The cleantech boom went bust! Solar is dead. Climate change is a hoax. We have all heard the doom and gloom. If you only read these sensationalist headlines you might think cleantech is dead.
Don’t believe the hype! Cleantech did not implode. While 2011 was a challenging year for cleantech, the industry continued to grow and there’s plenty to look forward to in 2012. With all the noise, you might not have realized how quickly solar installations are growing around the globe. For example, in the US solar installations grew more than 65% year-over-year. National and local governments are embracing cleantech like never before as they search for ways to stimulate their economies. Even though a number of venture funds have struggled, we saw global cleantech venture flows grow 14% to $9 billion last year.
Global enterprises invested in cleantech at record levels: Last year we tracked $41 billion in global M&A transactions in cleantech, up 153% from 2010. Big corporations from every industry and from across the globe are evolving sustainability programs into growth-oriented strategies to source cleantech innovation. French enterprises have led the way. Some groups have pursued an acquisition strategy: Schneider Electric, for example, made eight cleantech acquisitions in 2011. Areva became a major player in solar through their purchase of Ausra. Alstom used its acquisition of UISOL to expand its utility relationships into the world of demand response. Others like Veolia and EDF have focused on partnerships (instead of acquisitions) with innovative players. Total has led the way on numerous fronts: acquiring Sunpower; making minority investments in Amyris, Elevance, Gevo and others, and creating an innovative financing vehicle (Ecomobilité Ventures) in partnership with other big French groups (SNCF, Orange, PSA Peugeot Citroën).
Big companies from around the world reached for their checkbooks in 2011. While China is (rightfully) a topic of many cleantech conversations, we have noticed the rising influence of Korea. Hanwha Solar was a major investor in OneRoof Energy’s recent $50 million round. SK Group led an $80 million round in HelioVolt. AVACO and other Korean private equity investors led Stion’s $130 million round. Korea’s chaebols are committing massive amounts of capital to cleantech and articulating long-term strategies for establishing leadership in key sub-sectors.
As we look forward, we see 2012 as a pivotal year for cleantech. There is no doubt that as governments sort through their fiscal challenges, they are rethinking certain policies and programs. While this has slowed programs that provide direct support to cleantech markets, it has created a constructive global dialog on how to best stimulate sustainable growth.
Sustainability and cleantech will converge in 2012. The era of sustainability programs that consisted solely of marketing slogans is over. In 2012 sustainability officers will look to connect their sustainability goals with real solutions to help them reduce energy use, water consumption, or their carbon footprint.
Water and energy efficiency will emerge as key sectors as the conversation shifts back to resource scarcity. Especially in geographies where water is precious, governments and businesses will invest in technologies and business models to save water. Why? To reduce costs (both direct costs but also indirect costs like property damage that are not well understood) and to proactively manage risks.
Investors and corporations will increasingly appreciate the opportunity to cost-effectively cut energy use. Financing will come into focus as the top barrier to unlocking massive market opportunities. Creative financing models will emerge to help consumers, building owners, and industries take advantage of innovative technologies and services.
So while the news is filled with signs that cleantech is dead – the real story is far more complex and interesting. Corporations and governments will continue to invest heavily. The sustainability world will converge with cleantech in an effort to drive real change and efficiency savings. The trends are happening on a global scale, with French leadership and increased activity from countries like Korea. So don’t believe the hype. Clean technology is stronger than ever solid in 2012.