Smart Windows Markets, Exec Summary
 

Smart Windows Markets, Exec Summary

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This report identifies and quantifies the opportunities, challenges, and prospects for growth in the smart windows market. Specifically, it analyzes smart window technologies, geographic regions with ...

This report identifies and quantifies the opportunities, challenges, and prospects for growth in the smart windows market. Specifically, it analyzes smart window technologies, geographic regions with high growth potential, supply chain dynamics, and their impact on smart windows market growth; the dominant firms that will have the greatest impact on the growth of the market; other growth drivers; and our eight-year forecast for the smart windows market.

For the purposes of this report, smart windows include any window that has functionality applied to it either in a retrofit way or built-in manner that enables energy conservation, privacy, and/or convenience to the user.

We are principally concerned with the smart windows and materials/coatings themselves, but we will also consider and discuss the ancillary materials that are used in assembling smart windows. We will also discuss the manufacturing technologies and scale that will have impact on the growth of the smart windows market.

This report analyzes the use of and opportunities for smart windows in architectural, transportation, and other applications. This analysis is carried out taking consideration of the forces that shape smart coatings markets and those that shape construction and transportation markets. We also include an assessment of each of the types of smart coatings technologies that are likely to gain significant penetration into windows markets and the unique aspects of their use in windows.

While one of the major goals of the report is to provide detailed forecasts for the smart windows market, the continued uncertainty on a global economic scale and in construction markets in particular increases the uncertainty of such forecasts and predictions.

For example, the OLED market was predicted to be a multibillion dollar market by 2012. Due Economic turmoil and competition from incumbent LCD technologies has, however, resulted in significantly slower growth for OLEDs.

This report is international in scope. The forecasts are worldwide and there has been no geographic selectivity in the firms covered or interviewed in the collection of information for this report. We do, however, focus our global discussion on certain countries in different regions which we think are significant growth drivers for the smart windows.

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Smart Windows Markets, Exec Summary Smart Windows Markets, Exec Summary Document Transcript

  • www.nanomarkets.net Smart Windows Markets 2012 Nano-515 Published March 2012 © NanoMarkets, LCNanoMarkets, LCPO Box 3840Glen Allen, VA 23058Tel: 804-270-1718Web: www.nanomarkets.net NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netEntire contents copyright NanoMarkets, LC. The information contained in this report is basedon the best information available to us, but accuracy and completeness cannot be guaranteed.NanoMarkets, LC and its author(s) shall not stand liable for possible errors of fact or judgment.The information in this report is for the exclusive use of representative purchasing companiesand may be used only by personnel at the purchasing site per sales agreement terms.Reproduction in whole or in any part is prohibited, except with the express written permissionof NanoMarkets, LC. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netTable of ContentsExecutive Summary ............................................................................................................... 1 E.1 Three Key Trends Creating Opportunities for Smart Windows Manufacturers ............... 1 Page | i E.1.1 Key Trend 1: Energy Conservation, Smart Windows and the Future ..........................................................1 E.1.2 Key Trend 2: Smart Rather than Solar .........................................................................................................2 E.1.3 Key Trend 3: Smart Window and Green Aesthetics ....................................................................................3 E.2 Smart Glass Products: Passive and Active ..................................................................... 3 E.2.1 Passive Smart Windows ...............................................................................................................................4 E.2.2 Active Smart Windows .................................................................................................................................5 E.3 Opportunities for Glass and Window Firms ................................................................... 6 E.4 Opportunities for Materials and Specialty Chemicals Firms ........................................... 6 E.5 Opportunities for Construction and Architectural Firms ................................................ 8 E.6 Opportunities for Automotive, Aerospace and Other Transportation Firms ................... 8 E.7 Firms to Watch in the Smart Windows Space ................................................................ 9 E.8 Summary of the Eight-Year Forecasts for the Smart Windows Market ......................... 11Chapter One: Introduction ................................................................................................... 14 1.1 Background to this Report .......................................................................................... 14 1.1.1 Passive Smart Windows .............................................................................................................................14 1.1.2 Active Smart Windows ...............................................................................................................................15 1.1.3 Geographic Regions for Growth and Target Markets ................................................................................16 1.2 Objectives and Scope of This Report ........................................................................... 17 1.3 Methodology of this Report ........................................................................................ 18 1.4 Plan of this Report ...................................................................................................... 19Chapter Two: Smart Windows Market: Dynamics and Opportunities .................................... 20 2.1 Key Market Drivers ..................................................................................................... 