On June 24, Aspen Aerogels filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission, announcing plans to raise up to $115 million to expand its operations and manufacturing capacity. Aspen makes aerogel insulation, a highly-porous nanostructured material targeted at building insulation, industrial applications, transportation, and even clothing. The announcement has seemingly been in the works for years. In 2005, CEO Don Young projected his firm was on the cusp of profitability and a potential IPO, and we speculated in 2006 about an imminent exit for the company. However, the company has been held back by limited demand for its product, stemming both from its high cost as well as the building construction downturn in 2009.
Aspen originally targeted the building insulation market, but has found better traction in oil and gas applications, namely for undersea pipeline insulation. These “pipe-in-pipe” lines are high-value, space-constrained applications that are well suited to aerogels. Companies will pay a premium for a thermally-robust, highly-insulating material that is packed between the inner and outer pipe. This translates into a reduced diameter of the outer pipe, saving material costs of steel. Aspen’s customers in the subsea pipeline market include ExxonMobil, BP, and Total. Aspen’s shift of focus is analogous to many water desalination companies now targeting fracking applications for gas and enhanced oil recovery. Water and electricity remain subsidized commodities in many regions of the world, and emerging cleantech players may have to look at higher value markets , such as oil and gas, for their technologies.
Aerogels are one of several emerging technologies vying for a piece of the multi-billion dollar general insulation market in buildings. Although aerogels have suffered in the past from handling difficulties on a construction site, by far their main issue is cost. At up to $10/ft2, Aspen Aerogel’s Spaceloft aerogel blanket is simply not competitive with standard insulation like fiberglass, which costs about $0.50/ft2, except for niche, space-constrained applications. Cabot Corporation, one of Aspen’s rivals, is proposing a solution to both problems. Cabot encapsulates its granular Lumira aerogel material into translucent “daylighting” panels that enable natural light to be transmitted while being more insulating than standard double-glazed windows. With this product, Cabot is hoping to find a profitable niche as an eco-friendly daylighting solution in the green building sector. We review the prospects for advanced insulation products – namely aerogels, phase-change materials, and vacuum insulation panels – and size the market forward to 2020 in our latest LRGI state of the market report, Opening the Thermal Envelope: Emerging Innovation in Dynamic Windows and Advanced Insulation, projecting a $230 million market for aerogel building insulation by 2020.
The Department of Energy (DOE) announced this week that two government labs, Oak Ridge National Laboratory (ORNL) and Lawrence Berkeley National Laboratory (LBNL), will partner with Dow Chemical to develop higher-performing cool-roof technologies (client registration required). The main objectives of the partnership are to develop white elastomeric roof coatings (ERCs) that are more resistant to microbial growth and dirt accumulation, thereby preserving their reflective properties for a longer duration. The program also aims to raise current cool-roof standards for low-slope commercial roofs. Current standards dictate the material’s solar reflectance must be at least 55% three years after installation, but the new standards would raise reflectance requirements to 75% after five years. In certain building types, especially single-story facilities with large roof areas relative to floor areas, this could increase the air conditioning energy savings attributable to a cool roof from 15% to 25%.
Ideal materials for a cool roof are characterized by a high solar reflectance (r) in both the visible and infrared spectrum, and high infrared emittance (e) meaning whatever heat they do absorb, they effectively radiate. It is hard to beat the performance of a white-washed roof on a Mediterranean villa (r = 0.8, e = 0.9). But that hasn’t stopped materials suppliers such as Dow Chemical and Owens Corning, or roofing companies such as CertainTeed and GAF from exploring higher-tech solutions that achieve high thermal performance, deliver increased durability and microbial resistance, look aesthetically pleasing, and of course earn money in the process.
It is well known that cool roofs are one of the most cost-efficient strategies for increasing building energy efficiency in hot climates, such as the southern states and California. Not surprisingly, the DOE labs have been researching the space since the 1980s. What is new, and is acting as a market pull for building materials manufacturers like Dow Chemical, is the variety of federal, state, and utility-level programs encouraging – and in the case of California, mandating – cool roof adoption. California is a bellwether for the space. In 2005, its Title 24 building energy-efficiency standards mandated a three-year aged reflectivity value of r = 0.55 for most low-sloped roofs. Since the start of 2010, it has further required r = 0.20 for the steep-sloped roofs typical of residential homes. This rather modest target for steep-sloped roofs is indicative of the predominance of asphalt shingles, which are favored for their relatively low cost and darker shades. Asphalt shingles for residential cool roofs typically incorporate reflective granules that reflect the infrared parts of the spectrum while looking dark in the visible parts. Clients with materials capabilities should note that there is a huge scope for performance improvements in the (hot-climate) residential steep-roof shingle market by incorporating white (or light-colored) materials. However, such innovations will need to tackle weathering issues, such as streaking and discoloration (which is a major goal of the DOE / Dow Chemical partnership), as well as consumer preferences. Cool roofs are just one part of the building thermal envelope, which is a critical determinant of the thermal and energy performance of a building, and we will tackle the emerging technologies and market in this space in our Q2 2011 Green Buildings state of the market report.
On March 3, the building controls giant Johnson Controls announced its acquisition of EnergyConnect, a demand response company, for $32 million. EnergyConnect offers a software-as-a-service energy dashboard focused on the commercial and industrial (C&I) “price-response” demand response market, which helps customers save money by shifting consumption to times with lower electricity rates. It also offers traditional “dispatch” demand response to reduce energy consumption during periods of peak demand.
Building on a 60% revenue growth in 2010, EnergyConnect further increased its acquisition appeal in January when it won a multi-year contract with the California State University (CSU) system, which also happens to be a customer of EnergyConnect’s competitor EnerNOC. This head-to-head competition of direct response players within one institution is indicative of the increasingly competitive C&I marketplace, and the competition will only get hotter as building management systems integrate more deeply with smart-grid systems.
The strategic alignment of Johnson Controls with EnergyConnect furthers the ongoing consolidation in the DR industry, highlighted last year when Honeywell acquired Akuacom (see the May 17, 2010 LRGJ*). The “big four” building controls companies – JCI, Honeywell, Siemens, and Schneider Electric – all now have significant stakes in the lucrative C&I demand response market. As these diversified companies supplement their core offerings with a demand response add-on it will squeeze pure-play demand response providers like EnerNOC and Comverge by driving their margins down (see the November 17, 2010 LRPJ*).
As we reported last fall (see the September 29, 2010 LRPJ*), it is not only the building controls companies who are applying the squeeze, but also utilities (see the September 22, 2010 LRPJ*) and third-party deal-makers. As the size of the pie for C&I demand response grows, the winners will be determined not only by their ability to find new slices in uncharted territory, but also their ability to take bites out of competitors’ pieces by offering multiple DR services. Clients should divest investments in pure-play demand response companies, and look to establish partnerships in the building IT space before the best offerings are off the table (see the Lux Research report, Sifting Winners from Losers in the Building IT Acquisition Frenzy*).
*Client registration required.