SIEMENS

Transparent Energy Systems began in a backyard in Pune, India in the late 1980s with the production of small industrial steam boilers. Even then, the company’s boilers were more energy efficient than any others available in India. "The energy yield was at least five percent higher than that of boilers from rival firms," recalls CEO B. G. Kulkarni with pride.
Today, 20 years later, Kulkarni and his team are involved in the production of major industrial systems. Among the solutions they offer are those that convert industrial waste heat, such as that produced by cement plants, into electricity. This saves money and helps protect the environment. Systems from Transparent Energy Systems generate up to 16 MW of power — energy that used to be blown into the air as unused heat.
"Our solutions meet our customers’ needs — and not just in India," says Kulkarni. So in 2008 he started looking for a partner who understood all aspects of his products and business model — and reached an agreement with Siemens Venture Capital (SVC) in May 2009.
SVC usually acquires a minority interest in companies in the early phases of their development or, as with Transparent, as key strategic steps are about to be taken. SVC’s special advantage here is that it can draw from Siemens’ broad range of experience.
"Our connection to Siemens got started when we were invited to participate in Siemens’ India Innovation Program 2008 competition, organized by SVC," Kulkarni explains. Transparent ended up winning, and almost immediately after that it began talking with SVC’s representative in India, Rajesh Vakil. Thanks to Transparent’s expansion strategy, the company may soon significantly increase its workforce of 150 contractual employees and 150 wage laborers at two sites in India.
"Transparent is an excellent example of how we invest venture capital," says Johannes Schmidt, head of Equity & Project Finance at Siemens Financial Services, of which SVC is a part. "Our global network and expertise enable us to identify extraordinary companies before other venture capital firms. And in many cases we can also develop such companies more productively than our competitors can." By discussing their strategy with Siemens experts the companies benefit from Siemens’ technical expertise and global presence.
Dr. Ralf Schnell, CEO of SVC, is proud of his team. "Since its founding in 1998, SVC has participated in over 150 companies — and a third of the firms in our current portfolio offer solutions that boost energy efficiency. We’re active in all major markets — in Europe, Asia, and the U.S.," he says. SVC invests €2 to €5 million per financing round in early-stage companies. But recently, it started offering minority stakes of €10 to €30 million of so-called growth-capital financing to established companies. The first such investment was made in German waste heat specialist Maxxtec AG. Every investment ends with either the sale of the company or an IPO. "At that point, the bottom-line return must be solid," Schnell explains.

Coping with Demand Peaks. SVC is on track for success with Seattle-based Powerit Solutions, in which it acquired an interest in May 2009. Powerit, which has seen its sales double year after year, helps industrial firms avoid peaks in electricity demand during production operations. Powerit Solutions President Bob Zak has been overwhelmed by demand for his product. "Today, everyone wants to improve energy efficiency in production and have solutions tailored to their processes. That’s important, as avoiding demand peaks saves companies lots of money," he says.
This is the case in the U.S. at least, because many energy contracts stipulate that monthly energy invoices for industrial customers must be calculated on the basis of a single consumption interval — the one with the highest load — even if actual consumption over the entire month is lower. The intervals used by U.S. utilities are often only 15 minutes long. Energy companies justify this policy by arguing that they must maintain generating capacity to cover even extremely rare demand peaks.
To avoid such peaks, Powerit Solutions links and matches all key production power consumers. Food production facilities, where refrigeration units account for a big share of electricity consumption, are a good example. Using predictive algorithms, Powerit’s software determines when, how, and by how much to turn off or down equipment without affecting food quality or production. "Our experience with various industries gives us precise knowledge of the processes involved," says Zak. "We use this data to generate complex decision-making matrices that help us balance energy savings with productivity requirements. And the systems are adaptive, so they can adjust to a plant’s changing electric profile." This strategy makes it possible to reduce the power consumption not only of ongoing processes but also of processes to be carried out at a specific time in the future.
Powerit Solutions customers exploit such capabilities to take advantage of demand response programs — special contracts that allow providers to cap electricity supply at short notice, for example in midsummer, when air conditioners are running and the grid is in danger of overloading. Customers can save millions of dollars in just a few years through these programs, enabling them to recoup their initial investment very quickly.
Powerit Solutions’ industrial green technology activities still largely focus on North America; around 70 of its solutions can be found in the U.S., Canada, and Mexico. With the injection of financing by SVC, however, the company’s expansion can now be accelerated.
Bob Zak of Powerit Solutions and B. G. Kulkarni of Transparent have a lot in common in terms of business goals. Both intend to conquer the global market with their green technologies. And both have a partner in Siemens that offers financial strength, a global network, and industrial expertise, especially in environmental solutions.
Some environmental technology companies in the SVC portfolio call themselves green dwarfs. Together with the "green giant" Siemens they can more effectively make their vision of efficient resource utilization a reality.