20 2.1.1 Energy Conservation ..................................................................................................................................20 2.1.2 LEED Construction ......................................................................................................................................21 2.1.3 Style and Convenience ...............................................................................................................................22 NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.net 2.1.4 Product Differentiation ..............................................................................................................................22 2.2 Smart Window Technologies: Their Advantages and Disadvantages ............................ 23 2.2.1 Passive Smart Window Technologies .........................................................................................................23 2.2.2 Active On-Demand Smart Window Technologies ......................................................................................26 2.2.3 Photochromic Smart Windows ..................................................................................................................29 Page | ii 2.2.4 Thermochromic Smart Windows ...............................................................................................................29 2.3 Smart Windows Opportunities in Different Market Segments ..................................... 30 2.3.1 Smart Windows in Residential Buildings ....................................................................................................30 2.3.2 Smart Windows in Commercial (Income) Buildings ...................................................................................31 2.3.3 Smart Windows in Institutional Buildings ..................................................................................................32 2.3.4 Smart Windows in Transportation .............................................................................................................33 2.4 Geographic Market Outlook for Smart Windows Opportunities .................................. 34 2.4.1 U.S. Market Outlook for Smart Windows Opportunities ...........................................................................34 2.4.2 European Market Outlook for Smart Windows Opportunities ..................................................................37 2.4.3 Asian Market Outlook for Smart Windows Opportunities .........................................................................39 2.4.4 Latin America Market Outlook for Smart Windows Opportunities ...........................................................43 2.4.5 Summary of Geographical Smart Windows Opportunities ........................................................................45 2.5 Key Points Made in This Chapter ................................................................................. 46Chapter Three: Smart Window Products, Technologies, and Supply Chains ........................... 49 3.1 The Smart Windows Market: Manufacturers, Influencers (Marketing, Sales), and Service Providers ......................................................................................................................... 49 3.1.1 Basic Plastic Film Substrate Providers for Smart Window Applications ....................................................49 3.1.2 Flat Glass Substrate Providers for Smart Window Applications ................................................................52 3.1.3 Functional Materials and Component Providers for Smart Window Applications ....................................55 3.1.4 Marketing, Sales and Service Providers in the Smart Windows Market ....................................................56 3.2 Passive Smart Windows: Products, Technologies, and Supply Chains ........................... 57 3.2.1 The Passive Retrofit Window Film Market.................................................................................................58 3.2.2 The Passive Low-e Glass Smart Windows Market .....................................................................................61 3.2.3 The Passive Thermochromic Windows Market .........................................................................................62 3.2.4 The Passive Photochromic Windows Market ............................................................................................63 3.3 Active On-Demand Smart Windows: Products, Technologies, and Supply Chains ......... 64 3.3.1 PDLC Active On-Demand Smart Windows .................................................................................................65 3.3.2 SPD Active On-Demand Smart Windows ...................................................................................................66 3.3.3 Electrochromic Active On-Demand Smart Windows .................................................................................68 3.4 Self-Cleaning Smart Windows ..................................................................................... 72 3.5 Key Points from This Chapter ...................................................................................... 75 NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netChapter Four: Eight Year Smart Windows Forecast ............................................................... 78 4.1 Forecasting Methodology ........................................................................................... 78 4.1.1 Data Sources ..............................................................................................................................................80 Page | iii 4.1.2 Alternative Scenarios .................................................................................................................................80 4.1.3 Scope of the Smart Windows Market Forecasts ........................................................................................81 4.2 Forecasts of Passive Smart Windows by Application Area ........................................... 82 4.2.1 Forecast of Low-e Glass in Passive Smart Windows ..................................................................................84 4.2.2 Forecast of Retrofit Window Film in Passive Smart Windows ...................................................................85 4.2.3 Forecast of Thermochromic Film in Passive Smart Windows ....................................................................87 4.2.4 Forecast of Photochromic Film in Passive Smart Windows .......................................................................89 4.3 Forecasts of Active Smart Windows by Application Area ............................................. 