Clean Tech and Good Business

A Rebound in Cleantech Investments?

2009-09-07T09:38:00.000-07:00

The first half of this year has been much slower regarding investments in clean technologies and renewable energy projects, $294 million in the US in Q1 2009, compared to $1,8Bn in Q3 2008. Recently however, investments are increasing, reaching $540 in Q2 '09. A clear sign that the economy is recovering.

The lower activity is not necessarily only a bad thing; vc funds making deeper assessments before committing themselves will make the capital influx into the clean tech sector hopefully reach those who most deserve it, healthy, profitable companies with a feasible expansion plans. This will decrease the risk for creating bubbles. Many good ventures will however suffer, especially if they have not yet reached the commercial stage.
Ideally, increasing cleantech investments will be done with the scrutiny and careful analysis applied during the worst decline.

More in the Mercury and, regarding the Swedish situation, here

Investments continue to pour into cleantech

2009-05-14T06:52:00.000-07:00

Despite the fact that investment rate has decreased during the last six months, money continue to pour into cleantech. PowerIT is one of the companies; the may play an important role in increasing the efficiency in the US power grid.

Some observers have called the strong interest in renewable energy and environmental technology a "green bubble". I would argue that while it is definitely probable that some individual companies will not perform as well as expected, and temporary trends may create situations where entire sectors are overpriced, the underlying reasons for investing in cleantech are strong and valid, and many sectors will continue to grow until environmental problems are solved or at least mitigated.

Solar power companies see lights in the tunnel

2009-03-31T22:29:00.000-07:00

The optimism remains in a lot of Swedish cleantech companies, and solar power companies are no exception. For example, Climatewell is a Swedish cleantech company with a factory in Spain. With new investments in the fabric they are multiplying their production rate. Stockholm based Midsummer is another company using the sun as a direct source of energy, with a fully-automated production technology as their competitive advantage. The method is borrow from the cd/dvd industries. Recently, Midsummer was chosen as one of te most interesting technology companies in Sweden at a venture capital event. They are looking for additional financing to be able to scale up the production to commercial levels next year.

The most spectacular news however might be the articles about Ripasso Energi AB. Ripasso intends to use Stirling engines for solar power generation. The use of the stirling engine is an increasing trend in the solar tech sector, other proponents include Swedish Cleanergy. Ripasso pretends to use an engine earlier used in Swedish submarines. Another interesting aspect is the owner of Ripasso, former Ericsson CEO Sven-Christer Nilsson. According to a recent public funding application, their pretensions are far from modest: "to make Sweden a world leader in the area of Concentrated Solar Power".

Wind Power to Increase in Sweden

2009-02-12T16:30:00.000-08:00

The 30 largest wind power developers in Sweden are planning to develop wind farms amounting to approximately 18GW in power during next few years. This calculation considers approximately 6000 new towers, generating in total 55 TWh per year.
With increasing possibilities for EU member countries to count emission reductions from projects developed in other Annex I countries, this number may as well increase even further.

Further beneficial factors for the wind power industry are looming at the horizon, through a from a recent Swedish government proposal. According the proposal, bureaucratic obstacles will be removed, and the possibility for wind farm neighbors to appeal court decisions will be reduced.

Recovery through Infrastructure and Cleantech Investments

2008-11-25T11:05:00.000-08:00

According to Cleantechies.com, infrastructure and alternative energy will be two areas which Obama's recovery plan will focus on.

There are signs of similiar strategies in other countries. If carried out, this may soften the fall of young cleantech companies even further.

Morphic Biogas Fuel Cell System

2008-11-25T05:41:00.000-08:00

After successful pilot testing, Morphic will no start to market a complete system for biogas-to-hydrogen transformation. The reformer technology comes from their subsidiary Helbio S.A. and generates a hydrogen used in fuel cells from Exergy Fuel Cells, another subsidiary.
Naturally, biogas from waste disposal centres, farms and waste water treatment plants could be upgraded and used directly for heating, power generation or vehicle propulsion; it is not entirely necessary to convert it to hydrogen. But thanks to the conversion, the application is more versatile. The hydrogen can be used wherever fuel cells are necessary.
Read more about it here (in Swedish).

Biogas fuel cell applications, but with a rather different technology, have earlier been discussed here

Wave Power Competition

2008-11-15T11:53:00.003-08:00

WaveRoller and WaveDragon, technologies that have been mentioned earlier in this blog, are far from alone in the quest for efficient utilization of the energy generated by waves and tides.
earth2tech providedes a neat summary of 12 other competitors.

Short term challenges, long term opportunities

2008-10-25T09:58:00.001-07:00

No sector is immune to the current financial unrest, and also many cleantech companies will face hard times during the next year or two. And highly leveraged projects, as often is the case with many wind power, may be postponed or cancelled.

Still, there are reasons to believe that the cleantech sector will fare relatively better than other areas. And in the long term, the outlook is still positive. The reasons are several:

Renewable, domstic energy is a measure to improve national security. It's a long-term necessity independent of the current financial unrest. Public funding will continue to reach the necessary goals.

The possible physical mechanisms behind climate change are indifferent to a Wall Street crisis. Companies who embrace this fact will act accordingly and invest in renewable energy and related technology as a long term strategic resource. Further on, renewable energy will be a priority for public funding.

Emerging economies will participate in the global emissions market. Sooner or later, giant economies like China and India need to share the burden and reduce the CO2/$ growth ratio.
Higher living standards in emerging economies will increase consumer consciousness and the demand for a cleaner near-environment. When you are starving you don't have time to bother about smog or inadequate waste-management, but as conditions improve, these issues will come closer to the top of the agenda. That is good news for companies within these sectors.
Energy efficient is more important than ever when times are hard and resources scarse.

In particular, projects and technologies that benefit from public funding will find less problems than others. So will those companies and projects financed by equity rather than debt. The situation is troubling, but there is no need to panic.

Volvo to resume development of gas vehicles?

2008-10-15T08:19:00.000-07:00

Volvo CEO Stephen Odell has only been working for Volvo during a few weeks. According to a recent interview(in Swedish), Volvo may now reconsider their decision to not develop any more gas vehciles.

With their gas vehicles, Volvo had a relatively important part in the promotion of biogas in Sweden during the late 90's and early 00's. During these years the biogas sector developed considerably, with several technology companies starting up as a result. A few years later, Volvo informed about their decision to not develop gas versions of coming models. Until now, perhaps.

Wave Power Already Profitable?

2008-10-14T12:16:00.000-07:00

According to a study by Olav Olsen A.S. on behalf of Norwegian Langlee Wavepower, wave power technlogy from Langlee and other companies may already profitable in some parts of Europe such as Great Britain, Ireland and Portugal. The reason for this is the high prices of other types of ocean based energy in these countries.

Langlee, partly (10%) owned by Swedish Borevind, is developing a wave power technology that can exploit the energy relatively small waves.

Publicera inlägg

Cleantech Opportunities in the Eye of the Storm?

