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Substantial Growth Anticipated for Smart Windows Market
A NanoMarkets White Paper

Published September 2011 © NanoMarkets, LC

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Entire contents copyright NanoMarkets, LC. The information contained in this report is based on 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 companies and 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 permission of NanoMarkets, LC.

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Substantial Growth Anticipated for Smart Windows Market Demand for smart windows, or windows with functional capabilities such as self-cleaning and variable tinting in response to electrical or thermal changes, will be driven by the green building movement, attraction to the convenience they provide and the potential for cost savings. NanoMarkets, a leading provider of market research and analysis of the opportunities in advanced materials and emerging energy and electronics markets, believes that the market for smart windows will grow substantially over the next eight years, becoming a billion-dollar market by 2015 and then more than doubling by 2018. The following paper was drawn from a recently released report titled, Next-Generation Smart Windows: Materials and Markets: 2011

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Total Market for Smart Windows
3,000 2,500 2,000 $ Millions 1,500 1,000 500 0 2011 © NanoMarkets, LC 2012 2013 2014 2015 2016 2017 2018

Real Smart Technologies Today there are three established smart window technologies in the marketplace: thermochromic, electrochromic and self-cleaning. Thermochromic windows reduce the amount of heat that enters through the glass and thus contribute to real energy savings in warm weather. Traditionally based on “cloud gel”

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technology, thermochromic windows have a thin plastic film inserted into the assembly that becomes opaque (self-tints) when a specific temperature is reached, blocking light (and heat) from passing through the glass. While this temperature can be controlled through the choice of polymer in the film, it cannot be changed once installed in the window. Due to the visibility issue and the lack of on-demand variation, thermochromic windows have largely been restricted to architectural applications such as skylights and tall office buildings. Companies offering such products include Pleotint, Landec Intelligent Materials, and RavenBrick. Thermochromic windows offer a less costly—but also less controllable—alternative to electrochromic windows in applications where visibility is not critical. Like electrochromic windows, these windows can limit the heat that enters a building from the outside, but they automatically tint at a fixed temperature rather than allowing on-demand control. They are a good match for the sun-facing sides of buildings, where they reduce absorbed heat in the summer and on hot days. In transportation markets, they are most useful where visibility is not critical—sunroofs in automobiles and passenger compartments in other types of vehicles. Electrochromic windows contain glass that is "switchable" or "dimmable" through the use of electricity. Liquid crystal suspended particle devices c (SPDs) contain molecular particles suspended in a solution between plates of glass. In their natural state, the particles move randomly and collide, blocking the direct passage of light. When in contact with an electrical current, the particles align rapidly and the glazing becomes transparent. This type of switchable glazing can block up to about 90 percent of light. Smart windows based on polymer-dispersed liquid crystals (PDLCs) are translucent in the tinted state and scatter light more than they block it, providing privacy while blocking a portion of the heat. GlasNovations is one company involved in this area. Other electrochromic technologies offered by SAGE Electrochromics and EControl Glas become more opaque than PDLCs, allowing just 2-3% light transmissions and thus have greater potential for energy savings, but are more expensive. Because electrochromic windows can be tinted on demand, they are generally considered to be higher in value than thermochromic windows. They find use in numerous exterior and interior architectural, automotive, and other transportation (airplanes trains, ships) applications.

