CED CleanLinks Forum Feb. 9, 2012 -- ABB Technology Ventures

February 9, 2012 ABB Technology Ventures Overview CED CleanLinks Forum Confidential© ABB February 10, 2012

Table of Contents ABB Overview Thoughts on the Smart Grid Market Backdrop Technology Ventures© ABBFebruary 10, 2012 | Slide 2

ABB Overview $50 billion1 market cap Swiss power + automation company 130,000 employees in 100 countries $32 billion in revenue (2010) $5.6 billion2 in cash Growth via M&A: Ventyx ($1.2B), Baldor ($4.2B), Thomas & Betts ($3.9B; not yet approved) Formed by 1988 merger of Swiss & Swedish companies Headquarters in Zürich; U.S. headquarters in Cary, NC "As one of the world’s leading engineering companies, we help our customers to use electrical power efficiently, to increase industrial productivity and to lower environmental impact in a sustainable way.”1 Market capitalization as of 2/8/2012 2 As of 9/30/2011© ABBFebruary 10, 2012 | Slide 3

ABB OrganizationFive global divisions Power Automation Discrete Power Power Low Voltage Process Automation Products Systems Products Automation and Motion2010 Revenue $10.2 $6.8 $5.6 $4.6 $7.4 $ billions USD% Total 29% 20% 16% 13% 21% ~50% ~50% ABB’s portfolio covers: Electricals, automation, controls Low-voltage products and instrumentation for power generation and industrial Motors and drives processes Intelligent building systems Power transmission Robots and robot systems Distribution solutions© ABBFebruary 10, 2012 | Slide 4

Ground-breaking and nation-building projectsPushing the boundaries of technology Longest underwater power link First commercial Most remote offshore Mine hoist for wave power plant wind farm linked to grid largest potash mine First platform connected Europe’s largest to mainland grid thermal solar power plant Largest battery Longest and highest capacity power link Largest SVC installation Longest conveyor belt Automation of largest Largest SCADA alumina plant network Longest underground power link Largest gearless mill drive (for crushing ore) Largest reverse- osmosis desalination plant Power and automation Substation in world’s First 600 kV of largest chemical tallest building power link cellulose plant© ABB 20% of ABB revenue from the Americas, 38% from EuropeFebruary 10, 2012 | Slide 5

Improving capacity, reliability and efficiency in the gridA pioneer in smart technologies Challenge ABB solution • Deliver 6,400 MW of • Transmission at ultrahigh voltage China hydropower over 2,000 km • Minimal losses with direct current solution • Increase capacity and • World’s largest installation U.S. reliability for Texas utility enabling existing lines to carry more power • Also enables integration of renewable energy • Improve reliability in grid • Network management with real- India serving state of Karnataka time control (pop. 53 million) • Key building block for smart grid© ABBFebruary 10, 2012 | Slide 6

Innovation is key to ABB’s competitive advantageLeadership built on consistent R&D investment More than $1 billion invested annually in R&D1 6,000 scientists and engineers 7 global Corporate Research Centers (CRCs) Collaboration with 70 universities MIT (U.S.), Carnegie Mellon (U.S.), N.C. State (U.S.), Tsinghua (China), KTH Royal Institute of Technology (Sweden), Indian Institute of Science (Bangalore), ETH (Switzerland), Karlsruhe (Germany)© ABBFebruary 10, 2012 | Slide 7 1 Comprises non-order related R&D and order-related development

Targeted product development & investment scoping Example Development Areas: Maintaining the lead in conventional technologies, opening new areas Still, major innovation occurring out in the marketplace ABB Technology Ventures (ATV) is a critical strategic tool for finding, assessing, investing in, and integrating the best of these leading edge energy technologies Look to Silicon Valley, Washington (ARPA-E etc.), research institutions & labs, as well as ABB’s global network of entrepreneurs and partners for opportunities Tight linkages with ABB business units and R&D functions to ensure additional investment value-add, product pull-through and accelerated R&D© ABBFebruary 10, 2012 | Slide 8

