iControl Networks partnership with Time Warner Cable signals convergence in home energy management and security systems

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iControl Networks partnered recently with Time Warner Cable to develop the IntelligentHome home energy management and security system (HEMSS) for U.S. customers. The HEMSS will enable users to manage in-home appliances via wireless thermostats and lighting controls using a touch-screen control unit. Customers can also monitor, manage and control the system through a website or free mobile application. On the security side, IntelligentHome allows users to monitor their residences from abroad via preinstalled security cameras, and can be personalized to alert the user by email of any pre-prescribed events.

When we spoke to Redwood City, California-based iControl late last month, the company emphasized that its market research had indicated customers wanted an intelligent home management system that coupled both energy and security in one package. Through its partnership with Time Warner Cable, iControl opened a wide channel to market to test this hypothesis. If embraced by end-users, it could prove to be the new go-to differentiator for cable companies in 2012.

Clients should closely monitor happenings around two developing facets of the iControl/Time Warner Cable partnership. First, they should track the U.S. market’s adoption of the duo’s HEMSS offering, along with similar offerings from Comcast, Verizon, 4Home, and Ingersoll Rand. If strong, it could trigger a slew of similar product partnerships. Second, clients should watch for further convergence between the once disconnected security and energy management technology arenas, particularly as they manifest in home management systems that couple energy and security management in the same offering. Lux clients can look forward to a profile of iControl Networks in an upcoming issue of our biweekly Efficient Building Systems Journal.

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Steven Minnihan

The hydrogen economy – necessary and sufficient for fuel cell adoption?

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The U.S. Department of Energy (DOE) has already stated its skepticism* towards hydrogen fuel cells. So it isn’t surprising that a recent DOE funding round for hydrogen storage technologies totaled a meager $7 million.

It is no secret that fuel cells have failed to make a large impact in the transportation and stationary power generation markets. Despite a long list of subsidies and incentives, they are gaining little traction beyond the uninterruptable power supply (UPS) and telecommunication markets (see the June 2011 Lux Research report Off-grid: A Modest Meal for Starving Storage Developers*).

Even within these markets, pure hydrogen fuel cells are passed-over in favor of fuel cells powered by natural gas, methane or other fuels that are more readily available than H2. The “hydrogen economy,” or the ubiquitous infrastructure for generation, transport, storage and distribution of hydrogen for transport and stationary power, seeks to overcome the issue of fuel scarcity and obscurity. This has many technology developers wondering whether addressing the availability of hydrogen, would prompt fuel cell growth in all markets?

In order to answer the question, we must look at the single greatest barrier to fuel cell adoption – prohibitive capital costs. Without a hydrogen economy, a hydrogen fuel cell requires ancillary hardware including a fuel reformer or hydrolysis unit, as well as a water pretreatment unit if a region lacks access to clean water. Theoretically, a hydrogen economy would eliminate the need for this ancillary equipment, and thereby bring the capital cost for hydrogen fuel cells down between $4/W to $7/W. These lower price points put hydrogen fuel cells on par with natural gas and methane fuel cells. But these prices still require subsidies and incentives to make fuel cells cost competitive with other generation technologies in transportation and stationary power. Lux analysis indicates that fuel cells need to reach prices below $2/W at the system-level in order to attain stable growth in the stationary power markets.

So, while the hydrogen economy is necessary to enable success of the hydrogen fuel cell in transportation and stationary markets, it is not sufficient on its own to ensure stable market growth. In order for hydrogen power and hydrogen fuel cells to prove themselves in the market, clients must continue fundamental work on all nodes along the hydrogen economy and the fuel cell itself; including hydrogen generation*, hydrogen storage, and fuel cell catalysts*.

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Lux Innovation Grid Highlights Viable Partners for Display Developers

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There’s been no shortage of investment in printed, flexible, and organic electronics aimed at driving next-generation displays, organic photovoltaics (OPV), transparent conductive films (TCFs), smart packaging, and thin-film batteries. Yet, challenged by the inherent technical hurdles and long development cycles, few firms have turned their potential into big cash returns. Those that eventually succeed will do so by building partnerships today that pool expertise in materials, equipment and device development.