2008-09-25T21:31:00.000-07:00

The current financial crisis could possibly affect the energy industry in profound ways, according to Wall Street Journal

Although most opportunities may seem risky at this point, for investor with financial soundness and strength now could be a good period to acquire and take over undervalued assets. With banks turning down borrowers, projects could remain undeveloped and innovations left unfinanced.
Speaking of acqusitions, the largest Swedish power company Vattenfall has made an offer on British Eclipse Energy. The offer at £18 per share roughly amounts to £51,5 million. The company has a 250MW combined natural gas and wind power offshore project, on the coast of England, and five land based wind power projects in Wales. Iberdrola and EON are mentioned as other "predators".

New Swedish cleantech company to promote electric car networks in Sweden

2008-09-16T15:43:00.000-07:00

According to its CEO Patrik Nilsson, Sustainable Innovation Sust is "a national centre for energy efficiency in everyday life"
The Swedish company is so far supported by a dozen companies, among them Scania, Vattenfall and Sustainable Technology Partners.

Among the top priority for the company is to develop an infrastructue for electric vehicles in Sweden. Through a pilot project using 50-100 electric vehicles Sust and its partner companies will develop an infrastructure and a paymento model.

This project is interesting considering projects being planned or carried out in Israel, Germany and Denmark.

A mix of efforts to achieve higher transport sustainability is necessary to avoid being restrained to only one or two, potentially vulnerable technologies (such as 1st generation ethanol).

IKEA Greentech - a new Swedish cleantech investor

2008-08-12T09:03:00.000-07:00

IKEA will invest in Swedish and European cleantech companies, through it's subsidiary IKEA Greentech AB. IKEA prospers from the interesting combination of a excellent distribution network and customer base and a very solid financial position.

In particular, IKEA will invest in cleantech companies with products that benefit it's clients (they amount to 500 000 000), warehouses (270) or suppliers (1500), from the alternative energy and energy efficiency areas.

So what should they focus on? Do the maths, 500 000 000 clients is a very interesting customer base. Hence, finding high-quality products relevant for IKEA's customer should be a top priorirt. Further on, they should be cost-efficient in small scale. An area that satisfies both of these conditions is energy efficiency (including water and material efficency). I would say that where the largest potential is to be found.
Small-scale energy generation using energy from the sun (solar power, solar heating and wind power) does fit with the first description. Small-scale energy generation is getting increasingly popular whit high petroleum prices, and solar insolation is favourable in many of the countries where IKEA is present. However, as discussed earlier, the efficiency of these installations is often far lower than medium- to large scale plants.

Considering what may be useful for their suppliers and warehouses, other areas may be interesting as well.

Sweden has got the largest share of renewable energy in the European Union

2008-07-25T06:22:00.000-07:00

Sweden the top nation in the European Union regarding the share of energy coming from renewable sources, according to a recent study by the Swedish Energy Agency. Hydropower and forrest-based bioenergy are two contributing factors. 43,3% of the energy comes from renewable, up from 33,9% in 1990. 52% of the power supply is generated by renewable sources. The largest share is reached in the power sector, followed by the paper & pulp industries and the district heating sector. According to the study, the largest room for improvements regards the transport sector, which only represents 1% of the renewable energy use in Sweden.

Other countries in Scandinavia, while non-members of the European Union, generate an ever higher share of their energy from renewable sources. Iceland is the foremost example, with 73% of total primary energy supply and 100% of power production comes from renewable sources. Further on, an impressive 98% of Norwegian power supply comes from hydropower.

There are certainly many opportunities to increase the share of renewable energy in Sweden even further. Many medium-sized to large initiatives are under way. Large wind farms are being developed throughout the country for power production, and many medium-scale biogas plants are planned in southern and central Sweden. The biogas sector is already extensive in southern Sweden and in the Stockholm area. Further it is fairly within reach to increase the hydro power output by increasing and optimizing the generation the rivers already being used, and to develop low-temperature geothermal energy systems for heating. And as capital costs decrease, solar power and wave power will also be feasible options, although it would take many years for these types of energy to constitute an important part of the Swedish energy sector.

Fortum to invest US$ 10 million in cleantech venture capital fund

2008-07-23T09:04:00.000-07:00

Finnish energy consortium will invest US$10 million in the Canadian cleantech fund Chrysalix Clean Energy Fund.

The investment portfolio of Chrysalix includes solar power, fusion power research and fuel cell technology. More investemnts are being evaluated.

The purpose of these investment activities at Fortum is said to be dual; to gain strategic insight in new energy technology and to receive sound financial returns.
Investments in new clean technology will be made both internally and externally. Through enhanced R&D activities Fortum hope to gain long term competitive advantages.

Read more about it here.

Interesting IT solution for fuel efficiency

2008-06-04T06:10:00.000-07:00

Swedish company Blueflow Technologies has developed a technology for informing boat operators on fuel combination and speed. With simple additions to the boat, and with a wireless connection, it is possible to display the information on a cell phone or laptop computer.

Using this information it is easier for the boat owner to choose speeds with higher fuel efficiency. With soaring oil prices, investments in technology like these pay off in even shorter periods. Further on, BlueFlow are sure to find a strong domestic market as well, Sweden is the country with the most leisure boats per capita.

Check it out here

Lignoboost aqcuired byt Metso Power

2008-05-28T20:50:00.000-07:00

Lignoboost and their predecessors have during almost a decade developed a promising technology to produce biofuels from black-liquor a byproduct from the pulp industry. Now they are taken over by Finnish group Metso.

I have earlier mentioned them regarding my skepticism about some ability to attract Swedish VC. Well, at least they got aqcuired by a large group of companies, that already produce technology with the same target market. That will open up many opportunities for Lignoboost.
It will be interesting to see however, if politicians, public servants and institutional investors will take this as another example of the Swedish cleantech "brain-drain": the inability of Swedish cleantech companies to attract national investors, and the eventual take-over from foreign companies (Solibro being a high-profiled example). Further on, would it is interesting to question wether this is a problem or not.

Hemmamarknaden för biogasteknik

2008-05-15T07:15:00.000-07:00

Biogasprojekt får en tredjedel av KLIMP-stödet, rapporterar Ny Teknik.

Detta är mycket glädjande, eftersom det är det mest klimateffektiva biobränslet som existerar på kommersiell basis. Detta är inte främst genom högt energivärde i gasen (som i ej uppgraderad rågas endast uppnår 55 % - 65 % av energivärdet hos naturgas), utan för att kontrollerad rötning väldigt ofta ersätter alternativa behandlingssätt där avfallet spontanrötas och släpper utan metan till atmosfären. Som bekant är metan som växthusgas c:a 20 gånger mer potent än koldioxid. Att KLIMP-pengar hamnar i biogasprojekt är därför ett effektivt användande av pengarna. Det är givetvis också logiskt tillfredställande att man utnyttjar avfall som en resurs och inte som skräp.

