Green

8 trends to watch after cleantech's blockbuster $243 billion year

Global investment in clean energy topped $243 billion last year, surging 30 percent from $186.5 billion in 2009, according to a report by Bloomberg New Energy Finance.

The latest numbers show cleantech is still growing and attracting money, fueled in large part by government investment and favorable policies, such as Germany’s solar subsidies. Venture capital flowing into the sector also had a record $7.8 billion year, according to the Cleantech Group. But the last half of 2010 saw two consecutive quarters of decline in venture dollars invested, showing that venture capitalists are starting to pull back and look for more capital-efficient investments.

Big drivers for global activity in 2010 were China, which has put significant resources into renewables, offshore wind and European rooftop solar, which jumped 91 percent last year to nearly $60 billion, most notably in Germany (but the U.S., Czech Republic and Italy were also big markets). While offshore wind has struggled to get off the ground in the U.S., it had better luck in Europe last year, with a $1.7 million deal inked in Belgium and a $1 billion deal in Germany.

So, what’s next? Here are the predictions VentureBeat culled from the experts in the past few weeks:

A down year by solar standards — Last year marked a blockbuster year for the global solar industry, which grew more than 100 percent to 16.3 gigawatts, according to research company SolarBuzz, which expects 20.4 gigawatts to be installed this year thanks to some cutbacks on favorable solar policies from the strong market of Germany. But BNEF solar analyst Nathaniel Bullard predicts this will be a down year by solar standards — meaning 25 percent growth compared to the 40 to 100 percent growth seen in previous years.

Smaller financing rounds — The average global cleantech venture deal in recent quarters is now around $12 million, according to research firm Kachan and Co. According to managing partner Dallas Kachan, cleantech round sizes in the past few quarters have declined to “almost their lowest level in recorded history. And that’s good. More cleantech companies are now getting capital than in the days of the large, exclusionary government stimulus grants and loans that skewed investment last year towards larger deals.”

Biofuels shift strategies — The technology works, but biofuels have proven expensive and tough to scale. One big trend is that companies are shifting towards is making biochemicals — which sell at a higher price than fuels — and food additives. Indeed, BNEF reports that biofuels had almost a flat year last year, with overall investment down slightly to $7.9 billion from $8.1 billion in 2009. Biomass and waste‐to‐energy was also flat, at $11.6 billion, compared to $12 billion the previous year.

A good year for IPOs, possibly maybe — This is debatable, but at least one VC, Nat Goldhaber of Claremont Creek Ventures, has been banging the drum for IPOs in 2011, listing names like SunRun, Ice Energy, BrightSource Energy and Silver Spring Networks as potentials. Others aren’t so sure the market is ready for that yet.

Energy efficiency is king — Remember how investors are looking for capital-efficient investments to get more bang for their buck? Enter energy efficiency, which typically requires less capital than, say, a giant solar plant in the desert. Venture capitalists and market watchers have been predicting ad nauseam a good year for energy efficiency. Many of the most promising lighting, building controls and energy efficiency software startups have found success pitching to corporations and commercial building owners looking to cut their costs.

China dominates — What else is new here? With a giant population and booming energy needs, China has put billions into the smart grid and cleantech. Just today news hit that the Chinese government plans to double the country’s existing wind energy capacity by 2015. As many observers and stakeholders and Secretary of Energy Steven Chu have pointed out, boosting cleantech in the U.S.  will take the combined efforts of businesses, governments and environmental interests working together.

Building controls and demand response heat up — This is a class getting increasingly crowded, with big names and startups alike wading into the fray. Schneider Electric, Siemens, Johnson Controls, Lockheed Martin, GE and smart grid superstar startup Silver Spring Networks all have plays running in these sectors.

Big names and startups alike vie for a slice of electric car charging infrastructure market – As we reported earlier this week, big global companies like ABB and Siemens have partnered with or put millions into electric car charging station startups. Others, like GE and Eaton, are working to develop their own technology.

[Image via Flickr/xJasonRogersx]

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