Blue sky concepts win mainstream status
ADECADE ago, trying to raise funds for a ‘‘ clean’’ power project or to conduct research into a promising area was a task of Herculean proportions. But in the past five or six years the picture has changed dramatically, with investment in new power technologies moving into the financial mainstream.
‘‘ The ‘ cleantech’ market is still in the development stage,’’ says Jeffrey Castellas, CEO of Clean Technology Australia, a firm that brings together investors and companies for knowledge exchange and commercial interaction. ‘‘ But it is firmly established on the growth path. There is a sense of critical mass emerging. We are seeing a lot of money, both Australian in origin and from overseas investors, going into proven technologies like wind power — but there are also funds available for research into new technologies that might currently be called speculative but are likely to have a role in the longer term.
‘‘ It is significant, I think, that ‘ cleantech’ is now being recognised as a new industry. It is now seen as an opportunity to make good money if you do the right analysis and make the right choices, like any other sector.’’
Australian companies are becoming globally known for their expertise in renewable energy technologies, as well as clean coal technology, both because of the quality of the researchers involved and the range of projects currently under way.
Equally, a striking feature of the investment market in alternative power technology is the breadth. There are established companies investing in the area as well as small firms that have successfully listed on the ASX as a way of attracting capital. For investors, there are equity or debt options available, with a spectrum of risk profiles.
‘‘ For large companies, there was a big change when they started to adopt their own sustainability strategies,’’ Castellas says. ‘‘ Once you have begun to think about energy efficiency in your own operations, it’s a small and logical step to investing in clean tech power generation.
‘‘ Another big step has been the involve- ment of several of the big super funds. That has been led from the top, but it’s important that the broad membership has been willing to support it, both because they see it as a good financial opportunity and a key social objective. We have also seen respected financial institutions like Macquarie Bank and NAB move into this area successfully, creating specific divisions to focus on it. That has created a feeling of momentum. At the same time, there are now enough options in the field, between proven technologies and emerging ones, that an investor can spread their risk.’’
Castellas points to government involvement, from federal and state levels, as an important support. The willingness of governments to contribute substantial sums to development projects has both raised the profile of the clean energy field and provided a stable financial foundation. He nominates Victoria as the state that has probably done the most to foster the clean power industry, both in setting targets and assisting with finance, and points to the recent agreement between Victoria and California for collaboration on climate change actions.
But there is a problem in that there is still not enough financial skill amongst the people trying to raise funds, who tend to come from a technical background, and not enough technical knowledge in the financial community. ‘‘ We are behind the US and Europe in this, but it is getting better,’’ Castellas notes. ‘‘ You have to realise that this has all moved very fast.’’
One company that has emerged as a key investor in clean power technology is Origin Energy, usually known as a mainstream gas producer and a gas and electricity retailer. But, according to Origin’s Tony Wood, the company is looking to a future as an integrated energy company.
‘‘ We have two gas- powered, base- load electricity generating plants planned, in Queensland and Victoria, involving about a billion dollars of investment each,’’ he says. ‘‘ Gas involves about half of the emissions for black coal, and about one- third for brown coal, so it is a major step forward in reducing the greenhouse gas emissions from the electricity sector, the largest source of Australia’s emissions.’’
Origin has also been a key financial supporter of more efficient, cost- effective photovoltaic cells, called sliver technology, conducted by the Australian National University’s Centre of Excellence for Solar Energy Systems. A pilot plant for the manufacture of cells is operating in Adelaide with very promising results.
Sliver technology has the potential to reduce the cost of solar- generated electricity to a figure competitive with the retail price of electricity generated from fossil fuels, currently about 12- 18 cents per kilowatt hour.
Wood notes that Origin has already put over $ 40 million into the research and development of sliver cells, and more will be needed to commercialise the technology in a rapidly growing market. This will involve achieving manufacturing scale, securing supply of high- grade silicon and accessing the global market.
‘‘ Significant investment has been involved,’’ he says. ‘‘ We see it as an investment in the future, not only environmentally but financially. The shift in thinking of the past few years has not only identified the problems of a carbon- constrained world but has also opened up a host of strategic possibilities. The energy sector used to be, well, a bit on the dull side, known for stability rather than rapid change. But now it’s an exciting place to be.’’
Accepted: Jeffrey Castellas says new technologies, even if speculative, attract investors