Ett antal projekt planeras runt om i landet

En stark hemmamarknad gynnar våra inhemska biogasföretag, som de senaste åren blivit några fler, i form av företag som Scandinavian Biogas och Swedish Biogas International. De viktigaste utrustningsföretagen kommer däremot från Tyskland. Här är några av de främsta svenska företagen:

Läckeby Water Group
Malmberg Water
Sweco VIAK
Biosystem
Scandinavian Biogas
Swedish Biogas International
Bioprocess Control

Quote of the day

2008-05-14T19:16:00.000-07:00

"Don't get the idea that I've turned green. My business is making money, and I think this is going to make a lot of money."

-- T. Boone Pickens in the Guardian

Takeover king & oil baron T-Boone is planning a $10bn, 4GW wind farm in Texas, which would be the world's largest. He still thinks that wind turbines are ugly. Despite the merits of wind power, I do understand that many find wind turbines as not appealing. It would be far less visually obtrusive to generate power from waste heat (which is possible with the Opcon Power box).

By the way, Boone's biography is entertaining and can be find at bargain prices.

The state of the Swedish cleantech market

2008-05-12T18:28:00.000-07:00

According to E24 (in Swedish), Swedish cleantech companies face a dismal outlook, with only 3 out of 14 publicly traded companies making a profit last year.

A few observations could be made however. First of all, these numbers should not be taken as a representation of the whole cleantech market. Many successful cleantech companies are not traded on the public stock market. It is also important to remember that many companies not mentioned in the article work with cleantech in one way or another, but only as a part of their product or service portfolio. For instance: Sweco (consulting), ABB (energy efficiency, etc) and Alfa Laval (biofuel equipment, etc). Further on, in the long term several of the companies mentioned in the article face growing demand for their products.

To invest in a company that is yet to make a profit requires excellent market insight and at least a basic technical understanding of the products being offered. And even more so than in the case of investing young but profitable companies. Rome wasn't built in a day and many cleantech companies will need several years of R&D before being able to launch a competitive product. Ambitious innovators may become early leaders in developing markets. But without an initial knowledge, the outside investor might as well bring her or his money to a racecourse, where the gambling is equally risky but more exciting.

Investments in renewable energy reach USD100 billion per year

2008-05-07T08:39:00.000-07:00

Renewable energy investments now amount to USD100bn according to a report by the United Nations.

There is no question about this area being a part of the mainstream investment world. Some types of renewable energy investemts (large scale hydropower projects in particular) have represented an important part in the portfolio of energy companies since decades or even longer. Other kinds, such as wind power and solar power play an important role since more recently.

And a higher demand for energy, increasing oil prices, an increasing world population and the fear of climate change is going to keep the importance of this area growing. Cleantech is one of the fastest growing investment sectors in the US, increasing by 18% during the first quarter of this year - despite the current financial unrest. And as I predicted, energy efficiency plays an increasingly important part. It is the fastest growing segment in cleantech, with capital invested in Power and Efficiency Management Services increasing 454% from last year.

According to the National Academy of Engineering, of the 14 greatest engineering challenges for humanity, almost half are related to renewable energy and cleantech. If that tells us something about the future, the cleantech and renewable energy share of investments will keep growing.

Innovative farming to combat climate change and soaring food prices

2008-05-04T15:41:00.000-07:00

With food and crops prices soaring causing world-wide protest, the biofuel industry has come under heavy fire. In particular, biodiesel and ethanol production from corn, wheat, soy beans and other is questioned, but also biofuel production from other sources ; considering that the land could be used for food crops.
Biogas, should of course not course not be questioned in this way, as its relation to food prices is still very distant, and it is by far the most climate friendly biofuel.
The demand for crops is fueled by laws demanding a certain share of renewable energy (such as the
proposed EU-wide target of 10 percent by 2020) or subsidy programs (such as ethanol subsidies).

Other factors are even more important for crops prices, such as increased meat and bread consumption in China and India. Further on, some claim that the situation is worsened beceause of market inefficiency as a result of faulty goverment policies such as trade barriers and agricultural subsidies.

There are few reasons to believe that the situation is going to improve in a near future. Although it would be possible to improve efficiency, farming methods and logistics in some parts of the world, growing global demands for a higher living standard (including more meat) and for biofuels will keep increasing the prices.
In the medium term however, there are several interesting technologies that may not only increase productivity, but also decrease the need of farm land and replace some agricultural products entirely. They may seem rather un-orthodox, and perhaps even appalling to some. Still they may contribute to reduce the crops and food prices. How about:

In vitro meat
The livestock meat industry is very inefficient from an energy and nutritional point of view: 75% to 95% of what is used to feed the animal is lost through metabolism or transformed into inedible structures. Meat production needs up to ten times more energy per edible ton compared to grain production. In vitro meatis meat grown in laboratories, with ambitions to scale up the production to industrial scale in a near future. Basically, the meat is grown using stem cells or satellite cells, focusing on producing muscle fibers and fats. Hopefully, this could mean cheap meat with less animal suffering, less areal needed for grain production, less energy use and less methane emissions from livestock herds.

Chemical-free seed treatment
Although in vitro meat may raise some eye brows, most people would probably find the endeavors of Swedish-Dutch company Seedgard praiseworthy.
Crop diseases is a serious problem in several parts of the world, with recent outbursts of for instance black stem rust almost creating a disastrous famine. Traditionally, the seeds for sowing corn have been treated in chemical-intensive methods, to kill fungi and disease-generating organisms.
In the developing countries, not even the dirty methods are available to most farmers in the developing countries. Seedgard has developed a method for treating the seeds using hot air instead of chemicals, being no less efficient than traditional methods, and in some cases even more efficient.

Genetic engineering for better biofuel crops
From an environmental point of view, there are several reasons to be suspicious about genetically modified crops, which makes the use of modified crops for improved biofuel production a ”green dilemma”. Still, this branch of biotechnology could be an important part of the effort to reduce world hunger. During the last few years, research has been increasingly aimed at improving seeds and crops for biofuel production, in particular ethanol and biodiesel.
There are countless efforts in this field, with the variation of the type of research being great. Among the modifications are corn varieties that contain enzymes that otherwise would be needed to add later in the ethanol production, corn with a higher fermentable starch content (increasing the ethanol production with 2%-5%) to designing new biofuels from scratch. All of these efforts could be melted down to one desired result: more litres per acre.

Farm sky scrapers
If farms could be vertical rather than horizontal, less land would be needed for agriculture. This is something to have in mind when reading about projects as SkyFarm, a Toronto real estate project where food will produced in a 58-floor building. There are other projects under planning as well. Among the benefits growing vegetables and crops in an artificial environment in skyscraper like buildings: producing the food in urban areas, closer to the consumers reduces transport costs (and thereby emissions), protect the crops from pollution and unpredictable weather and against diseases.

Time will tell, which of these concepts will make a real difference in the quest for cheaper food and more biofuel. From an investor point of view, it is interesting to follow a few related companies closely, in particular gene-tech and seed companies such as Ceres, Syngenta and Targeted Growth.

Is domestic fuel production feasible?

