This report, written jointly by RW Ventures and Innovation Network for Communities, explores opportunities for Chicago area firms arising from the increasing market demand for energy and resource efficient products and services. The first part of the report describes the project's cluster approach, outlining the theory behind cluster-driven economic growth and identifying the particular criteria used to select promising clusters for the project. Using these criteria, the report narrows from many green sectors of opportunity to the one--energy efficient lighting--ultimately chosen to illustrate green cluster development. The second part of the report digs deeper into the energy efficient (EE) lighting sector, providing an overview of the industry and its current trends and dynamics. The report ends with recommendations for development of Chicago's EE Lighting sector as well as strategies for regional green economic development more broadly. Also available for download are an executive summary of the report produced by Metropolis Strategies and a copy of Bob Weissbourd's presentation based on the report.

1. Robert Weissbourd
The Midwest Green Economy: Past, Present and Future
The Chicago Region’s
“Green” Economic
Opportunities
Delta Institute and the Graham School of
Continuing Liberal and Professional Studies
January 26, 2012

2. Part I: Defining the Green
Economy

3. What Exactly IS the Green Economy?
First, Drivers …
Global Warming and
Pollution
High Fossil Fuel Prices Demand for Environmentally
Friendly Products

4. What Exactly IS the Green Economy?
First, Drivers …
Demand for low carbon technologies is driving growth of Clean Tech.
Demand for clean energy
generation
Demand for products that
reduce energy consumption
Demand for products that
reduce pollution

5. An Info-Tech Analogy
Like IT, Clean Tech will affect the way every company does business.
Producers Users

6. Segments of the Green Economy
Demand
Condition
Subcategory Segment
Increase
Renewable
Energy
Generation
Energy source Wind Solar Geothermal Biomass/Biofuels Hydro Waste Ocean/Wave
Energy storage &
infrastructure
Fuel Cells & Hydrogen Battery & Energy Storage Tech
Smart Grid/Smart
Metering
Reduce
Consumption
of Energy &
Natural
Resources
End-use-based
E.E. Lighting E.E. HVAC
E.E. Building Products
& Materials
E. E. Appliances Water Efficient Products
Audits & Retrofits
Green Architecture, Design &
Construction
Electric/Hybrid Vehicles
Process-based
Sustainable Forestry &
Related Products
Recycling & Reuse
Recycled-Content
Products
Systems-based Logistics Public Mass Transit Local Food Systems
Reduce GHGs
& Other
Pollutants
Product-based
Green Building Products &
Construction Materials
Green Chemicals &
Related Products
Nuclear Energy
Air & Water Purification
Technologies
Systems-based Carbon Sequestration Conservation & Management
Service-based
Air/Water/Sewage/Solid
Waste Management
Pollution Control &
Prevention
Remediation
Tech. & Services
Organic Farms & Food
Production
Support Services
Research, Engineering &
Consulting
Regulatory &
Compliance
Education &
Training
Green
Finance
Advocacy &
Policy

7. Broad Opportunities in the Green Supply Chain
Auto-supplier created gearbox housings product line for wind developer.
New 42,000 sq foot
facility
Gearbox housings

8. Regional Green Strategy Development
Identify Growth
Sectors
Apply established economic development strategies to green opportunities.
Analyze
Regional Assets
Determine
Development Needs
Develop Products and
Services

9. The Next Economy = Green
Source: Bloomberg New Energy Finance
Expected Global Annual Clean Energy Investment
BillionsofU.S.Dollars
600
500
400
300
200
100
0
2005
2010
2015
2020
2025
2030
“The rebuilt American economy must be more export-oriented
and less consumption-oriented, more environmentally-oriented
and less fossil energy-oriented, more bio- and software
engineering-oriented and less financial- engineering-oriented...”
Geothermal, marine, low
carbon tech
Small hydro
Biofuels
Biomass + Waste-to-Energy
Solar
Wind

10. Part II: Overview of
Chicago’s Green
Opportunities

11. Identify Growth Sectors and Analyze
Regional Assets: Chicago

12. Identify Growth Sectors and Analyze
Regional Assets: Chicago
0
0

13. Chicago’s Opportunities in Renewable Energy
Biofuels/BiomassWind
SolarThermal
Chicago is home to over a dozen
wind headquarters and over 100
component suppliers.

