Thursday, January 03, 2008

Integrated Tech / Services business models

Recent blog postings (link is here) in the greentech media have highlighted the investment opportunities for clean technologies integrated with downstream services. These services may include traditional consulting such as strategic planning and auditing, as well as more engineering design, construction, and especially operations or asset management services.

Discussions with executives at global Engineering & Construction and Environmental Management companies indicate that some firms are now positioning service lines in energy efficiency to take advantage of new technologies, as well as integrating new water treatment technologies into their water treatment and distribution practices.

Licensing relationships are currently being employed with the larger energy mgt and water treatment equipment manufacturers (think GE, Honeywell, Siemens, et al), but the real opportunity is discovering the start up or privately held cleantech companies; those that may not have the brand and marketing horsepower as the larger aforementioned equipment companies, but have innovative clean technologies, and also may be easier to work with (and license technologies from).

Looking at the water market, a good example could be new advances in filtration technology for water treatment. An E&C may position itself in the planning stages of a project to perform technology due diligence, and then also integrate newer technologies into the downstream engineering phases, thus driving additional value from optimizing (and possibly re-engineering) plant & facility design.

These business (and investment) opportunities reminded me of the real estate site evaluation market that was hot in the late 80s and 90s. Service providers (particularly E&Cs) had a great business in providing site evaluations for buyers who needed due diligence and perhaps extra negotiating power for acquiring commercial and industrial properties. The evaluations (or audits) allowed the service providers (engineering & construction, environmental) to then drive follow - on work: HVAC, environmental assessment & remediation, structural engineering, etc. While new and innovative technologies were not necessarily part of this business model, the use of front end audits and due diligence services allowed E&C firms to position themselves for downstream engineering and consulting services / revenues.

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