2008-04-28T13:01:00.000-07:00

Swedish scientist Bengt Steen of Chalmers University pretends to produce a renewable fuel, by letting hydrogen react with carbon dioxide from the atmosphere. The hydrogen is to be produced from solar power, wind power or hydro power. Moreover, the technology is to be small-scale, housed in a container no larger than a refrigerator. An ambitious idea, but is it economically feasible?
Well, at least Swedish Foundation for Strategic Environmental Research (Mistra) has some trust in the idea. Mistra will provide 4 MSek (approx. USD700000) of funding for the project.

Steen says that the small scale is "more" sustainable than current energy technology. But is small-scale fuel generation really sustainable? Or is the beauty of the concept more related to the somewhat utopist idea of everyone being energy independent?

This project still is at a very early stage, so it’s hard to comment on the financial aspects of this project. But small scale applications are often inefficient compared to larger scale ones. Further on, from a material point of view it is in many cases a waste of resources to produce a large number of small units for home users, than to assemble central plants. This is the case of many small-scale energy applications, such as anaerobic digestion, solar power and wind power.

Small scale may sound beautiful, but will it be sufficiently cost-efficient? Steen has an interesting challenge. Still, even if consumers would make a net profit from domestic production, this concept could still find a market in Sweden. Interest in domestic energy supply is high, as shown by a recent study. 68% of the persons asked reply that they are “very interested” in generating their own power (or own shares in wind power plants). Some legal obstacles remain however.

Fortum to acquire shares of wave power company

2007-10-25T12:44:00.000-07:00

According to Ny Teknik (in Swedish), Finnish power company Fortum will buy 8.4% of the company AW-Energy. The company work has developed a wave power solution called Wave Roller. In contrast to other wave power solutions, that take advantage of the motion energy at the surface, the WaveRoller concept is focused on generation power from bottom currents. Also covered here

Ann Arbor pioneer in using LED for street lighting

2007-10-24T12:25:00.000-07:00

Ann Arbor, Michigan will be the first city in the United States, and to my knowledge, in the world, to only use 100% LED lights for their street lighting. In addition to saving US$100.000 per year in electricity costs, it is estimated that CO2 emissions will be reduced by the equivalent of taking 400 cars out of traffic. Lighting stands for more than 20% of all the power consumed in the United States.

LED lighting has been discussed earlier on this blog, here and here. LED lamps offer several advantages over traditional bulbs, as well as CFL low energy bulbs.

Kista Cleantech Venture Day

2007-10-23T18:54:00.000-07:00

Another cleantech investment event is coming up, this time in Kista, Stockholm, 20th of November. At the event, which is co-organized by the city of Stockholm and the US Embassy, a group of Swedish Cleantech companies will be presented to US investors. Several of these companies have been mentioned earlier on this blog.

Read more about the event "Kista Cleantech Venture Day" here

The current state of the cleantech sector in Sweden

2007-10-23T18:49:00.000-07:00

The state of cleantech investment in Sweden

A brief overview of some current events in the Swedish cleantech investment sector:

Swedish public foundation Industrifonden ("The Industrial Fund"), has invested USD3 Million in Chromogenics.
Although the first commercial applications include bike helmet visors, the technology is expected to be used in energy efficient windows.I have earlier mentioned Chromogenics here and here.

The Swedish Energy Agency, Energimyndigheten, recently published their (in Swedish) overview of the Swedish cleantech sectors, with focus on the investment development. THe report can be found here (in Swedish).
How can cleantech companies and venture capitalists and other types of investors meet in a beneficial manner? That question was studied by Maria Tunberg from Cranfield University/Swedish Agricultural University. According to the study, TAG could be the answer. TAG stands for TechnologyApproval Group, and is a model that has been working with reasonable success is Great Britain. The TAG models focuses on uniting three different parts of the cleantech market: technology providers and developers looking for capital, possible clients and VC companies. A committee, with representatives from industry and possible, evaluates the market potential of different cleantech companies. In that way, cleantech providers can adapt their products and services according to the needs of the market, and find possible clients. Investors can take part of the results, and be sure to put their money in technology companies and innovators that are sure to have clients and a market potential.
Criticism has been forwarded regarding the interest (and hype) about cleantech in Sweden. According to Anders Ocklind from the Swedish fuel cell company Cellkraft, companies that have been hyped recently, especially those picked by Michael Wood. It should be noted however, that this criticism comes from a competitor to the chosen companies. The criticism seems to be focused on the technologies themselves. As earlier stated in this blog, it is true that specific companies and products may be overvalued, and thus failed investments. But that does not necessarily only depend upon technology characteristics. It should be remembered that although the technology is the primary component of the investment opportunity, it is not the only one. Revolutionary application or innovative marketing of a mature technology can give a strategic advantage. Besides, it is a natural consequence of selecting several assets for a conceptual portfolio that some assets will not develop as good as others. By diversifying the portfolio that is not necessarily a problem.

Virgin Air to fly with biofuels?

2007-10-16T14:15:00.000-07:00

Who will win the race for commercial use of renewable aviation fuels?

As reported Richard Branson plans to produce biofuels as a part of the Virgin Fuels ventures.

There are several technical challenges with aviation fuel, compared to fuels for terrestrial vehicles.
Butanol is thus an interesting alternative
I have earlier written about the topic of renewable aviation fuel here.

Miljöteknikexport & klimatmiljard

2007-09-11T13:49:00.000-07:00

Enligt Dagens Nyheter skall en del av regeringens klimatmiljard gå till demonstrationsprojekt av typen Sustainable City. Att kalla detta för ett "helt nytt koncept" är väl kanske att vara granne med sanningen, men däremot är det något som kan ge en viss typ av cleantech-företag en skjuts vad gäller export. I synnerhet gäller det teknikkonsulter och avfallshanteringsbolag. De förra eftersom om något är revolutionerande med Sustainable City så är det helhetsperspektivet, och eftersom konsulter kan utföra projekt med handplockade teknikleverantörer.
De senare eftersom avfallshanteringen är en central del i de här projekten. Andra delar av Sustainable City-konceptet som kan anses vara avant-garde, till exempel hållbar energiförsörjning är nog något som är svårt för svenska företag att slå mynt av, speciellt för de exportmarknader som präglas av en hög grad av privatisering av infrastruktur och samhällstjänster. I Sverige har många bioenergiprojekt varit möjliga tack vare att energibolag, avfallsbolag och kollektivtrafikbolag haft en och samma (kommunala) ägare. Genom att de är offentliga har de också kunnat genomföra icke-lönsamma projekt. Det är svårare att sälja detta helhetskoncept om en mängd aktörer måste komma överens. Kanske kan konceptet nå större exportframgångar i länder som likt Sverige präglas av en stor offentlig sektor, till exempel Kina. Det gäller att ha detta åtanke när man formgiver nya, liknande koncept.
I vilket fall som helst är mer satsningar på demonstrationsanläggningar och pilotprojekt något som svenska företag själva efterfrågat. Det återstår att se vilka affärer det konkret kommer att leda till.

