Grid Parity is the point at which renewables become cost-competitive with traditional grid power--making it the Holy Grail for clean technology. With that in mind, the Green Chip team presents the Grid Parity blog... chronicling the technology advancements and policies that will get us there.
The UK’s official commitment to cleantech is strong and growing. In its official Renewable Energy Strategy, the UK set a target of deriving 15 percent of its energy needs from renewables by 2020.
In keeping with that ambitious goal, the new UK Prime Minister, Conservative David Cameron, has wasted no time in highlighting the importance of the cleantech sector. “I don’t want to hear warm words about the environment. I want to see real action. I want this to be the greenest government ever… I intend to make decisions put off for too long to fundamentally change how we supply and use energy in Britain… To give the power industry the confidence it needs to invest in low carbon energy projects,” he said.
Here are my top ten reasons why I believe the UK is a cleantech leader:
1. The UK government has strong cross party political support for cleantech and climate change. The government recently passed the Climate Change Bill with cross party consensus meaning that the three main political parties in the UK agree that climate change is a serious challenge. Moreover, the Climate Change Act sets ambitious statutory limits on carbon emissions requiring a 34 percent cut by 2020, and an 80 percent cut by 2050.
2. The UK is oozing with people power! There is great strength in the UK’s civic society. For example, BTCV, the UK’s largest environmental volunteering charity has 300,000 members. The BTCV last year launched the Carbon Army campaign – a widespread effort incorporating practical action by its members to fight against climate change. This follows in the steps of other initiatives from organizations including CAFOD, Christian Aid, Greenpeace, Oxfam, RSPB, Tearfund, WWF-U.K., Stop Climate Chaos Coalition and Green Alliance. These efforts have prompted legislative change in the UK such as a minimum level of 30 percent of carbon capture sequestration on new coal plants.
3. The UK is a hub for cleantech VC finance. The UK has a long history of sustainable investing and consequently UK-based cleantech companies were the largest recipients of cleantech venture investment in Europe in 2009 receiving $300 million in 63 VC deals. The UK is also home to many top tier cleantech VC firms including Consensus Business Group, Generation Investment Management, Virgin Green Fund, Zouk Ventures, WHEB Ventures, Carbon Trust, Impax, Environment Technology Fund, Climate Change Capital, Bridges Ventures, Aloe Private Equity, Ludgate Environmental and Doughty Hanson. Moreover, key to the UK’s cleantech prowess has been the existence of London’s Alternative Investment Market (AIM) which has nearly 100 cleantech companies listed on it.
4. The UK is well organized in its mission to create a low carbon economy. With groups such as the U.K.TI which has a strong global presence through its network of deal makers, the UK is armed with the skills to transfer its cleantech companies and technologies into its economy. Also groups like UKSIF have been true leaders in this respect – UKSIF’s aim is to ensure that the UK finance sector is the world leader in advancing sustainable development through financial services.
5. The UK is a global leader in offshore wind. Offshore wind in the UK will be one of the largest renewable deployments in the world. Peter Löscher, president and CEO of Siemens AG, said: “In the foreseeable future the wind power market in the UK will be characterized by major offshore projects.” Siemens UK CEO Andreas J. Goss added: “The British government has established attractive terms and conditions for investors in renewable energy. This applies in particular to offshore wind power.” In the last couple of months, the Crown Estates gave out huge tenders worth £70 billion to wind companies to build offshore wind farms in the UK. Firms are moving quickly to take advantage of this: For example, General Electric announced plans to manufacture its 4MW offshore wind turbine in the UK as the result of these incentives.
6. The UK has the world’s most attractive wave companies. The UK is one of the few countries in the world that has serious wave and tidal projects in development. Wave companies are attracting the interest of large utilities and corporate giants such as Vattenfall and Siemens who are partnering/acquiring/investing in wave and tidal energy companies in the UK. Scotland has amazing waves for harnessing energy and there are a host of best-in-class companies working on wave projects in Scotland, such as Aquamarine, Pelamis and Minesto.
7. The UK government is planning on creating a giant green investment bank. The UK has set up a Green Investment Bank Commission which is an independent group tasked to advise the government on how to best increase investment in low carbon infrastructure and technologies. The current government openly backs the creation of a green investment bank which could provide funding in many forms such as grants, equity co-investments, insurance projects, wholesale capital and long-term carbon price underwriting.
8. Beep beep! Electric cars are coming to the UK. The UK government has launched a strategy to put electric and plug-in hybrid cars on British roads by subsidizing purchases by between £2000 and £5000. The initiative is part of the government’s vision to promote low carbon transport over the next five years.