This week’s graphic expressly focuses on display developers, and applies the Lux Innovation Grid to compare how potential partners compare in Technical Value and Business Execution. The field encompasses more mature technologies, like small molecule organic light-emitting diode (OLED) and electrophoretic displays, in addition to emerging technologies, including electrochromic and electrofluidic displays.

A glance at companies comprising the Dominant Quadrant clearly illustrates that OLED materials and equipment have a clear headstart over more emergent technologies like electrochromic and electrofluidic displays. OLED displays have found success thus far primarily in mobile displays, but development of larger displays like televisions is underway. Notable players include materials developers like Universal Display Corporation (UDC) and Novaled, in addition to equipment makers like Kateeva. These companies also comprise the majority of the “Positive” takes on the chart due to the strength of OLED technologies in general and the solutions that these companies can provide.

E Ink stands out for its Technical Value and Business Execution. The former derives from its high score in technology and intellectual property, the latter from its strong partnerships and management team. In addition, E Ink scores the only “Strong Positive” on our chart. This lofty position should not come as a surprise, since E Ink has a nearly 100% market share of the electrophoretic market, which is commonly found in e-readers like the Amazon Kindle.

Emerging reflective and flexible technologies are High-potential. Particularly for OLEDs, the transition to flexible displays requires new materials and substrates to protect the OLEDs from atmospheric contamination. New materials such as flexible glass from Corning Display or barrier films for plastic substrates from Tera-Barrier can enable flexible OLEDs.

Emerging reflective displays, like electrofluidic displays from Gamma Dynamics and cholesteric liquid crystal displays (LCDs) from Kent Displays, also fall into the High Potential category. Competing with electrophoretics will not be easy for the reflective technology developers, as both companies score above 3 on Technical Value, but below 3 on Business Execution – due to low scores on barriers to growth and revenue per employee.

Source: Lux Research report “Finding the Winning and Losing Companies in Printed, Flexible, and Organic Electronics.”

 

 

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Divestment wave continues as pharma banks on delivery systems

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The wave of divestures sweeping the pharmaceutical industry continues following the most recent announcements by SurModics and Pfizer*.

Beleaguered drug delivery company SurModics recently announced the sale of its pharmaceutical assets (such as injectable delivery platforms and biodegradable polymer implants) to Evonik Industries AG for $30 million. The move comes as no surprise following SurModics’ Q3 Earnings Call announcement, as well as the series* of layoffs* the company undertook over the past year. SurModics claims the move will allow it to recover from Johnson & Johnson subsidiary Cordis’ discontinuation* of “one-time blockbuster drug” Cypher, by focusing on growing its Medical Devices and In-Vitro Diagnostics (IVD) business units. SurModics faces an uphill task on the road to recovery with declining revenue from its profitable Medical Devices unit, and as the IVD unit faces stiff competition in the marketplace.

Generic and specialty drug company, Mylan, recently acquired the rights to Pfizer’s dry powder respiratory drug delivery system used to treat chronic obstructive pulmonary disorder (COPD) and other respiratory illnesses. While the $17.5 million sum Mylan will pay Pfizer may not seem substantial, Pfizer will earn “far more” in royalties from products Mylan is expected to develop and commercialize using Pfizer’s platform, especially when over 50% of the $34 million global respiratory and COPD markets comes off patent by the end 2016. While Mylan will initially use the Pfizer platform to produce generic versions of GSK’s asthma and COPD treatments, it will eventually develop its own brand product and additional generic products. This divestment comes on the heels of Pfizer’s sale* of its Capsugel platform, and the shuttering of its largest R&D plant in the U.K. as it struggles to slash $1 billion from its R&D budget. Expect Pfizer’s woes to continue when Lipitor comes off patent at the end of the year – although the profit sharing clause with Mylan will provide much-needed cash infusion. As Pfizer illustrates, drug delivery systems offer pharma companies a lifeline as traditional revenue streams dry up.