90 4.3.1 Forecast of PDLC Film in Active On-Demand Smart Windows ...................................................................92 4.3.2 Forecast of SPD Film in Active On-Demand Smart Windows .....................................................................93 4.3.3 Forecast of Electrochromic Smart Glass in Active On-Demand Smart Windows.......................................95 4.3.4 Forecast of Electrochromic Film in Active On-Demand Smart Windows ...................................................97 4.4 Summary of Forecasts ................................................................................................ 98 Abbreviations and Acronyms Used In this Report ........................................................... 103 About the Author ........................................................................................................... 104 List of ExhibitsExhibit E-1: Key Players in the Smart Windows Market ........................................................................ 10Exhibit E-2: Smart Window Glass and Film Market, 2012-2019 ($ Millions) ........................................... 11Exhibit 2-1: Likely End-Use Applications by Smart Window Technology ................................................ 34Exhibit 2-2: Regional Demand for Smart Windows by Technology ........................................................ 45Exhibit 2-3: Regional Growth of Smart Windows by Market Segment .................................................... 46Exhibit 4-1: Total High Quality Float Glass Market for Thermochromic film, Photochromic film and Low-e glass in million sq. meters @ 7% AGR, 2012-2019 ...................................................................... 79Exhibit 4-2: Volume of the Passive Smart Window Film/Glass Market (million sq. meters) 2012-2019 .... 82Exhibit 4-3: Value of the Passive Smart Window Film/Glass Market ($ Millions), 2012-2019 ................... 83Exhibit 4-4: Passive Smart Window Market –Low-e Glass, 2012-2019 ................................................... 85Exhibit 4-5: Passive Smart Window Market - Retrofit Window Film Market, 2012-2019 .......................... 86 NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netExhibit 4-6: Passive Smart Window Market - Themochromic Film, 2012-2019 ....................................... 88Exhibit 4-7: Passive Smart Window Market - Photochromic Film 2012-2019 .......................................... 89Exhibit 4-8: Volume of the Active Smart Window Film/Glass Market (million sq. meters), 2012-2019 ...... 91Exhibit 4-9: Value of the Active Smart Window Film/Glass Market ($ millions), 2012-2019 .................... 92Exhibit 4-10: PDLC Active On-Demand Smart Window Film Market, 2012-2019 ..................................... 93 Page | ivExhibit 4-11: SPD Active On-Demand Smart Window Film Market, 2012-2019...................................... 94Exhibit 4-12: Electrochromic Active On-Demand Smart Glass Market, 2012-2019 .................................. 96Exhibit 4-13: Electrochromic Active On-Demand Smart Window Film Market, 2012-2019 ....................... 98Exhibit 4-14: Smart Window Glass and Film Market, 2012-2019 ($ Millions) .......................................... 99 NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netExecutive SummaryE.1 Three Key Trends Creating Opportunities for Smart Windows ManufacturersSmart window technologies already have large end-use markets within the architectural Page | 1(residential and commercial buildings) and transportation (cars, airplanes, boats, etc.) sectors.NanoMarkets believes that the market for smart windows will grow significantly over the nexteight years, becoming a $42 billion market by 2012, and more than doubling to $87 billion by2019 (although much of this is made up of low-e glass).NanoMarkets sees three key trends that are currently driving the smart windows market andneed to be taken into consideration in building the business case for any smart windowsproduct. Each of these three trends are obvious at one level, but each has subtleties that areimportant for smart windows firms to consider and each has changed somewhat sinceNanoMarkets issued its last report on smart windows. E.1.1 Key Trend 1: Energy Conservation, Smart Windows and the FutureThe "smart" in "smart windows" can be used to describe many different kinds of functionality,including futuristic capabilities such as windows that can double as panel lighting or solarpanels. However, in reality most of the revenues that will be generated by the productsmentioned throughout the forecast period considered in this report will essential be derived bythe needs of building owners and managers to improve on energy conservation.Smart windows may be just what the doctor ordered when it comes to providing reducedenergy use in buildings, since according to some sources it can provide improvements in thisregard of up to 40 percent.However, NanoMarkets believes that smart windows firms must react to two separate trendswith regard to energy conservation needs:  The most important of these trends is the long-term real cost increase for energy that we expect to see over the next decade and beyond. What we have in mind here are the price pressures that growing demand for energy from large, rapidly emerging countries (especially China and India) are likely to produce. Energy production could keep up with this new demand, but is unlikely to until well into the next decade. Thus energy efficiency is likely to be a persistent concern of building mangers, owners and construction companies throughout the period under consideration. Because smart windows are able to offer a clear and distinct solution here, we think that smart NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.net windows makers will be able to ride the wave of energy shortage (as it were) throughout the period under consideration.  We also expect energy efficiency bubbles to appear over the next few years that will be especially good for the smart windows business, but only for brief periods. These will Page | 2 not be phenomena driven by real-world demand, but rather by high levels of inflation or deflated currency; that is, they are monetary phenomena and are relatively temporary in nature. For example, the cost of heating fuel shoots up in dollar and euro terms causing a spurt in sales for energy efficient devices including smart windows. It is important for smart windows firms to capitalize on such sentiments, while recognizing that they are likely to be temporary and for that reason it is important that they dont over commit. This kind of bubble phenomena seems more likely to occur sooner than it did when NanoMarkets last published a report on smart windows, given the current financial state of most of the countries in which smart windows are sold. E.1.2 Key Trend 2: Smart Rather than SolarNanoMarkets also believes that sustainable energy architecture may be about to experience achange in direction and this is also something new to note