers from comparing their electricity usage to their neighbors to gaining a better understanding of energy efficiency opportunities within a customer’s home. In addition utilities are embracing new ways to connect with their customers including developing apps that alert them to coming high bills, outages and estimated restoration times, and allowing customers to inform the utility if they are experiencing an Over the past few years there has been a lot of momentum outage of which the utility may be unaware. Utilities will building from utilities around their focus on residential need to improve their competencies in this area since they customers and the potential importance of this customer have never had to do this historically.
class. Many utilities and energy providers now see an opportunity to engage with those customers to not only sell electricity or natural gas, but a host of other products and services. This has already been taking place with C&I customers for several years. In addition, utilities have noticed other companies are trying (and some are succeeding) to disintermediate them from their customers.
As technology continues to progress (e.g. smart appliances) and become ubiquitous it will present additional opportunities for utilities, or their competitors, to engage with residential customers to provide better service as well as additional services. Utilities want customers to think about them more than just when their lights are off due to an outage. Whoever owns the customers’ mindshare will be able to generate significant value from them.
4
ENERTECH QUARTERLY Q2 & Q3 2015 ECP IV Portfolio Company News If you are viewing a digital version, please click on the news item for more information.
September 24
July 13
June 9
Blue Pillar VP of Finance and Operations September 25 Recognized By Trending 40
Seattle Business Magazine - EnergySavvy Named 2015 Tech Impact Award Winner
Blue Pillar, Con Edison and New York City August 14 Hospitals Work Together to Strengthen Electric Grid Resiliency June 16
GeekWire - EnergySavvy Debuts Service to Connect Utilities with Offline Customers
Blue Pillar Selected as a Red Herring Top 100 North America Winner June 3
Puget Sound Business Journal EnergySavvy Named one of Washington's Best Workplaces Overcoming Energy Efficiency’s Problem With Measuring Savings 5
ENERTECH QUARTERLY July 21
N-Dimension Improves Cybersecurity Integrity at Piedmont Municipal Power Agency
July 7
N-Dimension Selected by Central Florida Electric Cooperative – Helps Improve Utility’s Cybersecurity Posture
April 1
Greentech Media - Finding the Hidden Cyber Threats in the Power Grid
September 8
REGEN Files Patent Infringement Claim Against eCurv
Digital roads: speeding towards automated cars - Video by GeoDigital
September 10
GeoDigital Names Auto Industry Veteran to Lead 3D Mapping and Self-Driving Vehicles Business Unit
July 20
Tech Leader In 3D Mapping And Spatial Data Analytics To Establish North American Headquarters In Atlanta
June 20
Vegetation Management Goes High-Tech Tools & Technology Content From TDWorld
May 28
GeoDigital customer Peter Fox, NB Power, featured in T&D World magazine
May 13
Greentech Media – GeoDigital: Mapping The Utility Landscape With Big Data
May 28, 2015
HPC Energy Services launches updated website
September 22
N-Dimension’s N-Sentinel Delivers Intelligent Analysis and Prioritization of Security Concerns Accelerating Remediation
September 17
N-Dimension Closes $9M Series B Funding Round
September 9
N-Dimension Introduces N-Sentinel Continuous Vulnerability Assessment for Utilities
Space-Time Insight: How renewable energy is managed by Cal-ISO July 14
Space-Time Insight Helps Utilities Reduce Outage Duration And Frequency
June 30
Space-Time Insight Reduces Risk And Costs For Utilities With New Asset Analytics Application
June 25
Space-Time Insight And Enovation Partners Collaborate To Bring Real-Time Visual Analytics To Natural Gas Operations
May 14
Greentech Media recognizes SMUD’s SmartSacramento Initiative for using SpaceTime Insight
April 29
Space-Time Insight Solution Powers Sacramento Municipal Utility District Into 2015 Grid Edge 20
April 29
Grid Edge 20: The Top Companies Disrupting The US Electric Market
April 7
GISCafe: Space-Time Insight Takes Situational Intelligence A Step Further 6
