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MICHAEL KANELLOS: APRIL 19, 2010
Top Ten Green Giants

What are the most important companies in greentech? Hint: many are over 100 years old.


While startups have played a crucial role in getting the green industry off the ground, the future will likely be dominated by large, sprawling conglomerates. Why? Green technology essentially involves revamping the physical infrastructure of the modern world: replacing coal-fired power plants with wind turbines, building homes from materials concocted in chemistry laboratories, and swapping out engines for electric motors. Established companies are simply in a far better position to muster the capital, technological depth, managerial expertise and factory capacity that will all be needed to make the transition.

Familiarity plays a big role, too. Millions have flocked to play Farmville, but you won't see the same sort of giddy enthusiasm for those installing high voltage power lines or sewage-to-drinking-water plants. If the internet boom was a twenty-something billionaire, clean tech is a science teacher with a comb-over.

With that in mind, here is our list of the top ten Green Giants: the companies most likely to produce, develop and promote the ideas and products that will have the widest ranging effects.

Communist Party of the People's Republic of China
General Electric
Siemens
Nissan
Dow Chemical
Panasonic
Johnson Controls and Honeywell
Wal-Mart
Veolia
Cisco
Honorable mentions: Philips (lighting, electronics), Samsung (electronics, aims to be biggest solar maker by 2015), LG (whatever Samsung does, we will do too) Ford, Schneider (grid, green data centers), IBM (consulting and technology for water, grid, data centers and supply chain), Oracle, SAP (software, rampant acquirers), Chevron (oil, solar) Suntech, SunPower, First Solar (solar), Bechtel, Lockheed Martin, and Boeing (contractors, project managers).

1. Communist Party of the People's Republic of China

What isn't China doing? The country has kicked off at least 13 electric car trials, issued somewhat strict gas mileage standards for cars, and set aggressive renewable energy standards. The Chinese government will invest an estimated $300 billion in green stimulus over the next decade or so, and assist the effort by direct investments in companies through its estimated $200 billion sovereign wealth fund.

Just as importantly, the government is encouraging state-owned banks and manufacturers (as well as private companies) to collaborate with Westerners. First Solar will build power plants in China and provide Chinese utilities with the know-how to build them on their own, while Intel and IBM are working with state grid companies.

Exports will climb, too. Duke and Chinese conglomerate ENN will build and manage alternative energy power plants in the U.S. Meanwhile, Chinese wind power turbine maker A-Power Technologies will build a massive 1.6 GW power plant in Texas and a turbine factory in Nevada with financing from a Chinese bank. And electric car makers BYD and Coda Automotive want to bring cars made on Chinese assembly lines to the U.S.

Japanese companies established worldwide brands with cars and TVs. China will do the same with energy. Your next job might be with a Chinese conglomerate.

Other governments -- Germany, Spain, the U.S., California -- have set up stimulus programs, too, but the one-party government and state-owned status of many companies and banks (Coda will make its car on lines in a state-owned factory and funding for its battery venture comes from a state bank) put the PRC in the category of a market participant.


2. General Electric

No surprise here. In its second century of operation, GE remains one of the dominant forces in energy. It jousts with Vestas for the top spot in wind, is trying to establish WiMax as a standard for grid communications, and its oil and gas unit has a $400 million contract to provide compression equipment and services to the world's biggest carbon capture project. Last May, GE unfurled a plan to start producing sodium batteries for trains and the grid, giving Japan's NGK Insulators its first major competitor.

Recently, it said it would re-enter the market for solar panels in 2011 with cadmium telluride solar panels that will set a new efficiency standard. The announcement marked the first challenge from a major player for First Solar in a while. LED light bulbs come out later this year. OLEDs? Hopefully soon.

This energy behemoth has also devised an electronic home strategy so that all of your GE appliances will link smoothly into demand response and smart grid services. John McDonald, the chair of the Smart Grid Interoperability Panel Governing Board at the National Institute of Standards and Technology (NIST) will oversee home grid standards. He came from GE.


3. Siemens

GE with a German accent. The two focus in many ways on the same markets. In 2009, Siemens' environmental portfolio generated $23 billion euros in revenue, an 11 percent increase. The conglomerate seems be a little more active than GE when it comes to acquisitions lately. Siemens spent $418 million in 2009 to acquire Solel, which builds solar thermal power plants and said in December that it wants to be a top-three supplier of wind equipment by 2012. In the past, it scooped up a number of water companies. It also has investments in startups like Energy4U and Israel's Arava Energy.

