NewWorld Capital Group previously raised $170 million and has made two investments in diesel emissions limiter Cleaire Advanced Emissions Controls, and energy efficiency AC producer, Coolerado. This year NewWorld Capital Group plans to raise at least $300 million more with a goal to do 8-12 deals, at $30-50 million each. I caught up with Bales late on a Friday afternoon to discuss his investment principles, which include the 6 angels and 6 devils of environmental investing, and a 4-plank strategy to fix our global problems. Also don’t ever call him a cleantech investor (at least not to his face).

(This interview has been edited for length and clarity).

Q). When we first met, we talked about the six angels and the six devils of environmental-oriented investing. What are the angels?

A). The six angels characterize the attractiveness of the environmental opportunities sector. We invest in energy efficiency, clean energy, water resources and reclamation, waste-to-value, and environmental services. The six angels are the six things that make these sectors attractive:

1). It’s already big. It’s over 300 billion in the U.S. alone, middle market.

2). It’s growing at 2-4 times GDP, among the fastest growing sectors in the U.S. economy. Rapid growth is a beautiful thing.

3). A substantial amount of innovation is going on in the market, some of it driven by all the money that went into venture capital in the last decade, some driven by simply technology or regulatory push.  Innovation is a beautiful thing because it creates more diversity in the market and less competitive intensity.

4). Diversity. The cyclicality of the sector will be far less because the end industries that are driving the segments we invest in are very diverse. You’re not going to see the problem that many investors fear, which is investing in a sector fund and the whole sector goes into decline or cyclic downturn.

5). A lot of complexity. It strongly favors the prepared mind or the expert, and tends to keep the generalists journalists at the door. You’re going to get less copycat behavior.

6). It’s undercapitalized. When you track all the firms that play in this big sandbox, the venture firms kind of grew up small with the exception of Kleiner and a few others, but basically they grew up supporting computer software innovation, which are first cost businesses and you can revolutionize the whole market. In our industry, these companies are kind of capital hungry so they require growth capital to get to scale.

Q). And what are the six devils that you’re trying to avoid in all your investments?

1). Technology risk. We’re not a venture firm and we’re not a cleantech firm. We will not take physics risk or science risk. It isn’t just whether the product works or the technology works, it’s whether you can scale the manufacturing without getting a lot of risk. That’s a golden rule around here.

2). We will not take on hydrocarbon pricing risk. We don’t invest in renewables because we don’t take hydrocarbon pricing risk. Renewables rely on high hydrocarbon prices, and hydrocarbon prices are highly subsidized. They’re asking us to compete against it with virtually no subsidies, and the subsidies being so temporary that you don’t have any policy stability. It’s better to just avoid all that stuff.

3). We don’t want to take capital scale risk. We don’t want to write big checks. We’d rather write more small checks. We’d rather do follow-on investing, milestone-based investing, rather than take a big first cost by writing a big first check.

4). We do not take on foreign competitor risk. If China really wants something bad, they’ll throw large amounts of commoditizing capital at it to drive down value and ultimately win on volume.

5). Business scaling risk. We accept it but we want to mitigate it as much as possible. We’re prepared to actually do that and be deeply involved in helping these companies grow, but we want to be paid damn well for doing that because it is a real risk. One of my complaints about the venture world is that by betting on technologies, they run the risk of hanging one man twice. They have to have a technology risk work out to their benefit. And then after that they have to take the business scaling risk. We’re prepared to take one of those risks.

6). Regulatory and subsidy risk. We’re perfectly happy to take advantage of a subsidy. But we will not base our investment case on the subsidy.

Q). Do you think technology risk is a job for the venture capital industry or should that function shift primarily to government programs, like ARPA-E?

A). It depends totally on the nature of the business. If the business requires enormous scale to function and it’s competing against an established hydrocarbon based business that’s fat with subsidy, then you do need government participation. These are very often second mover businesses. The first mover breaks the sword.

