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	<title><![CDATA[Grist - Comment Feed for Hot new clean-tech startups are plug-and-play]]></title>
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            <title>Comment #1 by Sean Casten</title>
			<link>http://www.grist.org/article/2009-06-12-clean-tech-plug-and-play/</link>
			<pubDate>Fri, 12 Jun 2009 13:18:10 -0700</pubDate>
			<guid isPermaLink="false">http://www.grist.org/article/2009-06-12-clean-tech-plug-and-play/1</guid>
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				<p>I am very skeptical, and will cite a favorite aphorism from a friend who founded a (rather successful) on-site power company in VT years ago: "the one thing you know about someone who says plug-and-play is that they've never installed a generator before".</p><p>Power generators require customization.&nbsp; What voltage you have, how the system is operated to maximize your revenue per installed kW (given rate structure variance, local incentives, etc.) and of course whether or not you are going to tie into local heat loads are all site-specific issues that cannot be stipulated in the factory.&nbsp; As such, product standardization is incompatible with value-maximization.&nbsp; The proof is in the pudding - every company I am aware of in the power space that has insisted on standard product lines has ended up giving up most of the total profit margin to engineering and installation firms who do all the customization necessarily to fit it into the opportunity.</p><p>The upshot is two fold: (1) plug and play doesn't exist - although VCs love the soundbite, and (2) the only thing it gets you is standardized product that gives your margin away to everyone else in your value chain.&nbsp; In other words, even if it's successful, the end-state is a high-volume, low-margin manufacturing business.&nbsp; Which tends to be a pretty lousy investment thesis.</p><p>Note that none of this is a criticism of the technologies - it's simply an observation that the VC community and the "buzz" surrounding plug-and-play technologies is at odds with the realities of the business model.&nbsp;</p>
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				<p>I am very skeptical, and will cite a favorite aphorism from a friend who founded a (rather successful) on-site power company in VT years ago: "the one thing you know about someone who says plug-and-play is that they've never installed a generator before".</p><p>Power generators require customization.&nbsp; What voltage you have, how the system is operated to maximize your revenue per installed kW (given rate structure variance, local incentives, etc.) and of course whether or not you are going to tie into local heat loads are all site-specific issues that cannot be stipulated in the factory.&nbsp; As such, product standardization is incompatible with value-maximization.&nbsp; The proof is in the pudding - every company I am aware of in the power space that has insisted on standard product lines has ended up giving up most of the total profit margin to engineering and installation firms who do all the customization necessarily to fit it into the opportunity.</p><p>The upshot is two fold: (1) plug and play doesn't exist - although VCs love the soundbite, and (2) the only thing it gets you is standardized product that gives your margin away to everyone else in your value chain.&nbsp; In other words, even if it's successful, the end-state is a high-volume, low-margin manufacturing business.&nbsp; Which tends to be a pretty lousy investment thesis.</p><p>Note that none of this is a criticism of the technologies - it's simply an observation that the VC community and the "buzz" surrounding plug-and-play technologies is at odds with the realities of the business model.&nbsp;</p>
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            <title>Comment #2 by sunflower</title>
			<link>http://www.grist.org/article/2009-06-12-clean-tech-plug-and-play/</link>
			<pubDate>Fri, 12 Jun 2009 14:47:08 -0700</pubDate>
			<guid isPermaLink="false">http://www.grist.org/article/2009-06-12-clean-tech-plug-and-play/2</guid>
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				It is worse than you say, VC in Silicon Valley et al. made instant fortunes on software and chips, near zero industrial inertia, plug and play mass marketing, super high margins.  <p><p>Energy is at the opposite end of that spectrum, very heavy, lots of inertia, low margins.   <p><p>Computer VC is clueless with heavy energy and it shows.  We need more than toys and magic ponies.</p></p></p></p>
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				It is worse than you say, VC in Silicon Valley et al. made instant fortunes on software and chips, near zero industrial inertia, plug and play mass marketing, super high margins.  <p><p>Energy is at the opposite end of that spectrum, very heavy, lots of inertia, low margins.   <p><p>Computer VC is clueless with heavy energy and it shows.  We need more than toys and magic ponies.</p></p></p></p>
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            <title>Comment #3 by Delay And Deny</title>
			<link>http://www.grist.org/article/2009-06-12-clean-tech-plug-and-play/</link>
			<pubDate>Sat, 13 Jun 2009 09:32:00 -0700</pubDate>
			<guid isPermaLink="false">http://www.grist.org/article/2009-06-12-clean-tech-plug-and-play/3</guid>
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				<p>We need to question the "plug" part of it.</p><p><br />Electric grids are high voltage AC.&nbsp;&nbsp; They were designed to be able to carry current from distant generators optimally built and situated to customers hundreds of miles away.</p><p><br />With alternatives like wind and solar, generation can occur locally.&nbsp;&nbsp; Does it still make sense to base all our devices around high voltage AC?&nbsp;&nbsp;&nbsp; We would lose energy in the step up transformers and other processes to pump local energy back into the grid.</p><p><br />I propose that we formulate a "loosely coupled" grid (borrowed that term from information systems technology, in the world of SOA, or service oriented architecture).</p><p>Why not a house running on DC current?&nbsp;&nbsp; With devices built to use DC directly?&nbsp;&nbsp; It's not far fetched, in fact, Edison originally proposed that model at the turn of the 20th century.</p><p>Other local generation could be neighborhood fuel cells powered by Hydrogen.&nbsp;&nbsp;&nbsp; A "Hydronet" could supplement the electrical grid.&nbsp;&nbsp; Unlike AC/DC, there is no impedence for using Hydrogen...it becomes a universal energy currency.&nbsp;&nbsp;&nbsp;</p><p>With local solar, wind and hydrogen storage, and household devices such as refrigerators, furnaces and a/c that runs on direct current, we could cut around a lot of the impedence problems.</p><p>&nbsp;</p></br></br></br>
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				<p>We need to question the "plug" part of it.</p><p><br />Electric grids are high voltage AC.&nbsp;&nbsp; They were designed to be able to carry current from distant generators optimally built and situated to customers hundreds of miles away.</p><p><br />With alternatives like wind and solar, generation can occur locally.&nbsp;&nbsp; Does it still make sense to base all our devices around high voltage AC?&nbsp;&nbsp;&nbsp; We would lose energy in the step up transformers and other processes to pump local energy back into the grid.</p><p><br />I propose that we formulate a "loosely coupled" grid (borrowed that term from information systems technology, in the world of SOA, or service oriented architecture).</p><p>Why not a house running on DC current?&nbsp;&nbsp; With devices built to use DC directly?&nbsp;&nbsp; It's not far fetched, in fact, Edison originally proposed that model at the turn of the 20th century.</p><p>Other local generation could be neighborhood fuel cells powered by Hydrogen.&nbsp;&nbsp;&nbsp; A "Hydronet" could supplement the electrical grid.&nbsp;&nbsp; Unlike AC/DC, there is no impedence for using Hydrogen...it becomes a universal energy currency.&nbsp;&nbsp;&nbsp;</p><p>With local solar, wind and hydrogen storage, and household devices such as refrigerators, furnaces and a/c that runs on direct current, we could cut around a lot of the impedence problems.</p><p>&nbsp;</p></br></br></br>
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