In this report, we focus on emerging technologies in the window market. Specifically, we talk about “smart windows,” which are new window technologies that allow windows to adapt or respond to a changing environment with the goal of optimising energy consumption and building occupant comfort.
The use of glass as building envelope has been popular ever since the middle ages of civilization because of aesthetics and functional benefits. However, since glass was historically expensive to manufacture, its use was limited to only high value buildings. This trend changed in the 1950s when a then-novel production process called the Pilkington process made glass production simpler and less expensive. The popularity of glass as a building envelope was also driven by the need to build vertically as cities densified. A relatively thin layer of glass as a building envelope allows for reduced structural requirements, freeing up floor space and reducing building deadweight.
Using glass as a building envelope allows for abundant natural light to enter a building, reducing the need for artificial lighting. Some types of glass also help trap heat inside a building, which significantly reduces energy consumption from heating during cold winters. Other types of glass help reflect heat, keeping indoor temperatures cool and comfortable during the summer. When implemented properly, the use of a glass envelope can reduce building energy consumption and provide an aesthetically pleasing appearance.
One study says that energy consumption decreases as the ratio of glazed surface area per floor surface area increases. The figure above shows us that in residential buildings, energy consumption decreases as glazed area increases due to increased daylighting and reduced need for heating. This result shows us that glass can work well as a building envelope. Other reports have pointed out that the relationship between use of glass windows and energy consumption varies with climate. In order to maximise energy savings and occupant comfort, the characteristic of the glass installed—whether it reflects or absorb heat and light—should change depending on conditions.
Smart windows can reduce cooling costs and improve comfort
For the past 30 years, the best-in-class windows used in office buildings have been multilayer insulated windows made with low emissivity glass (referred to as low-E windows). These low-E windows improve the energy efficiency of buildings by preventing heat from passing through the window in the form of infrared (IR) light. In the summer, cooling costs are reduced because less heat from the warmer outdoors enters the building and in the winter heating costs are reduced because less heat from within the building is transferred to the cooler outdoors. Low-E windows also reduce the amount ultra-violet (UV) light that passes through building windows, which reduces the amount of fading and damage caused to furniture and textiles near the windows within buildings. Low-E windows are as durable as standard glass windows and fit in the same form factor. In simple terms, a low-E window unit is similar to a traditional insulated glass window unit, except that one of the sheets of glass is coated with a thin layer of material that efficiently reflects IR light (i.e. the low-E coating in the figure below). Furthermore, basic low-E windows only cost 10-20% more than standard glass windows and provide energy savings up to 30-40%. For these reasons, low-E glass adaption in office buildings has steadily increased over the past 20 years.
All of that said, low-E windows are by no means perfect. A major downside of these windows is that there is no way to manage glare without installing blinds or shades. Furthermore, the properties of low-E windows cannot be tuned or changed throughout the day. To maximize energy efficiency and occupant comfort, it is optimal to let more or less light and heat into the building depending on the time of day and year. Low-E windows are great at providing solid energy savings, but they lack more advanced capabilities.
New “smart window” technologies can provide all the benefits of low-E windows plus additional benefits. Smart windows often have properties that can be tuned or varied throughout the day. For example, the transparency of a smart window can be automatically reduced during times of the day when sun glare is a problem. Having windows that seamlessly transition from transparent to opaque as the position of the sun changes throughout the day vastly improves building occupant comfort (and as a result occupant productivity). Other smart window technologies can generate electricity using the IR light incident on the windows and can provide aesthetically pleasing colours and designs for windows and facades. We will discuss the major advantages and disadvantages of two types of emerging smart windows: electrochromic windows and solar cell windows (aka photovoltaic windows).
Electrochromic windows provide maximum comfort
The smart window technology that is furthest along in development is electrochromic (EC) window technology. In an EC window, several layers of electrically active materials are coated between two sheets of window glass. When an electrical voltage is applied between the two pieces of glass, the electrically active materials response and change their colour and transparency. As a result, with the flip of an electrical switch one can change the window from clear and transparent to dark and mostly opaque. The major benefits of EC windows compared to low-E windows include: improved occupant comfort, higher energy savings, and impressive design.
