Palo Alto resident Gene Wang and his band of musicians piled into their "Unplug It" bus last week and took off for Washington, D.C., on a two-fold mission -- to belt out "Happy Birthday Mother Earth" on the National Mall and to get the world to unplug its household appliances.

Wang is a singer and serial entrepreneur who works out of his Lowell Avenue home. His company, People Power, focuses on the so-called "smart grid" and energy efficiency. Its products allow developers to wire up buildings so that residents can see exactly how much energy each appliance is using and how much is being wasted.

"We love our gadgets: our TV, our mobile phone, our Wii and our Playstation," Wang said. "We love our microwave ovens, but guess what? A microwave oven, when it's just sitting there, consumes 6 watts doing absolutely nothing."

Energy efficiency is steadily emerging as one of the hottest sub-sectors in the expanding world of green technology. While local electric-car pioneers such as Better Place and Tesla Motors grab headlines and snag federal dollars, investors are increasingly eyeing green-building and energy-efficiency companies as the next big thing in clean-tech investment. A survey of venture capitalists conducted by the auditing firm KPMG earlier this year found that "energy storage and efficiency" is overtaking renewable power as the leading sub-sector in the growing green field, with 38 percent predicting it will receive the most investment in 2010, up from 33 percent in 2009 (renewable power came in next at 30 percent in the first quarter of 2010).

The trend could spell great news for Silicon Valley, a region still reeling from the economic troubles of late 2008. Tesla notwithstanding, the Valley isn't likely to transform into the electric Detroit or to bump China and Denmark out of the solar and wind markets. But experts say the region's high concentration of engineers, entrepreneurs, investors and environmentalists makes it perfectly suited to transform how the world uses and saves its energy.

Wang is optimistic about this trend. This month, People Power started selling its SuRF (Sensor Ultra Radio Frequency) kit, a software-development kit that allows engineers to create energy-efficiency programs for household appliances. These applications would be built on an open-source platform, which Wang hopes will foster more innovation among the area's software developers and engineers.

Wang's company has also created a Facebook application, Unplug, which allows users to calculate electricity consumption within their households and encourages them to turn their appliances off.

Wang founded the company in early 2009, several months after he visited his daughter's class in Jordan Middle School and heard students read their essays about climate change. Wang said the exercise made him think of the Native American saying, "We do not inherit our Earth from our ancestors; we borrow it from our children."

"Some of the kids were getting pretty incensed about how their parents' generation is destroying the planet and wondering how they're supposed to live," Wang recalled.

Though relatively new to the clean-tech field, Wang was a full-fledged member of Silicon Valley's I.T. revolution. He served as CEO of Computer Motion, a medical robotics company that he guided to an IPO (initial public offering) in 1997. He founded the company Photo Access, which made digital-camera chips and which was ultimately bought by Agilent Technologies.

Now, he is channeling his Silicon Valley experience into clean technology. People Power received a $150,000 grant from the U.S. Department of Energy in December and is competing for a $1 million grant this summer. The company now has about 60 employees. Wang said it's his boldest and most hopeful undertaking yet.

"I think this is the biggest thing I've ever done," Wang said. "Sky is the limit."

The green surge couldn't have come soon enough. In February, the groups Joint Venture: Silicon Valley Network and Silicon Valley Community Foundation released the 2010 Index of Silicon Valley, a report full of sobering news about the local economy.

According to the annual index, venture-capital investment in Silicon Valley's clean-tech companies dropped from $1.9 billion in 2008 to $1.2 billion in 2009 -- a 37 percent drop. The report cites a wide range of dismal data -- fewer patents, job losses, office vacancies and the near-extinction of the once-mighty IPOs -- and bluntly concluded, "Silicon Valley's economic and innovation engine has cooled off."

In this economic malaise, Silicon Valley's energy-efficiency sector was a rare success story. The region's energy-efficiency companies attracted 26 percent of total clean-tech investment in 2009, the report found, trailing only renewable energy, which attracted 41 percent. The report also noted that the value of energy-efficiency investment increased by 121 percent over 2008.

Outside of Silicon Valley, global investment in clean technology has been gaining momentum in recent months. A new report by Cleantech Group, which measures venture-capital investments in North America, Europe, India and China, showed clean-tech investments in the first quarter of 2010 surging to $1.9 billion, a new record for a single quarter.

This includes the $217 million invested globally in energy efficiency in the first quarter of the year. Though the segment still trailed transportation ($704 million, including $350 million secured by Better Place, a Palo Alto-based company that is building charging-station networks for electric vehicles) and solar power ($322 million) in money raised, it showed more activity than any other sector -- 39 deals, compared to 27 in each of the other two industries.

"The bounce back in venture investment from lows in early 2009 has continued, with the first three months of 2010 representing the strongest start to a year we have ever recorded," Cleantech Group President Sheeraz Haji said in a statement. "Key to growth has been increasing interest in a broader range of clean-tech themes."

