Cleantech needs sustainable business cases, not hype

1 12 2009

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Enjoy an Oprah moment with Vinod Khosla, perennial venture developer and powerhouse venture capitalist. While he wants the environmentally sustainable outcomes alternative energy and transportation systems are offering, he is very disappointed with the current status of business cases and the direction cleantech hype is currently pointing. Read the rest of this entry »





New Energy Markets Set for Long Term Boom

4 09 2008

Two new articles piqued my interest today for their bullishness on cleantech, renewable energy, and alternative fuels.  In the first, Michael Butler of Cascadia Capital lends a macroscopic overview of the economic opportunity for new energy technology from an excerpt of an upcoming book Financing the Future and the Next Wave of 21st Century Innovation. Butler brings organization and a seasoned investor’s perspective to the cleantech sector – breaking down the separate needs and opportunities of the solar, wind, bio-energy, energy storage, clean water, energy efficiency, green building, and smart grid sub-sectors.

Private Equity HUB – Energy Markets Confront the Post-Petroleum Era

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The Cost Of Cutting Emissions | BusinessWeek

19 03 2008

Have you ever wished the whole world would just buy hybrid cars and be done with this global warming thing? It turns out that the price premium for hybrids also includes an enormous opportunity cost in regards to cutting emissions – far more effective alternatives exist that would also provide a much more enticing financial case as well.

Cost of Cutting Emissions

Charts by Laurel Daunis-Allen

The March 10, 2008 edition of BusinessWeek included this clever graph depicting the range of emissions-cutting activities spanning the financial range from money-saving initiatives like updating residential lighting systems to money-chugging activities like hybridizing automobiles. While the magnitude of the bars indicates the net cost (or savings) of each initiative, the width suggests the relative quantity of greenhouse gases each activity could conserve.

This relative analysis points out, among other things, that improving automobile fuel economy standards is a much more cost-effective and emissions-effective means of reducing greenhouse gases than car hybridization. This data should be an essential reference for any company’s corporate social responsibility plan, and person’s own reference for greener living, and any government’s pursuit of effective business and environmental policy.

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Developments in wind and solar

30 05 2007

Originally published October 12, 2006.

The high-tech energy sector (which some would say is redundant) is really fascinating.  Nowhere else do I find such a tremendous confluence of global politics, high technology, excellent business, and the opportunity to introduce value to the entire world.  This same ethos has been exhibited by several energy companies visiting Darden recently, including Chevron, DuPont, and Intrinergy.

Two renewable energy news items caught my eye today.  The first was on the front page of the Wall Street Journal, highlighting Shi Zhengrong, the wealthiest private individual in China, who built his $1.7 billion ownership stake in two solar powered companies that are capitalizing on “first-world technology and developing-world prices” to solidify a very valuable competitive advantage in one of the most energy-hungry nations in the world.  That wealth wasn’t built overnight (as my dad likes to say), but rather came on the heels of a PhD in Australia, several successful patent applications, two solar ventures and at least one IPO valued at nearly half a billion dollars.  But for those of us looking to renewable energy for a better global future, there are some clear advantages to drawing on resources outside the US as manufacturing quality achieves outstanding levels and labor conditions rise to humane standards.

Another news item, this time in BusinessWeek, further emphasizes the advantages of looking for energy in non-traditional areas.  Even while oil companies make headlines for  deep seas discoveries and offshore rigs that avoid the political and physical safety challenges of land-based wells, one creative thinker is proposing that wind energy folks take a closer look at those offshore technologies.  Anchoring wind turbines offshore isn’t new technology, but constructing anchors in a sea bed under several hundred feet of water (i.e. far enough from land to avoid spoiling the regular horizon) is generally prohibitively expensive.  One idea bearing merit for further examination is floating anchors – using tension cables to anchor the floating base mounts for mammoth wind turbines, saving bundles on installation dollars and employing larger, more powerful turbines for great er wind energy returns.  I don’t know much about the physics of floating a torque-laden turbine in ocean currents and tides, but if it can be done this too holds great prospects for offshore wind.  The political and physical safety benefits of offshoring are assumedly similar to the oil industry as well, leading to greater stability in prices (which we all are grateful for).

As a parting shot, keep your eyes peeled for BusinessWeek’s MBA rankings to be released this evening.  Word has it that Darden, already a top recruiting destination for many energy companies, will be among the Top 10 in two discplines (Marketing and Finance), leading many of us to expect a Top 10 ranking overall.





Building green

30 05 2007

Originally published June 2, 2006.

I visited Manhattan for the first time in several years over the Memorial Day weekend, and I kept my eyes peeled for a particular new architectural marvel among the city skyline.  Walking a few blocks north from Times Square on Broadway, my eyes caught the unmistakeable angular facade of the new Hearst Magazine Building, the first building to win LEED Gold certification in New York city (where they said it couldn’t be done).

The stunning structure of diagonal steel grids (no horizontal beams are used) emerges from the original Hearst structure at street level, creating a stunning juxtaposition of form and material.  Each triangular section is four stories high, creating a powerful sense of scale.

Some quick research on the building’s website, which has an excellent photo gallery and video tour, found these quick stats:

The “innovative ‘diagrid’ system (a word contraction of diagonal grid) that creates a series of four-story triangles on the fa�ade. No horizontal steel beams are being used, which is a first for North American office towers. In addition to giving the tower a bold architectural distinctiveness, it is providing Hearst with superior structural efficiency. As a result, Hearst eliminated the need for approximately 2,000 tons of steel, a 20 percent savings over a typical office building.”

