This week’s Green Scene column in Crain’s Chicago Business: A website to assess your home’s energy efficiency

With Chicago temperatures dipping into the frigid zone, two local entrepreneurs are betting their new green startup will cater to the legions of homeowners who aren’t doing all they can to be energy efficient.

Energy Results co-founders Jason Blumberg and James Carlin, both 34, launched a consumer website earlier this month that will enable Chicago homeowners to get a free virtual energy audit of their home. If the audit shows they can benefit from some changes that could lower their heating bill, for example, the user can connect to services and products on the site to take that next step. Homeowners also can use a registry service to record all their energy improvements to demonstrate that value to prospective buyers when they sell their home.

The company’s founders predict they can help homeowners reduce their energy bills on average by about 30%, sometimes with easy fixes including sealing windows, replacing old appliances or adding insulation to walls.

Mr. Blumberg had been a consultant at McKinsey & Co., where he was advising large utilities and other companies on developing business strategies in the clean-tech sector. He eventually decided to take his own good advice and left to start a company that taps the growing awareness about energy consumption.

Mr. James was most recently an executive director in investment banking at J. P. Morgan Chase & Co. and left to join his friend and fellow Michigan State University classmate in launching the company.

The website took about 18 months to develop and the partners say they’re already generating revenues from visitors to the site. The founders invested their own money in the project, and later they may seek outside capital to grow beyond Chicago. By the end of 2011, they intend to roll out the services and products on its website to eight to 10 additional markets in the Midwest and Northeast where home energy consumption is high.

Jason Blumberg

Mr. Blumberg also sits on advisory committees for the Clean Energy Trust and the Midwest Energy Forum. This fall, he taught a clean tech entrepreneurship class at University of Chicago’s Booth School of Business.

Crain’s talked with Mr. Blumberg about his new venture.

Crain’s: How did you identify the need for this type of online consumer service?

Mr. Blumberg: Most homeowners have an opportunity to reduce their energy consumption by about 30% with things that pay for themselves. A middle-income suburban homeowner could typically save about $900 a year. If they have all this opportunity, why aren’t they capturing it? We figured if we can solve that, we can really develop a business that has a lot of opportunity and can help the environment at the same time.

There are a few other online energy audits out there. One is Lawrence Berkeley (National) Laboratory, but it’s very complex and takes about a half hour to fill out. It’s good if you can do it and know the R value of your walls, which most people don’t. We wanted to make something that was easy for most people that gets them 80% of the way there in 10% of the time. We created something that was easy for one of our relatives to do because the mass market is our target audience. A building science expert isn’t who we’re targeting.

What are some of the barriers you found that prevent homeowners from making energy-efficiency improvements to their home and how does your website solve those problems?

The first barrier is even knowing there’s a problem. Then when a homeowner does an audit and finds out they have a problem, they need to know what to do about it. Once they find out there’s six or seven things to fix it can get really complex to do it all, so many people stop there. If they go on, then they have to finance it, and know how to show the value for it when they go to sell their home.

There are people providing services in each one of these verticals, but there’s nobody making it easy and seamless for the consumer. We wanted to create an end-to-end solution and make easy-to-use online tools.

How are you getting the word out to consumers about your new business?

Right now we’re using less traditional forms of marketing. We’re focusing on pay-per-click marketing on Google. We’re trying to build Facebook and Twitter followings. We’re running a holiday contest right now with Facebook. With Twitter we’re trying to build relationships. If we decide to get some outside capital financing down the road, then we might have a bigger marketing budget to do more things.

What are your long-term growth plans?

We want to expand these services and products to other markets by the end of next year, but our hope and plan is to be a trusted energy adviser. There’s a lot that’s coming a few years down the road that consumers don’t even know about yet. Solar is going to become more cost-effective, electric vehicles are going to start playing into the grid and people are going to have smart meters in their homes. There’s going to be integrated homes for home energy efficiency management.

All these things will be coming at a homeowner that they don’t even know about today. What we hope is that we could take our platform and make it easy for homeowners to deal with all these things that will be coming out in the future.

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This week’s Green Scene column in Crain’s Chicago Business: Sending a message via recycled art

A sculpture crafted from recycled paper adorns one of Urban Innovations’ River North lobbies.

You wouldn’t normally expect a property management firm to install lobby art crafted from recycled paper and trash finds.

But that’s what’s going on in a handful of office buildings in River North — commercial spaces that are leased out to designers, architects, art galleries and furniture companies.