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In dollar terms, the biggest opportunities for smart coating firms are in supplying electrochromic coating materials to the smart window manufacturers. Electrochromic windows alone will grow to well over a billion dollar market by 2018, and a significant portion of the cost of those windows will be the electrochromic coatings. Technical opportunities include developing electrochromic coatings that are less costly and that provide a broader dimmable range, which would drive faster adoption—and increased sales of the materials. Electrochromic windows will produce the most revenue over the next eight years. This is also the only smart window type that will find significant markets in each of the application areas we have forecasted. Self-cleaning windows have either a hydrophobic (water repelling) or a hydrophilic (easily wettable) coating that helps water (from rain or manual spraying) clean off dirt or avoid depositing dirt in the first place. Super-hydrophobic coatings mimic the behavior of the lotus leaf by creating a patterned surface that causes water to bead and minimize contact, thereby avoiding dirt deposition. Super-hydrophilic coatings cause water to sheet and carry away dirt and debris. Some hydrophilic self-cleaning windows also contain titanium dioxide (TiO2), which acts as a photocatlyst when exposed to UV light and breaks down organic dirt that can then be more easily washed away. Because self-cleaning windows generally require water—and typically rainwater—to work, the market for this type of smart window is very much dominated by exterior architectural applications, but interest in niche interior uses (shower doors and enclosures, clothes washers and dish washers) is growing, as is the use in vehicles. Self-cleaning windows provide substantial value to each of the application areas covered—except perhaps interior architectural windows—through better glass clarity and reduced maintenance effort and cost. The opportunities are greatest for self-cleaning windows in the largest markets with weather-exposed windows, building exteriors and automotive windows. Technical opportunities exist for self-cleaning smart coatings that provide products with superior functionality, such as those that break down dirt—and perhaps non-organic kinds of dirt— more efficiently, especially if it can be done without direct sunlight. Possibly Smarter Technologies? Several other potential smart window applications are currently under development with varying ranges of time to market. Glass repair is already quite common using special
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adhesives; it seems reasonable that such adhesives could be embedded appropriately within the glass to provide self-repair functionality. This type of microencapsulation technology, in which microcapsules of a repairing agent are embedded in the glass, is not anticipated to reach the market for several years.
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Significant opportunities for using self-cleaning and self-tinting glass with photovoltaic panels of various sorts, including BIPV glass windows, is more likely in the near term. Selfcleaning PV panels have obvious benefits: reduced dirt buildup allows more sunlight to be converted to electricity and less labor is required to keep the panels clean. "Smart" PV panels could also be "dimmed" by shading via an electrochromic or thermochromic coating on the panel. On the negative side, however, the necessary coatings often absorb significant amounts of light themselves. The key for the self-cleaning market is to either use more transparent self-cleaning coatings for PV panels, or to use PV modules that make little use of the wavelengths that are absorbed by the self-cleaning coatings. For self-tinting panels, the coating could be placed on the backside of a semitransparent module with little effect on the PV conversion. Such smart panels represent an important BIPV opportunity in which natural daylight can provide lighting into a building behind the BIPV panel, but could also be shaded to block the daylight, much as electrochromic windows operate. Peer+ is developing such a product. Another possible new application is presented by OLED lighting. OLED lighting promises to be made transparent or semitransparent, and hence could be combined with an electrochromic coating similarly to the BIPV glass panel discussed above. Such a panel would allow lighting with natural daylight when not tinted, but could also be tinted for privacy or at night. The device would also provide artificial light when needed through the OLED lighting panel. And with such similar opportunities for PV panels and OLED panels using electrochromic coatings, it also seems reasonable that both could be combined in a single device. Such a device could bring together three distinct "green" technologies: PV power, the use of daylight for interior illumination, and energy-efficient OLED lighting, and this type of products seems likely to have appeal in some circles.