Improved occupant comfort is a major advantage. Since EC windows can actively change tint/transparency, they can darken when the sun shines directly into the windows, which prevents glare. This means building occupants no longer need to worry about shutting/opening blinds or shades. EC window companies believe that this capability will improve the productivity of workers in offices. If workers no longer need to deal with glare shining in their eyes or on their computer screen, they will be more comfortable and will be able to better focus on their work. Furthermore, studies have shown that natural light improves worker productivity when compared to offices with no windows or windows that are usually covered by shades or blinds., Even a worker productivity gain of 1% provides a significant financial incentive to companies. As an example, imagine an office building with 50 employees each with a salary of $80,000. If the productivity of each employee is improved by 1%, the company employing these workers will realize a gain of productivity worth at least $40,000 per year ($80,000 x 1% x 50 employees). A modest 1% gain in productivity provides a yearly benefit of half an employee salary!
Improved energy savings is another benefit of EC windows. Since these windows can reduce glare without using blinds or shades, EC windows can optimize the amount of natural light let into buildings throughout the day. Intelligently optimizing natural light entry provides savings in interior lighting, which accounts for up to 25% of building electricity draw. EC glass also blocks IR and UV light in a similar fashion to low-E glass, though EC windows can block a larger portion of heat from entering buildings. As a result EC windows provide great energy savings on building heating and cooling in addition to the aforementioned savings in interior lighting. In total, EC windows can provide 10-20% more energy savings when compared to low-E windows.
Impressive design is the third key benefit of EC windows when compared to low-E glass. The colour changing transition of EC windows provides designers and architects with a new paradigm for building design. Because EC windows actively prevent glare, new functional building designs can be achieved using EC glass. Examples include novel skylights and tall walls composed of many windows.
At this time, several companies are developing and manufacturing EC windows. These companies range from fairly established companies with manufacturing capacity (View and Sage Glass) to small-to-medium sized startups that are developing new types of EC windows (Kinestral Technologies and Heliotrope Technologies). The more established companies are producing products that can be purchased and installed in buildings today, though their production capacity is somewhat limited. These products rely on EC technologies that were developed 10-20 years ago and are manufactured using a relatively expensive technique known as solid-state sputtering. The cost of EC windows made by these companies are roughly 3-4 times as expensive as a standard low-E insulated windows. Due to this high cost, sales of EC windows have been fairly slow to date. In addition, the EC windows being sold have relatively slow transition times, taking between 5 and 15 minutes to transition from clear to tinted. Lastly, these EC windows are typically limited to blue coloured tints.
Several startups are working on new EC window technologies that are cheaper to produce, have faster transition times, and have more attractive colours and tints. These companies hope to produce products that are roughly 2x more expensive than a standard low-E window (vs. 3-4x). This may be accomplished by using solution processing techniques rather than sputtering. Furthermore, the startup companies have developed new electronically active materials that maintain a neutral grey colour throughout the transition process from transparent to tinted. The progress made by startup companies in the electrochromic space has been quite exciting over the past 5 years. The prices of EC windows may decrease significantly if these companies are successful. However, these startups must first scale up their manufacturing processes and prove to customers than they can produce durable and reliable windows at their proposed price points.
Windows can provide a view and generate electricity
A different type of emerging smart window utilizes solar cell technology to produce windows that generate electricity while still maintaining adequate transparency for a view to the outdoors. These windows are made in a similar fashion to EC windows, except that thin layers of solar cell material – instead of electrochromic materials – are placed between two pieces of glass in an insulated glass window unit. A major difference between EC windows and solar cell (SC) windows is that SC windows cannot change their tint over the course of a day. Companies making SC windows can make windows that are more or less transparent by varying the type and thickness of the solar cell material in the window, but the transparency and colour of the window cannot be changed after the window is manufactured. However, because SC windows are able to generate electricity in addition to blocking IR and UV, the energy savings from these windows can be quite high.
SC windows can be divided into two primary types, those that use opaque solar cells and those that use transparent solar cells. The SC windows made with opaque solar cells more efficiently generate electricity, but the resulting windows are not very transparent. This type of SC window is often used in skylights, canopies, and façades, and is less frequently used in office windows. SC windows made with transparent solar cells provide an appearance that is closer to that of a traditional low-E window. However, these windows do not generate as much electricity as the other type of SC window.