Let’s take CCS [carbon capture and storage] for example. CCS patent protection is not going to help very much. You’ve got so much social resistance to running a CO2 pipeline near somebody’s backyard. You’ve got a long, long process of educating the regulators and getting the permits. The first mover very often get’s screwed. The second mover comes in and buys the assets cheaper, discounts the first mover, and earns a respectful return.  Patent protection isn’t a very good protection, and you want to make sure that there’s some return for the risk taken by the first mover. If it’s a true capital scale business, then government has a role to play.

If it doesn’t require a big investment like carbon capture and storage, then it probably doesn’t require ARPA-E or whatever. Venture investment ought to be adequate.  But venture firms, as you know, can’t write really large checks.

The government isn’t particularly good at picking winners. But there are energy innovations that are needed where there is significant technology risk for which the venture industry is not fully fitted. You go to places like GE and so forth — rich corporations. Most of them don’t want to take that kind of chance around technology risk. They’d rather buy a company that’s successfully dealt with it, that’s been able to surmount a specific technology challenge. They might be very interested in simply purchasing it and getting ten years of learning in one transaction.

Q). What is the fundraising environment right now for cleantech, and has the politicization of the DOE loan program and concerns about returns for the sector, impacted your ability to raise money?

A). I think the environment for raising money for cleantech is reasonably negative. We’re not a cleantech investor so we’re not raising money for cleantech because cleantech implies technology risk. The reason cleantech has disappointed investors is a little bit of excessive exuberance and that tech risk is very often resolved on the wrong side of the equation. Or the cleantech investment works out okay but then doesn’t get the growth capital to reach commercial scale, and kind of dies on the vine.

I think cleantech generally is in under a cloud, made that way in part frankly by the tendency of venture firms to get into this field and then many of them welcome social media and they’ve got another girl to take to the dance. The secret of success is constancy of purpose. There hasn’t been as much of that in the venture world as perhaps is needed. I think it’s important for growth capital investors like us who won’t take technology risk to make that clear to investors early on.

I think we’re getting really good reception in the fundraising market.  We have a very experienced team, very operational, no investment bankers at all. A lot of people believe this could be to the next ten years what information technology was to the 90′s, a lot of very strong slow primary demand growth.

Q). In 2010 you gave a talk at the Imagine Solutions Conference, in which you opened by discussing discouraging figures related to the global environment — 90 percent of large ocean food fish are gone and unrecoverable, 50 percent of tropical forests have now been cut down, the U.S. is 5 percent of the world population but produces 25 percent of global CO2 emissions. How do you maintain hope and how does being an environmentally oriented investor figure in your worldview.

A). By nature I’m an optimist and in the broader world situation I’m a reluctant pessimist. I think the future of the world is in dire shape.

But that doesn’t mean that there aren’t really interesting business opportunities in the near and intermediate term. And the inefficiencies, resource exhaustion, all these other factors, they do offer commercial opportunities. What we’re trying to do here is earn a maximum bottom line for investors not because we’re greedy but because we realize without that, you won’t grow private capital for these problems. And without private capital for these problems, you won’t solve them. Government has neither the policy consistency or the resources to solve them. We have to show the way, that private capital can productively flow into these problems and earn a competitive return. I’m quite optimistic that there are significant opportunities.

Q). What would an ideal solution look like? In an ideal world where you could intervene in the market, what would that intervention look like?

A). There would be four planks to a solution — you need all four.

1). The first plank is intelligent regulation and some economic incentives to go after energy efficiency. Forty percent of the solution lies in buildings and the appliances that operate in buildings. Buildings leak energy and appliances consume excess energy. You’re not going to fix that without regulation. California has kept per capita electricity pretty constant over the last quarter century. Whereas the U.S. overall is up 28 percent per capita and Texas is up around 46 percent per capita, showing Texas is a massively energy inefficient state.

2). Turn carbon into a factor cost — that’s clearly needed. Whether it’s done through a tax on carbon or a cap and trade, whether the tax on carbon generates revenue to retire the public debt that gets distributed back to the public itself, you could argue but it doesn’t really matter. You must turn carbon into a factor cost despite the myth that the right wing has sold the nation that doing so would harm jobs.