9. Cleantech is embedded in the UK academia. The UK is home to Imperial College London which is the number 1 cleantech university in Europe and one of the top three globally. The College has incredible global reach and impeccable R&D credentials. In 2010, Imperial has already inked many significant corporate partnerships including a £70 million, 10-year collaborative project with Qatar Petroleum and Shell International for the development of carbon storage technologies as well as a joint venture agreement with Rolls-Royce to develop lower carbon aero engines.
10. The UK has many exciting and innovative cleantech companies. Exciting and innovative UK cleantech companies include Isentropic, Aquamarine Power, Juice Technology, Nexeon, Integrated Environmental Solutions, Breathing Buildings, Bowman Power and Sterecycle.
So there you have it – the UK has cross party government support for cleantech, people power, VC dollars (or in this case Sterling), and solid base of human capital which are all the key ingredients which make it a global cleantech leader.
**Shawn Lesser is the president and founder of Atlanta-based Sustainable World Capital, which is focused on fund-raising for private equity cleantech/sustainable funds, as well as private cleantech companies and M&A. He is also a founder of the GCCA Global Cleantech Cluster Association
If you’re like many cleantech startups right now, you’re looking at your funding goals and your funding level, and you’re seeing a sizable gap. For most companies, venture capital and angel investing hasn’t come back in 2010 as we had hoped. So what should you do?
Investors and start-up often talk about a place called the Valley of Death. On the near side of the valley of death is safety: Your company is small, but relatively stable. There is less risk, but your prospects for growth are much lower because you need funding to reach a critical mass and gain some momentum.
On the far side of the Valley of Death is also stability. This is the oasis that companies find after they’ve hit their funding goals, and they can focus on the blocking-and-tackling execution of creating a successful business.
Located between these two stages of comfort, the Valley of Death is a limbo stage. You can’t stay on the safe side of the valley forever, and you’ll need to grow to survive. And to achieve this growth, you’ll need funding. And there’s the catch: You’ll be far less risky to investors once you’re on the other side of the valley, and you’ve proven that your company is viable and profitable. The Valley is one, big Catch-22: You need funding to grow, but you need to grow to get funding.
There are a lot of cleantech companies in the Valley right now. For all the hoopla that the Tesla IPO created earlier this summer, funding for the non-superstars is still sluggish.
So if you don’t get funded in the second half of this year, what should you be doing?
First, you should invest the rest of 2010 in relationships. When the money comes back, you’re going to want investors to know who you are, and what you do. Go to conferences. Network. Understand that it’s a long game.
Second, consider looking at a merger. If there is another company, competitor, or group which is complementary to yours, it might make sense to join forces. There are companies with money in the treasury, which may not have everything they need to service their customers, and you might have that missing link for them.
Next, broaden your horizons. In my state, Colorado, we’ve had a number of government deals announced in the last couple of months. Promising start-ups such as ION Engineering and ADA Environmental Solutions received a combined $14 million for carbon capture technology. Just days before that, Abound Solar announced $400 million in loan guarantees from the federal government.
The Valley of Death is a dark, lonely place. But it can be crossed. Realize that it won’t happen all at once, and start planning your crossing today.
**Michele Ashby is the CEO of MiNE LLC, which is hosting the Modern Energy Investor Forum (MEIF) from Sep. 22-25, 2010, in Denver, Colorado. The Modern Energy Investor Forum is the premier invitation-only conference for clean technology firms and investors.
The rapid economic transition of China from an undeveloped nation to a country which now derives 50% of its GDP from industrial production created a series of negative side effects that has sown the seeds for China’s next wave of its economic journey; cleantech. In recent years it has been acting with vigor to create a sustainable economy and is now not only the world’s largest cleantech manufacturing hub, but its cleantech innovation capacity is rising rapidly. (See: The rise of home-grown cleantech innovation in China, by Cleantech Group analyst Stephen Marcus.)
So why is China a cleantech leader?
1. Government’s strategic focus and resolve. The Chinese government is determined to become the world’s leader in clean technology. And unlike a western democracy, when China’s central leaders make up their minds, action follows quickly. The Chinese government has set renewable energy targets of 20 GW of new solar and 150 GW of wind by 2020. Its policies state that non-fossil fuel sources of energy should account for 30% of the overall power supply by 2020. This would be a major shift given that 80% of China’s current supply comes from coal. This transformation represents a huge market opportunity.
2. China is the world’s largest cleantech investor. China pledged $200.8 billion for green initiatives in its stimulus bill in 2009, 79 percent more than the $112.2 billion allocated to the sector in the U.S.
