Cap and Rebate

CleanTech Investing in 2009 & 2010

Posted on by brettalan

356 investments in CleanTech occurred in 2009, a new high. However the dollar amount is down to $4.85B from $7.6B in 2008 over 350 deals comparatively, according to a new report from GreenTech Media. The downward trend over more deals may reflect the global capital markets as much as it does the CleanTech sector itself. Or, the optimist could point out that overall investment was nearly $5 billion in spite of the global economic crisis!

According to several VC firms spoken to on a recent trip to Silicon Valley by the staff of this blog, investors are seeking less capital intensive opportunities while seeing an influx of opportunities. Partnering with firms that have smaller capital needs, VCs may play a more significant role in their management and development, while lessening the potential for large, future capital re-investments. This trend may in part be a result of the challenge to raise capital most funds are facing as well as their preference to maintain control.

Source: GreenTech Media

The solar sector is generally viewed as capital intensive, but despite this was the largest sector accounted for in 2009 investments with 84 deals over $1.4B. Biofuels was second, and energy storage, smart grid and automotive rounded up the top CleanTech sectors. Water now is on the radar with $130MM over 33 deals.

Things to look for in 2010:

1) Codexis IPO? Tesla Motors IPO? Solyndra IPO? (all 3 have reportedly filed)
2) Will oil price fluctuations help CleanTech?
3) Will a recovery of the capital markets occur to help encourage the flow of seed money?
4) Introduction of more electrified automobiles effect on energy storage and transportation (many new models expected this year)
5) And much more! (water, smart grid, government mandates, materials and infrastructure)

(CMEA Ventures invested in A123, and is also invested in Codexis and Solyndra- a nice, potential 3 firm IPO streak for 2009-2010!)

Cap and Rebate

Posted on by brettalan

As a health care bill has exhausted both Americans and bi-partisanship simultaneously in the States- we hope 2010 turns its attention towards energy matters. More specifically, a Cap and Trade bill as mentioned by President Obama and the Democrats is scheduled to take front stage on the political arena. The bill, if passed, would affect the CleanTech sector largely as it would encourage the development of cleaner generation, efficiency plays and would affect energy prices in the largest fossil fuel market in the world.

While Cap and Trade’s prospects are currently shaky at best- a new bill introduced this December may circumvent both the flaws of C&T as well as the partisan warfare already surrounding it. Senators Maria Cantwell (D) and Susan Collins (R) introduced a Cap and Rebate bill- where 75% of the proceeds will be returned to the American people, with 25% going to fund clean energy research and development, efficiency programs and related regional assistance to reduce fossil fuel intensity. The average American family would receive $1,1oo throughout the year, with 80% of Americans receiving a net increase in funds accounting for increased energy expenses.

Why is this bill better? It puts energy use decisions in the hands of the public- who can choose to use their funds to increase the efficiency of their homes and businesses, reduce consumption or to procure renewable energy directly. Giving consumers both the direct price signal (increased prices) as well as the proceeds is very important both economically and politically. The bill avoids a carbon trading scheme involving the investment banks- who are politically cancerous at the moment. Carbon offsets are not permitted- avoiding any possible fraud or gaming of the system. And most importantly, it will reduce carbon emissions 20% by 2020 and 83% by 2050.

It is estimated that $16-$46 billion could be funneled to clean technologies (the 25% portion) by 2020.  The investment by both the government mandated fund as well as from the American public ($48-$138B) could have amazing effects for companies in the relevant clean energy and efficiency sectors!