Ampt has a proprietary power conversion technology protected by patents. But to use it effectively, it must be part of a solar system’s architecture. The economics of building that entire architecture, inverter, junction box and panel, is presently unworkable.

The alternative is a partnership with inverter, junction box and solar module makers. The High Definition PV Alliance is Ampt’s solution. The partners get access to Ampt’s technology, Ampt gets a place in the system architecture and solar system builders get potentially impressive cost savings.

“By ourselves, Ampt would be challenged to provide these cost savings,” acknowledged Ampt Sales and Marketing VP Evan Vogel. The Alliance’s set of business partnerships is “an end-to-end pre-tested solution that is predictable and characterized,” Vogel said, “and at a lower system cost.

On the soon-to-be-launched HD PV website, Vogel said, a system builder can compare solutions from inverter partners KACO New Energy, REFUsol and LTI REEnergy. Shoals Technologies and Amphenol have signed on as junction box partners and, Vogel said, “new partners are lining up quickly.” Solar module vendors Suniva, ZNShine, Upsolar and Eoplly are on board, as are monitoring service providers meteocontrol, Next Generation Energy, AlsoEnergy, and DECK Monitoring.

“Alliances are the way that companies join together but in solar it has never happened,” Vogel explained, because the best alliance partners are one another’s competitors.

“The reason they have come to this alliance,” Vogel said, is they recognize the patented Ampt technology provides a unique ability to drive down system cost, and they want to be a part of it.” Competitors have seen the benefit of signing on to Ampt’s Alliance, he said, “because they recognize it will change how utility-scale systems will be built in the near future.”

“Power conversion electronics prepares the power coming from the solar panel for the inverter,” Vogel explained. “Tigo does something similar. That’s the class of product we fall in.”

Ampt’s patented device “can’t take cost out of the inverter, but we can facilitate a much lower cost inverter,” Vogel said.

“Power conversion of any kind likes to have a well-conditioned, narrow-ranged, very predictable input,” Vogel explained. “The problem for solar inverters is that solar modules are not going to give them that. What we do is prepare the power coming from the solar panel." That, he said, alters inverter capability.

“LTI has a 600-kilowatt station. Without our devices at the junction boxes on the back of each panel, you would need five of the 600-kilowatt inverters for a three-megawatt installation. But the Ampt device conditions the power so that a 600-kilowatt inverter can turn a megawatt of DC into AC, Vogel explained. “So instead of needing five, only three are necessary.”

And, he added, “when that inverter went from 600 kilowatts to a megawatt, in terms of dollars per watt, the price of the box itself doesn’t change, but the dollars-per-watt on a system level went down 40 percent. That’s a big change.”

The Shoals MultiLink Junction Box “is set up with a pair of connectors that we clip and lock into. If it takes a minute, that’s a lot,” he said. “And the electronics have the same warranty as the solar module: 25 years.”

The solar industry, Vogel said, “is driving maniacally toward lower cost. For everybody we speak to, whatever piece of the puzzle they provide, they are getting pounded on for price.” The Alliance “can take cost out of the system with an architecture change. There is no way to accelerate that other than, we think, architecture changes.”

Because the Ampt power conversion device operates in utility-scale projects at the panel level instead of the string or multiple string level, Vogel added, every panel generates as much as possible at any given moment, with an average four percent per panel increase.

Ampt’s biggest actual installation to date is a 100-kilowatt system. “The interface is just now becoming a reality,” Vogel acknowledged, because until now, “the labor to install our technology on an individual panel level worked against our cost savings.” With the snap in connectors, that has been remedied. And the devices and connectors are TUV- and UL-approved, Vogel noted.

“We have smaller commercial systems that people are using as the litmus test to go into very high volume and higher-powered systems. We are transitioning from the smaller scale to some very large opportunities in installations we will be doing in 2013," he said.

It’s become less profitable to make ethanol from corn during this summer of drought in the United States, and less of it is being made.

The U.S. Energy Information Agency reported last week that high corn prices have driven down the profitability of producing ethanol from corn, stating that “ethanol producers may already be cutting back production, as July was the lowest month for ethanol production in the last two years.”

A U.S. renewable fuel standard (RFS) requires blenders to work 13.2 billion gallons of ethanol into gasoline this year. In a normal year, that would eat up about 40 percent of the corn crop. Due to drought, however, this year’s crop has been forecast to come in around 25 percent smaller than normal, so theoretically ethanol would siphon off a greater proportion.

That has spurred a debate about the RFS. The head of the United Nations Food and Agriculture Organization said in early August that waiving the RFS would help ease global food pressures. But it would be misleading to cast this as strictly a food vs. fuel debate. 'Money vs. money' might be equally accurate. On one side are agribusinesses that make ethanol -- they want to keep the RFS in place -- and on the other side are cattle and pork growers, who’d love to see it go away.