14. Over 100 firms are participating in the IIT-
led Smart Grid Regional Innovation Cluster
Chicago has more LEED-certified
buildings than any other city.
Vehicle Electrification
Chicago’s Opportunities in Energy Efficiency
Green Buildings
Smart Grid
Energy Efficient Lighting
Building Energy Management
Chicago’s highest
specialization is in
Energy Efficient
Lighting and the
region has over 30
firms working in
the space.

15. RecycledContentProducts
Chicago’s Opportunities in Waste
Remediation and Pollution Control
GreenChemicalsWaterPurificationandTreatment
OrganicFarming&Food
Production
Chicago ranks #1 in the country for
employment in “Air and Water
Purification Technologies.”
Chicago’s Waste to
Profit Network is a
national model of
“byproduct synergy,”
in which one
company’s trash
becomes another’s
treasure.

16. Part III: Examining Business
Opportunity – the Energy
Efficient Lighting Sector
Illustrating a Cluster Approach to Green
Economic Development

17. Market Analysis: Energy Efficient Lighting
 Huge LED growth
projected: from 7%
market share in
2010  60% in 2020
 30+ Chicago area
companies, >1000
employees
Source: McKinsey and Company

18. Barriers to Market Growth
 Cost to Performance Curve
 Product Quality
 Distribution barriers
 Confidence in Commercial Viability
LED CFL Incandescent
Light bulb projected lifespan 50,000 hours 10,000 hours 1,200 hours
Watts per bulb (equiv. 60 watts) 10 14 60
Cost per bulb $35.95 $3.95 $1.25
KWh of electricity used over
50,000 hours
500 700 3000
Cost of electricity (@ 0.10per KWh) $50 $70 $300
Bulbs needed for 50k hours of use 1 5 42
Equivalent 50k hours bulb expense $35.95 $19.75 $52.50
Total cost for 50k hours $85.95 $89.75 $352.50
COST SAVINGS OVER 50,000 HOURS, IN A HOME WITH 25 BULBS
Total cost of bulbs and energy $2148.75 $2243.75 $8812.50
Savings to household by switching
from incandescents
$6663.75 $6568.75 0

19. Market Dynamics: Change is in the Air
“The LED and energy efficiency
markets are a big challenge for
traditional lighting businesses.
They are used to being “order
takers” with repeat business
every 6 months based on how
many light bulbs they know are
going to burn out. If they
embrace LED, there will be no
bulb turnover, no predictable
repeat sales.”
Firm interviews and industry research reveal a transforming industry.
“LEDs will drive change in the distribution
model. Traditional distributors are avoiding
the LED market because it is too technical.”
“A big challenge with this market is its
archaic distribution system. You need to
make same sale several times, to the
architect, to the engineer, to the building
owner. There needs to be a new model.”
“I think you will see lots of new products for
niche applications. To be profitable you will
have to get into these markets. You will
have to have something someone else
doesn’t have.”
“I’ve never seen so many new
companies pop up in so short a
time. Our customer base has
almost tripled in number.” “We think the most interesting investment
opportunities in EE Lighting are on the
integration side…”

20. Understanding the Emerging Cluster
 Opportunity in broader cluster made up of:
 Energy efficient lighting
 Architecture, design and engineering
 Commercial building management
 Energy efficient HVAC
 Energy software and controls
 Energy management integration
 EE Lighting Sector  “Integrated Lighting
and Building Energy Systems” Cluster

21. Strategies for ILBES Cluster
 Make Chicago the easiest place in the world to do real
world applied R&D on building energy efficiency.
 Consortium of architects, engineers, designers, developers,
property owners, property managers, energy management
companies, utilities and component suppliers
 Proactive “IP mining” for leading edge technologies
 Applied R&D networks for rapid prototyping
 Technology demonstration sites – Merch. Mart?
 Proactive relationships with venture and equity firms
 Public sector as lead adopters

22. Summary
 Enormous market opportunity is rapidly emerging as
demand for energy and resource efficient products
and services affects how every company does
business
 Chicago has major competitive advantages: firms in
currently “green” or related industries (particularly
within strong manufacturing base); human capital;
infrastructure; knowledge and technology
specializations; demand conditions; etc.
 In context of emerging markets and competition
elsewhere, we need to compete deliberately –- build
institutional capacity, business led opportunity
identification and development, investment.

23. Robert Weissbourd
The Midwest Green Economy: Past, Present and Future
The Chicago Region’s
“Green” Economic
Opportunities
Delta Institute and the Graham School of
Continuing Liberal and Professional Studies
January 26, 2012