ENERTECH QUARTERLY Company News from Previous EnerTech Funds
August 1
Terralux Partners with ENERGY STAR to Develop Certification for LED Retrofit
June 21
TERRALUX featured in Hotel Business
May 3
LFI LED Lady Interview with Terralux
April/May issue
TERRALUX featured in Seniors Housing Business Magazine
Spring report
TERRALUX makes Edison Report top 10 products to see at Lightfair – LEDSENSE
May 19
FilterBoxx Lands Large Operations & Maintenance Contract
April 29
FilterBoxx Announces Debut of New Rig Combo Assets
June 2
Security Sessions | Municipal Utility Takes Action to Offset Steep Price Increases in New England
June 1
Braintree Electric Light Department and Pascoag Utility District Act to Reduce Peak Demand Cost Risk with Tangent
ECP III
ECP II September 15
Obvious Ventures Invests in Enbala Power Networks
August 27
Jeff MacAulay Joins Enbala Power Networks
August 17
Enbala Helps American Water Increase Efficiency; Triple its PJM Regulation Services Market Participation
August 7
Well-Known Energy Sales Executive Joins Enbala Team: Trent Bowers Comes on Board as EVP and CCO
April 23
Enbala Named as One of Greentech Media’s Top 20 Most Innovative Firms Binder Jet Machine
September 21
Large Camp Project Award in Texas
September 15
Large Camp Project Awarded in Canada
June 30
FilterBoxx Delivers First RemoteBoxx Unit in North Dakota
June 1
FilterBoxx Water & Environmental Announces Debut of New Rig Combo
September 24
NanoSteel Introduces BLDRmetal™ Powders for Binder Jet 3D Printing
June 29
Nanosteel In Automotive Manufacturing Solutions
June 23
Dave Paratore Interviewed On 'The Car Doctor' With John Paul
June 19
Nanosteel AM Expanding Capabilities In Automotive Engineering
June 4
Nanosteel Receives Venture Funding From Horizon Technology Finance
May 13
Nanosteel Presents ‘Lose A Little, Gain a Lot’ Infographic 7
ENERTECH QUARTERLY Venture Capital Update – Q2 & Q3 2015 – VC Investments in Canada A total of $636 million was deployed in 143 financing rounds by Canadian VCs in Q2 2015 according to final data released by Thomson Reuters. At the end of June, venture capital invested across Canada totaled $1.2 billion in 300 deals, which is up 33 percent from the same period in 2014. In fact, Canadian startups have not received as much venture capital in a January-to-June period since 2002 (Thomson Reuters).
Venture Capital Investment in Canadian Companies
Source: Thomson Reuters, CVCA A total of $664 million was deployed by Canadian VCs in Q3 2015 according to preliminary data released by Thomson Reuters. VC investments are on pace to reach $2.4 billion by the end of December, which will make 2015 the best year for activity since 2002. Select Canadian VC investments are outlined on the next page.
8
ENERTECH QUARTERLY Venture Capital Update – Q2 and Q3 2015 – VC Investments in Canada Select Canadian VC Investments from Q2 and Q3 2015 Company Name
Description
Major Investors
Investment Amount (Cdn)
Leading private fusion energy company, specializing in magnetized target fusion. Building subsystems at scale, expects to demonstrate all key systems over next three years.
Khazanah, Chrysalix, BDC, Braemar, Entrepreneurs Fund, SET , Bezos, Cenovus
$21.9 million
Developer of gallium nitride (GaN) technologies.
Cycle Capital, BDC, Tsing Capital, Rockport, Chrysalix
$20 million (amount in USD)
GE Ventures, BDC, Provider of software-defined operations Cisco Systems, solutions for the industrial Internet. Yaletown Venture Partners
$17.2 million
Black Coral Capital, Developer of power semiconductor BDC, EDC, Presidio chipsets and reference designs for use Ventures, Clean Energy within distributed, renewable power sysVenture, Inerjys Ventems. tures
$11 million
Developer of cyber security solutions for the critical infrastructure market.*
EnerTech, EDC
$9 million
Provider of IoT data analytics services.
McRock, White Star Capital
$6 million
Provider of demand side energy management solutions.*
Obvious Ventures
$3 million
Developer of a real-time machine intelli- BDC, Extreme Venture gence platform. Partners
Undisclosed
Developer of sensor technology designed to bring operational efficiency to the Prelude Ventures, EDC, mining industry by consolidating low conCycle Capital, Chrysalix centration ores and reducing energy, water, and chemical inputs.
