Green Innovations

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Monday, January 18, 2010

Top ten clean tech predictions for 2010

While it's hard to gaze into the crystal ball, The Cleantech Group has a knack for reading it well. Here is a quick round-up of their predictions for 2010.

1. Private capital growth recovers, record fund year
All in all, given the global recession, 2009 was not such a bad year for cleantech investing. We predict global venture and private equity in cleantech in 2010 will exceed that in 2009, and exceed it by a healthy margin. Above all, watch for greater innovation in fund strategies, for example those that bring “innovation and infrastructure” together or those that focus on cross-border plays.

2. Clean economies become the new space race
Fueled by unprecedented quantities of “green and clean” stimulus money, cities, states, provinces and countries are now competing to grow cleantech businesses, to bring innovation to market, to attract inward investment and to brand themselves as hubs of cleantech growth. It’s no longer about trading our way out of the carbon crisis, it’s about inventing new industries. Look out for changes in momentum, admittedly starting from very different starting points, from places such as Australia, Singapore, France, Germany, Scandinavia, Israel, parts of the U.S.,

3. Electric cars take the back seat to smart mobility
In 2009, electric vehicles and hybrids eclipsed fuel cell vehicles as the undeniable new center of gravity of the auto industry. In 2010, clean cars will form part of a broader shift to smart mobility. Look increasingly in 2010 for eco-city designs based on concepts such as “new urbanism.”

4. Resource constraints beyond carbon rise to the fore
While the world is understandably fixated with the challenge of moving to a low carbon economy, in 2010 we anticipate more attention will begin to be paid to other natural resource constraints. As and when the global economy picks up, the demand for commodities—especially metals, food and oil—will underscore that the natural resource problem hasn’t gone away. In 2010, watch for price spikes that affect cleantech industries, as well as for potential trade conflict over supplies of valuable natural resources. For example, with the rollout of a new generation of EVs in 2010, will there be a shortage of lithium?

5. Commodity tradeoff debates intensify
Associated with rising concerns over the scarcity of natural resources are tradeoffs between how resources should be used. Watch for these tradeoffs to hit the headlines in 2010 and the hunt for solutions to intensify:
  • Water-energy
  • Land-energy
  • Land-water
  • Carbon-water

6. Energy efficiency, driven by ICT, eclipses solar
In the coming year, software-based innovations are going to make up a much larger proportion of cleantech venture and PE investment than they currently do in a wide range of areas related to more sustainable and efficient use of energy, materials and natural resources, from the smart grid to remote sensing to industrial design. Private innovation capital/finance in energy-efficient ICT products and services could even eclipse that in solar, we predict.

7. Marketing suddenly matters
Marketing will take on an increasingly important role in cleantech in 2010. For clean technology vendors in some vertical technology sectors, such as solar and biofuels, an increased number of competitors, commoditized products and ballooning inventories are going to drive investments in marketing. In 2010, it’s going to be important to be able to articulate certain clean technologies’ propositions and differentiation, to consumer or enterprise buyers alike, and telegraph them in shorthand in a brand that stands for something in the mind of the prospect.

8. Buffett leads the super rich into cleantech
In late 2008 and 2009, the world’s most successful investor, Warren Buffett, made four high profile investments that, when stitched together, paint a picture that suggests the super-rich are now ready to play big in cleantech related investments. And that will further increase the awareness of cleantech as an investment sector and decrease the risk of participating in it. In 2010, Warren Buffett is likely to be joined by other super rich and super savvy, some partially motivated by worries over global warming, to make large scale commitments to cleantech innovation, directly and indirectly. George Soros is but one recently example, joining early players such as Virgin’s Richard Branson.

9. Acquisitions and consolidations accelerate
Not all will be pretty in cleantech during 2010. There will be losers as well, particularly in sectors and geographies where there has been overinvestment in recent years. The coming year will also likely see an overbuild of capacity in some cleantech sectors that will drive consolidation in 2011. LEDs (light emitting diodes) are poised, for instance, to follow the same bubble and bust seen in the solar PV manufacturing sector.

10. The rise of waste-to-energy, geothermal and aquaculture
Forecasting specific hot cleantech investment segments for 2010 is challenging in light of the broad secular megatrends driving toward a clean economy that touches every mainstream industry and sector—from cement to consumer electronics. While we think well-known clean energy technologies such as waste-to-energy and geothermal power will receive greater attention in 2010, in addition to the more visible renewable energy segments of wind and solar, we also believe increasing attention will be paid to nutrition-related investments, with sustainable aquaculture being one such area, as part of a shift to more sustainable agriculture and food production.

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