Last month, Urban Innovations Ltd. hired two artists to create free-flowing paper sculptures in the empty storefronts and lobbies of the nine 100-year-old loft buildings it owns and manages in the shadows of the Merchandise Mart. Round Two of the city of Chicago’s Green Office Challenge launches officially after the New Year, and Urban Innovations wants its tenants to participate in the yearlong event.

Alfrieda Green, Urban Innovations’ vice-president for property management, was part of the firm’s initiative to draw tenants’ attention to the city program. Crain’s met with Ms. Green to find out why the firm is so eager to get tenants onboard.

Crain’s: Why is Urban Innovations participating in the Green Office Challenge?

Ms. Green: We really want to get a message out to our tenants in a campaign called “UI Change it Up” and the Green Office Challenge is a part of that. We’ll be doing monthly tenant education meetings about the fundamentals of sustainability, such as efficiency and recycling and how they can have a sustainable procurement process. At our first meeting last month, about 5% of our tenants turned out, but we have high hopes for next year.

We have about 12 tenants already signed up for the challenge out of 130, so we have a long way to go. Luckily, it’s a yearlong program so we’re hoping to get quite a few more signed up. One of the goals of the challenge (for property owners) is how many tenants you can sign up.

Crain’s: Why did you decide to use recycled art to get your tenants excited about the Green Office Challenge?

Ms. Green: Because we’re in River North, the tenants we attract tend to be more creative and they come to us because they want flexibility in how they can design their space. We decided if we’re going to do an engagement program, we needed to engage them creatively. We commissioned a group called INDO to make artwork out of the recycled paper in our portfolio of buildings. If it’s a creative component that makes you think differently about how you throw your paper away or what you do with your waste, that’s great.

Crain’s: Where is the paper for the installations coming from?

Ms. Green: All the paper is generated by our properties. A few weeks ago, the artists wanted architectural drawing paper, and we have a lot of architects in our buildings. We went to their offices and asked for architectural paper that was going to be discarded, and they gave us more than we could ever want. So something that was going to be recycled anyway is turned into art.

We did some Dumpster-diving too. The artists are going to add to the installations as the Green Challenge progresses throughout next year. If we’re fortunate to lease the storefront space, the installation will be relocated.

Crain’s: What do tenants have to do if they enroll in the program?

Ms. Green: They have to designate a person as their green team member who will come to the monthly meetings at the building. Each month we’re going to highlight lighting efficiency, recycling or something else so they can start to develop their strategy for their office. They have to look at what they can do differently in their office to be more efficient. In some cases, that might involve an investment on their part, like changing out their light bulbs, but they could see a lot of savings, too. They also might not be fully using green programs already in place like recycling and programmable thermostats. The great thing about the Green Office Challenge is you can pick and choose what you want to do.

Crain’s: On the property management side of the challenge, what else does your firm have to do besides get tenants to sign up?

Ms. Green: Efficiency is another component of the challenge. You have to use the EPA’s Energy Star (rating system) and track your buildings’ performance, which is something we’re already doing. We expect to get to Energy Star by early next year for two of our properties. In order to qualify for the challenge, you don’t have to get to Energy Star, you just have to improve your efficiency. We’re looking to do that at every property. Energy efficiency saves us money. If we can get an award for doing that — fantastic. But we’re just as excited about saving money as we are about the award.

Crain’s: Is the art-driven strategy creating the kind of buzz you’re hoping for?

Ms. Green: We want more buzz. We already have a few tenants that are very excited about this program, but in January we’re going to do a big push to really get the message out. We’re very excited about what can come out of this.

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This week’s Green Scene column in Crain’s Chicago Business: Mayoral candidates talk green

In a packed West Loop auditorium earlier this week at the Illinois Institute of Technology’s Chicago-Kent College of Law, five Chicago mayoral candidates presented their environmental platforms to a gathering of more than 200 eco-minded Chicagoans. With one notable exception, supporting green business activity didn’t figure high on the candidates’ list of priorities. But some offered thoughtful ideas when pressed about how they anticipate stimulating the local green economy.

Some of the candidates — Chicago City Clerk Miguel del Valle, former U.S. Sen. Carol Moseley Braun and U.S. Rep. Danny Davis — showed up with a prepared agenda of environmental priorities they’d pursue if elected mayor. The most popular programs heard repeatedly that evening included energy efficiency retrofits for residential and commercial buildings, improving public transportation and revving up Mayor Richard M. Daley’s fledgling recycling program.