Integrating OT/IT – Smart grid pillars Transmission Grid Management Electric Vehicle Charging Work and Asset Management Utility IT Management Demand Management Energy Management System Flexible AC Transmission System Wide Area Management System High Voltage DC Link Business Intelligence Energy Storage Distribution Grid Management Distribution Management System Volt/Var Efficiency Outage Management System Self Healing Reliability OT/IT Integration Distributed Generation Demand Response Asset Health Management CIS and GIS Security Microgrids Monitoring & Diagnostics Asset Analytics Sensors & Monitors Dashboards Meter Management© ABB GroupFebruary 10, 2012 | Slide 10

Integrating OT/IT – Smart grid pillars Transmission Grid Management Electric Vehicle Charging Work and Asset Management Utility IT Management Demand Management Energy Management System Flexible AC Transmission System Wide Area Management System High Voltage DC Link Business Intelligence Energy Storage Distribution Grid Management Distribution Management System Volt/Var Efficiency Outage Management System Self Healing Reliability OT/IT Integration Distributed Generation Demand Response Asset Health Management CIS and GIS Back Office Security Microgrids Business Intelligence Monitoring & Diagnostics Asset Analytics Sensors & Monitors Smart Grid Dashboards 2.0 Cloud Computing Meter Management© ABB GroupFebruary 10, 2012 | Slide 11

NAM Smart Grid – Market ForecastsTotal Market: 2011 vs. 2016 Source – Pike Research AMI: Meters, components (such as remote disconnect switches & interfaces), communications, and solutions integration. Distribution Automation: Various technologies including distribution switchgear (reclosers, sectionalizers, switches, andunderground/overhead switches), volt/VAR systems, FDIR, feeder protection & control, and other technologies (fault indicators,sensors, etc.). Analytics: Products (and services) that enable the collection, aggregation, inspection, cleaning, interpreting, visualizing, andmodeling of data from smart grid devices (including smart meters). Analytics can be a “standalone” offering, but is frequentlyembedded as a value-added feature in a wide range of smart grid related applications (ex. MDM, DMS, OMS, etc.). Demand Response: Programs, solutions, and technologies that strive to shed, curtail, or eliminate energy usage by utilizingprice signals, incentives, and/or directions from grid operators. Microgrids: Integrated energy systems consisting of distributed energy resources and multiple electrical loads operating as asingle, autonomous grid either in parallel or “islanded” from the existing utility power grid. Products include DERS, control systems,switches, and energy storages. Services include consulting and development. EVSE: Public and private, AC and DC charging infrastructure.© ABB GroupFebruary 10, 2012 | Slide 12

NAM Smart Grid – Market ForecastsTotal Market: 2011 – 2016 (MUSD) Source – Pike Research© ABB GroupFebruary 10, 2012 | Slide 13

Smart Grid Value – Why smart grid is growing US Smart Grid Full Potential > $125 billion annually FDIR Peak Shifting Monitoring & Diagnostics Grid Energy Efficiency and Conservation Applications Customer Volt/Var Efficiency Applications and CVR Avoided Generation Capacity Costs WAMS AMI© ABB GroupFebruary 10, 2012 | Slide 14

Smart Grid Value Summary of Estimated Cost and Benefits of Smart Grid 20-Year Total ($billion) Net Investment 338 – 476 Required Net Benefit 1,294 – 2,028 Benefit-to-Cost 2.8 – 6.0 Ratio (Provided by EPRI Report 1022519: Estimating the Cost and Benefits of the Smart Grid)© ABB GroupFebruary 10, 2012 | Slide 15

Research Triangle Cleantech Cluster Research Triangle Cleantech Cluster Triple-helix development model – government, academia, industry Cleantech cluster – smart grid, renewable generation, electric transportation Research Triangle Regional Partnership NC State University Office for Economic Development Cooperation with NSF FREEDM Center, Duke Energy Envision Center, NC Solar Center, and Advanced Energy Center on NC State University campus Regional Smart Grid Taxonomy Report (Marcy Low, Duke University) "Smart Grid: Core Firms in the Research Triangle Region, NC." Raleigh Chamber Wake County Economic Development Smart Grid brochure http://www.raleigh-wake.org/page/smart-grid Smart Grid Executive Roundtable City of Raleigh NC Department of Commerce NCSEA and smart grid legislation Governor’s office – Economic development Council for Entrepreneurial Development (CED) – Cleanlinks Forum© ABB GroupFebruary 10, 2012 | Slide 16