The primary disadvantage of SC windows is that they often block >50% of the visible light that is incident on a building. As a result, less natural light is allowed into the building when compared to a low-E window. The tint of these windows will prevent glare in many cases, but it also means that a SC window will not provide as clear of a view of the outdoors as a low-E window will. While this disadvantage may not matter for all applications, it is certainly something to consider.
Improved energy savings is the primary selling point of SC windows. This type of window provides all the energy saving advantages of a low-E window plus it generates electricity over the course of its lifetime. These SC windows are cheaper to manufacture when compared EC windows and are typically priced around 2x the cost of a traditional low-E window. Because the windows generate electricity, the extra cost for installation is often payed back well within the lifetime of the windows (in many cases manufacturers claim payback times of <5 years).
Innovative colours and designs are another advantage of SC windows. These windows can incorporate differing types of solar cell material that have colours ranging from blue to green to red. Having a wide variety of differing colours and levels of transparency opens the door for many innovative building designs. However, it must be noted that the colour and tint cannot be changed once the window is manufactured.
The companies manufacturing SC windows can be roughly divided into two camps. The first camp includes the company Onyx Solar, among others. This type of company is incorporating well established solar cell technologies like crystalline and amorphous silicon into their SC windows. Windows made with these solar cell technologies are likely to be very reliable since these technologies have been thoroughly studied for over 20 years. However, it is unlikely that the cost of manufacturing this type of SC window will decrease much going forward since amorphous and crystalline silicon solar cell manufacturing is a fairly mature industry already.
The second camp of SC window manufacturers is made up of several startups including Next Energy Technologies, Ubiquitous Energy, Saule Technologies, and Heliatek (among others). These companies are designing SC windows that utilize new solar cell technologies made with innovative materials. The primary advantage of these new solar cells is that they can be manufactured with inexpensive and flexible methods. This opens the door for decreased prices and also enables windows with unique form factors. Many of these companies are quite early stage though, and their products are yet to be manufactured at scale and their reliability in real world conditions is still uncertain. If these startups are successful, however, the cost of SC windows is likely to continue to decrease. Furthermore, there will be a wide variety of colours and tints available for architects and designers to choose from.
The smart window market opportunity
In our view, the growth of the market for smart windows will be driven by increased concern for sustainability and energy savings measures. The concern for sustainability will spur retrofitting of existing windows (including building envelope) and will compel developers to use smart windows and increase the ratio of glazed surface to floor area in new construction projects.
Research by NavigantResearch puts the global building stock in 2014 at 152 bn square metres and growing to 172 bn sqm by 2024. Assuming a glazed-to-floor-area ratio of 10%, the global stock of glazed area is estimated to be 15.2 bn sqm. The cost of smart windows range between USD 200 psqm to USD 800 psqm, depending on features and producer. We expect cost to be closer to the cost of a standard low-e window (estimated around USD 100 psqm) before smart windows become widespread. Thus, we estimate the total addressable market for retrofit smart windows to be around USD 2.3 tn (150 psqm x 15.2 bn sqm). Furthermore, using the floor area growth estimate by NavigantResearch, and assuming a growth in the ratio of glazed-to-floor area, the amount of new glazed surface area added to the market is estimated to be c2-3 bn sqm. The new glazed surface area equates to a market potential of USD 300 – 450 bn in 2014 to 2024. This market is exceedingly large and even modest market penetration could produce significant revenue.
Because of the significant market potential, substantial VC funding has gone into companies producing SC windows and EC windows. We list cUSD 1 bn of venture funding invested in the top 10 leading companies in the industry. One company, Sage Electrochromics, was acquired by Saint Gobain in 2012. From our list, companies developing EC windows have received more funding compared to companies developing SC windows. Despite that, we take the view that significant technology development is still needed for electrochromic technologies to reach a cost-benefit proposition that is acceptable to the mass market. On the other hand, we believe SC window adoption will outpace electrochromic adoption in the near term due to its lower upfront cost (vs. electrochromic) and more concrete value proposition (higher upfront costs that are recouped from electricity generation). EC windows may win out over time because of their dynamic properties, but significant price decreases are needed to capture mass market adoption.