Two other candidates, John Hu and Patricia Van Pelt-Watkins, discussed their broader views of sustainability and environmental concerns for the city. However, they frankly admitted they hadn’t yet crafted an environmental wish list for addressing the city’s needs, even though they considered it important.

Mr. Davis launched his remarks with a call for advancing green technology in Chicago.

“I will push for green technology and for the city to become a hub of innovation and manufacturing of green technology, from wind turbines to solar panels,” he said. Mr. Davis noted that people want to build solar panel manufacturing plants in Chicago and he would identify or create tax incentives and tap zoning regulations in the city to help those companies get established in the city.

He placed a high priority on retrofitting city-owned office buildings and encouraging others to retrofit privately owned commercial and residential structures. “That would create jobs, but it will also create efficiencies through new technologies and create environmentally friendly environments,” he said.

In comments after the forum ended, Ms. Braun emphasized the need for advancing economic development in Chicago by encouraging public and private investment in the local green economy.

“Clean technology holds great promise, but right now there’s no access to venture capital to make it happen,” she told me. “The city can use its influence to make venture capital more readily available. Right now 40% of our pension fund investments go to venture capital funds and they’re only putting 10% of that money back here in Chicago. We can make clean tech and other green business a criteria for investment.”

In addition, Ms. Braun said she would work on making city regulations less onerous and encouraging local banks to offer financing for entrepreneurs and small businesses keen on getting involved in green-related ventures.

Ms. Braun has some insight to the challenges of starting a green business. Since leaving public office, which included a stint as U.S. ambassador to New Zealand, she launched a Chicago-based organic tea, coffee and spice company called Ambassador Organics.

“I also want to support technology transfer from our huge research and technology assets in this region,” she added. “The more we can tap into that for universities to partner with new or small businesses, the better we’ll be at building a new green economy.”

If elected mayor, Mr. del Valle said he’d focus on promoting energy efficiency retrofits on a massive scale for commercial buildings as a potential driver to boost green economic development. “These retrofits will serve as a major job creator if we go the scale recommended in the Chicago Climate  Action Plan,” he said. “Energy efficiency retrofits create an estimated 10 jobs for $1 million invested.”

He added: “As mayor, I’ll be proactive about finding and creating new financing mechanisms for green initiatives. Chicago has become a hub for entrepreneurs working to create new green businesses and green jobs. But in many cases they’ve been hindered by our antiquated zoning and licensing requirements. As mayor, I’ll bring businesses and community groups together with city departments to conduct a comprehensive review of Chicago’s zoning restrictions and licensing requirements.”

John Hu, a Republican candidate, said he didn’t know much about environmental issues and pointed to members of the audience who are active players in various environmental organizations and said he’d probably seek them out for advice on how to proceed if he gets elected.

Ms. Van Pelt-Watkins, a longtime community organizer and activist, emphasized a big-picture interpretation of sustainability in her prepared remarks. She said it’s impossible to talk about sustainability for Chicago without first addressing the underlying problems of violence in many neighborhoods. Residents need to feel safe before they’re willing to come out and help make their neighborhoods more sustainable through the purchase of goods from local merchants and gathering in commercial areas, she asserted. After listening to other candidates who spoke before her, Ms. Van Pelt-Watkins confessed she didn’t realize the audience was probably more interested in the granular details of how the next mayor would address some of the city’s ongoing environmental problems.

The event was organized by Foresight Design Initiative, which sponsors monthly Green Drinks networking and meeting events, as well as other substantive programs for Chicago professionals engaged in the sustainable business community.

Rahm Emanuel didn’t make it to the candidates’ forum but coincidentally released an energy-efficiency agenda on the same day, offering his plan for boosting building retrofits in the city if he’s elected mayor.

In that plan, he promises to triple the number of local building retrofits among homeowners and businesses in Chicago from 7,000 in 2009. Mr. Emanuel estimates his plan would create more than 400 jobs, and he outlined an implementation strategy that includes establishing an investment fund to help finance the projects and identifying partner organizations in neighborhoods to carry out the details.

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This week’s Green Scene column in Crain’s Chicago Business: Power2Switch lets users comparison-shop for electricity

A local energy-broker startup is making it easier for small businesses to compare electricity rates in Illinois and switch to the cheapest — or the greenest — supplier if a better deal comes along.