3). Selective government assistance to help technologies reach commercial scale where they can compete against heavily subsidized carbon alternatives. CCS is an example of something the market could never develop. If you’re ever going to get smart and begin to build your nuclear portfolio, you’re going to need significant amounts of government funding, if for no other reason than taking 15 years to build a nuclear plant, including permitting, suggests it’s not a commercially plausible private investment.

4). Reverse the negative trend in the U.S. carbon sink. There’s a major opportunity in restoration conservation to protect more natural land. We really need to have our own carbon sink as an offset to greenhouse gas emissions. That’s actually a very cost effective opportunity, pretty simple to do.

Q). From a personal perspective, how did you get interested in climate change? You started at McKinsey, how did environmental concerns shift to your professional life?

A). Everybody to some extent, but maybe me to a greater extent, has a connection to nature. I’ve been deeply connected to nature. I can see over the longer term what’s happening. It doesn’t take much to wake up one day and realize that everything that’s been done by the Nature Conservancy over the last 50 years—and they’ve saved well more than a single Switzerland inside the U.S. domain—and all of that is going to be destroyed by climate change. When climate change first came to my consciousness in 2004, because I was asked to give a talk about it over at the U.N., it dawned on me pretty quickly that this was going to destroy much of what I held to be really dear, which is the functioning and the outlook of the biodiversity in the natural world. Once I reached that conclusion, I got very concerned and very active. The world has never seen a challenge like this where the cost of acting on it is now and the penalty of not acting on it is tomorrow.

UPDATE: New World Capital reached out to say that it’s targeting deals in a broader range, from about $15 to $40 million.

Image courtesy of Svenstorm.

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• After Solyndra: analyzing the solar industry
• Connected world: the consumer technology revolution
• Flash analysis: lessons from Solyndra’s fall

The report says that after a rise in cleantech support and clean power installations between 2006 and 2011, tens of billions of dollars will suddenly come to a screeching halt and tax breaks for clean power are also in danger of expiring. As the New York Times noted: “there will be a estimated 75 percent decline in federal clean technology spending by 2014 from a peak of $44.3 billion in 2009.”

The drop in U.S. support is particularly unfortunate as various clean power technologies are still more expensive than fossil fuel-based power, but some are on the brink of grid parity, like solar, with its drop in solar cell prices.

Of course, the fossil fuel industry received decades and billions of support over the years. GigaOM Pro analyst Adam Lesser looks into a report from Roger Bezdek, a 30-year energy consultant, and found that $837 billion (in 2010 dollars) in incentives were expended over the past 60 years with oil, coal and natural gas getting 70 percent of that, or $594 billion. Oil alone was the big winner with $369 billion by itself while renewable energy, defined primarily as solar and wind, has received $74 billion, about what nuclear has received.

Image courtesy of Mike Lehen.

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• Ups and downs for cleantech in Q1
• Key technologies for the smart city
• After Solyndra: analyzing the solar industry

In the wake of Solar Trust’s recent bankruptcy, conservatives were eager to brand the company’s collapse as another Solyndra. Cleantech has become highly politicized, so much so that Obama’s first reelection ad was a defense of his clean energy policy. Looking back at the responses to Solar Trust’s bankruptcy, my personal favorite was a tweet from Arizona Congressman David Schweikert:

I liked a couple of things about this one. First was the fact that Schweikert is factually incorrect. Solar Trust never took any government money, even though it was offered a DOE loan guarantee. The other thing I liked was the rare acknowledgement that yes, the federal government subsidizes the oil industry through tax breaks.

I recently spoke with Roger Bezdek, a 30-year energy consultant who at one point directed energy research at the Department of Energy, and who briefed the McCain and Obama staffs on energy policy during the 2008 election. During his long career Bezdek has done the painstaking work of analyzing the U.S. government’s energy incentives for all industries, from oil to solar, going back 60 years to 1950. This involves doing things like going over more than half a century of Office of Management and Budget (OMB) budgets as well as incorporating policy decisions and budgets from individual agencies like the Department of the Interior to get a complete view of how the government supports certain energy sectors.

