Why Are Investors Bearish on Clean Energy?
I called my friend, 2GreenEnergy Associate and clean energy finance expert Bill Paul for some advice the other day. “I have a client with a breakthrough in battery chemistry, and I’m trying to find them a manufacturing partner in the electric vehicle space. Where do you think I should look?” I asked.
By the word “where,” what I meant was “At what companies?” But what I got from Bill was this: “My first suggestion is that you forget everyone and everything in the United States.” He went on, “There’s no money here. More correctly, there’s plenty of money, but it’s not moving. It’s sitting on the sidelines — two trillion dollars of it. Check out Europe. They have their own issues, of course, but at least they’re making clean energy investments, and not just sitting around watching the rest of the world fly past them.”
That’s sobering, isn’t it? What are we doing here that’s so dramatically wrong?
My answer, simplistic as it may be, is that our leaders in government have investors terrified. I am completely sympathetic to someone with money, who looks at the political scene and says to himself, “Next year, the U.S. could elect a president whose mission will be to roll back decades of progress the country has made in protecting its environment. His campaign platform calls for a near-total dismantling of the EPA, and, if elected, he’ll spend four years doing his damnedest to remove the last vestiges of regulation, enabling private enterprise to do whatever it wants regardless of the ecological consequences. Let’s see here…. how much money would I be smart to have invested in clean energy when the national interest in this subject goes from “tentative’ to ‘zero?’”
I’d be interested in your viewpoints.
You may have noticed they are not investing in anything else much, either. I would think that Battery technology might draw some attention. Storage of energy is the Holy Grail if wind and solar are to make the leaps that everybody keeps saying they already have. They have not. The wind does not blow all the time (particularly in cold weather) and the sun does not shine all the time. Of the two, in my opinion, solar has the most to offer because it is more reliable and its infrastructure is relatively maintenance free.
When the grants run out (the governments have no more money), who is going to be responsible for maintaining these massive wind farms that have been built?
Non-distributed, consumer owned and managed wind and solar for on-site use may have a lot of merit if things keep going the way they are but no one wants to hear that.
If the battery is good enough and affordable to work in solar PV off grid mode for at least till ten years then there is a market in India for a 500 watts capacity solar PV standalone device that is to be fitted in “Three hundred square feet” house for those who are below the poverty line.
Regards
Prabakar
It is a contradiction between aspiration to get profit and intention to build Green World.
To build green world is very easy when you are talking about it but don’t doing it.
The profit something materialistic is. That’s why ROI is the main item of any proposed green project and weighs more than all other its ideas.
The snobbery of investors and their advisors the second issue is.
If you want to do, you are looking to possibilities or seeking them. If you want to reject, you are looking to causes, obstacles, and circumstances or inventing them.
I can understand the reluctance to invest in the development of new technologies. But what about projects with clearly defined payback using proven technologies? What about projects outside the US?
There are no national distinctions in business and the criminal world so far as concerns mutual benefit.
What does it mean proven technologies? All data from technological tests do not show commercialization of them, reasonability only.
However when investor supposes that he knows everything about the technology and the business (snobbery), the reasonability is zero.
Hi,
Commenting on the battery technology without understanding the full details of the proposal is difficult to advice the prospecting partner. Electric transport will take some time to take up widely as many disruptive technologies and require widespread infrastructure which will take time. Meanwhile, if technology is promising, many applications are awaiting in PV as well as in wind sector for energy storage. If it is reasonably priced, the big markets as well as places of marketing are in China, India and other developing countries.Manufacturing and marketing depends on the level of sophistication of technology and price on the market.
Hi Craig! For investment opportunities, I would suggest my country the Philippines. We have a few manufacturers of motor batteries and the owner of the biggest battery manufacturer is a family friend and they are now looking to expand the business for lithium ion or other efficient batteries for EVs. Since we are strategically situated in Asia Pacific, we can supply our Asian neighbors: HK, Malaysia, Thailand, Vietnam, Singapore, etc. Kindly tell Mr. Bill Paul and if you are interested for JV or set up a new company, please let me know. Thank you and hope to hear from you …… VerR.
Virgilio R. Reambillo, Consultant & Project Manager, Board of Investments (BOI), Office of the Undersecretary of Department of Trade & Industry and BOI Vice Chairman, Trade & Industry Bldg.,
385 Sen Gil J Puyat Ave., 1200 Makati City
CP (63)920-960-1246, Mobile LL (+632)788-0528 Ofc DL (+632-890-9332, Email vreambillo@gmail.com, Website http://www.boi.gov.ph
WOW Craig, I thought it was something wrong with my presentation, or a few investors had all their funds tied up in Real Estate and just didn’t have any funding available. And those were the ones I had aproached. I didn’t know the USA was all messed up. That must be the recession everyone is talking about when they need an excuse. Perhaps all the Inventors and other “Conceptualizers” who have a need for investment funding for a startup should look to Israel, I read recently that even General Electric is investing in an Israel company developing a fuel cell that runs on sewage as a fuel generating electricity while purifing the effluent so it can be dumped into shallow ponds and allowed to dry leaving only plant fertilizer behind to sell to farmers and a considerable odor. (Ops the odor is a secrit, so no-one will know what smells bad about this concept.)