In the wake of declining revenues and patent expiries*, pharma companies like Pfizer will need to expand beyond their core business and seek additional revenue streams by turning to delivery systems. Considering this trend – as well as the increasing number of startups thirsting* for funding - clients have an opportunity to seek out promising technologies, whether through co-development partnerships or licensing new drug delivery platforms.

* Client registration required.

 

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Matthew Feinstein

Nanosolar’s progress – or lack thereof – revealed at 4th Thin Film Summit USA

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In early December, we attended the Fourth Thin Film Summit USA in San Francisco, where we heard an interesting company presentation from Brian Stone at Nanosolar – a noteworthy venture-backed copper indium gallium diselenide (CIGS) module producer. After raising nearly $400 million prior to 2009, the company has remained largely quiet for the past year. Lux last profiled* Nanosolar in late 2009.

Brian presented Nanosolar’s utility panels – an application-specific product, not unlike the utility panels offered by First Solar and crystalline silicon (x-Si) incumbents like Trina Solar. The panels, he said, delivered 11% efficiency, with a roadmap to 16% by 2015. He also highlighted a few pilot projects at Nanosolar, including plans for 8 MW to 10 MW of production in early 2012.

Brian also shed some light on the company’s cost structure, citing $0.65/W to $0.70/W for materials today, decreasing to $0.30/W to $0.35/W – however, we still believe that nanoink costs remain a major bottleneck* for the company. At 2.5 GW annual capacity, Nanosolar anticipates total module costs of $0.40/W to $0.45/W. Today, he cited total production costs between $1.10/W and $1.20/W. Lastly, Brian highlighted balance of systems savings in the company’s pilot projects, citing $0.10/W to $0.15/W savings by using Nanosolar panels.

Despite its ambitious roadmap to low production costs, we think Nanosolar’s lack of competitiveness today will prohibit it from reaching its goals.

It is targeting utility-scale projects, but an 11% efficient panel won’t allow it to compete with cadmium telluride (CdTe) leader First Solar, which can also develop utility-scale projects internally. Even amorphous silicon (a-Si) can prove competitive against an 11% efficient CIGS panel, depending on location. On the other hand, CIGS is gaining traction in commercial rooftop applications, which are less space-constrained than residential rooftops.

In general, it’s clear that Nanosolar could very well be a victim of the solar shakeout in 2012 without additional investment. The company is simply not keeping up with the leaders in the CIGS market, like Stion and Solibro – both of which are above 13% production efficiency – and capacity leader Solar Frontier. That competitive landscape, in addition to bolstered competition from x-Si and CdTe, place Nanosolar squarely on the outside looking in.

* Client registration required.

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Jaideep Raje

Korean green building forum reinforces key messages and spotlights local market opportunity

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Recently, we attended the Green Building Forum 2011 organized by the American Chamber of Commerce in Korea (AMCHAM). Market leaders like 3M, BASF, and Southwall Technologies joined representatives of the Ministry of Land, Transport and Maritime Affairs and the Korea Institute of Construction Technology to discuss topics like net zero energy buildings, and zero carbon homes. They also vetted solutions for facilitating a positive future for green buildings in Korea. Forum participants reinforced several key messages familiar to clients from past* coverage.*

  1. Real-world deployment data has proven that “integrated planning” and a design-build approach make it possible to cost-neutrally construct commercial buildings that are 50% more energy efficient
  2. There is often a disconnect between design and actual building energy performance with some buildings saving less than expected. A few buildings even perform worse than the code baseline. As a result, it is important to measure, monitor and manage energy performance during occupancy
  3. Existing building stock offers an important, but oft overlooked opportunity,where energy efficiency improvements can be realized at no/low cost

The interactions between leading multinationals and the AMCHAM highlighted the fact that the Korean market poses an attractive opportunity for global clients developing green building products and services. As a small country with limited energy and mineral resources, South Korea must find ways to improve its energy efficiency. As a high-income developed country (15th in the world by nominal GDP and 12th by purchasing power parity) it has the financial power and domestic appetite for sustainable solutions in its building and construction space.

