The business of energy conservation

When employees don't turn off their computers after work, it can cost companies millions each year in wasted electricity. But one Seattle startup has turned this failure to shut down into a plan to rake in revenue.

Verdiem offers Surveyor, software that basically does what any individual can do: It turns a computer off and then back on. Yet unlike a human, the software always remembers to do it.

With increased awareness of global warming and greenhouse-gas emissions, as well as rising oil prices, companies are placing more importance on go-green measures to reach initiatives and slash spending.

Intel and AMD, for instance, have poured money into developing energy-efficient processors. Dell has established programs so customers can plant trees to offset the carbon impact of electricity required to power the systems.

Verdiem and other entrepreneurial ventures engaged in green technology have taken it a step further: Energy conservation is at the heart of their business plans and the main source of their revenue, creating a category that's gaining more attention.

Last year, $2.9 billion was plugged into the "clean tech" field, which includes the development of alternative energy and energy-efficient services, according to Cleantech Venture Network — a nearly 80 percent increase from 2005. VCs in California accounted for more than one-third of that total.

The power of PCs

The amount of electricity used to power 100 average PCs over one year is equal to:

38 metric tons of carbon dioxide

8.21 passenger cars not driven for one year

4,318 gallons of gasoline

88 barrels of oil

0.31 acre of forest preserved from deforestation

13 tons of waste recycled instead of land-filled

Source: U.S. Climate Technology Cooperation Gateway, www.usctc gateway.net

(Based on a PC that consumes 600 kilowatt hours per year)

Green mentality

The go-green mentality in the high-tech sector is particularly strong in the Bay Area, Texas and Boston, but it hasn't picked up in the same way locally, said William Brent, a vice president at Weber Shandwick's Seattle office.

"The Northwest is a leader in consuming green tech, but it's not a leader in developing it," said Brent, who leads the consultancy's Cleantech unit.

Still, Verdiem has made some headway since it was founded in 2001.

Since then, the company has drawn $7 million in venture backing and expects to triple its year-over-year revenue in 2007.

For the company, the opportunity rests with an Environmental Protection Agency finding that more than half of all business PCs are left on continuously.

Considering that a typical PC running around the clock costs about $60 a year to power, this can be costly to a corporation with thousands of computers.

Kevin Klustner, Verdiem's president and chief executive, said about two-thirds of all energy is used when no one is in front of the computer.

"Because corporations are looking to reduce their environmental footprint, they're forcing all areas in their companies to participate ... but there hasn't been a lot of attention paid to the IT-device side yet," he said.

Workers often don't turn off PCs, Klustner said, because they have misconceptions about lower power modes; don't want to wait for the PC to turn on in the morning; or are told by the IT departments to leave the computers running.

Simple step

Turning off a computer at night, on the other hand, can trim about one-third of the company's energy spending.

"It has become not just a consumer interest, but large corporations are saying, 'It's in our best interest to be able to reduce our environmental impact,' " Klustner said. "It's better for the bottom line, it's better for customer relations; it could be better for the valuation of the company."

It costs $25 per PC to install Verdiem's Surveyor software, then $3 a year to maintain that computer after that. That cost can sometimes be less through utility subsidies. In one year, a client sees about $20 to $25 in savings each year per computer, according to Verdiem. (Savings vary somewhat depending on location and cost of electricity in the region).

In a company or school district with a network of several thousand computers, this can equal big savings.

District benefits

The Lake Washington School District began using Surveyor in the fall of 2004. Before installing the software, teachers and custodians were responsible for turning off the 11,000 computers throughout the district's 48 schools, said Chuck Collins, the district's resource-conservation manager. The software has been helpful, he said.

"It achieved something they were already trying to do. It just did it more simply," he said.

Now the school district pays $25,000 a year to Verdiem in maintenance — and saves $179,000 a year on its electric bill.

Surveyor is not the only software out there helping companies' bottom lines. BigFix, based in Emeryville, Calif., offers a similar service in addition to other computer-management tools, according to senior technology director Ben Kus.

Serving 700 clients and 7 million computers, the company says it has seen 100 percent revenue growth over the past three years.

Though most green-technology development may be occurring elsewhere in the country, one big recent investment in this area involved the alternative-energy side of green technology. Last month Seattle-based Imperium Renewables secured $101 million in debt financing toward building refineries for biodiesel, which was on top of $113 million in venture money.

In the energy-efficiency arena, another area company developing a green business is MicroPlanet in Seattle. It created a technology to lower the amount of voltage received in homes or businesses to the minimum amount needed to power appliances.

Wasteful voltage

Many buildings receive power at a higher voltage than necessary, and that extra voltage goes to waste.

Cost of installing a voltage regulator can range from about $1,000 for a home to $8,000 for a company, and savings over time is about 5 to 10 percent.

Bruce Lisanti, MicroPlanet president and CEO of the eight-person staff, said companies are becoming more interested in how to reduce their energy consumption, but it's tough to find fixes that don't require overhauls.

"They are scrambling because there aren't a lot of really good ways to make that happen without significant changes in behavior," he said.

Verdiem's Klustner, meanwhile, is hoping to expand the number of employees from 30 to 55 by the end of the year. He also plans to widen the company's energy-efficiency technology to other devices besides computers.

Smarten up

"People are realizing this energy thing is a real problem, and we need to get smarter about how we consume it," Klustner said.

Verdiem had 27 customers in 2004 and has 107 today; its software is operating on 350,000 computers.

Still in the R&D stage, Verdiem has plugged all its revenue back into the company. Klustner expects it to be profitable by the end of 2008 and is keeping his fingers crossed in a market that's heating up.

"We come into work paranoid every day about seeing competition," he said. "It's all about moving fast."

Christina Siderius is a freelance writer in Seattle.