The Next Energy Innovators

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A BOOST FROM THE FEDS

Even in a terrible business climate, several factors are bolstering the fortunes of cleantech companies that were up and running before the financial crisis hit. The $787 billion federal stimulus bill makes billions in funding available for everything from lithium-ion car batteries to green construction. And new federal and state tax incentives make the price of solar and wind power more competitive with fossil fuels. If passed, the carbon emissions trading system approved by the House of Representatives would increase pressure on both businesses and households to use any means they can to conserve energy or switch to cleaner fuels. Then there's the price of oil. For all the volatility, it's bound to rise again when global growth resumes and emerging economies kick back into high gear, says GreenBiz's Makower. (Disclosure: Makower is an adviser to VantagePoint Venture Partners and has a small financial interest in the firm. VantagePoint has investments in five companies on the list: Bridgelux, BrightSource Energy, MiaSolé, Solazyme, and Tendril.)

As the roster of 25 startups shows, advanced green technologies are finally graduating from the lab and taking root commercially. AltaRock Energy of Sausalito, Calif., is building its first U.S. power plant in Northern California, tapping geothermal heat in "basement rock" deep in the ground to boil water in artificial reservoirs. And Coulomb Technologies in Campbell, Calif., is on track to install more than 1,000 curbside recharging stations for electric cars across the U.S. this year, up from just 100 last year.

MAKING IT SIMPLE

Several startups say they are close to price parity with carbon-based fuels. One common benchmark is to produce electricity at around 10 cents per kilowatt hour. That would still be about 40% pricier than power from coal plants, but it's on a par with the gas-fired plants utilities rely on during peak times. "If you can make power that can compete with a gas-fired plant, you can have a huge market," says Joseph Laia, CEO of Santa Clara's (Calif.) MiaSolé, which is marketing solar panels made from low-cost, flexible materials.

As some innovators grapple with technology challenges, others are focusing on making clean energy systems easier for ordinary people to use. "The real innovation now won't be in making a better panel that is 10% cheaper," says SolarCity CEO Lyndon Rive, who co-founded the company with his brother Peter. "Widespread adoption will come if you can take away the complexity and hassle of installing solar."

SolarCity's chief asset is computer automation. Working with satellite images of customer rooftops and utility-rate data, it cuts the process of designing each installation and obtaining building permits and government rebates from months to days. The software also estimates the return on solar investments for each customer and remotely monitors their use of power. The company says it makes a profit on the installations. SolarCity's advantage: It gets a volume discount on the panels, and its software tools help streamline costs.

Another startup, BioFuelBox of San Jose, also is betting on an innovative business model. It collects waste from facilities such as meatpacking plants and sewage processors, converts it to biodiesel, and then sells the fuel. The company wasn't the first to figure out how to cook waste into useful stuff. But BioFuelBox realized the true value lay not in selling disposal systems to customers but in saving them money by taking their refuse for free. So it developed compact refineries that can be loaded onto flatbed trucks and sent to waste sites. Even if the government eliminates subsidies for biodiesel, the company says it can profitably sell its fuel for the same price truckers pay for oil-based diesel. Its first refinery is in Idaho, converting waste from potato processing plants. Given that the world produces 12 billion gallons a year of suitable waste that can be turned into diesel, CEO Steven Perricone hopes to "run a large network of microrefineries worldwide in three or five years."

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