Consequently, the country has instituted a Green Building Certification System (GBCS) that it hopes will spur adoption of green buildings, as the LEED system did within the United States’ institutional and government sectors. Korea’s GBCS covers semi-residential buildings, office buildings (public and private), commercial buildings, and remodeled buildings, as well as residential projects, which account for a bulk of the green building initiatives in the country. It emphasizes indoor environmental quality and material and resources. Also, somewhat uniquely (relative to other global systems) it accounts for land use, like access to rivers, mountains, and forests, as well as and creation of pedestrian walkways in the apartment complex. Although, the guidelines under the GBCS are non-binding and somewhat ambiguous, they are expected to stiffen over time. As evidenced from the AMCHAM event, several foreign corporations are betting on this and increasing their local activities. Clients that are not currently active in the market should give the country a close, second look.

* Client registration required.

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New building norms can drive BIPV mainstream, with 6.6 GW market in 2021

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Building-integrated photovoltaics (BIPV) have remained a niche technology due to high costs and stringent specification requirements. Nor has their adoption been helped by the slow emergence past the developmental stage of thin-film solar modules – the best suited PV candidate for replacing traditional building materials.

As this week’s graphic shows, however, BIPV may yet enter the mainstream. Recent analysis by Lux Research projects a scenario in which BIPV sees a 1.2 GW global market by 2016, equivalent to $6 billion per current estimates, with a 69% share for Europe.

Currently, the European Commission’s Net‐Zero Energy Buildings (NZEBs) standards continue to fuel widespread adoption across the continent, and are on track to give Europe a lion’s share of BIPV installations in 2016 – assuming, of course, that the Euro Zone sees continued macroeconomic stability.

Primarily driven by greater adoption of LEED buildings, BIPV installations in the U.S. will grow at a steady clip, albeit slower than the EU. Meanwhile, growth in Asia will be limited to showcase projects driven by government and corporate sustainability goals.

Given that the EU directives on NZEBs all have 2020 targets, it is further likely that BIPV’s inflection point will occur in the 2017-18 timeframe as 2020 NZEB targets loom over EU member countries. In this scenario, the divergence between Europe and the rest of the world grows even larger, with Europe accounting for over 85% of global BIPV installations at 6.6 GW.

Source: Lux Research report “Building Integrated Photovoltaics: Moving Beyond Showcase Projects.”

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Steven Minnihan

Does China’s battery manufacturing capacity threaten your strategy in grid storage?

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It may seem shocking that China, with large manufacturing capacity for relatively low-cost lead-acid and lithium-ion batteries, comprises only 1% of the global installed megawatts of emerging grid storage capacity according to the recently published Lux Research Grid Storage Tracker.* While the North American market has seen tremendous movement on a regulatory* front* for energy storage in the past months, grid storage remains in the pilot stage in China as the Chinese government focuses on electric vehicles.* Is China snubbing the grid storage market and, if so, what does that mean for clients looking towards the Chinese market?

The European, North American, Korean and Japanese markets offer much stronger bets than the Chinese markets for near-term growth of grid storage. Due to a mixture of domestic storage technology developers, relatively swift regulation and government spending, these markets will continue to overshadow China’s grid storage market in the immediate future. However, the tides can, and will shift with staggering speed when China makes its move. Today’s leading markets rely on regulation, market pricing and consumer demand, resulting in slow, steady market growth. Conversely, the Chinese market will see immediate and explosive growth once government and the State Grid Corporation decide to turn their attention to grid storage.

