Challenges and Opportunities of Investing in Cleantech and Renewable Energy

By Zhan Zhou*

Based on the database of the Cleantech Group, there are about 19,200 cleantech companies in the world, of which over 1/3  are based in the United States.[I] Despite some minor setbacks, there is no doubt that cleantech has become one of the most targeted sectors for both public and private investment. A few numbers can shed light on the fact that the cleantech industry has emerged to be a fast-growing industry of great political and environmental significance:

• During 2012 alone, cleantech companies around the globe raised $6.56 billion of venture capital across 732 deals [II]
• For the global Foreign Direct Investment (FDI), the cleantech sector ranked as the second largest sector after oil and gas by attracting $12 billion from the global FDI into the U.S. in 2011, making it the fastest growth sector for the past decade [III]
• Through July 20^th, 2012, the §1603 American Recovery and Reinvestment Act program had awarded $13.0 billion to nearly 45,000 renewable energy projects [IV]

Market Challenges
With a seemingly growing appetite for investment in cleantech, some important market challenges lie ahead.

Five Insights from ACORE’s National Renewable Energy Policy Forum

by Candice D. McLeod*

On February 6^th, the American Council on Renewable Energy (ACORE) held its 10^th annual Renewable Energy Policy Forum on Capitol Hill. The event featured a host of industry, financial and government leaders, who spent the day discussing the progress of the renewable energy industry, from the industry’s current purgatorial state due to impending policy deadlines to the potential implications of the current fiscal and partisan climates.

The overall themes were clear – more financing options for renewables, renewable energy policy stability, and China setting the global rhythm.

Here are five main insights drawn from the forum:

1. Renewable energy markets continue to grow significantly. Perhaps we should stop referring to them as “alternative sources” of energy
2. Economic security -keep your eye on Iowa and rural America
3. More policy stability, please
4. More financing options -MLPs  & REITs
5. Don’t throw the baby out with the bathwater

1. Renewable energy markets continue to grow significantly. Perhaps we should stop referring to them as “alternative sources” of energy

John R. Norris, Commissioner, U.S. Federal Energy Regulatory Commission (FERC) opened the panel Renewable Energy Market Growth with the statement, “[if] it wasn’t for an economy that’s walking with a limp and a dramatic decrease in natural gas prices, the renewable energy market would be twice the size.”

Noam Lior presents on Sustainable Energy Development

IES/IGEL Seminar: Noam Lior
Wednesday, October 17th, 2012
12:00pm-1:30pm
The Carolyn Lynch Room, Chemistry Building
University of Pennsylvania
(Corner of 34th & Spruce Streets)

Noam Lior, Professor of Mechanical Engineering and Applied Mechanics at the University of Pennsylvania, will present on sustainable energy development at the upcoming IES/IGEL seminar on October 17th, 2012. This event  is free and  open to the public, no registration required. See the abstract for the presentation and mark your calendar. This is an event not to be missed.

Can Venture Capital Really Influence Environmental Sustainability?

Panel at Wharton Global Alumni Forum

Can venture capital really lead to sustainable businesses, energy and products? Or is venture capital an outdated and inefficient means of funding sustainable enterprises?

We posed this question and more to a panel hosted by IGEL and Bank of America at the Wharton Global Alumni Forum in San Francisco.(1)

Venture capital is the only way to sustainability. – Ashmeet Sidana, Panelist, Foundation Capital

The panel’s consensus was a resounding yes – venture capital can lead to environmental sustainability.  Panelist Ashmeet Sidana of Foundation Capital went on to argue that venture capital is the only way to reach sustainable goals. Panelists highlighted their cleantech investments, including new methods of algae biofuels manufacturing, solar power, geothermal energy and smart grids.  Last quarter saw the most investments in cleantech ever, said Andrew Chung of Lightspeed. Robert MacDonald of Craton Equity Partners showed the optimism of the markets by remarking that investments in cleantech is nearly $200 billion worldwide.

Remarkably, these investments are largely consumer-driven with large corporations like GE, Chevron and Intel buying in. Consumer and corporate buy-in is crucial,  given the lack of policy-leadership in the U.S. on clean energy.  In fact, investors’ frustrations are only mounting from uncertainty in the political climate.

The panelists also discussed necessary steps for scaling up cleantech investments. Capital efficiency is crucial, said Cynthia Ringo of DBL Investors.  Also necessary is further advances in technology for renewable energy storage.

What are your thoughts?  Leave us a comment in the Comments section or connect with us on Facebook or Twitter.

The panelists were:

Ashmeet Sidana, General Partner, Foundation Capital

Mr. Sidana has investments in cloud computing, network efficiency and consolidation, and wireless monitoring.  He also is involved in solar power for India; he led the Foundation’s investment in and currently serves on the board of AzurePower, a solar power company in India. Foundation Capital also invests in such green and clean-tech such as smart grid technology, paper-less sharing systems, food and water sanitation systems, environmentally-friendly advanced materials manufacturing, energy conversion and efficiency technology, and thermal management.

Cynthia Ringo, Managing Partner, DBL Investors

Ms. Ringo is a board observer for LiveScribe, a new computer-version of pen and paper, as well as a board member for Solexant and Soladigm, two solar companies with new PV technologies. Prior to DBL, she was the CEO of CopperCom, a next-generation telecom equipment company. DBL also invests in electric cars and smart grid technology.

Andrew Chung, Principal, Lightspeed

Mr. Chung is a Principal at Lightspeed and has helped lead the firm’s entry into new areas of investment that include cleantech, education, genomics, and healthcare IT. Lightspeed’s investments include next-generation biofuels. Andrew chairs the Cleantech Advisory Board for The Indus Entrepreneurs (TIE), serves on the Advisory Board for Stanford Energy Crossroads, and is an advisor to the Clean Tech Open.

Jon Krahulik, Managing Director and Global Head of Clean Technology Investment Banking, Bank of America Merrill Lynch

Mr. Krahulik is responsible for growing the firms’’ coverage of companies across the clean tech sector globally. Mr. Krahulik joined Bank of America Merrill Lynch from Deutsche Bank Securities, where he served for four years, most recently leading clean tech investment banking.  Earlier in his career, Krahulik spent seven years in the global technology group at Lehman Brothers, most recently as a senior vice president.

Robert MacDonald, Managing Partner,  Craton Equity Partners

Mr. MacDonald developed Catalyst Energy Corporation into one of the largest IPPs in the country. Bob currently serves on the boards of EnLink Geoenergy Services, GigaCrete, Inc., Petra Solar, and RYPOS.

(1) Bank of America and IGEL have teamed up to create a speaker series on topics in business and environment.
Click here for SmartPlanet’s coverage of the panel.