Saturday, December 31, 2011

Clean energy 2011: Musk, Crane, Khosla and Jurvetson brighten gloom

This year ends on a downbeat note amid the gloom of the US debt and eurozone crises. In 2011, financial commitment to renewable energy stood at £2.5bn. Although the Department of Climate Change and Energy tried to spin this as a boost to the UK economy, it's a sharp fall from the £7.1bn invested in 2009. It is also a long way off from the £200bn required to stimulate the development of low carbon energy generation and tackle the perhaps more pressing energy capacity gap facing the UK.
This is also more than the entire global investment of $185.1bn in wind, solar and biomass according to Bloomberg New Energy Finance figures cited in Ernst & Youngcountry attractiveness indices (CAI) for national renewable energy markets.

Take a look at Ernst & Young's polls on pages nine and ten, which show where investor confidence has been undermined the most. It would seem that the $50trn budget deficit is small beer compared with the eurozone crisis.

The UK still holds it own at joint fifth (dubiously with Italy) in the top 10 all renewables index. E&Y report quarterly. I can't help but feel these rankings will change again come the next report for the UK and its European neighbours.
Figures soon to be published from the Cleantech Group show that $8.398bn was invested globally in cleantech VC last year. That's a drop from 2008's high point of $9.556bn but it's still an improvement on the past two years.
Most of that VC money is being spent in the US, with investment levels in Israel, India and China dwarfing those in Germany, Britain and France in the last quarter.
These are the kinds of figures I quote at people when I tell them that I report on clean energy - most of the time they exhale in sympathy, assuming the worst in the industry given the difficulties facing the renewables industry in the US, UK, Spain, Italy and Germany.
But such pessimism is not necessary - it's a bit like diagnosing terminal cancer in a patient with a broken leg. At some point, the broken economy will recover. We should be reassured that there is less capital in the industry - discipline and due diligence have to be more stringent than ever. The last thing the energy industry needs is a dotcom boom and bust cycle.
But venture capitalists such as Vinod Khosla and Alan Salzman are not about to give up on clean energy. Capital invested has a forcing effect on the rest of the industry - investment in innovations is where energy technology begins. For example, without Elon Musk and the success of Tesla, I'm pretty certain that the Volt and Ford's electric Focus would still be in the R&D lab.
But for Musk, the success of Tesla is a more earthly reward than his ambition of populating other planets with life which he dreamt about at college, before founding PayPal with Peter Thiel.
Musk's optimism is earned despite not quite turning a profit at Tesla, although its stock trades higher than the traditional automakers.
But Musk is not unique. He kicked off last year's west coast clean energy conference season at the Cleantech Summit. These conferences offer flashes of optimism that flare brightly amid the economic gloom.
If you'd like to cheer yourself up, spend some time listening to what these upbeat "thoughtleaders" have to say about their industries.
In this first one, Musk compares starting a company with "eating glass staring into the abyss of death…" but predicts that electric transport will be widespread - cars, trains and even planes.
In April, NRG Energy's David Crane explained how electric vehicles would take off in the US - and why as an electricity generator and retailer, it made sense for his company to stay ahead of the curve.
In August, Jesse Berst gave the best explanation I've seen so far as to why the US needs smart grid at the National Clean Energy Summit. Secretary Chu and Mabus are also worth listening to …

At the Going Green Conference in September, Vinod Khosla talked about his $1bn in profits so far from advanced biofuels, and Steve Jurvetson gave an almost evangelical exposition on synthetic biology.

However you end the year, hopefully these clean energy visionaries will be a source of inspiration for 2012.

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