With a growing pool of domestic battery supply and tremendous government funding, the Chinese market can lead global production and consumption of grid storage technologies, just as the world has seen it do in the automotive and solar sectors. The message is clear: clients need to integrate themselves into China’s domestic battery supply chain in order to capitalize on this growth.

However, these regional dynamics offer a valuable insight for clients looking to sell products outside of China. Specifically, the grid storage market offers strong growth for lithium-ion and other storage technologies outside of China, while other existing markets for storage remain China-focused. Based on market conditions earlier in 2011, Lux forecast that electric bikes and heavy electric vehicles will dominate demand for lithium-ion, with the vast majority of demand and supply coming from China. Conversely, the grid storage market is growing today in North America, Europe, Japan and Korea, making these regions primary focal points for companies looking to generate revenues outside of China.

* Client registration required.

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Brent Giles

Will O&G companies get the frack (water) out?

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There has been an explosion of frack water treatment companies, especially in the Marcellus, where geography and water disposal challenges favor small-scale solutions. Companies like WaterTectonics*, NeoHydro*, Produced Water Solutions*, Latitude*, Watervap*, and Altela* have pinned their hopes on a robust fracking market despite soft gas prices and strong regulations that fall just short of banning the practice outright. So far, the market has developed well regionally, with notable bans in New York State and in France. But we’ve expected a shakeout in the number of companies in the space, and the technologies applied to it.

Enter GasFrac, a startup that uses hydrocarbons like propane instead of water to fracture the rock. Already deployed at one site in the Marcellus, the company’s technology promises performance superior to water fracking, as well as capabilities that would be impossible using water – namely, reduced fluid volumes and near-complete recovery of used fluid.

Reducing the volume of water used in fracking won’t shut down demand for technologies that treat and dispose of produced water. GasFrac may not even be competitive in regions that generate an excess of produced water for disposal. But it has the potential to replace water fracking in dry climates, where water supply is problematic. That includes sites in the Middle East and China. Plus, if accepted by regulators as a more environmentally friendly way to frack, it could carve major inroads into regions where water is the current method of choice. Clients considering investing in this space should watch GasFrac’s progress carefully.

* Client registration required.

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Ross Kozarsky

Wind and aerospace lead demand for advanced composite materials

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This week’s Graphic comes from Lux Research’s recent report forecasting market growth for advanced composites based on carbon fibers, carbon nanotubes, and graphene. All told, the combined market is on track to expand from $7.0 billion this year to $25.8 billion in 2020 – an average compound annual growth rate (CAGR) of 16%.

As illustrated, most future growth will be powered by wind turbine applications that, thanks to increasingly strict renewable energy standards and a shift towards larger offshore installations, are on track to supplant aerospace’s historic role as lead adopter. The report predicts wind energy applications will balloon from $2.5 billion in 2011 to $15.4 billion in 2020, a CAGR of 23%.

Even so, the market for aerospace composites will also gain altitude – largely on the wings of Boeing’s successful 787 Dreamliner. The aerospace industry’s willingness to pay a price premium to reduce weight gave it an early start as the leading adopter (and developer) of novel structural materials. Yet, as wind applications become the dominant driver of future growth, aerospace composites will still see a healthy average CAGR of 13% – rising from $2.1 billion in 2011 to $6.3 billion in 2020.

While slim industry margins and long development timelines have slowed the automotive industry’s adoption of advanced composites, it will see the second largest average industry CAGR at 17%. That aside, revenues will actually only grow from $519 million in 2011 to $2.1 billion in 2020.

Oil & gas will also see relatively slow growth due to the end market’s inherent conservatism and its happiness to “get by” on conventional steel. The market will see a modest 5% CAGR from $273 million in 2011 to $427 million in 2020. Lastly, while sporting goods consumers are willing to pay for higher performance, they do not represent a volume driver. Total market size for sporting goods will remain steady at around $1.5 billion throughout the decade.

Source: Lux Research report “Carbon Fiber and Beyond: The $26 Billion World of Advanced Composite.”

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