Intressant för miljöteknikföretagens del blir också nästa budget, och vilken kombination av piskor och morötter som finns där för att motverka klimatförändringar. Ur effektivitetssynvinkel bör morotsdelen i hög utsträckning ligga på forskning snarare än konsumtion, eftersom den bristande lönsamheten för flera former av förnyelsebar energi beror på materialrelaterade utmaningar.

More cleantech money than investment opportunities?

2007-09-10T13:24:00.000-07:00

As earlier mentioned in this blog, investor's interest in cleantech is growing, and there is no sign that this trend is over anytime soon. At a global scale, investments grew with approximately 67% between 2005 and 2006. New Energy Finance estimates that this sector will keep growing by 17% until In total, US$17 Bn was invested in the cleantech sector in 2006. US$2Bn available was not used however. Apparently there is more money dedicated for cleantech investment than there are opportunities. Possibly, a greater amount of international integration of cleantech investments could be beneficial in this case, especially to capture and to market innovations in neighbour countries and from the emerging economies. In that way, a larger part of the resource could be used for what they are intended. In particular, this could be an opportunity in the Scandinavian region, where the cultural and geographic distances are small.
There are several challenges for this development. Trade tariffs is one of them. And regional and national protectionist subsidy schemes & public investment mechanisms may encourage a local rather than an international focus.

Morphic to get another break-through order

2007-09-06T08:02:00.000-07:00

Morphic is one of four contenders for a 4 Bn SEK (approximately US$600 Million) wind power deal. The deal regards the delivery of approximately 100 turbines for the Laholm project of Arise Windpower. The delivery of fuel cells was considered a breakthrough order (in Swedish). This would definitely be another one.

The competition is stiff, however: GE, Siemens and Nordex are the other three contenders.

Volvos konkurrenter: Google & svenska uppfinnare

2007-09-06T07:32:00.000-07:00

Volvo, som kanske inte ska kallas svenskt längre, har en "plug-in"-hybridbil på gång.

Svenske uppfinnaren Lennart Stridsberg kan eventuellt förse Volvos konkurrenter med en elhybridmotor. Steget från skisser till färdig produkt är dock långt. Detta gäller i synnerhet i Stridsbergs fall, då han ämnar hoppa över demonstrationssteget och vill att produktern skall börja serietillverkas direkt.

Riktigt intressant blir det när plug-in-hybrider baseras på förnyelsebar energi, eller av en hushållsanläggning där bränsleceller används för att generera el. Google och Bloom Energy, två företag att räkna med när det gäller förnyelsebar energi & hållbara transporter?

Trade tariffs against cleantech

2007-09-05T13:55:00.000-07:00

The European Commission has extended the European import duties on efficient light bulbs. The tariffs are supposed to protect European light bulb producers from their Chinese counter parts. This is problematic from a cleantech trade point of view. It means higher prices for consumers and less incentives to improve domestic and commercial building energy efficiency in Europe. Further on, it is a hinder for the development of the environmental technology industries in emerging economies.

However, perhaps could European LED and OLED lighting producers benefit from this?

The Value of Young Cleantech Investment Companies?

2007-09-05T13:00:00.000-07:00

While the blog Investeringar i vindmöllor och förnyelsebar energi" (in Swedish) recommends Borevind as an investment, considering it's rather low value, it would not be an investment free of risk. The price/equity ratio is 225%, which is lower to other Swedish cleantech companies. But should Borevind be compared to technology companies such as Morpic or generation asset owner Elous Vind? They have a rather different focus (Morpic develop technology solutions and Elous own wind power projects). No doubt about Borevind having chosen an interesting market niche. Metainvestments in the renewable energy field, if conducted wisely, could be more profitable than focusing on a few specific technologies or one kind of power projects. The Borevind portfolio is not very diverse however, focusing mainly on wind power. The tiny investment in Rindi Energi may be a step in the right direction, considering the stable conditions and increasing demand for this type of bioenergy solutions.

placera.nu (in Swedish) confirms that the Borevind investments need to be quite successful to meet the high expectations. Investors, often institutional ones, may create a hype in the cleantech area when pumping in money into the market without proper previous research, because a general political and public interest in renewable energy. The valuation of companies like Borevind may be a sign of this hype.

Further on, the price-to-equity ratio should be used with care when analyzing young cleantech companies. There is little historical data available and thus difficult to make a comparative analysis. Thus, other factors should be considered to estimate the value and assess the investment opportunity. Price-to-earnings is of one them.

Landmark approval of Wallenius system

2007-08-31T08:58:00.000-07:00

The PureBallast system, developed by Swedish companies Wallenius Waters and Alfa Laval has been approved by UN/IMO. PureBallast is a solution for treating ballast water of ships. The process is checmical-free and imitates nature's own way of treating water. This is the first time a chemical-free solution of this kind gets approval by the IMO. The solution can also be used in other applications, such as cleaning swimming pools.
German shipping company E. R Schiffahrt has already ordered the systems for four of their boats.

Ballast water is a huge environmental problem, with microorganisms and other organisms invading coastal areas where they are non-indigenous.

Morphic får banbrytande order

2007-08-30T08:01:00.000-07:00

Morphic får en relativt stor order på sina bränsleceller.

Bolaget går faktiskt med förlust, och om de inte har väldigt höga vinstmarginaler är denna order inget som kommer att ändra på det. Ändå stiger aktiekuresen.
Är förväntingarna rimliga? Det krävs troligen fler order på vindparker eller pa Morphics hybridsystem för att företagets värdeökning skall kunna betraktas som substantiell.

Charging the cell phone with the palm of your hand

2007-08-23T12:53:00.000-07:00

Scientists from the Fraunhofer Institute are developing battery chargers that make use of low temparature sources, such as body heat. Scientists behind the project hope that their findings may find applications such charging cell phones. According to project manager Peter Spies, electircity can be generated at any place where a temperature difference occurs.
Read more here.

The Cleantech Investment List Is Growing

2007-08-22T08:58:00.001-07:00

Michael Wood, the US ambassador in Sweden, has put cleantech investments on the top of the agenda. Recently, he added a few companies on his list of interesting Swedish cleantech companies:

Ageratec
Catator AB
EcoHeater AB
HB Transfer Stockholm
Kockums AB
Midsummer AB
Nilar International AB
Svensk Rökgasenergi AB
Swedish Biogas International AB

Readers of this blog will remember that I have written about some of these companies earlier. And having followed Ageratec for some time, I am glad to see they get attention.

There are however more companies that potentially could be included. How about:

Malmberg Water, water treatment and biogas upgrading
Envac, automatic waste management systems
Hotab, biomass combustion plants
Ecoera, advanced agro-pellets technology
Scandroots, biological waste treatment
myFC, small fuel cells

Ethanol worse than oil?

2007-08-21T13:55:00.000-07:00

Grist, quoting a recent study in Science, reports that the production and use of ethanol may make a larger contribution to global warming than the same amount of oil would have. These results are reached by considering the forests and grasslands being razed for biofuel crops plantations.
This is no surprise for ethanol skeptics. But it does underline the importance of detailed assessments, from source to end use, when comparing the environmental and climate impact of different type of fuels.