since our last smart windows report.The change that we are talking about is one that deemphasizes some of the green energytechnologies (solar and wind) as subsidies decline in various geographies. This is alreadyhappening in Germany and we expect this to happen in other important countries over the nextfew years.Assuming this analysis is correct, one possible consequence of a decline in government supportfor green energy generation will be to integrate greenness into building materials and productsin order to improve the economics of green building. In other reports, NanoMarkets hasdiscussed extensively this trend in the context of building-integrated PV (BIPV), but it is just aslikely to impact the smart windows market.In other words, the green building of the future may look a little more like a passive solarbuilding, with a distinct architecture and no highly visible generation systems. However, whatwe are talking about here is not really a passive building in the old sense, but one in which theactive components are much more fully part of the building.Making this kind of development more possible is the arrival of green standards such as LEEDand some equivalent standards from Europe. These can be embedded in building codes and NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netfrequently are, which has the implicit effect of broadening the addressable markets for greenbuilding products including smart windows. In the context of this development, smart windowsmay also form an important part of net zero energy buildings.The existence of codes embody LEED and the like make novel energy efficient products—such Page | 3as smart windows—more acceptable and credible to building owners and managers andtherefore both broaden addressable markets and take the green building market further fromthe highly customized space in which it began. E.1.3 Key Trend 3: Smart Window and Green AestheticsSo far, the general trends that we have discussed here are ultimately based on various aspectsof the significant energy efficiency benefits that smart windows can bring in their wake.However, there is an aesthetic aspect attached to all of this, too. Architects, construction firmsand building managers are likely to be attracted to using green building materials in order tocreate a sense of "green chic" that can help market themselves and their buildings to certainowner/lessor demographics.To the extent that the next-generation green buildings take off, smart windows are likely to bepart of the story that sells them. The new types of smart windows—that is, primarily the activesmart windows—may become part of some future aesthetics that combine "greenness" withhigh tech.This type of new aesthetic may have a different appeal in different geography and an analysis ofarchitectural tastes in different countries lies well beyond the scope of this report. However,we note that the desire for novelty and convenience in new architectural designs has beenparticularly pronounced in the emerging economies of China, India, Brazil, and others. Oneexample of a convenience-driven smart window application is the use of PDLC film smartwindow technology for privacy glass in the internal walls of hotels and offices in China.E.2 Smart Glass Products: Passive and ActiveAlthough several technologies, such as thermochromic, electrochromic, and photochromicwindows are maturing and growing in acceptance, in our estimation, the penetration of energysaving smart windows as a percentage of the global high-quality float glass market remains low(~22 percent), and that is only considering "smart windows" under the broadest definition.This penetration is mainly dominated by energy saving passive low-e glass and retrofit windowfilm products. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netIn this report, NanoMarkets makes a distinction between "passive" smart windows and "active"on-demand smart windows. E.2.1 Passive Smart WindowsThe first kind of smart window is entirely passive. They might reasonably be thought of as Page | 4being built wholly from smart materials and do not include an embedded electrical or electronicsystem. In passive smart windows, one or more components in a window passively but smartlycarry out a function, such as blocking UV rays, absorbing heat/IR radiation from sunlight whileallowing most of sunlight to pass through the window, without any external stimulus providedby the user. Generally speaking, these technologies have been around for quite a while, so theyare mature and only so much market growth can be squeezed out of them.Another issue is that for those looking to build high-tech buildings the responsiveness of thepassive smart windows may not match the kind of requirements that the building owners andmanagers expect and/or require. Specifically, one big disadvantage of passive smart windowtechnologies is that they do not provide energy saving benefits on-demand with the flip of aswitch. This kind of functionality is found in the active smart windows systems, which is wherethe new opportunities for smart windows are to be found going forward.Low-e glass: Low-e glass allows for energy savings in buildings by blocking harmful radiationand heat from sunlight. This technology is the most mature among all of the energy savingsmart window technologies and the market for low-e glass is already huge.Nonetheless, NanoMarkets see the market for this material expanding significantly in the futuredriven by the energy efficiency trends mentioned above. Nonetheless, this is a fairlyundifferentiated product, where the opportunity for distinguishing products in the marketplaceis not that great.Architectural window film: Apart from its most obvious difference—one is glass and one isfilm—the economics and functionality of window film is very similar that of low-e glass. Oneother factor, however, is that window film is often found in use in transportation applications,which low-e glass is not.Thermochromic windows: This type of window provides clarity or tint in response totemperature changes and can be used in transportation as well as architectural applications.However, while the technology is interesting it has not yet proved high performing. And as aresult, the market for such windows has not proved very large; NanoMarkets does not expectthis market situation to change much during the period under consideration. