Green tech puts electronics distributors in the black

Here's one gage of what's going on in green technologies: Big-name electronics distributors say they are getting a boost from sales of equipment aimed at better energy efficiency. “One of the biggest trends we're seeing right now are products and solutions going into data centers,” says John Beimfohr, director if integration for Avnet Technology Solutions, an electronics distributor based in Phoenix. “With the virtualization of servers, companies are saving energy and money in several ways. Fewer servers means less cooling as well as less physical space for data centers, meaning less overall energy usage.”

Green tech certainly seems to be helping the bottom line of electronics distributors. Avnet handily beat its earnings estimates in its last two quarters. Arrow Electronics Inc., Melville, N.Y., more than met its expectations as well. Brean Murray analyst Ananda Baruah recently raised his ratings on both electronics distribution companies to buy from hold. “Our demand checks indicate that fundamental demand for IT products, both in the enterprise and small and medium business, appears to be carrying over into 2010 from a solid fall 2009,” he writes. He also raised his June 2010 fiscal year earnings estimate for Avnet.

A new study from Frost & Sullivan concurs. In its report, Green Data Centers — Emerging Trends and Developments, analysts cite the economic downturn as “an unlikely driver for the adoption of green data centers. In an attempt to cut costs, data center owners are investigating technologies and solutions that would enhance the energy efficiency of their centers.” With estimates that IT infrastructure accounts for 5 to 10% of a typical company's total energy usage, it's easy to see why companies are trying to get more efficient in this area. Green technologies such as virtualization, cloud computing, and power management techniques are capable of significantly lowering energy consumption within data centers, say the analysts.

“Lighting is another huge area of opportunity,” says Avnet's John Beimfohr. “As companies are striving to become more sustainable, this is certainly one of the areas they're looking at.” Recent DOE announcements lead to the same conclusion: On January 15, Energy Secretary Steven Chu announced more than $37 million in funding to support high-efficiency solid-state lighting (SSL) projects.

Projects using the stimulus funds will concentrate on three main areas: Core technology research; product development (commercially viable solid-state lighting source, component, or integrated lighting products); and SSL manufacturing, which will address the technical challenges needed to bring prices down. Winners of funding for product development include Cree, General Electric, Osram Sylvania Products, Philips Lumileds Lighting, and PPG Industries, some of the same companies strategically forming alliances with large electronics distributors.

For its part, Arrow Electronics Inc. has joined with Cree and National Semiconductor Corp. to deliver a reference design for a flicker-free, wide-dimming-range LED driver board. The reference design aims to help engineers rapidly develop LED lighting products and features white LEDs on a programmable board that meets Energy Star power requirements.

Another growth area is the smart grid. “Modernizing the electric grid will require major investments and an infrastructure overhaul,” says Avnet's Beimfohr. “Investments are being made slowly, so this will be an area of future growth.”

A study from The Freedonia Group Inc., Cleveland, supports this view and forecasts that U.S. demand for electric transmission and distribution equipment is expected to rise 2.6% annually to$24 billion in 2013.

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