Bezdek’s 59-page report, which he did for the Nuclear Energy Institute last October, found $837 billion (in 2010 dollars) in incentives were expended over the past 60 years with oil, coal and natural gas getting 70 percent of that, or $594 billion. Oil alone was the big winner with $369 billion by itself while renewable energy, defined primarily as solar and wind, has received $74 billion, about what nuclear has received.

These historical figures are instructive during an election year in which incentives for clean energy are under constant political attack. We can have ideological debates about the role of government in financing energy development—whether it should only be supporting research and development programs like ARPA-E or whether there’s a role for it to play in picking sectors and companies with programs like loan guarantees, tax credits, or tariffs—but we cannot dispute the fact that the government has been providing incentives for over sixty years, primarily to fossil fuel industries.

And this raises secondary questions: Are the oil, coal and natural gas industries where they are today because of historical subsidies? And where would we be in 60 years if we subsidized renewable energy the way we have subsidized fossil fuels over the past 60 years?

The answer to this first question tells us a great deal about how fundamentally differently we have to look at renewable energy incentives versus fossil fuel incentives. Even if the fossil fuel industries received a boost from subsidies, today’s price of oil, no doubt, has not been much impacted by historical subsidies precisely because oil exists in a global market where prices spikes have been driven by surging demand in India, China and Indonesia.

But renewables are not, by and large, governed by pricing volatility in natural resources because their fuel—wind, sun, geothermal—is free. Meaning any subsidies that improve upon and lessen the price of the technology that produces renewable energy should hold up over time, which isn’t true of incentives for fossil fuels. You can design a better oil rig but demand for the underlying fuel remains the driver of price, unless you take drastic market intervention steps like the ones Venezuela takes, selling gas for as little as 12 cents a gallon. A solar panel that is twice as efficient, however, should stabilize future energy prices downward.

The answer to the second question of where we might be say, if we dumped four or five hundred billion dollars in incentives into renewables over the next half century, is unknowable but we can assume that prices would come down, just as they have over the past 20 years with the modest incentives provided. For the record, people like Bezbek are firmly in the Bill Gates camp of not believing that market interventions like tariffs work, and we’re clearly seeing some of the problems as the rollback on solar tariffs in Europe is hurting the solar industry. These folks all want to keep government support limited to research and development, even if those solutions are unlikely to have a major near term effect on greenhouse gas emissions.

With most governments facing debt problems, it’s unlikely that any energy sector will see significant subsidies in the next ten years. When asked whether the renewable energy industry deserved its shot at subsidies, Bezbek said “the idea that oil got a hundred billion dollars, and we [renewable energy] want a hundred billion, is simply not going to fly.” But as we think about how we got to the place we’re in—increasing energy prices, growing greenhouse gas emissions, a wholesale move of the U.S. energy economy toward natural gas—we might just keep in historical perspective, which energy sectors have really taken the lion share of government help. And if everyone can’t agree on intervening in the market with tariffs, we could all agree that the government should make very large R&D investments to remove as much technology risk as possible so that renewables can get to market.

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• The politicization of cleantech and the history of energy subsidies
• Key technologies for the smart city
• Flash analysis: lessons from Solyndra’s fall

The round was led by True North Venture Partners, the $300 million fund started by Ahearn and Ahearn will join the Board of Directors of Harvest Power. True North Venture Partners officially launched Summer of 2011 and this is one of the first investments I’ve heard coming from them. Oil refinery firm American Refining and DAG Ventures also participated in the round.

Trash giant Waste Management was a previous investor, but isn’t named in this round on the release. Back in January 2010 Harvest Power also announced a deal with Waste Management to access organic waste (feedstock for its recycling processes) from Waste Management’s operations across the U.S. and Canada, but I’m also not sure on the status of that deal. I’ll update this when I know more.

Founded in 2008, Harvest Power says it’s sold “millions of bags” of organic soils and mulches in 2011 and is in the process of building “two of the largest foodwaste to energy facilities in North America.” The company plans to complete construction of those plants this year, and has been operating seven other smaller sites.

