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The Transition to a Green Economy: A Cleantech Roadmap

3p Contributor | Monday November 24th, 2008 | 0 Comments

turbine_freeway_structure_2.jpg With all this talk about the green economy, it’s nice to know that some people are working on the play-by-play plan to get us there. This road map comes from Scott Clavenna, CEO of Greentech Media. He calls it a “Greentech Market Taxonomy.”
It’s broken down into five major market segments:

Power Technology:
generation, storage, transmission and management
Transportation: vehicles, fuels, and infrastructure
Built Environments: greener buildings, energy efficient technologies
Environmental Technology: recycling, remediation, pollution control
Water, wastewater, and related technologies
Each of those categories contain four main sub-markets: Materials, Products, Systems, and Software/Services.
As you can imagine, with the breadth of these markets and sub-markets, fierce competition is brewing among nascent start-ups and established companies to carve out a lucrative niche in the new market segments destined to emerge.
After the jump you’ll find some of the new business opportunities that exist in these market segments. Each one will spawn new companies that will ultimately deliver profits for savvy Green Chip investors.


Power Technology
advanced battery technologies (materials)
high voltage transmission (systems)
smart grid, advanced metering, demand management (software)

Transportation

biofuels (materials)
hybrid, plug-in hybrid, and electric vehicles (systems)
electric charging infrastructure (software./services)
Built Environments
green construction materials (materials)
light emitting diodes (LEDs), organic LEDs (products)
smart building management systems and architecture (software/services)

Cleantech Opportunities & Challenges

Indeed, all those exciting new opportunities will certainly keep Green Chip investors busy, what will all the fresh technologies and investment vehicles.
But before we can get to a fully established new energy economy, where cleantech investors are giddy from staring at green numbers all day, there are first some hurdles to overcome.
First and foremost, there are some mental roadblocks that need to be addressed.
For example, as the cleantech industry evolved, certain sectors garnered more attention than others. You can probably name them off the top of your head: solar, wind, geothermal, etc.
And that was fine. Then.
Now, a platform has been laid consisting of now-efficient and proven energy generating technologies, like geothermal power systems, wind turbines, and solar panels.
Of course, work still needs to be done to reduce costs, create economies of scale, and numerous mergers and consolidation will likely occur.
Going forward though, investors at all levels–venture capital, private equity, institutional, governmental and retail–need to focus on nascent and emerging cleantech sectors. These are the companies and technologies that will allow us to use already developed clean energy sources to a greater degree, while updating the grid, and offering real-time energy and data management to homeowners and utilities.
Second, there a few glaring gaps that must be filled in before clean energy can become ubiquitous.
There are three main categories of these glaring gaps:
Technology gaps
Funding gaps and
Policy gaps

Technology gaps include sufficient storage capacity for renewable energy, transmission and utility grid management, and the lack of an efficient infrastructure for charging the electric vehicles of tomorrow.
Funding gaps consist of a current lack of will to bring start-up companies to maturity and, eventually, to scale.
Policy gaps relate to a lack of legislative leadership at the federal level, leaving the market uneven and uncertain. A price on carbon and a national renewable portfolio standard are desperately needed, and doing it piecemeal at the state level is simply ineffective.
Cleantech: Only the Beginning
The transition to a green energy economy is a multi-trillion dollar opportunity. As we have seen, there is still work to be done.
Seed and venture capitalists need to recognize promising technologies early, and fund them at those nascent levels.
Private equity and institutions need to start helping these companies emerge from the start-up phase so they bring real solutions to market.
And the government needs to be an actionable leader, providing clear guidance and policy on how to bridge the gap from the fossil fuel age to the energy framework of tomorrow.
We’re already moving in this direction. So savvy investors need pay attention to these up-and-coming technologies, solutions, and companies.
Because the smart grid start-up of today could be the green chip juggernaut of tomorrow.
But you’ll only know about it and be able to capitalize on it if you read about the industry early and often, and actually invest in it.
We all know about the success stories of today. Solar companies like First Solar and Q-Cells. The Ormats of the solar world.
Which sectors and companies will fuel the next round of cleantech innovations and profits?
This chart of recent venture capital activity holds more than a few clues:
cleantechventurecapital.gif
Solar and biofuels still lead the pack in terms of funding, but smart grid, demand response, and energy storage are the rapidly emerging new kids on the block.
Lighting and vehicle technology aren’t far behind, in terms of 2008 funding numbers.
Keep an eye out for those sectors to merge into the mainstream in coming months and years, as we we continue down the road to a new energy economy.
Call it like you see it,
Nick
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Nick Hodge is a regular contributor to Green Chip Review and Energy & Capital.


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