Innovation Scorecard

When it comes to alternative and renewable energy, it's not enough to have the coolest non-oil-using eco-friendly widget.

By its very nature, the renewable-energy industry is one of the most innovative around. Solar power, wind power, fuel cells -- all are the result of technologies deployed mostly in just the past decade. But what makes this generation of upstarts truly exciting isn't the power (literally) of their inventions, but the manner in which those innovations came to be.

Check out the winners of this month's Innovation Scorecard, a project by Fast Company and the Monitor Group to identify the most innovative companies in key industries. Changing World Technologies compresses millions of years of decomposition into just a few hours. Just as impressive, its oil-from-junk works just fine with current fuel systems. Likewise, Konarka Technologies doesn't require a rethink of existing technologies: Its foldable solar cell will power any number of cell phones or laptops.

Energy Innovations' solution to the low efficiency of solar cells is to focus 25 times more light on them with mirrors. And Ballard Power Systems is keeping its edge through tight partnerships with carmakers and an Edisonian approach, incrementally testing new designs to ensure its ideas don't go the way of the dinosaurs.

Speaking of dinosaurs, what are those big oil and gas companies up to?

Fowl to Fuel

Changing World Technologies

West Hempstead, New York
www.changingworldtech.com

Brian S. Appel doesn't sell snake oil, but he could. A veteran entrepreneur with experience pitching chocolates, concert tickets, and perfume, Appel runs a venture, Changing World Technologies, that can convert just about anything -- from turkey scraps to tires to used cell phones -- into oil.

CWT has discovered a shortcut to a process that normally requires millions of years. The company takes fats, bones, feathers, and grease hauled from ConAgra's Butterball plant in Carthage, Missouri, and blends the material into sludge. After a few hours of extreme heat and pressure, voila! One ton of turkey scraps yields 640 pounds of heating oil, 100 pounds of methane, and 60 pounds of fertilizer (plus another 1,200 pounds of, um, leftovers). Appel says the $31 million plant goes through about 250 tons of biowaste a day, producing 20,000 gallons of fuel that's sold to a local industrial customer for heating.

It sounds too good to be true -- and indeed, some observers say the thermal depolymerization technology is far from proven. (Appel fielded a call in 2003 from a Securities and Exchange Commission investigator concerned that the company was hyping its science in advance of an IPO. No offering was planned, then or now.) But on a small scale, it shows remarkable promise.

CWT's secret to innovation? It thinks inside the box. "We look for where we can take advantage of existing infrastructure," says Appel. Some alternative energies such as hydrogen fuel cells and biodiesel, he points out, require customers to adopt new machinery and practices. But "you can't alienate the people with the existing infrastructure. That's a self-serving boutique mentality."

Instead, CWT engineers look for ways to innovate within existing systems. The company's fuels are designed to burn in today's boilers and engines, while leftover materials are ground into farm-ready fertilizers. CWT also applies in-the-box thinking to smaller logistical practices. "Seventy-five percent of my team is focused on optimizing," says Appel."Is there a better pump to pump the fuel? Is there a better heater to heat it? Can we do it better?"

That focus on practicality has inspired the company to look to other waste products that may someday be converted into fuels, such as junk plastic and rubber. CWT is currently running a test with USCAR -- the research cooperative of the Big Three automakers -- to create fuel from leftover car parts such as foam seats and rubber hoses. Even sewage is a viable fuel source.

That's an outlandish vision -- your toilet connected to an oil refinery. But it's not so far-fetched in Europe, where CWT is looking to set up several biowaste plants, including one that's pending in Ireland. The innovation's future is less certain in the United States, where its economics are muddied by recent legislation that creates incentives for rival technologies -- and where the biggest barrier, Appel says, isn't the science itself, but the status quo. -- Lucas Conley

Cell Therapy

Ballard Power Systems

Burnaby, British Columbia
www.ballard.com

Ballard Power Systems scored headlines in April 1997, when it sold a 25% stake to Daimler-Benz. It was chump change for the giant carmaker, but the investment ignited talk that hydrogen-based fuel-cell technology might hold the key to a viable, clean-burning alternative to the classic combustion engine.

Not surprisingly, Ballard's deal sparked a burst of new competition, as Daimler and other automakers placed bets across the alternative energy spectrum -- investing in hybrids, cleaner-burning diesel engines, and a range of hydrogen-powered systems. "Our biggest challenge now," says Ballard CEO Dennis Campbell, "is simply to stay on top of our game in terms of the core technology."

Ballard's fuel cells ingest hydrogen and oxygen, which chemically react with a membrane that throws off electricity. The appeal: The only by-product of the process is water. Ballard demonstrated the concept for autos in the early 1990s. Since then, it has focused on making the basic cell technology run as efficiently and durably as possible.