What will be the primary source of energy for our vehicles in 20 years? Electricity? Hydrogren? DME? One can only make a qualified guess. It is clear however that it is something that will depend upon political decisions as much as market logics.

Updated:
And ethanol makes food prices soar as well.

Morphic soon to ship pilot plants

2007-08-17T10:05:00.000-07:00

Swedish energy technology company Morphic will soon start to market pilot plants of their hybrid wind power-hydrogen energy systems. Surplus wind power is used to produce hydrogen. The hydrogen can be used in fuel cells when the power demand increases (or for other fuel cell applications). Thus, the system is suitable for places where the conditions don't allow continuous power generation. Further on, the plant is compact enough to be transported on a truck or a jeep - making it useful in remote locations.

The capacity of the plant is not known.

Swedish aviation fuel cleanest in the world

2007-08-10T06:46:00.000-07:00

The fuel AVGAS 91/96 UL from Swedish oil company Hjelmco Oil has been selected as the cleanest aviation fuel in the world, by Federal Office of Civil Aviation, Switzerland. "Clean", as in "low emissions", that is. There are other contenders, mostly based on natural gas. If similar technologies could be applied on coal, the economy could get even better.

Another question regarding the sustainability of aviation, is how to make use of renewable energy. Ethanol as an aviation fuel shows some promise. And where natural gas can be used, so can upgraded biogas. (A matter of time in Sweden?)
Hydrogen is not a sustainable alternative however, considering the current state of production technology. Far too much power is needed to produce sufficient quantities of fuel for long range flying.

Update 05/09:
Please check the comments regarding key difference between the fuels discussed in this post

Small player tactics in the solar technology game

2007-08-10T06:34:00.000-07:00

While Norwegian REC may be the most well-known example of Scandinavian solar energy technology, there are some very fine examples from Sweden as well.

However, for solar cell production, economy of scale is often a very important factor. Large investments are necessary for the construction of production facilities, and that creates an entry barrier for smaller players in the field. So how could smaller players tackle this? Well, economy of scale is not a phenomenon that is unique for the solar power tech sector, and lessons can be learnt from other sectors. One way for smaller companies to remain in the competition might be to find a niche market, and being unique or extraordinarily good at something very specific. For solar power, the variables commonly available to make your product stand out are efficiency and price. With cells being more efficient every year, and companies can stand out if they can offer commercial products with efficiency close to the levels reached in laboratories.
Another way to move ahead may be to apply unorthodox production methods to lower the price even in small and medium scale production. By simplifying the process, or applying techniques from other types of industrial production, cheaper cells can be produced, at the cost of lower efficiency.
Swedish company Midsummer are doing just that, hoping to get a share of the flourishing solar market.

Is this the way forward for smaller solar technology firms? Or would they, as in the case of Solibro, be better off trying to excell in quality, performance or efficiency, and associating themselves with a company of large production capacity?

Prediction of the Cleantech Market: Looking into the Crystal Ball (II)

2007-07-26T09:04:00.000-07:00

I have in a recent post written about my predictions for the cleantech market. In that post, I suggested that energy efficiency would be the sector that will get the most attention in the near future from investors. In this post, I will develop the issue, including suggestions of the companies that would benefit from such attention.

Energy efficiency is low-hanging fruit when trying to reduce GHG emissions. Both in industrial and domestic sectors, there are huge gains to be made/wastes (naturally, the cost of capital may vary). In many cases, it is easier to implement these measures than that to replace fossil fuel sources with renewables as a way to reduce CO2 emissions. There is a large potential for companies that provide energy efficiency a key issue in their product offer and perform well, since the concept is yet to take off on a grand scale. Considering that potential, some of them might be undervalued today. Further on, as the world economy grows, and new groups adapt to Western consumption patterns and standards, the need for energy efficiency will increase.
Good performance in the EE area may not show in the stock price however, if energy efficiency is a small part of the companies activities.

Some of the companies and sectors suggested in this post might not be thought of as "energy efficient" at a first glance, but they will profit from providing efficient products and services. Citing Tom Konrad, there is no Vestas of energy efficiency. Energy efficiency isn't a clearly defined sector, but rather a philosophy that spans across several sectors. A common characteristic however, is technology. Through technology the use of energy will diminish: power technology, engine technology, building & infrastructure technology, information technology and so forth. Energy efficiency is about making components and appliances lighter yet stronger, wasting less energy and resources.

Power monitoring and regulation
It is quite obvious that companies that work directly with energy efficiency are bound to benefit from an energy efficiency wave. Especially companies for monitoring and regulating power at a large scale are interesting. These companies may be found in the software, microelectronics & power engineering sectors.
Example of companies in these sectors:
enerNoc: Energy and power management for utilities
Energy connect: Supply and demand based power management
Comverge: Power management & Metering

IT, data management & computing efficiency
Stationary and server computers waste a lot of energy in the form of heat. In addition, because of this heat the computers need to be cooled to avoid break-downs, causing further energy consumption. With ever increasing server parks, this is becoming a significant factor. Google has together with Intel launched a program for increasing energy efficiency in computing, and setting performance targets. The initiative includes tech heavyweights such as Dell and eBay. In addition to improved management, using innovative materials may reduce power consumption. Information technology obviously also offers opportunities for reducing energy consumption, such as remote working, video conferencing etcetera.
IBM: processing data for peak-hours calculation, server management software
Google: efficient information management
Norstel: low energy semi-conductor materials
Cisco & WebEx: remote office solutions
Western Digital: a new line of energy efficient hard drives

Lighting
Increasing the use of LED for lighting will reduce energy consumption drastically, according to Peter Svensson, energy consumption from lightning represents 22%, and with a higher use of LED lighting that consumption could be reduced by 50%. They are already more efficient than CFL bulbs ("low energy bulbs"). Further on, CFL bulbs contain mercury. Still they seem to be the mainstream choice for years to come. More countries are bound to follow in the footsteps of South Africa, Brazil and Australia to phase out incandescent in favour of CFL bulbs. LED lighting would probably need larger cost reductions before making a real break-through.
LED & CFL bulb producers:
Lighting Science Group Corp
Philips

Infrastructure & construction
The have we construct and maintain buildings and infrastructure has an important impact on the energy consumption. Companies that can deliver “green buildings”, or that provides parts that lower energy consumption will benefit from this. Further on, consultants refurbishing existing buildings and infrastructure will have a busy schedule.
Johnson Controls: building energy efficiency
HySSIL Pty Ltd: light weight, high-strength concrete
Chromogenics: energy saving, "intelligent" windows
ITT Flygt: pump systems awarded for their efficiency

Efficient power generation, transformation & operation
General Electric & Sensicast Systems: remote motor management through wireless networks
Power Efficiency Corp: technology for managing electrical motors & increasing efficiency
ABB: a large number of products & services increasing efficiency

Energy efficiency is not only for the philantropic investor, it is a necessary measure and as such a sound investment opportunity.

Swedish cleantech investors are making moves at home...

