Five questions:  Brett Feldman, ex-NSTAR

Some light reading for those of you doing some heavy digesting this weekend (Happy Thanksgiving!):

Regular readers of this site will know that we’re generally big on energy efficiency and demand response, and more and more investors seem to be getting on board with these sentiments.  So when we learned that a smart colleague in the field was leaving his position on the utility side, it seemed like a good opportunity to pick his brain as part of our Five Questions series…

Brett Feldman recently left NSTAR after 3 years as an energy efficiency program manager to pursue another opportunity in the field. At NSTAR, he managed energy efficiency and demand response programs for commercial and industrial customers. Prior to NSTAR he was with energy consulting firms for four years and also earned his MBA.

1. What are generally the biggest business priorities for electric utilities these days?  How do conservation and demand response/ negawatts rank in terms of prioritization of “mindshareâ€? among utility execs, in general?

I only worked at one particular utility, but there are certainly commonalities no matter what the company or regulatory environment. Investor owned utilities are always responsible to their shareholders, however to best serve them. There is a lot of M&A action going on currently. Billions of dollars in Transmission and Distribution investments will be required in the next decade to upgrade an aging system. Most utilities are not proactive in promoting conservation; some may try to preempt impending regulation, while the bulk are reactionary. These days, climate change is a bigger issue for utility execs. I heard NSTAR’s CFO say that the senior team watched “An Inconvenient Truth” together this year, and that type of thing never would have happened before 2007.

2. What’s your perspective on the pace of adoption of demand response (DR) and peak shifting among electric utilities?  Is it too slow, too fast, or “just rightâ€??

The pace of DR adoption is slow. There are a lot of factors that come to play: rate structures that disincentive it; expensive metering requirements that need rate recovery; lack of good estimates of the benefits of DR on pricing and the T&D infrastructure; proven technologies to perform the DR: and customer education and engagement.

3. What do you think could be done, and by whom, to most effectively accelerate the roll-out of large-scale energy efficiency (EE) programs?

There are many different levels of action that could be taken to accelerate EE. Many people are waiting for some kind of federal carbon regulations or trading scheme to set things in motion. Some states do not want to wait for federal action and have begun their own statewide or regional programs. Other people believe that municipalities should take the lead on the local level, and high-intensity targeted grassroots community initiatives are the best method. I believe that the private sector financial industry needs to take a closer look at the economics of energy efficiency and realize its potential for investing and lending. Returns can be high and projects can be low-risk. It’s a matter of getting to a scale that is meaningful for investors.

4. What do you think could be done, and by whom, to most effectively accelerate the roll-out of demand response programs?

There are two basic kinds of demand response: large commercial and industrial controls and mass market (small commercial and residential) direct load control. Both markets will require similar advances: new time-of-use (hourly or real-time pricing) rate structures that encourage DR; metering, communication, and control equipment that cost-effectively provide services; and customer education on the societal needs for and individual benefits of DR. For the large C&I market, the competitive suppliers or utilities could offer the services. For the mass market, the utility is the most likely party.

5. What’s the biggest “unmet needâ€? you see for electric utilities these days?  Is there a missing or under-performing technology area where an entrepreneur should be focusing their efforts?

Metering and communications are huge opportunities for technology advances. These are the keys in being able to measure and promote EE, DR, and distributed generation (cogeneration, solar, wind). Controls are always improving: remote energy monitoring and management, daylighting, different types of occupancy sensors. Of course any kind of more efficient end-use equipment such as lighting (LEDs), HVAC, motors, compressed air.

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Other news and notes:

• SolFocus extended their Series B/ Series A (incl. funding for a European subsidiary) by $11.6mm from an unnamed hedge fund.
• Stonybrook Water Purification took in a second, $1mm tranche of their milestoned Series A.
• Akermin, which is developing technology for the use of enzymes as replacements for precious metal catalysts (for example, for fuel cells), raised a $4.96mm insider Series A-2.  Investors include Prolog Ventures, OnPoint, Chrysalix, and St. Louis Arch Angels.
• Cleantech investors in the news:  VentureWire reported this week that Firelake Capital is anticipating closing a $100mm new fund in January.

Interesting commentary on the status of the ongoing silicon shortage…  OPEC launching a $750mm cleantech fund?...  Cleantech investing ramps up in India...  Finally, it’s well worth checking out Dan Primack’s analysis of 4,300 venture capital “busts” since 1990.