Power2Switch LLCis like the travel website Expedia, except the focus is on electricity. It offers a one-stop online price comparison service for small businesses in Illinois looking for better rates than what they get from Commonwealth Edison Co. Customers also have the option to switch to a renewable energy source if that’s on their shopping list.

Seyi Fabode

Seyi Fabode started the company last January as part of a student competition while he was getting his MBA at the University of Chicago’s Booth School of Business. Instead of pursuing an internship, Mr. Fabode, 34, used that time to test an idea he developed after being inspired by a professor who was researching consumer electricity rates.

The Chicago-based company took off in earnest last summer. Mr. Fabode and a fellow student co-founder plowed their own savings and family loans into the venture, created an easy-to-use web portal and signed up 10 electricity suppliers to participate. Seven of those 10 providers also offer a renewable energy option, typically wind energy. The suppliers most active in promoting their green products include MC Squared Energy Services, Nordic Energy Services, Commerce Energy and Integrys Energy Services.

About 100 small Illinois businesses have agreed to let Power2Switch scout for better rates and services on their behalf. To date, 12 of them, including Bobtail Ice Cream Co. and Sangria restaurant and night club in Chicago, have moved to new electricity providers after the startup found them more competitive contracts.

Companies typically achieve a 10% to 15% savings when they switch, Mr. Fabode says. The service is free to the small business owner and Power2Switch collects a commission from the energy supplier when a business converts to a new provider.

Mr. Fabode isn’t new to the energy sector. Before moving to Chicago to pursue his MBA, the Nigerian native studied at Warwick University in England and worked several years there for a diesel and natural gas power generation plant as an operations/commercial analyst. In this new venture, he intends to give businesses better information about clean energy in the hope that they’ll go for it.

Crain’srecently met with Mr. Fabode. He talked about the opportunities of Illinois’ deregulated energy environment and how small businesses can be among the early adopters of wind energy.

Crain’s: If Illinois has deregulated electricity providers, why do business owners need your services when they can shop around for better rates on their own?

Mr. Fabode: There is choice of electricity supply in Illinois, but it’s very hard to access them. You can find the information about the suppliers on the ICC (Illinois Commerce Commission) website. Then you have to call or visit the individual suppliers. You can’t just do it on their websites. It’s a long, convoluted process, and it’s even harder to get renewable energy from them.

Seven of the 10 suppliers we work with provide flexible products. On our website you can select interest in information about renewable energy or you can just choose to look for only cost savings. When a small business signs up with us, they can get information about the cheapest rates possible, a mixture of fossil and renewable energy, or just renewables. We’re constantly tracking information from the suppliers and we ping the businesses when we find a rate we think they might like.

Wind farms are popping up all over the Midwest. Are you seeing electricity providers jumping on the bandwagon to add renewable energy sources for the end user?

The industry is not that embracing of change, but some of the providers are starting to come around. Most of the 10 suppliers we’re working with — and two more large ones we’re about to sign on —are providing alternative energy. Some have bought wind farms because it’s supposed to be part of their renewable energy portfolio, but they’re not really pushing it. The real problem the utilities have is this feeling that customers don’t care about renewables. We’re trying to change that.

Right now coal is cheaper because the infrastructure is set up for coal and the subsidies the industry gets for coal aren’t factored into the price. The more we integrate renewables into the mix, the quicker we’ll get to the point where prices are level. Consumers will then get to decide if they want to buy power from a wind farm or from coal-generated energy.

Are your small business customers really interested in switching to electricity that comes from renewable sources or are they focused primarily on saving cash?

Our customers tell us they want renewables but they don’t want to pay the increased premium you tend to get from that selection. We’re doing a lot of analysis on the back end to find out what the optimal points are for the suppliers so they can put that in their pricing model in a way that customers will begin to buy it but not pay through the teeth for it. We’re slowly seeing a move in that direction and I believe sharing more data will help because it will increase awareness and adoption of renewable energy.

Even if most of our clients aren’t choosing renewable energy right now, we have dedicated some of our own revenues to sustainable initiatives. At the end of the year, we’ll donate 2% of our revenues to blueEnergy, which pursues localized alternative energy initiatives in many parts of the world, and to EarthDay, to help spread the word about environmentalism.

Do you plan to expand your operation beyond small-business clients in Illinois?

There are 15 other deregulated states, mostly in the Northeast, but the most logical expansion would be first to offer our services to residential customers in Illinois. Then we’d move to offering gas in the state. In about two years, we’ll make a decision about going to other states. To scale things, we’ll have to raise some money at some point. We expect to get angel investors for this.

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