Is Clean Tech Dead?

R..P.? IS CLEAN O TECH DEAD? With the recent bankruptcy of Solyndra many are beginning to question the sustainability of clean tech industries. Is clean tech on the verge of death? Not really. Investments in clean tech have been slightly rising with new deals on the frontier. We take a look at the current state and future of clean tech. CURRENT STATÉ OF While the funds invested in clean tech industries CLEAN TECH have increased since 2010, there has not been an increase in the number of newly formed clean tech projects. NOTABLE BANKRUPTCIES AND CLOSURES IN CLEAN TECH There have been a slew of recent bankruptcies in the clean tech industry. Some companies, such as Applied Materials, have dropped their clean tech divisions to avoid losses. APPLIED MATERIALS EVERGREEN SOLAR TESSERA SOLON SPECTRA WATT SOLYNDRA SELLS SUNFAB, SWITCHES TO LED VENTURES BANKRUPTCY ABANDONS 200-MEGAWATT BID CLOSES U.S. MANUFACTURING PLANT BANKRUPTCY BANKRUPTCY 2010 JULY 2011 APRIL 2011 APRIL 2011 AUGUST 2011 AUGUST 2011 SEPTEMBER TOTAL VENTURE CAPITAL AND PRIVATE EQUITY INVESTMENTS CLEAN TECH DEALS IN BILLION USD The number of deals in clean tech VC funding increased in Q3 2011 with 29 more deals than Q1. $2.7 $3.0 BILLION $2.2 $.5 $2.0 $1.8 BILLION ........ $1.9 BİLLION 160 BILLION, BILLION $20 ......... ******* DEALS 01 2011 S15-...... 179 SL.O -.... DEALS 02 2011 $0.5 -....... 189 DEALS $.0. 03 2011 02 2010 03 2010 01 2011 02 2011 03 2011 VC INVESTMENTS B1% 81 percent of the funding 55% SERIES B generated in Q3 were Though VC investments in the clean tech industry increased in Q3 of 2011, the majority of the funding went to follow-on rounds for capital-intensive companies. Many investors seem to be more inclined to back well-established clean tech start-ups than newer clean tech projects. for these 55 percent of VC clean tech companies $1.8 companies. The funding totaled $1.8 billion. were in Series B or later rounds. BILLION The newest trend in clean tech investment has seen an CLEAN TECH INVESTMENT TYPES upswing in the amount invested in energy storage. ENERGY STORAGE $514 MILLION SOLAR ENERGY EFFICIENCY TRANSPORTATION $350 MILLION $223 MILLION $177 MILLION OBSTACLES FOR CLEAN TECH COMPETITION FROM CHINA One of the largest obstacles comes from CHINA: MERGERS AND IPOS global competition in clean tech. China currently leads the world in IPOS and clean tech investments. The cheap cost of labor and manufactoring makes it very hard for other countries to compete domestically. IPOS and M&As were down across the board compared to the first half of the year. However, China was by the far the country with the largest number of clean tech IPOS. Il out of 14 China accounted for 49 percent of global clean tech proceeds. 49% IPOS launched this year were from China, China is particularly competitive because of their CLEAN TECH INCENTIVES IN CHINA incentives. % TAX BREAKS MANUFACTURING COSTS 72 67 Many clean tech companies enjoy a preferential tax rate of 15 percent, compared with the 25 China is renowned for its cheap labor and manufacturing costs. In addition, all renewable energies Ernst and Young scored China higher than the U.S. in terms of attracting potential clean tech percent tax rate on other are guaranteed purchase by investors. corporations. utilities. SHAKEY INVESTORS VENTURE CAPITAL INVESTMENTS In 2008, Venture Capitalists invested $49 billion into 800 software companies and $4.1 billion into only 250 clean tech companies. $4.1 MILLION 250 Investing in clean tech is expensive. Clean tech startups require significant capital outlays to develop prototypes and manufacture products. In software startups, talent is usual the major cost. clean tech $4.9 MILLION 800 software FUTURE OF CLEAN TECH Could the U.S. military be the savior of the clean tech industry? CLEAN TECH AND THE DOD DOD INVESTMENTS For the clean tech industry in the U.S., survival The DOD has begun to heavily invest in clean tech. It is predicted by 2030 its investment will total $10 billion. may actually depend on investment from the government and not VC funding. The Department of Defense is the single largest energy consumer in the world, surpassing the SIO BİLLION $10 energy consumption of 100 nations. 75% $5 50/ $6 $4.5 BILION BILION $3 BILION. $4 25 percent of DOD energy costs are spent on infrastructure. 75 percent of DOD energy costs are spent on fuel. $2 ..... ..... $0 2030 2030 CHINA 2015 2025 UNITED STATES CURRENT MILITARY PROJECT A $2 billion 500-megawatt solar power installation will be built on a military reserve at the National Training Center in Fort Irwin, California. SOURCES: SMARTPLANET.COM I CBINSIGHTS I REUTERS I GIGAOM I BUSINESSGREEN.COM I EY.COM I NYTIMES.COM I TECHNOLOGYREVIEW.COM I XCONOMY.COM I CLEANTECH.COM FOCUS