Harvest Power previously raised $51 million about a year ago, putting its total funding raised to over $160 million. The company used part of that money to add recycling technologies, such as a high-temperature process to create synthesis gas. Syngas can be used to produce electricity, transportation fuels and other chemical products.

While Harvest Power Harvest is developing its own technology, it also makes use of others’ know-how. The company previously teamed up with Germany’s GICON Bioenergie to engineer and build processing plants using GICON’s anaerobic digestion technology.

The Wall Street Journal reports that the company — which makes money by selling fertilizer and power, as well as charging waste pick-up fees — generated less than $50 million in revenue in 2011, and expects to generate between $75 million and $100 million this year.

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• Key technologies for the smart city
• After Solyndra: analyzing the solar industry
• The opportunities for the Internet and clean power

The document is a culmination of months of collaborative work by many people, including the Department of Energy and other government groups, and I attended one of the informal meetings on the document waaay back in December 2010. The project was led by Matthew Inman, an Albert Einstein Distinguished Educator Fellow with the DOE (who I described after the meeting as the embodiment of your favorite high school teacher).

The document itself is very high level, and essentially a science lesson on how energy flows work. But I think it’s important to have some sort of definitive source on energy education. A couple years ago there was a survey published in The Proceedings of the National Academy of Sciences, that found that Americans overestimate the energy savings of actions like turning off lights, and riding public transportation, but underestimate the energy consumption of other things like using central air conditioning. A key to guiding people to make better decisions about their own energy usage, will be establishing the knowledge about how energy flows work at an earlier age.

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• The perils of cleantech investing: KiOR and the long-term, high-risk view
• The opportunities for the Internet and clean power
• Key technologies for the smart city

The energy storage problem

Back in 2009, Fyke — a mechanical engineer out of MIT who has both cleantech venture investing and entrepreneurial experience — started tinkering with how to tackle the problem of energy storage. The power grid currently utilizes very little energy storage technology and constantly has to balance supply and demand in real time — that makes it pretty inefficient. In addition, with the development of clean power like solar and wind, which only generate power at certain times of the day, there will need to be a lot more energy storage technologies used to smooth out the intermittent generation.

One of the most widely-embraced forms of energy storage by utilities is currently pumped hydro, where energy is used to pump water up a hill and then when energy is needed, the water is released to flow back down the hill. This is one of the cheapest forms of energy storage — far cheaper than big battery farms that can store energy. The Electric Power Research Institute (EPRI) says that there is at least 127,000 MW of pumped hydro energy storage projects globally, and pumped hydro makes up a whopping 99 percent of the world’s energy storage technologies.

However, pumped hydro technology has a few of its own issues. One is that it can only be done in very specific locations that have both a certain level of elevation and also reservoirs for the water. Another problem is these locations can take years to permit and cite. Lastly, pumped hydro is not all that flexible when it comes to being able to provide quick bursts of power to the grid to help it run more smoothly, called frequency regulation, because water flows can be difficult to stop and reverse quickly.

The drop dead simple idea

Fyke’s idea, which he worked on with the help of Idealab investor and inventor Bill Gross, was what if a technology was modeled off of pumped hydro, but used a motor and a cheap solid material instead of a liquid so that the system could be built in more locations and could also react quickly? The result is the hyper simple system that is Energy Cache’s intellectual property and the first of its kind system for energy storage in the world: a system of buckets on a line that picks up gravel at the bottom of a hill, and moves the gravel to the top of the hill; when the process is reversed the gravel moves back down the hill and powers a generator to produce energy.

Nat Goldhaber, Managing Director at Claremont Creek Ventures, which participated in a seed round in Energy Cache, described the idea as “such a simple solution for such an intractable problem.” When I asked him if the tech is the most “out there” investment he has backed, he said yes.

Fyke says the benefits of using gravel is that it can behave like both a liquid and a solid when moving it and it is also incredibly cheap. The system can be built in many more places than pumped hydro, says Fyke, because each line is twenty feet wide and doesn’t need a reservoir to run. Unlike pumped hydro, the system is also meant to be able to be scaled up, from a couple lines to some day hundreds of lines for a utility-scale project.