2007-06-29T08:16:00.000-07:00

.. slowly. And the steps aren't that big.

But things are happening. Recently, Sustainable Technology Partners Nordic invested 15 million SEK in Swebo from Boden, northern Sweden. Swebo is (was) a family owned company, providing plants and equipment for bioenergy generation, with an focus on efficient combustion solutions of non-refined feedstocks.

And the 15th of June, Capman announced that they, together with SEB Venture Capital and Aloe Private Group, will acquire 80% of the shares in KMW, a company delivering medium-to-large scale biomass CHP plants. The company is based in Norrtälje, north of Stockholm.

Both these companies have in common a long tradition, stable development, quality products of proven technologies on a growing international market. They are no brand new "stars", with a hyped technology and high expectations based un uncertain assumptions. The message is quite clear from Swedish cleantech investors, at least so far.
Let's do some predictions. Next targets may include Hotab-Gruppen. 30 years in the combustion market, with turnkey biomass plants for multiple feedstocks. They also have a clear export focus, especially directed towards the Eastern European market. It is family owned, and venture capital influx would facilitate further expansion. Other potential candidates may be Janfire and Petrokraft.

Companies with a shorter history, and expectations rather than a solid sales record, might find it harder to attract domestic investors. That may affect more or less hyped, innovation-based companies. A few examples: Ecoera, Chromogenics and Lignoboost
(Don't get me wrong, I am not judging their products, only their short term possibilities to access Swedish venture capital.)

Another possible future trend may be horizontal integration, takeovers and fusions between the cleantech companies themselves, which was the case when Nibe acquired Iwabo Naturenergi

Risk för cleantechbubbla? Knappast. Däremot för enskilda företagsbubblor

2007-06-20T08:14:00.000-07:00

Dagens Miljö skriver idag om risken för en cleantechbubbla. Visst, på kort sikt kan enskilda företag och delsektorer att sjunka i värdering, till föjld av uppskruvna förväntningar. Detta kan tillfälligt drabba hela sektorn. Men cleantechsektorn som helhet har större potential, särskilt om man sprider sina ägg.
Jag har redan skrivit om detta här, och om att nästa "boom" kommer inom energieffektivisering.

"Boomen" vi sett är i stort sett logisk och marknadsmässig.
Självklart kommer enskilda företag av olika skäl inte klara sig i konkurrensen, och vissa företag är säkerligen övervärderade redan idag.
T.o.m. hela delsektorer kan komma att krascha. Marknaden kommer till exempel så småningom att straffa t.ex. etanolsektorn p.g.a. lågt energiutbyte för vissa former av etanol (majs&spannmål), och externa kostnader för andra typer (jatropha). En eventuell rekyl inom en delsektor kommer att drabba hela sektorn, dock tillfälligt.
Cleantechsektorn som helhet kommer på lång sikt snarare bara öka, eftersom fler blir varse om de externa kostnaderna i ett icke-hållbart samhälle. Förnyelsebar energi behövs inte bara p.g.a. klimatförändringar, utan också av säkerhetsskäl och för energioberoende. Även andra delar av cleantechsektorn kommer att gynnas i takt med att länder blir rikare och efterfrågar en renare miljö. Dessutom har investerare dotcom-bubblan i färskt minne och kommer att vara mkt mer kritiska i granskningen av förhållandet mellan nuvarande vinster & värde.

Would an all-black Google have an impact on climate change?

2007-06-15T07:27:00.000-07:00

By default, the pixels of your screen are black. Lighting them with bright colours requires more power. Therefore, web sites with white backgrounds, that are used by millions of users (like Google), cause a considerable use of energy. The people behind the page Blacke had that in mind when launching Blackle. The page consists of the Google search engine, but with a mostly black interface. According to Mark Ontkush, if Google would have a black background, energy use of their users would go down by 750MWh. This claim is however valid for old, energy hogging CRT screens - if all screens were to be of the modern LCD type, the numbers would be different. And even if 750MWh would be a correct figure, it is negigible when count per user.

But initiatives like Blackle are interesting, because they highlights the energy use of tech companies. Although the internet society reduces energy use on a macro level through distance work, reduced use of physical materia, etcetera, internet tech companies have come into focus regarding energy use.
With soaring costs for energy use (web giants like Yahoo and Google report yearly 20% to 40% increases in energy costs, not counting the cost for their users), it is going to be interesting to see how companies like Google respond to the impact of their business. As a starter, Google are installing asolar power system at the Googleplex.

The uranium price boom

2007-06-13T12:35:00.000-07:00

The subject of this post is somewhat related to nuclear power, a controversial issue among renewable energy proponents. Uranium price is increasing, which will make the price of nuclear power increase. The price of uranium has increased from the 2001 bottom of $6.70 to $130. That's a 2000% increase. This might not look very spectacular considering the general price increase of metals and other commodities. According to some, the prices are inflated because of speculation. There are however underlying geopolitical reasons for the uranium price boom, with obvious connections between the price of oil and the price of uranium.

Here is a short background for the price fluctuations of uranium:
- interest in nuclear power declined somewhat in the 80's because of environmental and other concerns. This lead to a certain over-capacity in uranium exploration, and to falling prices.
- falling prices reduced the incentives for new exploration, with several producers leaving the business.
- interest in nuclear is increasing because of the fear of climate change and the need to reduce CO2 emissions from power generation from fossil sources.
- fear of dwindling future sources makes the price go up even further

Of course, the higher price allows exploring companies to re-open old mines and reconsider projects that were not economically feasible some years ago.
Nuclear power is still cheaper than power from solar or wind resources, in most cases (especially when not counting different types of subsidies). And in Europe and elsewhere there is certain aversion to large-scale hydro power projects because of environmental concerns.
The soaring uranium prices could make power generation from renewable sources more competitive - as well as fossil based generation, ironically enough. But will this happen anytime soon? Probably not. The reason for this is the low effect of the cost of uranium and the price of power. Uranium only counts for about 5% of the price of power. This means that if the price of uranium increases with 100%, the price of power would only increase with 5%. As a comparison, the price of power generated from fossil sources is more price sensitive, and so is the price of many biofuels. For instance, the price of feedstock represents 75%-80% of the price of ethanol.
Thus, the price of uranium could soar even more - but nuclear power would still be more competitive than renewable power, price wise. For uranium being as expensive as oil, considering the price of the power, the price uranium would need to increase even further. Thus, the price of nuclear power will stay relatively low despite the uranium prices, and decreasing inventories won't change that. The competitiveness of nuclear power and it's weak relation to uranium prices is a challenge for proponents of power from renewable sources.

Ps. The uranium boom and the space for further price increases may be an eye-opener for persons looking for investment opportunities. It should be mentioned however that this doesn’t necessarily leads to uranium mining stocks booming. A 100% increase in the price of uranium does not automatically translate to a 100% increase in profit for there mining company, or soaring share values. And there will be differences between individual companies.

Fuel cells operating on biogas

2007-06-04T13:13:00.000-07:00

This is very interesting, in several ways.

