Following a week of candidates campaigning in Michigan about challenges facing the U.S. economy and heightened discussion around the possibility of recession as many companies dropped their expected earnings for upcoming quarters, it was refreshing to read that the clean tech industry is continuing to prosper.
The Cleantech Group released numbers this week indicating venture investment in clean tech across North America and Europe increased 40% in 2007 – reaching $5.18 billion in 2007. Red Herring reports the high numbers are attributed to “an unexpectedly strong fourth quarter despite growing uncertainty in the global economy.”
The number of venture funding announcements in the first few weeks of 2008 suggests growth in clean tech will continue in 2008. TheDailyGreen writes the continuing rise of clean tech companies will be instrumental in battling increasing unemployment, wages dropping and housing troubles. Something especially relevant in clean tech cities like San Francisco and Austin, where we’re already seeing job creation and new opportunities.
Outside of investment news, industry leaders – Google, Dell, HP, IBM, Sony, Nokia and Ptiney Bowes – made green headlines this week. Interestingly, six out the seven mentioned above made announcements that involve developing industry standards.
The Carbon Disclosure Project (CDP), which involves 11 corporations including HP and Dell and hundreds of investors, is developing a standard method to gather carbon-emissions information from suppliers. The hope is that suppliers can more easily provide carbon emissions details to customers by following one standard rather than juggling requests in various forms.
Additionally, IBM, Sony, Nokia and Pitney Bowes announced an effort called Eco-Patent Commons, which will make available rights to environmentally friendly technologies. Twenty-seven of the first 31 patents are being contributed by IBM. It’s off to a good start – we’ll watch to see how this programs grows in the coming year and if more companies join on to support the cause.
— Barbara DeConto, Text 100 Clean Tech Practice
Even with the holidays approaching, there was no shortage in clean tech news this week. Not surprising, end of year analysis and predictions for the clean tech market in 2008 are in full swing. Here are a few highlights from the week:
The National Venture Capital Association released its 2008 predictions from Venture Capitalists and not surprisingly, the majority (80%) of VCs surveyed said 2008 will be a big year for clean tech investments.
- According to a Forrester report “Green Progress in IT,” as of October 38 percent of IT professionals said that their companies were using environmental criteria in their evaluation and selection of IT equipment, compared with 25 percent in their April survey. The main motivation? According to 55 percent of respondents, was to reduce energy-related operating expenses. While that is not surprising, the number two motivator was “doing the right thing for the environment.”
- A new study from IBM, “Plugging in the consumer: Innovating utility business models for the future,” finds that of countries survived (Australia, Germany, Japan, the Netherlands, the United Kingdom and the United States), 67 percent said they’d pay as much as 20 percent more for energy from sources with a lesser effect on the environment. Responses came from 1,894 bill-paying households over 18 years of age. However, only 14 percent expect their energy use to decrease somewhat. Check out the finding: PDF.
- In clean tech investing news, greentechmedia reports several new deals in energy-efficient lighting including Element Labs, a provider of LED-based products for entertainment, architecture and signage applications, raising $12.75 million Series B funding.
- After a year filled with funding announcements, it is great to start hearing more clean tech product news. San Jose based Nanosolar, a maker of thin-film solar cells, announced it has shipped its first product. Along with Beck Energy of Germany, Nanosolar won a contract to create a solar farm on the site of a former landfill owned by a wastewater treatment plant in Luckenwalde, Germany. The facility will generate 1 megawatt of electricity, enough to power 750 California homes.
- If you have friends, family, colleagues looking to learn more about clean tech heading into the new year, there is a good (and brief) clean tech overview posted on ZDNet from venture firm Foundation Capital.
No “Week in Review” next week as I’ll be off for the holidays, but I’m sure we’ll have plenty more news to highlight in the new year. Have a happy (and green) holidays!– Barbara DeConto, Text 100 Clean Tech Group
John Dessauer, editor of John Dessauer’s Investor’s World, is in the camp of those who are worried that alternative energy has become too popular among investors: “Alternative sources of energy, including ethanol, have already been fully exploited by Wall Street. Not much opportunity is left for us in that category.”
Knowing how soundbites work, I’m not going to take that quote at face value and will assume that there is context missing. Because if there is not opportunity left for us in that category (i.e. clean tech), there are going to be a lot of sad VCs, corporations and consumers in a few years. Fully exploited by Wall Street? There are hundreds of startups – many of which are still in stealth mode – who haven’t even come close to liquidation events. Leading VCs like Draper Fisher, Kliener Perkins, VantagePoint Venture Partners, Mohr Davidow Ventures are betting the farm on this industry.
