Class Notes 10-5-09
Sean Wood
$10,000 first prize:
· Best working prototype
· Business summary of the market opportunity
· Potential for impact
Schedule 2010:
· Feb 11: Intent to submit
· March 5: 5-7 page summary
· March 28th: 1-page exec summary
· April 1st: Challenge day at Magnussen park
Next Week
· Class in Sieg 134
o Rob Bernard (CFO from Microsoft)
· Rick Livvy: Energy 2 starter
· UW Technologies: Jeff Canaan—entrepreneur in residence in the office of technology, huge expert in the energy area
o Great resource if you have questions on what’s happening in UW
Speaker: Ash Awad
· McKinstry
o Started in 1960s
o Cited by Barack Obama as an absolute example of what construction companies can do with conservation
o They don’t publicize their numbers—local, private company with about 1600 employees.
· Personal Background
o Began with a passion for Aerospace engineering
o Did some consulting in the Pac NW
o Found out passions were in energy
o His grandparents had a solar/thermal panel system that provided all the hot water for their house. His fascination with this devise drove him to study at the UW under Ashley Ambrey
o Proceeded into the energy efficiency industry
o Ash was very fascinated by solar energy
o Was not aware of the challenges faced in an area with very little sunlight
o To really move the needle on this topic, you must have a lot of passion
· McKinstry
o Started in about 1960
o Started
off as a plumber in
o Early on, a founder, George Allen, decided he was not interested in being a contractor who would get into a battle with the clients.
o Began introducing ideas that would create a more durable McKinstry
o McKinstry focused on core beliefs, relationships with clients, and working with new ideas.
o The first thing that McKinstry did back in the 1970s and 1980s was bring engineers in house.
o This immediately, as the market saw it, was the end of McKinstry
o Yet the belief was, if you’re going to give your customer the best product and service, you must be an expert on what you’re doing.
o This
helped propel the company toward creating the best ideas in the industry, and
made it the biggest of its kind in the
o Ended up switching to “For the Life of Your Building”—Post construction services
o How people see us: “White Truck, Blue Dot.”
o McKinstry works to keep their jobs efficient and working even after the construction is complete.
o Now, a company that is focused on integrated delivery
o During the last recession, did not have to lay off any people
o Core beliefs: to protect and take care of our people and our clients
§ We integrate the delivery from design to delivery and to post.
o The company with the best business people wins.
o Not every client wants us to do their work, but the ones that do end up being the best and longest lasting clients.
· Energy and Sustainability
o Back in 2000, Ash and Mike Lock (a friend) went to McKinstry
o Started to imagine what it was to form an energy services section in McKinstry
o Learned very quickly that the business was different enough to do this
o Started with a few employees in 2000; in 2001/2002, the recession set in
o The construction business that was the profitable piece of McKinstry, which promptly dropped dramatically
o Focused on the new idea at McKinstry of making the currently built environment energy efficient.
o In the worst economic times lie some of the best opportunities
o This is a time, right now, where people are actually looking for different ways of doing business
§ To reduce operational costs, make systems more efficient, etc.
o In 2001, McKinstry seized the opportunity, and invested in that particular venture.
o McKinstry moved staff around and hired more
o Ultimately, the math they were looking at was this:
§ McKinstry works in the built environment—mostly non-residential
§ There’s 80 billion square feet of non-residential, commercial work done by McKinstry
§ Buildings consume ~60% of energy and put out ~40% of the Carbon
§ Think about what opportunities lie to make the built environment more energy efficient.
o Adopted the Following kind of approach to the built environment:
§ You must conserve resources
· Lessen what you consume
· Make more efficient systems
§ You must move energy around effectively
· Sometimes that’s within a building
· Sometimes that’s within a grid
§ Bring on Renewables
·
The environmental community firmly believes that
you have to bring renewables on fast.
·
However, if you bring on the clean power first,
you may be putting up more power than is needed, which creates waste and
inefficiency.
·
This is why it is imperative to achieve the
first two goals before bringing renewables into the equation.
o President
Obama saw a solid company employing a diverse group of people, with few to
no layoffs.