Ira Ehrenpreis, a partner at Technology Partners in Palo Alto, believes the trend is by no means ephemeral. Ehrenpreis' venture-capital firm, headquartered on University Avenue, decided in the late 1990s to put half of its funds into the clean-tech sector ("before the 'clean-tech' moniker even existed," he says).

When he started out, the segment attracted what he calls a "niche demographic" of investors and about 1 percent of total venture capital. Now, it's attracting about 18 percent of all venture dollars and is widely seen as the "greatest opportunity of the 21st century," Ehrenpreis said.

He attributes this to the confluence of five drivers: the segment's diverse nature, a global market and major shifts in how the public, corporations and politicians view the clean-tech field.

In the early days, clean-tech investment focused primarily on solar power and biofuels, Ehrenpreis said. The field broadened in recent years.

"We're beginning to see that breadth and diversity open up," said Ehrenpreis, whose firm invests in such companies as Imperium Renewables, a Seattle-based company specializing in biofuel technology; Deeya Energy, a Fremont-based energy-storage company; and Tesla Motors, where Ehrenpreis sits on the board of directors.

"We're seeing investment in things like smart grid, electrification of vehicles, energy storage, coal technology and green-building technology."

What makes clean-technology investment such a huge opportunity right now is the global market, Ehrenpreis said. Unlike traditional areas of venture capital, which are centralized in a small number of places, what he calls the "clean-tech arms race" extends across the planet, with China and Europe dominating the solar and wind markets and Brazil leading the way in alternative fuels.

This gives venture capitalists like him great reason for hope. Companies that develop breakthrough clean technologies would have customers across the globe, Ehrenpreis said.

At the same time, giant corporations that had previously only seen clean technology as a public-relations tactic have now genuinely embraced the field. In May 2009, German car giant Daimler bought 10 percent of Tesla (it later sold a 4 percent stake to Abu Dhabi's Aabar Investments). Two months later, ExxonMobil invested $600 million in Synthetic Genomics, a firm based in La Jolla, to develop biofuel. These days, a major company that doesn't have a green component is an exception, not a rule, Ehrenpreis said.

Elected officials and the public have also taken notice of the burgeoning clean-tech sector. People have different reasons for becoming involved -- some want to avert climate change, others to lower their electric bill, yet others to avoid importing oil from terrorist-sponsoring nations. In Washington, meanwhile, green is ceasing to be a strictly Red-versus-Blue issue.

"Politicians on both sides of the aisle are fighting to be the greenest," Ehrenpreis said. "We have a president who aspires to have the greenest administration in history and, for the first time ever, we have a Nobel laureate as our secretary of energy."

The trend is also playing out on the state level, in the race for the open seat in the 21st Assembly District, where clean-tech venture capitalist and political newcomer Josh Becker has emerged as a strong contender in the Democratic primary.

Last month's campaign-finance documents showed Becker dominating his Democratic opponents in cash raised with $224,099, compared to $92,457 raised by former Palo Alto Mayor Yoriko Kishimoto and $82,516 by San Mateo Supervisor Rich Gordon.

Becker touts himself as the "innovation Democrat" and points to his long track record in green technology. His venture-capital firm, New Cycle Capital, focuses on clean technology and invests in such energy-efficiency companies as TerraPass, a San Francisco company that allows people to buy offsets for their carbon emissions; OPower, a smart-grid and energy-efficiency company based in Virginia; and Oakland-based Renewable Funding, which specializes in energy-efficiency financing.

In 2008, he led the coalition Cleantech and Green Business Leaders for Obama, which raised $1.6 million for Obama's presidential campaign in 2008.

If Silicon Valley's economic engine has indeed cooled, Becker believes clean technology will warm it up again. He sees the industry as the key for both reducing carbon emissions and adding jobs. Becker sees green manufacturers such as Tesla Motors and Solyndra, a Fremont-based solar-panel manufacturer, as hopeful signs for a region that lost thousands of jobs in 2009 and thousands more last month, when Fremont's NUMMI plant closed.

"A lot of innovation is happening here," Becker said. "We've got to make sure we get manufacturing here, too."

That, however, may prove a challenge in the brainy 21st District, particularly in a city like Palo Alto, which is better known for its ideas than for its factories. Though city officials welcomed Tesla's new manufacturing facility on Deer Creek Road with great fanfare last August, their excitement only underscored the fact that Tesla is the exception rather than the rule. The city's brainiacs typically crank out ideas that build factories elsewhere.

The same holds true, to some degree, for Silicon Valley. The San Jose company Twin Creek Technologies announced recently that it is building a solar-panel factory in Mississippi. Santa Clara-based Applied Materials, meanwhile, recently opened a giant solar research-and-demonstration facility in Xi'an, China.

"It's tough for manufacturers to come here because the real estate is so expensive," said Michael Kanellos, editor of Greentech Media, a research firm focusing on clean technology. "What you see here is a lot of pilot plants and R&D facilities, with some manufacturing in the East Bay and Sacramento area."

