And what are the three hottest technologies? Smart grid, algae (advanced biofuels), and, surprise surprise, thin-film solar.
Venture capital investment in clean tech has been soaring in recent years because of high energy prices along with the growing concern and growing action on global warming. You might think that VC investment would be hurt by the financial downturn, as credit freezes up and capital markets lose money. But in fact VC investment is aimed at payoffs in the three- to five-year time frame and beyond.
People who understand that oil prices are inevitably going up in the medium-term (assuming we don't end up in a global depression) and that U.S. action on climate change is inevitable no matter who wins the election, then medium-term clean tech investments become a very good place to park your money right now. And that's just what a new report from the Cleantech Group finds:
... cleantech venture investments in North America, Europe, China and India total[ed] $2.6 billion across 158 companies, an all-time record quarter. The previous record quarter was 2Q08, which saw $2.2 billion in cleantech venture investments.
The 3Q08 total is a 37 percent increase over the same period a year ago, and 17 percent increase over 2Q08. Cleantech venture investments through 3Q08 now total $6.6 billion, exceeding the full-year 2007 total of $6.0 billion.
"Cleantech venture investing has continued to show strong growth despite the unprecedented turmoil in the credit markets during the quarter," said Michael Goguen, Managing Partner, Sequoia Capital and co-chair of the North American advisory board of the Cleantech Group's Cleantech Network, the largest global network of cleantech investors and companies. "In the coming quarters, we could foresee large scale cleantech projects having to work harder to get financed. However, the capital efficient, early-stage companies addressing the inefficiencies of existing markets should see continued venture financings."
Precisely. The good news for project financing is that it finally looks like we are going to get the renewable energy tax credits extended. Investing in early-stage companies now is analogous to getting your MBA or going to grad school during a tough job market. It's a good way to ride out tough times. Here is where the hot money is going:
* SMART GRID: Smart grid companies raised a record $202 million in 3Q08, led by Gridpoint, which raised $120 million, Trilliant at $40 million, BPL Global at $23 million, and Eka Systems at $18.5 million. By comparison, over the past 10 quarters, smart grid companies raised slightly under $30 million per quarter.
* ALGAE: Following a record 2Q08 which saw $84 million in investments in algae, 3Q08 saw over $95 million in investments. Sapphire Energy raised at least another $50 million while Solazyme raised over $45 million.
* THIN-FILM SOLAR: Thin-film startups raised a staggering $620 million in investments in 3Q08. CIGS (copper-indium-gallium-selenide) startups raised the most capital, including SoloPower at $200 million, OptiSolar at $78 million, and Miasole at $35 million, while German CIS (copper-indium-sulfide) provider Sulfurcell Solartechnik raised $134 million. AVA Solar, a competitor to First Solar in the cadmium telluride space, raised $104 million, while UK-based G24 Innovations raised $30 million for its flexible organic dye thin film technology.
"The impending production of electric vehicles by major manufacturers, which will require utility companies to improve the electrical grid to manage plug-in vehicles, has spurred investment in smart grid companies," said Brian Fan, Senior Director of Research for the Cleantech Group. Fan added, "We have seen the arms race in thin-film solar reach new heights, and now we are seeing it in the algae sector, as investors funnel ever-increasing amounts of capital to companies that have not yet successfully scaled up commercial production. Investors are doubling down to maximize the probability that their portfolio companies can keep up with competition and become winners in their respective markets."
EUROPE
The amount invested in European companies was the highest ever recorded for a single quarter. European companies (including Israel) received $742 million in 46 disclosed financing rounds, or 28 percent of the global total. Sectors in Europe which advanced this quarter include thin-film solar and wind.
NORTH AMERICA
U.S. companies received a record $1.75 billion in 77 financing rounds, accounting for 67 percent of the global total. California-based companies received approximately 42 percent of cleantech investments, with a record $1.1 billion in 35 investments. Canadian companies received $49 million in six investments.
CHINA and INDIA
Chinese companies raised $111 million in venture capital across seven rounds, accounting for approximately 4 percent of the global total. The largest single investment was in Feida PV Co., Ltd., which produces solar cells and modules. Investments in solar companies accounted for more than half of the investments made in China.