Undisclosed
Smart window technology for regulating solar heat in vehicles for improved fuel economy and passenger comfort.
Undisclosed
Pangaea Ventures, GrowthWorks, BDC, Five Corners Capital
*N-Dimension and Enbala are EnerTech Capital portfolio companies. 9
ENERTECH QUARTERLY Venture Capital Update – Q2 2015 – VC Investments in the US In the US Venture capitalists invested $17.3 billion in 1,202 deals in the second quarter of 2015, according to data provided by Thomson Reuters. Quarterly venture capital (VC) investment increased 30 percent in terms of dollars and 13 percent in the number of deals, compared to the first quarter when $13.5 billion was invested in 1,048 deals. The second quarter is the sixth consecutive quarter of more than $10 billion of venture capital invested in a single quarter.
Select US VC Investments from Q2 2015 Company Name
Description
Major Investors
Investment Amount
(USD) Developer of vanadium redox flow battery systems for grid-scale applications.
VantagePoint, Starwood Energy Group.
$58.2 million
Provider of diesel and ethanol directly derived from sunlight and CO2 using micro-organisms.
Flagship Ventures
$34 million
Developer of high-efficiency, low-cost crystalline silicon solar cell and module products.
Riyadh Valley Company
$31 million
Developer of facilities for the conversion of municipal solid waste and other waste products to ethanol and other renewable transportation fuels.
United Airlines
$30 million
Developer of a mass-market urban transportation solution that is flexible, cost-effective, and environmentallyfriendly.
Pitango, Hearst Ventures, Ervington Investments, 83North
$27 million
Developer of Internet of Things hardware and software for large scale wireless sensor systems.
Andreessen Horowitz
$25 million
Developer of an in-car sensor and tandem mobile app designed to monitor driver behavior and notify drivers when their behavior is compromising fuel economy.
USAA, Comcast Ventures, CDK Global, Y Combinator, RPM, Amicus, Anthemis, Mark Goines, Jared Kopf, Rob Chandhok, Dan Rose
$24 million
Developer of proprietary rechargeable zinc-air battery technology for utility, automotive, commercial applications.
AltEnergy, NRG Energy, OCI, Fisher Brothers
$23 million
Electranova Capital, BatProvider of commercial customer intel- tery Ventures, RockPort, ligence software for energy providers Nth Power, E.ON Ventures
$23 million 10
ENERTECH QUARTERLY Venture Capital Update – Q3 2015 – VC Investments in the US In the US Venture capitalists invested $16.3 billion in 1,070 deals in the third quarter of 2015, according to data provided by Thomson Reuters. Total venture dollars deployed to startup companies for the quarter decreased 5 percent and total deal count was down 11 percent compared to the second quarter when $17.3 billion was invested in 1,202 deals.
Select US VC Investments from Q3 2015 Company Name
Description
Major Investors
Investment Amount (USD)
Developer of energy-efficient glass technologies for buildings.
NZ Superannuation Fund, Madrone Capital, Corning
$150 million
Developer of a revolutionary 3D printing technology known as Continuous Liquid Interface Production (CLIP).
Google Ventures, Yuri Milner, Reinet, Sequoia, Silver Lake, Northgate
$100 million
Engineers of biological organisms for applications in the energy, medicine and food sectors.
Viking Global, Y Combinator, Felicis Ventures, OS Fund
$45 million
Developer of UAV technologies and systems.
GP Capital, GGV, Lebox PreAngel, OFC Investment, ZhenFund
$42 million
Founders Fund, BP Developer of nanolaminated structures ConocoPhillips, Chevron, in vats to produce extremely strong Catamount,, Second Avestructures and coatings that resist cornue, Sunshine Tech, Allirosion and can withstand high temperaance of Angels, Golden tures. Seeds
$33.5 million
Combines powerful learning software and energy storage, simultaneously RWE, GE Ventures, Angehelping businesses better manage elecleno, Iberdrola, Total, tricity use and enhancing grid operaConstellation tions.
$33 million
Tsing Capital, Mission Ventures, Presidio, Infinite Potential Technologies
$30 million
Developer of high energy density rechargeable Li-ion batteries.
Developer of zinc-bromine flow batterI2BF, Anglo American ies for electrical energy storage. Platinum, Chrysalix, DBL
$25 million
AMS installs advanced energy storage systems in buildings to lower energy costs for consumers and provide clean, instant load reduction to electric utilities. We're building a more efficient, more resilient electric grid.