Kanellos, like many other industry experts, is bullish on energy efficiency and green building, calling it "one of the most exciting spots in clean-tech today."

If so, Palo Alto seems particularly well-suited to benefit given its green builders, architects and residents, who are willing to pay a little more to help the environment.

Palo Alto officials have been adopting policies to promote energy-efficient buildings. In 2008, the city became the first in Santa Clara and San Mateo counties to adopt mandatory green-building requirements. Developers now complete a checklist and accumulate green points before they can build residential and commercial structures. The checklist includes such items as sustainable construction materials, drought-resistant landscaping and solar panels.

The city's renewable-energy program, Palo Alto Green, repeatedly wins awards for the highest rate of customer participation.

The private sector has also signed on. The city's leading developer, Jim Baer, last year founded the not-for-profit organization Wave One that aims to retrofit existing buildings and make them more efficient. One of Wave One's early projects is the Emerson Street office of Congresswoman Anna Eshoo, now the most energy-efficient congressional office in the country.

The city also boasts a high population of engineers, academics, venture capitalists and entrepreneurs.

"Palo Alto has been one of the key epicenters of entrepreneurship and venture capital," Ehrenpreis said. "What we're seeing is many of the historic players in Palo Alto now focusing on clean-tech.

"It's become the area where so many of the best and the brightest entrepreneurs and executives want to focus on for the rest of their professional lives."

Few exemplify this better than Mark Porat, a Palo Alto resident who made the switch from information technology to clean technology in the early 2000s.

Porat's house on University Avenue has all the trappings of its affluent Crescent Park neighborhood -- a sprawling yard, a Prius in the driveway and a refrigerator that can house a small family. But it's also decked out in the latest green-building technology -- a reverse-cycle chiller that heats his water, low-carbon drywall and windows, top-tier insulation and an air-filtration system that replaces the air inside the house every three hours.

Born in Israel, Porat now splits his time between Palo Alto, New York and Washington, D.C., He lives off the electric grid in his "net-zero" house and leads three Bay Area companies devoted to green building.

CalStar Products, based in Newark, manufactures eco-friendly bricks. ZETA Communities, headquartered in San Francisco, builds ultra-efficient apartment buildings and mixed-use structures. Serious Materials, which he co-founded with his friend Kevin Surace, manufactures an assortment of energy-efficient building products, including insulated windows, soundproof doors and eco-friendly drywall that is made of 80 percent recyclable materials.

"Anyone can quickly and easily save 20 percent of energy without making much of an effort," said Porat, whose house has already achieved 63 percent in energy savings and counting. "We should be aiming for 50 percent for everyone."

Like Wang and many others in the emerging field of clean technology, Porat honed his entrepreneurial skills in the information-technology revolution. In the 1980s and 1990s, the companies he founded focused on television networks, handheld communication devices and supply-management software. He made the jump to green technology in the early 2000s.

Buildings seemed like a natural place to start. They consume 39 percent of the nation's total energy, and more than 70 percent of its total electricity, according to the U.S. Environmental Protection Agency. Building materials account for another 12 percent of energy use. Seeking to bring their entrepreneurial skills to the emerging green field, Porat and Surace founded Serious Materials.

"In Silicon Valley, we're used to hypercompetitive product cycles and innovation, yet that's not how the building environment works," Porat said. "What Kevin and I did was bring Silicon Valley speed and aggressiveness into a much slower industry."

The economic recession didn't slow them down. Last September, Serious Materials announced that it secured $60 million in investment, raising its total capital invested to $120 million. In February, the company's energy-efficient windows were used in the ABC reality show, "Extreme Makeover: Home Edition," for construction of a net-zero home. Last month, the Sunnyvale-based company began its most ambitious and visible undertaking yet: replacing all the windows in the Empire State Building.

Porat is optimistic about green building and clean technology in general. He points to the Obama administration's new energy-efficiency initiatives, including grants for smart meters and the "Cash for Caulkers" program, which offers rebates to people who retrofit their homes for energy efficiency. And as the field grows, Porat expects Silicon Valley to be among the chief beneficiaries.

"Silicon Valley has gone through multiple waves of innovations," Porat said, citing information, bio-tech and energy-technology revolutions "Every wave of innovation results in a tremendous boon to the Silicon Valley economy as rising stars come out through IPOs and entire ecosystems of smaller companies begin to emerge."

But Porat's three companies also typify the limitations of Silicon Valley. Though they have seven factories between them, these factories are scattered geographically, with one in Wisconsin, another one in Pennsylvania and several in Fremont.

Porat said he doesn't see that as a problem for Silicon Valley or for Palo Alto. The region may have to go through some changes, he said, but it will continue to lead the world in innovation. The growth of clean technology will bring prosperity to the region and the city, he said, even if this prosperity doesn't come as manufacturing jobs.

"The fact that they're not manufacturing-oriented things isn't that big a deal," Porat said. "Intel and Apple don't necessarily do all their manufacturing here, but the source of innovation is here and that creates local wealth."