If there's a big project in the world, like the massive Desertec project that will harness North African sun for power for Europe, Siemens will invariably be involved.


4. Nissan

Back in 2007, when Nissan was a distant third among Japanese car makers, Minoru Shinohara, who runs the company's technology division, told me that Nissan would largely skip over hybrids and start producing all-electric commuter cars in 2011 or 2012. It sounded intriguing, but he was a lab exec, after all. Were the higher-ups listening?

Apparently so. Renault Nissan announced a push into electric cars a few months later. Perhaps the most surprising part, however, is that Nissan has kept on track. The Leaf will make its debut later this year at a price, $32,800, which will make it comparable or cheaper than equivalent gas-powered cars after tax credits.

More electric cars -- all equipped with the lithium polymer battery developed in conjunction with NEC -- will spill out in 2011 and 2012. The Leaf brought much-needed credibility to electric cars.

Along the way, Nissan has also been a boon to charging station and electric car service providers: it has alliances with nearly all the major players (Better Place, Ecotality, eTec, etc.). Arguably, Ford -- which is coming out with all-electrics, plug-in hybrids, and a series of energy-efficient EcoBoost engines -- belongs here instead, but Nissan has in many ways been the biggest champion of electric vehicles.


5. Dow Chemical

The chemical giant, founded when William McKinley sat in the White House (1897), has embarked upon a multi-pronged strategy to exploit its know-how in membranes, coatings and material science to reduce the amount of fossil fuels consumed by others in manufacturing their own products. Think of it as invisible green.

Last September, Dow Corning, a joint venture between Dow and Corning, brought a silicone sealant originally devised for outer-space solar panels to the conventional solar panel market. Silicone protects better than standard coatings, the company said, but also increases factory output. In November, Dow signed a multimillion dollar, multi-year research alliance withCaltech to develop next-generation solar technologies.

This year, the company will sell copper indium gallium selenide (CIGS) solar roofing tiles. Initial customers for the tiles, developed in conjunction with Global Solar, include mass market home builders Lennar and Pulte Homes. It also has an investment in small CIGS developer NuvoSun, which was founded by Miasole founder Dave Pearce.

Meanwhile, Dow Kokam, a joint venture, makes batteries for electric cars. Water is also on Dow's ambitious agenda: it bought Rohm and Haas to expand into desalination.


6. Panasonic

When Fumio Ohtsubo, who runs the Panasonic conglomerate, announced that the company would invest $1 billion into expanding its green market, it was less a breakthrough than a coup de grace.

Panasonic has been building its green portfolio for years. The company makes the nickel batteries for the Toyota Prius and the lithium ion batteries for the Tesla Roadster. Last year, it started selling home fuel cells though local utility Osaka Gas that turn methane into electricity. And, like a lot of TV manufacturers, it has begun to tout energy efficiency as a selling point in its TVs. Some of its plasma TVs consume only 142 watts, explained Pete Fannon, vice president of technology, policy and government regulation at Panasonic.

The company also has plans to release a LED light bulb that costs $40, consumes about 7 watts, and emits as much light as a 60-watt incandescent. Panasonic also participates in electronics recycling facilities and is a member of a number of smart grid panels in the U.S.

Last year, in a move geared to let it get into solar panels and beef up its battery portfolio, the company bought a controlling interest in Sanyo, which was started in the first half of the 20thcentury by one of Panasonic's early employees. The company is also working with a number of Japanese companies on smart grid trials in Los Alamos, New Mexico.

The next push? Homes. The company has a construction unit that can produce modular homes complete with energy efficient washing machines, TVs, new forms of insulation, standby lithium battery packs, solar panels and passive air conditioners from various divisions in the company itself. (See the video). It helps to have thousands of engineers and lots of factories at your disposal.

The big question mark is how aggressive Panasonic will be. Like many Japanese conglomerates, the company has been somewhat skittish about taking some of its domestic products overseas. I asked Ohtsubo about the company's green home plans in 2007. Japan, and maybe Europe, he said. Whether you see the blue Panasonic label all over the place again, or whether most of this stuff says in trade show purgatory will become one of the more interesting issues in the green consumer market.


7. Johnson Controls and Honeywell

Yes, it's cheating to declare a tie, but these two companies are mentioned in tandem quite a bit. In fact, I can't think of the last time someone mentioned Johnson Controls without adding "...and Honeywell" and vice versa.