3. Cleantech is not an option; it’s a necessity! The country’s enormity and economic growth rates make sustainable development a necessity. With hyper annual growth at around 5%-9% annually and 18 million people moving to urban areas every year, China needs as much cleantech as possible, as soon as possible and as cost effectively as possible. The country fully understands that their energy demands and pollution levels are unsustainable – sixteen of the world’s most polluted cities are in China. China’s policy has changed – it’s no longer growth at any cost; it now has to be green GDP.
4. The financial landscape for Chinese cleantech innovation goes beyond state funding. There is a huge influx of new venture capital and private equity funds that are focused on Chinese cleantech. Additionally, limited partners around the globe are planning on increasing their exposure to China. 38% of European LPs plan to have more than a tenth of their PE exposure in the Asia-Pacific region in the next two years; 41% of North American LPs and 87% of Asia-Pacific LPs aim to have a similarly high proportion. Newly announced China-focused funds include China International Capital Corp (CICC), Infinity Group, Olympus Capital, Origo Partners, Redwood Capital and Tano Capital.
5. Cleantech IPOs in China are strengthening whilst the rest of the world is flailing. In 2009, for the first time, China/Hong Kong accounted for the largest share of money raised from cleantech IPOs (69%), well ahead of the U.S. (26%). It also accounted for the majority of cleantech IPOs by deal number. In 2009 China accounted for 17 (53%) of the 32 cleantech IPOs that were tracked globally.
6. China is attracting top tier corporations that see the commercial opportunities in cleantech. Corporations such as American Superconductor, Duke Energy, Applied Materials, Verdant Power, GE, IBM, Daimler, Intel, and Boeing have all set up strategic partnerships in China in 2010. Increasingly these partnerships are based around developing technology, not just outsourcing manufacturing.
7. Transitioning from ‘Made in China’ to ‘Created in China’. China is emerging as a source of cleantech innovation and valuable IP, the implications of which the rest of the world should not underestimate. Home grown cleantech innovation in China extends way beyond what most people realize, and the universities, research labs and start-ups are developing great cleantech ideas. There are currently over 1,600 government supported incubators and science parks in China and it already ranks fourth in the world in terms of cleantech patents across a variety of clean technologies.
8. The Winds blows strongly in China. The Global Wind Energy Council (GWEC) has reported that China “doubled its entire installed capacity each year since 2005.” Last year, they became the largest wind market in the world, passing the U.S. and Europe. “The Chinese government is essentially using the state banks and state power companies to support and foster a turbine industry,” according to Jefferies Bank analyst Michael McNamara.
9. Chinese prices. Energy is commodity meaning that the market will end up in the hands of the lowest cost producer. This is where China is king. It is estimated that business costs in China are about three times less, when compared to the rest of the world, meaning that any comparative investment numbers actually understate the value of the capital being deployed in China. An exemplar case is Broad Air Conditioning – a provider of air conditioning units powered by clean energy sources – which was founded in 1988 with a $3,000 investment and now employs over 2,000 people and had over $450 million in revenue in 2007.
10. The government is focusing on both commercialization of technology and on cleantech R&D. The Ministry of Finance has decentralized the R&D process by using policies such as preferential tax treatments, favorable financing policies, government procurement policies and the implementation of technology standards to encourage R&D institutions to partner more with the private sector. The Ministry of Education also provides universities with incentives to turn their research into commercially viable products. As a result, the industry share of R&D spending in China has dramatically increased from less than 30% in 1996 to approximately 60% in 2003. Today this number is expected to be even higher. China’s 11th 5 year plan (2006-2010) was clearly focused on conserving energy and natural resources, sound environmental practices and R&D. The next 5 year plan is expected to be even more cleantech and R&D focused.
Conclusion
The pitting of U.S. vs. China in cleantech will no doubt continue for many years to come. And whilst the political will and investment numbers in China are putting the rest of the world to shame, one must be careful not to overinflate where China’s cleantech sector is today, nor underestimate where it is heading in the coming years.
The West is still king when it comes to cleantech innovation and expanding new industries. China’s immediate need to create a sustainable economy means that China will need to collaborate with companies and investors from other countries, creating huge market opportunities for foreign stakeholders across all asset classes. “Already, 86% of cleantech joint ventures with a Chinese company, involve a foreign partner, and I would expect to see more cross-border cleantech investments involving Chinese cleantech firms in the future,” according to Cleantech Group research analyst, Stephen Marcus.
Stephen Lacey’s piece Is the Transmission 'Problem' Real? is a good and fair analysis of certain of the gating factors that limit the penetration of renewables. The article notes that the argument that the grid needs to be upgraded in order to increase the overall percentage of clean energy in the mix is specious – at least in certain cases – a red herring thrown in to confuse and distract advocates and drive more profits for the utilities. There is a lot of truth here, especially in California, the site of the examples that Stephen uses in his commentary.
