Ethical Investor, Page: 17
Wednesday, 24 May 2006
Cleantech is the new buzzword flying around the venture capital world and is broadly defined as manufacturing processes or product technologies that reduce pollution or waste, energy use, or materialuse in comparison to the technologies that they replace. Examples include such innovative and expanding technologies as solar photovoltaics, wind power, hybrid electric vehicles, fuel cells, biobased materials and advance water filtration. Increasingly, financial investors are taking more of an interest in the emerging ideas and efficiencies of cleantech. No longer is it just a matter of complying with the latest regulation - businesses are now seeing the financial benefits of such investments, which is clearly reflected in the growth of clean energy markets.
There has, without doubt, been an elevation in the importance and urgency of clean technology, making it one of the fastest growing sectors in the world. US research has identified 4 key cleantech growth areas. Biofuels (global manufacturing and wholesale pricing of ethanol and biodiesel) will grow from US$15. 7 billion in 2005 to US$52. 5 billion by 2015. ASX listed companies leading the way include Australian Ethanol (ASX: AAE), Australian Renewable Fuels (ASX: ARW) and Australian Biodiesel Group (ASX: ABJ).
Wind power (new installation capital costs) will expand from US$11. 8 billion in 2005 to US$48. 5 billion in 2015, including Babcock & Brown Wind Partners (ASX:BBW) which has successfully grown from a single asset private investment vehicle to a listed fund with a portfolio of wind energy assets diversified across Europe, North America and Australia. Solar photovoltaics (including modules, system components and installation) will grow from a US$11. 2 billion industry in 2005 to US$51. 1 billion by 2015. Australian company Solar Heat and Power Pty Ltd builds the world's lowest cost large scale solar concentrators.
The fuel cell and distributed hydrogen market will growfrom US$1. 2 billion last year to US$15. 1 billion by 2015. Ceramic Fuels Cells Ltd (ASX:CFU), for example, has a unique fuel cell design based on work done within the CSIRO, from which the Company spun off in 1992 with the support of many contributing partners before listing on the Australian Stock Exchange in 2004. In that time, they have improved the design, systems and product configuration of their solid oxide fuel cells, whilst winning an international reputation in their field.
It is estimated that these 4 clean-energy technologies will grow fourfold within the next decade. We have seen increased interest by major corporations in adopting cleantech to drive productivity and reduce waste and the emergence of experienced management teams, who introduce innovative business techniques, assist in building investor confidence in the emerging cleantech sector. Global resource constraints and increased concern for climate change have played a major role in positioning clean technologies for sustained growth. The energy demands of the 2 new economic powerhouses, China and India, are stretching existing power sources to their limits.
Water shortages are prompting investment in water treatment and recycling technologies. The soaring prices of oil and gas have led to producers and users searching for new technologies. The advancement of new technologies has helped drive down wind energy production costs by 80% over the last 20 years and solar power has dropped to one-tenth the cost it was during the 1970s, while new technologies and innovations are proliferating. At the same time new, credible scientific evidence of climate change and its impacts has greatly increased community, government and corporate pressure to reduce co2 emissions.
Venture Capital (VC) and private equity activity in cleantech, the form of both dedicated cleantech funds and mainstream venture capital firms, has been a key contributor to this growth. US VC investing in clean energy has increased over 80% as a portion of total VC investment over the past 5 years to over US$900m in 2005. The Australian VC and private equity industry is showing signs of following suit. In Australia there are 2 dedicated cleantech venture capital funds, of which CVC Sustainable Investments Limited is open to retail investors.
To complete the story, other Australian mainstream venture capital firms are now allocating dedicated resources to the cleantech sector.
0 comments:
Post a Comment