Clean tech next big thing in en­ergy

The Weekend Australian - Travel - - Resources - Keith Orchi­son

FOR­GET dot­com. It’s wattcom that is the new big thing — or, in the lan­guage of Sil­i­con Val­ley, ‘‘ clean­tech.’’ The latest United Na­tions re­port on sus­tain­able en­ergy in­vest­ment re­veals that $US70.9 bil­lion was in­vested in ‘‘ clean-tech’’ com­pa­nies in 2006 — par­tic­u­larly those en­gaged in wind, so­lar and bio­fu­els de­vel­op­ment — and it fore­casts that the sec­tor will at­tract $US85 bil­lion this year.

The UN En­vi­ron­ment Pro­gram study, un­der­taken by Lon­don-based an­a­lysts New En­ergy Fi­nance, adds that a fur­ther $US30 bil­lion en­tered the sec­tor via merg­ers, ac­qui­si­tions, lever­aged buy­outs and as­set re­fi­nanc­ing last year.

UNEP says that, al­though re­new­able en­ergy ac­counts for only 2 per cent of global power sup­plies, it is now at­tract­ing 18 per cent of in­vest­ment in elec­tric­ity gen­er­a­tion.

Achim Steiner, UNEP ex­ec­u­tive di­rec­tor, says: ‘‘ This is full-scale in­dus­trial de­velop- ment, not just a tweak­ing of the en­ergy sys­tem. The chal­lenge for gov­ern­ments now is to turn near-term ad­vances into con­tin­ued sec­tor growth.’’

UNEP com­ments that the vol­ume of in­vest­ment flow­ing in to clean en­ergy now dwarfs the dot­com boom, has lasted longer and is show­ing no sign of abat­ing. New in­vest­ment through ven­ture cap­i­tal and private eq­uity reached $US7.1 bil­lion last year, 163 per cent higher than in 2005.

De­spite the global crit­i­cism of the Amer­i­can Gov­ern­ment for fail­ing to sign the Ky­oto treaty, two-thirds of the ven­ture cap­i­tal and private eq­uity funds — to­talling $US4.9 bil­lion — flowed to the US in 2006.

While the fo­cus of in­vest­ment is in Amer­ica and Asia, Aus­tralian clean-tech in­ter­est is grow­ing fast, too. A fo­rum in Melbourne ear­lier this year drew 230 par­tic­i­pants. The or­gan­is­ers, Clean Tech­nol­ogy Aus­trala­sia, say that the clear mes­sage from the fo­rum is that there is a strong op­por­tu­nity to cre­ate a glob­ally com­pet­i­tive clean-tech in­dus­try here. ‘‘ Now is an im­por­tant time to seek so­lu­tions that make money as well as gen­er­ate en­vi­ron­men­tal and so­ci­etal gains.’’

Terry Tam­mi­nen, a spe­cial ad­viser to Cal­i­for­nia Gov­er­nor Arnold Sch­warzeneg­ger, told the Melbourne fo­rum that the op­por­tu­nity ex­isted for ‘‘ a hub of clean-tech in­vest­ment and in­no­va­tion’’ to be es­tab­lished in Vic­to­ria to take ad­van­tage of mar­kets in In­dia, China and the Pa­cific Rim.

Mean­while, an­a­lysts con­fess baf­fle­ment at the poor per­for­mance of Europe in clean-tech in­vest­ment. New En­ergy Fi­nance says in­vest­ment in the sec­tor from Europe fell two per cent last year against growth of 138 per cent in North Amer­ica, in­clud­ing Mex­ico, and 45 per cent in Asia.

NEF says the fig­ures make de­press­ing read­ing for Euro­pean gov­ern­ments, ‘‘ who have set great store in achiev­ing global lead­er­ship in clean en­ergy de­vel­op­ment’’.

How­ever, the take-off of in­ter­est in new en­ergy tech­nol­ogy is not with­out dan­ger. Matthew Nor­dan, pres­i­dent of New York- based Lux Re­search ar­gues that the clean-tech en­ergy seg­ment is start­ing to look over­heated, with 930 start-ups es­tab­lished around the world in less than two years. ‘‘ There is no way more than a frac­tion of them can pos­si­bly suc­ceed,’’ he says.

Nor­dan ac­knowl­edges, how­ever, that there is a huge amount of in­vestor in­ter­est in the area and says there is up to $US200 bil­lion worth of ven­ture and private eq­uity money avail­able at present for in­vest­ment.

Lux Re­search also notes that gov­ern­ment and cor­po­rate in­vest­ment around the world in en­ergy re­search is soar­ing. Last year, says Nor­dan, to­tal clean-tech R&D fund­ing glob­ally reached $US48 bil­lion with gov­ern­ments, in­clud­ing those in Aus­tralia, con­tribut­ing $US24 bil­lion.

The store of sci­en­tific pa­pers on clean tech is also grow­ing ex­traor­di­nar­ily fast — 50,000 ar­ti­cles were pub­lished in 2005 and 2006.

US-based con­sul­tancy Clean Edge Inc says ‘‘ six Cs’’ make up the key forces re­shap­ing the global en­ergy land­scape: cost, cap­i­tal, compe- tition, con­sumers, cli­mate and China. They have moved clean en­ergy from the fringe of en­ergy sup­ply to the main­stream, it adds, and in com­bi­na­tion they are ac­cel­er­at­ing the growth of tech­nolo­gies, com­pa­nies and mar­kets ‘‘ faster than even many op­ti­mists might have imag­ined.’’

Clean Edge says its re­search points to a $US60 bil­lion in­crease in in­vest­ment in pro­duc­tion of ethanol and biodiesel be­tween now and 2016, an out­lay of more than $US40 bil­lion on wind farms in 10 years, a $US54 bil­lion ex­pen­di­ture on so­lar pho­to­voltaics and in­vest­ment of $US14 bil­lion in fuel cells and dis­trib­uted hy­dro­gen tech­nol­ogy (mostly for re­search and test units) by 2016.

‘‘ This level of growth is more akin to the PC, wire­less and web in­dus­tries in their hey­day than to the staid and usu­ally slow­mov­ing en­ergy sec­tor,’’ Clean Edge com­ments. ‘‘ Clean en­ergy is at­tract­ing the in­ter­est and com­mit­ment of many of the same in­no­va­tors and in­vestors who cre­ated the in­fotech revo­lu­tion.’’

Many ven­ture cap­i­tal­ists, it adds, have found ways to ap­ply their skill sets to clean tech with­out stray­ing too far from their IT and bio-tech knowl­edge and ex­pe­ri­ence.

How­ever, the con­sul­tancy also has a warn­ing for in­vestors. It points to sharp cost in­creases in a num­ber of en­ergy ar­eas. The av­er­age cost for in­stal­la­tion of a megawatt of wind farm has risen 20 per cent in two years. More sil­i­con is now go­ing into mak­ing so­lar pan­els in the US than into com­puter chips and the re­sult­ing high price of pro­cessed sil­i­con is driv­ing up so­lar pho­to­voltaic cap­i­tal out­lays. Profit mar­gins for ethanol in the US have nearly col­lapsed in the past year be­cause of a dou­bling in the corn price.

Clean Edge also ar­gues that there is ‘‘ sun­light at the end of the tun­nel,’’ pre­dict­ing that sil­i­con costs will sta­bilise, that wind tur­bine prices will ‘‘ calm’’ and bio­fuel pro­duc­ers will ben­e­fit from new re­fin­ing tech­niques and the de­vel­op­ment of non-corn feed­stocks.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.