But let's look at the transmission issue on a national or continental scale. I know there are tons of smart people – from Bill McKibben to thousands of other authors – who look to individuals as the solution to the energy problem. McKibben, for example, sees a future in which there is a "farmers’ market" of energy, where everyone is his own utility, putting his unused electrons back onto the grid.
While it’s hard to disagree with this, there is most definitely a matter of scale. With our growing population of energy-hungry consumers, utility-scale renewables appears to me to be the only way to get this done. Yet renewable resources are localized: the sun shines hottest in the southwestern deserts, the wind blows hardest in the plains, the mountains have the best geothermal resources, etc. And this is where the transmission issue comes in.
As with most aspects of the world energy problem, the difficulty here is almost exclusively political. In particular, we’re being told that, for legal reasons, we can’t have a national high-voltage grid. And unfortunately, the US Supreme Court didn’t help the cause in its recent ruling, either.
But give me a break. We have crystal-clear eminent domain legislation to create corridors for transmission lines. We have national pathways for the transportation of automobiles, railway cars, natural gas, etc. – and that land didn’t come from donations from philanthropists. There should be nothing new or scary about this. We simply need to get this done.
** Craig Shields boasts a 30-year career in business and marketing consulting for clients that include IBM, Hewlett-Packard, ABB, National Semiconductor, Agfa, Oracle, Litton, Sony, Microsoft, 3M, Philips Electronics, and FedEx, as well as hundreds of smaller enterprises and venture-capitalized start-ups. Combining his advocacy for clean technology, Craig now functions as editor of 2GreenEnergy.com, where he and his team provide information, services, and investment capital to companies in renewable energy and electric transportation. His book, Renewable Energy: Facts and Fantasies, was published in 2010. Craig holds a Bachelor's degree in physics and a Master's degree in philosophy
While the microfinance industry continues to strive for increased client services and improved portfolio quality, there's always going to be constant pressure to remain focused on profit maximization. That being said, microfinance institutions (MFIs) are also finding that there are meaningful (and profitable) synergies that exist between social performance (SP) and financial performance (FP).
A recent study by the Microfinance Information Exchange (Microfinance Synergies and Trade-offs: Social versus Financial Performance Outcomes ) identified relationships between SP and FP, and found that. . .
Improving client retention and devoting funds to further enhance the skills of staff workers directly improves financial performance. This means that qualitative factors, such as client relationships and staff discipline, could be intricately linked to a firm’s profitability.
Critics of high interest rates must understand that these costs are a result of exclusive targeting towards the very poor. This reality illustrates that MFIs can reach more people and increase efficiency by easing its targeting requirement.
Social performance factors must be emphasized in order to increase financial performance. In this sense, fully training employees and creating prudent human resources policies is directly tied with an increase in productivity and efficiency.
Microfinance Information Exchange Data concludes that “[m]any statistically significant results were found confirming some of the starting hypotheses. This suggests some internal consistency in the data reported. This research confirms many of the trade-offs and synergies between SP and FP.”
Although this is merely one study and should not be generalized for the entire microfinance community, it does illustrate that there is some kind of notable interaction between social and financial performance.
With most folks praying for a recovery, should MFIs only concentrate their efforts on purely financial factors? Or do you think this interaction between SP and FP is worth continued study in the microfinance sector?
A couple of days ago, I saw some footage of a group of scientists releasing Kemp's Ridley sea turtles into the waters near Cedar Key, FL.
There were plenty of cheers to go around, and the often cynical news reporters, in full plastic perma-smiles, carried on about how things are finally getting back to normal.
I don't know who's orchestrating this illusion, but they're doing a bang-up job!
First we hear that all this oil magically disappeared thanks to a bunch of hungry microbes. Then we get some photo ops of the President taking a dip in the Gulf, followed up by happy scientists and happy turtles sharing a moment in the Florida Keys.
I'm just waiting for someone in Washington to order a few “Mission Accomplished” signs to display across a fleet of shrimp boats in Louisiana.
Sorry folks, you can smear as much Vaseline on that camera lens as you want. But there's a lot of stuff that still doesn't add up. Especially the claim by the National Oceanic and Atmospheric Administration (NOAA) that the “vast majority” of the oil spill is completely gone, and the remaining 25 percent consists of residual oil that's buried in sediments and sand.
I'm not buying it. And neither are a handful of scientists who have been on the front lines of this clean up effort.
