Tag Archives | venture capital

The renewable energy bubble has burst

RENIXX tracks the 30 biggest renewable energy companies by market cap. Credit:

The renewable energy bubble was just another sector to be exploited by financial interests who had had no real interest in the companies themselves. This is made worse by the viciously mercenary renewed interest in natural gas, oil, and fracking, which is also hurting development of grid-scale renewable energy. Between money leaving renewable energy and ultra-cheap natural gas, green energy is hurting.

Greentechmedia explains that too often venture capital was simply looking for the next big thing, and wishes they’d been thinking long-term instead. So do I.

As one major LP [Limited Partner] told me a few years back, the major reason for LPs to put any money into venture capital at all, with its sub-par risk-reward performance over the past decade, is in the hopes of getting in ahead of the next great bubble… and he hoped that cleantech might become that.

So really, all the LP wanted was a bubble to make a quick buck.

Cleantech venture capital was supposed to save the world. This was supposed to be a feel-good story. Do well by doing good, and all that. But in the meantime bigger resource shifts (namely, natural gas abundance in the US) have led to reduced carbon emissions while also lowering the competitive price targets emerging energy technologies have to beat in order to look attractive. So again, what’s the point?

The point is trying to stop climate change and generate our own energy internally. Switching from coal to natural gas does reduce emissions but not nearly enough and is no solution at all, especially considering the hideous environmental damage caused by fracking.

The Market Oracle in the UK explains how a renewable energy bubble formed, because this time was different and there was no risk. But of course, there was risk. Many renewable energy programs get big subsidies. So does big oil, of course. But a distrubution network already exists for oil and gas. It doesn’t for renewable energy like offshore wind farms. The current grid can’t handle it and a new grid takes many years to build. This assumes that we have the will to build a new grid to replace our aging, inadequate grid. But we don’t.

For instance, the available grid capacity in Ontario (Canada) was oversubscribed in the launch period the the FIT programme. Ambitious grid expansion plans are planned, but over a period of decades. Even if we were not facing financial crisis, the financing for specific projects would have long since disappeared before the projects could expect to receive at FIT contract. Similarly in Europe, the grid connections necessary to build out off-shore wind on a large scale simply do not exist, and cannot be brought into existence in less than several decades time. Time is a major factor for high tech investors used to a rapid, or even explosive pace of development:

Time is also a major factor is doing something about climate change. Now that the renewable energy bubble has burst, cleantech will be out of favor by investors for too many years to come.

Cleantech could be biggest VC sector in five years

solar reflectors

Venture capital investing in cleantech continues to increase, even in a declining economy. Boom times are coming.

“This is an area that’s ripe for investment — we’re going to be seeing the next eBay, the next Google coming out of the cleantech sector,” says Mark Heesen, president of the National Venture Capital Association.

Like Google, they will be disruptive technologies that create entire new industries and businesses, and will be providing clean power and energy to all of us.

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