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netPhotochromic windows: The thermochromic windows story is very much repeated forphotochromic windows. In particular, the market for these kinds of windows is very small andlikely to stay that way. Photochromic windows change tint in response to exterior light,otherwise these windows also allow for energy savings similar to thermochromic windows. Page | 5 E.2.2 Active Smart WindowsThe bottom line is that until fairly recently all the technologies and solutions that could addressthe trends and opportunities mentioned at the beginning of this chapter, were fairly primitiveand inadequate to meet future needs for smart windows.As a result, the new active smart windows which are emerging from several differenttechnology research programs offer a much stronger way to address these needs and—as aresult—NanoMarkets revenue growth projections for these technologies are quite bullish.Despite being fairly disparate technologically, they all share the ability of fast response timeproviding building users with enhanced comfort and improved energy savings.In active smart windows, one or more of the components in the window carry out a functionsuch as blocking or transmitting sunlight on-demand in response to an external stimulus, suchas an electric current provided by the user (the flip of a switch).PDLC film-based smart windows: This technology is based on liquid crystals dispersed in apolymer matrix that are sensitive to electric fields. It dims through the use of diffraction of lightupon application of an electric field.NanoMarkets does not believe that PDLC will ever be huge market and seems likely to beconfined to architectural markets for the extent of the forecasts presented in this report.However, the technology has already, found use in interior privacy applications and we expectthis technology to produce revenues in the low hundreds of millions of dollar through much ofthe forecast period.SPD film-based smart windows: This technology, NanoMarkets believes, will produce revenuesabout twice to three times that of PDLC. This is because this technology has considerablepotential in the transportation sector as well as the architectural sector; SPD has already foundapplications in transportation, such as in automobiles and airplanes, for example.SPD provides gradual tinting upon application of an electric field to field-sensitive particlessuspended in a polymer matrix. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netElectrochromic technology: Electrochromic technology is the most established of the activesmart windows technologies. Electrochromic windows provide clarity or tint in response to anelectrical field. Electrochromic glass for transportation markets is already a half-billion dollarmarket, but electrochromic glass for architectural applications is only just beginning to emergeand should be a substantial market by 2017 or so. Electrochromic films, however, seem much Page | 6more likely to be confined to niche markets.E.3 Opportunities for Glass and Window FirmsSmart windows provide a growth platform for architectural glass manufacturers and windowmanufacturers:  Already "pricey" architectural glass and window products can be sold at incremental premiums, while providing valuable additional features such as energy savings with smart coatings on the windows and glass facades. Thus, smart windows will enable higher-priced product sales for glass and window manufacturers.  By partnering with architectural and construction companies, which typically determine the product specifications for their buildings, window and glass manufacturers can create industry leverage, and thus can make substantial money by developing energy saving smart films or glass that can be used in smart windows.NanoMarkets further believes that, as awareness of the smart windows market grows, end-users (building owners/operators, home owners, and auto owners) will further demand addedfunctionality, such as solar energy generation and OLED lighting integrated with smartwindows. Such technology advances will further fuel the growth and adoption of smartwindows.As usual, there are some negatives to be considered here too. As we have already discussed,there are lots of technologies floating around in this segment and there are real risks of glass orwindows companies picking the wrong horse or applying a technology to a market sector inwhich it does not work particularly well.E.4 Opportunities for Materials and Specialty Chemicals FirmsMaterials and specialty chemical firms are a key part of the smart window supply chain. Just aselectronic technology in general was enabled by innovations in materials science, the growth ofthe smart window market will be fueled by innovation in specialty chemicals and materialsscience. This fact in itself delineates some important opportunities for materials and specialtychem firms. The main material classes used in smart windows can be categorized as follows: NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.net  Substrates such as plastic films (if not glass)  Functional coatings and their components that provide "smarts" to the window  Adhesives and sealants for assembling an air-tight window to enable longer lifetimes for Page | 7 the active components of the smart window  Transparent conducting films for electrochromic smart windows  Window frame materialsThe growth of the smart windows market will bring significant growth and innovationopportunities to materials suppliers in all of the categories described above. However, the majorgrowth areas are electrochromic coatings and self-cleaning coatings. Thermochromic coatingswill provide moderate growth opportunities for material suppliers.Electrochromic glass, by itself, for the transportation and architectural markets combined willbecome a $3-billion market by 2019. Most of this growth will come from the new constructionand automotive segment of the market. In addition to electrochromic coatings, there areseveral other opportunities for materials suppliers to further enable the adoption of smartwindows technologies:  Reduction of the cost of electrochromic coating materials, since they are the most expensive component in a smart window.  Development of photochromic coatings that provide a broader range of dimmability and uniformity as a function of incident light.  Development of thermochromic coatings with improved response times for tinting and clearing; such advances would provide a big boost for adoption and market growth.  Reduction in the manufacturing cost of PDLC films by leveraging manufacturing efficiencies and new materials for higher market penetration of PDLC film smart windows.  Development of adhesives and sealants that can provide extra protection for the transparent conducting layers of electrochromic smart windows.From a materials stand point, the main driver for enabling smart windows growth is to developelectrochromic materials that are cost effective and provide broad tunability for on-demandtinting and privacy. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netE.5 Opportunities for Construction and Architectural FirmsLEED design and construction—and compliance with other similar standards in Europe—hasbeen arguably the single most important differentiating and growth factor for construction andarchitectural firms in recent years. One such area of differentiation is the extensive use of glasswith the integration of appropriate smart window technologies. Page | 8  Smart windows enable maximization of energy conservation through the use of natural sunlight to control the environment inside the building in the winter and summer months.  The use of natural light in office buildings has also been shown to improve the productivity of workers.NanoMarkets believes that construction and architectural firms that focus on LEED design (andsimilar standards) and construction, and who adopt smart windows technologies as part of thisfocus will benefit. Such firms can also deliver energy efficient buildings with superior aesthetics,an enhanced interior environment, and convenience.As smart windows technology pervades the marketplace, it will eventually become a "requiredtechnology" for LEED design and construction. Therefore, architectural and construction firmsthat are early adopters of smart windows technology in their building designs could gain theusual advantages of early entry.E.6 Opportunities for Automotive, Aerospace and Other Transportation FirmsOne of the most important drivers for new product design in the transportation market isachieving the highest fuel efficiency possible while providing increased convenience to vehicleowners.Automotive, railway car, and aerospace companies achieve fuel efficiency for their products intwo ways: reducing weight and using new technologies such as smart windows to reduceenergy usage and thus fuel consumption. Manufacturers of vehicles will, therefore, benefit byproviding higher-value, fuel-efficient products using smart windows technologies. This isalready beginning to happen to some extent:  One of the earliest successes for smart windows technology in the transportation sector was the rearview mirror in cars. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.net  The most recent example of the adoption of a smart window technology is the use of electrochromic liquid crystal-based smart windows for the passenger windows in the Boeing 787 Dreamliner airplane.  Electrochromic liquid crystal-based windows in metro trains in Singapore provide Page | 9 privacy for both the passengers and people living in houses along the railway.Electrochromic technology has been the technology of choice in transportation,thermochromic, photochromic, and SPD film technologies are also an option:  The initial success of electrochromic glass in automobiles was demonstrated in dimmable rearview mirrors.  An example, of a thermochromic technology application in automobiles is in the sunroofs of cars.  SPD technology has been used in automotive and airplane windows. If passengers need privacy, protection from harmful radiation, and comfort on-demand, then electrochromic and SPD technology are a more preferred option.E.7 Firms to Watch in the Smart Windows SpaceNanoMarkets believes that the firms listed in Exhibit E-1 will have a significant influence on thegrowth of the smart windows market in the coming years. These companies fall into fourcategories smart glass, smart film, functional materials, and ancillary materials suppliers. It isprobably fair to add that certain architectural firms are also emerging that are particularlyenthusiastic about green materials and are also shaping the markets considered in this report inimportant ways.The main component of any smart window technology is either the smart film or the smartglass. The smart window materials and coatings are on the glass or in the film that is eitherapplied onto the glass or laminated between two pieces of glass (in the case of laminatedglass). Thus, glass suppliers to the smart windows market have significant influence within thevalue chain and on the end markets. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netExhibit E-1: Key Players in the Smart Windows MarketSmart Glass Suppliers Smart Film Suppliers Ancillary Chemicals & Materials Suppliers Saint-Gobain Switch Materials DuPont Teijin Films (Film substrates) Pilkington/NSG Group Ravenbrick Toray (Film substrates) Cardinal Polytronix SKC (Film substrates) Page | 10 Guardian Pleotint Dai Nippon Ink Asahi Glass US E-Chromics Landec Intelligent Materials AFG Industries Beijing All Brilliant Material Sciences Corp PPG Industries Sun-TEC Momentive (Silicone) Schott Glass Chromogenics Dow (Silicone) Soladigm DaiNippon Chemicals Solutia Performance Films (ITO) Sage Electrochromics Hitachi Chemicals Bayer MaterialScience Architectural Glass 3M Projects Gentex Solutia Performance Films GlasNovations Chiefway Citala© NanoMarkets 2012Although no single glass supplier as of today can deliver a complete smart window "drop-in"solution to window manufacturers, NanoMarkets believes that the recent merger andacquisition activity in this sector indicates a recognition by materials and glass suppliers of aneed to consolidate the long and fragmented supply chain.  Saint-Gobain acquired Bekeart Specialty Films to compliment its SAGE Electrochromics portfolio and offer a "complete" and "drop in" smart glass to window manufacturers, and also to gain access to the film coating technology of Bekaert.  Solutia acquired Southwall Technologies to gain access to glass coating technologies and to enhance its product portfolio of retrofit window films for energy savings. (Solutia itself was recently acquired by Eastman Chemical.)Despite these deals, the smart windows supply chain remains long and fragmented.NanoMarkets believes that as smart window market growth accelerates, there will beopportunities for firms with available capital to either forward integrate or backward integrateto reduce cost, innovate new products, and offer a complete portfolio of smart window productsto window manufacturers, end users, such as building construction companies, buildingoperators, and transportation OEMs. