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Solving The Climate Crisis By Making You Comfy

SAN FRANCISCO, CALIFORNIA — On a typically grey and fogged in morning in the Bay Area, a group of entrepreneurs, venture capitalists and assorted wonks from the world over gather together in what once served as the administration center for the 1939 World’s Fair. They are here for the 2014 CleanTech forum, and while the range of start-ups being presented run the gamut, the sense of showmanship is consistent with each one.

There’s the fantastic self-promotion of the COO of Energy Dynamics, who addresses the crowd by confidently stating that, “first there was Mickey Mouse, then came the Apple Mouse, and now I give you the Eco Booster Mouse!” He holds aloft a modest piece of beige equipment that looks like a kiddie nightlight, promising that it allows for 10 percent in commercial and residential energy savings per month. And then there is the dedicated booth for WaterMarket Solutions, which calls to mind a half-finished art installation; it features nothing more than a pristine white porcelain toilet, while a sign off to the side touts it as the cutting edge in leak detection technology.

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The day is finally inaugurated by a speech from Cathy Zoi. As a former Assistant Secretary and Acting Under Secretary in President Obama’s Department of Energy, Zoi supervised over $30 billion in energy investments. And so it is, with great enthusiasm, that she announces to the crowd that she has, “never been more excited about how the ecosystem is working and about the prospects for CleanTech in this country.”

Based in Oakland, California, Building Robotics is a prime example of the ecosystem. The company describes itself as, “an interdisciplinary team of engineers, designers and building industry experts re-inventing building controls with advanced computing and thoughtful user experience.” That’s represented perfectly by their first fully commercialized product. Comfy, is an easy-to-use bit of software that addresses a common workplace complaint by allowing office workers to alter the climate in their immediate settings, adjusting the air conditioning and heating according to their own personal levels.

As the entrepreneurs who designed Comfy see it, the inefficiencies in commercial heating and cooling are a prime intersection, offering an opportunity to both make money and battle climate change. “Building managers are generally working with antiquated systems,” explains Lindsay Baker, the company’s Vice President of Business Development. “They really don’t have the ability to consider everyone’s preferences, and they certainly don’t have the time to cater to them.”

Although I may get hot very easily, whereas my co-worker one floor down spends her every waking hour bundled up with a sweater and scarf, there is a good chance that we are both reasonably comfortable (and therefore reasonably productive) in a narrow temperature of, say, 73-76 degrees. As a result, managers will set this specific parameter for the entire building at the beginning of each day. In so doing, they force the building to consume an enormous amount of energy (sustained precision of a building’s temperature requires that heating or cooling constantly click on), while failing to fully satisfy either me or my co-worker. Comfy pitches itself as the solution to this dilemma, allowing managers to set much wider bands each morning, leaving it to the individual employees to make their own adjustments throughout the day.

On a warm afternoon in late November, I visited the Sutardja Dai Hall on the UC Berkeley Campus to test the product for myself. Sitting in a large space on the fourth floor, one that, with its laminate tables, lime cloth chairs and grey pleather couches could easily double for nearly any office in the country, I logged into the Comfy app via an iPhone. After confirming my precise location as calibrated by the app’s GPS component, the phone showed a simple screen offering three buttons that read, “Warm My Space,” “I Am Comfortable,” and “Cool My Space.” I clicked on the final choice and waited. Twenty seconds later, cool air came streaming out the nearest duct while the other vents in the immediate area remained quiet.

“Those designing and selling clean tech have to include a human-centric element,” offers Baker. “What we’ve learned is that providing comfort for people is a real service, and that it’s possible to combine it with something socially responsible.”

Too often, the dialog around climate change is couched in sacrifice and it’s a major reason why the issue has failed to reach critical mass. Reducing carbon emissions as the global population continues to grow undoubtedly requires that we use energy in a more efficient manner. However, getting enough people to sign on and make the necessary adjustments necessitates that, in so doing, we make their lives easier rather than harder. The scale and complexity of climate change combined with our dependence on fossil fuels quickly inspire headaches, and, often, indifference. But, as the developers of Comfy see it, everyone can and will use an app that makes their workday more pleasant.

Of course, history repeats itself, and this isn’t the first go around the clean tech wheel. The late 90’s and early aughts were characterized by a similar financial commitment to the industry, birthing indisputable successes like Tesla and Solar City. However, that era, referred to colloquially as CleanTech 1.0, garnered headlines for the failure of the solar panel manufacturer Solyndra. Before the company declared bankruptcy in 2011, Solyndra burned through $529 million in government loans. Coming as it did in the middle of President Obama’s re-election drive, Republicans quickly used this example as ammunition for attacking the president and convincing voters that the Chicago community organizer didn’t understand business and economics.