Energy Cache is adopting gear from the mining and ski lift industries to build the systems, which will make the projects really low cost, and so that “we don’t have to reinvent the wheel,” says Fyke. A scaled up project could eventually cost 40 percent less than pumped hydro, says Fyke.

Fyke says that the system could also potentially generate more revenue than pumped hydro, because the motorized system can respond immediately to a utility’s command and the lines could be tweaked to move fast or slow to deliver power when the utility needs it. The amount of weight on the line (or pounds of gravel in the buckets) could be tiered to deliver the most efficient system for the customer.

Early stage

Energy Cache has built a 50 kW prototype of its gravel bucket system in Irwindale, Calif. (see video). The team, which has less than 10 employees, has largely been quiet to date because they were waiting for the prototype to get built. To get the prototype constructed, the company raised money from Clarement Creek Ventures, Idealab and Bill Gates.

Goldhaber says he invested in the company after seeing Fyke’s demo project of buckets and gravel in a garage. Bill Gross brought in both Goldhaber and fellow energy innovation enthusiast Bill Gates.

The next step is for Energy Cache to build a larger scale demonstration project that will roughly be the size of one commercial line, and potentially could be sized between 500 kW and 1 MW. Fyke says that one line will probably be “sub 1 MW,” though the company hasn’t yet decided the exact size of the standard line yet. After that demo line is built, the company will then be looking to raise project financing to have its first commercial project built, perhaps in as little as three years.

Fyke says Energy Cache is already in discussions with grid operators in deregulated markets like ERCOT in Texas, PJM, and California ISO in California. Power producers and utilities will be the end customers for Energy Cache, but the grid operators will be the gate keepers to the early market of selling energy storage.

The efficiencies in the system still need to be proven out at a large scale, and all areas of friction need to be eliminated where possible. Systems with a lot of moving parts tend to lose efficiency as more parts are added. And it remains to be seen if the efficiency levels can be maintained for a larger 1 MW system.

Potential for change

However, if the system works as planned, this could be “a very big deal,” says Goldhaber. The solution could be a cheap, modular, more flexible way to solve the energy storage problem using currently available standard parts and gear.

Last year the Electric Power Research Institute (EPRI) predicted that 2011 and 2012 would be turning points for the grid energy storage market in the U.S., because companies that have collectively received more than $250 million in federal stimulus funding are expected to complete research and development work and move into field trial stages in the U.S. The Department of Energy has provided loans and grants to a multitude of storage tech developers and utilities for R&D and pilot projects (including this list of tech developers receiving ARPA-E grants).

Will the long held problem of energy storage finally be solved by gravel, buckets, a ski lift?

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• Key technologies for the smart city
• Flash analysis: lessons from Solyndra’s fall
• Smart Grid Apps: Six Trends That Will Shape Grid Evolution

In a Pike Research webinar held at the event, Andres Carvallo, the chief strategy officer of smart grid network software provider Proximetry, noted that the smart grid has “reached the teenage years” and is “still evolving.” As it grows up and reaches its full potential, I’ve put together five important ways in which how we interact with our utility can be revolutionized and why they matter.

To read the full post check out GigaOM Pro (subscription required).

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• What the utility of the future looks like
• Key technologies for the smart city
• Green IT Wrap-up: Q1 2009

Data centers are increasingly requiring energy capacity of close to 100 MW of power, which is the equivalent power for about 80,000 U.S. homes, says Greenpeace. While most Internet companies don’t disclose the details of their facilities’ energy consumption, Apple’s billion-dollar data center in North Carolina is estimated to require 100 MW, according to Greenpeace. Google’s data center in North Carolina is estimated to require between 60 MW to 100 MW when the second phase of it is fully built out, and Facebook has another data center in North Carolina, which is estimated to be smaller with a capacity of 40 MW.

A large coal plant, or even a really large solar thermal plant, can produce 500 MW of power. So a 100 MW data center would consume a significant portion of the output of a large power plant.

How dirty the power is that goes to these data centers depends on the region. As Greenpeace explained in its report last year: North Carolina, which is housing some of these Internet companies’ new data centers, “is one of the dirtiest in the country, with only 4 percent of electricity generation from renewable sources and the balance from coal (61 percent) and nuclear (30.8 percent).”