§ During
the last recession, McKinstry has been hiring at a minimum of two people per
week
§ The
president saw a company transformed, that cared about its people and its clients.
§ The
company had a commitment to business, community, and environment.
o What’s
good for business and what’s good for the environment are perfectly in balance
o It’s
ridiculous to assume that to be sustainable is to give up some sort of
profitability.
· We create products where no products exist, which customers like even in poor economic times:
o We take the risk that guarantee the first cost, and we’ll also take the risk and guarantee the savings to the client
o Ultimately, we have to put a financial construct with the following thought in mind: that the actual savings we are creating covers the loan
o We take advantage of tax credits to buy down the $1 million; no capital required from the client.
· Over the last several years, we have offices in many states
o Opened
an office in
· We focus on trust with our clients and hyper-transparency.
· We are a privately held company, and at the beginning of this year, we were awarded a $5 million contract with the federal government.
· Areas which you might want to be attentive to:
o Cap and trade
§ We
are GOING to get a carbon market in the
§ The EPA, last week, started to regulate greenhouse gasses—it’s done.
§ They are now going after the big emitters of greenhouse gasses.
o Gas efficient vehicles
§ Unless the price indicators are in play, we—a society of consumers—will not act.
o Energy crises are going to rise significantly over the next five years
§ When energy prices rise, we see increases in energy efficiency
o We are just going to have to move away from being worried about $5 gas
§ We must focus on getting vehicles with incredible gas efficiency
o New Energy efficient tech is afoot
§ Motors are becoming more efficient
§ New incandescent lamps (48 w)
· Phillips and GE are working on things like these.
§ Very efficient dimming ballast systems
· Smart—IP address identifiable
§ Energy controls
· Thermostats are going wireless—can measure temp, CO2, are IP address identifiable
· Lighting systems are becoming more efficient
§ LED technology is moving along very nicely
· Inevitably, we’ll see some level of LED technology in lamps for interiors
§ Not only are systems becoming more efficient, but their life expectancy has more than tripled—leading to less waste.
· From a total cost of ownership perspective (maintenance, environmental impact, energy savings), we’re getting systems that balance quite well
§ Biomass
is a big deal in the
· Taking woody debris out of forests and pushing them through these biomass systems
·
In the
§ Creating reservoirs involving wind power pumping stations
o Photovoltaic
§ Thin film solar has room for growth, but are at very low efficacy right now
§ Must be heavily subsidized, or probably won’t take off at market scale
o Solar-Thermal
§ Concentrated solar power to create steam, which then makes thermal power out of it.
o Microgrids
§ Thought about how buildings use energy.
§ Pesky humans mess with systems too much.
§ Much of the energy inefficiency we find is systems running amock
§ Solution: active energy systems to regulate this
· High tech systems reporting
· Remote monitoring of systems to make sure they are efficient
o Smart grids: Utilities are working in inefficient analog systems
§ Putting out enough sensors within a grid and combining it with wind and solar to make it more sophisticated is something that has to happen
§ If we make our buildings smarter, they’ll make the grid get smarter.
§ Storage ideas relating to smart grid:
· How we integrate electric vehicles is important
· We’ll charge our vehicles at home and at night
· We’ll drive to work, then sell power back to the buildings we work at
· First we must figure out how to keep these vehicles charged
· Then we’ll figure out how to charge them at home, then potentially sell power back to buildings
·
THE BIG
IDEA THOUGH:
o We’re
going to need an entirely different financial marketplace
o A
financier is never taking into consideration that the system they just financed
has a potential return on investment
o Financial marketplace is waking up
§ Trillions
of dollars of opportunity
§ No
money going into new construction—how do we move money into the retrofit
marketplace
§ Figuring
out on a global basis how to create green securities
§ Question
being asked: How do we get these retrofits paid for?
§ What
this ultimately does is value conservation as power generation.
o Green
Securities—Last note
§ Secretary
Chu wants utility costs to weigh in to
how people get financed for their homes.
§ What
if, up front, when you’re going to buy a home, somebody has to disclose what
utility costs are, and they put that into the value of the home?
§ This
is why green securities are so critical
·
Energy Efficiency and Renewables marketplace
will most likely be a trillion dollar industry.