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Architectural Opportunities The architectural windows market depends heavily on the overall construction market. This market is still struggling worldwide since the burst of the housing bubble, and will probably continue to do so for several years. Smart windows suppliers will thus need to focus on two areas: segments where the construction market is relatively better off, and retrofits of existing buildings. With its nuclear industry essentially crippled and energy costs high, Japan may be very open to novel technologies that promote energy efficiency as rebuilding efforts get underway in the parts of Japan that have been devastated by the earthquake and tsunami of 2011. Germany has long been home to strong "green" movements and renewable energy deployments and these could also prove drivers for smart windows, especially in the growing commercial property segment. NanoMarkets also expects China to be a significant market for smart windows going forward, however many of these products may ultimately be made within China. Retrofits are a bit problematic for smart windows, as the coatings in a retrofit must be applied to the outside of the pane and are thus subject to UV light and especially weathering far in excess of new installations, where the coatings can be applied to the interior surface of the outer pane. In addition, applying the new film to existing glass exposes the full cost of the coating to the decision-making process. NanoMarkets, however, believes there are likely to be niche markets for retrofit films to make smart windows out of ordinary ones, mainly for large commercial windows, where the cost of removing and reinstalling existing windows may be prohibitive. NanoMarkets also expects that, due to the significant differences between commercial and residential markets, distinct product lines will be developed for each. Furthermore, commercial users of electrochromic windows are likely to be first to do away with blinds and avoid their costs and associated aesthetics, although residential markets will also eventually switch to smart windows. In fact, self-tinting windows stand to capture a significant share of the market for blinds, shades, curtains, etc. used primarily to block light from passing through architectural windows. The growing interest in green-building will be a major driving factor for growth of electrochromic and thermochromic windows. The improvements in energy efficiency provided by smart windows are typically required to meet green certification
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requirements, and they are often preferable to mechanical louvers or other, more complex, alternatives. In addition, smart windows seem as if they will have a major role to play in the development and proliferation of net zero homes. The convenience provided by self-cleaning windows through reduced manual cleaning and improved clarity will also be attractive to certain segments of the market. In business settings, the reduced labor has a definite value, while for residential owners, it is the time savings that is appreciated. Importantly, smart window technologies will spill over into more mainstream building markets. Therefore, while smart windows will most likely remain but a niche of the construction glass industry, the architectural market is the largest segment of the smart windows market, and that industry is so large that such a niche still means real moneymaking opportunities—on the order of more than a billion dollars in annual revenues by 2018. Not surprisingly, most of those revenues will come from exterior applications. When considering the technology, electrochromic windows account for about 90% of sales. Automotive Interest Some of the best commercialization success stories have involved automatically dimming rear-view mirrors and important up-and-coming applications are to be found in automotive windows. And NanoMarkets expects the automotive market to begin using electrochromic glass in other places—like side windows and sunroofs—before too long. To increase the addressable market in automobiles beyond mirrors, however, electrochromic smart coating firms will need to improve response times, develop effective failsafe measures to prevent unexpected tinting and provide more precise control of tinting levels to address safety concerns related to visibility through most automotive windows. On-demand control of self-cleaning glass, though it will not emerge for a few years, will offer even greater opportunities than electrochromic glass in the automotive market in the next eight years. Because of the scope and importance of automotive window cleaning, NanoMarkets sees the automotive sector as the largest segment of the self-cleaning windows market by 2018. By this time, revenues from automotive markets will in fact become comparable to those from architectural markets.
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Expanding to New Markets Electrochromic glass already has a foothold in commercial transportation markets with controlled shading windows in aircraft passenger windows and isolation screens for train operators. Increased penetration in these transportation markets is coming as costs come down and awareness of their features goes up, along with new penetration into consumer markets for appliances, household mirrors, and toys. The switchable functionality of electrochromic glass provides opportunities for suppliers to develop new, innovative uses for some market niches. The market for thermochromic windows in other transportation sectors is proportionally larger than in the automotive segment because of the lesser importance of controlled visibility in passenger compartments of other vehicles. Smart Selling Self-tinting windows have been available for many years, but have never generated much money for their suppliers, partially because they were not effectively marketed. NanoMarkets now sees opportunities for greater commercialization of smart windows as prices are coming down, materials are getting better, and companies are raising money. In addition, some companies are obscuring the cost of the smart coatings by combining them with the high and variable cost of the glass on which they are used. In fact, smart windows benefit a great deal from the high cost of the glass itself. Because even conventional architectural glass is quite expensive, for example, the cost of substituting conventional windows with smart windows can seem smaller when compared in relative terms, particularly when the dividing line between the cost of the glass and the cost of the smart functionality is blurred. For self-cleaning windows, the high cost has been a major limiting factor as the main advantages of using self-cleaning glass have been less quantifiable or smaller in value than energy savings. A major opportunity for self-cleaning window suppliers is to lower the cost of the self-cleaning coatings and also focus on perceived cost by matching the coatings with midrange glass such that the final product can be more comparable in cost to a conventional high-end window. For additional details about this report, please visit the NanoMarkets website at www.nanomarkets.net or contact us via email at sales@nanomarkets.net or by phone at 804-270-4370.
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