Smart Grid Leadership© ABB GroupFebruary 10, 2012 | Slide 17

Technology solutions – how are we responding 1. Power electronics HVDC and FACTS Inverters for Solar PV Drives for industrial automation DC grids for data centers 2. Creating a more flexible, adaptive grid Distribution grid management – FDIR, Volt/Var Efficiency Distributed energy resource management Microgrids Demand response Energy storage Distributed generation 3. OT/IT integration Back office data processing – MDMS, WAMS, VPP Business intelligence – Asset Health Systems integration – Smart Grid Operations Center© ABB GroupFebruary 10, 2012 | Slide 18

CoE – Addressing Distribution Automation • CoE functions: 1) Demonstration Center, 2) System Verification Center, 3) sales and proposal support, 4) project integration and management, 5) program management for accelerated R&D • Demonstration Center – Ventyx (DMS, DRMS, Focal Point, Service Suite), MicroSCADA, Relion, GridShield, GridGuard, GridSync, padmount switch, capacitors, Industrial Defender security, Trilliant communications, Ecotality EV charging, Energate home automation© ABB GroupFebruary 10, 2012 | Slide 19

End-to-End Solution to Drive Asset Performance© ABB GroupFebruary 10, 2012 | Slide 20

DERMS – Integrating OT/IT with virtual power plants© ABB GroupFebruary 10, 2012 | Slide 21

Microgrids Operate connected to grid or as an island. Integrate fossil and renewable generation with energy storage and demand response. DOD requirements – supply critical loads for 30 days without re-supply. Renewable power to meet 25% of power needs by 2025. Data Centers and DC Distribution Systems: Brookfield, CT Direct current (DC) power NAM supply systems for data center efficiency Santa Clara, CA Data center automation NAM and energy efficiency management software© ABB GroupFebruary 10, 2012 | Slide 22

Energy storage© ABB GroupFebruary 10, 2012 | Slide 23

EV Charging infrastructure© ABB GroupFebruary 10, 2012 | Slide 24

Demand Response – engaging the end-use consumer Price-Based Demand Response energy time-of-use day-ahead hourly real-time hourly efficiency rates pricing (RTP) pricing (RTP)/CPP power & load reduction delivery years months day-ahead day-of system planning operational planning economic scheduling economic dispatch < 15 <1515min <15 min <minmin dispatch commitment capacity/ancillary demand bidding/ emergency interruptible direct load services programs buyback programs programs control Source – DOE Incentive-Based Demand Response Today residential consumers use energy without regard to the actual supply situation Power producers plan the supply and deliver without knowing the detailed projected consumption Effective information exchange and automation of appropriate actions of both parties can optimize the demand supply equation For US a 20% reduction potential in peak demand after full deployment of demand response is estimated – Source FERC 2009 The future electrical system must facilitate an effective dialog© ABB GroupFebruary 10, 2012 | Slide 25

Demand Response – Energy Rates All electricity is not created equally – as demand Price increases, the cost to generate and deliver electricity increases 6 Control 5 PCT 4 IHD kW WEB 3 Source – OG&E ALL 2 1 2 3 44 5 5 6 6 7 7 8 8 9 910 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1 22 33 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 10 11 12 13 14 23 24 1 15 16 17 18 19 20 21 22 23 24© ABB GroupFebruary 10, 2012 | Slide 26

Distributed Generation Connecting solar energy to the grid – integration with microgrids and energy storage Proposal to California Solar Initiative with PG&E to study feeders with high concentrations of PV Recent investment of approximately $20 million for a substantial minority stake in California-based GreenVolts, a leading provider of turnkey concentrating photovoltaic (CPV) systems© ABB GroupFebruary 10, 2012 | Slide 27

Integrating OT/ITDeveloping Smart Grid Control Center Large-scale smart grid in Stockholm Royal Seaport 7 1 Smart homes/Buildings and Demand Response Reduced peak load and increased energy efficiency by demand side participation and home/building automation 6 2 Distributed Energy Systems Integration of production for local generation PV and Wind in Home/Building Automation Solution 6 2 Integration and Use of electric vehicles 6 3 Integration of PHEV Charging Infrastructure 3 4 Energy Storage for Network Support and DES 4 Increased stability and power quality 5 Harbor Control Solution Reduced CO2 emission based High voltage shore 1 connection 6 Smart Primary Substations 4 Increased efficiency and reliability with higher automation 2 level 5 Goals: 1. Royal Seaport is fossil free by 2030 2. CO2 emissions below 1.5 tons per person by 2020© ABB GroupFebruary 10, 2012 | Slide 28