All of these numbers highlight just how energy-intensive the Internet has become, and how always-on servers will require increasing amounts of power to be sustained as more people get online and spend more of their time online. While the energy consumption growth of data centers was hampered slightly by the recession in recent years, according to Jonathan Koomey’s report on the subject last year, electricity used by data centers worldwide grew by 56 percent from 2005 to 2010, and by 36 percent over that time period in the U.S.

The total electricity use by data centers in 2010 was 1.3 percent of all electricity use for the world, and two percent of all electricity use for the U.S. At one point, the Environmental Protection Agency predicted data center power consumption in the U.S. would grow to 12 gigawatts by the end of 2011, or the output of 25 large power plants.

At the same time, Internet companies are starting to be more conscientious about making data centers more energy-efficient, and some are even investing in clean power, too. For example, Apple has been building a solar project near its data center in North Carolina, and both Facebook and Google are aggressively cutting their cooling power needs by using outside air for cooling for some of their data centers.

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• Key technologies for the smart city
• NewNet 2012: companies and technologies set to disrupt
• Connected world: the consumer technology revolution

Demand response is when the customers of utilities agree to let their energy-consuming devices — like thermostats, pool pumps and smart appliances — to be turned down during peak events (like the hot summer months), in return for financial compensation or other benefits. Residential demand response projects aren’t all that common these days, but the numbers of customers enrolled in these programs are growing. Energy Hub says it already has 100,000 smart thermostats under management and the company plans to add another 100,000 this year.

The e5 service will launch in Texas this summer and use a WiFi-connected thermostat from 3M. The consumer is the one who enrolls in the program and installs the thermostat, which can be obtained at retailers or online. The consumer can benefit through energy savings, and the utility can benefit from better demand response. EcoFactor has developed a similar service using weather data, smart thermostats and real-time demand response.

Earth Networks was formerly called AWS Convergence Technologies, and the firm refocused last year to start working on building a network of greenhouse gas emissions monitoring stations throughout the U.S. Those stations will use gas-detecting sensor boxes from Picarro, a startup in Santa Clara, Calif. However, clearly, Earth Networks’ weather data is still important to its business.

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• Key technologies for the smart city
• Smart Grid Apps: Six Trends That Will Shape Grid Evolution
• Green IT Q1: Cleantech Breaking Out — and Bracing for Hard Times

Over the weekend, the Cleanweb hackers created applications like NYC BLDGS, a web data base of the energy consumption of buildings in New York that pits the best and worst buildings against each other in friendly competition. Econofy, a web site created over the weekend that enables consumers to compare the energy consumption of appliances, won both the audience choice award and the judges’ award for best overall hack.

The first Cleanweb Hackathon was held in San Francisco in September of last year, and the New York event this weekend was a slightly more high-profile affair. Judges of the hacks included investor Fred Wilson and Rachel Sterne, New York City’s chief digital officer. United States Chief Technology Officer Aneesh Chopra made an appearance as a special guest.

The event is the latest sign the ecosystem around clean technology is changing. As investors look back at the mistakes that have been made and money lost in capital-intensive investments like next-gen solar, biofuels and electric cars, some investors are taking a different route and looking to make cleantech investing look a lot more like web and mobile investing — literally. Paul’s firm Spring Ventures invests in Cleanweb companies like Solar Mosaic.

The Cleanweb is an attractive way to attack the problem of climate change and resource management for an age of 9 billion people. Information technologies are available now — compared to the science experiments in biofuels and parts of clean power — and thanks to Moore’s Law they are cheap, and will get increasingly cheaper. Now it’s time to tap into the innovation of the developer community to try to create new ways to leverage IT to solve the world’s problems.

Check out the video of the event below and Paul’s explanation of the Cleanweb at our Green:Net 2011 event:

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• Key technologies for the smart city
• Flash analysis: lessons from Solyndra’s fall
• The perils of cleantech investing: KiOR and the long-term, high-risk view