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netE.8 Summary of the Eight-Year Forecasts for the Smart Windows MarketExhibit E-2 presents NanoMarkets eight-year forecasts for the passive and active smart filmand smart glass markets. As these numbers show, the markets considered here are dominatedthroughout the period by low-e glass. However, this is, as we have already noted a huge, butrelative undifferentiated sector. Page | 11Exhibit E-2: Smart Window Glass and Film Market, 2012-2019 ($ Millions) 2012 2013 2014 2015 2016 2017 2018 2019Passive Smart Window MarketPassive SmartWindow FilmsPassive SmartWindow GlassTotal Passive SmartWindow Forecast($ millions)Active Smart Window ForecastActive Smart WindowFilmsActive Smart WindowGlassTotal Active SmartWindow Market($ millions)Total Passive andActive SmartWindow Film($ millions )Total Passive andActive SmartWindow Glass($ millions )Total Passive andActive SmartWindow Market($ millions )© NanoMarkets 2012 NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netAgain as we have noted, however, NanoMarkets analysis suggests that some of thetechnologies will never move beyond niche applications. This is especially true of the existingpassive technologies other than the most traditional window films and glass. We are also notanticipating high growth for electrochromic films in the active sector. Page | 13 NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netChapter One: Introduction1.1 Background to this ReportAfter many years of being no more than a niche, the smart windows market now seems as if it Page | 14is about to generate major revenues for companies that are actively involved. Drivers include:  Growing consumer awareness of energy conservation, green building, fuel efficient transportation, and the desire for novelty and convenience.  Larger addressable markets as the result of emerging middle class populations in Asia (India, China) and Latin America (Brazil).Meanwhile, new smart windows technologies are emerging that enable energy conservationthrough smart windows and hence are providing several growth opportunities for variouscompanies in the smart window value chain:  The smart windows market provides growth opportunities to everyone from materials/coatings suppliers to glass manufacturers to window manufacturers, and most importantly to end users such as builders, building owners, home owners, and transportation owners.  No matter what technologies emerge as the winners, glass manufacturers are certainly going to be the beneficiaries of smart window growth. One factor that will help with acceptance of the slightly higher cost of smart glass compared to the standard glass used in buildings and transportation is the already high current cost of standard glass; substituting standard windows with functional smart windows with only a marginally higher cost will be more easily accepted by the consumer.  As the demand volume for smart glass increases, there will be further growth opportunities through cost reductions for smart coatings and materials and in smart glass manufacturing. 1.1.1 Passive Smart WindowsAlthough awareness of smart windows has only increased in recent years, in reality smartwindows have existed for at least the last 15. These older smart windows were produced byretrofitting existing windows with window films based on low-e coatings that provide energysavings. We classify these retrofitted windows as passive smart windows; while these films arefunctionally smart, they do not provide their functional benefits "on-demand". NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.net  There are many retrofit window film products that impart functionality and provide other benefits to windows. These benefits include the blocking of harmful UV radiation from sunlight, the blocking of heat coming inside through the window in the summer, and the retention of heat inside a room and the maintenance of the ambient indoor temperature in the winter. They all enable energy conservation by reducing the use of Page | 15 energy to keep buildings warm in the winter and cool in the summer.  There are other window film products that also improve the aesthetics of the room. These films eliminate the need for traditional window treatments such as blinds, shades, curtains, etc. and save on maintenance costs.Although the films designed for retrofitting of windows have been available for a long time, dueto their evident additional installation costs, the market for these products has started growingonly in recent years along with the increasing awareness of energy conservation.A note on self-cleaning windows: Yet another category of passive smart windows is self-cleaning windows. These windows offer more convenience than energy savings. Owners ofbuildings (commercial and residential) spend quite a bit of money and time to maintain thewindows so that they provide a clear, aesthetically pleasing view of the exterior environment.However, while self-cleaning windows do provide the benefit of eliminating the labor costsassociated with maintenance, the cost of applying these coatings vs. the savings in maintenancecosts is difficult to justify for existing windows.NanoMarkets therefore believes that self-cleaning windows will be more easily adopted in newconstruction where the impact of the additional cost of self-cleaning coatings can be softenedwith the overall cost of a smart window. As the self-cleaning window concept becomes moreaccepted in new construction, the cost of self-cleaning coatings will decrease and enablegrowth in the retrofit market as well. 1.1.2 Active Smart WindowsWhile the market drivers listed above will provide an important new impetus for consumers tobuy passive smart windows, NanoMarkets sees the major growth in this sector coming fromthermochromic and photochromic smart windows, active smart windows/technologies thatallow users to control the energy savings and convenience benefits on-demand. There are alsochallenges in this segment, however:  Applying these coatings on existing windows NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.net  The uniformity of performance across various windows on a building, since they depend on either the temperature on the glass surface or the sunlight on the glass surface.There are several types of electrochromic technologies including Polymer Dispersed LiquidCrystal (PDLC) and Suspended Particle Device (SPD) systems and vacuum glass coated with Page | 16multilayer electrochromic coatings. Each has its advantages and disadvantages. Polymerdispersed liquid crystal (PDLC) technology has, however, emerged as the clear winner in thesmart windows market at this time.Active, on-demand smart windows provide a broad range of benefits such as energyconservation, privacy, and convenience. They also offer future opportunities to smart glass andwindow manufacturers for enhancing functionality and energy conservation benefits throughintegration of organic light emitting diode (OLED) displays and building integrated photovoltaics(BIPV) into the windows.Several firms and research institutions are aggressively investing in improving the technology orthe manufacturing process to make smart windows more commercially viable. Given the paceat which advances are being achieved, it is certain that the active smart window market ispoised for significant growth.NanoMarkets believes that the key to success for smart windows growth is to integrate thesmart glass into the window frame and the smart window into a building. In this way, thetechnology can be easily operated and its efficiency and benefits be maximized. With thatrecognition, the trend today is to offer more complete functional materials that glassmanufacturers can easily integrate into their glass. At the same time, glass manufacturers aremoving towards a turn-key smart glass that can be seamlessly integrated into window frames.Such trends towards easy integration may lead to unique market dynamics in the smartwindows market. 