Market Forces VC funding rebounding Cleantech investing on the rise, too, but returns remain tepid Severe blowouts Solyndra Beacon Power Evergreen Solar Stirling Reduction in government subsidies Corporates playing Failings of DOE LPO 1705 more active role1 2010© ABBFebruary 10, 2012 | Slide 30

Overall VC Activity© ABBFebruary 10, 2012 | Slide 31

Exits are Still Skewing to M&A© ABBFebruary 10, 2012 | Slide 32

Venture Activity by Sector Up 75% from 2010Source: PwC MoneyTree© ABBFebruary 10, 2012 | Slide 33

Corporate VC Activity % of Total VC Deals with Corporate VC InvolvedSource: PwC MoneyTree© ABBFebruary 10, 2012 | Slide 37

Corporate VC Activity % of VC Deals and Dollars in Cleantech 2010 and 2011 % of Total % of Clean % of Total % of Clean Total # Deals Deals Tech deals $M Invested Investment Tech $All VC 7,222 100% $51,698 100%Cleantech Only 646 9% 100% $8,448 16% 100%Corporate VC Investment in 142 2% 22% $1,233 2% 15%Cleantech Source: PwC MoneyTree © ABB February 10, 2012 | Slide 38

Why does a big company need a VC group? Emerging Technologies Emerging Competitors Smart Grid Cyber Security Thousands of Start-Ups Renewables Teaching ABB businesses to be paranoid! Teaching ABB businesses to be paranoid!© ABB Group - Introduction to ABB Technology VenturesJanuary 12, 2012 | Slide 40

A CVC group augments healthy R&D and M&A Other CVC Groups Other Sectors 80 CVCs - Reese Schroder formed in 2011! Motorola Solutions Venture Capital© ABB Group - Introduction to ABB Technology VenturesJanuary 12, 2012 | Slide 41

ATV Overview ABB Technology Ventures (ATV) is the corporate VC arm of ABB Group (NYSE: ABB), a $32B1 revenue power & automation technology provider Legally separate entity formed to profitably invest ABB’s assets, to increase the pace of internal innovation and to access leading edge energy technologies Began investing in 2010 Approx. $100 million deployed 10 investments to date: 8 investments into companies 2 investments as Limited Partners into other VC funds 5 person investment team with broad business and technology due diligence and portfolio company support from ABB Technology/market due diligence and portfolio company support from ABB business units, segment initiatives (ISIs) and corporate research (CRC)1 2010© ABBFebruary 10, 2012 | Slide 43

ATV Team Girish Nadkarni 8 yrs. at ABB; prev. responsible for ABB’s global cost MBA, Harvard migration program and ran global automotive business LL.M., UVA Managing Director for the Robotics Division as Sr. Vice President LL.B., University of Mumbai Head of ABB Technology Ventures Prior: EIR, View Group; President & CEO, vSimplify; B.Com, University of Mumbai Mgr., Corp. Dev., GE; GE Capital; Prudential Capital Andrew Tang 10+ yrs. VC experience; founding Managing Director at MBA, Wharton DFJ DragonFund; exits include Broadbus (MOT), MSEE, MIT Managing Director Zettacom (IDTI), and NuTool (ASMI) BSEE, UT Austin Prior: Partner, Infineon Ventures; Credit Suisse First Boston (investment banking); Intel and Motorola Grant Allen Formerly VP at Core Capital Partners ($350MM MBA, Wharton Washington, DC fund focused on enterprise software) BSE, Duke Vice President Notable deals: Validus, Valen Tech, OLO (fka GoMobo) Prior: Microsoft Corp., Liberty Associated Partners (VC), Dean & Company (mgmt. consulting), 3 start-ups Kurt Kaltenegger 20 yr. ABB veteran; fmr. head of high voltage circuit PhD, Montanistic U. Leoben breaker development; global medium voltage products (solid state physics & Head of Technology BU technology manager superconductivity) Director of Research Center in China (Beijing) and CTO MSc, Karl-Franzens for ABB CN; more than 30 patents University Graz Mohamed Eissa Prior: United Nations Headquarters NY (Intern at the MSc, New York Institute of Policy Analysis and Networks Branch, DESA) Technology Global Trainee, Energy Futures Design Engineer, ABB-PPMV, Egypt BSc, Cairo University© ABBFebruary 10, 2012 | Slide 44