The two companies are primarily known for building management systems, a growing market that will likely undergo a rapid evolutionary spurt, but they have other interests, too. Honeywell is the parent of UOP, which is leading the charge in developing catalysts required to transform feedstocks into "drop in" fuels like renewable diesel, jet fuel, and gasoline that require no changes to fuel infrastructure or fleet engines.

Johnson, meanwhile, is participating on the retrofit of the Empire State Building, while its battery group received $299 million from the DOE to develop nickel cobalt batteries for hybrids. The joint venture Johnson Controls-Saft makes lithium ion batteries for Ford.

The company also likes solar steam. "It is about a 40 percent efficient process. Solar thermal has advantages we need to capitalize on," Don Albinger, vice president of renewable energy solutions, told us last year.

Another interesting, and ancient, company that will loom large in green building: Alcoa.


8. Wal-Mart

Wal-Mart plays three roles in the green industry. As the world's largest retailer, it is both a buyer and seller, a consumer and provider, of goods. Its sprawling real estate holdings make it one of the richest targets for reducing energy consumed in operations.

The sheer size of the company makes almost anything it does noteworthy. Earlier this year, it launched a plan with the Environmental Defense Fund to help its suppliers reduce packaging and their own energy consumption. Streamlining undertaken at Wal-Mart's behest, of course, will invariably lead to lower-carbon products at other stores. Roughly 30,000 factories in China will be affected.

The company will also begin to put tags on its own brand-name clothes telling consumers that they can be washed in cold water, thereby saving downstream energy. Locavores have cheered the programs the discount giant has put in place to encourage farming in close proximity to its superstores.

Inside stores, experiments with LED lights in freezer cases, solar panels, fuel cells and other technologies move relatively quickly from prototype installations to commercial practices. The little things add up. Taking the lights out of soda machines in break rooms cut $1 million from operating costs.


9. Veolia

Veolia shares three distinct characteristics with many other companies on this list. One, it's old,founded in 1853 to provide irrigation services. Two, it's not based in the U.S. -- Veolia hails from France. And three, it pulls in a tremendous amount of revenue ($50 billion euros annually) providing relatively anonymous, arguably dull services that modern civilization can't live without.

Veolia, in fact, could be considered the king of unsexy green. The company has four lines of business: public transportation, water treatment, heating and cooling and garbage. Ever take the SuperShuttle to the airport? Veolia owns that. Roughly 75 percent of its revenue derives from providing services to public agencies and government.

The trust that governments are willing to give the conglomerate, however, explains its inclusion on the list. For the foreseeable future, governments will remain some of the largest consumers of green technology and services. Homeowners might own their own solar panels to get off the grid, but don't expect to see an explosion of eco-friendly home sewage systems anytime soon. Like GE and Siemens, Veolia has something of a free pass when it comes to the initial stages of due diligence.

Earlier this year, the company has created an accelerator program to recruit startups to participate in live prototype projects. It is working with NanoH2O, a company that has devised an energy-efficient desalination membrane, and Veolia wants to find a trash company to help it separate recyclable metals in waste streams.

"What we can provide is the customer base and pilot capabilities," said Philippe Martin, senior vice president of Veolia Environement.


10. Cisco

More of a potential giant than an actual one -- yet. The networking king unfurled its EnergyWise platform last year to reduce the energy consumed by PCs, networking equipment, and phones. Ultimately, Cisco wants to manage energy in buildings. It has already bought Richards-Zeta Building Intelligence to expand in that market. It has also entered into a few smart grid projects and plunked an investment into Grid Net, the broadband smart grid provider.

Another market: videoconferencing and city planning. Cisco cut its own travel budget by $500 million using video.

Granted, that pales in comparison to what others on the list have accomplished. Even Silver Spring is still a bigger name in smart grid. Nonetheless, two factors make Cisco a threat. One, it has a somewhat strong history of acquiring companies and then actually exploiting their technology in their own products. (That flip camera one notwithstanding.) With a market that will see a tremendous amount of M&A activity, this is a subterranean skill.

Two, smart grid is all about networking and Cisco has quite a bit of expertise here. Still, we'll have to wait and see. Various IT companies have laid plans to expand from their core markets and never quite succeeded. Only time will tell on this one.

Rick Thompson, Co-Founder and President of Greentech Media, contributed to this article.


Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
eschwerin@rosemontseneca.com
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