$18 million
DBL Investors, Arnold Schwarzenegger, Engie
11
ENERTECH QUARTERLY The EnerTech Team A Seasoned, Diversified, and Experienced Group Philadelphia
Scott Ungerer Managing Director
Bill Kingsley Managing Director
Dean Sciorillo Director
Gian Vergnetti Associate
Colleen Pale Director of Finance and Administration
Boston
Houston
Menlo Park
Orange County
Jarett Carson Managing Director
Robert M. Chiste Dr. Dominic Geraghty Executive in Residence Executive in Residence
Wally Hunter Managing Director
Lyndsy MacArthur Executive Assistant
Angelica Mengana Analyst
Montreal
Calgary
Anne-Marie Bourgeois VP Investments
Eric Schmadtke VP Investments
Donna Smith Executive Assistant
Hoon Chung, Executive in Residence
Toronto
Giovanni Ravina Intern, ENGIE New Ventures (formerly GDF SUEZ New Ventures)
12
ENERTECH QUARTERLY The EnerTech Strategic Advisory Board Our Network is an Extended Family of Deal Sourcing, Due Diligence and Exits The EnerTech Strategic Advisory Board is made up of a diverse and experienced group of visionaries, industry leaders and experts in various disciplines. They bring unparalleled expertise and a wide network in the areas of energy services and policy, information technology, Oil & Gas, and clean energy innovation. We are proud and grateful to have them as members of our Advisory Board.
Limited Partners
Strategic Partners
13
ENERTECH QUARTERLY Independent Board Members J. Scott Magrane Managing Director, Coady Diemar Partners Sharon Allan President & CEO, SGIP
David Milenthal CEO, The Milenthal Group Mike Babcock Coach of the Toronto Maple Leafs Governor George Pataki Former Governor of New York
Dr. Jim de Wilde President, JdW Strategic Ventures Gordon Pridham Principal, Edgewater Capital and Newalta Board Member
Michael Harris Former Premier of Ontario
Vicky Sharpe Founding President of SDTC
Dr. Bill Madia Chairman of the Board of Overseers and VP for the SLAC National Accelerator Laboratory, Stanford University
Rob Soni Independent Board Member
14
ENERTECH QUARTERLY LP and Strategic Partner Board Members
Alex Beliaev Investment Manager, EDC
John Morris Sr. Vice President of Field Operations Waste Management
Basil El-Borno VP Innovation & Process Development, Newalta Corporation
Guillemette Picard Investment Director, ENGIE New Ventures (formerly GDF SUEZ New Ventures)
Rebecca Giffen Director of Investments, Alberta Enterprise Corporation
Rebecca Kauffman President and COO, Southern Ute Alternative Energy
Eric Legault Managing Partner, Teralys Capital
Victor Scutaru Director, Fund Investments, BDC Venture Capital
Marty Toomajian President of Energy, Health & Environment, Battelle
Nils Voermann - Global Managing Director Technologies, Hatch
15
ENERTECH QUARTERLY Upcoming Industry Events October 26 – 29, 2015 – San Jose, CA VERGE
Remember the EnerTech Capital Forum and LP Meeting is coming up in December. We hope to see you there!!!
November 2 - 4, 2015 - San Diego, CA Greentechmedia US Solar Market Insight November 17 – 20, 2015 – Shanghai, China Cleantech Showcase Shanghai December 1 - 3, 2015 - Key Biscayne, FL EnerTech Capital Forum and LP Meeting December 8 - 9, 2015 - San Francisco, CA Greentechmedia US Energy Storage Summit December 8 – 10, 2015 – Las Vegas, NV Power-Gen International Conference
January 25 – 27, 2016 - San Francisco, CA Cleantech Forum San Francisco 2016 February 24 - 25, 2016 - Lake Louise, AB VCAA Ski Day March 16 - 17, 2015 - Calgary, AB Propel Energy Tech Forum
www.EnerTechCapital.com Philadelphia ● Toronto ● Montreal ● Menlo Park ● Calgary For questions or comments, please contact: Wally Hunter Managing Director, EnerTech Capital whunter@enertechcapital.com tel #416-363-8563
16