Tell your friend that there is a world beyond the borders of the USA. Quite possibly a better world nowadays, and especially for the next few years.
For the most part new technologies, especially “disruptive technologies” have been financed by the VC world. (Or a specific companies VC carve out) Unfortunately this means that you or your client have to peak their interest and follow their game plan. (This would include giving up most of his/her company & control) The problem with the VC model is that it is good for industries and not so good for others. Given the diversity of the Cleantech world, this would infer that the VC model is probably not the best route for most fledgling Cleantech companies. As for big companies (multinats or mid cap public companies) there exist other challenges. As previously mentioned the lack of clear legislative direction (with the possible exception of California or the EU) also adds another component of risk to any investment of this nature. In summary, the lack of real risk taking to develop the next generation of “new, clean” energy and transport is greatly hampered by the lack of risk capital specifically targeted at these type of investments. Additionally, the deep pockets of the established, old tech multinats (read oil companies) continue to lobby against any new developments on the cleantech scene.
Craig,
As you well know, investors do not care about technology and they are short-sighted visionaries if there is such a thing. All they want is a quick X-fold return of their investment. For this reason innovation is doomed now.
If your friends are those who I believe they are, they should look into competition’s yard:
http://www.revolttechnology.com/news.asp?id=57
I would agree on the thesis of uncertainty in the USA.
I would opine that there is an even greater uncertainty in the minds of the developed nations leadership regarding the nature of our overdrawn economies, and how we can continue to put our money where our greenish tinted mouths might be. My personal greatest fear is that the inevitable deleveraging that must continue to occur will drive us to the choices our more nobler instincts recoil from. Energy is at the beginning of all supply chains, and coal is the cheapest (in direct cost terms) energy on the planet – by quite a margin. Only leadership of the most (figuratively) dictatorial sort can deal with such intense dichotomies.
Craig – right now Cleantech investing is on the margin. Except for specific funds managers who have stated missions of investing in green technologies, fund managers have to have a clear 5X return picture to even consider investing. In this intertwined world economy as long as oil stays cheap (under $120/bbl) there is little motivation for alternative transportation. As the world economy improves (and it will) and the demand for oil goes up – interest in alternative fuels will follow. For those of us who have been involved in the industry for decades it is hard to wait. When it does happen – we will be visionaries!
Washington is not broken, it is working very well for the people who have bought & paid for it. That is not how a democracy works. Why would an investor want to invest in an industry when the US Congress violates the federal anti trust laws by giving oil and coal large amounts of cash to keep on destroying the environment.
As Greg Wilson has adroitly observed above, it is not that “our leaders in government have investors terrified”… it is that a sizable and powerful element among the investing class have utterly failed to prevent the corporations in which they hold shares from purchasing all of “our leaders in government” wholesale, and working them like sock puppets for short-term and short-sighted gains.
The problem is not “our leaders in government” – it is the process by which they are selected (and therefore the parties to which they are beholden) in order even to have a shot at actual candidacy for elected office. I’m not writing about political parties here, I’m writing about financial parties – call them misguided investors in government.
Both parties are completely prostituted to the following interests – Big Oil, Big Pharma, Wall Street, Telecom and the Killing Machine. The only differences between red and blue suits are the velocity at which they drive us toward the cliff edge, and the pride or shame they show in their wholly-owned status. No stable policy that resembles a sane path for our population has any hope to prosper and succeed while our state federal corporate brothels are still accepting legal tender as “Free Speech”.
Ladies and gentlemen, unless we can get the foxes out of the henhouse, get the town criers out of the merchants’ pockets, and put the population in the driver’s seat, America’s best days are far behind her, and our most noble realistic goal will be to obtain the forgiveness of our children.
Define “revolutionary”. Cheap, safe materials? Significantly higher energy density? Proven ability to recharge hundreds of times? Does your friend have their intellectual property house in order? Meaning, due diligence to ensure that it can be protected, and probably provisional patent application filed. Note that your friend talked about the US or Europe; based on IP considerations, those are the only ones I would consider also.
I have some trouble believing that if your client has a revolutionary battery chemistry — much higher energy density, or cheap non-toxic materials, or some other revolutionary advantage — has IP protection to go with it, and is at the stage where they are ready to go to manufacturing, that they can’t attract interest from either a battery or chemical company.
You might try the National Venture Capital Association – http://www.nvca.org
If the technology is proven, I would be willing to put together an investment group for manufacturing, but not research.
Craig,
In the last two years I have viewed over 40 ‘miracle’ battery proposals. Not one has the faintest hope of ever reaching manufacture.
Solid State batteries are a promising new development. The first scientific publication of the technologies potential had investors scrambling to get on board, even though commercialisation will be a decade away.
If your friend really has a practical battery product, with genuine potential, there are hundreds of US investors and tech companies that would joint venture, just to share in the DOE grants and loans still available.