Intrigued by new energy management software, the Utility Accountant by Load IQ, Siemens decided to underwrite a small-scale beta test of it in Germany. Liking what they saw, they are exploring another larger-scale beta test as well. What’s so appealing? Load IQ’s Utility Accountant enables property or facility managers to monitor the energy consumption each of their appliances across multiple buildings in real time at once on one screen. AT&T is testing it too.

How did Siemens and AT&T know about Load IQ? They were introduced to Load IQ by a trusted source: the Nevada Institute for Renewable Energy Commercialization, or NIREC, a clean-energy incubator. Why would Siemens partner with a clean energy incubator? To gain early access to pre-screened, burgeoning technologies ahead of their competition from a reliable source.

“The focus of clean energy incubators, first and foremost, is commercialization. They are interested in supporting the development of technologies that hold the promise of a materially significant market share and scalability,” explained James F. Groelinger, Executive Director of the Clean Energy Alliance, the national association of cleantech incubators. “Companies start small with a big idea, and the most successful entrepreneurs seek advisors who can speed up the learning and profitability curves. Incubators are a one-stop shop for all the services entrepreneurs need.”

Coach, Engage, and Accelerate

Clean energy incubators have become the secret weapon in the large company toolbox, guiding entrepreneurs through the healthy birth of their businesses. Clean energy incubators, such as those in the Clean Energy Alliance specialize in “birthing” clean energy entrepreneurships, including those in energy efficiency, potential “clean” traditional or renewable energy technologies, or products that reduce the energy consumption of a large-scale manufacturing process.

All incubators are not created equal, and thus they specialize not only in industry — such as cleantech — but also in skill set. Incubators help entrepreneurs prepare their business plans, identify and understand their target market, focus their business model based on market conditions, identify and build revenue streams, forecast sales and prepare financial statements (and accounting systems), create their websites and marketing tools, and raise funds, either through presentations/introductions to investors or through grants.

Importantly, incubators also provide executive coaching, helping founders who often are technologists or scientists think like a business person, build their team, and get through the various “valleys of death” on the entrepreneurial journey.

Outsourcing R&D and Process Improvements

Clean-energy incubators are enabling executives at large companies to keep abreast of upcoming technologies and seize relevant opportunities. Sometime these early stage companies offer these big companies a competitive advantage, before their competition even knows the technology exists.

Ultimately, clean energy incubators become a resource for what many large companies are not nimble enough to do. “They see incubators as the equivalent of an outsourced R&D department, providing an opportunity to access new technologies without having to internalize the management and financial burdens. It’s very much about the bottom line,” according to Groelinger.

Clean energy technologies are very capital intensive and very risky investments – the kind of investments that large companies shy away from. Through a clean energy incubator, an executive at a large company can keep an eye on the promising newbie at low risk, even funding a very small beta test here and there. Then they can increase their involvement if/when results warrant, and build a relationship that may result in a new investment, supplier, or acquisition.

A Pipeline of Cutting Edge Solutions

As Andrew Trickett, Executive Director of the San Antonio Clean Energy Incubator told me, “They see me as a pipeline of interesting technologies to take a look at and maybe utilize in their own operations, or that they might want to invest in. Our introductions are well-received, because they know we have pre-screened them. I am going to be very careful about who I take to them, since my reputation is at stake.”

Explaining why he works with incubators, Gerd Goette of Siemens focused on the value Siemens derives from identifying promising companies and technologies early. He likes that incubators get to know Siemens’ business model, and bring his attention to entrepreneurships that are relevant and could pay off down the road.

“Something that has a reasonably good fit with the core business, or that would extend them into a related technology,” Trickett added, large companies “ are looking for huge market opportunities – it has to be measured in billions of dollars – as well as a truly differentiated technology, and a great management team both technically and in business skill.”

Trickett should know, he’s a successful, serial high-tech entrepreneur himself. One of the companies he’s mentoring through the Department of Energy Small Business and Clean Energy Alliance Partnership is Colnatec, a manufacturer of products that dramatically reduce the failure rates in manufacturing organic light-emitting diodes (OLEDs). OLEDs are part of the screens on your cell phones, flat screen TVs, and computer monitors.

That’s one huge billion-dollar market. Nice pipeline.

Image of hatching Earth by jaylopez via Shutterstock.