The new clean tech is... not tech?
- 10 December 2008
By Molly Webb, Head of Smart Technologies, The Climate Group.
What is clean tech? In his opening remarks at an Intel Capital-hosted event on Dec 10, Richard Youngman of the Cleantech Group defined it as technologies focused on resource reduction activity and economic productivity.
Is there a 'bubble' in funding of clean tech that is in danger of going bust? The general consensus was that because clean tech crosses all sectors, not only power generation, then there can't be an overall boom and bust, but certainly some technologies may be overvalued.
The US has a capital advantage now, but not a tech advantage, so expect new ideas from unexpected places.
Youngman said that from 2002 onward, clean tech was in its 'pioneering' phase. From 2006 onward we experienced the first 'golden' age of clean tech investment. And from 2009 onward, we can expect that the drivers underpinning the investment are the same, but valuations are down so there are good opportunities for investors.
What are the trends to watch for? Expect that the winners will be companies and investors that grasp the complexity of the interrelationships between resources: water, energy, food, etc. Youngman is not optimistic about a global deal in 2009, but it is unclear how much this will affect in investment as there is no wavering in the interest in the corporate community. Expect a pullback in the energy sector focus of clean tech, with more of a boom in energy efficiency. The IT industry will take on a bigger role in 2009-10, because it has proven it can deliver resource efficiency. (I'd like to think the SMART 2020 report contributed somewhat to that!)
Overall, the peak of investment may have been Q3 of 2008, but the investment won't 'fall off a cliff' - there are Asian companies picking up undervalued assets and private equity firms taking an increasing interest.
After Youngman spoke, I sat on a panel with Nikolaus Meyer, CEO of Sulfurcell, a thin-film photovoltaics firm from Germany, and Steve Eichenlaub, Managing Director of the Cleantech sector of Intel Capital. Ashish Patel, Managing Director of EMEA for Intel Capital introduced the event and James Murray, Editor of BusinessGreen.com moderated.
Steve likes to think of clean tech as either the more efficient generation of electrons, or movement of those electrons, a definition that ties ICT into the discussion well.
Some of my main takeaways:
- unlike IT investment, clean tech is interlinked with the policies of multiple sectors, making it a big factor in the success of a company. Policies matter!
- clean tech is truly global - SunTech's original IP is from Australia, manufactured in China and listed on the New York stock exchange
- winners are the enablers - it is all about the business models like Better Place or ICt-led solutions like smart grid which enable a host of innovations
- systems integration is the next big thing - we have the technologies, but they mean nothing unless they can be rolled out and USED.
- Clean tech isn't about technology (hardware) alone, it's about the business models, policies and skills (software) that links hardware to users.