It is one of the worlds first fuel cell systems where the biogas is used directly in the cell - without using a fuel reformer. The fuel cells are of the high-temperature type, and a provided by Acumentrics of the United States.
It is an interesting addition for small-scale, remote biogas systems. Even more interesting would be if the the system would be easily scalable, for industrial applications.

It is no coincidence that this takes place in Sweden, country of perhaps the world's most advanced biogas applications. This is partially a result of a quite advanced waste and wastewater management industry (which is a result of decades of strict legislation), government "climate change" project subsidies and and integration of the waste & energy sectors.

It is also interesting because it is installed in Hammarby Sjöstad, a part of Stockholm designed according to the Sustainable City concept. The area counts with several innovative and holistic solutions regarding waste management, energy, water and transport, such as energy from solar panels and a nearby wastewater & waste biogas plant, a car pool and a waste separation system. Although yet to prove itself as a real export success, the concept has drawn interest from countries around the world.

Vattenfall: här finns inspirationen

2007-05-31T14:20:00.000-07:00

Genom sitt intresse för litauisk kärnkraft visar
Vattenfall återigen att de riktigt stora satsningarna gör man helst på icke-förnyelsebar, icke hållbar energi. Detta är ytterligare ett tecken på att svenska staten borde utöva ett mycket mer aktivt ägande.

Om nu Vattenfall vill vara en statlig storspelare på den internationalla energimarknaden, varför satsar man inte på att bli en förnyelsebar sådan? Inspiration kan hämtas från till exempel Acciona eller Econergy.

Difference between the renewable energy boom and the dot-com bubble

2007-05-31T13:41:00.000-07:00

Joel Makower at the Environmental Economics & Sustainable Development blog provides some important points about why the renewable energy boom is persistent, and not yet another dot-com bubble. The most important point he makes is:

1. The problems aren't getting any better. This is fairly obvious, especially if you've seen The Movie. The environmental movement, it's been said, is rapidly morphing into the climate movement, and there's a parallel shift taking place on the business side. The motivations may be different -- for activists, climate has become a rallying cry that gives disparate groups a singular focus; for companies, it's about the need to squeeze efficiency out of every operational nook and cranny while reducing risk and enhancing image -- but the upshot is the same: Until the climate problem is under control, it will be Job One, environmentally speaking, inside most companies. And as concern, regulation, and market-based mechanisms to address climate change ramp up, this will be a key business focus for a long, long time.

Although I do not entirely agree on the statement that problems aren't getting better (at least I believe they are become worse at a decreasing speed), the essence is important: there is a real and big problem to counter. Companies in the renewable energy and cleantech sectors are speculated at higher and higher values, but if they do provide a solution to the underlying problems, they deserve it.

Another point, that wasn't made by Makower, is the experience learnt by investors from the dot-com bubble. This time investors will investigate the companies scrupulously before investing, and companies will need to show net profit. The marginal influx of capital from gold-digging amateurs will not affect this. Companies will not become stock market stars only by claiming that they provide "cleantech solutions" or that they work with "sustainable fuels"

One may suggest that the renewables boom and the bubble of the late 90's have one thing in common: the element of uncertainty. Speculations in companies in the IT era where often made because of unknown future revenues, based on a large customer base. Investors wanted to jump on a train without knowing the final destination, only that the general direction felt right. There are two general aspects of uncertainty regarding the renewable energy sector: the extent and effects of climate change as well as the policys implemented to counter it. However, these elements are not significant for the development of the renewable energy sector as whole. The uncertainty regarding the effects of climate change does not refer to the existence of climate change, but rather details; will the damage on the global economy be 1% or 10% of global GDP? Further on, although the political development may vary, the general direction is clear. Certain types of renewable energy will most likely fall in political disfavour with time, like corn-based ethanol. Depending on how subsidies and taxes are designed, it will be easier to invest in certain types of energy because difference in capital and operational costs. It is clear however, that the sector as whole will benefit.

Prediction of the Cleantech Market: Looking into the Crystal Ball (I)

2007-05-25T07:54:00.000-07:00

For many of us working or studying within the field of renewable energy, the recent boom in renewable energy interest among the general public and the financial sector did not come as a surprise. Scholars, engineers, inventors and environmentalists have for a long time seen and discussed the problems of current energy systems, and invested time, interest and money in alternatives and solutions. Our current energy systems are not sustainable and create high external costs. Reducing these external costs by replacing fossile energy sources with renewable energy is a logical step.

In the same manner, the next phase will come out of logic. Actually, it should be something that should have preceded the interest in renewable energy. The next boom will revolve around energy efficiency. This is not something entirely new; energy efficiency is an issue that has got a lot of attention during the last couple of years, with rising prices, climate change, energy dependence and other problems with the oil economy. Energy efficiency was a hot topic already during the oil crisis of the 70's. Whenever there are output reductions or price peaks, which may be the case with wars and conflicts, energy conservation and efficiency appear as necessary measures. What has not been frequently highlighted is the advantages of energy efficiency when compared to renewable energy. Don't get me wrong, they are two completely different concepts. Both are necessary for fighting climate change and other than on a national level, they mostly don't compete with each other. But when considering in which companies to invest your money, they often do compete. It is easy to understand the benefits of energy efficiency. If we need to reduce the energy generated from fossile sources with 1 TWh in a sustainable manner, we could go for installing more renewable energy capacity. Or, we could implement energy efficient technology. In the case of energy efficiency, we would not need to bother where to find more sources of energy. We would not even need to debate the issues of uncertain profitability and high investment costs of renewable energy production facilities, or deal with the issues with raw materia un-sustainability of ethanol, biogas generation versus incineration. Better than to find replacement sources of energy is to not need to use the energy in the first place. There is an inherent beauty in energy efficiency - earning more by wasting less. That is attractive for most of us conducting business. Thus, because of the logics of energy efficiency, it is a logical step that energy efficiency will be next highlighted cleantech sector. As in the case of renewable energy, this will not be a temporary trend. The problems connected to the oil economy are permanent, as are the problems with energy from other non-sustainable sources.

In a later post, I will highlight which sectors and companies will be the winners in this new wave of cleantech. There are a lot of companies that are rather invisible when thinking of cleantech, but that do work with energy efficiency.

PS. A quick note on energy efficiency vs. energy conservation. Although often used interchangably, they are not necessarily identical. Energy conservation means using less energy by doing less. That could involve sacrificing processes that we would have preferred to keep. Energy efficiency means using less energy by keep doing something, but with less energy input. Energy conservation is to turn off the light, energy efficiency is to change the light bulb to a energy saving one.

First post on this blog - and the champagne bottle goes crack

2007-05-21T19:30:00.001-07:00

Welcome to this blog, where I will cover news and trends in the renewable energy technology area, as well as the underlying general political, social and macroeconomic development.
The blog will have a special focus on renewable energy finance, applications of renewable energy tech in the developing world, groundbreaking innovations and the Scandinavian technology offer.

Swedish issues will be covered in Swedish and international issues in English.