Efficiency: not glam but good at saving energy CLEAN ENERGY

Raul Ramirez assembles a super insulated SuperWindow (cq) at Serious Materials on Thursday March 12, 2009 in Sunnyvale, Calif. Serious Materials which makes energy-efficient windows, drywall and other building materials is hoping to cash in on President Obama's stimulus plan which will devote more than $10 billion to making homes and offices more energy efficient. less Raul Ramirez assembles a super insulated SuperWindow (cq) at Serious Materials on Thursday March 12, 2009 in Sunnyvale, Calif. Serious Materials which makes energy-efficient windows, drywall and other building ... more Photo: Mike Kepka, The Chronicle Photo: Mike Kepka, The Chronicle Image 1 of / 3 Caption Close Efficiency: not glam but good at saving energy 1 / 3 Back to Gallery

Kevin Surace's peers in the world of alternative energy make solar cells, wind turbines and exotic biofuels. He makes windows and drywall.

Glamorous, it isn't. But his Sunnyvale company, Serious Materials, represents one of the most important elements of the country's clean energy future - efficiency.

Surace's windows and insulated drywall can slash energy bills in homes and offices. One building renovation project in New York will install $1.5 million of Serious windows, a big investment. But the windows will save the building more than $700,000 each year, Surace said.

"In about two years, you get your money back, and after that, it's the gift that keeps on giving," he said. "If you save energy, it actually puts money back in your pocket. Solar doesn't. Wind doesn't. So that's a powerful tool."

For years, efficiency was the "other" alternative energy trend, overshadowed by the high-tech allure of renewable power. Saving energy just didn't have the same cachet as engineering a better solar panel or coaxing fuel from corn stalks and algae. Most American politicians and business leaders focused on finding more energy, not using less.

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That has changed.

President Obama's economic stimulus package devotes more than $9.5 billion to making low-income homes and federal office buildings more energy efficient. Almost $412 million will go to efficiency and weatherization programs in California. The Golden State, whose government started focusing on efficiency long before it was in vogue, has its own set of rebates for homeowners and businesses that want to install more efficient windows, lighting and appliances. Venture capitalists have been pumping money into startups developing new ways to manage energy use, in the home and across the electric grid.

Then there's the recession. Faced with declining sales, businesses have a powerful incentive to cut their utility bills by installing energy-efficient lighting or air-conditioning systems. Some companies that conduct energy efficiency audits or make power-conserving equipment say their sales have actually increased during the downturn.

This hum-drum industry's time has come.

"It's a non-sexy, non-glamorous, boring thing," said David Asplund, chief executive officer of Lime Energy, which finds ways to make office buildings more efficient and is based in the Chicago suburbs. "The guys in our company who have been doing this for 20 years feel like they've been wandering in the desert, and they've just now come to the promised land."

Unlike other subsets of green tech, the energy efficiency industry is hard to define and has fuzzy borders. Some efficiency companies make building materials. Others design software that cuts the power use of computers or other kinds of equipment. Still others, such as Lime, provide a service, studying how much energy their clients use and cutting their utility bills.

All these companies share a mission: They find ways to do more with less. Think of the compact fluorescent light bulb that has become an emblem of the industry. It puts out the same amount of light as its incandescent competitors while using far less energy.

"You want the same performance, or better performance, for less," said James Davis, president of Chevron Energy Solutions Co. "The answer is better technology, not reprogramming people."

Davis' outfit is the efficiency wing of Chevron Corp., the global oil company based in San Ramon. Much like Lime, Chevron Energy Solutions performs energy audits for its clients, inspecting their buildings and equipment. The auditors determine how much energy each building uses and how much could be saved by upgrading its lighting, its heating and air conditioning and the machinery inside. Then Chevron gives its clients a menu of the most cost-effective upgrades and lets them pick. On average, the company can cut a client's energy bills by 30 percent, Davis said.

Mixing oil and efficiency

Chevron Corp. does not give specific profit or revenue figures for Chevron Energy Solutions. But Davis said his company has been profitable since 2003, and its revenues have been rising about 20 percent annually. He expects the growth to continue this year.

Davis says there's nothing incongruous about an oil company getting into the efficiency business. Most of his customers are government agencies, which will soon have even more money to spend on efficiency upgrades thanks to the stimulus. And his single largest customer is Chevron Corp. itself. The corporation's energy bill for 2008 was roughly $7.5 billion, he said. It would have been about $3 billion higher if the corporation hadn't put so much effort into making all its operations more efficient.

"We're in a little hiatus right now," with energy prices, said Davis. "But when you look out over the next 30 years, there's going to be more demand than supply."

While Davis' company is part of a large, highly profitable corporation, many efficiency businesses are still startups, trying to gain a foothold in the field.

They've had help. Since 2003, the amount of venture capital flowing into energy efficiency companies has grown 505 percent to hit $427 million in 2008, according to the Ernst & Young consulting firm. That's about 9 percent of all the venture capital investments in the clean tech world last year.

Tracking energy use

Like the efficiency industry as a whole, the startups represent a wide range of ways to save power. Greenbox Technology of San Bruno has developed a computer program that can tie into the new generation of high-tech electrical meters that utilities - including Pacific Gas and Electric Co. - are installing on homes and businesses across the country. The program lets homeowners track when and how they use energy, breaking the information down into a series of graphs and charts on their home computers.

"When you can see something visually, you understand it in a fundamentally different way," said Matthew Smith, Greenbox's vice president of marketing.

The company has already tested its program with 24 customers of Oklahoma Gas and Electric, and most of them cut their energy use and saved money after studying the information. That kind of data will become much more important if electrical utilities start charging customers different rates for different times of day instead of the flat rates that are now the norm.

Empowering energy users

"The feedback we got from people is, 'We always thought of electricity as a fixed cost - we didn't really think we had that much control over it,'" Smith said. "That was a very empowering thing."

The industry probably won't escape the recession unscathed. While the economic downturn may help some efficiency companies, it may hurt others that haven't yet established themselves and may have trouble finding funding for their projects.

But the stimulus package has helped prime a market that already has great potential, said Jeff Grabow, leader of Ernst & Young's clean-tech practice for the Pacific Northwest.

"It provides the certainty that this won't be another flash in the pan like it was in the 1970s, after the last energy crisis," he said.