I’d be willing to venture that the fun is just starting in alternative energy investing. Take solar for instance. There has been some industry consolidation, new players from the tech industry like Applied Materials are entering the game, and companies in China are becoming billion dollar players over night. If we haven’t come close to deciding who the industry leaders are going to be, how could there not be much opportunity left? That’s like saying the tech industry was dead in 1979 when Apple and Microsoft were a few years old.
Dessauer goes on to point out:
“Wall Street is ignoring what I see as an obvious and highly profitable profit opportunity” to exploit the move towards greater energy efficiency: Technology stocks.
Most of my time is spent working with some of the biggest technology companies so I definitely agree that there is tremendous opportunity for these companies to make a real and substantial impact, something that should be reflected in how investors view them. The article names a few: Cisco, Intel and Philips Electronics. The list goes on from here. IBM, Sun, the PC makers… they all are doing things to address the way energy is consumed, managed and distributed by businesses and consumers.
Getting back to “alternative energy investing is fully exploited.” If we take the short-term view that Wall Street has trained some of us to adopt, maybe Dessauer is right. Ethanol gets over hyped, investors flock to it, some stocks don’t perform, and then we call it exploited and move on to the next thing. Same could go for solar. Silicon supply finally catches up with demand. Some solar companies face a margin squeeze, and people only looking three to six months out ditch the market entirely and move on to something else. It could happen. But then you could look at the solar market differently, as Todd Woody’s “Big Solar’s Day in the Sun” did in the June issue of Business 2.0 that just hit the stands. He shows the deals happening today for “industrial-strength solar energy sold to public utilities in 20-year contracts measured in gigawatts.” This industry is starting to align for the long-term.
So investors could move on. Or, they can stick around and find the renewable energy winners in a market that is certaintly not going anywhere. Maybe we need to look again at how we define alternative energy. If a big technology company can come up with a much more efficient way to get solar or wind power to the power grid and into your home, could they be in the same circle as the company making the solar panels? If we take that view, renewable energy becomes a much bigger space and the investing opportunities are endless. I’d like to think that’s where we’re heading.
- global markets for biofuels (global manufacturing and wholesale pricing of ethanol and biodiesel) reached $20.5 billion in 2006 and are projected to grow to $80.9 billion by 2016;
- wind power (new installation capital costs) is projected to expand from $17.9 billion in 2006 to $60.8 billion in 2016;
- solar photovoltaics (including modules, system components, and installation) will grow from a $15.6 billion industry in 2006 to $69.3 billion by 2016; and
- the fuel cell and distributed hydrogen market will grow from a $1.4 billion industry (primarily for research contracts and demonstration and test units) to $15.6 billion over the next decade
David Baker of the San Francisco Chronicle covered the report today, Sales soar at green-tech companies.
And of course don’t miss Business of Green: A Special Section in today’s New York Times. Highlights:
- Audio Slide Show: Big Is Beautiful
- Consumers: Attention Shoppers: Carbon Offsets in Aisle 6
- Companies: Calculate your carbon footprint
- Restaurants: It Takes More Than Veggies to Make a Kitchen Green
- Homegrown Industry: Vermont Wants You to Fill Its Open Spaces
- New Concepts: ‘Corporate Hippies’ Seek Their Bliss in a New Environmental Economy and For Internet Barons, Uncharted Investment Territory
- Friend of Nature? Let’s See Those Shoes
- A Coal Executive With a Cleanup Mission
- As the Climate Heats Up, Lawyers Sharpen Their Wits
- Call of the Truck Stop: Gentlemen, Stop Your Engines
- Across the Atlantic, Slowing Breezes
I was just checking out Martin LaMonica’s blog at CNET and it looks like the 2006 clean tech numbers came out from the Cleantech Venture Network. $2.6b invested in clean technologies; 78 percent increase over 2005. Even better, Martin references a recent study by the National Venture Capital Association showing that VCs plan to maintain investment levels in “hot” sectors such as energy and the Internet in 2007.
Lots of money. Lots of startups. Lots of VCs building their clean credentials. Let’s hope the path to commercialization is fast and successful.
An article in one of Forbes’ newsletters today by Will McClatchy of ETFZone describes how clean and green investing options have evolved significantly in recent years and highlights what we need to know about the two main approaches to social investing in the form of exchange-traded funds (ETFs). A lot of this isn’t new to people tracking the clean tech industry closely but it’s nice to see it summarized in one place for a mainstream investor audience. If you have a few dollars to spare and are looking for socially responsible investment options without the time commitment of individual stocks, one of these clean ETFs could be your answer.