The Obama administration -- most notably Agriculture Secretary Tom Vilsack -- has stood firmly behind the RFS, agreeing with the ethanol industry that the program has the flexibility to allow the market to balance out supply and demand pulls and pushes. “The market is already adjusting to lower crop production,” Vilsack said last month in Nebraska. “We should let the market work.”

Defenders of the mandate have pointed to an Iowa State study [PDF] produced in July that found that a reduction in the mandate this year -- or even waiving it entirely -- would have a modest effect on corn prices. The main reason cited was that the RFS already allows obligated parties to carry over blending credits from previous years, which “significantly lowers the economic impacts of a short crop.”

Ethanol interests also dispute the claim that they use 40 percent or more of the corn crop. The industry group Growth Energy says that because just one-third of the kernel is used for ethanol and the protein, fiber and oil are returned to the food chain in the form of high-protein animal feed. So in the end, they claim, just 16 percent of the corn acres harvested goes to ethanol production.

Still, the Environmental Protection Agency, in response to requests for waivers by some governors, has opened a comment period [PDF], through Sept. 26, on the RFS. Meanwhile, even with the RFS still in place, the ethanol industry has been feeling some pain. With little leverage to raise prices for ethanol, the high price of corn has put a squeeze on ethanol plants.

This squeeze can be seen in the 'corn spread,' which measures corn’s impact on the price of ethanol. It’s the per-bushel price of corn divided by 2.8 (the average number of gallons of ethanol produced from a bushel of corn) subtracted from the per-gallon price of ethanol. The corn spread dropped 22 cents since early June, the EIA said. “A negative spread does not necessarily mean that producers are losing money by making ethanol, since the leftover feedstock and other byproducts can be sold,” the agency reported. “However, the $0.22 per gallon drop in the spread since early June has reduced profitability.”

The Renewable Fuels Association, another industry group, told NPR that 10 percent of the nation’s ethanol plants are offline, with the remainder running at 75 percent to 80 percent of capacity.

Meanwhile, one thing folks around the country might wonder is if this summer’s high corn prices have helped drive up gasoline prices. No, the EIA said. “Ethanol is a component of gasoline after blending; however, there is little evidence of the rising corn prices affecting the current price of gasoline,” the EIA reported. “The ratio of the price of gasoline to the price of petroleum (called a 'crack spread') has remained relatively constant, indicating that the rise in cost of gasoline was largely due to the rise in cost of crude oil, and not because of issues specifically related to the gasoline or ethanol markets.”

***

Editor's note: This article is reposted in its original form from EarthTechling. Author credit goes to Pete Danko.

One thing I've learned as an investor that is true beyond cleantech: offering a compelling value proposition to customers is important, but it's not sufficient for a startup to be able to grow revenues quickly.

Growing revenues rapidly as a startup (with limited marketing resources, brand recognition, etc.) requires essentially fishing in a barrel. You need a concentration of either customer mindshare, or of actual customers. The best situation, of course, is to have both: a bunch of easy-to-find customers who all put a priority on the problem you're solving. That way you can quickly and cheaply reach new customers, you get their attention, and you quickly convince them to open up their wallets.

But that's not always possible, and it's not fully necessary. Flipping that around to put it another way, you can get away with having either customers with fragmented mindshare, or highly fragmented customers, but not both. 

The problem is that, for many opportunity areas in cleantech, such as building energy efficiency solutions, agriculture solutions, alternative vehicles, etc., the startup is indeed presented with both challenges simultaneously. These are highly fragmented markets, and while the customers would all agree that operating improvements are a priority, it's rarely their top priority on a day-to-day basis.

I believe this is one reason why building energy-efficiency solutions have typically found it hard to scale. The building owners and managers who place a high priority on energy improvements and happen to be in a position to carry them out (e.g., a budget is in place, perhaps a general retrofit is already scheduled) are out there -- but they're highly scattered.  And the rest will nod their heads and often take a meeting, but always find a reason (or a distraction) not to say yes. So we've seen a lot of very interesting energy solutions for residential, commercial and industrial customers that have failed to grow revenues rapidly, because the cost of customer acquisition is high in terms of both dollars and time (both of which can be deadly to a startup).

The saving grace for cleatech entrepreneurs facing this challenge, however, is that these markets are just so darn big. Billions of dollars of potential markets are just waiting to be tapped. Even if only a small portion of those markets are truly receptive and eager at any given time, that small portion still adds up to a very attractive market -- if you can find it.

