Cleantech has arrived with a bang. Can the momentum persist?
The race is on to make renewable energy and alternative fuels an economically viable alternative to fossil-based energy sources—a race played from Wall Street to Iowa’s cornfields to Silicon Valley. In 2007, venture capitalists poured $2.2 billion into US cleantech companies. This marked a 45% jump from 2006, according to the MoneyTree™ Report, a quarterly study of venture capital investment activity in the United States, produced by PricewaterhouseCoopers and the National Venture Capital Association (NVCA) based on data provided by Thomson Reuters.1 The adoption of clean energy has taken root too. Installation of solar energy systems in the US rose 125% in 2007 over 2006, wind turbine installations leapt 45%, and bioethanol production lifted 32%.
Despite signs of a weakening economy, the credit squeeze, and volatile public markets, investment in the sector is expected to persist, priming significant exit activity by 2009 and throughout 2010, then accelerating as more companies graduate through a well-fed pipeline. Investment in 2008 will likely continue to flow into wind and solar and channel out to an increasingly diverse range of sub-sectors, including next-generation biofuels and energy storage technologies.
Looking ahead, more activist federal energy policies—such as a cap-and-trade system for carbon-based emissions, expanded renewable energy mandates, or even a federal carbon tax—would further drive the sector. For the first time, leading US presidential candidates of both parties favor national carbon management programs.