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
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måndag 7 september 2009
torsdag 14 maj 2009
Investments continue to pour into cleantech
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.
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.
torsdag 12 februari 2009
Wind Power to Increase in Sweden
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.
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.
tisdag 25 november 2008
Recovery through Infrastructure and Cleantech Investments
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.
There are signs of similiar strategies in other countries. If carried out, this may soften the fall of young cleantech companies even further.
lördag 25 oktober 2008
Short term challenges, long term opportunities
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:
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.
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.
torsdag 25 september 2008
Cleantech Opportunities in the Eye of the Storm?
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".
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".
tisdag 12 augusti 2008
IKEA Greentech - a new Swedish cleantech investor
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.
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.
onsdag 23 juli 2008
Fortum to invest US$ 10 million in cleantech venture capital fund
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.
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.
onsdag 28 maj 2008
Lignoboost aqcuired byt Metso Power
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.
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.
onsdag 7 maj 2008
Investments in renewable energy reach USD100 billion per year
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.
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.
torsdag 25 oktober 2007
Fortum to acquire shares of wave power company
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
tisdag 23 oktober 2007
Kista Cleantech Venture Day
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
Read more about the event "Kista Cleantech Venture Day" here
måndag 10 september 2007
More cleantech money than investment opportunities?
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.
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.
onsdag 5 september 2007
The Value of Young Cleantech Investment Companies?
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.
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.
onsdag 22 augusti 2007
The Cleantech Investment List Is Growing
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:
There are however more companies that potentially could be included. How about:
- Ageratec
- Catator AB
- EcoHeater AB
- HB Transfer Stockholm
- Kockums AB
- Midsummer AB
- Nilar International AB
- Svensk Rökgasenergi AB
- Swedish Biogas International AB
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
torsdag 26 juli 2007
Prediction of the Cleantech Market: Looking into the Crystal Ball (II)
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.
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.
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