Investment Criteria Targeting 5 new deals per year $2 - $10 million USD typical initial investment size Stage and geography agnostic Typically partner with leading financial VCs and/or other strategic investors Investment must meet traditional VC return requirements and have credible strategic value to ABB parent Financial + Strategic • 30%+ IRR • Exposure/learning for ABB • Returns • Hedging bets among competing commensurate with technologies early-stage business • Pre-M&A (Cisco approach) & technology risk • Indirect market support (Intel approach)© ABBFebruary 10, 2012 | Slide 45

Adding Value “ABB is value-added capital.” Examples of Value Add • Hired seasoned international business development FTE • Found new CEO • Backstopped working capital line • Convertible debt with attractive terms • Introduced to major partners in China • Brokered purchase of robotics for manufacturing line at premium pricing© ABBFebruary 10, 2012 | Slide 46

ATV Investment Focus ABB Focus: Power and automation technologies to improve utility and industrial customer performance and to lower environmental impact ABB Divisions ATV Investment Themes Power Products Power Enabling Connectivity + Power Systems Generation Technologies Intelligence Discrete Automation & Motion Renewables Energy Efficiency & Smart Grid •CPV and other solar Management Tech. •Demand/response •Wind •Energy storage Power Electronics Low Voltage Products •Efficiency/mgmt. Other •Cyber security High Speed Motion •Waste energy Process Automation •Small scale/ Advanced Materials Sensors, Measurement distributed gen. & Control Systems Industry Segment Initiatives Turbine Technology Wireless Analytics & Diagnostics Energy Smart Grid Efficiency Energy Storage For: • Load leveling Industrial Automation •Electrochemical cells • Spinning reserve Other Software •Flow batteries • Frequency regulation Wind Water Rail • Peak shaving Platforms •Other • Renewables integration Specific Sector Focus • Data Center • Water • Green Lighting & • O&G • Power conversion • Treatment/desal. Commercial Control Areas: • Energy efficiency • Monitoring Systems • Monitoring/analytics • Manipulation© ABBFebruary 10, 2012 | Slide 47

ATV Investments Board Company Location Description Involvement Co-Investors 1 Redwood City, CA Smart grid communications network Observer GE, Investor Growth USA using self-forming, self-balancing, Capital, VantagePoint, and self-healing radio mesh MissionPoint, zouk 2 Foxborough, MA Cyber security company with 1 seat Deep River Ventures USA applications for power systems, automation, and control systems 3 Santa Clara, CA Data center automation and energy Observer DFJ, Point Judith, Good USA efficiency management software Energies, Department of Energy 4 Rehovot, Israel Advanced LIDAR technology for Observer Cedar Fund, Evergreen remote sensing of wind vectors to Venture Partners, DFJ optimally align turbines 5 Edinburgh, UK Marine energy conversion using 2 seats Sigma Capital, Royal Oyster wave power technology Academy of Engineering, Scottish Enterprise, et al. 6 San Francisco, CA Electric vehicle (EV) fast charging 2 seats Public (NASDAQ: ECTY) USA technology 7 Brookfield, CT Direct current (DC) power supply 4 seats Oak Hill USA systems for data center efficiency 8 Fremont, CA Highly efficient, fully integrated 2 seats Oak Investment Partners USA concentrating photovoltaic (CPV) solar systems1 = All amounts in millions unless noted; amounts represent first round of investment only. Deals listed in chronological order of initial ATV investment.2 = PIPE© ABBFebruary 10, 2012 | Slide 48

Tips to working with ABB and other CVCs Plan well & do your homework Know your goals: acceleration, funding, M&A, etc. Be patient BU buy-in is often a good beachhead Think globally Have a partnership and future integration plan© ABB Group - Introduction to ABB Technology VenturesJanuary 12, 2012 | Slide 49

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CED CleanLinks Forum Feb. 9, 2012 -- ABB Technology Ventures

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CED CleanLinks Forum Feb. 9, 2012 -- ABB Technology Ventures — Presentation Transcript