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The Transition to a Green Economy: A Cleantech Roadmap


By Nick Hodge
Green Chip Review and Energy & Capital
November 24, 2008


With all this talk about the green economy, it’s nice to know that some people
are working on the play-by-play plan to get us there. This road map comes from
Scott Clavenna, CEO of Greentech Media. He calls it a “Greentech Market Taxonomy.”

It's broken down into five major market segments:

Power Technology: generation, storage, transmission and management

Transportation: vehicles, fuels, and infrastructure

Built Environments: greener buildings, energy efficient technologies

Environmental Technology: recycling, remediation, pollution control

Water, wastewater, and related technologies

Each of those categories contain four main sub-markets: Materials, Products,
Systems, and Software/Services.

As you can imagine, with the breadth of these markets and sub-markets, fierce
competition is brewing among nascent start-ups and established companies to
carve out a lucrative niche in the new market segments destined to emerge.
After the jump you'll find some of the new business opportunities that exist in
these market segments. Each one will spawn new companies that will ultimately
deliver profits for savvy Green Chip investors.

Power Technology

advanced battery technologies (materials)
high voltage transmission (systems)
smart grid, advanced metering, demand management (software)

Transportation

biofuels (materials)
hybrid, plug-in hybrid, and electric vehicles (systems)
electric charging infrastructure (software./services)
Built Environments
green construction materials (materials)
light emitting diodes (LEDs), organic LEDs (products)
smart building management systems and architecture (software/services)

Cleantech Opportunities & Challenges

Indeed, all those exciting new opportunities will certainly keep Green Chip
investors busy, what will all the fresh technologies and investment vehicles.
But before we can get to a fully established new energy economy, where cleantech
investors are giddy from staring at green numbers all day, there are first some
hurdles to overcome.

First and foremost, there are some mental roadblocks that need to be addressed.
For example, as the cleantech industry evolved, certain sectors garnered more
attention than others. You can probably name them off the top of your head:
solar, wind, geothermal, etc.

And that was fine. Then.

Now, a platform has been laid consisting of now-efficient and proven energy
generating technologies, like geothermal power systems, wind turbines, and solar
panels.

Of course, work still needs to be done to reduce costs, create economies of
scale, and numerous mergers and consolidation will likely occur.
Going forward though, investors at all levels--venture capital, private equity,
institutional, governmental and retail--need to focus on nascent and emerging
cleantech sectors. These are the companies and technologies that will allow us
to use already developed clean energy sources to a greater degree, while
updating the grid, and offering real-time energy and data management to
homeowners and utilities.

Second, there a few glaring gaps that must be filled in before clean energy can
become ubiquitous.

There are three main categories of these glaring gaps:

Technology gaps
Funding gaps and
Policy gaps

Technology gaps include sufficient storage capacity for renewable energy,
transmission and utility grid management, and the lack of an efficient
infrastructure for charging the electric vehicles of tomorrow.

Funding gaps consist of a current lack of will to bring start-up companies to
maturity and, eventually, to scale.

Policy gaps relate to a lack of legislative leadership at the federal level,
leaving the market uneven and uncertain. A price on carbon and a national
renewable portfolio standard are desperately needed, and doing it piecemeal at
the state level is simply ineffective.

Cleantech: Only the Beginning

The transition to a green energy economy is a multi-trillion dollar opportunity.
As we have seen, there is still work to be done.

Seed and venture capitalists need to recognize promising technologies early, and
fund them at those nascent levels.

Private equity and institutions need to start helping these companies emerge
from the start-up phase so they bring real solutions to market.
And the government needs to be an actionable leader, providing clear guidance
and policy on how to bridge the gap from the fossil fuel age to the energy
framework of tomorrow.

We're already moving in this direction. So savvy investors need pay attention to
these up-and-coming technologies, solutions, and companies.

Because the smart grid start-up of today could be the green chip juggernaut of
tomorrow.

But you'll only know about it and be able to capitalize on it if you read about
the industry early and often, and actually invest in it.

We all know about the success stories of today. Solar companies like First Solar
and Q-Cells. The Ormats of the solar world.

Which sectors and companies will fuel the next round of cleantech innovations
and profits?

This chart of recent venture capital activity holds more than a few clues:

Solar and biofuels still lead the pack in terms of funding, but smart grid,
demand response, and energy storage are the rapidly emerging new kids on the
block.

Lighting and vehicle technology aren't far behind, in terms of 2008 funding
numbers.

Keep an eye out for those sectors to merge into the mainstream in coming months
and years, as we we continue down the road to a new energy economy.
Call it like you see it,

 

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