Just last week, however, the Energy Department released statistics on the $32.4 billion loan guarantee program that Solyndra was a part of, and the results are staggering. The government expects to earn between $5 and $6 billion while experiencing a loss rate of only two percent. By anyone’s measure, that makes the program a success. Combined with solar energy’s increased cost competitiveness, its seems likely that this latest boom is here to stay.

Although Solyndra inaccurately characterizes the industry’s early success, the company is partially representative of CleanTech 1.0’s composition. Many of the investments made during that period went to ambitious startups with an eye toward manufacturing hardware. These were potentially massive entities, requiring actual factories, intensive infrastructures, and, most importantly, plenty of money and time. When those bets ran head-on with the 2008 recession, the combination was disastrous.

Entrepreneurs are counting on things being different this time around. According to a recent story in the New York Times, “industrial and energy start-ups attracted $1.24 billion in venture capital financing in the first half of 2014, more than twice as much as in the period a year earlier.” For the first time since the onset of the recession, financiers are again teaming up with scientists and entrepreneurs in order to launch new products and services that promise to make a mint while simultaneously boosting efficiency and cutting emissions. Unlike those start-ups launched prior to the recession, these new ventures have the incredible advantage of mobile computing on their side.

That same Times article also notes that while current investment is way up compared to the year prior, its overall size is still only a fourth of what it was during the peak of the first boom. While some point to this as evidence that the sector is still struggling to get back on its feet, others dismiss the analysis as superficial. Instead, they hold that investors and entrepreneurs have simply wised up to the fact that it doesn’t always take so much capital to change the world. After all, Google was built on “just” $25 million prior to its initial public offering. In this current landscape, then, it’s no longer thought necessary to invest heavily in something big in order be successful and cut down on fossil fuel usage. Instead, smaller bets on innovative software like Comfy might help do the trick at a fraction of the cost.

Steve Westly is one of the largest investors in Building Robotics. He is also a remarkably successful and influential figure in Silicon Valley, having struck gold with two of the most iconic startups in history. In 1997, he was hired by eBay as an early executive, and, after serving as California’s State Controller from 2002 to 2006, joined the board of Tesla Motors in 2007. He now runs The Westly Group, a venture capital firm that concentrates almost exclusively on early stage investing in clean tech businesses, and it is shocking to hear him say that he wouldn’t put his money in a company like Tesla these days.

“As an investor, if you think the current opportunities in clean tech are similar to Solyndra or Tesla, then you’re missing it,” he explains. “This space is moving into new models, ones that are characterized by the rise of the sharing economy and the interconnectivity of systems and phones.”

The iPhone, an ingredient that is obviously integral to Comfy’s existence, was first released in June of 2007, at the tail end of CleanTech 1.0. Unless the financiers making those early bets harnessed the powers of Nostradamus, it was impossible for them to foresee the profound impact that smartphones and mobile computing would have on the economy.

That trend was on display at the CleanTech forum, where entrepreneurs nodded vigorously at Zoi’s observation that these devices enable us to walk around, “with a computer in our pocket that is more powerful than what NASA used to put a man on the moon in 1969.” The logistical and IT capabilities unleashed by these developments, by the unbelievable amount of data they capture and communicate, and by the ease of interactivity that they facilitate, is the foundation upon which much of CleanTech 2.0 is constructed.

Westly is quick to highlight Comfy’s concentration on efficiency as a central reason behind his decision to back Building Robotics. “This is what the internet enables,” he explains. “In the dark ages, most people didn’t care how long they left the lights on, because energy was cheap. But in the last five or six years, there has been a marked shift, and people have been saying that we need to use less. What I love about Building Robotics is that it absolutely represents the future.”

If Westly is understandably enthused about one of his own investments, we should nonetheless look hopefully to his prognostications, if for no other reason than that our office buildings waste a tremendous amount of energy. In the fight to control carbon emissions and slow climate change, a few obvious fronts dominate headlines and inspire the most committed activism. The Keystone XL pipeline, possibly dormant no more thanks to the Republican midterm wins, is one obvious example. The Environmental Protection Agency’s new rules designed to curb the carbon emissions from both existing and new coal-fired power plants is yet another. Commercial real estate is considerably less flashy than either of these battlefields, which is a both a problem and an opening.