Indian companies raised $6.3 million in venture investments across two rounds, accounting for approximately 0.2 percent of the total. The only disclosed deal in India this quarter was raised by Attero Recycling, an e-waste management and recycling company.
This is all very good news for those of us who believe in serious climate action. While much bigger federal investment in clean tech R&D can't hurt, what we are most in need of now is what we are in fact seeing -- larger investment in companies with technologies that that hold the promise of scaling up big-time in the five-year time frame.
This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.
‘Heretic’ battles straw man
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Delay And Deny Posted 12:49 pm
04 Oct 2008
There's real Green technology.
Then there's "The Cult".
The Cult is:
Apple
Priuses
Al Gore
Hollywood Hasbeens
If you violate the cult things, then they say your "against science".
Unfortunately The Cult doesn't like the one real technology that will power the 21st Century: Hydrogen.
CleanTech doesn't like hydrogen.
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Sam Wells Posted 2:51 pm
04 Oct 2008
My take is that the smart money has departed from computers, housing finances, big oil, and all the other bubbles. Many investors have fled to the relative safety of T-bills, minerals such as gold, and food-grade commodities (but watch ethanol bubble too). So where does the savvy investor look for action? Clean energy certainly is one.
The numbers mentioned in the article are but a very small part of the market, like almost nothing. Algae? You must be kidding. The "staggering" 620 million for thin-film is tiddley-winks. But it does show some inertia in non-traditional markets outside of windmills and the hocus-pocus pipe dream about clean coal. Why not mention the tide and wave machines as well?
By the way, "smart grids" aren't smart and they're not a source of energy at least as I know. I've always promoted the concept of improving the electrical infrastructure but you're talking some make bucks there, and the states, regional power consortia, and national government does seem to have a clue ... maybe except a few West Coast folks. It's simply called "hooking up power in a manner to distribute it more efficiently and to expand into the electric vehicle sector." Gee, how much simpler. -sam
Onward through the fog
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Pangolin Posted 1:35 am
05 Oct 2008
It's just not good enough to simply produce an improved solar panel anymore. New systems that people are bringing to the market will track the sun, tell you what the power output of each component is and e-mail you if the panels are dirty or a section is getting shaded. Sometimes they will give you hot water as well as power.
The improved power sources are going to be connected to improve household energy management tools that will track household power use, appliance efficiency and regulate how your heating/cooling system is managed to sync with wind or solar power availability. It's not unthinkable that a unit the size of your current thermostat could plan and regulate your house's heating budget weeks in advance.
This is what the engineers that brought us the dot.com boom are doing and although not all of them are going to hit some of them surely will. These are the smartest guys in the world, they see business failure as just another scientific experiment. They share the data and move on.
Interesting times.
Put the Carbon Back
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Bob Wallace Posted 3:35 am
05 Oct 2008
Much better than the limits of a simple on/off system, we get to tweak the gray areas for maximum performance.
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Sam Wells Posted 4:24 am
05 Oct 2008
But my house - I'm going to rip out that programmable thermostat and go with a Honeywell mercury switch controller. To heck with all that noise. No telling how many times I've redone it because the flash memory is no good - and I've got an expensive one. I'm going to literally throw it out the window.
Perhaps I'm a unique case. I live in South Texas and have a wife who is going through menopause. So she goes to work and I let the temperature float up to about 83 with the windows and doors open. Then the boss comes home and SHE gets to have it her way, usually cooler A/C or windows open in the winter.
I can't do that with a programmable thermostat. It doesn't know when I have the flu and want it warm, or when the wife is throw off all the covers in the middle of the night. Personally, I think programmable thermostats for residential homes are way over-rated and can sometimes lead to excessive bills, not cheaper.
How do I save money? I caulked everything tight and bought some new units that consume way less energy than the old 1970 stuff that came with the house. To me it's not the energy as much as saving money, plain and simple. And ... err ... not having a war with the wife!
sam
Onward through the fog
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Bob Wallace Posted 6:44 am
05 Oct 2008
Why can't you get one that allows you to tweak it via your cell phone/computer/whatever?
That's where we need to go. Programs for 'normal' with easy ways to change. Even from a remote location.
Heading home earlier/later than normal? Should only be a few button pushes to change the heat up/cool down time for that day. Or three Thursdays from now....
That's how I see the smart grid working.
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