Unfortunately, I see too many startups in these markets reaching out to a smallish pipeline of potential customers (out of necessity, due to limited bandwidth and marketing resources), and then working really hard to close on a high proportion of those opportunities. Others take the opposite approach and just spend way too much on marketing, but without ever really engaging with potential customers until they're already 'sold.' Several of the earlier posts in this Lessons series have dealt with this indirectly, by talking about the right role of marketing and PR, or the missing channels for a lot of these solutions. There are some tactics there for addressing the problem a bit. But basically, when you're dealing with a fragmented and distracted customer base, identifying a very few opportunities and then wrestling them to the ground will just never scale. And you can waste a lot of venture capital on marketing without knowing for sure that the customers are receptive and ready. The hoped-for 'inflection point' where you get enough customer momentum that the ball starts rolling downhill by itself is a lot further along than the startups and their investors anticipate when you're dealing with the double fragmentation problem.

So how do you deal with fragmentation? Aggregation.

We've seen how this works in the solar sector. As today's announced research from GTM and SEIA illustrates, the market for solar installations in the U.S. has been growing by leaps and bounds, including within the very same set of residential, commercial and industrial building owners referred to above. And arguably, solar on the roof has a worse economic value proposition than efficiency improvements in the building. So how is this growing so quickly?

Different companies have taken different approaches, but they're all about aggregating and effectively engaging the scattered demand. Perhaps only 10% of homeowners want solar on their roof (and at this point, that looks to be a low guess), but if you can quickly reach and quickly assess and quickly convert those scattered homeowners, you can build a backlog very quickly. So in downstream solar, the metric of the day is 'cost of customer acquisition.' It should be the metric for all sorts of other cleantech sectors as well, especially energy efficiency.

How do you effectively aggregate fragmented demand, then, to lower that cost of customer acquisition?

1. Build a network of potential customers, even including those who may not be in the market to spend money right now. Figure out what will make them want to interact with you, and make it easy. Or find existing aggregation points and tap into those funnels.

2. Get their data. Get rich information about their patterns, their needs, their existing conversations and research.

3. Analyze the data so you can present them with even more valuable opportunities that they may or may not have known about but can trust. Do their homework for them, and help them succeed with what they acknowledge is something they want to do but have trouble prioritizing.

This may sound like motherhood and apple pie, but understand that for most of the past decade the theory most cleantech entrepreneurs and investors seemed to follow was that a great technical/product innovation would drive customers to rapidly purchase the solution. You still hear echoes of this when very smart guys like Vinod and Bill Gates talk about the need to find radical innovation with ten-fold performance improvements as the be-all-end-all of cleantech entrepreneurship. But even if you can find and develop such solutions, I would argue that we've learned that it's still tough to scale up revenues in the real marketplace, without also tackling these other challenges. The fact that such basic lessons about entrepreneurship are still relatively untapped in the cleantech sector are what give me hope that we're on the cusp of a powerful next surge in our market. Because we know it can be done, and how to do it.

You will likely read the above three points and think they sound very applicable to internet-based business opportunities. They do. But not necessarily so. One of the reasons our portfolio company Next Step Living has been growing so quickly recently is that the firm went through this exercise but started with a physical touchpoint with customers. The firm partnered with towns and utilities to be able to visit thousands of homes per year as a trusted energy advisor. Now that Next Step Living has that customer network in hand, the data-driven side of its business is yielding exciting results, but it didn't start with an internet-based business plan.

On the other hand, (and as proof that we're at least attempting to walk the talk), see our latest investment, Noesis Energy. It was our first "cleanweb" investment at Black Coral. And that firm is doing exactly what's being proposed above -- as this well-done write-up by Katie Tweed illustrates: they're giving away some really cool value to building owners and managers for free, and in easy-to-use ways. We got to see how, even in a quiet beta mode, it was a no-brainer for building owners and managers to sign up for a value proposition like that. And as you can tell from the above thesis, we have a lot of big plans for what can be done with that network. I'm fascinated by data-driven cleantech plays, by opportunities to reinvent channels in these markets, and by great teams. With Noesis, we think we've found all three.

I'm using these examples from our own portfolio as illustrations, because I like these companies and their teams, so if I'm going to brag about someone to prove my point, then hey, why not. But I think cleantech investors out there will find it a common refrain in many of the other fast-growing companies in the sector, especially among those going after distributed customers (i.e., not utilities or chemicals giants).

Whether you're a hardware innovator or a cleanweb entrepreneur, figure out how to aggregate fragmented potential customers, and figure out how to get in an ongoing conversation with them. The revenue growth opportunities will follow from that -- not the other way around.

BOULDER, COLO.—As part of the effort to cut costs in the global recession, many commercial building owners and managers have installed building energy management systems (BEMS) to reduce energy use and operating expenses. While these new systems can provide significant efficiency gains, their sophistication can be beyond the capabilities and resource levels of a building’s operating or maintenance staff.