1.1.3 Geographic Regions for Growth and Target MarketsAlthough the green building and energy conservation movements are driving the awareness ofsmart windows in many markets, ironically, the majority of growth in smart windows demandhas been driven by the use of PDLC-based smart glass in interior privacy applications in hotelsand offices. A majority of this growth is coming from new and retrofit construction in emergingAsian and Middle Eastern economies such as in China, Hong Kong, Singapore, Saudi Arabia, andAbu Dhabi. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netFrom the perspective of smart windows makers, much will depend on the revival of commercialconstruction in the medium-term future, and for now—unfortunately—the indicators seem topoint in more than one direction. Credit markets still seem wary to finance construction, but insome cases there are local factors that are counteracting this resistance. For example, Brazil isgearing up for two major international events in the next eight years—soccers World Cup and Page | 17the summer Olympics—which should bring a boom to the economy in general, and toconstruction in particular.Because smart windows can be most easily cost-justified in commercial and industrial buildings,the health of these sectors is of primary concern to smart windows makers. In addition, we seemoderate growth, especially in the retrofit market, due to government incentives for replacingold windows with more energy efficient windows. But new installations in residential homesare much harder to gauge. Conditions seem to be in place for a revival of construction in themedium-term in the U.S., Germany and Japan (although there are also dampening effects), buteverybody is wary about a housing bust in the all-important Chinese construction market.1.2 Objectives and Scope of This ReportThis report identifies and quantifies the opportunities, challenges, and prospects for growth inthe smart windows market. Specifically, it analyzes smart window technologies, geographicregions with high growth potential, supply chain dynamics, and their impact on smart windowsmarket growth; the dominant firms that will have the greatest impact on the growth of themarket; other growth drivers; and our eight-year forecast for the smart windows market.For the purposes of this report, smart windows include any window that has functionalityapplied to it either in a retrofit way or built-in manner that enables energy conservation,privacy, and/or convenience to the user.We are principally concerned with the smart windows and materials/coatings themselves, butwe will also consider and discuss the ancillary materials that are used in assembling smartwindows. We will also discuss the manufacturing technologies and scale that will have impacton the growth of the smart windows market.This report analyzes the use of and opportunities for smart windows in architectural,transportation, and other applications. This analysis is carried out taking consideration of theforces that shape smart coatings markets and those that shape construction and transportationmarkets. We also include an assessment of each of the types of smart coatings technologiesthat are likely to gain significant penetration into windows markets and the unique aspects oftheir use in windows. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.netWhile one of the major goals of the report is to provide detailed forecasts for the smartwindows market, the continued uncertainty on a global economic scale and in constructionmarkets in particular increases the uncertainty of such forecasts and predictions.For example, the OLED market was predicted to be a multibillion dollar market by 2012. Due Page | 18Economic turmoil and competition from incumbent LCD technologies has, however, resulted insignificantly slower growth for OLEDs.This report is international in scope. The forecasts are worldwide and there has been nogeographic selectivity in the firms covered or interviewed in the collection of information forthis report. We do, however, focus our global discussion on certain countries in differentregions which we think are significant growth drivers for the smart windows.1.3 Methodology of this ReportThe information in this report comes from a variety of sources, but principally comes fromprimary sources, including interviews of entrepreneurs, business owners, businessdevelopment and marketing managers, and technologists involved with various aspects of thesmart coatings and smart windows markets and emerging electronic technologies such asOLED.Secondary research for this report was also taken from information available on the WorldWide Web, commercial and government databases, trade press articles, technical literature,information learned at technical conferences and trade shows, and SEC filings and othercorporate literature.In addition, some of the data for this report comes from other NanoMarkets reports including"Smart Coatings Market 2011" (February 2011) and "Smart Windows Market 2011" (February2011). Whenever information has been used from an earlier report, we have reinvestigated,reanalyzed, and reconsidered it in light of the current market status.The forecasting approach in this report is explained in detail in Chapter Four, but the basicapproach taken here is to identify and quantify the underlying addressable markets, varioussmart window technology penetrations in those market, and how other market elements suchas, for example, the commercial and residential construction industry, may impact smartwindow growth. We also evaluate the stated plans of the key firms in the market in ourforecasting analysis. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259
  • www.nanomarkets.net1.4 Plan of this ReportIn Chapter Two, we examine the key market drivers for the smart coatings/smart windowmarkets. We also discuss which of the specific segments (residential, commercial, andinstitutional) within the building market will have the most impact on the growth of the marketin the coming years. Page | 19In Chapter Three, we explore smart window functional materials, technologies, and firms in themarket. We also evaluate the supply chain and the potential impact of market dynamics on thestructure of the industry and the supply chain going forward. In Chapter Four we present oureight-year forecasts for the smart windows markets. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-270-1718 | FAX: 804-360-7259