A decade later, fuel cells haven't yet changed the energy world. Cost, endurance, and extreme temperatures all still pose hurdles to commercialization. But on February 17, Ballard unveiled studies showing its newest fuel-cell stack, an array of individual fuel cells, to be capable of running for 2,000 hours and of starting in temperatures down to -20 degrees Celsius -- at a production cost 30% lower than its predecessor.

That progress won't pay the bills -- for that, Ballard just won about $45 million in funding from DaimlerChrysler and Ford Motor. But it does make Campbell's talk of commercialization by 2010 sound reasonable. "Talk to any of the automakers," he says. "They'll tell you that fuel-cell technology is what engines will be built on in the future." -- Ryan Underwood

"Sunflower" Seeds

Energy Innovations

Pasadena, California
www.energyinnovations.com

As he pondered California's energy crisis five years ago, a lightbulb went off in Idealab founder Bill Gross's head. Wasn't there a way to cut the cost of solar energy? Besides being expensive to manufacture, traditional solar panels were at best 25% efficient. That is, they converted just a quarter of the sun's energy into power.

Energy Innovations, which Gross founded in 2001, solves that problem with mirrors. Rather than relying on one large, flat panel, its "Sunflower" design employs a 5-foot-square block of 25 mirrors to focus solar rays onto a collector positioned above -- a contraption that looks something like an overhead projector on steroids.

It's the result of three years of experimentation and innovation, but the most significant discoveries occurred only in the last year. That's when Energy Innovations asked 27 potential customers -- southern California businesses with big, flat roofs -- to design a new solar receptor.

Some of the customers' observations were surprising: Rather than wanting energy around noon when the sun was at its brightest, they wanted to defer production to late afternoon, which would yield more savings on their electric bills. It also turned out that the new devices didn't have to be pretty. "We thought we had to compete with flat-panel photovoltaic cells," says Gross. "But they said, if you get something below a five-year payback, we'll accept something that sticks up."

The lesson: Sometimes customers actually know what's best. Another lesson: It's okay not to get it right the first time. Check out Energy Innovations' Web site for a showcase of design iterations that didn't quite pan out. The company is "willing to try a lot of things to find all the dead ends and learn from them," Gross says. "We have an environment that is very forgiving of failure as long as you don't make the same mistake twice." -- MP

Camo-Panels

Konarka Technologies

Lowell, Massachusetts
www.konarka.com

The way Daniel McGahn sees it, Konarka doesn't compete with all the other solar-panel makers out there. His company's offering, photovoltaic cells layered between flexible plastic, is so unlike anything else on the market, he hopes it can be embedded anywhere plastic is used, "but with the added benefit of turning it into a power source."

Konarka's team reflects the intersection of chemical, energy, and electronics technologies that drive its innovation. McGahn, Konarka's executive vice president, is a nanotech veteran. Chief scientist Alan Heeger is a physicist who won the 2000 Nobel Prize for chemistry. Randolph Chan, the head of engineering, designed the power strips on the sides of Duracell's batteries. By contrast, cofounder, chairman, and CEO Howard Berke isn't a scientist at all; he's an MBA who has founded or cofounded 12 startups across the fields of biotech, software, telecom, and energy.

Konarka's basic idea is to market foldable panels that can power laptop computers, phones, and a variety of mobile devices. "The key," McGahn says, "is to innovate with existing products." How will that happen? With a manufacturing process as revolutionary as the product itself. Unlike traditional photovoltaic cells, which are made using rigid pieces of silicon, Konarka's cells are literally printed onto rolls of plastic. The process allows different colors to be imprinted on the material -- so a prototype tent Konarka is creating for the military, for example, can be produced in camouflage colors.

The result? A portable energy source that can be dressed up and taken out anywhere. Imagine cells built into the fabric of handbags, say, or curtains. "You're talking about making photovoltaics disappear," McGahn says. "Now you have a whole new way to think about where you can provide power generation." -- MP

How We Did It

The Innovation Scorecard for the renewable-energy sector involved a two-part analysis. In the first phase, we identified finalist companies from three sources. Among the few publicly traded companies in the sector, we looked at shareholder return, growth, and revenue and profit per employee. We also examined venture capital investments to find companies that attracted at least $25 million in funding or with a valuation greater than $30 million. Most important, we solicited nominations from 50 experts across renewable-energy disciplines.

That first phase yielded 27 finalists. We asked these companies to participate in two assessments -- an online survey and a direct interview. These instruments analyzed corporate innovation along five criteria: vision and leadership within the industry; culture and organization; innovation processes; partnerships and other external relationships; and platforms for innovation and growth.

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