Why Smart Windows Has a Bright Future

Smart windows—which we take here to mean self-dimming or self-tinting windows—are first and foremost materials plays.  At every level of the value chain the business opportunities presented by smart windows are dependent on the specific smart materials on which the windows’ functionality is based.  For example, smart glass based on PDLC technology never quite becomes transparent; so this technology is primarily used for privacy glass.

Smart glass is already extensively used for self-dimming auto mirrors, but has not yet been found in windows to any great extent.  OEMs in the building products and automotive sectors that have needed tinted glass for windows have mostly adopted a non-smart (i.e., non-dynamic) solution; either coating window glass with a tinted material or laminating a tinted film to the glass.  These materials are low-cost, but have fixed performance levels; their transmission/blocking of light never changes.  Eastman Chemical, which claims to be the leading manufacturing company offering retrofit window films, continues to see its film business as a source of growth, according to its recent annual report.

Smart windows may eat into the retrofit film business, but NanoMarkets has no expectations that the retrofit windows business is in any danger of going away.  What we do think is that the smart windows business will grow out of its current niche-like status.  And as it does so, materials selection will play a key role in determining which smart windows technologies will do best.

The reason for NanoMarkets being bullish on smart windows in this sense is primarily our belief that there are widespread consumer expectations that the real price of energy will continue to rise for years to come.  This will promote the sales of products that promote energy savings; smart windows being one such product type. Buildings need smart windows to comply with LEED or zero-energy requirements.  Automobiles adopt smart windows to keep interiors cool and cut down on the need for air-conditioning on sunny days, while letting as much light as possible through on gloomy ones.

We expect these novel market drivers for smart windows to combine with more traditional ones—especially the need to reduce glare in the summer while not obscuring visibility in the winter.  But the new market drivers for smart windows based on energy prices, NanoMarkets believes, will help grow the smart windows business dramatically.

Electrochromics Rises

As NanoMarkets sees it, electrochromic materials have already staked out an enviable position in the emergent smart windows sector.  What we are seeing here is a list of factors that combine to position electrochromic materials as the materials of choice for smart windows in many instances.  These factors include:

• Low technological risk.  Electrochromic materials are already widely used in auto mirrors, so much is already understood about their performance and capabilities

• Potentially low cost. Electrochromic windows are fabricated with such non-exotic materials such as conductive polymers and metal oxides. Nonetheless, prices of electrochromic windows remain high at this point in time reflecting the early stage of the self-dimming windows market.

• Long product life.  Metal oxides are also not easily degraded by light, adding to the life of the window; lifetimes being an obviously important factor for any building product.

• Low power requirements.  Although smart windows based on electrochromic materials need to be powered, this is not a major drawback.  According to NREL, powering 1,500 square feet of color-changing glass (about 100 windows) would require less power than a 75-watt light bulb.

At least four companies are actively pursuing the development of electrochromic windows, Sage, View, Chromogenics and US e-Chromic.  At least two of these companies—Sage and View—are already shipping and both have access to extensive marketing and financial resources.

Sage is especially to be watched because it is now part of the Saint-Gobain group and can muster both the money and the supply channel strength that being part of a huge multinational offers it.  In fact, Sage had been well funded even before it was fully acquired by Saint-Gobain and it continues to announce new customers on a frequent basis.  View (which used to be Soladigm) also has some customers, as well as investment that includes money from Corning and GE.  View also has an alliance with Corning that NanoMarkets believes will help View move forward both technically and at the marketing/supply chain level.

We think that another company worth watching is Gentex, which dominates the electrochromic self-dimming mirror space.  Gentex’s electrochromic technology is not completely suited to smart windows.  But Gentex is a large company that has already made windows for airliners.  So, if the smart windows market grows fast, Gentex’s entry would not be a complete surprise.{pagebreak}

And the Others: Thermochromic and Photochromic Materials, SPD and PDLC

When NanoMarkets conducted an online survey on the topic of smart windows materials, we found that the vast majority of respondents saw electrochromic materials as the smart material that would compete with retrofit window films.  To us this suggests a familiarity with and acceptance of electrochromic materials by the windows/glass industry and perhaps by OEMs in the automotive and construction sectors too.  Add to this the big names (GE, Corning, Saint-Gobain) and one has to ask whether alternatives to electrochromic materials have a chance at commercial success.

NanoMarkets believes that the jury is still out on this, but we note that there are several firms that are using materials platforms for their smart windows that are completely different from electrochromic materials.  At the very least, alternatives to electrochromic materials may give firms some protection from patent squabbles that have troubled the electrochromic sector.

That said, it seems unlikely to us that any firm is going to go full force against electrochromic materials across the full range of smart windows.  Instead, they are out looking for spaces where electrochromic materials may not be entirely well suited.

Thus, Switch Materials has developed a smart windows technology using a class of photochromic materials, developed at Simon Fraser University in Canada.  This firm is pitching its smart windows at the automotive window business where it believes that high switching speeds, low cost and the ability to fit in with curved surfaces will give it an advantage over electrochromic materials.  Research Frontiers (RFI) has also identified automotive smart windows as an important opportunity for its suspended particle (SPD) materials technology.

Picking a niche in which a novel smart windows materials platform has clear advantages obviously makes strategic sense.  But as NanoMarkets sees it, more may be needed.  To the materials/technology platforms that we have already mentioned, we should also add thermochromic materials and polymer dispersed liquid crystals (PDLC), although the latter is mostly for privacy glass.  There are also smart windows based on microblinds, but these aren’t so much a materials play.

But the point is that, as NanoMarkets sees it, the smart windows business is getting quite crowded and we think that it will take more than just a strong materials platform to win in the smart windows sector going forward.  It will take money and strong partnerships, we believe.

As far as we can tell, there does not seem to be high levels of investment in the smart windows space today, which NanoMarkets sees as a problem.  But we note that the big glass companies seem to be interested enough in non-electrochromic smart windows materials to give these smart windows their blessing.  For example, PPG and Pleotint jointly market a commercial window glass system that combines Pleotint’s thermochromic technology with PPG glass. RFI has also been able to draw the attention of important players in the auto glass industry, notably Nippon Sheet Glass.

This kind of interest by big glass firms may well be enough to let a variety of firms find profitability in a few years.  But at some time—and in the not too distant future—we think there will need to be some notable investments in the non-electrochromic sector; tens of millions of dollars, at least.

Where is this money going to come from?  Our best guess is the big glass firms will be the source.  But perhaps venture capitalists, too.  There is also the off chance that specialty chemical firms—principally those involved with coatings—might get in on the smart windows act, both in the form of a visible part of a business ecosystem and as a source of finance.  At the present time, coatings/chemical firms are visibly absent from the smart windows space.