Energy efficiency to shine in 2010

SAN JOSE, Calif. — Solar and wind power may get the headlines and attention, but green-tech experts say 2010 will be dominated by energy efficiency, the mundane but critical process of cutting the amount of gas and electricity that homes and offices use.

Energy Secretary Steven Chu regularly describes himself as an "energy-efficiency nut." Sixteen states, including California and New York, have passed legislation enabling homeowners to finance energy-efficiency upgrades through their property taxes. President Obama even declared insulation "sexy" at a Home Depot last month.

Then there are the sheer numbers:

Venture-capital investment in energy efficiency hit a record in 2009: at least 115 deals worth nearly $1 billion, according to a preliminary tally by the Cleantech Group and Deloitte. That's up 39 percent from 2008.

Meanwhile, solar, which had 84 deals worth about $1.2 billion, was down 64 percent from 2008, and there's increasing talk about solar being "overfunded."

"In 2009, there was a pullback and realization by investors that because of the capital intensity of solar, there may be safer places to put their money," said Scott Smith, U.S. cleantech leader for Deloitte.

Energy efficiency generally refers to a wide range of technologies designed to cut energy use such as improved lighting, greener building materials and sophisticated software that monitors power consumption.

And it's increasingly seen as an effective way to create desperately needed jobs, save struggling consumers money, wean America from its dependence on foreign oil and reduce carbon emissions — all at the same time.

Home energy use accounts for 21 percent of the nation's carbon footprint — roughly twice the carbon emissions of passenger cars, according to the Pew Center on Global Climate Change. There are 100 million homes in America, and energy-saving measures like insulation, caulking, and heating and cooling system upgrades can reduce household energy consumption by 10 percent to 40 percent, according to a memo by the President's Economic Recovery Advisory Board.

And saving energy saves money: Californians pay an average of $84 a month for electricity, according to the U.S. Energy Information Administration.

Kevin Surace has seen the shift firsthand. For years, the CEO of Serious Materials, which makes energy-saving windows and drywall, was the only energy-efficiency executive at industry conferences.

"I remember standing with a piece of drywall at the Cleantech Forum in 2006," he said. "Every other company was solar, wind and biofuel. People were like: What are you doing at our conference?"

Now Surace is the keynote speaker at many of the conferences he attends.

"All the cleantech conferences are efficiency, efficiency, efficiency," said Surace. "When you really break it down, every dollar spent on energy efficiency pays back the investment four or five times. It saves people money and creates jobs. And it has bipartisan support."

Another company riding the surge of interest in energy efficiency is San Francisco-based Recurve, which provides detailed home energy audits and green energy remodeling to Bay Area homeowners.

"Five or six years ago, energy efficiency was such a backwater," said co-founder and President Matt Golden, who remembers the days of being met with blank stares when he would talk about insulation and duct-system leakage. "Everyone was like: There's no money in energy efficiency."

The company, which had 12 employees in 2007, has grown to 65. It is creating customized software that it plans to license to other contractors in the energy-retrofit industry and is actively hiring software engineers. Golden is so sought after as a public-policy leader that he spends much of his time in Washington these days.

Recurve, which raised a first round of venture funding in September 2008, is backed by RockPort Capital and Shasta Ventures.

"Energy efficiency is very capital-efficient," said Rob Coneybeer, of Shasta Ventures. "We like the idea of people using IT to measure, monitor and improve their energy usage. We felt like Recurve had done a really good job, and we really liked the founders — that's a big reason why we invested in them."