No Big Surprises
A group of researchers at the University of George recently reported that about 75 percent of the oil from the blown-out Macondo well is still lurking below the surface. One of the lead researchers, Charles Hopkinson said. . .
“The idea that 75 percent of the oil is gone and is of no further concern to the environment is just absolutely incorrect.”
Another group of researchers from the University of South Florida has noted that their findings show that oil from the BP spill has settled on the sea floor further east than previously suspected, and at levels which are toxic to marine life.
And University of Georgia marine sciences professor Samantha Joye responded to the NOAA's report by saying that she has not seen any data that leads her to conclude that 50 percent of the oil is gone.
There's also an interesting article here where writer Kate Sheppard asks: Where's the Math on Government Oil Spill Report? Apparently there's a lack of actual calculations to back up the numbers the NOAA came up with.
Big surprise there!
And of course, there was the news yesterday that researchers have mapped a 22-mile long underwater plume of oil drifting through the Gulf at a depth of about 900 meters.
I suspect we'll continue to hear reports that challenge the NOAA's analysis for years to come.
In the meantime, here's what you can find today in Prince William Sound, where more than 20 years ago, 11 million gallons of oil (nowhere near the roughly 200 million gallons spilled into the Gulf) spilled out into the water:
Yeah, everything will be just fine. After all, 75% of all that oil in the Gulf is gone, right?
Right?!!
Jeff
Will we ever get it?
That's the question I asked myself after reading a Reuters piece on Wednesday, which basically focused in on how pathetically backwards our thinking has become when it comes to clean energy.
It pains me to say it, but while the rest of the world moves forward on a new industrial revolution – we're playing partisan games in Washington, and essentially turning our backs on the greatest investment opportunity of the 21st century.
How does that make you feel?
How does it make you feel to know that this country is being left in the dust – missing out on huge job creation opportunities and economic development – because our energy policy is being dictated by Big Oil and King Coal?
Hell, even Kevin Parker, the global head of Deutsche Bank's Asset Management Division, recently blasted the U.S. for “being asleep at the wheel.”
Parker said. . .
“Amid so much political uncertainty in the United States, Deutsche Bank will focus its 'green' investment dollars more and more on opportunities in China and Western Europe – where it sees governments providing a more positive environment.
They're [the United States] asleep at the wheel on climate change, asleep at the wheel on job growth, asleep at the wheel on this industrial revolution taking place in the energy industry.
The U.S. hasn't even entered the race yet for a clean energy economy.”
Of the $7 billion Deutsche Bank manages for green investments, about $45 million originated in the United States.
Given our superior solar, geothermal and wind resources, this is absolutely unacceptable!
And rest assured – the longer we keep acting like this transition is not an economic imperative – the quicker we'll become a second-rate nation.
It's real easy, folks. Either we get on board on now, or we all start learning Chinese.
It's our choice.
Jeff
It's no secret that coal and oil reign supreme – not because coal and oil are the best energy options, but because the coal and oil industries shell out the most cash for our elected officials.
If this wasn't the case, there would be no need for Big Oil and King Coal to pony up all those millions of dollars every year in campaign contributions. It's amazing at what a few bucks can do to keep all those fossil fuel subsidies flowing.
Of course, we're not the only ones screaming from the rooftops that something is terribly wrong here. In fact, there's a website called dirtyenergymoney.com, which tracks all that filthy lucre that moves from the conventional energy industry to Washington.
Here are few findings from the good folks at Dirty Energy Money, as reported by Steve Kretzmann at Oil Change International:
Overall, the coal industry has been friendlier to the Democrats than Republicans thus far in the 111th Congress, with over $3.7 million going to Democratic members of the House and Senate, compared with about $2.8 million to Republicans.
Republicans continue to take more oil and gas money, with the oil and gas industry contributing over $5.1 million to Republicans and $3.1 million to Democrats.
Senators voting in favor of a narrowly defeated June 10 resolution sponsored by Senator Murkowski that would have weakened the Clean Air Act and blocked new fuel economy standards, took on average two and a half times as much Dirty Energy Money as those who voted against it.
Senators who voted against a June 15 vote sponsored by Senator Sanders that would have eliminated big oil and gas company subsidies have taken more than 3 times more oil and gas money in this Congress than those who voted for the amendment.
House votes exhibit similar trends. Members who voted against the recently passed CLEAR Act (HR 3534), which removes the liability cap for oil spills and reforms oil and gas industry regulations, took nearly five times the amount of oil and gas money on average in the 111th than those voting for the Act.
To see how much dirty energy money your local politician has received, click here now.
Jeff
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Contributing editor Shawn Lesser offers 10 reasons why the UK is a global cleantech leader.
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