As Stanford Engineering Professor Raymond Levitt told me, “buildings represent the single largest consumer of energy — up to 40 percent of all energy, and about 30 percent of this wastefully — in the U.S. economy. They are the largest sectoral contributor to greenhouse gas emissions. I’ve worked on this problem for a while, and it’s easy to show that there is money to be made tackling it. This is a huge opportunity.”

The team behind Carbon Lighthouse agrees with this assessment, which is why they concern themselves with the entire energy system of a building. Whereas Comfy offers a simple software-driven solution to heating and cooling, Carbon Lighthouse is a pioneer in the field of comprehensive auditing. The company’s great innovation isn’t in designing a flashy app; rather, it’s in creating a business model that might enable them to disrupt their much larger competitors while addressing a massive source of carbon emissions. The leading companies in the space are large multi-nationals like Honeywell, Siemens, and Johnson Controls, and while their size makes them profitable, it also prevents them from offering their services to the vast majority of commercial landlords in the United States.(Disclosure: Tom Steyer, an investor in Carbon Lighthouse, sits on the board for the Center for American Progress. The Center for American Progress is the sister organization of the Center for American Progress Action Fund, which is the parent organization of ThinkProgress.)

According to the Department of Energy, the median building size in the United States is 5,100 square feet, while the average size is 15,700 square feet. And yet, it is almost never in the financial interest of these large corporations to improve the energy infrastructure of buildings smaller than 200,000 square feet. Although these firms pitch themselves as efficiency experts, and although they are comprised of highly qualified engineers, their fundamental business models make them, in effect, hardware salesman. Simply put, the profit from selling some building a state-of-the-art boiler is far greater than what can be gained from an engineer studying how to make an old one more efficient, and it’s the largest buildings that have the most to spend on this sort of equipment. Considering the fact that nearly 40 percent of the energy used by commercial buildings in this country goes to real estate in the 10,000 to 100,000 square foot range, the best efforts of Honeywell and its competitors just aren’t good enough.

Via a novel process, Carbon Lighthouse has managed to close the gap, pioneering a method that allows them to scrutinize buildings as small as 20,000 square feet while still turning a profit. Unlike their much larger competitors, Carbon Lighthouse only charges for their services once a landlord has seen demonstrable reductions in his or her energy bills, and the size of their fee is directly tied to the size of the reduction. This is accomplished by placing sensors at key energy points throughout a building, and recording energy expenditure rates every 1 to 15 minutes. Even smaller buildings are complicated organisms, with a multitude of different parts (fans, boilers, lights) that interact with each other dynamically in ways that differ in each location. A large part of what Carbon Lighthouse has built is a system for knowing when to measure what in which building.

Brenden Millstein is the CEO and co-founder of the company, and his focus on climate change is almost single-minded; it’s rare for him to answer a technical question about something as seemingly mundane as heating coils without the explanation ultimately relating back to energy use and carbon emissions. His passion is admirable, and one imagines that it served him well in his previous, short-lived career as a jazz musician who once opened as a breakdancer for Busta Rhymes.

Like Comfy, Brendan’s service would never have succeeded during CleanTech 1.0, for three crucial reasons. “The sensors that we use and strategically place throughout a building in order to gather data … It’s only recently that they became cheap enough for us to use them en masse,” he explains. “Secondly, after we collect the enormous amount of data that those sensors give us, we run it through $800 desktops with more analytical power than the supercomputers of a decade ago. Finally, as good as our system is, there are moments when it’s no substitute for the human knowledge possessed by an expert. We can send a 25-year-old engineer out into the field with an iPhone and have him or her FaceTime an expert back in the office, enabling real-time and precise instructors on how to do the job.”

Sitting behind his desk in downtown San Francisco, Millstein opens a raw data set, one comprised of every output from an ongoing project. If it were possible to give a building an MRI, this is what it would look like, and the results are mind-boggling. Millstein’s screen looks like the trickling green rain drops interpreted by the protagonists in the Matrix movies. He’s undeterred, though; in fact, he’s downright giddy. “I’m not seeing data,” he says, “I’m seeing all of these different ways to help people reduce emissions and costs. In this column, I see an industrial fan that’s being used too heavily. And in this column is a clear optimization that can cut the landlord’s cost in half. This isn’t data; it’s an opportunity to provide a great financial return while helping to protect the planet.”

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