“In addition, Hearst is using high efficiency heating and air-conditioning equipment that will utilize outside air for cooling and ventilation for 75 percent of the year, as well as Energy Star appliances. These and other energy-saving features are expected to increase energy efficiency by 22 percent compared to a standard office building. This is a welcome innovation in New York City, where rapidly growing electricity demand is threatening to overwhelm the local power supply.”

My green buildilng interest was further titillated by a full feature article in the current Harvard Business Review, Building the Green Way (free) – well worth the read on your train ride home!  Should the link ever fail, you can download the full article in PDF as well:

HBR_-_Building_the_Green_Way.pdf





VC for alternative energy

30 05 2007

Originally published May 17, 2006.

Venture capital investors seem to have one major, common point of reference – the dot come bust of 2000-2001.  That bust followed a record year of VC fundraising – some $106 billion in 2000 among top benchmark firms – and preceded a major fallout of invested dollars across the economy.  The lessons learned all seem to point to greater discipline in VC investments, but that’s not holding back (re-)growth in VC fundraising.  The Associated Press reported in April that venture capital firms had raised some $6 billion in the first quarter of this year, more than 20% over last year’s figure for the same quarter, with projected annual fundraising around $30 billion.  (See the article as published in the Washington Post online: Venture Capital Fundraising Rises in 1Q.pdf.) [Update: The New YorkTimes ran an article suggesting that the renewed vigor in venture capital is not a sign of a new bubble: A Few Signs of Froth Do Not a Bubble Make]

The trends of last year indicated strong venture capital interest in “clean tech” and alternative energy as solar and wind technologies matured and new ventures generated profitable cash flows, buyouts, and IPOs.  In fact, three of the top IPOs of 2005 were solar power companies, as reported by the Wharton Private Equity Review.  [Update: See BW interview with Bill Joy, co-founder of Sun Microsystems and current partner at venture capital firm KPCB: Green: The Next Big Thing.  He thinks greentech is going to provide the next Google in terms of revolutionary wealth-creation.)

Now, the energy market is showing no signs of decreased demand despite continually high gas prices.  As Americans (and others around the world) effectively say “no” to conservation (see James Ellis’ op-ed piece in BW, No Sacrifices, Please), energy demand will continue to grow while limited stocks of fossil fuels (not to mention the political delicacies surrounding the international energy market) keeps a ceiling on supply.  With the proven returns in solar and wind power, and wide interest and policy incentives in ethanol, biomass, and energy storage technologies, the stage could be set for continued successful investment in clean tech industries.

And hopefully in two years the stage will be set to hire this Darden MBA into a successful and growing VC clean tech fund.





Venture capital for energy technology

30 05 2007

Originally published March 17, 2006.

Advanced energy technologies for clean and sustainable (financially and environmentally) power seem to be a sort of Dr. Jekyll and Mr. Hyde in the United States.  While major corporations, such as Exxon, disavow any interest in trendy renewables, other large cap firms continue to celebrate their profitable ventures into next generation energy technologies.  BP Solar, a subsidiary of the more-recognized petroleum company, achieved profitability in the last two years, with continued prospects for high growth.  GE Energy, part of the venerable General Electric empire, recently announced a partnership with the Department of Energy’s National Renewable Energy Laboratory (NREL) to construct offshore wind turbines with 5-7 MW capacity – among the largest turbines ever built, and could result in extremely cost-competitive grid-tied wind energy at 5 cents per kWh (which would be at the lower end of US electricity prices).

The market for efficient and renewable energy technologies may be a matter of perception, but I’m excited to learn of increasing venture capital interest in the sector.  Nth Power, a prominent energy technology venture capital firm, “believes a classic venture capital environment exists in the energy sector. Experienced management teams are developing disruptive technologies aimed at underserved markets where value can be created in relatively short timeframes and where exits to public markets or acquirers are available and proven” (from Nth Power’s website).  Clean energy, which used to be squarely in the purview of environmental friendliness, is now holding prospects for widespread adoption as a high-growth industry (albeit still on a small- to mid-cap basis).

Nth Power, which receives roughly 500 business proposals each year (and funds 3-6, according to its website),  also released its annual energy-tech venture data report, showing some $917 million of venture capital flowing into 80 companies – a capital increase of 28% over 2004.  This energy tech venture capital represents perhaps 4% of the nearly $22 billion VC market, but that’s an increase from 1% in 1999, according to Nth Power publishing partner Clean Edge.

With the prospects of continued high growth in hydrogen creation and storage, more efficient solar PV modules and technologies, and large-scale, grid-tied wind power installations, efficient and renewable energy may continue to make in-roads as a viable and profitable high tech industry.  And with global business drivers like China and India aggressively pursuing rapid and sustainable energy expansion, the market demand only stands to increase.

Other energy tech and related venture capital links:

GE Energy

BP Renewable and Alternative Energy

Nth Power – Venture capitalEnerTech Capital – Venture capitalRenewable Ventures – Venture capitalKPCB – VC firm portfolio includes giants like Amazon.com and Google, as well as new “Green Technologies” portfolioFA Technology Ventures – Venture capitalThe Altire Group – Venture capital

Technology Partners VC – Venture capitalGreenlight Energy – Large scale wind developerIntrinergy – BIomass distributed generation, founded by Darden MBA graduates